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<HTML><HEAD><TITLE>wemu jun 08</TITLE>
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<DIV style="WIDTH: 626px">
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B></P>
<P style="MARGIN: 0px"><BR></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt"
align=center><B>UNITED STATES</B></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt"
align=center><B>SECURITIES AND EXCHANGE COMMISSION</B></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt"
align=center><B>Washington, D.C. 20549</B></P>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt" align=center><B>FORM
10-Q</B></P>
<P style="MARGIN: 0px"><BR></P>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><U>X&nbsp;</U>QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934</P>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt" align=center><B>For
the quarterly period ended June 30, 2008</B></P>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=center>_
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934</P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px" align=center>For the transition period
from ____ to ____</P>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B><U>WORLDWIDE ENERGY AND MANUFACTURING USA, INC.</U></B></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=center>(Exact
name of registrant as specified in its charter)</P>
<P style="MARGIN: 0px" align=center><BR></P>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0 align=center>
<TR style="FONT-SIZE: 0px" height=0>
<TD width=220></TD>
<TD width=186></TD>
<TD width=220></TD></TR>
<TR>
<TD vAlign=top width=220>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>Colorado</P></TD>
<TD vAlign=top width=186>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>0-31761</P></TD>
<TD vAlign=top width=220>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>84-1536519</P></TD></TR>
<TR>
<TD vAlign=top width=220>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>(State or other jurisdiction of incorporation or
organization)</P></TD>
<TD vAlign=top width=186>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>(Commission File Number)</P></TD>
<TD vAlign=top width=220>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>(I.R.S. Employer Identification No.)</P></TD></TR>
<TR>
<TD vAlign=top width=220>
<P>&nbsp;</P></TD>
<TD vAlign=top width=186>
<P>&nbsp;</P></TD>
<TD vAlign=top width=220>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top colSpan=3>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>408 N. Canal Street</P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>South San Francisco, &nbsp;CA &nbsp;94080</P></TD></TR>
<TR>
<TD vAlign=top colSpan=3>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>(Address of principal executive
offices)</P></TD></TR></TABLE>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>Registrant&#146;s telephone number, including area code: (650) 794-9888
</P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Indicate by check
mark whether the registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer, or a smaller reporting company. &nbsp;See the
definitions of &#147;large accelerated filer,&#148; &#147;accelerated filer&#148; and &#147;smaller
reporting company&#148; in Rule 12b-2 of the Exchange Act.</P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Large Accelerated
Filer&nbsp;&nbsp;&nbsp;o
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accelerated
Filer&nbsp;&nbsp;&nbsp;x&nbsp;&nbsp;&nbsp;</P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Non-Accelerated
Filer&nbsp;&nbsp; o (Do not check if a smaller reporting company)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Smaller reporting
company &nbsp;&nbsp;o</P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Indicate by check
mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes__ &nbsp;&nbsp;No <U>X</U></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Indicate the number
of shares outstanding of each of the issuer's classes of stock, as of the latest
practicable date.</P>
<P style="MARGIN: 0px"><BR></P>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0>
<TR style="FONT-SIZE: 0px" height=0>
<TD width=338></TD>
<TD width=286></TD></TR>
<TR>
<TD vAlign=top width=338>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify>Class of Securities</P></TD>
<TD vAlign=top width=286>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify>Shares Outstanding at August 10, 2008</P></TD></TR>
<TR>
<TD vAlign=top width=338>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify>Common Stock, no par value</P></TD>
<TD vAlign=top width=286>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify>3,188,473</P></TD><A name=_Toc133030766></A><A
name=_Toc143508260></A><A name=_Toc143509054></A><A
name=_Toc143509150></A><A name=_Toc166657191></A><A
name=_Toc166657341></A></TR></TABLE>
<P style="MARGIN: 0px"><BR></P>
<P style="MARGIN: 0px"><BR><BR></P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 1 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B></P>
<P style="MARGIN: 0px"><BR></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 14pt"><B>PART 1 - FINANCIAL
INFORMATION</B></P>
<P style="MARGIN: 0px"><BR></P><A name=_Toc133030767></A>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 12pt; MARGIN-BOTTOM: -18px; LINE-HEIGHT: 14pt"><B>ITEM
1. </B></P>
<P
style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 96px; LINE-HEIGHT: 14pt"><B>FINANCIAL
STATEMENTS</B></P>
<P style="MARGIN: 0px"><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 12pt; MARGIN-BOTTOM: -20px; LINE-HEIGHT: 15pt">(a)
</P>
<P
style="FONT-SIZE: 12pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">The
unaudited financial statements of registrant for the six months ended June 30,
2008, follow. &nbsp;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.</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt">&nbsp;</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt">&nbsp;</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt">&nbsp;</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt">&nbsp;</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt">&nbsp;</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt">&nbsp;</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt">&nbsp;</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt">&nbsp;</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt">&nbsp;</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR>&nbsp;</P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 2 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B></P>
<P style="MARGIN: 0px">&nbsp;</P>
<P style="FONT-SIZE: 12pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>INDEX</P>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0 align=center>
<TR style="FONT-SIZE: 0px" height=0>
<TD width=632></TD>
<TD width=60></TD></TR>
<TR>
<TD vAlign=top width=632>
<P>&nbsp;</P></TD>
<TD vAlign=top width=60>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>Page</B></P></TD></TR>
<TR>
<TD vAlign=top width=632>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"><B>ITEM 1.
&nbsp;FINANCIAL STATEMENTS</B></P></TD>
<TD vAlign=top width=60>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=632>
<P>&nbsp;</P></TD>
<TD vAlign=top width=60>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=632>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"><B>CONDENSED
CONSOLIDATED BALANCE SHEET </B></P></TD>
<TD vAlign=top width=60>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>4</B></P></TD></TR>
<TR>
<TD vAlign=top width=632>
<P>&nbsp;</P></TD>
<TD vAlign=top width=60>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=632>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"><B>CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)</B></P></TD>
<TD vAlign=top width=60>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>5</B></P></TD></TR>
<TR>
<TD vAlign=top width=632>
<P>&nbsp;</P></TD>
<TD vAlign=top width=60>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=632>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"><B>CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)</B></P></TD>
<TD vAlign=top width=60>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>6</B></P></TD></TR>
<TR>
<TD vAlign=top width=632>
<P>&nbsp;</P></TD>
<TD vAlign=top width=60>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=632>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"><B>NOTES TO THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)</B></P></TD>
<TD vAlign=top width=60>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>7</B></P></TD></TR>
<TR>
<TD vAlign=top width=632>
<P>&nbsp;</P></TD>
<TD vAlign=top width=60>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=632>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -17px; LINE-HEIGHT: 13pt"><B>ITEM
2.</B></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 72px; LINE-HEIGHT: 13pt"><B>MANAGEMENT&#146;S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS</B></P></TD>
<TD vAlign=top width=60>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>20</B></P></TD></TR>
<TR>
<TD vAlign=top width=632>
<P>&nbsp;</P></TD>
<TD vAlign=top width=60>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=632>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -17px; LINE-HEIGHT: 13pt"><B>ITEM
3.</B></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 72px; LINE-HEIGHT: 13pt"><B>CONTROLS
AND PROCEDURES</B></P></TD>
<TD vAlign=top width=60>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>26</B></P></TD></TR>
<TR>
<TD vAlign=top width=632>
<P>&nbsp;</P></TD>
<TD vAlign=top width=60>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=632>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"><B>&nbsp;PART
II. &nbsp;OTHER INFORMATION</B></P></TD>
<TD vAlign=top width=60>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>26</B></P></TD></TR>
<TR>
<TD vAlign=top width=632>
<P>&nbsp;</P></TD>
<TD vAlign=top width=60>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=632>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"><B>EXHIBITS</B></P></TD>
<TD vAlign=top width=60>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>26</B></P></TD></TR>
<TR>
<TD vAlign=top width=632>
<P>&nbsp;</P></TD>
<TD vAlign=top width=60>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=632>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"><B>SIGNATURES</B></P></TD>
<TD vAlign=top width=60>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>28</B></P></TD></TR>
<TR>
<TD vAlign=top width=632>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"><B>&nbsp;</B></P></TD>
<TD vAlign=top width=60>
<P>&nbsp;</P></TD></TR></TABLE>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="MARGIN: 0px" align=center><BR><BR></P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 3 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>&nbsp;</P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>CONDENSED CONSOLIDATED BALANCE SHEETS</B></P>
<P style="MARGIN: 0px" align=center><BR></P>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0 align=center>
<TR style="FONT-SIZE: 0px" height=0>
<TD width=428></TD>
<TD width=16></TD>
<TD width=126></TD>
<TD width=16></TD>
<TD width=109></TD></TR>
<TR>
<TD vAlign=bottom width=428>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P style="MARGIN: 0px" align=center>June 30,</P></TD>
<TD vAlign=bottom width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=109>
<P style="MARGIN: 0px" align=center>December 31,</P></TD></TR>
<TR>
<TD vAlign=bottom width=428>
<P>&nbsp;</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=126>
<P style="MARGIN: 0px" align=center>2008</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=109>
<P style="MARGIN: 0px" align=center>2007</P></TD></TR>
<TR>
<TD vAlign=bottom width=428>
<P>&nbsp;</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P style="MARGIN: 0px" align=center><B>(Unaudited)</B></P></TD>
<TD vAlign=bottom width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=109>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=428>
<P style="MARGIN: 0px" align=center>ASSETS</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P>&nbsp;</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=109>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=428>
<P style="MARGIN: 0px">Current assets:</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P>&nbsp;</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=109>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=428>
<P style="MARGIN: 0px; TEXT-INDENT: 13px">Cash and cash equivalents</P></TD>
<TD vAlign=top width=16>
<P style="MARGIN: 0px">$</P></TD>
<TD vAlign=bottom width=126>
<P style="MARGIN: 0px; TEXT-INDENT: 13px" align=right>1,739,692</P></TD>
<TD vAlign=top width=16>
<P style="MARGIN: 0px">$</P></TD>
<TD vAlign=top width=109>
<P style="MARGIN: 0px" align=right>2,111,825</P></TD></TR>
<TR>
<TD vAlign=top width=428>
<P style="PADDING-LEFT: 23px; MARGIN: 0px; TEXT-INDENT: -9px">Accounts
receivables, net of allowances of $42,371 and $130,528,
respectively</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P style="MARGIN: 0px; TEXT-INDENT: 13px" align=right>4,733,225</P></TD>
<TD vAlign=bottom width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=109>
<P style="MARGIN: 0px" align=right>3,275,024</P></TD></TR>
<TR>
<TD vAlign=top width=428>
<P style="MARGIN: 0px; TEXT-INDENT: 13px">Inventories</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P style="MARGIN: 0px; TEXT-INDENT: 13px" align=right>3,795,606</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=top width=109>
<P style="MARGIN: 0px" align=right>2,333,148</P></TD></TR>
<TR>
<TD vAlign=top width=428>
<P style="MARGIN: 0px; TEXT-INDENT: 13px">Income tax receivable</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P style="MARGIN: 0px; TEXT-INDENT: 13px" align=right>68,918</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=top width=109>
<P style="MARGIN: 0px" align=right>82,131</P></TD></TR>
<TR>
<TD vAlign=top width=428>
<P style="MARGIN: 0px; TEXT-INDENT: 13px">Loan receivable</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P style="MARGIN: 0px; TEXT-INDENT: 13px" align=right>784,840</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=top width=109>
<P style="MARGIN: 0px" align=right>-</P></TD></TR>
<TR>
<TD vAlign=top width=428>
<P style="MARGIN: 0px; TEXT-INDENT: 13px">Advances to suppliers</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P style="MARGIN: 0px; TEXT-INDENT: 13px" align=right>224,428</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=top width=109>
<P style="MARGIN: 0px" align=right>260,540</P></TD></TR>
<TR>
<TD vAlign=top width=428>
<P style="MARGIN: 0px; TEXT-INDENT: 13px">Related parties payables</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P style="MARGIN: 0px; TEXT-INDENT: 13px" align=right>236,110</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=top width=109>
<P style="MARGIN: 0px" align=right>30,422</P></TD></TR>
<TR>
<TD vAlign=top width=428>
<P style="MARGIN: 0px; TEXT-INDENT: 13px">Prepaid and other current
assets</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=126>
<P style="MARGIN: 0px; TEXT-INDENT: 13px" align=right>66,904</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=109>
<P style="MARGIN: 0px" align=right>117,621</P></TD></TR>
<TR>
<TD vAlign=bottom width=428>
<P style="MARGIN: 0px">Total current assets</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P style="MARGIN: 0px; TEXT-INDENT: 13px" align=right>11,649,723</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=109>
<P style="MARGIN: 0px" align=right>8,210,711</P></TD></TR>
<TR>
<TD vAlign=bottom width=428>
<P>&nbsp;</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P>&nbsp;</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=109>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=428>
<P style="MARGIN: 0px">Property, plant and equipment, net</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P style="MARGIN: 0px; TEXT-INDENT: 13px" align=right>601,616</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=109>
<P style="MARGIN: 0px" align=right>545,494</P></TD></TR>
<TR>
<TD vAlign=bottom width=428>
<P style="MARGIN: 0px">Deposits paid for investment</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P style="MARGIN: 0px; TEXT-INDENT: 13px" align=right>40,680</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=109>
<P style="MARGIN: 0px" align=right>-</P></TD></TR>
<TR>
<TD vAlign=bottom width=428>
<P style="MARGIN: 0px">Other assets</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=126>
<P style="MARGIN: 0px; TEXT-INDENT: 13px" align=right>6,636</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=109>
<P style="MARGIN: 0px" align=right>6,636</P></TD></TR>
<TR>
<TD vAlign=bottom width=428>
<P style="MARGIN: 0px">Total assets</P></TD>
<TD vAlign=bottom width=16>
<P style="MARGIN: 0px" align=right>$</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom width=126>
<P style="MARGIN: 0px" align=right>12,298,655</P></TD>
<TD vAlign=bottom width=16>
<P style="MARGIN: 0px" align=right>$</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom width=109>
<P style="MARGIN: 0px" align=right>8,762,841</P></TD></TR>
<TR>
<TD vAlign=bottom width=428>
<P>&nbsp;</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P>&nbsp;</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=109>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=428>
<P style="MARGIN: 0px" align=center>LIABILITIES AND STOCKHOLDERS&#146;
EQUITY</P></TD>
<TD vAlign=bottom width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=109>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=428>
<P style="MARGIN: 0px">Current liabilities:</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P>&nbsp;</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=109>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=428>
<P style="MARGIN: 0px; TEXT-INDENT: 13px">Accounts payable</P></TD>
<TD vAlign=top width=16>
<P style="MARGIN: 0px">$</P></TD>
<TD vAlign=bottom width=126>
<P style="MARGIN: 0px; TEXT-INDENT: 13px" align=right>1,984,415</P></TD>
<TD vAlign=top width=16>
<P style="MARGIN: 0px">$</P></TD>
<TD vAlign=top width=109>
<P style="MARGIN: 0px" align=right>2,453,317</P></TD></TR>
<TR>
<TD vAlign=top width=428>
<P style="MARGIN: 0px; TEXT-INDENT: 13px">Lines of credit</P></TD>
<TD vAlign=bottom width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P style="MARGIN: 0px; TEXT-INDENT: 13px" align=right>523,702</P></TD>
<TD vAlign=bottom width=16>
<P>&nbsp;</P></TD>
<TD vAlign=top width=109>
<P style="MARGIN: 0px" align=right>1,758,584</P></TD></TR>
<TR>
<TD vAlign=top width=428>
<P style="MARGIN: 0px; TEXT-INDENT: 13px">Accrued expenses</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P style="MARGIN: 0px; TEXT-INDENT: 13px" align=right>105,828</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=top width=109>
<P style="MARGIN: 0px" align=right>156,524</P></TD></TR>
<TR>
<TD vAlign=top width=428>
<P style="MARGIN: 0px; TEXT-INDENT: 13px">Taxes payable</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P style="MARGIN: 0px; TEXT-INDENT: 13px" align=right>88,582</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=top width=109>
<P style="MARGIN: 0px" align=right>78,637</P></TD></TR>
<TR>
<TD vAlign=top width=428>
<P style="MARGIN: 0px; TEXT-INDENT: 13px">Current portion of long-term
debt</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=126>
<P style="MARGIN: 0px; TEXT-INDENT: 13px" align=right>-</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=109>
<P style="MARGIN: 0px" align=right>884</P></TD></TR>
<TR>
<TD vAlign=bottom width=428>
<P style="MARGIN: 0px">Total current liabilities</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P style="MARGIN: 0px; TEXT-INDENT: 13px" align=right>2,702,527</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=109>
<P style="MARGIN: 0px" align=right>4,447,946</P></TD></TR>
<TR>
<TD vAlign=bottom width=428>
<P>&nbsp;</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P style="MARGIN: 0px; TEXT-INDENT: 13px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=109>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=428>
<P style="MARGIN: 0px">Non-current liabilities</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P>&nbsp;</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=109>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=428>
<P style="MARGIN: 0px; TEXT-INDENT: 13px">Loan payable to
stockholders</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=126>
<P style="MARGIN: 0px" align=right>414,235</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=109>
<P style="MARGIN: 0px" align=right>498,812</P></TD></TR>
<TR>
<TD vAlign=bottom width=428>
<P>&nbsp;</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P>&nbsp;</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=109>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=428>
<P style="MARGIN: 0px">Total liabilities</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P style="MARGIN: 0px" align=right>3,116,762</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=109>
<P style="MARGIN: 0px" align=right>4,946,758</P></TD></TR>
<TR>
<TD vAlign=bottom width=428>
<P>&nbsp;</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P>&nbsp;</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=109>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=428>
<P style="MARGIN: 0px">Stockholders&#146; equity </P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P>&nbsp;</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=109>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=428>
<P style="MARGIN: 0px; TEXT-INDENT: 13px">Common stock (No Par Value :
100,000,000 shares authorized;</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P>&nbsp;</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=109>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=428>
<P style="PADDING-LEFT: 23px; MARGIN: 0px; TEXT-INDENT: 0px">3,132,466 and
2,047,363 shares issued and outstanding, respectively)</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P style="MARGIN: 0px" align=right>4,736,755</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=109>
<P style="MARGIN: 0px" align=right>270,746</P></TD></TR>
<TR>
<TD vAlign=top width=428>
<P style="MARGIN: 0px; TEXT-INDENT: 13px">Accumulated other comprehensive
income</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P style="MARGIN: 0px" align=right>539,665</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=109>
<P style="MARGIN: 0px" align=right>295,225</P></TD></TR>
<TR>
<TD vAlign=top width=428>
<P style="MARGIN: 0px; TEXT-INDENT: 13px">Retained earnings</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=126>
<P style="MARGIN: 0px" align=right>3,905,473</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=109>
<P style="MARGIN: 0px" align=right>3,250,112</P></TD></TR>
<TR>
<TD vAlign=top width=428>
<P style="MARGIN: 0px">Total stockholders&#146; equity </P></TD>
<TD vAlign=bottom width=16>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=126>
<P style="MARGIN: 0px" align=right>9,181,893</P></TD>
<TD vAlign=bottom width=16>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=109>
<P style="MARGIN: 0px" align=right>3,816,083</P></TD></TR>
<TR>
<TD vAlign=top width=428>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=126>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=16>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=109>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=428>
<P style="MARGIN: 0px">Total liabilities and stockholders&#146; equity</P></TD>
<TD vAlign=bottom width=16>
<P style="MARGIN: 0px">$</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom width=126>
<P style="MARGIN: 0px" align=right>12,298,655</P></TD>
<TD vAlign=bottom width=16>
<P style="MARGIN: 0px">$</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom width=109>
<P style="MARGIN: 0px" align=right>8,762,841</P></TD></TR></TABLE>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=center>See
accompanying notes to condensed consolidated financial statements.</P><A
name=_Toc80349519></A>
<P style="MARGIN: 0px" align=center><BR><BR></P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 4 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND </B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>COMPREHENSIVE INCOME</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>(UNAUDITED)</B></P>
<P style="MARGIN: 0px" align=center><BR></P>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0>
<TR style="FONT-SIZE: 0px" height=0>
<TD width=313></TD>
<TD width=10></TD>
<TD width=75></TD>
<TD width=10></TD>
<TD width=79></TD>
<TD width=10></TD>
<TD width=75></TD>
<TD width=10></TD>
<TD width=80></TD></TR>
<TR>
<TD vAlign=bottom width=313>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top colSpan=3>
<P style="MARGIN: 0px" align=center>For The Six Months Ended</P></TD>
<TD vAlign=bottom width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom colSpan=3>
<P style="MARGIN: 0px" align=center>For The Three Months Ended</P></TD></TR>
<TR>
<TD vAlign=bottom width=313>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top colSpan=3>
<P style="MARGIN: 0px" align=center>June 30,</P></TD>
<TD vAlign=bottom width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom colSpan=3>
<P style="MARGIN: 0px" align=center>June 30,</P></TD></TR>
<TR>
<TD vAlign=bottom width=313>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=75>
<P style="MARGIN: 0px" align=center>2008</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=79>
<P style="MARGIN: 0px" align=center>2007</P></TD>
<TD vAlign=bottom width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=75>
<P style="MARGIN: 0px" align=center>2008</P></TD>
<TD vAlign=bottom width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=80>
<P style="MARGIN: 0px" align=center>2007</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px" align=justify>Revenue</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=79>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=80>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px" align=justify>Regular sales, net of returns of $0
in 2008 and $0 in 2007</P></TD>
<TD vAlign=top width=10>
<P style="MARGIN: 0px">$</P></TD>
<TD vAlign=bottom width=75>
<P style="MARGIN: 0px" align=right>12,245,410</P></TD>
<TD vAlign=top width=10>
<P style="MARGIN: 0px" align=right>$</P></TD>
<TD vAlign=bottom width=79>
<P style="MARGIN: 0px" align=right>5,233,563</P></TD>
<TD vAlign=top width=10>
<P style="MARGIN: 0px">$</P></TD>
<TD vAlign=bottom width=75>
<P style="MARGIN: 0px" align=right>6,854,953</P></TD>
<TD vAlign=top width=10>
<P style="MARGIN: 0px" align=right>$</P></TD>
<TD vAlign=bottom width=80>
<P style="MARGIN: 0px" align=right>2,570,041</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=79>
<P style="MARGIN: 0px; FONT-FAMILY: Arial" align=right>&#12288;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=80>
<P style="MARGIN: 0px; FONT-FAMILY: Arial" align=right>&#12288;</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px" align=justify>Cost of goods sold</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=75>
<P style="MARGIN: 0px" align=right>9,755,254</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=79>
<P style="MARGIN: 0px" align=right>3,561,120</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=75>
<P style="MARGIN: 0px" align=right>5,519,194</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=80>
<P style="MARGIN: 0px" align=right>1,633,994</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=75>
<P style="MARGIN: 0px" align=right>&#12288;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=79>
<P style="MARGIN: 0px; FONT-FAMILY: Arial" align=right>&#12288;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=75>
<P style="MARGIN: 0px" align=right>&#12288;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=80>
<P style="MARGIN: 0px; FONT-FAMILY: Arial" align=right>&#12288;</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Gross profit</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-TOP: #000000 1px solid" vAlign=bottom width=75>
<P style="MARGIN: 0px" align=right>2,490,156</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-TOP: #000000 1px solid" vAlign=bottom width=79>
<P style="MARGIN: 0px" align=right>1,672,443</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=75>
<P style="MARGIN: 0px" align=right>1,335,759</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=80>
<P style="MARGIN: 0px" align=right>936,047</P></TD></TR>
<TR>
<TD vAlign=bottom width=313>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=79>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=80>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px" align=justify>Operating Expenses</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=79>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=80>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Other selling, general and
administrative expenses</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P style="MARGIN: 0px" align=right>1,476,518</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=79>
<P style="MARGIN: 0px" align=right>1,198,835</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=75>
<P style="MARGIN: 0px; TEXT-INDENT: 13px" align=right>777,345</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=80>
<P style="MARGIN: 0px" align=right>677,465</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Stock based compensation
expense</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P style="MARGIN: 0px" align=right>110,000</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=79>
<P style="PADDING-RIGHT: 6px; MARGIN: 0px" align=right>-</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=75>
<P style="MARGIN: 0px; TEXT-INDENT: 13px" align=right>-</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=80>
<P style="MARGIN: 0px" align=right>-</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="PADDING-LEFT: 31px; MARGIN: 0px; TEXT-INDENT: -4px">Management
and professional fees paid to stockholders-(Note 10)</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=75>
<P style="MARGIN: 0px" align=right>153,000</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=79>
<P style="MARGIN: 0px" align=right>108,000</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=75>
<P style="MARGIN: 0px; TEXT-INDENT: 13px" align=right>72,680</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=80>
<P style="MARGIN: 0px" align=right>76,500</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Depreciation</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P style="MARGIN: 0px" align=right>7,834</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=79>
<P style="MARGIN: 0px" align=right>15,361</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P style="MARGIN: 0px" align=right>3,862</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=80>
<P style="MARGIN: 0px" align=right>7,106</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=75>
<P style="MARGIN: 0px" align=right><B>&#12288;</B></P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=79>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=75>
<P style="MARGIN: 0px" align=right>&#12288;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=80>
<P style="MARGIN: 0px" align=right>&#12288;</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px" align=justify>Total operating expenses</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=75>
<P style="MARGIN: 0px" align=right>1,747,352</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=79>
<P style="MARGIN: 0px" align=right>1,322,196</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=75>
<P style="MARGIN: 0px" align=right>853,887</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=80>
<P style="MARGIN: 0px" align=right>761,071</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=79>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=80>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px" align=justify>Net operating income</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P style="MARGIN: 0px" align=right>742,804</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=79>
<P style="MARGIN: 0px" align=right>350,247</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=75>
<P style="MARGIN: 0px" align=right>481,872</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=80>
<P style="MARGIN: 0px" align=right>174,976</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=79>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=80>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px" align=justify>Other Income (expenses)</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=79>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=80>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Interest income</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=75>
<P style="MARGIN: 0px" align=right>3,950</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=79>
<P style="MARGIN: 0px" align=right>1,388</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=75>
<P style="MARGIN: 0px; TEXT-INDENT: 13px" align=right>2,812</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=80>
<P style="MARGIN: 0px" align=right>696</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Interest expenses</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=75>
<P style="MARGIN: 0px" align=right>(73,088)</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=79>
<P style="MARGIN: 0px" align=right>(29,881)</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=75>
<P style="MARGIN: 0px; TEXT-INDENT: 13px" align=right>(38,703)</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=80>
<P style="MARGIN: 0px" align=right>(6,141)</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Interest expense paid to
stockholders (Note 10)</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=75>
<P style="MARGIN: 0px" align=right>(17,446)</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=79>
<P style="MARGIN: 0px" align=right>(12,250)</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P style="MARGIN: 0px" align=right>-</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=80>
<P style="MARGIN: 0px" align=right>(12,250)</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Other income</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P style="MARGIN: 0px" align=right>-</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=79>
<P style="MARGIN: 0px" align=right>124,677</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P style="MARGIN: 0px" align=right>-</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=80>
<P style="MARGIN: 0px" align=right>124,677</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Exchange loss</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P style="MARGIN: 0px" align=right>(693)</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=79>
<P style="MARGIN: 0px" align=right>(95,366)</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P style="MARGIN: 0px" align=right>(691)</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=80>
<P style="MARGIN: 0px" align=right>(55,824)</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=75>
<P style="MARGIN: 0px" align=right><B>&#12288;</B></P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=79>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=75>
<P style="MARGIN: 0px" align=right>&#12288;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=80>
<P style="MARGIN: 0px" align=right>&#12288;</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px" align=justify>Total other income (expenses)</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=75>
<P style="MARGIN: 0px" align=right>(87,277)</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=79>
<P style="MARGIN: 0px" align=right>(11,432)</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=75>
<P style="MARGIN: 0px" align=right>(36,582)</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=80>
<P style="MARGIN: 0px" align=right>51,158</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=79>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=80>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px" align=justify>Income from continuing operations
before income taxes</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P style="MARGIN: 0px" align=right>655,527</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=79>
<P style="MARGIN: 0px" align=right>338,815</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P style="MARGIN: 0px" align=right>445,290</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=80>
<P style="MARGIN: 0px" align=right>226,134</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Income taxes benefit/
(expense)</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P style="MARGIN: 0px" align=right>(8,298)</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=79>
<P style="MARGIN: 0px" align=right>(15,723)</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P style="MARGIN: 0px" align=right>(19,702)</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=80>
<P style="MARGIN: 0px" align=right>(2,985)</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=75>
<P style="MARGIN: 0px" align=right><B>&#12288;</B></P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=79>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=75>
<P style="MARGIN: 0px" align=right>&#12288;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=80>
<P style="MARGIN: 0px" align=right>&#12288;</P></TD></TR>
<TR>
<TD vAlign=bottom width=313>
<P style="MARGIN: 0px">Income from continuing operations</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P style="MARGIN: 0px" align=right>647,229</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=79>
<P style="MARGIN: 0px" align=right>323,092</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P style="MARGIN: 0px" align=right>425,588</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=80>
<P style="MARGIN: 0px" align=right>223,149</P></TD></TR>
<TR>
<TD vAlign=bottom width=313>
<P style="MARGIN: 0px">Income from discontinued operations, net of
tax</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=75>
<P style="MARGIN: 0px" align=right>8,132</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=79>
<P style="MARGIN: 0px" align=right>4,066 </P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=75>
<P style="MARGIN: 0px" align=right>(553)</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=80>
<P style="MARGIN: 0px" align=right>(5)</P></TD></TR>
<TR>
<TD vAlign=bottom width=313>
<P style="MARGIN: 0px">Net income</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P style="MARGIN: 0px" align=right>655,361</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=79>
<P style="MARGIN: 0px" align=right>327,158</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P style="MARGIN: 0px" align=right>425,035</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=80>
<P style="MARGIN: 0px" align=right>223,144</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=79>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=80>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px" align=justify>Other comprehensive income</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=79>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=80>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign currency
translation</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=75>
<P style="MARGIN: 0px" align=right>244,440</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=79>
<P style="MARGIN: 0px" align=right>32,945 </P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P style="MARGIN: 0px" align=right>146,017</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=80>
<P style="MARGIN: 0px" align=right>49,241</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px" align=justify>Comprehensive income</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=top width=75>
<P style="MARGIN: 0px" align=right>899,801</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=top width=79>
<P style="MARGIN: 0px" align=right>360,103</P></TD>
<TD vAlign=top width=10>
<P style="MARGIN: 0px">$</P></TD>
<TD style="BORDER-TOP: #000000 1px solid; BORDER-BOTTOM: #000000 3px double"
vAlign=top width=75>
<P style="MARGIN: 0px" align=right>571,052</P></TD>
<TD vAlign=top width=10>
<P style="MARGIN: 0px" align=right>$</P></TD>
<TD style="BORDER-TOP: #000000 1px solid; BORDER-BOTTOM: #000000 3px double"
vAlign=top width=80>
<P style="MARGIN: 0px" align=right>272,385</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=79>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=80>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px" align=justify>Earnings per share</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=79>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=80>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px" align=justify>Continuing operations</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=top width=75>
<P style="MARGIN: 0px" align=right>0.29</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=top width=79>
<P style="MARGIN: 0px" align=right>0.16</P></TD>
<TD vAlign=top width=10>
<P style="MARGIN: 0px">$</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=top width=75>
<P style="MARGIN: 0px" align=right>0.20</P></TD>
<TD vAlign=top width=10>
<P style="MARGIN: 0px">$</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=top width=80>
<P style="MARGIN: 0px" align=right>0.11</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px" align=justify>Discontinued operations</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=top width=75>
<P style="MARGIN: 0px" align=right>0.00</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=top width=79>
<P style="MARGIN: 0px" align=right>0.00</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=top width=75>
<P style="MARGIN: 0px" align=right>0.00&#12288;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=top width=80>
<P style="MARGIN: 0px" align=right>0.00</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=79>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=75>
<P>&nbsp;</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD vAlign=top width=80>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=313>
<P style="MARGIN: 0px" align=justify>Weighted average shares
outstanding</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=top width=75>
<P style="MARGIN: 0px" align=right>2,202,490</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=top width=79>
<P style="MARGIN: 0px" align=right>2,033,083</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=top width=75>
<P style="MARGIN: 0px" align=right>2,158,525</P></TD>
<TD vAlign=top width=10>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=top width=80>
<P style="MARGIN: 0px" align=right>2,033,083</P></TD></TR></TABLE>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="MARGIN: 0px" align=center><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=center>See
accompanying notes to the condensed consolidated financial statements.</P>
<P style="MARGIN: 0px" align=center><BR><BR></P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 5 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B><BR></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>(UNAUDITED)</B></P>
<P style="MARGIN: 0px" align=center><BR></P>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0>
<TR style="FONT-SIZE: 0px" height=0>
<TD width=416></TD>
<TD width=13></TD>
<TD width=89></TD>
<TD width=13></TD>
<TD width=89></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=13>
<P>&nbsp;</P></TD>
<TD vAlign=bottom colSpan=3>
<P style="MARGIN: 0px" align=center>For The Six Months Ended</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=13>
<P>&nbsp;</P></TD>
<TD vAlign=bottom colSpan=3>
<P style="MARGIN: 0px" align=center>June 30 </P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=13>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=89>
<P style="MARGIN: 0px" align=center>2008</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=89>
<P style="MARGIN: 0px" align=center>2007</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px">Cash flows from operating activities</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Net income</P></TD>
<TD vAlign=top width=13>
<P style="MARGIN: 0px" align=justify>$</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px" align=right>&nbsp;655,361 </P></TD>
<TD vAlign=top width=13>
<P style="MARGIN: 0px" align=justify>$</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;327,158
</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px">Adjustments to reconcile net income to net cash
used in operating activities:</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px" align=right>&#12288;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Depreciation</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px" align=right>63,407</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;43,675
</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Allowance for bad debts</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(20,000)</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-
&nbsp;&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Stock based compensation
expense</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;110,000
</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-
&nbsp;&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Stock issued for service</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px" align=right>-</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;32,500
</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px">Changes in operating assets and liabilities:</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Accounts receivable</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1,342,927)</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(301,589)</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Inventories</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1,428,840)</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(420,005)</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Income tax receivable</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15,769
</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(18,451)</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Loan receivable-affiliate</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-
&nbsp;&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(17,962)</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Advances to suppliers</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;69,565
</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(500,673)</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Prepaid and other current
assets</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px" align=right>(101,209)</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20,766
</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Accounts payable</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px" align=right>(475,019)</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(379,328)</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Accrued expense</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px" align=right>(48,783) </P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;37,065
</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Income tax payable</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6,221
</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-
&nbsp;&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Receipt in advance</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px" align=right>(7,328)</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-
&nbsp;&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=89>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=89>
<P style="MARGIN: 0px" align=right>&#12288;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px">Net cash used in operating activities</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px" align=right>(2,503,783)</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px" align=right>(1,176,844)</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=89>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px">Cash flows from investing activities</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=89>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Loan to related parties</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=89>
<P style="MARGIN: 0px" align=right>(816,704)</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-
&nbsp;&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Capital expenditure</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px" align=right>(173,142)</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(105,637)</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Deposits paid for investment in
subsidiaries</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px" align=right>(40,680)</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-
&nbsp;&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=89>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=89>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px">Net cash used in investing activities</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px" align=right>(1,030,526)</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px" align=right>(105,637)</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=89>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px">Cash flows from financing activities</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=89>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Proceeds from issuance of common
stock</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=89>
<P style="MARGIN: 0px" align=right>4,356,009</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-
&nbsp;&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Proceeds / repayment of
stockholders loan</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=89>
<P style="MARGIN: 0px" align=right>(84,577)</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;438,126
</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Principal payments on long term
debt</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=89>
<P style="MARGIN: 0px" align=right>(884)</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-
&nbsp;&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Proceeds / repayment from lines
of credit</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1,234,882)</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px"
align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;311,113
</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Proceeds from long term
note</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=89>
<P style="MARGIN: 0px" align=right>-</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px" align=right>-</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=89>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=89>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px">Net cash flows provided by financing
activities:</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px" align=right>3,035,666</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px" align=right>749,239</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px">Effect of exchange rate changes on cash</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=89>
<P style="MARGIN: 0px" align=right>126,509</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=89>
<P style="MARGIN: 0px" align=right>32,945</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=89>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px">Net increase (decrease) in cash</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px" align=right>(372,134)</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P style="MARGIN: 0px" align=right>(500,297)</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=89>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px">Cash- beginning of period</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=89>
<P style="MARGIN: 0px" align=right>2,111,825</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=89>
<P style="MARGIN: 0px" align=right>1,439,801</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=89>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px">Cash- end of period</P></TD>
<TD vAlign=top width=13>
<P style="MARGIN: 0px" align=justify>$</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=top width=89>
<P style="MARGIN: 0px" align=right>1,739,691</P></TD>
<TD vAlign=top width=13>
<P style="MARGIN: 0px" align=justify>$</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=top width=89>
<P style="MARGIN: 0px" align=right>939,504</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=89>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px">Supplemental disclosure of non cash investing and
financing activities:</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=89>
<P>&nbsp;</P></TD>
<TD vAlign=top width=13>
<P>&nbsp;</P></TD>
<TD vAlign=top width=89>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Stock based compensation
expense</P></TD>
<TD vAlign=top width=13>
<P style="MARGIN: 0px" align=justify>$</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=top width=89>
<P style="MARGIN: 0px" align=right>110,000</P></TD>
<TD vAlign=top width=13>
<P style="MARGIN: 0px" align=justify>$</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=top width=89>
<P style="MARGIN: 0px" align=right>-</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Interest paid in cash</P></TD>
<TD vAlign=top width=13>
<P style="MARGIN: 0px" align=justify>$</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=top width=89>
<P style="MARGIN: 0px" align=right>51,887</P></TD>
<TD vAlign=top width=13>
<P style="MARGIN: 0px" align=justify>$</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=top width=89>
<P style="MARGIN: 0px" align=right>42,129</P></TD></TR>
<TR>
<TD vAlign=bottom width=416>
<P style="MARGIN: 0px; TEXT-INDENT: 26px">Income taxed paid in cash</P></TD>
<TD vAlign=top width=13>
<P style="MARGIN: 0px" align=justify>$</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=top width=89>
<P style="MARGIN: 0px" align=right>35,758</P></TD>
<TD vAlign=top width=13>
<P style="MARGIN: 0px" align=justify>$</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=top width=89>
<P style="MARGIN: 0px" align=right>41,392</P></TD></TR></TABLE>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>&nbsp;</P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>&nbsp;</P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=center>See
accompanying notes to the condensed consolidated financial statements</P>
<P style="MARGIN: 0px" align=center><BR><BR></P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 6 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B><BR></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>(UNAUDITED)</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><STRONG></STRONG>&nbsp;</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -21px; LINE-HEIGHT: 16pt"><B>1.
</B></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 14pt"><B>MANAGEMENT'S
REPRESENTATION OF INTERIM FINANCIAL INFORMATION</B></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>The
accompanying 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. &nbsp;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.
&nbsp;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. &nbsp;All such adjustments are of a normal and
recurring nature. Interim results are not necessarily indicative of results for
a full year.&nbsp;These financial statements should be read in conjunction with
the audited financial statements at December 31, 2007 as filed in the Company
Form 10-KSB filed with the Commission on April 15, 2008. &nbsp;</P>
<P style="MARGIN: 0px"><BR></P>
<P
style="PADDING-RIGHT: 96px; MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -21px; LINE-HEIGHT: 16pt"><B>2.
</B></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 14pt"><B>SIGNIFICANT
ACCOUNTING POLICIES </B></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>This
summary of significant accounting policies of the Company is presented to assist
in understanding the Company&#146;s financial statements. &nbsp;The financial
statements and notes are representations of the Company&#146;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. </P>
<P style="MARGIN: 0px"><BR></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt"><B>Description
of Business </B></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify>Worldwide Energy and Manufacturing USA, Inc. (Worldwide, the
Company) is a manufacturing engineering firm and international contract
manufacturer, using factories in China. &nbsp;Worldwide provides services to
several companies in the United States and European markets, primarily in the
solar, aerospace, automotive, and electronics industries. &nbsp;Worldwide
employs thirty-three (33) staff engineers through its wholly owned subsidiary,
Shanghai Intech Electro-Mechanical Products Co., Ltd. (Intech). &nbsp;Intech
provides technical advisory, design, delivery, material procurement, and
manufacturing quality control services. &nbsp;Worldwide uses its engineers to
write the production and inspection procedures, manages the production process,
and conducts quality control audits as well as in-progress and final inspections
of the customers&#146; products. </P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>On
September 30, 2003, the Company, formerly known as Tabatha III, Inc., acquired
all of the issued and outstanding common stock of Worldwide Energy and
Manufacturing USA, Inc. (Worldwide USA), a privately held operating company, in
a share exchange transaction. &nbsp;The Company issued 27,900,000 shares in the
share exchange transaction for 100%, or 10,000 shares, of the issued and
outstanding shares of Worldwide USA&#146;s common stock. &nbsp;Immediately prior to
the acquisition, 10,762,000 shares of stock had been outstanding, and as part of
the acquisition arrangement, certain shareholders of Tabatha III, Inc. agreed to
surrender for cancellation a total of 8,662,000 common shares held by them.
&nbsp;Total shares outstanding after the Worldwide USA acquisition were
30,000,000. &nbsp;As a result of the share exchange transaction, Worldwide USA
became a wholly-owned subsidiary of the Company. &nbsp;The parent company,
Tabatha III, Inc., changed its name to Worldwide Manufacturing USA, Inc. in
November, 2003. On February, 25, 2008 the company changed its name from
Worldwide Manufacturing USA, Inc. to Worldwide Energy and Manufacturing USA,
Inc. to focus on the renewable, clean energy sector. &nbsp;&nbsp;</P>
<P style="MARGIN: 0px" align=center><BR><BR></P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 7 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>&nbsp;</P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>(UNAUDITED)</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><STRONG></STRONG>&nbsp;</P>
<P style="MARGIN: 0px"><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -17px; LINE-HEIGHT: 13pt"><B>2.
</B></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"><B>SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED) </B></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>The
former stockholders of Worldwide USA acquired a majority of the issued and
outstanding common stock as a result of the share exchange transaction.
&nbsp;The transaction has been accounted for as a recapitalization of Worldwide
USA, whereby Worldwide USA is the accounting acquirer. &nbsp;The accompanying
financial statements reflect the financial position and operating results of the
Company for all periods presented. </P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>On May
18, 2005, the Company formed a new company called Changchun Chengde Automobile
Air-Conditioner Co., Limited which is the manufacturer of automobile
air-conditioners. On November 14, 2005, the Company formed another company
called Shanghai Intech Precision Machinery Co., Ltd. which is engaged in the
manufacturing and trading of equipments. On February 2, 2007, the Company formed
another company called Shanghai Shutai Intech Precision Machinery Co., Ltd. All
those companies are the wholly owned subsidiaries of Worldwide Energy and
Manufacturing USA, Inc.</P>
<P style="MARGIN: 0px"><BR></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt"><B>Principles
of Consolidation </B></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>The
accompanying financial statements include Worldwide Energy and Manufacturing
USA, Inc., a Colorado corporation (formerly Tabatha III, Inc.) and a public
company, its operating subsidiary, Worldwide USA, a California corporation, and
three subsidiary companies owned by Worldwide USA. &nbsp;Intercompany
transactions have been eliminated in consolidation. </P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify><B>Property and equipment</B></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify>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. &nbsp;</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify><B>Impairment of Long-lived Assets</B></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify>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.</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt"><B>Inventories
</B></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify>Inventories consist of finished goods of manufactured products.
&nbsp;Cost is stated at the lower of cost or market on a first-in, first-out
(FIFO) basis. &nbsp;The Company has not recorded an allowance for slow-moving or
obsolete inventory. &nbsp;Obsolete inventory at June 30, 2008 and December 31,
2007 was minimal. &nbsp;&nbsp;</P>
<P style="MARGIN: 0px"><BR>&nbsp;</P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 8 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B><BR></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>(UNAUDITED)</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><STRONG></STRONG>&nbsp;</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P
style="PADDING-RIGHT: 96px; MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -21px; LINE-HEIGHT: 16pt"><B>2.
</B></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 14pt"><B>SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)</B></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt"><B>Revenue
Recognition </B></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>The
Company recognizes revenues in accordance with the guidelines of the Securities
and Exchange Commission (&#147;SEC&#148;) Staff Accounting Bulletin (&#147;SAB&#148;) No. 104
&#147;Revenue Recognition&#148;. &nbsp;The Company recognizes revenue from product sales
when the orders are completed and shipped, provided that collection of the
resulting receivable is reasonably assured. &nbsp;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. &nbsp;Returns on defective catalogue parts,
which can be resold, may be exchanged for replacement parts or for a refund.
&nbsp;Revenue from non-refundable customer tooling deposits is recognized when
the materials are shipped or when the deposit is forfeited, whichever is
earlier. &nbsp;&nbsp;</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt"><B>Repairs
and Maintenance </B></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>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. </P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt"><B>Income
Taxes </B></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>The
Company uses the liability approach to financial accounting and reporting for
income taxes. &nbsp;The differences between the financial statement and tax
bases of assets and liabilities are determined annually. &nbsp;Deferred income
tax assets and liabilities are computed for those differences that have future
tax consequences using the currently enacted tax laws and rates that apply to
the period in which they are expected to affect taxable income. &nbsp;Valuation
allowances are established, if necessary, to reduce deferred tax asset accounts
to the amounts that will more likely than not be realized. &nbsp;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. &nbsp;</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>The
September 30, 2003 recapitalization of the Company qualifies as a reverse
acquisition under Section 1.1502-75(d)(3) of the Internal Revenue Code.
&nbsp;Prior to this date, the stockholders of the Company had elected for it to
be taxed as a &#147;Subchapter S&#148; corporation. &nbsp;Subsequent to the
recapitalization, the Company filed a consolidated tax return. </P>
<P style="MARGIN: 0px"><BR></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt"><B>Intangibles
</B></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>Patent
costs and other identifiable intangibles are capitalized and generally amortized
over useful lives of 15 years or less. &nbsp;Effective in 2001, goodwill is
assessed for impairment annually and is not amortized. </P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 11pt"><B>Research
and Development </B></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 11pt"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>The
Company expenses the cost of research and development as incurred. &nbsp;No
research and development costs were charged to operations during 2008 or 2007.
&nbsp;&nbsp;</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt" align=justify><BR>&nbsp;</P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 9 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B><BR></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>(UNAUDITED)</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><STRONG></STRONG>&nbsp;</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P
style="PADDING-RIGHT: 96px; MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -21px; LINE-HEIGHT: 16pt"><B>2.</B></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 14pt"><B>SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)</B></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt"><B>Cash
and Cash Equivalents </B></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>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. &nbsp;&nbsp;</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt" align=justify><BR></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt"><B>Non-Cash
Equity Transactions </B></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>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. </P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt" align=justify><BR></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt"><B>Estimates</B></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>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. &nbsp;Actual results may differ from those estimates and
such differences may be material to the financial statements. &nbsp;The more
significant estimates include: &nbsp;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. </P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt"><B>Accounting
Method </B></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>The
Company&#146;s financial statements are prepared using the accrual method of
accounting. </P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt" align=justify><BR></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt"><B>Foreign
Currency Transactions and Translation </B></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify>Transaction gains and losses result from a change in exchange
rates between the functional currencies in which a foreign currency transaction
is denominated. &nbsp;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. &nbsp;All transaction gains and losses are
included in other income or expense. &nbsp;For all years presented, sales to
customers were primarily denominated in U.S. dollars.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>Assets
and liabilities of Intech are translated into U.S. dollars at the prevailing
exchange rate in effect at each period end. &nbsp;Revenue and expenses are
translated into U.S. dollars at the average exchange rate during the reporting
period. &nbsp;Contributed capital is translated into U.S. dollars at the
historical exchange rate when capital was injected. &nbsp;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.
&nbsp;Exchange differences are recognized in the income statement in the period
in which they occur.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="MARGIN: 0px" align=center>&nbsp;</P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 10 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B><BR></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>(UNAUDITED)</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><STRONG></STRONG>&nbsp;</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P
style="PADDING-RIGHT: 96px; MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -21px; LINE-HEIGHT: 16pt"><B>2.
</B></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 14pt"><B>SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED) </B></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt"><B>Fair
Value of Financial Instruments </B></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>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. &nbsp;At June
30, 2008 and 2007, accounts receivable in the amounts of $1,809,735 and $805,289
respectively, were pledged as collateral in connection with bank loans. </P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt"><B>Compensated
Absences </B></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify>Employees of the Company are entitled to be compensated for
absences depending on job classification, length of service, and other factors.
&nbsp;At June 30, 2008 and 2007, the minimal amounts unused by employees could
not be estimated, and accordingly, no provision is recorded.</P>
<P style="MARGIN: 0px"><BR></P><A name=FIS_UNIDENTIFIED_TABLE_5></A>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt"><B>Concentrations,
Risks, and Uncertainties </B></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>The
Company did not have concentration of business with suppliers constituting
greater than 8.5% of the Company&#146;s gross sales during 2008 while the company&#146;s
one largest supplier comprised 32% of its manufacturing cost during 2007. </P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>The
Company&#146;s customers in the aerospace, telecommunications, automotive, and
electronics industries comprised the majority of its sales in 2007. &nbsp;These
four industries counted for 60% of the Company&#146;s sales in 2007. &nbsp;For the
six months ended June 30, 2008, 47% of the company's business was in the
renewable energy industry.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>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. &nbsp;The loans are generally unsecured and may carry interest at the
prevailing market rate for short-term instruments. &nbsp;Such tooling is in most
cases owned by the suppliers, and is a value primarily for the specific needs of
the Company&#146;s customers. &nbsp;The Company in turn requires its customers to
provide a non-refundable down payment to cover such startup costs. &nbsp;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&#146;s
products. &nbsp;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&#146;s operating
results. &nbsp;At June 30, 2008 and 2007, the balance of advances owed to the
Company is $224,428 and $260,540, respectively.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>The
Company sells its goods and services internationally, although the majority of
its revenue is derived from customers in the United States and Europe. &nbsp;As
such, the Company is susceptible to credit risk on accounts and notes receivable
from customers in that region. &nbsp;Additionally, a significant portion of the
Company&#146;s U.S. customers consists of entities in the aerospace industry, which
has proven to be sensitive to swings in the economic cycle. &nbsp;Generally, the
Company does not obtain security from its customers in support of accounts
receivable. &nbsp;</P>
<P style="MARGIN: 0px" align=justify><BR>&nbsp;</P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 11 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B></P>
<P style="MARGIN: 0px">&nbsp;</P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>(UNAUDITED)</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><STRONG></STRONG>&nbsp;</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P
style="PADDING-RIGHT: 96px; MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -21px; LINE-HEIGHT: 16pt">2<B>.
</B></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 14pt"><B>SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED) </B></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt"><B>Stock
Based Compensation </B>&nbsp;&nbsp;</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>The
Company will account for employee stock option plans under the intrinsic value
method prescribed by Accounting Principles Board Opinion No. 25, <I>&#147;Accounting
for Stock Issued to Employees&#148; </I>, and has adopted the disclosure only
provisions of Statement of Financial Accounting Standards No. 123,
<I>&#147;Accounting for Stock-Based Compensation&#148; </I>(&#147;SFAS 123&#148;). &nbsp;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.&nbsp;96-18,
&#147;Accounting<I> for Equity Instruments that are Issued to Other than Employees
for Acquiring, or in Conjunction with Selling Goods and Services&#148;.</I></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt"><B>Earnings
Per Share </B></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>The
Company adopted Statement of Financial Accounting Standard No. 128, &#147;Earnings
per Share&#148; (&#147;SFAS No. 128"), which is effective for annual periods ending after
December 15, 1997. &nbsp;Earnings per share (EPS) are computed based on the
weighted average number of shares actually outstanding. </P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0>
<TR style="FONT-SIZE: 0px" height=0>
<TD width=328></TD>
<TD width=138></TD>
<TD width=15></TD>
<TD width=144></TD></TR>
<TR>
<TD vAlign=top width=328>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">For the Six
Months Ended</P></TD>
<TD vAlign=top width=138>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt"
align=right>June 30, 2008</P></TD>
<TD vAlign=top width=15>
<P>&nbsp;</P></TD>
<TD vAlign=top width=144>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt"
align=right>June 30, 2007</P></TD></TR>
<TR>
<TD vAlign=top width=328>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Weighted
average number of common shares used</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom width=138>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>2,202,490</P></TD>
<TD vAlign=top width=15>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom width=144>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>2,033,083</P></TD></TR>
<TR>
<TD vAlign=top width=328>
<P>&nbsp;</P></TD>
<TD vAlign=top width=138>
<P>&nbsp;</P></TD>
<TD vAlign=top width=15>
<P>&nbsp;</P></TD>
<TD vAlign=top width=144>
<P>&nbsp;</P></TD></TR></TABLE>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify><B>Recent Accounting Pronouncements</B></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>SFAS
No.&nbsp;141 (revised 2007), <I>&#147;Business Combinations
(&#147;SFAS&nbsp;141R&#148;)</I></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>In
December 2007, the FASB issued SFAS No.&nbsp;141 (revised 2007), Business
Combinations (&#147;SFAS&nbsp;141R&#148;). SFAS&nbsp;141R establishes principles and
requirements for how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, any
noncontrolling interest in the acquiree and the goodwill acquired.
SFAS&nbsp;141R also establishes disclosure requirements to enable the evaluation
of the nature and financial effects of the business combination. This statement
is effective for the Company beginning January&nbsp;1, 2009. The Company is
currently evaluating the potential impact of the adoption of SFAS&nbsp;141R on
its consolidated financial position, results of operations or cash flows.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>SFAS
No.&nbsp;160, <I>&#147;Noncontrolling Interests in Consolidated Financial
Statements&#151;an amendment of Accounting Research Bulletin No.&nbsp;51&#148; - </I></P>
<P style="MARGIN: 0px" align=justify><BR>&nbsp;</P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 12 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B><BR></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>(UNAUDITED)</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><STRONG></STRONG>&nbsp;</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P
style="PADDING-RIGHT: 96px; MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -21px; LINE-HEIGHT: 16pt">2<B>.
</B></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 14pt"><B>SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED) </B></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>In
December 2007, the FASB issued SFAS No.&nbsp;160, Noncontrolling Interests in
Consolidated Financial Statements&#151;an amendment of Accounting Research Bulletin
No.&nbsp;51 (&#147;SFAS&nbsp;160&#148;). SFAS&nbsp;160 establishes accounting and
reporting standards for ownership interests in subsidiaries held by parties
other than the parent, the amount of consolidated net income attributable to the
parent and to the noncontrolling interest, changes in a parent&#146;s ownership
interest, and the valuation of retained noncontrolling equity investments when a
subsidiary is deconsolidated. SFAS&nbsp;160 also establishes disclosure
requirements that clearly identify and distinguish between the interests of the
parent and the interests of the noncontrolling owners. This statement is
effective for the Company beginning January&nbsp;1, 2009. The Company is
currently evaluating the potential impact of the adoption of SFAS&nbsp;160 on
its consolidated financial position, results of operations or cash flows.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>In May
2008, the FASB issued Statement of Financial Accounting Standards No. 162,
<I>The Hierarchy </I>of <I>Generally Accepted Accounting Principles </I>(&#147;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 the<I>
</I>hierarchy 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.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify><B>Recent Accounting Pronouncements</B> <B>(Continued)</B></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>In
April 2008, the FASB issued FASB Staff Position (FSP) FAS 142-3,
<I>Determination of the Useful Life of Intangible Assets</I>, 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, <I>Goodwill and Other Intangible Assets. </I>This Staff
Position is effective for financial statements issued for fiscal years beginning
after December 15, 2008, and interim periods within those fiscal years. Early
adoption is prohibited. Application of this FSP is not expected to have a
significant impact on the financial statements or (This FSP is not currently
applicable to the Company).</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>In June
2008, the FASB issued FSP EITF 03-6-1, <I>Determining Whether Instruments
Granted in Share-Based Payment Transactions are Participating Securities</I>.
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. 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.</P>
<P style="MARGIN: 0px" align=justify><BR>&nbsp;</P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 13 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B><BR></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>(UNAUDITED)</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><STRONG></STRONG>&nbsp;</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P
style="PADDING-RIGHT: 96px; MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -21px; LINE-HEIGHT: 16pt">2<B>.
</B></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 14pt"><B>SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED) </B></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>In May
2008, the FASB issued FASB Staff Position (FSP) APB 14-1, <I>Accounting for
Convertible Debt That May Be Settled in Cash upon Conversion (Including Partial
Cash Settlement) </I>("FSP 14-1"). FSP 14-1 will be effective for financial
statements issued for fiscal years beginning after December 15, 2008. The FSP
includes guidance that convertible debt instruments that may be settled in cash
upon conversion should be separated between the liability and equity components,
with each component being accounted for in a manner that will reflect the
entity's nonconvertible debt borrowing rate when interest costs are recognized
in subsequent periods. FSP 14-1 is not currently applicable to the Company since
the Company does not have convertible debt.</P>
<P style="MARGIN: 0px"><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -17px; LINE-HEIGHT: 13pt"
align=justify><B>3. </B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"
align=justify><B>COMMITMENTS AND CONTINGENCIES</B></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>The
Company leases its office spaces and certain vehicles under non-cancelable
operating leases. &nbsp;The Worldwide office lease requires increasing annual
payments plus a share of operating costs. &nbsp;Minimum future rental payments
under non-cancelable operating leases with remaining terms in excess of one year
as of December 31, 2007, in the aggregate and for each of the five succeeding
fiscal years are as follows: </P>
<P style="MARGIN: 0px" align=justify><BR></P>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0>
<TR style="FONT-SIZE: 0px" height=0>
<TD width=244></TD>
<TD width=15></TD>
<TD width=107></TD></TR>
<TR>
<TD vAlign=top width=244>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Year ended
December 31</P></TD>
<TD vAlign=top colSpan=2>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=244>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">2008</P></TD>
<TD vAlign=top width=15>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>$</P></TD>
<TD vAlign=bottom width=107>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>&nbsp;&nbsp;91,777 &nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=244>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">2009</P></TD>
<TD vAlign=top width=15>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=107>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>203,298</P></TD></TR>
<TR>
<TD vAlign=top width=244>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">2010</P></TD>
<TD vAlign=top width=15>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=107>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>154,195</P></TD></TR>
<TR>
<TD vAlign=top width=244>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">2011</P></TD>
<TD vAlign=top width=15>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=107>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>131,660</P></TD></TR>
<TR>
<TD vAlign=top width=244>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">2012</P></TD>
<TD vAlign=bottom width=15>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=107>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>135,610</P></TD></TR>
<TR>
<TD vAlign=top width=244>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=15>
<P>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=107>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=244>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Total minimum
future rental payment</P></TD>
<TD vAlign=bottom width=15>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>$</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom width=107>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>716,540</P></TD></TR>
<TR>
<TD vAlign=top width=244>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=15>
<P>&nbsp;</P></TD>
<TD vAlign=bottom width=107>
<P>&nbsp;</P></TD></TR></TABLE>
<P style="MARGIN: 0px" align=justify>&nbsp;</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>Total
rent and lease expense was $12,917 and $79,618 as of June 30, 2008 and 2007,
respectively.</P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify>&nbsp;</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -17px; LINE-HEIGHT: 13pt"
align=justify><B>4.</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"
align=justify><B>ACCOUNTS RECEIVABLE</B></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify>Accounts receivable by major categories are summarized as
follows:</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0 align=center>
<TR style="FONT-SIZE: 0px" height=0>
<TD width=256></TD>
<TD width=19></TD>
<TD width=120></TD>
<TD width=15></TD>
<TD width=120></TD></TR>
<TR>
<TD vAlign=top width=256>
<P>&nbsp;</P></TD>
<TD vAlign=top width=19>
<P>&nbsp;</P></TD>
<TD vAlign=top width=120>
<P>&nbsp;</P></TD>
<TD vAlign=top width=15>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=120>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>June 30, 2008</P></TD></TR>
<TR>
<TD vAlign=top width=256>
<P>&nbsp;</P></TD>
<TD vAlign=top width=19>
<P>&nbsp;</P></TD>
<TD vAlign=top width=120>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>&nbsp;</P></TD>
<TD vAlign=top width=15>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B></P></TD>
<TD vAlign=top width=120>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=256>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Accounts
Receivable &#150; pledged to banks</P></TD>
<TD vAlign=top width=19>
<P>&nbsp;</P></TD>
<TD vAlign=top width=120>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;</P></TD>
<TD vAlign=bottom width=15>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;$</P></TD>
<TD vAlign=bottom width=120>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;1,809,735</P></TD></TR>
<TR>
<TD vAlign=top width=256>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Accounts
Receivable &#150; others</P></TD>
<TD vAlign=top width=19>
<P>&nbsp;</P></TD>
<TD vAlign=top width=120>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;</P></TD>
<TD vAlign=top width=15>
<P style="MARGIN: 0px"><BR></P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=120>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;2,969,031</P></TD></TR>
<TR>
<TD vAlign=top width=256>
<P>&nbsp;</P></TD>
<TD vAlign=top width=19>
<P>&nbsp;</P></TD>
<TD vAlign=top width=120>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;</P></TD>
<TD vAlign=top width=15>
<P style="MARGIN: 0px"><BR></P></TD>
<TD vAlign=top width=120>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;4,778,766</P></TD></TR>
<TR>
<TD vAlign=top width=256>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Less:
allowances for doubtful accounts</P></TD>
<TD vAlign=top width=19>
<P>&nbsp;</P></TD>
<TD vAlign=top width=120>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;</P></TD>
<TD vAlign=top width=15>
<P style="MARGIN: 0px"><BR></P></TD>
<TD vAlign=top width=120>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;45,541</P></TD></TR>
<TR>
<TD vAlign=top width=256>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Total</P></TD>
<TD vAlign=top width=19>
<P>&nbsp;</P></TD>
<TD vAlign=top width=120>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;</P></TD>
<TD vAlign=top width=15>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>&nbsp;$</P></TD>
<TD style="BORDER-TOP: #000000 1px solid; BORDER-BOTTOM: #000000 3px double"
vAlign=top width=120>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;4,733,225</P></TD></TR></TABLE>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt" align=justify>Under
the terms of a revolving line of credit agreement with Golden Gate Bank
indicated in note 7, the revolving line of credit is secured by 70% of accounts
receivable and all business assets of the company and guaranteed by its
officers. </P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="MARGIN: 0px" align=justify><BR>&nbsp;</P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 14 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>&nbsp;</P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>(UNAUDITED)</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><STRONG></STRONG>&nbsp;</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -17px; LINE-HEIGHT: 13pt"
align=justify><B>4.</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"
align=justify><B>ACCOUNTS RECEIVABLE (CONTINUED) </B></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify>Concentrations in Accounts Receivable - At June 30, 2008, one
customer accounted for more than 10% of the Company&#146;s accounts receivable, with
total amounts of $2,539,464, representing 62% of total accounts receivable in
aggregate. At June 30, 2007, two customers accounted for more than 10% of the
Company&#146;s accounts receivable, with total amounts of $603,707, representing 23%
of total accounts receivable in aggregate</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 24px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -17px; TEXT-INDENT: -24px; LINE-HEIGHT: 13pt"
align=justify><B>5. </B></P>
<P
style="PADDING-LEFT: 24px; FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 23px; LINE-HEIGHT: 13pt"
align=justify><B>INVENTORIES</B></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify>Inventories by major categories are summarized as follows:</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0 align=center>
<TR style="FONT-SIZE: 0px" height=0>
<TD width=294></TD>
<TD width=16></TD>
<TD width=85></TD>
<TD width=15></TD>
<TD width=100></TD></TR>
<TR>
<TD vAlign=top width=294>
<P>&nbsp;</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=top width=85>
<P>&nbsp;</P></TD>
<TD vAlign=top width=15>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=100>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>June 30, 2008</P></TD></TR>
<TR>
<TD vAlign=top width=294>
<P>&nbsp;</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=top width=85>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>&nbsp;</P></TD>
<TD vAlign=top width=15>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B></P></TD>
<TD vAlign=top width=100>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=294>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Raw
materials</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=top width=85>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;</P></TD>
<TD vAlign=bottom width=15>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;$</P></TD>
<TD vAlign=bottom width=100>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;175,522</P></TD></TR>
<TR>
<TD vAlign=top width=294>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Work in
progress</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=top width=85>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;</P></TD>
<TD vAlign=bottom width=15>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;</P></TD>
<TD vAlign=bottom width=100>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;154,001</P></TD></TR>
<TR>
<TD vAlign=top width=294>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Finished
goods</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=top width=85>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;</P></TD>
<TD vAlign=bottom width=15>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;</P></TD>
<TD vAlign=bottom width=100>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;1,820,065</P></TD></TR>
<TR>
<TD vAlign=top width=294>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify>Finished goods &#150; pledged to the bank (refer to note
7)</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=top width=85>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;</P></TD>
<TD vAlign=bottom width=15>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=100>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;1,646,018</P></TD></TR>
<TR>
<TD vAlign=top width=294>
<P>&nbsp;</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=top width=85>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;</P></TD>
<TD vAlign=bottom width=15>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;</P></TD>
<TD vAlign=bottom width=100>
<P
style="PADDING-LEFT: 26px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;3,795,606</P></TD></TR>
<TR>
<TD vAlign=top width=294>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Less:
allowances for slowing moving items</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=top width=85>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;</P></TD>
<TD vAlign=bottom width=15>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom width=100>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;-</P></TD></TR>
<TR>
<TD vAlign=top width=294>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Total</P></TD>
<TD vAlign=top width=16>
<P>&nbsp;</P></TD>
<TD vAlign=top width=85>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;</P></TD>
<TD vAlign=bottom width=15>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;$</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom width=100>
<P
style="PADDING-LEFT: 26px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;3,795,606</P></TD></TR></TABLE>
<P style="MARGIN: 0px" align=justify><BR></P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 24px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -17px; TEXT-INDENT: -24px; LINE-HEIGHT: 13pt"
align=justify><B>6. </B></P>
<P
style="PADDING-LEFT: 24px; FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 23px; LINE-HEIGHT: 13pt"
align=justify><B>PROPERTY AND EQUIPMENT </B></P>
<P
style="MARGIN-TOP: 6px; FONT-SIZE: 11pt; MARGIN-BOTTOM: 6px; LINE-HEIGHT: 13pt"
align=justify>Property and equipment, which is located in the USA and PRC,
consisted of the following at June 30, 2008: </P>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0 align=center>
<TR style="FONT-SIZE: 0px" height=0>
<TD width=252></TD>
<TD width=24></TD>
<TD width=120></TD>
<TD width=15></TD>
<TD width=120></TD></TR>
<TR>
<TD vAlign=top width=252>
<P>&nbsp;</P></TD>
<TD vAlign=top width=24>
<P>&nbsp;</P></TD>
<TD vAlign=top width=120>
<P>&nbsp;</P></TD>
<TD vAlign=top width=15>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=120>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>June 30, 2008</P></TD></TR>
<TR>
<TD vAlign=top width=252>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify>Vehicles</P></TD>
<TD vAlign=top width=24>
<P>&nbsp;</P></TD>
<TD vAlign=top width=120>
<P>&nbsp;</P></TD>
<TD vAlign=top width=15>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>&nbsp;$</P></TD>
<TD width=120>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>174,663</P></TD></TR>
<TR>
<TD vAlign=top width=252>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify>Furniture &amp; fixtures</P></TD>
<TD vAlign=top width=24>
<P>&nbsp;</P></TD>
<TD vAlign=top width=120>
<P>&nbsp;</P></TD>
<TD vAlign=top width=15>
<P style="MARGIN: 0px"><BR></P></TD>
<TD width=120>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>83,918</P></TD></TR>
<TR>
<TD vAlign=top width=252>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify>Equipment</P></TD>
<TD vAlign=top width=24>
<P>&nbsp;</P></TD>
<TD vAlign=top width=120>
<P>&nbsp;</P></TD>
<TD vAlign=top width=15>
<P style="MARGIN: 0px"><BR></P></TD>
<TD width=120>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>811,919</P></TD></TR>
<TR>
<TD vAlign=top width=252>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify>Software</P></TD>
<TD vAlign=top width=24>
<P>&nbsp;</P></TD>
<TD vAlign=top width=120>
<P>&nbsp;</P></TD>
<TD vAlign=top width=15>
<P style="MARGIN: 0px"><BR></P></TD>
<TD width=120>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>35,461</P></TD></TR>
<TR>
<TD vAlign=top width=252>
<P>&nbsp;</P></TD>
<TD vAlign=top width=24>
<P>&nbsp;</P></TD>
<TD vAlign=top width=120>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;</P></TD>
<TD vAlign=top width=15>
<P style="MARGIN: 0px"><BR></P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=120>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=252>
<P>&nbsp;</P></TD>
<TD vAlign=top width=24>
<P>&nbsp;</P></TD>
<TD vAlign=top width=120>
<P>&nbsp;</P></TD>
<TD vAlign=top width=15>
<P style="MARGIN: 0px"><BR></P></TD>
<TD width=120>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>1,105,961</P></TD></TR>
<TR>
<TD vAlign=top width=252>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify>Less: accumulated depreciation</P></TD>
<TD vAlign=top width=24>
<P>&nbsp;</P></TD>
<TD vAlign=top width=120>
<P>&nbsp;</P></TD>
<TD vAlign=top width=15>
<P style="MARGIN: 0px"><BR></P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" width=120>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>(504,345)</P></TD></TR>
<TR>
<TD vAlign=top width=252>
<P>&nbsp;</P></TD>
<TD vAlign=top width=24>
<P>&nbsp;</P></TD>
<TD vAlign=top width=120>
<P>&nbsp;</P></TD>
<TD vAlign=top width=15>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>&nbsp;</P></TD>
<TD width=120>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=252>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify>Total</P></TD>
<TD vAlign=top width=24>
<P>&nbsp;</P></TD>
<TD vAlign=top width=120>
<P>&nbsp;</P></TD>
<TD vAlign=top width=15>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>&nbsp;$</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" width=120>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>601,616</P></TD></TR></TABLE>
<P style="MARGIN: 0px"><BR></P>
<P style="MARGIN: 0px" align=center><BR><BR></P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 15 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B></P>
<P style="MARGIN: 0px">&nbsp;</P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>(UNAUDITED)</B></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -17px; LINE-HEIGHT: 13pt"
align=justify><B>7. &nbsp;</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"
align=justify><B>SHORT TERM LOAN </B></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>As of
June 30, 2008, the Company has the following line of credit:</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0>
<TR style="FONT-SIZE: 0px" height=0>
<TD width=132></TD>
<TD width=130></TD>
<TD width=132></TD>
<TD width=111></TD>
<TD width=18></TD>
<TD width=101></TD></TR>
<TR>
<TD vAlign=top width=132>
<P>&nbsp;</P></TD>
<TD vAlign=top width=130>
<P>&nbsp;</P></TD>
<TD vAlign=top width=132>
<P>&nbsp;</P></TD>
<TD vAlign=top width=111>
<P>&nbsp;</P></TD>
<TD vAlign=top width=18>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>&nbsp;</P></TD>
<TD vAlign=top width=101>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=132>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Banker</P></TD>
<TD vAlign=top width=130>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Loan
period</P></TD>
<TD vAlign=top width=132>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Interest
rate</P></TD>
<TD vAlign=top width=111>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Secured
by</P></TD>
<TD vAlign=top width=18>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;</P></TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top width=101>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>&nbsp;June 30, 2008</P></TD></TR>
<TR>
<TD vAlign=top width=132>
<P>&nbsp;</P></TD>
<TD vAlign=top width=130>
<P>&nbsp;</P></TD>
<TD vAlign=top width=132>
<P>&nbsp;</P></TD>
<TD vAlign=top width=111>
<P>&nbsp;</P></TD>
<TD vAlign=top width=18>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>&nbsp;</P></TD>
<TD vAlign=top width=101>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B></P></TD></TR>
<TR>
<TD vAlign=top width=132>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Bank of the
West</P></TD>
<TD width=130>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">5/20/2008-5/20/2009</P></TD>
<TD width=132>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Wall Street
journal prime</P></TD>
<TD width=111>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">70% Accounts
receivable + 50% inventory</P></TD>
<TD width=18>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;$</P></TD>
<TD style="BORDER-BOTTOM: #000000 3px double" width=101>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;523,702</P></TD></TR>
<TR>
<TD vAlign=top width=132>
<P>&nbsp;</P></TD>
<TD width=130>
<P>&nbsp;</P></TD>
<TD width=132>
<P>&nbsp;</P></TD>
<TD width=111>
<P>&nbsp;</P></TD>
<TD vAlign=top width=18>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;</P></TD>
<TD width=101>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=right>&nbsp;</P></TD></TR></TABLE>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt" align=justify>On May
20, 2008 the Company paid off its line of credit with Wells Fargo in the amount
of $960,000 and established a new credit facility with Bank of the West. Under
the terms of a 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. &nbsp;Funds from these borrowings may be used for any
purpose</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"
align=justify>The revolving line of credit is secured by the assets of the
company and guaranteed by its officers<FONT style="COLOR: #00007f">. </FONT>On
August 01, 2008 the amount used on the line of credit was $1,109,118. At August
01, 2008 there is $1,915,882 is still available at an interest rate of 5.0%.</P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"
align=justify>&nbsp;</P>
<P style="MARGIN: 0px"><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -17px; LINE-HEIGHT: 13pt; FONT-FAMILY: TimesNewRomanPSMT-Identity-H"><B>8.
</B></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"><B>STOCK
TRANSACTION</B></P>
<P style="MARGIN: 0px"><BR></P>
<P
style="PADDING-RIGHT: 2px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 12.95pt"
align=justify>On January 1, 2008, the Company issued 10,000 shares of its common
stock to consultants and 20,000 shares of its common stock to an employee,
valued at $110,000, fair value, which is reflected in stock based compensation
expense. In addition, the Company&#146;s stock symbol changed from &#147;WWMU&#148; to &#147;WEMU&#148;
in the first quarter of 2008 to better reflect the company's change in focus to
the renewable clean energy sector.</P>
<P style="MARGIN: 0px"><BR></P>
<P
style="PADDING-RIGHT: 2px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 12.95pt"
align=justify>On June 23, 2008, the Company received subscriptions for the sale
of an aggregate of $4,747,970.50 or 1,055,103 shares of common stock and the
Company received the net amount of $4,356,009 after the deduction of the
offering expenses of $391,961.50. Concurrently with the issuance of the Shares,
the Company also issued an aggregate of 685,817 Series A Warrants of the Company
(the &#147;Series A Warrants&#148;) and an aggregate of 369,286 Series B Warrants of the
Company (the &#147;Series B Warrants&#148;). The Series A Warrants are exercisable for a
period of 24 months from closing at an exercise price of $7.00 per share. The
Series B Warrants are exercisable for a period of 36 months from the closing at
an exercise price of $9.00 per share. The Series A and Series B Warrants provide
the investors with full ratchet anti-dilution protection with relation to the
exercise price of the warrant for a period of 18 months from the closing. The
Series A and Series B Warrants may not be exercised if, after such exercise,
such holder would beneficially own, as determined in accordance with Section
13(d) of the Securities Exchange Act of 1934 and the rules and regulations
promulgated thereunder, more than 9.99% of the number of shares of common stock
then issued and outstanding.</P>
<P style="MARGIN: 0px"><BR></P>
<P style="MARGIN: 0px" align=center><BR><BR></P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 16 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B><BR></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>(UNAUDITED)</B></P>
<P style="MARGIN: 0px"><BR></P>
<P style="MARGIN: 0px"><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -17px; LINE-HEIGHT: 13pt"><B>9.
</B></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"><B>PENSION
PLAN AND STOCK OPTION PLAN </B></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 12.95pt"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>The
Company established a SEP plan for the benefit of all full-time employees.
&nbsp;Contributions to the plan are limited to a statutory amount per employee.
&nbsp;No contributions were made for 2005 or 2006. &nbsp;The Company also
established a stock option plan for its employees on April 1, 2004. &nbsp;The
Company approved the plan to issue up to 300,000 shares of common stock.
&nbsp;The stock option plan provides employees, consultants and directors the
opportunity to purchase shares. &nbsp;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&#146;s common stock on the date the option is
granted. &nbsp;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. &nbsp;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. </P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -17px; LINE-HEIGHT: 13pt"
align=justify><B>10. </B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"
align=justify><B>RELATED PARTY TRANSACTIONS </B></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">The Company paid
wages in the amount of $153,000 and $108,000 to certain stockholders, who are
also members of the Board of Directors, as of June 30, 2008 and 2007
respectively. </P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>Jimmy
and Mindy Wang, who are principal stockholders, executive officers and members
of the Board of Directors of the Company, have advanced funds to the Company for
working capital purposes. &nbsp;At June 30, 2008, the Company owed Jimmy and
Mindy Wang $414,235. &nbsp;The advances are interest bearing at 8% per annum,
with a default interest rate of 10%. All unpaid amounts on this note are due in
full on January 1, 2010. &nbsp;The Company paid cash in the amount of $27,284
for interest expense to Mr. and Mrs. Wang for the six months ended June 30,
2008.</P>
<P style="MARGIN: 0px">&nbsp;</P>
<P style="MARGIN: 0px">&nbsp;</P>
<P
style="PADDING-RIGHT: 96px; MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -17px; LINE-HEIGHT: 13pt"><B>11.
</B></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"><B>OPERATING
RISK</B></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"
align=justify>Interest rate risk</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>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. </P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"
align=justify>Credit risk</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>The
Company is exposed to credit risk from its cash in bank and bills and accounts
receivable. &nbsp;The credit risk on cash in bank is limited because the
counterparties are recognized financial institutions. &nbsp;Bills and accounts
receivable are subjected to credit evaluations. &nbsp;An allowance has been made
for estimated irrecoverable amounts which have been determined by reference to
past default experience and the current economic environment. </P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="MARGIN: 0px" align=justify><BR>&nbsp;</P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 17 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>(UNAUDITED)</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><STRONG></STRONG>&nbsp;</P>
<P style="MARGIN: 0px" align=center><BR></P>
<P
style="PADDING-RIGHT: 96px; MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -17px; LINE-HEIGHT: 13pt"><B>11.
</B></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"><B>OPERATING
RISK (CONTINUED)</B></P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>Foreign
currency risk</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>Most of
the transactions of the Company were settled in Renminbi, U.S. dollars and
Euros. &nbsp;Thus, the company has significant foreign currency risk exposure.
</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"
align=justify>Company&#146;s operations are substantially in foreign countries </P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify>Substantially all of the Company&#146;s products are manufactured in
China. The Company&#146;s operations are subject to various political, economic, and
other risks and uncertainties inherent in China. Among other risks, the
Company&#146;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</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P
style="PADDING-RIGHT: 2px; MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -17px; LINE-HEIGHT: 13pt"><B>12.
</B></P>
<P
style="PADDING-RIGHT: 2px; FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"><B>SEGMENT
INFORMATION </B></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt" align=justify>The
Company&#146;s operations are classified into four principal reportable segments that
provide different products or services. &nbsp;Worldwide USA purchases and sells
manufactured goods from China procured by its subsidiary, Shanghai Intech
Electro-Mechanical Products Co., Ltd. (&#147;Intech Electro&#148;). &nbsp;Intech Electro
provides technical advisory, design, delivery, material procurement, and
manufacturing quality control services. &nbsp;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. <A name=FIS_UNIDENTIFIED_TABLE_7></A>Changchun Chengde
Automobile Air-Conditioner Co., Limited (&#147;Changchun Changde&#148;) sells automobile
air-conditioners while Shanghai Intech Precision Machinery Co., Ltd. sells
equipment. </P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt"><B>Segmental
Data &#150; 2008 </B></P>
<P style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt"
align=center><B>Reportable Segments</B></P>
<P
style="PADDING-RIGHT: 96px; PADDING-LEFT: 14px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt">(amounts
in thousands)</P>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0>
<TR style="FONT-SIZE: 0px" height=0>
<TD width=168></TD>
<TD width=78></TD>
<TD width=7></TD>
<TD width=62></TD>
<TD width=5></TD>
<TD width=62></TD>
<TD width=5></TD>
<TD width=57></TD>
<TD width=5></TD>
<TD width=80></TD>
<TD width=7></TD>
<TD width=55></TD>
<TD width=19></TD></TR>
<TR>
<TD width=168>
<P>&nbsp;</P></TD>
<TD width=78>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>WWMUSA</P></TD>
<TD width=7>
<P>&nbsp;</P></TD>
<TD width=62>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>Intech<BR>Electro</P></TD>
<TD vAlign=top width=5>
<P>&nbsp;</P></TD>
<TD width=62>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>Intech<BR>Precision</P></TD>
<TD vAlign=top width=5>
<P>&nbsp;</P></TD>
<TD vAlign=top width=57>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>Shutai</P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>Precision</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=80>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>Discontinued Operations</P></TD>
<TD width=7>
<P>&nbsp;</P></TD>
<TD width=55>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>Total</P></TD>
<TD vAlign=top width=19>
<P>&nbsp;</P></TD></TR>
<TR>
<TD width=168>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">External
revenue</P></TD>
<TD width=78>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>9,916</P></TD>
<TD width=7>
<P>&nbsp;</P></TD>
<TD width=62>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>137</P></TD>
<TD vAlign=top width=5>
<P>&nbsp;</P></TD>
<TD width=62>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>2,176</P></TD>
<TD vAlign=top width=5>
<P>&nbsp;</P></TD>
<TD vAlign=top width=57>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>(830)</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=80>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>-</P></TD>
<TD width=7>
<P>&nbsp;</P></TD>
<TD width=55>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>12,245</P></TD>
<TD vAlign=top width=19>
<P>&nbsp;</P></TD></TR>
<TR>
<TD width=168>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Intersegment
revenue</P></TD>
<TD width=78>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>-</P></TD>
<TD width=7>
<P>&nbsp;</P></TD>
<TD width=62>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>2,651</P></TD>
<TD vAlign=top width=5>
<P>&nbsp;</P></TD>
<TD width=62>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>-</P></TD>
<TD vAlign=top width=5>
<P>&nbsp;</P></TD>
<TD vAlign=top width=57>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>-</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=80>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>-</P></TD>
<TD width=7>
<P>&nbsp;</P></TD>
<TD width=55>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>2,651</P></TD>
<TD vAlign=top width=19>
<P>&nbsp;</P></TD></TR>
<TR>
<TD width=168>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Interest
income</P></TD>
<TD width=78>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>1</P></TD>
<TD width=7>
<P>&nbsp;</P></TD>
<TD width=62>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>-</P></TD>
<TD vAlign=top width=5>
<P>&nbsp;</P></TD>
<TD width=62>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>3</P></TD>
<TD vAlign=top width=5>
<P>&nbsp;</P></TD>
<TD vAlign=top width=57>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>-</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=80>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>-</P></TD>
<TD width=7>
<P>&nbsp;</P></TD>
<TD width=55>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>4</P></TD>
<TD vAlign=top width=19>
<P>&nbsp;</P></TD></TR>
<TR>
<TD width=168>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Interest
expense</P></TD>
<TD width=78>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>(40)</P></TD>
<TD width=7>
<P>&nbsp;</P></TD>
<TD width=62>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>(27)</P></TD>
<TD vAlign=top width=5>
<P>&nbsp;</P></TD>
<TD width=62>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>(1)</P></TD>
<TD vAlign=top width=5>
<P>&nbsp;</P></TD>
<TD vAlign=top width=57>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>(5)</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=80>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>-</P></TD>
<TD width=7>
<P>&nbsp;</P></TD>
<TD width=55>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>(73)</P></TD>
<TD vAlign=top width=19>
<P>&nbsp;</P></TD></TR>
<TR>
<TD width=168>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Depreciation</P></TD>
<TD width=78>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>(8)</P></TD>
<TD width=7>
<P>&nbsp;</P></TD>
<TD width=62>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>(35)</P></TD>
<TD vAlign=top width=5>
<P>&nbsp;</P></TD>
<TD width=62>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>(16)</P></TD>
<TD vAlign=top width=5>
<P>&nbsp;</P></TD>
<TD width=57>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>(4)</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=80>
<P>&nbsp;</P></TD>
<TD width=7>
<P>&nbsp;</P></TD>
<TD width=55>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>(63)</P></TD>
<TD vAlign=top width=19>
<P>&nbsp;</P></TD></TR>
<TR>
<TD width=168>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Net profit
after tax</P></TD>
<TD width=78>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>306</P></TD>
<TD width=7>
<P>&nbsp;</P></TD>
<TD width=62>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>149</P></TD>
<TD vAlign=top width=5>
<P>&nbsp;</P></TD>
<TD width=62>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>198</P></TD>
<TD vAlign=top width=5>
<P>&nbsp;</P></TD>
<TD vAlign=top width=57>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>(6)</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=80>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>8</P></TD>
<TD width=7>
<P>&nbsp;</P></TD>
<TD width=55>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>655</P></TD>
<TD vAlign=top width=19>
<P style="MARGIN: 0px; LINE-HEIGHT: normal" align=center><B>(1</B><FONT
style="FONT-SIZE: 11pt"><B>)</B></FONT></P></TD></TR>
<TR>
<TD width=168>
<P>&nbsp;</P></TD>
<TD width=78>
<P>&nbsp;</P></TD>
<TD width=7>
<P>&nbsp;</P></TD>
<TD width=62>
<P>&nbsp;</P></TD>
<TD vAlign=top width=5>
<P>&nbsp;</P></TD>
<TD width=62>
<P>&nbsp;</P></TD>
<TD vAlign=top width=5>
<P>&nbsp;</P></TD>
<TD vAlign=top width=57>
<P>&nbsp;</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=80>
<P>&nbsp;</P></TD>
<TD width=7>
<P>&nbsp;</P></TD>
<TD width=55>
<P>&nbsp;</P></TD>
<TD vAlign=top width=19>
<P>&nbsp;</P></TD></TR>
<TR>
<TD width=168>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Expenditures
for long-lived assets</P></TD>
<TD width=78>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>12</P></TD>
<TD width=7>
<P>&nbsp;</P></TD>
<TD width=62>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>111</P></TD>
<TD vAlign=top width=5>
<P>&nbsp;</P></TD>
<TD width=62>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>-</P></TD>
<TD vAlign=top width=5>
<P>&nbsp;</P></TD>
<TD width=57>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>50</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=80>
<P>&nbsp;</P></TD>
<TD width=7>
<P>&nbsp;</P></TD>
<TD width=55>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>173</P></TD>
<TD vAlign=top width=19>
<P>&nbsp;</P></TD></TR></TABLE>
<P style="MARGIN: 0px; LINE-HEIGHT: 12.95pt"><BR></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 12.95pt"><B>(1)</B>
$(26,521) in inter-company profit was eliminated in consolidation.</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 12.95pt"><BR></P>
<P style="MARGIN: 0px" align=center><BR><BR></P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 18 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B><BR></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>(UNAUDITED)</B></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><STRONG></STRONG>&nbsp;</P>
<P style="MARGIN: 0px" align=center><BR></P>
<P
style="PADDING-RIGHT: 2px; MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -17px; LINE-HEIGHT: 13pt"><B>12.
</B></P>
<P
style="PADDING-RIGHT: 2px; FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: normal"><B>SEGMENT
INFORMATION (CONTINUED</B><FONT style="FONT-SIZE: 12pt"><B>)</B></FONT></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 14pt"><BR></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt"><B>Segmental
Data &#150; 2007 </B></P>
<P style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt"
align=center><B>Reportable Segments</B></P>
<P
style="PADDING-RIGHT: 96px; PADDING-LEFT: 14px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 14pt">(amounts
in thousands)</P>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0>
<TR style="FONT-SIZE: 0px" height=0>
<TD width=194></TD>
<TD width=73></TD>
<TD width=5></TD>
<TD width=64></TD>
<TD width=5></TD>
<TD width=84></TD>
<TD width=12></TD>
<TD width=82></TD>
<TD width=9></TD>
<TD width=72></TD>
<TD width=26></TD></TR>
<TR>
<TD width=194>
<P>&nbsp;</P></TD>
<TD width=73>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>WWMUSA</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=64>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>Intech<BR>Electro</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=84>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>Intech<BR>Precision</P></TD>
<TD width=12>
<P>&nbsp;</P></TD>
<TD width=82>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>Discontinued Operations</P></TD>
<TD vAlign=top width=9>
<P>&nbsp;</P></TD>
<TD width=72>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>Total</P></TD>
<TD vAlign=top width=26>
<P>&nbsp;</P></TD></TR>
<TR>
<TD width=194>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">External
revenue</P></TD>
<TD width=73>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>4,244</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=64>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>78</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=84>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>911</P></TD>
<TD width=12>
<P>&nbsp;</P></TD>
<TD width=82>
<P>&nbsp;</P></TD>
<TD vAlign=top width=9>
<P>&nbsp;</P></TD>
<TD width=72>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>5,233</P></TD>
<TD vAlign=top width=26>
<P>&nbsp;</P></TD></TR>
<TR>
<TD width=194>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Intersegment
revenue</P></TD>
<TD width=73>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>-</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=64>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>1,306</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=84>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>-</P></TD>
<TD width=12>
<P>&nbsp;</P></TD>
<TD width=82>
<P>&nbsp;</P></TD>
<TD vAlign=top width=9>
<P>&nbsp;</P></TD>
<TD width=72>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>1,306</P></TD>
<TD vAlign=top width=26>
<P>&nbsp;</P></TD></TR>
<TR>
<TD width=194>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Interest
income</P></TD>
<TD width=73>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>1</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=64>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>-</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=84>
<P>&nbsp;</P></TD>
<TD width=12>
<P>&nbsp;</P></TD>
<TD width=82>
<P>&nbsp;</P></TD>
<TD vAlign=top width=9>
<P>&nbsp;</P></TD>
<TD width=72>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>1</P></TD>
<TD vAlign=top width=26>
<P>&nbsp;</P></TD></TR>
<TR>
<TD width=194>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Interest
expense</P></TD>
<TD width=73>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>(30)</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=64>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>-</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=84>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>-</P></TD>
<TD width=12>
<P>&nbsp;</P></TD>
<TD width=82>
<P>&nbsp;</P></TD>
<TD vAlign=top width=9>
<P>&nbsp;</P></TD>
<TD width=72>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>(30)</P></TD>
<TD vAlign=top width=26>
<P>&nbsp;</P></TD></TR>
<TR>
<TD width=194>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Depreciation
under administrative expenses</P></TD>
<TD width=73>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>(7)</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=64>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>(7)</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=84>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>(2)</P></TD>
<TD width=12>
<P>&nbsp;</P></TD>
<TD width=82>
<P>&nbsp;</P></TD>
<TD vAlign=top width=9>
<P>&nbsp;</P></TD>
<TD width=72>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>(43)</P></TD>
<TD vAlign=top width=26>
<P>&nbsp;</P></TD></TR>
<TR>
<TD width=194>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Net profit
after tax</P></TD>
<TD width=73>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>(66)</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=64>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>187</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=84>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>98</P></TD>
<TD width=12>
<P>&nbsp;</P></TD>
<TD width=82>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>4</P></TD>
<TD vAlign=top width=9>
<P>&nbsp;</P></TD>
<TD width=72>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>223</P></TD>
<TD vAlign=top width=26>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>(1)</B></P></TD></TR>
<TR>
<TD width=194>
<P>&nbsp;</P></TD>
<TD width=73>
<P>&nbsp;</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=64>
<P>&nbsp;</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=84>
<P>&nbsp;</P></TD>
<TD width=12>
<P>&nbsp;</P></TD>
<TD width=82>
<P>&nbsp;</P></TD>
<TD vAlign=top width=9>
<P>&nbsp;</P></TD>
<TD width=72>
<P>&nbsp;</P></TD>
<TD vAlign=top width=26>
<P>&nbsp;</P></TD></TR>
<TR>
<TD width=194>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Expenditures
for long-lived assets</P></TD>
<TD width=73>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>-</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=64>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>3</P></TD>
<TD width=5>
<P>&nbsp;</P></TD>
<TD width=84>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>102</P></TD>
<TD width=12>
<P>&nbsp;</P></TD>
<TD width=82>
<P>&nbsp;</P></TD>
<TD vAlign=top width=9>
<P>&nbsp;</P></TD>
<TD width=72>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>105</P></TD>
<TD vAlign=top width=26>
<P>&nbsp;</P></TD></TR></TABLE>
<P style="MARGIN: 0px; LINE-HEIGHT: 12.95pt"><BR></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 12.95pt"><B>(1)</B>
$(16,555) in inter-company profit was eliminated in consolidation.</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 12.95pt"><BR></P>
<P
style="PADDING-RIGHT: 96px; MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -17px; LINE-HEIGHT: 13pt"><B>13.
</B></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"><B>DISCONTINUED
OPERATION</B></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=justify>Changchun Chengde Automobile Air-Conditioner Co., Limited, the
Company's wholly owned air-condition factory that makes units for small trucks,
ceased its business in May 2008. &nbsp;The results of operations are recorded
under the discontinued operations amounting $8,132 and $4,066 for the six months
ended June 30, 2008 and 2007 respectively.</P>
<P style="MARGIN: 0px"><BR></P>
<P style="MARGIN: 0px"><BR></P>
<P
style="PADDING-RIGHT: 96px; MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -17px; LINE-HEIGHT: 13pt"><B>14.
</B></P>
<P
style="PADDING-RIGHT: 96px; FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"><B>SUBSEQUENT
EVENT</B></P>
<P style="MARGIN: 0px"><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: 7px; LINE-HEIGHT: 13pt"
align=justify>On July 23, 2008, the company complete financing of $252,029
&nbsp;whereby the company issued 56,006 shares of &nbsp;restricted Common Stock,
no par value (the &#147;<U>Common Stock</U>&#148;), and warrants (the &#147;<U>Warrants</U>&#148;)
to purchase shares of the Company&#146;s Common Stock, (36,404 warrants are
exercisable at $7.00 per share and 19,602 warrants are exercisable $9.00 per
shares).</P>
<P style="MARGIN: 0px"><BR></P>
<P style="MARGIN: 0px" align=center>- 19 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B></P>
<P style="MARGIN: 0px">&nbsp;</P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -17px; LINE-HEIGHT: 13pt"><B>ITEM
&nbsp;2.</B></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 96px; LINE-HEIGHT: 13pt"><B>MANAGEMENT&#146;S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</B></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">DISCLAIMER REGARDING
FORWARD LOOKING STATEMENTS</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">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. &nbsp;We caution you not to place undue reliance
on these forward-looking statements. &nbsp;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. </P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"><B>Overview</B></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">We
are an engineering, contract manufacturing and direct manufacturing company,
primarily servicing 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 &#147;middle man,&#148; 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. </P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">We
feel that as a contract manufacturer, we are 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&#146; 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&#146; 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. </P>
<P style="MARGIN: 0px"><BR></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">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. During the first
quarter of 2005, we acquired the assets of Chengde, a factory that manufactures
automobile air </P>
<P style="MARGIN: 0px"><BR><BR></P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 20 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">conditioning units,
and in the fourth quarter of 2005, we established 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. 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, as of March 31, 2008, we own
and operate three 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. &nbsp;In January,
2008 we established an Energy Division that focuses on solar modules and the
development of our brand.. The establishment of these factories, including asset
purchases and factory upgrades, was funded primarily 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. 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. </P>
<P style="MARGIN: 0px"><BR></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">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.</P>
<P style="MARGIN: 0px"><BR></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">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
representing approximately 30% of our business. The electronics product lines
now account for approximately 16% of our business as compared to approximately
6% in 2005. &nbsp;Solar module now represents 47% of our business and we expect
this percentage to continue to increase in the foreseeable future.</P>
<P style="MARGIN: 0px"><BR></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"><FONT
style="BACKGROUND-COLOR: #ffffff">Generally, our operating results have been,
and will continue to be, affected by a number of factors, including the
following: </FONT></P>
<P style="MARGIN: 0px"><BR></P>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0>
<TR style="FONT-SIZE: 0px" height=0>
<TD width=64></TD>
<TD width=25></TD>
<TD width=524></TD></TR>
<TR>
<TD vAlign=top width=64>
<P style="FONT-SIZE: 11pt; MARGIN: 0px">&nbsp;</P></TD>
<TD vAlign=top width=25>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">&#149;&nbsp;</P></TD>
<TD vAlign=top width=524>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">our customers
may cancel or delay orders or change production quantities;</P></TD></TR>
<TR>
<TD width=64>
<P style="FONT-SIZE: 11pt; MARGIN: 0px">&nbsp;</P></TD>
<TD width=25>
<P>&nbsp;</P></TD>
<TD width=524>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=64>
<P style="FONT-SIZE: 11pt; MARGIN: 0px">&nbsp;</P></TD>
<TD vAlign=top width=25>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">&#149;&nbsp;</P></TD>
<TD vAlign=top width=524>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">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;</P></TD></TR>
<TR>
<TD width=64>
<P style="FONT-SIZE: 11pt; MARGIN: 0px">&nbsp;</P></TD>
<TD width=25>
<P>&nbsp;</P></TD>
<TD width=524>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=64>
<P style="FONT-SIZE: 11pt; MARGIN: 0px">&nbsp;</P></TD>
<TD vAlign=top width=25>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">&#149;&nbsp;</P></TD>
<TD vAlign=top width=524>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">integration of
acquired businesses and facilities;&nbsp;and</P></TD></TR>
<TR>
<TD width=64>
<P style="FONT-SIZE: 11pt; MARGIN: 0px">&nbsp;</P></TD>
<TD width=25>
<P>&nbsp;</P></TD>
<TD width=524>
<P>&nbsp;</P></TD></TR>
<TR>
<TD vAlign=top width=64>
<P style="FONT-SIZE: 11pt; MARGIN: 0px">&nbsp;</P></TD>
<TD vAlign=top width=25>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">&#149;&nbsp;</P></TD>
<TD vAlign=top width=524>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">managing growth
and changes in our operations.</P></TD></TR></TABLE>
<P
style="MARGIN-TOP: 7px; FONT-SIZE: 11pt; MARGIN-BOTTOM: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"><FONT
style="BACKGROUND-COLOR: #ffffff">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. </FONT></P>
<P style="MARGIN: 0px"><BR></P>
<P style="MARGIN: 0px"><BR><BR></P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 21 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>&nbsp;</P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"><B>Results of
Operations</B></P>
<P style="MARGIN: 0px"><BR></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">Net
sales for the three months ending June 30, 2008 were $6,854,953 compared to net
sales of $2,570,041 for the same period in 2007. This increase of $4,284,912, or
approximately 166.7%, was the result of an increase in orders in our energy
division of approximately $3,284,770 for solar modules and an increase in our
die cast factory of approximately $300,000 which was the result of obtaining an
order from Shanghai GM on March 24, 2008. The shipping volume of this order from
Shanghai GM is valued at $183,357 per month or $2.2 million annually. Shanghai
GM is one of the largest vehicle manufacturers in China and GM is the seventh
Fortune 500 customer obtained by Worldwide Energy. &nbsp;This order is for the
production of a number of General Motors&#146; automobile parts on a monthly basis,
including 20,000 sets of base brackets; 20,000 sets of offset bushes; 50,000
sets of water pumps; and 20,000 sets of oil pumps. &nbsp;</P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Additionally,
revenues increased in the quarter due to greater sales for the company's
electronic factory where demand for electronic components continues to
increase.</P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">&nbsp;&nbsp;</P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Net sales for the six
month period ending June 30, 2008 was $12,245,410 compared to sales of
$5,233,563 in six month period ending June 30, 2007. &nbsp;The increase of
$7,011,847 or approximately 134% was the result of an increase in orders in our
energy division of approximately $5,790,747 for solar modules which represent
approximately 47% of the company's gross sales in the six month period ending
June 30, 2008. Additionally, the company obtained an order for its die cast
factory from Shanghai GM on March 24, 2008 where revenues are approximately
$183,357 per month. For the six month period the Shanghai GM order has generated
$1,265,000 in sales. The company will continue to focus its efforts in the
energy division where we feel that there will be continued strong demand in
renewable, clean energy. Additionally, the company plans to expand its
electronic division to include power supply units for industrial and commercial
uses</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">Gross
profit increased by $399,712, or approximately 42.7% from $936,047 in the
quarter ending June 30, 2007 to $1,335,759 for the three months ending June 30,
2008, reflecting &nbsp;solar module sales in the energy division and the order
from Shanghai GM. &nbsp;For the six months ending June 30, 2008 gross profit was
$2,490,156 compared to gross profit of $1,672,443 in the same period in 2007.
This represents an increase of $817,713 or approximately 48.9% due to our energy
division and our Shanghai GM order. </P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"><BR>Cost
of goods sold for the three months ended June 30, 2008 was $5,519,194 compared
to $1,633,994 for the same period in 2007. &nbsp;The increase of $3,885,200 or
approximately 237.7% was the result of greater revenues in the energy division
and our die cast factory. Cost of goods sold for the six months ended June 30,
2008 was $9,755,254 compared to $3,561,120 for the same period in 2007.
&nbsp;The increase of $6,194,134 or approximately 173.9% was the result of
greater revenues in the energy division and the new order by Shanghai GM for our
die cast factory.</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">The
gross margin was 19.5% for the three months ending June 30, 2008 compared to
36.4% in the same period in 2007. The declined of 16.9% in gross margin was the
result of the company utilizing more sub-contractors for production of our solar
modules. &nbsp;The gross margin was 20.3% for the six months ending June 30,
2008 compared to 31.9% in the same period in 2007. &nbsp;The declined of 11.6%
in gross margin was the result of the company utilizing more sub-contractors for
production of our solar modules. It is expected that gross margins will continue
to improve as the company continues its transition of becoming a direct
manufacturer for its products.</P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">&nbsp;</P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">Net
income before tax for the three months ending June 30, 2008 was $445,290
compared to a profit of $226,134 for the three months ended June 30, 2007. The
increase of $219,156 or approximately 96.9% was the result of new orders for our
energy division and die cast factory as described above. &nbsp;For the six month
period net income was $655,527 compared to net income of $338,815 in the same
period in 2007. The increase of $316,712 or approximately 100.3% was the result
of the new orders in solar and die </P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 22 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">cast business
segments. Additionally, there was a non-cash deduction of $110,000 for stock
based compensation in 2008 compared to no stock compensation in the periods of
2007.</P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">&nbsp;</P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">General
and administration expenses for the three months ended June 30, 2008, totaled
$777,345 compared to $677,465 in the same quarter in 2007. The increase of
$99,880 or approximately 14.7% was due to the establishment of our energy
division. For the six month period ending June 30, 2008 general and
administration expenses was $1,476,518 compared to $1,198,835 in the same period
in 2007. This increase of $277,683 or approximately 23.2% reflects the
establishment of our energy division.</P>
<P
style="MARGIN-TOP: 6px; FONT-SIZE: 11pt; MARGIN-BOTTOM: 6px; LINE-HEIGHT: 13pt">LIQUIDITY</P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"
align=justify>Historically, we have funded our operations and supported our
growth with cash provided by our net income, loans from Jimmy and Mindy Wang,
our principal stockholders and the revolving line of credit with Golden Gate
Bank and previously Wells Fargo Bank. &nbsp;On May 20, 2008 the Company paid off
its line of credit with Wells Fargo in the amount of $960,000 and established a
new credit facility with Bank of the West. Under the terms of a 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. &nbsp;The revolving line of credit is secured by the assets of
the company and guaranteed by its officers<FONT style="COLOR: #00007f">.
</FONT>On August 01, 2008 the amount used on the line of credit was
$1,109,118.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">At
August 01, 2008 there is $1,915,882 is still available at an interest rate of
5.0%. In addition, net profits of the Company will be used to provide capital
for the expansion of inventory held for the convenience of customers, and for
acquiring additional equipment, if needed. The Company has raise approximately,
$4,747,970 on June 23, 2008 and an additional $252,027 on July 24, 2008 for a
total of approximately 5 million dollars which the company nettled after
offering expenses $4,586,916 The company issued 1,111,109 restricted common
shares along with warrants to purchase an additional 1,111,109 warrants with
722,221 having an excise 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 and
to provide additional working capital to expand and develop the company's
business segments.</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">&nbsp;Net
cash flows provided by financing activities for the six month period ending June
30, 2008 was $3,035,666 compared to $749,239 &nbsp;&nbsp;which reflect the
company raising capital through equity with net proceeds in the amount of
$4,356,009. On June 23, 2008 the company issued 1,055,103 restricted common
shares to certain accredited investors along with warrants to purchase 1,055,103
common shares of which 685,817 have an excise price of $7.00 and 369,286 of
those warrants have an excise price of $9.00 that expire in June 23, 2011. Net
cash used in operating activities was $2,503,783 compared in net cash used in
operating activity of $1,176,844 as accounts receivable and inventories increase
due to new order in our solar division. The effect of exchange rates was 126,509
compared to $32,945 in the six month period of June 30, 2007 as the RMB
continues to appreciate against the dollars. Net cash used in investing
activities was $1,030,526 for the six month period ending June 30, 2008 compared
to $105,637 for net cash used in investing activities. The increase reflects
further expansion of the company. The balance of the stockholder loan was
$413,352 for period ending June 30, 2008 compared to $959,264 in the same period
in June 30, 2007. </P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">&nbsp;</P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">PLAN OF OPERATION</P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">In
August 2005, we established Intech Electronics, our electronics factory, which
operates as a division of Shanghai Intech. In connection with the establishment
of this factory, we purchased approximately $250,000 worth of electronics
equipment from Opel Technology, one of our former electronics vendors. The total
cost to set up this factory was $290,000, including the equipment purchase.</P>
<P style="MARGIN: 0px"><BR></P>
<P style="MARGIN: 0px"><BR><BR></P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 23 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">In
October 2005, we established Intech Precision, our die-casting and machining
factory. We purchased certain assets owned by the former majority owner of the
factory for $500,000, which amount is payable in March 2008 and hired that owner
as the general manager of our factory. We began operating this factory in
December 2005.</P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">In January 2008, the
Company established a new energy division that will focus on the manufacturing
and development of solar modules. The Company plans on continuing to expand its
presences in this sector along with further development of its own brand.
Additionally, the company will explore acquisitions in this sector in the near
future.</P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">The Company raised
$4,747,970 in the second quarter and an additional $252,027 on July 24, 2008 in
order to expand its solar division. These funds were obtained from institutions
and accredited investors. Additionally, the Company plans on adding an
additional factory in the power supply industry in 2008.</P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Moreover, the Company
has closed its air-conditioner factory, Chengde, where sales and profit have
declined in the previous periods in order to focus on its new products.</P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"><B>Off-Balance Sheet
Arrangements </B></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 32px; LINE-HEIGHT: 13pt">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. </P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"><B>Critical
Accounting Policies, Estimates and Judgments </B></P>
<P style="MARGIN: 0px"><BR></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">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. </P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">We
believe the following critical accounting policies reflect the more significant
judgments and estimates used in the preparation of our consolidated financial
statements: </P>
<P style="MARGIN: 0px"><BR></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"><I>Property,
plant and equipment </I></P>
<P style="MARGIN: 0px"><BR></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">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&#146;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.&nbsp;</P>
<P style="MARGIN: 0px"><BR></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"><I>Inventories
</I></P>
<P style="MARGIN: 0px"><BR></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">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 December
31, 2007 and 2006 was minimal. &nbsp;&nbsp;</P>
<P style="MARGIN: 0px"><BR><BR></P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 24 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center>&nbsp;</P>
<P style="MARGIN: 0px"><BR></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"><I>Revenue
Recognition </I></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">We
recognize revenues in accordance with the guidelines of the Securities and
Exchange Commission (&#147;SEC&#148;) Staff Accounting Bulletin (&#147;SAB&#148;) No. 104 &#147;Revenue
Recognition&#148;. 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. &nbsp;Revenue from non-refundable customer
tooling deposits is recognized when the materials are shipped or when the
deposit is forfeited, whichever is earlier.</P>
<P style="MARGIN: 0px"><BR></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt"><I>Foreign
Currency Transactions and Translation </I></P>
<P style="MARGIN: 0px"><BR></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">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.</P>
<P style="MARGIN: 0px"><BR></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">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.</P>
<P style="MARGIN: 0px"><BR></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">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.</P>
<P style="MARGIN: 0px" align=justify><BR></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 12.95pt"><BR></P>
<P style="MARGIN: 0px">&nbsp;</P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 25 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -17px; LINE-HEIGHT: 13pt"><B>ITEM
3.</B></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 76px; LINE-HEIGHT: 13pt"><B>CONTROLS
AND PROCEDURES</B></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13.85pt">The
Securities and Exchange Commission defines the term disclosure controls and
procedures to mean a company&#146;s controls and other procedures that are designed
to ensure that information required to be disclosed in the reports that it files
or submits under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission&#146;s rules and forms. &nbsp;&nbsp;The Company maintains such a
system of controls and procedures in an effort to ensure that all information
which it is required to disclose in the reports it files under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified under the SEC's rules and forms. </P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px">&nbsp;</P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13.85pt">Based
on an evaluation performed, the Company's certifying officers have concluded
that the disclosure controls and procedures were effective as of&nbsp;June 30,
2008, to provide reasonable assurance of the achievement of these
objectives.</P>
<P style="MARGIN: 0px"><BR></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">There
was no change in the Company's internal control over financial reporting during
the period ended&nbsp;June 30, 2008, that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"><B>PART II.
&nbsp;OTHER INFORMATION</B></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -20px; LINE-HEIGHT: 15pt">Item
1.</P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 96px; LINE-HEIGHT: 13pt">Legal
Proceedings</P>
<P
style="PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">None</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -20px; LINE-HEIGHT: 15pt">Item
2.</P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 96px; LINE-HEIGHT: 13pt">Unregistered
Sales of Equity Securities and Use of Proceeds</P>
<P
style="PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">None
</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -20px; LINE-HEIGHT: 15pt">Item
3.</P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 96px; LINE-HEIGHT: 13pt">Defaults
upon Senior Securities</P>
<P
style="PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">None
</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -20px; LINE-HEIGHT: 15pt">Item
4.</P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 96px; LINE-HEIGHT: 13pt">Submission
of Matters to a Vote of Security Holders</P>
<P
style="PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">None</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -20px; LINE-HEIGHT: 15pt">Item
5.</P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 96px; LINE-HEIGHT: 13pt">Other
Information</P>
<P
style="PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">None</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P style="MARGIN: 0px; TEXT-INDENT: 302px">- 26 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><BR>&nbsp;</P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -20px; LINE-HEIGHT: 15pt">Item
6.</P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 96px; LINE-HEIGHT: 13pt">Exhibits</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">The
following exhibits are filed herewith:</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P
style="MARGIN-TOP: 0px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -21px; TEXT-INDENT: 48px; LINE-HEIGHT: 16pt">3.1</P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -20px; TEXT-INDENT: -48px; LINE-HEIGHT: 15pt">3.1</P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -20px; LINE-HEIGHT: 15pt">Articles
of Incorporation (incorporated by reference from Registration Statement </P>
<P
style="PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 480px; LINE-HEIGHT: 13pt">on
Form 10-SB filed with the Securities and Exchange Commission on October 11,
2000).</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -20px; TEXT-INDENT: -48px; LINE-HEIGHT: 15pt">3.2</P>
<P
style="PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Bylaws
(incorporated by reference from Registration Statement on Form 10-SB filed with
the Securities and Exchange Commission on October 11, 2000).</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -20px; TEXT-INDENT: -48px; LINE-HEIGHT: 15pt">4.1</P>
<P
style="PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">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).</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -20px; TEXT-INDENT: -48px; LINE-HEIGHT: 15pt">4.2</P>
<P
style="PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">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).</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -20px; TEXT-INDENT: -48px; LINE-HEIGHT: 15pt">10.1</P>
<P
style="PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Common
Stock Purchase Warrant (incorporated by reference from Form 10-KSB filed with
the Securities and Exchange Commission on September 27, 2001).</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -20px; TEXT-INDENT: -48px; LINE-HEIGHT: 15pt">14.</P>
<P
style="PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Code
of Ethics (incorporated by reference from Form 10-KSB filed with the Securities
and Exchange Commission on March 31, 2005).</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -20px; TEXT-INDENT: -48px; LINE-HEIGHT: 15pt">31.1
</P>
<P
style="PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Certifications
pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of
1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -20px; TEXT-INDENT: -48px; LINE-HEIGHT: 15pt">31.2
</P>
<P
style="PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Certifications
pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of
1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.</P>
<P style="MARGIN: 0px; LINE-HEIGHT: 13pt"><BR></P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -20px; TEXT-INDENT: -48px; LINE-HEIGHT: 15pt">32.1
</P>
<P
style="PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Certifications
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section &nbsp;906 of
the Sarbanes-Oxley Act of 2002.</P>
<P
style="PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: -48px; LINE-HEIGHT: 13pt">&nbsp;</P>
<P
style="MARGIN-TOP: 0px; PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN-BOTTOM: -20px; TEXT-INDENT: -48px; LINE-HEIGHT: 15pt">32.2
</P>
<P
style="PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Certifications
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.</P>
<P
style="FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: 48px; LINE-HEIGHT: 13pt">&nbsp;</P>
<P style="MARGIN: 0px"><BR></P>
<P style="MARGIN: 0px" align=center>- 27 -</P>
<P style="MARGIN: 0px"><BR></P>
<HR style="MARGIN-TOP: 9px; MARGIN-BOTTOM: 9px" noShade SIZE=1>
<P
style="FONT-SIZE: 11pt; PAGE-BREAK-BEFORE: always; MARGIN: 0px; LINE-HEIGHT: 13pt"
align=center><B>&nbsp;</B></P>
<P style="MARGIN: 0px">&nbsp;</P>
<P
style="PADDING-LEFT: 48px; FONT-SIZE: 11pt; MARGIN: 0px; TEXT-INDENT: -48px; LINE-HEIGHT: 11pt"><B>SIGNATURES</B></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">In accordance with
the requirements of the Exchange Act, the registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.</P>
<P style="MARGIN: 0px"><BR></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt"><B>WORLDWIDE ENERGY
AND MANUFACTURING USA, INC.</B></P>
<P style="MARGIN: 0px"><BR><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">By<U>: /S/ JIMMY
WANG</U></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">&nbsp;Jimmy Wang, CEO
and Director</P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Date: &nbsp;August
19, 2008</P>
<P style="MARGIN: 0px"><BR></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">By<U>: /S/ JEFF
WATSON</U></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">&nbsp;Jeff Watson,
President</P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Date: &nbsp;August
19, 2008</P>
<P style="MARGIN: 0px"><BR></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">By<U>: /S/ MINDY
WANG</U></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Mindy Wang,
Secretary, Treasurer and a director</P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Date: August 19,
2008</P>
<P style="MARGIN: 0px"><BR></P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">By<U>: /S/ JOHN
BALLARD</U></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">John Ballard, Chief
Financial Officer / Principal Accounting Officer</P>
<P style="MARGIN: 0px"><BR></P>
<P style="FONT-SIZE: 11pt; MARGIN: 0px; LINE-HEIGHT: 13pt">Date: August 19,
2008</P>
<P style="MARGIN: 0px"><BR></P>
<P style="MARGIN: 0px"><BR></P>
<P style="MARGIN: 0px">&nbsp;</P>
<P style="MARGIN: 0px"><BR><BR></P>
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{"company-data": {"conformed-name": "WORLDWIDE ENERGY & MANUFACTURING USA INC", "cik": "0001111816", "assigned-sic": "3990", "irs-number": "841536519", "state-of-incorporation": "CO", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-31761", "film-number": "081026367"}, "business-address": {"street1": "408 N. CANAL STREET", "street2": "UNIT A & B", "city": "SAN FRANCISCO", "state": "CA", "zip": "94080", "phone": "(650) 794-9865"}, "mail-address": {"street1": "408 N. CANAL STREET", "street2": "UNIT A & B", "city": "SAN FRANCISCO", "state": "CA", "zip": "94080"}, "former-company": [{"former-conformed-name": "WORLDWIDE MANUFACTURING USA INC", "date-changed": "20031114"}, {"former-conformed-name": "TABATHA III INC", "date-changed": "20000413"}]}
wemu jun 08
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
X
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended June 30, 2008
_
TRANSITION REPORT UNDER 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 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   o
                                                                     Accelerated
Filer   x
Non-Accelerated
Filer   o (Do not check if a smaller reporting company)
Smaller reporting
company   o
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 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 August 10, 2008
Common Stock, no par value
3,188,473
- 1 -
PART 1 - FINANCIAL
INFORMATION
ITEM
1.
FINANCIAL
STATEMENTS
(a)
The
unaudited financial statements of registrant for the six months ended June 30,
2008, 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.
- 2 -
INDEX
Page
ITEM 1.
 FINANCIAL STATEMENTS
CONDENSED
CONSOLIDATED BALANCE SHEET
4
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
5
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
6
NOTES TO THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
7
ITEM
2.
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
20
ITEM
3.
CONTROLS
AND PROCEDURES
26
PART
II.  OTHER INFORMATION
26
EXHIBITS
26
SIGNATURES
28
- 3 -
WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30,
December 31,
2008
2007
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
1,739,692
$
2,111,825
Accounts
receivables, net of allowances of $42,371 and $130,528,
respectively
4,733,225
3,275,024
Inventories
3,795,606
2,333,148
Income tax receivable
68,918
82,131
Loan receivable
784,840
-
Advances to suppliers
224,428
260,540
Related parties payables
236,110
30,422
Prepaid and other current
assets
66,904
117,621
Total current assets
11,649,723
8,210,711
Property, plant and equipment, net
601,616
545,494
Deposits paid for investment
40,680
-
Other assets
6,636
6,636
Total assets
$
12,298,655
$
8,762,841
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
1,984,415
$
2,453,317
Lines of credit
523,702
1,758,584
Accrued expenses
105,828
156,524
Taxes payable
88,582
78,637
Current portion of long-term
debt
-
884
Total current liabilities
2,702,527
4,447,946
Non-current liabilities
Loan payable to
stockholders
414,235
498,812
Total liabilities
3,116,762
4,946,758
Stockholders' equity
Common stock (No Par Value :
100,000,000 shares authorized;
3,132,466 and
2,047,363 shares issued and outstanding, respectively)
4,736,755
270,746
Accumulated other comprehensive
income
539,665
295,225
Retained earnings
3,905,473
3,250,112
Total stockholders' equity
9,181,893
3,816,083
Total liabilities and stockholders' equity
$
12,298,655
$
8,762,841
See
accompanying notes to condensed consolidated financial statements.
- 4 -
WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME
(UNAUDITED)
For The Six Months Ended
For The Three Months Ended
June 30,
June 30,
2008
2007
2008
2007
Revenue
Regular sales, net of returns of $0
in 2008 and $0 in 2007
$
12,245,410
$
5,233,563
$
6,854,953
$
2,570,041
Cost of goods sold
9,755,254
3,561,120
5,519,194
1,633,994
Gross profit
2,490,156
1,672,443
1,335,759
936,047
Operating Expenses
Other selling, general and
administrative expenses
1,476,518
1,198,835
777,345
677,465
Stock based compensation
expense
110,000
-
-
-
Management
and professional fees paid to stockholders-(Note 10)
153,000
108,000
72,680
76,500
Depreciation
7,834
15,361
3,862
7,106
Total operating expenses
1,747,352
1,322,196
853,887
761,071
Net operating income
742,804
350,247
481,872
174,976
Other Income (expenses)
Interest income
3,950
1,388
2,812
696
Interest expenses
(73,088)
(29,881)
(38,703)
(6,141)
Interest expense paid to
stockholders (Note 10)
(17,446)
(12,250)
-
(12,250)
Other income
-
124,677
-
124,677
Exchange loss
(693)
(95,366)
(691)
(55,824)
Total other income (expenses)
(87,277)
(11,432)
(36,582)
51,158
Income from continuing operations
before income taxes
655,527
338,815
445,290
226,134
Income taxes benefit/
(expense)
(8,298)
(15,723)
(19,702)
(2,985)
Income from continuing operations
647,229
323,092
425,588
223,149
Income from discontinued operations, net of
tax
8,132
4,066
(553)
(5)
Net income
655,361
327,158
425,035
223,144
Other comprehensive income
Foreign currency
translation
244,440
32,945
146,017
49,241
Comprehensive income
899,801
360,103
$
571,052
$
272,385
Earnings per share
Continuing operations
0.29
0.16
$
0.20
$
0.11
Discontinued operations
0.00
0.00
0.00
0.00
Weighted average shares
outstanding
2,202,490
2,033,083
2,158,525
2,033,083
See
accompanying notes to the condensed consolidated financial statements.
- 5 -
WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For The Six Months Ended
June 30
2008
2007
Cash flows from operating activities
Net income
$
655,361
$
327,158
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation
63,407
43,675
Allowance for bad debts
(20,000)
-
Stock based compensation
expense
110,000
-
Stock issued for service
-
32,500
Changes in operating assets and liabilities:
Accounts receivable
(1,342,927)
(301,589)
Inventories
(1,428,840)
(420,005)
Income tax receivable
15,769
(18,451)
Loan receivable-affiliate
-
(17,962)
Advances to suppliers
69,565
(500,673)
Prepaid and other current
assets
(101,209)
20,766
Accounts payable
(475,019)
(379,328)
Accrued expense
(48,783)
37,065
Income tax payable
6,221
-
Receipt in advance
(7,328)
-
Net cash used in operating activities
(2,503,783)
(1,176,844)
Cash flows from investing activities
Loan to related parties
(816,704)
-
Capital expenditure
(173,142)
(105,637)
Deposits paid for investment in
subsidiaries
(40,680)
-
Net cash used in investing activities
(1,030,526)
(105,637)
Cash flows from financing activities
Proceeds from issuance of common
stock
4,356,009
-
Proceeds / repayment of
stockholders loan
(84,577)
438,126
Principal payments on long term
debt
(884)
-
Proceeds / repayment from lines
of credit
(1,234,882)
311,113
Proceeds from long term
note
-
-
Net cash flows provided by financing
activities:
3,035,666
749,239
Effect of exchange rate changes on cash
126,509
32,945
Net increase (decrease) in cash
(372,134)
(500,297)
Cash- beginning of period
2,111,825
1,439,801
Cash- end of period
$
1,739,691
$
939,504
Supplemental disclosure of non cash investing and
financing activities:
Stock based compensation
expense
$
110,000
$
-
Interest paid in cash
$
51,887
$
42,129
Income taxed paid in cash
$
35,758
$
41,392
See
accompanying notes to the condensed consolidated financial statements
- 6 -
WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
1.
MANAGEMENT'S
REPRESENTATION OF INTERIM FINANCIAL INFORMATION
The
accompanying 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, 2007 as filed in the Company
Form 10-KSB filed with the Commission on April 15, 2008.
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.
Description
of Business
Worldwide Energy and Manufacturing USA, Inc. (Worldwide, the
Company) is a manufacturing engineering firm and international contract
manufacturer, using factories in China.  Worldwide provides services to
several companies in the United States and European markets, primarily in the
solar, aerospace, automotive, and electronics industries.  Worldwide
employs thirty-three (33) staff engineers through its wholly owned subsidiary,
Shanghai Intech Electro-Mechanical Products Co., Ltd. (Intech).  Intech
provides technical advisory, design, delivery, material procurement, and
manufacturing quality control services.  Worldwide uses its engineers to
write the production and inspection procedures, manages the production process,
and conducts quality control audits as well as in-progress and final inspections
of the customers' products.
On
September 30, 2003, the Company, formerly known as Tabatha III, Inc., acquired
all of the issued and outstanding common stock of Worldwide Energy and
Manufacturing USA, Inc. (Worldwide USA), a privately held operating company, in
a share exchange transaction.  The Company issued 27,900,000 shares in the
share exchange transaction for 100%, or 10,000 shares, of the issued and
outstanding shares of Worldwide USA's common stock.  Immediately prior to
the acquisition, 10,762,000 shares of stock had been outstanding, and as part of
the acquisition arrangement, certain shareholders of Tabatha III, Inc. agreed to
surrender for cancellation a total of 8,662,000 common shares held by them.
 Total shares outstanding after the Worldwide USA acquisition were
30,000,000.  As a result of the share exchange transaction, Worldwide USA
became a wholly-owned subsidiary of the Company.  The parent company,
Tabatha III, Inc., changed its name to Worldwide Manufacturing USA, Inc. in
November, 2003. On February, 25, 2008 the company changed its name from
Worldwide Manufacturing USA, Inc. to Worldwide Energy and Manufacturing USA,
Inc. to focus on the renewable, clean energy sector.
- 7 -
WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
2.
SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
The
former stockholders of Worldwide USA acquired a majority of the issued and
outstanding common stock as a result of the share exchange transaction.
 The transaction has been accounted for as a recapitalization of Worldwide
USA, whereby Worldwide USA is the accounting acquirer.  The accompanying
financial statements reflect the financial position and operating results of the
Company for all periods presented.
On May
18, 2005, the Company formed a new company called Changchun Chengde Automobile
Air-Conditioner Co., Limited which is the manufacturer of automobile
air-conditioners. On November 14, 2005, the Company formed another company
called Shanghai Intech Precision Machinery Co., Ltd. which is engaged in the
manufacturing and trading of equipments. On February 2, 2007, the Company formed
another company called Shanghai Shutai Intech Precision Machinery Co., Ltd. All
those companies are the wholly owned subsidiaries of Worldwide Energy and
Manufacturing USA, Inc.
Principles
of Consolidation
The
accompanying financial statements include Worldwide Energy and Manufacturing
USA, Inc., a Colorado corporation (formerly Tabatha III, Inc.) and a public
company, its operating subsidiary, Worldwide USA, a California corporation, and
three subsidiary companies 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.
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 June 30, 2008 and December 31,
2007 was minimal.
- 8 -
WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
2.
SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
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.
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
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.
The
September 30, 2003 recapitalization of the Company qualifies as a reverse
acquisition under Section 1.1502-75(d)(3) of the Internal Revenue Code.
 Prior to this date, the stockholders of the Company had elected for it to
be taxed as a "Subchapter S" corporation.  Subsequent to the
recapitalization, the Company filed a consolidated tax return.
Intangibles
Patent
costs and other identifiable intangibles are capitalized and generally amortized
over useful lives of 15 years or less.  Effective in 2001, goodwill is
assessed for impairment annually and is not amortized.
Research
and Development
The
Company expenses the cost of research and development as incurred.  No
research and development costs were charged to operations during 2008 or 2007.
- 9 -
WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
2.
SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
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.
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.
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.
- 10 -
WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
2.
SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
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 June
30, 2008 and 2007, accounts receivable in the amounts of $1,809,735 and $805,289
respectively, were pledged as collateral in connection with bank loans.
Compensated
Absences
Employees of the Company are entitled to be compensated for
absences depending on job classification, length of service, and other factors.
 At June 30, 2008 and 2007, the minimal amounts unused by employees could
not be estimated, and accordingly, no provision is recorded.
Concentrations,
Risks, and Uncertainties
The
Company did not have concentration of business with suppliers constituting
greater than 8.5% of the Company's gross sales during 2008 while the company's
one largest supplier comprised 32% of its manufacturing cost during 2007.
The
Company's customers in the aerospace, telecommunications, automotive, and
electronics industries comprised the majority of its sales in 2007.  These
four industries counted for 60% of the Company's sales in 2007.  For the
six months ended June 30, 2008, 47% 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 June 30, 2008 and 2007, the balance of advances owed to the
Company is $224,428 and $260,540, respectively.
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 aerospace 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.
- 11 -
WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
2
.
SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
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,
"Accounting
for 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 Six
Months Ended
June 30, 2008
June 30, 2007
Weighted
average number of common shares used
2,202,490
2,033,083
Recent Accounting Pronouncements
SFAS
No. 141 (revised 2007),
"Business Combinations
("SFAS 141R")
In
December 2007, the FASB issued SFAS No. 141 (revised 2007), Business
Combinations ("SFAS 141R"). SFAS 141R establishes principles and
requirements for how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, any
noncontrolling interest in the acquiree and the goodwill acquired.
SFAS 141R also establishes disclosure requirements to enable the evaluation
of the nature and financial effects of the business combination. This statement
is effective for the Company beginning January 1, 2009. The Company is
currently evaluating the potential impact of the adoption of SFAS 141R on
its consolidated financial position, results of operations or cash flows.
SFAS
No. 160,
"Noncontrolling Interests in Consolidated Financial
Statements—an amendment of Accounting Research Bulletin No. 51" -
- 12 -
WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
2
.
SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements—an amendment of Accounting Research Bulletin
No. 51 ("SFAS 160"). SFAS 160 establishes accounting and
reporting standards for ownership interests in subsidiaries held by parties
other than the parent, the amount of consolidated net income attributable to the
parent and to the noncontrolling interest, changes in a parent's ownership
interest, and the valuation of retained noncontrolling equity investments when a
subsidiary is deconsolidated. SFAS 160 also establishes disclosure
requirements that clearly identify and distinguish between the interests of the
parent and the interests of the noncontrolling owners. This statement is
effective for the Company beginning January 1, 2009. The Company is
currently evaluating the potential impact of the adoption of SFAS 160 on
its consolidated financial position, results of operations or cash flows.
In May
2008, the FASB issued Statement of Financial Accounting Standards No. 162,
The Hierarchy
of
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 the
hierarchy 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.
Recent Accounting Pronouncements
(Continued)
In
April 2008, the FASB issued 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.
This Staff
Position is effective for financial statements issued for fiscal years beginning
after December 15, 2008, and interim periods within those fiscal years. Early
adoption is prohibited. Application of this FSP is not expected to have a
significant impact on the financial statements or (This FSP is not currently
applicable to the Company).
In June
2008, the FASB issued FSP EITF 03-6-1,
Determining Whether Instruments
Granted in 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. 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.
- 13 -
WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
2
.
SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
In May
2008, the FASB issued FASB Staff Position (FSP) APB 14-1,
Accounting for
Convertible Debt That May Be Settled in Cash upon Conversion (Including Partial
Cash Settlement)
("FSP 14-1"). FSP 14-1 will be effective for financial
statements issued for fiscal years beginning after December 15, 2008. The FSP
includes guidance that convertible debt instruments that may be settled in cash
upon conversion should be separated between the liability and equity components,
with each component being accounted for in a manner that will reflect the
entity's nonconvertible debt borrowing rate when interest costs are recognized
in subsequent periods. FSP 14-1 is not currently applicable to the Company since
the Company does not have convertible debt.
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 December 31, 2007, in the aggregate and for each of the five succeeding
fiscal years are as follows:
Year ended
December 31
2008
$
91,777
2009
203,298
2010
154,195
2011
131,660
2012
135,610
Total minimum
future rental payment
$
716,540
Total
rent and lease expense was $12,917 and $79,618 as of June 30, 2008 and 2007,
respectively.
4.
ACCOUNTS RECEIVABLE
Accounts receivable by major categories are summarized as
follows:
June 30, 2008
Accounts
Receivable – pledged to banks
$
1,809,735
Accounts
Receivable – others
2,969,031
4,778,766
Less:
allowances for doubtful accounts
45,541
Total
$
4,733,225
Under
the terms of a revolving line of credit agreement with Golden Gate Bank
indicated in note 7, the revolving line of credit is secured by 70% of accounts
receivable and all business assets of the company and guaranteed by its
officers.
- 14 -
WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
4.
ACCOUNTS RECEIVABLE (CONTINUED)
Concentrations in Accounts Receivable - At June 30, 2008, one
customer accounted for more than 10% of the Company's accounts receivable, with
total amounts of $2,539,464, representing 62% of total accounts receivable in
aggregate. At June 30, 2007, two customers accounted for more than 10% of the
Company's accounts receivable, with total amounts of $603,707, representing 23%
of total accounts receivable in aggregate
5.
INVENTORIES
Inventories by major categories are summarized as follows:
June 30, 2008
Raw
materials
$
175,522
Work in
progress
154,001
Finished
goods
1,820,065
Finished goods – pledged to the bank (refer to note
7)
1,646,018
3,795,606
Less:
allowances for slowing moving items
-
Total
$
3,795,606
6.
PROPERTY AND EQUIPMENT
Property and equipment, which is located in the USA and PRC,
consisted of the following at June 30, 2008:
June 30, 2008
Vehicles
$
174,663
Furniture & fixtures
83,918
Equipment
811,919
Software
35,461
1,105,961
Less: accumulated depreciation
(504,345)
Total
$
601,616
- 15 -
WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
7.
SHORT TERM LOAN
As of
June 30, 2008, the Company has the following line of credit:
Banker
Loan
period
Interest
rate
Secured
by
June 30, 2008
Bank of the
West
5/20/2008-5/20/2009
Wall Street
journal prime
70% Accounts
receivable + 50% inventory
$
523,702
On May
20, 2008 the Company paid off its line of credit with Wells Fargo in the amount
of $960,000 and established a new credit facility with Bank of the West. Under
the terms of a 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.  Funds from these borrowings may be used for any
purpose
The revolving line of credit is secured by the assets of the
company and guaranteed by its officers
.
On
August 01, 2008 the amount used on the line of credit was $1,109,118. At August
01, 2008 there is $1,915,882 is still available at an interest rate of 5.0%.
8.
STOCK
TRANSACTION
On January 1, 2008, the Company issued 10,000 shares of its common
stock to consultants and 20,000 shares of its common stock to an employee,
valued at $110,000, fair value, which is reflected in stock based compensation
expense. In addition, the Company's stock symbol changed from "WWMU" to "WEMU"
in the first quarter of 2008 to better reflect the company's change in focus to
the renewable clean energy sector.
On June 23, 2008, the Company received subscriptions for the sale
of an aggregate of $4,747,970.50 or 1,055,103 shares of common stock and the
Company received the net amount of $4,356,009 after the deduction of the
offering expenses of $391,961.50. Concurrently with the issuance of the Shares,
the Company also issued an aggregate of 685,817 Series A Warrants of the Company
(the "Series A Warrants") and an aggregate of 369,286 Series B Warrants of the
Company (the "Series B Warrants"). The Series A Warrants are exercisable for a
period of 24 months from closing at an exercise price of $7.00 per share. The
Series B Warrants are exercisable for a period of 36 months from the closing at
an exercise price of $9.00 per share. The Series A and Series B Warrants provide
the investors with full ratchet anti-dilution protection with relation to the
exercise price of the warrant for a period of 18 months from the closing. The
Series A and Series B Warrants may not be exercised if, after such exercise,
such holder would beneficially own, as determined in accordance with Section
13(d) of the Securities Exchange Act of 1934 and the rules and regulations
promulgated thereunder, more than 9.99% of the number of shares of common stock
then issued and outstanding.
- 16 -
WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
9.
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.
10.
RELATED PARTY TRANSACTIONS
The Company paid
wages in the amount of $153,000 and $108,000 to certain stockholders, who are
also members of the Board of Directors, as of June 30, 2008 and 2007
respectively.
Jimmy
and Mindy Wang, who are principal stockholders, executive officers and members
of the Board of Directors of the Company, have advanced funds to the Company for
working capital purposes.  At June 30, 2008, the Company owed Jimmy and
Mindy Wang $414,235.  The advances are interest bearing at 8% per annum,
with a default interest rate of 10%. All unpaid amounts on this note are due in
full on January 1, 2010.  The Company paid cash in the amount of $27,284
for interest expense to Mr. and Mrs. Wang for the six months ended June 30,
2008.
11.
OPERATING
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.
- 17 -
WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
11.
OPERATING
RISK (CONTINUED)
Foreign
currency risk
Most of
the transactions of the Company were settled in Renminbi, U.S. dollars and
Euros.  Thus, the company has significant foreign currency risk exposure.
Company's operations are substantially in foreign countries
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
12.
SEGMENT
INFORMATION
The
Company's operations are classified into four 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.
Changchun Chengde
Automobile Air-Conditioner Co., Limited ("Changchun Changde") sells automobile
air-conditioners while Shanghai Intech Precision Machinery Co., Ltd. sells
equipment.
Segmental
Data – 2008
Reportable Segments
(amounts
in thousands)
WWMUSA
Intech
Electro
Intech
Precision
Shutai
Precision
Discontinued Operations
Total
External
revenue
9,916
137
2,176
(830)
-
12,245
Intersegment
revenue
-
2,651
-
-
-
2,651
Interest
income
1
-
3
-
-
4
Interest
expense
(40)
(27)
(1)
(5)
-
(73)
Depreciation
(8)
(35)
(16)
(4)
(63)
Net profit
after tax
306
149
198
(6)
8
655
(1
)
Expenditures
for long-lived assets
12
111
-
50
173
(1)
$(26,521) in inter-company profit was eliminated in consolidation.
- 18 -
WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND
SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
12.
SEGMENT
INFORMATION (CONTINUED
)
Segmental
Data – 2007
Reportable Segments
(amounts
in thousands)
WWMUSA
Intech
Electro
Intech
Precision
Discontinued Operations
Total
External
revenue
4,244
78
911
5,233
Intersegment
revenue
-
1,306
-
1,306
Interest
income
1
-
1
Interest
expense
(30)
-
-
(30)
Depreciation
under administrative expenses
(7)
(7)
(2)
(43)
Net profit
after tax
(66)
187
98
4
223
(1)
Expenditures
for long-lived assets
-
3
102
105
(1)
$(16,555) in inter-company profit was eliminated in consolidation.
13.
DISCONTINUED
OPERATION
Changchun Chengde Automobile Air-Conditioner Co., Limited, the
Company's wholly owned air-condition factory that makes units for small trucks,
ceased its business in May 2008.  The results of operations are recorded
under the discontinued operations amounting $8,132 and $4,066 for the six months
ended June 30, 2008 and 2007 respectively.
14.
SUBSEQUENT
EVENT
On July 23, 2008, the company complete financing of $252,029
 whereby the company issued 56,006 shares of  restricted Common Stock,
no par value (the "
Common Stock
"), and warrants (the "
Warrants
")
to purchase shares of the Company's Common Stock, (36,404 warrants are
exercisable at $7.00 per share and 19,602 warrants are exercisable $9.00 per
shares).
- 19 -
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
We
are an engineering, contract manufacturing and direct manufacturing company,
primarily servicing 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.
We
feel that as a contract manufacturer, we are 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. During the first
quarter of 2005, we acquired the assets of Chengde, a factory that manufactures
automobile air
- 20 -
conditioning units,
and in the fourth quarter of 2005, we established 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. 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, as of March 31, 2008, we own
and operate three 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.  In January,
2008 we established an Energy Division that focuses on solar modules and the
development of our brand.. The establishment of these factories, including asset
purchases and factory upgrades, was funded primarily 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. 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.
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
representing approximately 30% of our business. The electronics product lines
now account for approximately 16% of our business as compared to approximately
6% in 2005.  Solar module now represents 47% 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.
- 21 -
Results of
Operations
Net
sales for the three months ending June 30, 2008 were $6,854,953 compared to net
sales of $2,570,041 for the same period in 2007. This increase of $4,284,912, or
approximately 166.7%, was the result of an increase in orders in our energy
division of approximately $3,284,770 for solar modules and an increase in our
die cast factory of approximately $300,000 which was the result of obtaining an
order from Shanghai GM on March 24, 2008. The shipping volume of this order from
Shanghai GM is valued at $183,357 per month or $2.2 million annually. Shanghai
GM is one of the largest vehicle manufacturers in China and GM is the seventh
Fortune 500 customer obtained by Worldwide Energy.  This order is for the
production of a number of General Motors' automobile parts on a monthly basis,
including 20,000 sets of base brackets; 20,000 sets of offset bushes; 50,000
sets of water pumps; and 20,000 sets of oil pumps.
Additionally,
revenues increased in the quarter due to greater sales for the company's
electronic factory where demand for electronic components continues to
increase.
Net sales for the six
month period ending June 30, 2008 was $12,245,410 compared to sales of
$5,233,563 in six month period ending June 30, 2007.  The increase of
$7,011,847 or approximately 134% was the result of an increase in orders in our
energy division of approximately $5,790,747 for solar modules which represent
approximately 47% of the company's gross sales in the six month period ending
June 30, 2008. Additionally, the company obtained an order for its die cast
factory from Shanghai GM on March 24, 2008 where revenues are approximately
$183,357 per month. For the six month period the Shanghai GM order has generated
$1,265,000 in sales. The company will continue to focus its efforts in the
energy division where we feel that there will be continued strong demand in
renewable, clean energy. Additionally, the company plans to expand its
electronic division to include power supply units for industrial and commercial
uses
Gross
profit increased by $399,712, or approximately 42.7% from $936,047 in the
quarter ending June 30, 2007 to $1,335,759 for the three months ending June 30,
2008, reflecting  solar module sales in the energy division and the order
from Shanghai GM.  For the six months ending June 30, 2008 gross profit was
$2,490,156 compared to gross profit of $1,672,443 in the same period in 2007.
This represents an increase of $817,713 or approximately 48.9% due to our energy
division and our Shanghai GM order.
Cost
of goods sold for the three months ended June 30, 2008 was $5,519,194 compared
to $1,633,994 for the same period in 2007.  The increase of $3,885,200 or
approximately 237.7% was the result of greater revenues in the energy division
and our die cast factory. Cost of goods sold for the six months ended June 30,
2008 was $9,755,254 compared to $3,561,120 for the same period in 2007.
 The increase of $6,194,134 or approximately 173.9% was the result of
greater revenues in the energy division and the new order by Shanghai GM for our
die cast factory.
The
gross margin was 19.5% for the three months ending June 30, 2008 compared to
36.4% in the same period in 2007. The declined of 16.9% in gross margin was the
result of the company utilizing more sub-contractors for production of our solar
modules.  The gross margin was 20.3% for the six months ending June 30,
2008 compared to 31.9% in the same period in 2007.  The declined of 11.6%
in gross margin was the result of the company utilizing more sub-contractors for
production of our solar modules. It is expected that gross margins will continue
to improve as the company continues its transition of becoming a direct
manufacturer for its products.
Net
income before tax for the three months ending June 30, 2008 was $445,290
compared to a profit of $226,134 for the three months ended June 30, 2007. The
increase of $219,156 or approximately 96.9% was the result of new orders for our
energy division and die cast factory as described above.  For the six month
period net income was $655,527 compared to net income of $338,815 in the same
period in 2007. The increase of $316,712 or approximately 100.3% was the result
of the new orders in solar and die
- 22 -
cast business
segments. Additionally, there was a non-cash deduction of $110,000 for stock
based compensation in 2008 compared to no stock compensation in the periods of
2007.
General
and administration expenses for the three months ended June 30, 2008, totaled
$777,345 compared to $677,465 in the same quarter in 2007. The increase of
$99,880 or approximately 14.7% was due to the establishment of our energy
division. For the six month period ending June 30, 2008 general and
administration expenses was $1,476,518 compared to $1,198,835 in the same period
in 2007. This increase of $277,683 or approximately 23.2% reflects the
establishment of our energy division.
LIQUIDITY
Historically, we have funded our operations and supported our
growth with cash provided by our net income, loans from Jimmy and Mindy Wang,
our principal stockholders and the revolving line of credit with Golden Gate
Bank and previously Wells Fargo Bank.  On May 20, 2008 the Company paid off
its line of credit with Wells Fargo in the amount of $960,000 and established a
new credit facility with Bank of the West. Under the terms of a 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.  The revolving line of credit is secured by the assets of
the company and guaranteed by its officers
.
On August 01, 2008 the amount used on the line of credit was
$1,109,118.
At
August 01, 2008 there is $1,915,882 is still available at an interest rate of
5.0%. In addition, net profits of the Company will be used to provide capital
for the expansion of inventory held for the convenience of customers, and for
acquiring additional equipment, if needed. The Company has raise approximately,
$4,747,970 on June 23, 2008 and an additional $252,027 on July 24, 2008 for a
total of approximately 5 million dollars which the company nettled after
offering expenses $4,586,916 The company issued 1,111,109 restricted common
shares along with warrants to purchase an additional 1,111,109 warrants with
722,221 having an excise 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 and
to provide additional working capital to expand and develop the company's
business segments.
Net
cash flows provided by financing activities for the six month period ending June
30, 2008 was $3,035,666 compared to $749,239   which reflect the
company raising capital through equity with net proceeds in the amount of
$4,356,009. On June 23, 2008 the company issued 1,055,103 restricted common
shares to certain accredited investors along with warrants to purchase 1,055,103
common shares of which 685,817 have an excise price of $7.00 and 369,286 of
those warrants have an excise price of $9.00 that expire in June 23, 2011. Net
cash used in operating activities was $2,503,783 compared in net cash used in
operating activity of $1,176,844 as accounts receivable and inventories increase
due to new order in our solar division. The effect of exchange rates was 126,509
compared to $32,945 in the six month period of June 30, 2007 as the RMB
continues to appreciate against the dollars. Net cash used in investing
activities was $1,030,526 for the six month period ending June 30, 2008 compared
to $105,637 for net cash used in investing activities. The increase reflects
further expansion of the company. The balance of the stockholder loan was
$413,352 for period ending June 30, 2008 compared to $959,264 in the same period
in June 30, 2007.
PLAN OF OPERATION
In
August 2005, we established Intech Electronics, our electronics factory, which
operates as a division of Shanghai Intech. In connection with the establishment
of this factory, we purchased approximately $250,000 worth of electronics
equipment from Opel Technology, one of our former electronics vendors. The total
cost to set up this factory was $290,000, including the equipment purchase.
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In
October 2005, we established Intech Precision, our die-casting and machining
factory. We purchased certain assets owned by the former majority owner of the
factory for $500,000, which amount is payable in March 2008 and hired that owner
as the general manager of our factory. We began operating this factory in
December 2005.
In January 2008, the
Company established a new energy division that will focus on the manufacturing
and development of solar modules. The Company plans on continuing to expand its
presences in this sector along with further development of its own brand.
Additionally, the company will explore acquisitions in this sector in the near
future.
The Company raised
$4,747,970 in the second quarter and an additional $252,027 on July 24, 2008 in
order to expand its solar division. These funds were obtained from institutions
and accredited investors. Additionally, the Company plans on adding an
additional factory in the power supply industry in 2008.
Moreover, the Company
has closed its air-conditioner factory, Chengde, where sales and profit have
declined in the previous periods in order to focus on its new products.
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 December
31, 2007 and 2006 was minimal.
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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.
- 25 -
ITEM
3.
CONTROLS
AND PROCEDURES
The
Securities and Exchange Commission defines the term disclosure controls and
procedures to mean a company's controls and other procedures that are designed
to ensure that information required to be disclosed in the reports that it files
or submits under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms.   The Company maintains such a
system of controls and procedures in an effort to ensure that all information
which it is required to disclose in the reports it files under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified under the SEC's rules and forms.
Based
on an evaluation performed, the Company's certifying officers have concluded
that the disclosure controls and procedures were effective as of June 30,
2008, to provide reasonable assurance of the achievement of these
objectives.
There
was no change in the Company's internal control over financial reporting during
the period ended June 30, 2008, that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting
PART II.
 OTHER INFORMATION
Item
1.
Legal
Proceedings
None
Item
2.
Unregistered
Sales of Equity Securities and Use of Proceeds
None
Item
3.
Defaults
upon Senior Securities
None
Item
4.
Submission
of Matters to a Vote of Security Holders
None
Item
5.
Other
Information
None
- 26 -
Item
6.
Exhibits
The
following exhibits are filed herewith:
3.1
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).
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.
Code
of Ethics (incorporated by reference from Form 10-KSB filed with the Securities
and Exchange Commission on March 31, 2005).
31.1
Certifications
pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of
1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
31.2
Certifications
pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of
1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
32.1
Certifications
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section  906 of
the Sarbanes-Oxley Act of 2002.
32.2
Certifications
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
- 27 -
SIGNATURES
In accordance with
the requirements of the Exchange Act, the registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
WORLDWIDE ENERGY
AND MANUFACTURING USA, INC.
By
: /S/ JIMMY
WANG
Jimmy Wang, CEO
and Director
Date:  August
19, 2008
By
: /S/ JEFF
WATSON
Jeff Watson,
President
Date:  August
19, 2008
By
: /S/ MINDY
WANG
Mindy Wang,
Secretary, Treasurer and a director
Date: August 19,
2008
By
: /S/ JOHN
BALLARD
John Ballard, Chief
Financial Officer / Principal Accounting Officer
Date: August 19,
2008
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