W&E Source Corp. - Quarter Report: 2012 March (Form 10-Q)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012 or

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

For the transition period from __________ to __________

Commission File Number: 000-52276

W&E Source Corp.
(Exact name of registrant as specified in its charter)

113 Barksdale Professional Center, Newark, DE 19711
(Address of principal executive offices) (Zip Code)

(302) 722-6266
(Registrant’s telephone number, including area code)

News of China, Inc.
(Former name of Registrant)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [X]     No [   ]

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
47,900,000 shares of common stock issued and outstanding as of May 14, 2012.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

W&E Source Corp.
(Formerly News of China, Inc.)
(A Developmental Stage Company)
Consolidated Balance Sheets
(Unaudited)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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W&E Source Corp.
(Formerly News of China, Inc.)
(A Development Stage Company)
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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W&E Source Corp.
(Formerly News of China, Inc.)
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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W&E Source Corp.
(Formerly News of China, Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)

Note 1 – Organization, Nature of Operations and Basis of Presentation

W&E Source Corp. (“the Company”) was incorporated in the State of Delaware on October 11, 2005 and is based in Montréal, Québec, Canada. The Company is a development stage enterprise and its main activities to date have been developing a market for its services.

In January 2012, the Company changed its name from News of China, Inc. to W&E Source Corp. and increased its authorized shares to 500,000,000 common shares.

On August 25, 2011, the Company incorporated a company called Airchn Travel Global, Inc. (“ATGI”) in the State of Washington, USA. ATGI is a wholly owned subsidiary of the Company. ATGI focuses on a business segment of travel businesses which includes air ticket reservations, hotel reservations and other travel services.

On October 4, 2011, the Company incorporated a company called Airchn Travel (Canada) Inc. (“ATCI”) in the Province of British Columbia, Canada. ATCI is a wholly owned subsidiary of ATGI. ATCI has a similar business segment as ATGI.

On May 2, 2012, the Company incorporated a company named Airchn Travel (Beijing) Inc. (“BEIJING”) in Beijing, China. BEIJING is also a wholly owned subsidiary of ATGI. BEIJING has a similar business segment as ATGI.

The accompanying unaudited interim financial statements as of March 31, 2012 and for the three and nine months ended March 31, 2012 and 2011 have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") for interim financial information, and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission ("SEC") and on the same basis as the annual audited financial statements. The financial statements as of and for the three and nine months ended March 31, 2012 and 2011 are unaudited. In the opinion of the management, these financial statements included all adjustments, which, unless otherwise disclosed, are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations, and cash flows for the period presented.

The results for interim periods are not necessary indicative of results for the entire year. The balance sheet at June 30, 2011 has been derived from audited financial statements; however, the notes to the financial statements do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. The accompanying unaudited interim financial statements should be read in conjunction with the financial statements and notes thereto included in the audited financial statements filed with the SEC on Form 10-K.

Principles of Consolidation. The consolidated statements include the accounts of the Company and its wholly owned subsidiaries, ATGI, ATCI and BEIJING. All inter-company transactions and balances were eliminated.

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Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expense during the period. Actual results could differ from those estimates.

Property and Equipment. Property and equipment is stated at cost and depreciated using the straight-line method over the estimated useful life of the asset. The estimated useful lives of our property and equipment are generally three years.

Subsequent Events. The Company evaluated events subsequent to March 31, 2012 through the date the financial statements were issued.

Note 2 – Going Concern

As reflected in the accompanying financial statements, the Company has an accumulated deficit of $413,127, and a net loss for the nine-month periods ended March 31, 2012 and 2011 of $213,267 and $11,386, respectively. Also, the Company currently does not have any business activities to generate funds for its own operations. These factors raise substantial doubt about our ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on its ability to raise additional capital and implement its business plan. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.

Note 3 – Related Parties

Mrs. Hong Ba serves as the Chief Executive Officer and Director of the Company. Mr. Feng Li, the husband of Mrs. Ba, is the owner of the Canada Airchn Financial Inc. (“CAFI”). For the nine months ended March 31, 2012, ATCI accrued $4,806 expense for office rent from CAFI. Rent payable to CAFI was $2,353 as of March 31, 2012.

At March 31, 2012, the Company has a payable of $5,471 to Mr. Li, which includes his advance to ATGI on January 20, 2012 and February 9, 2012 and his reimbursable expenses.

During the three months ended March 31, 2012, the Company issued 22,000,000 shares of common stock to Ms. Ba for an aggregate purchase price of $630,000 (approximately RMB 4,000,000). The shares purchased are subject to a lock-up period of 5 years.

At March 31, 2012, the Company had a payable of $35,433 to Mrs. Ba, which is her advance to BEIJING for the period from January to March 2012.

Mr. Chen Xi Shi, the Chief Financial Officer and Director of the Company, makes advances to the Company from time to time for the Company’s operations. These advances are due on demand and are non-interest bearing. As of March 31, 2012 and June 30, 2011, the Company had payables to Mr. Chen Xi Shi in the amount of $25,920 and $30,033, respectively.

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Note 4 – Commitments and Contingencies

The Company leases office space under an operating lease commenced on November 11, 2011. The office lease provides for escalated lease payments through the five-year term, which expires on October 31, 2016. For the nine months ended March 31, 2012, the Company recorded rent expense of $8,926 under the terms of the lease on a straight-line basis. The Company has recorded deferred rent expense of $3,667 included in accrued liabilities related to this lease as of March 31, 2012.

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

Forward Looking Statements

This report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors”, that may cause our company’s or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in United States dollars (US$) and are prepared in accordance with United States generally accepted accounting principles.

In this quarterly report, unless otherwise specified, all references to “common shares” refer to the common shares of our capital stock.

As used in this quarterly report, the terms “we”, “us”, “our”, “W&E Source Corp.”, “the Company” means W&E Source Corp., unless otherwise indicated.

Corporate Overview

We are a development stage company incorporated in Delaware on October 11, 2005. Our principal business was to provide an online financial media outlet for researching China-related stocks. This media outlet provided financial news and commentary, online video broadcasting, and other information for researching China-related stocks. China-related stocks refer to the stocks issued by companies whose main operations are located in China. However, due to our online financial media outlet software problems and other difficulties, we were not able to achieve the milestones we set to fully implement our business operations in online financial media outlet for researching China-related stocks.

In July 2011, the Company’s new management team began re-evaluating our business plan and determined that it would be in the best interest of the Company to take a new business direction. In the new business model, the Company will serve as an incubator for innovative enterprises across various industries with diverse practices. The Company will identify such enterprises and acquire them through various business combination transactions. As an incubator, the Company will provide the necessary assistance and environment for the acquired businesses to grow with the eventual goal of spinning them off as independent publicly reporting entities.

The Company has identified the global tourism market as its first investment target. As it currently exists, the tourism industry is fragmented into various geographic regions. We believe that approaching this industry from a global perspective is an emerging market with tremendous growth potential. We plan to set up and/or acquire offices in various regions of the world and through them, develop the local tourism industry and expand our local tourism market. Ultimately, we plan to unify and manage our regional offices and to market our global services through the internet.

We have recently set up three subsidiaries, Airchn Travel Global, Inc. in Seattle, Washington (“ATGI”) and Airchn Travel (Canada) Inc., in Vancouver, British Columbia in Canada (“ATCI”) and Airchn Travel (Beijing) Inc. in Beijing, China. We plan to set up additional subsidiaries in Hong Kong, Macau, Taiwan, Japan and Korea in the near future.

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We will eventually engage in services such as, airline and cruise ticketing, customized and packaged tours, travel blogs, travel magazines, sales of travel related merchandise, group hotel reservations, business travel arrangements, conference travel arrangements, car rental and admission ticket sale for local tourist attractions.

As per of our new business plan, we will continue to explore other business growth opportunities, regardless of industry, in order to diversify our business operations and investments.

In order to reflect our new business plan better, on January 17, 2012, the Company filed a Certificate of Amendment to its Certificate of Incorporation with the Secretary of State of Delaware to change its name from New of China, Inc. to W&E Source Corp. In connection the name change, our listing symbol on the OTCQB also changed from “NWCH” to “WESC.” Our new website which is currently under construction can be accessed at www.wescus.com. In addition, the Company also increased its total authorized shares to 500,000,000 to anticipate future financing through the issuance of our equity or convertible debt to finance our business.

Results of Operations

The following summary of our results of operations should be read in conjunction with our unaudited financial statements for the fiscal quarter ended March 31, 2012 and 2011.

Three and Nine Months Ended March 31, 2012 and 2011

Revenues

We have not generated any revenues from operations since our inception.

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Expenses

Expenses for the three and nine months ended March 31, 2012 increased by $159,935 and $202,570, respectively, over the same periods in 2011 primarily because of the increases in professional fees related to legal and accounting as well as general and administrative expenses incurred in establishing Airchn Travel (Beijing) Inc.

Liquidity and Capital Resources

Our financial condition for the fiscal quarter ended March 31, 2012 and the changes between those periods for the respective items are summarized as follows:

Working Capital

Our working capital significantly increased from deficit to assets since the previous fiscal year ended June 30, 2011 because we have raised cash from investors for capital investment.

Cash Flows

Cash Used in Operating Activities

For the nine months ended March 31, 2012, our cash used in operating activities increased by $228,965 from $12,526 for the same period of previous year. The increase is mainly due to the increase in professional fees related to legal and accounting and general and administrative expenses incurred in establishing Airchn Travel (Beijing) Inc.

Cash Used in Investing Activities

For the nine months ended March 31, 2012, we purchased fixed assets at the amount of $40,460 to establish Airchn Travel (Beijing) Inc.

Cash Provided by Financing Activities

For the nine months ended March 31, 2012, we received $630,000 from the sale of 22,000,000 shares of the company’s common stock to our CEO, $35,433 in advances from a related party and repaid $4,113 for a loan from one of our shareholders.

Cash Requirements

Over the next 12 months ending March 31, 2013, we anticipate that we will incur the following operating expenses:

Management believes that our Company’s cash will be sufficient to meet our working capital requirements for the next 12-month period for our Company has already successfully raised the capital required to satisfy our immediate short-term needs and additional capital required to meet our estimated funding requirements for the next 12 months primarily through the private placement of our equity securities.

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There is substantial doubt about our ability to continue as a going concern as the continuation of our business is dependent upon the continued financial support from our shareholders, our ability to obtain necessary equity financing to continue operations, and achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

In addition to the issues set out above regarding our ability to raise capital, global economies are currently undergoing a period of economic uncertainty related to the tightening of credit markets worldwide. This has resulted in numerous adverse effects, including unprecedented volatility in financial markets and stock prices, slower economic activity, decreased consumer confidence and commodity prices, reduced corporate profits and capital spending, increased unemployment, liquidity concerns and volatile but generally declining energy prices. We anticipate that the current economic conditions and the credit shortage will adversely impact our ability to raise financing. In addition, if the future economic environment continues to be less favorable than it has been in recent years, we may experience difficulty in completing our current business plan.

Off Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Recently Issued Accounting Standards

We continue to assess the effects of recently issued accounting standards. The impact of all recently adopted and issued accounting standards has been disclosed in the Footnotes to the financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We maintain “disclosure controls and procedures”, as that term is defined in Rule 13a-15(e), promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed 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, and that such information is accumulated and communicated to our management, including our principal executive officer and principal accounting officer to allow timely decisions regarding required disclosure.

As required by paragraph (b) of Rules 13a-15 under the Securities Exchange Act of 1934, our management, with the participation of our principal executive officer and principal financial officer, evaluated our company’s disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, our management concluded that as of the end of the period covered by this quarterly report on Form 10-Q, our disclosure controls and procedures were not effective due to the material weaknesses described in Management's Report on Internal Control over Financial Reporting contained in the Company’s 2011 Annual Report on Form 10-K.

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Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the third quarter of our fiscal year ending March 31, 2012 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

We know of no material, active or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 1A. RISK FACTORS

As of the date of this filing, there have been no material changes from the risk factors disclosed in Part II, Item 1A (Risk Factors) contained in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012. We operate in a changing environment that involves numerous known and unknown risks and uncertainties that could materially affect out operations. The risks, uncertainties and other factors set forth in our Annual Report on Form 10-K for the year ended June 30, 2011 and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 may cause our actual results, performances and achievements to be materially different from those expressed or implied by our forward-looking statements. If any of these risks or events occurs, our business, financial condition or results of operations may be adversely affected.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On February 1, 2012, the Company issued 22,000,000 shares of its common stock to its CEO, Mrs. Hong Ba, pursuant to a Stock Purchase Agreement dated January 23, 2012 as disclosed in the Current Report on Form 8-K filed on January 24, 2012. The shares issued to Mrs. Ba were not registered under the Securities Act of 1933, as amended and were issued pursuant to Regulation S under the Securities Act of 1933.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

On January 17, 2012, the Company filed a Certificate of Amendment to its Certificate of Incorporation to change its name from News of China Inc. to W& E Source Corp. and to increase its total authorized shares to 500,000,000, par value $0.0001 per share. As a result of the name change, the Company’s listing symbol on the OTCQB is also changed to WESC, effective January 20, 2012.

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ITEM 6. EXHIBITS

*filed herewith

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SIGNATURES

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

W&E Source Corp.

By:

/s/ Hong Ba
Hong Ba
CEO and Director
Principal Executive Officer
Date: May 14, 2012

/s/ Chenxi Shi
Chenxi Shi
CFO and Director
Principal Financial Officer and Principal Accounting Officer
Date: May 14, 2012

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