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

FORM 10-K

(Mark One)

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

For the fiscal year ended: December 31, 2012

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

For the transition period from _____________to _____________

Commission File No. 333-154610

GOLDENWAY, INC.
(Exact name of registrant as specified in its charter)

Nevada	22-3968194
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

     28/F, Tower 2,
The Gateway, Harbour City,
Tsim Sha Tsui, Kowloon,
Hong Kong
(Address of principal executive offices)

+852-3719-9399
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act: None

Securities registered pursuant to Section 12(g) of the Exchange Act: Common Stock

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ]    No [ X ]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ]    No [ X ]

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 Website, 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes [ ]     No [ X ]

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 [ ]	Non-Accelerated Filer [ ]	Accelerated Filer [ ]	Smaller reporting company [X]
(Do not check if a smaller reporting company)

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

As of June 30, 2012 (the last business day of the registrant’s most recently completed second fiscal quarter), the aggregate market value of the shares of the registrant’s common stock held by non-affiliates was approximately $4,719,418. Shares of the registrant’s common stock held by each executive officer and director and each by each person who owns 10% or more of the outstanding common stock have been excluded from the calculation in that such persons may be deemed to be affiliates of the registrant. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

Common Stock, $0.001 par value per share: 14,660,029 shares outstanding as of March 22, 2013.

DOCUMENTS INCORPORATED BY REFERENCE

None.

Annual Report on Form 10-K

For the Fiscal Year Ended December 31, 2012

TABLE OF CONTENTS

PART I
Item 1.	Business	5
Item 1A.	Risk Factors	18
Item 1B.	Unresolved Staff Comments	26
Item 2.	Properties	26
Item 3.	Legal Proceedings	27
Item 4.	Mine Safety Disclosures	27
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	27
Item 6.	Selected Financial Data	28
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 8.	Financial Statements and Supplementary Data	44
Item 9.	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	44
Item 9A.	Controls and Procedures	44
Item 9B.	Other Information	46
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	46
Item 11.	Executive Compensation	49
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	50
Item 13.	Certain Relationships and Related Transactions, and Director Independence	52
Item 14.	Principal Accounting Fees and Services	54
PART IV
Item 15.	Exhibits, Financial Statement Schedules	55

Special Note Regarding Forward Looking Statements

In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We use words such as “believe,” “expect,” “anticipate,” “project,” “target,” “plan,” “optimistic,” “intend,” “aim,” “will” or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenues, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those identified in Item 1A “Risk Factors” included herein, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements.

Readers are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the SEC. These reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of operations and prospects. The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation, except as required by law, to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.

Use of Certain Defined Terms

Except where the context otherwise requires and for the purposes of this report only:

• the “Company,” “we,” “us,” and “our” refer to the combined business of Goldenway, Inc., a Nevada corporation, and its wholly-owned subsidiaries, (i) Goldenway Precious Metals Limited, a Hong Kong company, or “Goldenway Precious Metals”; (ii) Goldenway Global Investments (UK) Limited, a United Kingdom company, or “Goldenway UK”; (iii) Goldtop Success Limited, a Hong Kong company, or “Goldtop”; and (iv) Goldenway Financial Holdings Limited, a Hong Kong company, or “Goldenway Financial”;
• “BVI” refers to the British Virgin Islands;
• “CGSE” refers to “The Chinese Gold and Silver Exchange Society”;
• “Exchange Act” refers to the Securities Exchange Act of 1934, as amended;
• “Goldenway Investments” refers to Goldenway Investments Holdings Limited, the former sole shareholder of Goldenway Precious Metals and now the Company’s 71% majority stockholder;
• “Goldenway HK” refers to Goldenway Investments (HK) Limited, an entity owned and controlled by Goldenway Investments;
• “Goldenway Asset Management” refers to Goldenway Asset Management Limited, an entity owned and controlled by Goldenway Investments;
• “Goldenway NZ” refers to Goldenway Global Investments (New Zealand) Limited, an entity owned and controlled by Goldenway Investments;
• “Shenzhen Gateway” or “Gateway” refers to Shenzhen Gateway Technology Co. Ltd., a PRC-based IT services provider in which our former CEO, Hao Tang, holds a 29% equity interest;
• “Hong Kong” refers to the Hong Kong Special Administrative Region of the People's Republic of China;
• “Renminbi” and “RMB” refer to the legal currency of the People's Republic of China;
• “SEC” refers to the Securities and Exchange Commission;
• “Securities Act” refers to the Securities Act of 1933, as amended; and
• “U.S. dollars,” “dollars”, “USD” and “$” refer to the legal currency of the United States; and “HKD” and “HK$” refer to Hong Kong dollars, the legal currency of Hong Kong.

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PART I

ITEM 1. BUSINESS

Business Overview

Through our subsidiary, Goldenway Precious Metals, we are a recognized electronics trading member of the Chinese Gold and Silver Exchange Society, or the CGSE, in Hong Kong, and hold a Type AA License which authorizes us to engage in the electronic trading of Kilo Gold and Loco London Gold and Silver. We also engage in the provision of foreign exchange brokerage services in the United Kingdom through our subsidiary, Goldenway UK.

We provide precious metals contract trading services via our 24-hour electronic trading platform and telephone transaction system in Hong Kong. Our electronic trading platform provides our customers with CGSE price quotations on gold and silver trading contracts, on a Loco London basis, as well as information updates on the gold and silver market, based on an evaluation of third-party market pricing sources such as M-Finance and Bloomberg. In addition to our retail customers, we also trade contracts of precious metals with other third-party providers of trading contract services in Hong Kong. See details regarding our services under the “Our Products, Services and Customers” heading in this report.

We face daily fluctuations in the prices of gold and silver, foreign exchange rates, as well as interest rates. Although we have not done so since incorporation, through our client agreement with Goldenway HK, an entity owned and controlled by Goldenway Investments, our majority stockholder, we may engage in the trade of future contracts and other derivative instruments to hedge against these market risks. Goldenway HK holds Type 1, Type 2 and Type 3 licenses approved by the Securities and Futures Commission, SFC, which enables Goldenway HK to deal in futures contracts as defined under Hong Kong’s Securities and Futures Ordinance, SFO. Through our client agreement we are also able to ensure our ability to cover any excess customer demand for gold and silver.

Our revenue from our electronic trading platform in regard of price trading of precious metals is derived from the difference between the customer’s bid and offer prices and the eventual settlement price. If we receive customers’ trading contract orders requesting physical delivery, we will meet their demands either by selling bullion from our inventory or purchasing the bullion from a third-party bullion provider and reselling them to our customers. Hence, our revenue from our purchase and sale of gold and silver products is earned on the resale of the resulting bullion to our customers based on the revaluation of precious metals on hand at higher prices.

In addition, through our subsidiary, Goldenway UK, our revenue generated is derived from the provision of foreign exchange brokerage services to active retail customers globally.

Our revenues increased from $40.1 million for the year ended December 31, 2011, to $59.2 million for the year ended December 31, 2012, representing an increase of approximately 47.5% . Our net income increased to $14.2 million for the year ended December 31, 2012, from $12.7 million for the year ended December 31, 2011. Revenue generated from contracts traded on the electronic trading platform accounted for approximately 96.1% and 96.6% (including the investment loss from trading contracts) of our revenues for the year ended December 31, 2012 and 2011, respectively. Revenue generated from foreign exchange brokerage services, resulted in 0.8% and 0.4% of our revenues for the years ended December 31, 2012 and 2011, respectively. Revenue generated from rollover interest revenue accounted for approximately 2.7% and 2.5% of our revenues for the years ended December 31, 2012 and 2011, respectively. Revenue generated from the fair value changes in precious metals accounted for approximately 0.3% and 0.4% of our revenues for the years ended December 31, 2012 and 2011, respectively.

Our Corporate History and Background

We were organized under the laws of the State of Nevada on September 10, 2007, as a software design and e-commerce company. From September 10, 2007 (date of inception) through to the date of the share exchange transaction, discussed below, we were a development stage company, engaged in the business of distributing economically-priced downloadable application software via the Internet, but with minimal operations.

Acquisition of Goldenway Precious Metals

On September 30, 2011, we acquired Goldenway Precious Metals from its sole shareholder, Goldenway Investments, whereby we acquired 100% of the issued and outstanding capital stock of Goldenway Precious Metals, in exchange for 24,587,299 newly issued shares of our common stock, par value $0.001, which constituted 80.80% of our issued and outstanding capital stock on a fully-diluted basis as of and immediately after the consummation of transactions contemplated by the Share Exchange Agreement. Mr. Hao Tang, our former Chief Executive Officer, is deemed to be the beneficial owner of the shares held by Goldenway Investments because Mr. Tang is the sole trustee of SMP Trustees (NZ) Limited, the sole shareholder of Goldenway Investments.

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As a result of the acquisition, we have assumed the business and operations of Goldenway Precious Metals. Goldenway Precious Metals was established in April 2009 in Hong Kong to engage in the dealing and trading of precious metals and precious metals price trading contracts. The company initially provided an electronic trading platform that offered one-stop electronic trading and technological support in China, but expanded its services to include the sale of gold and silver.

The acquisition of Goldenway Precious Metals was treated as a reverse acquisition, with Goldenway Precious Metals as the accounting acquirer and Goldenway, Inc. (formerly, Cyber Informatix, Inc.) as the accounting acquiree. Unless the context suggests otherwise, when we refer in this report to business and financial information for periods prior to the consummation of the reverse acquisition, we are referring to the business and financial information of Goldenway Precious Metals. For accounting purposes, the acquisition of Goldenway Precious Metals has been treated as a recapitalization with no adjustment to the historical book and tax basis of its assets and liabilities.

Acquisition of Goldenway UK

On September 16, 2011, Goldenway Precious Metals received the approval of the London Financial Services Authority, or the FSA, to complete the acquisition of Goldenway UK, formerly Goldenway Voltrex Investments Limited, a company registered in the United Kingdom. On November 1, 2011, Goldenway Precious Metals acquired all of the equity interest in Goldenway UK for an aggregate purchase price of £1,447,203 (approximately $2,307,757). Goldenway Precious Metals acquired a 90.5% majority interest in Goldenway UK for £1,301,978 (approximately, $2,076,134), pursuant to a share purchase agreement with the prior shareholders of Goldenway UK, and on the same day, Goldenway Precious Metals acquired the remaining 9.5% interest in Goldenway UK from Goldenway Investments, our majority stockholder, for £145,225 (approximately $231,623). Goldenway Investments had acquired its minority interest in Goldenway UK in May 2011 at the same cost. Goldenway UK was formed on July 14, 1997, to engage in the provision of foreign exchange brokerage services in the United Kingdom. On January 9, 2012 we launched Goldenway UK’s business and operations under our management.

Goldtop Success Limited

On August 30, 2012, Goldenway Precious Metals acquired 100% equity interest in Goldtop Success Limited (“Goldtop”), an inactive Hong Kong limited company, for an aggregate purchase price of HK$600 (approximately $77), pursuant to a purchase and sale agreement, dated August 30, 2012. Goldtop was incorporated in Hong Kong on June 26, 2012, to engage in business promotions but has been inactive since inception.

HXPM Limited

On October 4, 2012, Goldenway Precious Metals signed a non-binding memorandum of understanding (the “MOU”) with Denling Limited and its sole shareholder, Ms. Yeung Yin, to explore the potential acquisition by the company of 20,000 ordinary shares, representing 40% of the issued share capital of HXPM Holdings Limited, a company incorporated under the laws of British Virgin Islands, and its wholly-owned Hong Kong subsidiary, HXPM Limited (“HXPM”). HXPM is engaged in the trading and brokering of bullion and is also a member of CGSE. The Company is exploring the potential acquisition of the HXPM minority interests for a price of up HK$110 million (approximately $14.2 million) and the Company’s payment of a non-interest bearing and refundable deposit of HK$50 million (approximately $6.5 million), subject to the completion of an independent valuation of, and due diligence on HXPM. The deposit is personally guaranteed by the controlling shareholder of the Company’s majority stockholder.

Plan of Merger and Reorganization

On August 28, 2012, the Company entered into an Agreement and Plan of Merger and Reorganization (the “Plan of Merger”), dated August 28, 2012, between the Company and Goldenway Financial Holdings Limited, a Hong Kong limited company and the Company’s wholly-owned subsidiary formed for that purpose. Pursuant to the Plan of Merger, the Company planned to change its jurisdiction of incorporation from Nevada to Hong Kong by merging with and into Goldenway Financial. Pursuant to the terms of the Plan of Merger, Goldenway Financial would be the surviving entity and the issued and outstanding shares of the Company’s Common Stock would automatically be converted into shares of Goldenway Financial ordinary shares, at the rate of one ordinary share of Goldenway Financial for each single share of the Company’s Common Stock. After the effective date of the merger, Goldenway Financial would own and conduct the Company’s business and would be managed by the same Board of Directors and executive officers who currently manage the Company. However, the Memorandum and Articles of Association of Goldenway Financial would become the governing instruments of the Company and would differ in several respects from the current Articles of Incorporation and Bylaws of the Company.

The parties to the Plan of Merger had filed a registration statement on Form F-4 to register the ordinary shares to be issued to the Company’s shareholders in the merger. However, the parties are discussing a possible restructuring of the transaction and have filed a withdrawal request subsequent to the Company’s year end with the SEC with respect to the registration statement.

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Our Corporate Structure

All of our business operations are conducted through our Hong Kong operating subsidiary, Goldenway Precious Metals. For ease of reference, below is a chart that presents our current corporate structure.

Our principal executive offices are located at 28/F, Tower 2, The Gateway, Harbour City, Tsim Sha Tsui, Kowloon, Hong Kong. The telephone number at our principal executive office is +852 3719-9399. All our transactions and the technologies, including the servers that carry out these transactions, are all executed and located in Hong Kong.

Our Industry

In the past, investors have focused on increasing wealth through investment in stock, however, industry publications, such as those available at http://www.forbes.com/2010/06/22/investing-precious-metals-personal-finance-gold.html and at http://www.dailyfinance.com/2011/12/07/gold-stocks-are-precious-metals-still-a-safe-haven/, reflect that recent turmoil in global financial markets resulted in increased interest in the precious metals market, particularly the market for gold and silver, as a means of preserving or enhancing the value of their investments.

The Market for Gold

Investors generally buy gold as a hedge against economic, political, or social fiat currency crises (including investment market declines, burgeoning national debt, currency failure, inflation, war and social unrest). Gold has been used throughout history as money and has been a relative standard for currency equivalents specific to economic regions or countries. Many European countries implemented gold standards in the latter part of the 19th century until these were dismantled in various financial crises. The last currency to be divorced from gold was the Swiss Franc in 2000. Since 1919 the most common benchmark for the price of gold has been the London gold fixing, a twice-daily telephone meeting of representatives from five bullion-trading firms of the London bullion market. Furthermore, gold is traded continuously throughout the world based on the intra-day spot price, derived from over-the-counter gold-trading markets around the under the code "XAU". The five members of the London Gold Market Fixing Ltd. determine the price of gold twice each business day in London market. The fixing is intended to fix a price for settling contracts between members of the bullion market. On September 6, 2011, gold reached a new record high of $1,921.17 at the London Gold Fixing.

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Like most commodities, the price of gold is driven by supply and demand, as well as by speculation. However, unlike most other commodities, saving and disposal plays a larger role in affecting its price than its consumption. Most of the gold ever mined still exists in accessible form, such as bullion and mass-produced jewelry, with little value over its fine weight, and may be reintroduced onto the gold market. At the end of 2006, it was estimated that all the gold ever mined totaled 158,000 tons. Given the huge quantity of gold stored above-ground compared to the annual production, industry publications available at http://www.tdcgold.com/html/eng/knowledge-story/knowledge-story-1-gold-investment.html and at http://www.articlesnatch.com/Article/Current-Global-Gold-Prices---How-The-Price-Of-Gold-Is-Fixed/881578, reflect that the price of gold is mainly affected by changes in sentiment, rather than changes in annual production. According to the World Gold Council, annual mine production of gold over the last few years has been close to 2,500 tons, approximately 2,000 of which goes into jewelry or industrial/dental production, and 500 tons of which goes to retail investors and exchange traded gold funds.

Many factors influence fluctuations in the price of gold, including the following factors:

Conduct of Central Banks – Central banks and the International Monetary Fund play an important role in the price of gold. At the end of 2004 central banks and official organizations held 19 percent of all above-ground gold as official gold reserves. The ten-year Washington Agreement on Gold (WAG), which dates from September 1999, limits gold sales by its members (Europe, United States, Japan, Australia, Bank for International Settlements and the International Monetary Fund) to less than 500 tons a year. In 2009, this agreement was extended for an additional five years, but with a smaller annual sales limit of 400 tons. Although central banks do not generally announce gold purchases in advance, some, such as Russia, have expressed interest in growing their gold reserves again as of late 2005. In early 2006, China, which only holds 1.3% of its reserves in gold, announced that it was looking for ways to improve the returns on its official reserves which has led to speculation that China might reposition more of its holdings into gold in line with other Central Banks. Central banks may also affect the price of gold through interest rate policies. It is generally accepted that as interest rates rise, the general tendency is for the price of gold, which earns no interest, to fall, and as rates dip, for the gold price to rise. As a result, the price of gold can be closely correlated to central banks via the monetary policy decisions made by them related to interest rates.

Jewelry and Industrial Demand – Jewelry consistently accounts for over two-thirds of annual gold demand. India is the largest consumer in volume terms, accounting for 27% of demand in 2009, followed by China and the USA. Industrial, dentistry and medical uses account for around 12% of gold demand. Gold has high thermal and electrical conductivity properties, along with a high resistance to corrosion and bacterial colonization. Jewelry and industrial demand has fluctuated over the past few years due to the steady expansion in emerging markets of middle classes aspiring to Western lifestyles, offset by the financial crisis of 2007–2010.

Hedge Against Financial Stress – Gold, like all precious metals, may be used as a hedge against inflation, deflation or currency devaluation. As Joe Foster, portfolio manager of the New York-based Van Eck International Gold Fund, explained in September 2010: the currencies of all the major countries, including ours, are under severe pressure because of massive government deficits. The more money that is pumped into these economies –the printing of money basically – then the less valuable the currencies becomes. If the return on bonds, equities and real estate is not adequately compensating for risk and inflation, then the demand for gold and other alternative investments such as commodities increases.

The Market for Silver

Silver, like other precious metals, may be used as an investment. For more than four thousand years, silver has been regarded as a form of money and store of value. The main demand resulted from industrial applications, jewelry, bullion coins and exchange-traded products. Like most commodities, the price of silver is driven by speculation and supply and demand. Compared to gold, the silver price is notoriously volatile. This is because of lower market liquidity, and demand fluctuations between industrial and store of value uses. At times this can cause wide ranging valuations in the market, creating volatility.

According to industry publications available at http://www.buyinggoldandsilver.com/language/ru-ru/prices.aspx and at http://silver.pricestoday.net/, the price of silver often tracks the price of gold due to store of value demands, although the ratio can vary. The gold/silver ratio is often analyzed by traders, investors and buyers; the average gold/silver ratio during the 20th century has been 1:47, which means that 1 troy ounce of gold would buy 47 troy ounces of silver. The lower the ratio/number, the more expensive silver is compared to gold. Conversely the higher the ratio/number, the cheaper silver is compared to gold. From September 2005 onwards, the price of silver has risen fairly steeply, being initially around $7 per troy ounce but reaching $14 for the first time by late April 2006. The monthly average price of silver was $12.61 per troy ounce during April 2006, and the spot price was around $15.78 per troy ounce on November 6, 2007. In March 2008, it hovered around $20 per troy ounce. However, the price of silver plummeted 58% in October 2008, along with other metals and commodities, due to the effects of the credit crunch. By April 2011, silver had rebounded to reach a 31-year high hitting $49.21 per ounce on April 29, 2011 due to economic concerns about inflation and uncertainty regarding bailouts in the Euro zone. The price of silver fell in 2012 amid worries of slowing global economic growth and the European debt crisis. This threat of slowing industrial demand for silver is weighing heavily on prices. Silver recently fell to $28.86 an ounce as of March 15, 2013 which is an approximately 60% decline from its peak in April 2011.

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Many factors influence fluctuations in the price of silver, including the following factors:

• Actions of Large Traders – The silver market is much smaller in value than the gold market. The London silver bullion market turns over 18 times less money than gold. With physical demand estimated at only $15.2 billion per year, it is possible for a large trader or investor to influence the silver price either positively or negatively. For example, from 1973 the Hunt brothers began cornering the market in silver, helping to cause a spike in January 1980 of the London Silver Fix to $49.45 per troy ounce, silver futures to reach an intraday all-time high of $50.35 per troy ounce and a reduction of the gold/silver ratio down to 1:17.0 (gold also peaked in 1980, at $850 per troy ounce). In the last nine months of 1979, the brothers were estimated to be holding over 100 million troy ounces of silver and several large silver futures contracts. However, a combination of changed trading rules on the New York Mercantile Exchange (NYMEX) and the intervention of the Federal Reserve put an end to the game. By 1982 the London Silver Fix had collapsed by 90% to $4.90 per troy ounce.

• Industrial, Commercial and Consumer Demand – The traditional use of silver in photographic development has been decreasing since 2000, due to the growth of digital photography. However, silver is also used in electrical appliances (silver has the lowest resistivity of industrial metals), photovoltaics (one of the highest reflectors of light), RoHS compliant solder, clothing and medical uses (silver has antibacterial properties). Other new applications for silver include RFID tags, wood preservatives, water purification and food hygiene and new products are being introduced almost daily. Established companies are incorporating silver based products in current lines - clothing, refrigerators, mobile phones, computers, washing machines, vacuum cleaners, keyboards, countertops, furniture handles and more. The newest trend is the use of nano-silver particles to deliver silver ions. The expansion of the middle classes in emerging economies aspiring to Western lifestyles and products may also contribute to a long-term rise in industrial and jewelry usage.

• Hedge Against Financial Stress – Silver, like all precious metals, may be used as a hedge against inflation, deflation or currency devaluation. According to Joe Foster, portfolio manager of the New York- based Van Eck International Gold Fund, the currencies of all the major countries are under severe pressure because of massive government deficits. The more money that is pumped into these economies – the printing of money basically – then the less valuable the currencies become.

Chinese Gold and Silver Trading Society

Under the current laws of Hong Kong, the trading of gold and silver price trading contracts is an unregulated industry. At present, there is no requirement to register and/or obtain licenses to trade gold and silver price trading contracts with any regulatory body. However, the Company has voluntarily registered with the Chinese Gold and Silver Exchange Society, or the CGSE, a registered self-regulatory society in Hong Kong which also acts as an exchange for gold and silver. The CGSE has the following mission:

To provide a trading place, facilities and related services to its members for gold, silver and precious metals transactions

• To establish and implement rules and regulations, and to normalize transactions;
• To supervise transaction processes, settlements and delivery arrangements;
• To design trading contracts and regulations, and monitor the fulfillment and completion of contracts;
• To establish and implement a risk management system to control risk in the market;
• To establish settlement prices, and announce and disseminate market information; and
• To supervise and examine all transactions, and to execute punishment if the act of any members violates CGSE rules and regulations.

The CGSE’s Executive and Supervisory Committees are the highest decision-making authority and are responsible for implementing CGSE policies, effecting development plans and monitoring their effectiveness. All CGSE members must conduct themselves in accordance with a code of conduct which is regulated by CGSE. The CGSE’s constitution limits CGSE membership to 192 members, all of whom must have a minimum required working capital, defined as cash plus precious metals, of approximately $193,000 and minimum required assets of $645,000. The CGSE requires its members to submit a quarterly liquidity capital report, in order to ensure that the bank balances exceed or equal the balance of customer deposits. We were in compliance with these requirements as at December 31, 2012. As of December 31, 2012 and 2011, we had $24.2 million in cash and approximately $0.2 million in gold and silver, and $10.3 million and $1.7 million respectively. As of December 31, 2012 and 2011, we had $57.5 million and $28.7 million, respectively, in total assets.

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Applicants to the CGSE must apply for and/or purchase membership and licensing from the CGSE or from existing members, and the CGSE has the power to suspend and/or revoke membership for breach of its rules and regulations. There are 5 categories of CGSE operation status (AA, A1, A2, B and C) that permit the member to deal with various CGSE gold and silver products. We currently hold the following CGSE licenses:

Licenses	Issuing Authority	Effective Date	Expiration/Term
London Gold and Silver Trading License (AA)	CGSE	June 3, 2009	N/A
Physical Precious Metals Metal Trading License (AA)	CGSE	February 5, 2010	N/A

The CGSE has two trading methods for participating members: the open outcry method, and since March 2008, electronic trading. The open outcry method is used in most major futures markets and describes the conduct of floor traders who call out buy and selling prices in Cantonese in the trading hall and supplement such calls with hand signals. When a transaction is complete, the seller must complete a trading note within 15 minutes and hand it to the buyer for confirmation. Thereafter, the trading note is submitted to the CGSE Settlement Department and the transaction is registered. "99 Tael Gold Contracts" and "Kilo Gold Contracts" are traded with the open outcry method.

The following contracts for 100oz / 10oz Loco London Gold, 5000oz / 500oz Loco London Silver and Kilo Gold RMB are traded with the electronic trading system:

100 Ounces Loco London Gold Contract
Fineness:	995 or up
Basic Trading	100ounces
Unit:
Price unit:	US/Ounces
Minimum Price	USD0.01/ounces
Fluctuation:
10 Ounces Loco London Gold Contract
Fineness:	995 or up
Basic Trading	10ounces
Unit:
Price unit:	US/Ounces
Minimum Price	USD0.01/ounces
Fluctuation:
5000 Ounces Loco London Silver Contract
Fineness:	9999 or up
Basic Trading	5000 ounces
Unit:
Price unit:	US/Ounces
Minimum Price	USD0.0001 per ounce
Fluctuation:
500 Ounces Loco London Silver Contract
Fineness:	9999 or up
Basic Trading	500 ounces
Unit:
Price unit:	US/Ounces
Minimum Price	USD0.0001 per ounce
Fluctuation:
Kilo Gold RMB Contract
Fineness:	9999 or up
Basic Trading	1 KG or 1000 Gram
Unit:
Price unit:	RMB/Gram
Minimum Price	RMB0.01 per gram
Fluctuation:

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Trading hours for the CGSE electronic trading platform begin at 8:00 a.m. and end at 3:30 a.m. on the following day, Hong Kong time, and electronic trading lasts 19.5 hours. The CGSE also assigns a unique “Contract Transaction Code” to every contract traded on its electronic-trading platform. The assigned Contract Transaction Code protects customer interests and provides transaction transparency by allowing customers to review their transaction details on the CGSE‘s website.

Industry Terminology

Throughout this report, we may use the following gold and silver industry terminology:

• “Interest Determination” is one of Hong Kong Gold Market's characteristics. The determination of interest is done once a day at 11:00 a.m. during weekdays and at 10:30a.m. on Saturday. Positive interest arises when the demand for physical gold exceeds the supply. Buyers who cannot get hold of gold are awarded interest paid by sellers who cannot deliver gold. Negative interest arises when the supply of physical gold exceeds the demand for it. As a result, sellers who do not get sale proceeds are awarded interest paid by buyers who do not have sufficient cash to pay sellers. Even interest arises when supply and demand for physical gold or cash are in equilibrium - that is neither party has to pay the interest. Interest is quoted in Hong Kong dollars per ten taels.

• “Loco London Basis” refers to the method of trading used by the Loco London Gold Market in Hong Kong, which is modeled on the London Gold Spot Market. Dealers usually quote their own books, and deal with the investors as principal. Loco London Gold is traded and quoted against US dollars and the minimum size for one contract is 100 ounces.

• “Loco London Spot Price” refers to the basis for virtually all transactions in gold and silver in London. It is a quotation made by dealers based on US dollars per fine troy ounce for gold and US dollars per troy ounce for silver. Settlement and delivery for both metals is in two full business days in London after the day of the deal. From this basis price, dealers can offer material of varying fineness, bar size or form - for example, grain - at premiums to cover the costs of producing smaller, exact weight bars, or bars of a fineness above the 995 fine minimum.

• “London Fix” or the “Fixing” refers to the two daily bidding sessions in London of five major gold firms who are members of the London Gold Market Fixing Ltd., at which the price of gold is "fixed" or set.

• “Troy Ounce” refers to the trading unit for gold and silver. Gold is traded in per fine troy ounce and silver is traded in per troy ounce. In the case of gold, the unit represents pure gold irrespective of the purity of a particular bar, whereas for silver it represents one ounce of material of which a minimum of 999 parts in every 1,000 will be silver. One troy ounce is equal to 1.10 ounces.

Our Growth Strategy

We believe that the precious metals market creates a significant growth opportunity on which we intend to capitalize by utilizing the following strategies:

• Improved Research and Development. We believe that in order to compete effectively in our product market, we must constantly improve the quality of our trading platform and service and deliver new services through expanded research and development efforts. We have established a strong team of over ten IT employees to maintain and develop our trading platform. Pursuant to our software development contract discussed elsewhere in this report, our affiliated IT services provider, Shenzhen Gateway Technology Limited, or Gateway, provides us with additional research and development support as necessary.

• Brand Recognition. We also plan on developing our brand recognition. In addition to providing high quality products and effective 24-hour access to the bullion market through our electronic trading platform, we believe that in order to promote our brand recognition, strengthen the management of our distribution network and improve our sales revenue and market share, we will also need to continue expanding our sales channels and engage in more sophisticated marketing. With adequate funding, we plan to acquire a number of local and overseas foreign exchange providers as well as precious metals and commodities brokers that can complement our strengths in services, integration, and implementation. We expect that this strategy will result in expanding our services to a wider customer base.

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Our Products, Services and Customers

Through our subsidiary, Goldenway Precious Metals, we are a recognized electronic trading member of the Chinese Gold and Silver Exchange Society, or the CGSE, in Hong Kong, and hold a Type AA License which authorizes us to engage in the electronic trading of Kilo Gold and Loco London Gold and Silver. We provide precious metals price trading contract trading services via our 24-hour electronic trading platform and telephone transaction system in Hong Kong. Our trading platform provides our customers with price quotations on gold and silver price trading contracts, on a Loco London basis, as well as information updates on the gold and silver market. Our revenue from the trade of precious metals price trading contracts via our electronic trading platform is derived from the difference between the price quoted in the contract on the creation date (the customer’s buy price) and the market price for the commodity on the settlement date (the customer’s sell price). In addition to our retail customers, we also trade price trading contracts of precious metals with other third-party providers of price trading contract services in Hong Kong for position risk management purposes. On a regular basis and based on our internal evaluation of the aggregated exposures on our customers’ opened buy and sell precious metal price trading contracts, our management may trade precious metal price trading contracts with other third-party providers of precious metal price trading contract services to reduce our exposure limit to an acceptable level.

Upon the initial of a buy contract, the underlying precious metals are effectively purchased from, and deliverable by, the Company to the customer, whether in the form of physical delivery or liquidation of the contract. As such, when a customer enters a purchase contract for precious metals at a price, the Company bears the risk and/or reward of any price fluctuation of the delivered/unsettled precious metal as illustrated below.

Since we are the counterparty to customer transactions, we face daily fluctuations in the price of gold and silver, foreign exchange rates, as well as interest rates, and may suffer a loss depending on our customers’ liquidation choice. If our sell side customers are in a gain position where there is a decrease in the price of precious metals, we would incur an equal value loss serving as the counterparty in the transaction. On the other hand, if our sell side customers are in a loss position where there is an increase in the price of precious metals, we would incur an equal value gain serving as the counterparty in the transaction.

We mitigate the risk associated with serving as the counterparty to customer transactions through (1) the automatic foreclosure function of our trading platform which automatically retains customer deposits that do not meet the contractual deposit requirement and (2) by including an absolute mark-up amount in our price for buy side contracts and an absolute mark-down amount for sell side contracts. We seek to control the credit risks associated with customers’ activities by requiring customers to maintain in their accounts as collateral at all times an amount equal to 20% of their minimum deposit in open positions (“Collateral”). The minimum deposit ranges from $50 (for 5 ounces) to $1,000 (for 100 ounces and above), depending on the size of the contract, and so the required Collateral per position can range from $10 to $200. The electronic trading platform does not allow customers to enter into trades if sufficient Collateral is not on deposit with the Company. Once such accounts are established and trades are initiated, the customer is solely responsible for ensuring that its minimum Collateral are maintained, especially in light of fluctuation in precious metals prices. For example, if the price of Loco London Gold is $1,600 per ounce and a customer initiates a contract for 5 ounces (value at $8,000), then the customer is required to have and maintain at least $10 in his or her account (20% of $50) at all times. Or if a customer initiates a contract for 100 ounces (valued at $160,000), then the customer is required to have and maintain at least $200 in his or her account (20% of $1,000) at all times. Failure to keep the minimum Collateral results in an automatic foreclosure of accounts by our system and retention of deposits, which in turn results in revenues to the Company.

Our price may include an absolute mark-up amount (usually $0.25) for buy side contracts or mark-down amount (usually $0.25) for sell side contracts. We occasionally adjust the ratio of this absolute mark-up amount included in the price on new contracts if, after close monitoring of customer trading, we determine that there is an unequal balance of either buy side or sell side contracts. In such cases we adjust the ratio on our prices for new buy and sell side contracts keeping within our aggregate adjustment range of $0.50, until our aggregated net position returns to a balance position. For example, if the volume of opened buy side contracts are significantly greater than the volume of opened sell side contracts, we may set our buying price for new contracts at market price +$0.40 (instead of our usual +$0.25) and lower our selling price at market price -$0.10 (instead if -$0.25) . Despite this occasional adjustment, we have found that the value of our open contracts at period end does not substantially deviate from the market price quoted on Bloomberg.

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Our Electronic Trading Services

Customers use our electronic trading platform to place their purchase and sale of precious metal price trading contracts on gold and silver online. This user interface is inter-connected with a number of proxy servers and a price server which retains all pricing data feed and formulate from a spectrum of third party market pricing sources (such as M-Finance and Bloomberg). Our customer instructions with respect to their contracts then route through the proxy servers and execute through our trading servers, and all trading instructions are archived in our trading database. Our electronic trading platform offers a speedy, 24-hour trading channel, allowing customers to acquire and/or dispose of their precious metal price trading contract of precious metals anytime anywhere. Our electronic trading platform was developed in partnership with, and is operated and maintained by Gateway, our affiliate and developer of the platform.

The following steps detail a typical customer transaction, from the initiation of the transaction through settlement:

Steps	Description
1.	Customer enters into contract to open trading accounts through our electronic trading platform and provides background information.
2.	Customer deposits either directly to our designated bank accounts or indirectly through transfer agents to respective trading accounts with us. Customers are required to have sufficient funds in their accounts in order to initiate a precious metal price trading contract and must maintain the minimum margin requirement on their open positions at all times. Since the market price of precious metal price trading contracts on precious metals fluctuates, there are instances where a customer’s deposits on opened precious metal price trading contracts would fall below 20% of their margin requirement, and in such cases our electronic trading platform would instantly foreclose such precious metal price trading contracts.
3.	Customer opens bid or ask precious metal price trading contracts at the prevailing price through our electronic trading platform and such information is recorded. Within 30 minutes of a transaction, if requested by our customer, our electronic trading platform automatically obtains a Contract Transaction Code from the CGSE and then sends such code to the customer via mobile phone (SMS).
4.	At a prevailing price, a customer may submit a withdrawal request in order to liquidate its bid or ask precious metal price trading contracts through our electronic trading platform. Our agreements with customers provide the option for physical delivery of precious metals, however there have been no instances of physical delivery since our incorporation. Instead, customers so far have opted for liquidating their precious metal price trading contracts with gain or loss derived from the difference of the precious metal price trading contract price and the market price.
5.	Based on withdrawal requests, our Settlement Department checks such customer’s trading history as well as historical deposit amounts and then processes payments.

Unlike other traditional precious metals providers, our electronic trading platform offers other services including real-time price quotations as well as updates on global market information. In December 2011 we released our English language electronic trading platform, as well as a smart phone trading system. We believe that these additional ways of accessing our services will retain existing customers as well as attract new customers with diverse needs. Our agreements with customers provide the option for the physical delivery of precious metals, however there have been no instances of physical delivery since our incorporation. Instead, customers so far have opted for liquidating their precious metal price trading contracts with gain or loss derived from the difference of the precious metal price trading contract price and the market price. We have not earned any fee revenue since incorporation, however, should a customer request physical delivery in the future, a fixed handling fee will be charged and thus result in fee revenue to us.

The Company serves as the counterparty for all precious metals price trading contracts that our customers enter into through our electronic trading platform. The table below describes some of our average customer purchases of gold and silver price trading contracts on a Loco London basis:

Product	Loco London Gold*	Loco London Silver*
Contract Size (one lot)	100 ounces	5000 ounces
Minimum price fluctuation	US$0.01	US$0.01
Minimum and maximum trading volume for each order	Minimum: 0.05 lot	Minimum: 0.05 lot
	Maximum: 100 lots	Maximum: 100 lots
Spread (Under normal market conditions)	US$0.5	US$0.04

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*A “London Good Delivery” gold bar, which is the market standard, must have a minimum fineness of 995.0 and a gold content of between 350 and 430 fine ounces with the bar weight expressed in multiples of 0.025 of an ounce - the smallest weight used in the market. Gold bars are generally close to 400 ounces or 12.5 kilograms. A London Good Delivery silver bar must have a minimum fineness of 999 and a recommended weight between 750 and 1,100 ounces, although bars between 500 and 1,250 ounces will be accepted. Silver bars generally weigh around 1,000 ounces.

We use our best efforts to ensure that all transactions are open and fair to all of our customers. Our revenue from our electronic trading platform trading precious metal price trading contracts of precious metals is derived from the difference between the customer’s buy and sell prices and the eventual settlement price. If we receive customers’ precious metal price trading contract orders requesting physical delivery, we will meet their demands either by selling bullion from our inventory or purchasing the bullion from a third-party bullion provider and reselling them to our customers. Hence, our revenue from our purchase and sale of gold and silver products is earned on the resale of the resulting bullion to our customers based on the revaluation of precious metals on hand at higher prices. Our electronic trading platform accounted for approximately 96% and 97% of our revenues in fiscal year 2012 and 2011, respectively.

Sales and Marketing

In today’s competitive environment, companies must strategically position themselves to increase revenue using a variety of media. As the internet becomes a primary information medium, our website is our main sales and marketing tool. In addition to our expertise in technology, we have employed a team of seasoned marketing staff to create update and maintain our website, which is readily available to access from major search engines. Our marketing team also designs online promotions that are intended to increase the volume of trade and frequency of visits by our targeted groups of customers.

We also regularly conduct seminars in various cities such as Hong Kong, Shenzhen and Guangzhou to meet customers directly. Mr. Simon Yam, a well known and respected Chinese movie star, acts as our spokesperson and we have featured Mr. Yam in our advertisements in various publications in Hong Kong and China.

Every customer is important to us and we respect their comments regarding our products and services. We have established a forum on our website, which serves as a platform for customers to communicate with us. Our forum administrator(s) gathers the customer comments and suggestions for our consideration when preparing our yearly plan. We also launch periodic promotion campaigns to reward customer loyalty, such as lucky draws and token redemption promotions. We also have VIP accounts to honor customers who meet certain levels of trade volume and frequency.

Competition

The retail market for gold and silver is fragmented and highly competitive. Our competitors in the retail market can be grouped into several broad categories based on size, business model, product offerings, target customers and geographic scope of operations. These include international retail precious metals brokers, international multi-product trading firms, other electronic trading firms and international banks and other financial institutions with significant precious metals operations. We expect competition to continue to remain competitive and strong for the foreseeable future.

Our Competitive Strengths

We attribute our success to date and potential for future growth to a combination of strengths, including the following:

• Self-Developed Technology Meets Evolving Customer Needs. We view ourselves primarily as an e-commerce platform provider. We believe that our technological capabilities and our continuous investment in technology provide us with a significant advantage over our competition by enabling us to provide a 24-hour platform for our customers to acquire and/or dispose of precious metals and precious metals price trading contracts. We continuously carry out research and gather data on customer behavior and trends so that we may continuously develop our technology to meet evolving customer demands.

• Experienced Management Team. Our key employees have significant experience and expertise in the application of technology and automation systems and, as significant equity owners of our Company, are heavily committed to our success. Our senior management team, in particular, has substantial experience of operating electronic trading platform an average of 10 years’ experience in the gold and silver industry between them.

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• Low Cost Structure through Automation. Our focus on automation and expense management practices enables us to operate with a low cost structure.

• Provide Excellent Customer Service. We view ourselves not only as a product provider but also as a service provider. We have a 24-hour online customer service to respond to customer queries and our technical response team is on standby 24 hours a day, 7 days a week to provide technology assistance to customers.

Research and Development

We have 41 employees devoted to the research and development function of our company. Costs of research and development constitute a major part of our recurrent expenses. Our research development team has developed a live version of our electronic trading platform for use on iPhone and iPad devices. A beta-test version of this application is available through the iTunes store.

Intellectual Property

We believe our intellectual property is important to our success. The intellectual property rights of an owner are not automatically protected by the laws of Hong Kong if the trademark or proprietary technology is not registered with the Trade Marks Registry of Hong Kong.

In June 2011, we registered our trademark with the Intellectual Property Department of Hong Kong for marketing and brand recognition, but we have not registered our proprietary electronic trading platform. Our electronic trading platform was developed for our exclusive use by Shenzhen Gateway, pursuant to a software development contract, dated March 26, 2010, between us and Gateway. The intellectual property rights to the trading platform are owned jointly by both parties, but Gateway cannot use or share the technology without our written authorization. If Gateway violates this provision, Gateway will be subject to a fine of HK$200,000 (approximately $25,786). Under the terms of the agreement, Gateway assists us in the ongoing operation, maintenance and development of the platform in exchange for annual service fee.

We rely on Hong Kong’s intellectual property laws, where applicable, and on contractual restrictions to protect our trademark or proprietary technology from parties licensed to use our trademarks and proprietary technology.

Employees

As of December 31, 2012, we employed a total of 135 full time employees and no part-time employees. The following table sets forth the number of our employees by function.

Function	Number of
	Employees
Senior Management	4
Operations	26
Sales and Marketing	36
Finance	6
Technology, Research and Development	41
Legal and compliance	2
Human Resource & Administration	20
Total	135

Regulations

Because our primary operating subsidiary is located in Hong Kong, we conduct our business operations in Hong Kong and are regulated by Hong Kong laws, including those outlined in more detail below. Our customers may not reside in Hong Kong and may access and place orders on our electronic trading platform via the internet from anywhere in the world. Except with respect to the U.S., we have not analyzed whether such operations in foreign jurisdictions would be generally prohibited or limited by the regulations of such jurisdictions. We have recently amended or customer contracts to clarify that we do not accept orders from customers located in the U.S. The enactment of such legislation and failure to comply may have a material negative impact on our financial condition and business results.

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We believe that we are in material compliance with all registrations and requirements for the issuance and maintenance of all licenses required by the governing bodies of Hong Kong and that all license fees and filings are current. Although we have not done so since incorporation, through our client agreement with Goldenway HK, an entity owned and controlled by Goldenway Investments, our majority stockholder, we may engage in the trade of futures contracts and other derivative instruments to hedge against these market risks, as well as cover any excess customer demand for gold and silver. Goldenway HK holds a Type 1, Type 2 and Type 3 licenses approved by the Hong Kong Securities and Futures Commission, SFC, which enables Goldenway HK to deal in futures contracts as defined under Hong Kong’s Securities and Futures Ordinance. However, as we have not traded any futures contracts to position manage our exposure under precious metal price trading contracts since incorporation, we believe that this activity is immaterial to our business.

Permits and Certificates

Our industry, being the acquisition and disposition of gold and silver on precious metal price trading contracts, is currently unregulated in Hong Kong. Dealing in futures contracts of commodities, including gold and silver, on the other hand, is a regulated activity governed by the Hong Kong Securities and Futures Commission, or the SFC, and requires a license for the Dealing of Futures Contracts, referred to as Type 2 licensing. Through our relationship with our affiliate, Goldenway HK, a licensed corporation holding the requisite license, we are able to trade gold and silver futures contracts for position risk management. Any and all transactions of futures contracts and/or options are executed through Goldenway HK on our instructions.

We are also a member of the Chinese Gold & Silver Exchange Society (CGSE), a self-regulated body with established industry standards. The CGSE operates in Hong Kong as a registered society and operates as an exchange for gold and silver. The CGSE’s Executive and Supervisory Committees are the highest decision-making authority and are responsible for implementing CGSE policies, effecting development plans and monitoring their effectiveness. The CGSE’s constitution limits CGSE membership to 192 members, all of whom must have a minimum required working capital, defined as cash plus precious metals, of approximately $193,000 and minimum required assets of $645,000. The CGSE requires its members to submit a quarterly liquidity capital report, in order to ensure that the bank balances exceed or equal the balance of customer deposits, as well as comply with the code of conduct which is regulated by CGSE. We were in compliance with these requirements as at December 31, 2012. As of December 31, 2012 and 2011, we had $24.2 million in cash and $0.2 million in gold and silver, and $10.3 million and $1.7 million respectively. As of December 31, 2012 and 2011, we had $57.5 million and $28.7 million, respectively, in total assets.

Applicants must apply for and/or purchase membership and licensing from the CGSE or from existing members, and CGSE has the power to suspend and/or revoke membership for breach of its rules and regulations. There are 5 categories of CGSE operation status (AA, A1, A2, B and C) that permit the member to deal with various CGSE gold and silver products. We hold the following CGSE licenses and certifications:

	Issuing
Licenses	Authority	Effective Date	Expiration/Term
London Gold and Silver Trading License (AA)	CGSE	June 3, 2009	N/A
Physical Precious Metals Metal Trading License (AA)	CGSE	February 5, 2010	N/A

Regulation of Online Services

Our revenues are generated through the ability of our customers to access our electronic trading platform through the internet and our website. The Hong Kong government and other regulatory agencies may block or suspend our internet transmission capabilities if we are deemed to be in violation of the following content regulations for online services:

• Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) – We are subject to the laws, rules and regulations regarding trading. The Securities and Futures Commission is responsible for: maintaining and promoting the fairness, efficiency, competitiveness, transparency and orderliness of the securities and futures industry. The Commission may suppress illegal, dishonorable and improper practices in the securities and futures industry; to take appropriate steps in relation to the securities and futures industry. Regardless of the communication or delivery medium used, the Commission will continue to apply the general anti-fraud and anti-manipulation provisions of the relevant Ordinances in its enforcement actions. If any person responsible for activities over the Internet is found to have acted in contravention of the provisions of the Ordinances or appears to have been involved in any misconduct whether in Hong Kong or elsewhere, the Commission may exercise its regulatory powers (including prosecution or taking other disciplinary actions as may be required); and when necessary, the Commission may consider other regulatory means available to it including seeking cooperation from foreign regulators and law enforcement agencies to take joint enforcement action, if necessary. We are prohibited from carrying on any regulated activity, as defined under the Securities and Futures Ordinance, such as dealing in securities and/or futures contracts, unless we have been granted the appropriate license(s) from the Commission.

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• Personal Data (Privacy) Ordinance (Cap. 486 of the Laws of Hong Kong) – We are subject to data privacy laws, rules and regulations that regulate the use of customer data. In Hong Kong we are governed by the Personal Data (Privacy) Ordinance and as a data user we are prohibited from doing or engaging in any practice that contravenes the data protection principles set out therein.

• Telecommunications Ordinance (Cap. 106 of the Laws of Hong Kong), Crimes Ordinance (Cap. 200 of the Laws of Hong Kong) and Theft Ordinance (Cap. 210 of the Laws of Hong Kong) – Provisions under the Telecommunications Ordinance, Crimes Ordinance and Theft Ordinance make it an offense for unauthorized access to computer by telecommunication, to access a computer with criminal or dishonest intent, and extend the meaning of criminal damage to include misuse of computer programs or data, and burglary to include unlawfully causing a computer to function other than as it has been established and altering, erasing or adding any computer program or data. In this respect, any of the abovementioned computer related crimes committed by any staff, employees or agents, will subject us to possible criminal charges and/or investigations.

These rules and regulations are administered by the three branches of Hong Kong’s Commerce and Economic Development Bureau: (i) the Commerce, Industry and Tourism Branch (responsible for policy matters on Hong Kong's external commercial relations, inward investment promotion, intellectual property protection, industry and business support, tourism, consumer protection and competition), (ii) the Communications and Technology Branch (responsible for policy matters on broadcasting, film-related issues, overall view of creative (including film) industry, development of telecommunications, innovation and technology, and control of obscene and indecent articles); and (iii) the Office of the Government Chief Information Officer (responsible for policy, strategy and execution of information technology programs and initiatives).

If any of these government agencies acts to block or limit access to our website or adopt policies restricting our customers from providing us with accurate and up-to-date information, the value of our electronic trading platform could be negatively impacted, which would adversely affect our ability to offer compelling hiring and marketing solutions and subscriptions to our customers, enterprises, and professional organizations.

FSA Oversight and Pillar 2

Our United Kingdom subsidiary, Goldenway UK, is subject to the rules and regulations promulgated by the FSA, an independent agency that regulates the financial services industry in the UK in order to promote efficient, orderly and fair financial markets.

In May 2007, the FSA published its Pillar 2 assessment framework, also known as the Supervisory Review and Evaluation Process, or SREP. Pillar 2 is one of the three supervisory pillars originally set out in the revised Basel Accord on recommended banking laws and regulations issued by the Basel Committee on Banking Supervision in June 2004. It was written into European Law, through the capital requirements directive, or CRD, and further developed in the Pillar 2 guidance issued by the Committee of European Banking Supervisors. Pillar 2 requires certain banks, credit institutions and investment firms to: (i) develop and maintain an Internal Capital Adequacy Assessment Process, or ICAAP, to assess the amount of internal capital they consider adequate to cover all of the risks to which they are, or likely to be, exposed; and (ii) cause the senior management (including Board members) of such firms to review and evaluate their ICAAP as part of the FSA’s Pillar 2 assessment framework or SREP.

The framework is designed to enable FSA supervisors to review and evaluate a firm’s ICAAP so that the FSA can be sure firms understand the risks to which they are exposed and hold capital proportionate to these risks. The Pillar 2 assessment includes a range of things, including: the analysis of a firm’s exposure to risks; the processes it uses for identifying, measuring and controlling risks; its capital resources; and ongoing compliance with standards laid down in the CRD. The expectation is that such evaluation should reduce the probability of financial failure and thus protect consumers and help to maintain confidence in the financial markets. As a result of its Pillar 2 assessment, the FSA may recommend that a firm take corrective or preventive measures such as: giving Individual Capital Guidance, or ICG, that reflects the amount of capital that the FSA believes is adequate for a firm’s risk profile and strategy, after taking into account its internal governance and risk management infrastructure; giving individual guidance reaffirming or amending any existing liquidity ratios, limits or behavioral concessions; and taking resultant prudential or other measures.

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The FSA requires Goldenway UK to maintain a regulatory basic capital (“Pillar 1 required capital”) of the greater of (i) £100,000 (approximately, $150,000); or (ii) the sum of its credit and market risk requirements of approximately £13,000 (approximately, $20,000); or (iii) Goldenway UK’s fixed overhead requirement (“FOR”) of approximately £475,000 (approximately, $713,000), and a Pillar 2 capital requirement of £475,000 (approximately, $713,000). Capital is managed through budgeting, forecasting and daily and monthly entity and consolidated capital reporting. Goldenway UK is in compliance with these requirements as of December 31, 2012.

ITEM 1A. RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this report, before making an investment decision. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. You should read the section entitled “Special Note Regarding Forward-Looking Statements” above for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context of this report.

RISKS RELATED TO OUR BUSINESS

Enterprises or Professional Organizations, Including Governmental Agencies, May Restrict Access to Our Website, Which Could Lead to the Loss or Slowing of Growth in Our Customer Base or the Level of Customer Engagement.

Our revenues are generated through the ability of our customers to access our electronic trading platform through the Internet and our website. Enterprises or professional organizations, including governmental agencies, could block access to our website or the Internet generally for a number of reasons such as security or confidentiality concerns or regulatory reasons, or any government of any jurisdiction in which we are considered to be carrying on business in may block or suspend our internet transmission capabilities. If these entities block or limit access to our website or adopt policies restricting our customers from providing us with accurate and up-to-date information, the value of our electronic trading platform could be negatively impacted, which would adversely affect our ability to offer compelling hiring and marketing solutions and subscriptions to our customers, enterprises, and professional organizations.

Our Revenue is Influenced by Trading Volume and Volatility, Which Are Directly Impacted by Domestic and International Market and Economic Conditions That Are Beyond Our Control.

During the past few years, there has been significant disruption and volatility in the global financial markets. Many countries, including the United States, have recently experienced recessionary conditions. Our revenue is influenced by the general level of trading activity in the gold and silver market. Our revenue and operating results may vary significantly from period to period primarily due to movements and trends in the world’s currency markets and to fluctuations in trading levels. We have generally experienced greater trading volume in periods of volatile markets. In the event we experience lower levels of currency volatility, our revenue and profitability will likely be negatively affected. Like other financial services firms, our business and profitability are directly affected by elements that are beyond our control, such as economic and political conditions, broad trends in business and finance, changes in the volume of transactions, changes in supply and demand for currencies, movements in currency exchange rates, changes in the financial strength of market participants, legislative and regulatory changes, changes in the markets in which such transactions occur, changes in how such transactions are processed and disruptions due to terrorism, war or extreme weather events. Any one or more of these factors, or other factors, may adversely affect our business and results of operations and cash flows. As a result, period-to-period comparisons of our operating results may not be meaningful and our future operating results may be subject to significant fluctuations or declines.

Reduced Adjustments in Precious Metals, Levels of Trading Activity and Trading Through Alternative Trading Systems Could Reduce Our Revenues.

The evolution of technology and development of faster execution programs reduce profitability on transactions. Reduced revenues and increased competition could make the execution of trades and less profitable. In addition, new and enhanced alternative trading systems have emerged as an option for individual and institutional investors to carry out proprietary trades, which could result in reduced revenue.

A substantial portion of our revenue and operating profits is derived from our role as a service provider. In our role as a service provider, we attempt to derive a profit from the difference between the prices at which we buy and sell, or sell and buy, Loco London Gold and Silver precious metal price trading contracts. Customers are given the option to trade on open precious metal price trading contracts and to liquidate their positions for gains or losses or to take physical delivery of precious metals. Since these activities involve the purchase or sale of Loco London Gold and Silver precious metal price trading contracts, whether or not the transaction involves the physical delivery of the underlying gold or silver, we may incur trading losses for a variety of reasons, including:

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• price changes in precious metals;
  
  
• lack of liquidity in precious metals in which we have positions; and
  
  
• inaccuracies in our proprietary pricing mechanism, or rate engine, which evaluates, monitors and assimilates market data and reevaluates our outstanding currency quotes, and is designed to publish prices reflective of prevailing market conditions throughout the trading day.

These risks may affect the prices at which we are able to sell or buy Loco London Gold and Silver contracts, or may limit or restrict our ability to either resell precious metals that we have purchased or repurchased precious metals that we have sold.

Reduced Adjustments in foreign currencies, levels of trading activity, trading through alternative trading systems and price competition from principal model firms could harm our business.

Computer-generated buy and sell programs and other technological advances and regulatory changes in the foreign exchange market may continue to tighten markup and markdown price difference on foreign currency transactions. Tighter markup and markdown price difference and increased competition could make the execution of trades and market-making activities less profitable. In addition, new and enhanced alternative trading systems have emerged as an option for individual and institutional investors to avoid directing their trades through retail foreign exchange brokers, which could result in reduced revenue derived from our foreign exchange brokerage business. We may also face price competition from our competitors. Many competing firms using a principal model can set their own prices as they generate income from trading with their customers. In contrast, the prices we provide to our customers are set by our foreign exchange market makers which vary based on market conditions.

Our Risk-Management Policies and Procedures May Not Be Effective and May Leave Us Exposed to Unidentified or Unexpected Risks.

We are dependent on our risk-management policies internal controls, control systems and compliance manuals set in place and the adherence to such policies, systems, and manuals by our trading staff. Our policies, procedures and practices used to identify, monitor and control a variety of risks, including risks related to human error, customer defaults, market movements, fraud and money-laundering, are established and reviewed by the risk committee of our board of directors. Under certain circumstances we may elect to adjust our risk-management policies to allow for an increase in risk tolerance, which could expose us to the risk of greater losses. To deal with and to manage our risks, our approach is discretionary by nature and are considered on a case by case basis and developed internally. We observe historical market behavior and also involve reliance on standard industry practices. These methods may not adequately prevent losses, particularly as they relate to extreme market movements, which may be significantly greater than historical fluctuations in the market. Our risk-management methods also may not adequately prevent losses due to technical errors if our testing and quality control practices are not effective in preventing software or hardware failures. We rely on a combination of technical and human controls and supervision that are subject to error and failure. These methods may not protect us against all risks or may protect us less than anticipated, in which case our business, financial condition and results of operations and cash flows may be materially adversely affected.

We Depend on Our tailor-made Technology. Any Disruption or Corruption of Our tailor-made Technology or Our Inability to Maintain Technological Superiority in Our Industry Could Have a Material Adverse Effect on Our Business, Financial Condition and Results of Operations and Cash Flows. We May Experience Failures While Developing Our Self-developed Technology.

We rely on our technology, particularly the electronic trading platform, to accurately and timely receive process internal and external data. Any disruption for any reason in the proper functioning of the electronic trading platform, or any corruption of our software may cause error trades or require us to suspend our services and could have a material adverse effect on our business, financial condition and results of operations and cash flows. In order to remain competitive, our proprietary technology is under continuous development and redesign. As we develop and redesign our proprietary technology, there is an ongoing risk that failures may occur and result in service interruptions or other negative consequences such as slower quote aggregation, slower trade execution, erroneous trades, or mistaken risk-management information.

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We believe our technology has provided us with a competitive advantage relative to many of our competitors. If our competitors develop more advanced technologies, we may be required to devote substantial resources to the development of more advanced technology to remain competitive. The gold and silver market is characterized by rapidly changing technology, evolving industry standards and changing trading systems, practices and techniques. We may not be able to keep up with these rapid changes in the future, develop new technology, realize a return on amounts invested in developing new technologies or remain competitive in the future.

We are Vulnerable to System Failures or Attacks, Which Could Cause Interruptions or Decreases in the Responsiveness of our Services and Harm our Business.

We are heavily dependent on our technology infrastructure, among other functions, to operate our trading platform. Our ability to facilitate transactions successfully and provide high quality customer service depends on the efficient and uninterrupted operation of our computer and communications hardware and software systems. Our systems are vulnerable to damage or interruption from human error, natural disasters, power loss, telecommunication failures, break-ins, sabotage, computer viruses, intentional acts of vandalism, computer denial-of-service attacks and other similar events. If our systems fail to perform, we could experience periodic interruptions and disruptions in operations, slower response times or decreased customer satisfaction.

Our Cost Structure Is Largely Fixed. If Our Revenues Decline and We Are Unable to Reduce Our Costs, Our Profitability Will Be Adversely Affected.

Our cost structure is largely fixed. We base our cost structure on historical and expected levels of demand for our services, as well as our fixed operating infrastructure, such as computer hardware and software, hosting facilities and security and staffing levels. If demand for our services declines and, as a result, our revenues decline, we may not be able to adjust our cost structure on a timely basis and our profitability may be materially adversely affected.

Attrition of Customer Accounts and Failure to Attract New Accounts Could Have a Material Adverse Effect on Our Business, Financial Condition and Results of Operations and Cash Flows. Even if We Do Attract New Customers, We May Fail to Attract the Customers in a Cost-Effective Manner, Which Could Materially Adversely Affect Our Profitability and Growth.

Our customer base is primarily comprised of individual customers who generally trade in gold and silver. Although we offer products and tailored services designed to educate, support and retain our customers, our efforts to attract new customers or reduce the attrition rate of our existing customers may not be successful. If we are unable to maintain or increase our customer retention rates or generate a substantial number of new customers in a cost-effective manner, our business, financial condition and results of operations and cash flows would likely be adversely affected. For the year ended December 31, 2012, we incurred selling and marketing expenses of approximately $10.8 million. Although we have spent significant financial resources on selling and marketing expenses and related expenses and plan to continue to do so, these efforts may not be cost-effective at attracting new customers. In particular, we believe that rates for desirable advertising and marketing placements, including online, search engine, print and television advertising, are likely to increase in the foreseeable future, and we may be disadvantaged relative to our larger competitors in our ability to expand or maintain our advertising and marketing commitments.

The Loss of Our Key Employees Would Materially Adversely Affect Our Business, Including Our Ability to Grow Our Business.

Our key employees, including Ricky Wai Lam Lai, our chief executive officer, and Yue Yuen Chan, our chief financial officer, have significant experience in the electronic trading platform industry and have made significant contributions to our business. Our continued success is dependent upon the retention of these and other key executive officers and employees, as well as the services provided by our trading staff, technology and programming specialists and a number of other key managerial, marketing, planning, financial, technical and operations personnel. The loss of such key personnel could have a material adverse effect on our business. In addition, our ability to grow our business is dependent, to a large degree, on our ability to retain such employees.

Any Future Acquisitions May Result in Significant Transaction Expenses, Integration and Consolidation Risks and Risks Associated With Entering New Markets, and We May Be Unable to Profitably Operate Our Consolidated Company.

Although our growth strategy has not focused historically on acquisitions, we may in the future selectively pursue acquisitions and new businesses. Any future acquisitions may result in significant transaction expenses and present new risks associated with entering additional markets or offering new products and integrating the acquired companies. Because acquisitions historically have not been a core part of our growth strategy, we do not have significant experience in successfully completing acquisitions. We may not have sufficient management, financial and other resources to integrate companies we acquire or to successfully operate new businesses and we may be unable to profitably operate our expanded company. Additionally, any new businesses that we may acquire, once integrated with our existing operations, may not produce expected or intended results.

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Our Hong Kong operating subsidiary, Goldenway Precious Metals, offers and sells gold and silver precious metal price trading contracts in Hong Kong. Pursuant to a client agreement with our affiliate, Goldenway HK, which is SFC licensed to engage in Type 1, Type 2 and Type 3 regulated activities, Goldenway HK carries out on behalf of Goldenway Precious Metals transactions dealing with options, futures contracts and exchange traded products in Hong Kong. Precious metal price trading contracts in gold and silver are not and may not be offered in the U.S. by us, including by our non-U.S. subsidiary, and are not eligible for resale to U.S. residents. They are not currently registered with the U.S. Securities and Exchange Commission or any other U.S. regulators.

We May Be Unable to Respond to Customers’ Demands for New Services and Products and Our Business, Financial Condition and Results of Operations and Cash Flows May Be Materially Adversely Affected.

Our customers may demand new services provided by our electronic trading platform. If we fail to identify these demands from customers or update our services accordingly, and new services and products provided by our competitors may render our existing services and products less competitive. Our future success will depend, in part, on our ability to respond to customers’ demands for new services and products on a timely and cost-effective basis and to adapt to address the increasingly sophisticated requirements and varied needs of our customers and prospective customers. We may not be successful in developing, introducing or marketing new services and products. In addition, our new service and product enhancements may not achieve market acceptance. Any failure on our part to anticipate or respond adequately to customer requirements, or any significant delays in the development, introduction or availability of new services, products or service or product enhancements could have a material adverse effect on our business, financial condition and results of operations and cash flows.

We May Be Unable to Respond to the Evolving Industry Practices and Technology Solutions, and Our Business, Financial Condition and Results of Operations and Cash Flows May Be Materially Adversely Affected.

To remain competitive as a precious metals electronic trading platform provider, we must continue to invest in research and development of new technology solutions in order to keep up with the ever evolving industry practices and enhancements to our existing solutions. The process of developing new technologies, products and services is complex and expensive. The introduction of new solutions by our competitors, the market acceptance of competitive solutions based on new or alternative technologies or the emergence of new industry practices could render our solutions less competitive.

Our Failure to Adequately Compete in Other Emerging Markets, Either Directly or Through Agents or Other Business Partners, Could Have a Material Adverse Effect on Our Business, Financial Condition and Results of Operations and Cash Flows.

Expanding our business in other emerging markets is an important part of our growth strategy. To compete successfully in these emerging markets, we must continue to design, develop, and sell new and enhanced precious metals electronic trading programs and services that are culturally acceptable to these emerging markets. We anticipate that emerging markets will include potentially high growth opportunities, offset by potential entrenched local competition, higher credit risks, cultural differences, less developed and established local financial and banking infrastructure, reduced protection of intellectual rights, inability enforce contract in some jurisdictions, difficulties and costs associated with staffing and managing foreign operations, including reliance on newly hired local personnel, currency and tax laws that may prevent or restrict the transfer of capital and profits among our various operations around the world; and time zone, language and cultural differences among personnel in different areas of the world. If we do not develop innovative and reliable precious metals electronic trading program and services in a cost-effective and timely manner which are attractive to consumers in these markets, if consumer demand for precious metals electronic trading in emerging markets does not increase as much as we expect, or if we invest resources in products or geographic areas which do not produce the growth or profitability we expect, or when we expect it, our business and results of operations could be significantly harmed.

Our Operations Present Special Challenges and Our Failure to Adequately Address Such Challenges or Compete in These Markets, Either Directly or Through Agents or Other Business Partners, Could Have a Material Adverse Effect on Our Business, Financial Condition and Results of Operations and Cash Flows.

Expanding our business in other emerging markets is an important part of our growth strategy. Due to certain cultural, regulatory and other challenges relevant to those markets, however, we may be at a competitive disadvantage in those regions relative to local firms or to international firms that have a well-established local presence. These challenges include:

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• less developed or mature local technological infrastructure and higher costs, which could make our products and services less attractive or accessible in emerging markets;

• difficulty in complying with the diverse regulatory requirements of multiple jurisdictions, which may be more burdensome, not clearly defined, and subject to unexpected changes, potentially exposing us to significant compliance costs and regulatory penalties;

• less developed and established local financial and banking infrastructure, which could make our products and services less accessible in emerging markets;

• reduced protection of intellectual property rights;

• inability to enforce contracts in some jurisdictions;

• difficulties and costs associated with staffing and managing foreign operations, including reliance on newly hired local personnel;

• tariffs and other trade barriers;

• currency and tax laws that may prevent or restrict the transfer of capital and profits among our various operations around the world; and

• time zone, language and cultural differences among personnel in different areas of the world.

Failure to Identify and/or Manage Risk Associated with Dealing in Precious Metal Price Trading Contracts May Expose Us to Additional Liability and Adversely Affect Our Profitability and Growth.

A substantive portion of our revenue is generated through our dealings with precious metals price trading contracts, where we enter into contractual obligations with our customers to buy and/or sell precious metals at the prevailing market prices. Since our incorporation, no customer has requested fulfillment of a precious metal price trading contract order for precious metals, however, our customers are offered the option to request that we fulfill our precious metal price trading contract obligations for physical delivery of precious metals. As such we may be obligated, at the customer’s request, to fulfill a precious metal price trading contract for physical delivery. We believe that our client agreement with Goldenway HK, an entity owned and controlled by Goldenway Investments, our majority stockholder, ensures our ability to cover any excess customer demand for gold and silver. Through them we may engage in the trade of futures contracts and other derivative instruments to manage our position risk against these market risks. Goldenway HK holds a Type 1, Type 2 and Type 3 licenses approved by the Securities and Futures Commission, SFC, which enables Goldenway HK to deal in futures contracts as defined under Hong Kong’s Securities and Futures Ordinance, SFO. Failure to hedge our precious metal price trading contract obligations or properly identify and/or manage such obligations could expose us to additional liability and adversely affect our profitability and growth.

We are subject to risk of default by payment transfer agents that hold our funds and our customers’ funds.

We do not have direct access to payment networks, which enable our acceptance of credit cards and debit cards (including some types of prepaid cards). Therefore, we have significant deposit payment transfer agents. As of December 31, 2012, our payment transfer agents held approximately $7.5 million in funds on behalf of us and our customer funds of $2.3 million. Our subsidiary GPML is not required to segregate customer funds from our own funds. As such, we aggregate our customers’ funds and our funds and hold them in deposit accounts at payment transfer agents. In the event of insolvency of one or more of the payment transfer agents with whom we have deposited these funds, both we and our customers may not be able to recover such funds. In such an event, our business and cash flow would be materially adversely impacted. Because our customers’ funds are aggregated with our own, they are not insured by any deposit insurance in Hong Kong or abroad and in any such insolvency, we and our customers would rank as unsecured creditors in respect of claims to funds deposited with any such payment transfer agents. As a result, we may be subject to claims by customers due to the loss of customer funds and our business would be harmed by the loss of our own funds.

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RISKS RELATED TO REGULATION

Litigation and Regulatory Investigations May Result in Significant Financial Losses and Harm to Our Reputation.

We face significant risk of litigation, regulatory investigations and similar actions in the ordinary course of our business, including the risk of lawsuits and other legal actions relating to unauthorized transactions, error transactions, breach of data privacy laws, breach of fiduciary or other duties. Any such action may include claims for substantial or unspecified compensatory damages, as well as civil, regulatory or criminal proceedings against our directors, officers or employees, and the probability and amount of liability, if any, any remain unknown for significant periods of time. We may be also subject to various regulatory inquiries, such as information requests and book and records examinations, from regulators and other authorities in the geographical markets in which we operate.

A substantial liability arising from a law suit judgment or a significant regulatory action against us or a disruption in our business arising from adverse adjudications in proceedings against our directors, officers or employees could have a material adverse effect on our business, financial condition and results or operations. Moreover, even if we ultimately prevail in the litigation, regulatory action or investigation, we could suffer significant harm to our reputation, which could materially affect our prospects and future growth, including our ability to attract new customers, retain current customers and recruit and retain employees and agents.

Data Privacy Law, Rules and Regulations in Our Geographical Markets Could Have a Material Adverse Effect on Our Business, Financial Condition and Results of Operation.

We are subject to data privacy laws, rules and regulations that regulate the use of customer data. For instance, in Hong Kong we are governed by the Personal Data (Privacy) Ordinance (Chapter 486 of the Laws of Hong Kong) and as a data user we are prohibited from doing or engaging in any practice that contravenes the data protection principles set out therein. Compliance with these laws, rules and regulations may restrict our business activities, require us to incur increased expenses and devote considerable time to compliance efforts.

Servicing Customers Via the Internet May Require Us to Comply With the Laws and Regulations of Each Country in Which We Are Deemed to Conduct Business. Failure to Comply With Such Laws May Negatively Impact Our Financial Results.

Since our services are available over the Internet in foreign countries and we have customers residing in foreign countries, foreign jurisdictions may require us to qualify to do business in their country. We believe that the number of our customers residing outside of the United States will increase over time. We are required to comply with the laws and regulations of each country in which we conduct business, including laws and regulations currently in place or which may be enacted related to Internet services available to their citizens from service providers located elsewhere. Any failure to develop effective compliance and reporting systems could result in regulatory penalties in the applicable jurisdiction, which could have a material adverse effect on our business, financial condition and results of operations and cash flows.

We conduct our business operations in Hong Kong and currently only accept and process transactions for precious metal price trading contracts on gold and silver placed over the internet in Hong Kong. So although our customers may not reside in Hong Kong, they may access our electronic trading platform via the Internet from anywhere in the world. Since we do not conduct such operations in foreign jurisdictions, we have not analyzed whether the acceptance and processing of orders in foreign jurisdictions would be prohibited by the regulations of such jurisdictions. While we are not currently aware of any prohibition in a foreign jurisdiction that would bar us from accepting orders placed over the internet from customers outside Hong Kong, any such jurisdiction may enact new laws or adopt measures that regulate or prohibit their residents from engaging in such transactions over the internet. The enactment of such legislation and failure to comply may have a material negative impact on our financial condition and business results.

Without Local PRC Registration, Licensing or Authorization, We May Be Subject to Possible Enforcement Action and Sanction for Our Operations in the PRC if Our Operations Are Deemed to Have Violated PRC Regulations.

For the fiscal year ended December 31, 2012, all of our precious metal price trading contracts trades were executed and concluded in Hong Kong where, the industry is unregulated. However, when permitted, we promote our services to customers outside of Hong Kong, including to customers in China where our industry is regulated. The regulatory rules and procedures for engaging in our business in China are complex and are not as clear as those in many other jurisdictions and so we have not sought licensing from PRC government authorities to conduct, and we do not conduct our business operations in China. We do work with third party agents to promote and introduce our services to individuals and businesses in China and we accept them as customers via our website. Our PRC legal counsel, the Beijing Dacheng (Guangzhou) Law Offices, has advised us that our activities in China are in compliance with PRC law because such activities are purely promotional and never involve the conduct of any business transactions in China. We cannot assure you that PRC rules and regulations will not change such that we can no longer engage in such promotional activities or offer our precious metals trading services to PRC residents online. In such case, we may be subject to fines, penalties, or sanctions or may be required to cease such offerings to PRC residents all together. These restrictions may limit our ability to increase revenues and would have a material adverse effect on our results of operations.

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Our Growth May Be Limited by Various Restrictions and We Remain at Risk That We May Be Required to Cease Operations if We Become Subject to Regulation by Local Government Bodies.

We currently have only a limited presence in a number of significant markets and may not be able to gain a significant presence there unless and until regulatory barriers to international firms in certain of those markets are modified. Consequently, we cannot assure you that our international expansion will continue and that we will be able to develop our business in emerging markets as we currently plan. Furthermore, we may be subject to possible enforcement action and sanction if we are determined to have previously offered, or currently offer, our services in violation of local government’s regulations. In these circumstances, we are exposed to sanction by local enforcement agencies and our contracts with customers may be unenforceable. We may also be required to cease the conduct of our business with customers in the relevant jurisdiction and/or we may determine that compliance with the regulatory requirements for continuance of the business is too onerous to justify making the necessary changes to continue that business.

Procedures and Requirements of the Patriot Act May Expose Us to Significant Costs or Penalties.

As participants in the financial services industry, we are, and our subsidiaries are, subject to laws and regulations, including the Patriot Act of 2001, that require that we know our customers and monitor transactions for suspicious financial activities. The cost of complying with the Patriot Act and related laws and regulations is significant. We face the risk that our policies, procedures, technology and personnel directed toward complying with the Patriot Act are insufficient and that we could be subject to significant criminal and civil penalties due to noncompliance. Such penalties could have a material adverse effect on our business, financial condition and results of operations and cash flows. In addition, as an online financial services provider with customers worldwide, we may face particular difficulties in identifying our customers and monitoring their activities.

RISKS RELATED TO THIRD PARTIES

We Rely on Third-Party Providers in Several Areas of Our Operations and therefore Do Not Have Full Control over the Services Provided to Our Customers.

We rely on our affiliate, Gateway, to maintain our electronic trading platform and information technology services. If Gateway were to fail to provide technical services with respect to our electronic trading platform, and we were unable to secure an adequate alternative, our business and results of operation could be materially affected.

We also rely on our affiliate, Goldenway HK, to carry out all our futures contracts and options (if any) both of which are regulated activities as defined under the SFO. If Goldenway HK were to fail to provide execution of regulated activities services for us, and we were unable to secure an adequate alternative, our business and results of operation could be materially affected.

We are Subject to Counterparty Risk Whereby Defaults by Parties With Whom We Do Business Can Have an Adverse Effect on Our Business, Financial Condition and Results of Operations and Cash Flows.

In order to reduce our contract positions risk exposures with customers, Goldenway Precious Metals entered the same transaction as customer on other CGSE member to minimize the risk exposure when the total net position is greater than a certain level. Therefore, our precious metals position risk management operations require a commitment of capital and involve risks of losses due to the potential failure of our customers or counterparty to perform their obligations under these transactions. Our margin policy allows customers to leverage their account balances by trading notional amounts that may be significantly larger than their cash balances. We mark our customers’ accounts to market each time a trading price in their portfolio changes. While this allows us to closely monitor each customer’s account, it does not guarantee our ability to eliminate negative customer account balances prior to an adverse trading price change. Although we have the ability to alter our margin requirements without prior notice to our customers, this may not eliminate the risk that our access to liquidity becomes limited or market conditions, including Loco London Gold and Silver price volatility and liquidity constraints, change faster than our ability to modify our margin requirements. In light of the current turbulence in the global economy, we face increased risk of default by our customers and other counterparties. For example, during the second half of 2008, Lehman Brothers Holdings Inc. declared bankruptcy, and many major U.S. financial institutions consolidated, were forced to merge or were put into conservatorship by the U.S. federal government. Any liability arising from our precious metals operations could be significant and could have a material adverse effect on our business, financial condition and results of operations and cash flows.

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Failure of Third-Party Systems or Third-Party Service and Software Providers Upon Which We Rely Could Adversely Affect Our Business.

We rely on certain related party’s computer systems or third-party service and software providers, including trading platforms, back-office systems, Internet service providers and communications facilities. For example, for the year ended December 31, 2012, approximately 90% of our precious metals trading volume was derived from trades utilizing our Shenzhen Gateway Technology Limited’s electronic trading platform, a related party trading platform we acquired that is popular in the international retail trading community and offers our customers a choice in trading interfaces. Any interruption in these third-party services, or deterioration in their performance or quality, could adversely affect our business. If our arrangement with any third party is terminated, we may not be able to find an alternative systems or services provider on a timely basis or on commercially reasonable terms. This could have a material adverse effect on our business, financial condition and results of operations and cash flows.

Our Computer Infrastructure May Be Vulnerable to Security Breaches. Any Such Problems Could Jeopardize Confidential Information Transmitted Over the Internet, Cause Interruptions in Our Operations or Give Rise to Liabilities to Third Parties.

Our computer infrastructure is potentially vulnerable to physical or electronic computer break-ins, viruses and similar disruptive problems and security breaches. Any such problems or security breaches could give rise to liabilities to one or more third parties, including our customers, and disrupt our operations. A party able to circumvent our security measures could misappropriate proprietary information or customer information, jeopardize the confidential nature of information we transmit over the Internet or cause interruptions in our operations. Concerns over the security of Internet transactions and the safeguarding of confidential personal information could also inhibit the use of our systems to conduct precious metals transactions over the Internet. To the extent that our activities involve the storage and transmission of proprietary information and personal financial information, security breaches could expose us to a risk of financial loss, litigation and other liabilities. Our current insurance policies may not protect us against all of such losses and liabilities. Any of these events, particularly if they result in a loss of confidence in our services, could have a material adverse effect on our business, financial condition and results of operations and cash flows.

RISKS RELATED TO THE MARKET FOR OUR STOCK

The market price of our common stock can become volatile, leading to the possibility of its value being depressed at a time when you may want to sell your holdings.

The market price of our common stock can become volatile. Numerous factors, many of which are beyond our control, may cause the market price of our common stock to fluctuate significantly. These factors include:

• our earnings releases, actual or anticipated changes in our earnings, fluctuations in our operating results or our failure to meet the expectations of financial market analysts and investors;
• changes in financial estimates by us or by any securities analysts who might cover our stock;
• speculation about our business in the press or the investment community;
• significant developments relating to our relationships with our customers or suppliers;
• stock market price and volume fluctuations of other publicly traded companies and, in particular, those that are in our industry;
• customer demand for our products;
• investor perceptions of our industry in general and our Company in particular;
• the operating and stock performance of comparable companies;
• general economic conditions and trends;
• announcements by us or our competitors of new products, significant acquisitions, strategic partnerships or divestitures;
• changes in accounting standards, policies, guidance, interpretation or principles;
• loss of external funding sources;
• sales of our common stock, including sales by our directors, officers or significant stockholders; and
• additions or departures of key personnel.

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Securities class action litigation is often instituted against companies following periods of volatility in their stock price. Should this type of litigation be instituted against us, it could result in substantial costs to us and divert our management’s attention and resources.

Moreover, securities markets may from time to time experience significant price and volume fluctuations for reasons unrelated to the operating performance of particular companies. These market fluctuations may adversely affect the price of our common stock and other interests in our Company at a time when you want to sell your interest in us.

Although publicly traded, the trading market in our common stock has been substantially less liquid than the average trading market for a stock quoted on the Nasdaq Global Market and this low trading volume may adversely affect the price of our common stock.

Our common stock trades on the OTCQB Market. The trading market in our common stock has been substantially less liquid than the average trading market for companies quoted on the Nasdaq Global Market. Limited trading volume will subject our shares of common stock to greater price volatility and may make it difficult for you to sell your shares of common stock at a price that is attractive to you.

We may be subject to penny stock regulations and restrictions and you may have difficulty selling shares of our common stock.

The SEC has adopted regulations which generally define so-called “penny stocks” to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. If our common stock becomes a “penny stock,” we may become subject to Rule 15g-9 under the Exchange Act, or the Penny Stock Rule. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and “accredited investors” (generally, individuals with a net worth in excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their spouses). For transactions covered by the Penny Stock Rule, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market.

For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.

There can be no assurance that our common stock will qualify for exemption from the Penny Stock Rule. In any event, even if our common stock were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None

ITEM 2. PROPERTIES.

Our executive offices are located at 28/F, Tower 2, The Gateway, Harbour City, Tsim Sha Tsui, Kowloon, Hong Kong. We use it for administration, marketing and customer service. The Company leases its office space under non-cancelable operating lease agreements that expire on various dates through 2013. Major lease contracts are disclosed in more detail on the table below.

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Premises	Lessor/Sub-lessor	Term of Tenancy/Expiration Date	Rent and Charges
Suite No. 9 12th Floor of Tower 1, China Hong Kong City, No. 33 Canton Road, Kowloon, Hong Kong	Wide Harvest Investment Limited	2/22/2010-2/21/2013	HK$62,880 (approximately $8,080) per month for rent and HK$17,135 (approximately $2,202) per month for management fee and air conditioning fee
Suites 2801-8, 2811-12, on the 28th Floor of Tower 2, the Gateway, Harbour City, Hong Kong	Harbour City Estates Limited	7/3/2012-7/2/2015	HK$777,168 (approximately $100,000) per month for rent, HK$51,811 (approximately $6,600) per month for air- conditioning fee and HK38,858 (approximately $5,000) per month for service charge)
Suites 2809-10, on the 28th Floor of Tower 2, the Gateway, Harbour City, Hong Kong	Harbour City Estates Limited	10/17/2012-10/16/2015	HK$107,328 (approximately $15,000) per month for rent, HK$7,155 (approximately $900) per month for air- conditioning fee and HK$5,366 (approximately $700) per month for service charge

We believe that all space is in good condition and that the property is adequately insured by the Company.

ITEM 3. LEGAL PROCEEDINGS

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business.

Our subsidiary, Goldenway UK, is currently disputing claims approximately £0.1 million (approximately $0.2 million) for services provided to the Company which considers to have caused by cessation of the relevant agreement during the period. The Company counter offered a settlement of £0.02 million (approximately $0.03 million) and the other party counter offered a settlement of £0.05 million (approximately $0.08 million).

Other than the aforesaid, we are currently not aware of any such legal proceedings or claims that we believe will have a material adverse impact on our business, financial condition or operating results.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is quoted on the OTCQB Market under the symbol “GWYI.” Historically, there has not been an active trading market for our common stock. The following table sets forth, for the periods indicated, the high and low closing prices of our common stock. These prices reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.

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		Closing Bid Prices(1	)
		High			Low
Fiscal year ended December 31, 2012
1st Quarter	$	2.17		$	1.11
2nd Quarter		1.11			1.11
3rd Quarter		1.11			1.11
4th Quarter		1.11			1.11
Fiscal year ended December 31, 2011
1st Quarter	$	N/A		$	N/A
2nd Quarter		2.00			0.60
3rd Quarter		0.75			0.51
4th Quarter		2.15			1.01

Holders

As of December 31, 2012 there were approximately 50 stockholders of record of our common stock. This number does not include shares held by brokerage clearing houses, depositories or others in unregistered form.

Dividends

On June 30, 2011 and September 30, 2011, prior to the closing of the share exchange transaction, Goldenway Precious Metals declared a dividend of $14,005,862 and $4,236,452, or $0.14 per share and $0.04 per share, respectively, on the 100,000,000 shares issued to Goldenway Investments, the direct shareholder of Goldenway Precious Metals. Any decisions regarding the additional declaration of dividends will be made by our board of directors. We currently intend to retain and use any future earnings for the development and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. Our board of directors has complete discretion on whether to pay dividends, subject to the approval of our stockholders. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant.

Securities Authorized for Issuance under Equity Compensation Plans

We do not have in effect any compensation plans under which our equity securities are authorized for issuance and we do not have any outstanding stock options.

Recent Sales of Unregistered Securities

We have not sold any equity securities during the fiscal year ended December 31, 2012 that were not previously disclosed in a quarterly report on Form 10-Q or a current report on Form 8-K that was filed during the 2012 fiscal year.

Purchases of Equity Securities

No repurchases of our common stock were made during the fourth quarter of 2012.

ITEM 6. SELECTED FINANCIAL DATA

Not Applicable.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis should be read in conjunction with our financial statements and the notes thereto and the other financial information appearing elsewhere in this report. In addition to historical information, the following discussion contains certain forward-looking information. See “Special Note Regarding Forward Looking Statements” above for certain information concerning those forward looking statements. Our financial statements are prepared in U.S. dollars and in accordance with U.S. GAAP.

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Overview of our Business

We were organized under the laws of the State of Nevada on September 10, 2007. Since September 30, 2011, through our subsidiary, Goldenway Precious Metals, we are a recognized electronics trading member of the Chinese Gold and Silver Exchange Society, or the CGSE, in Hong Kong, and hold a Type AA License which authorizes us to engage in the electronic trading of Kilo Gold and Loco London Gold and Silver. We provide precious metals price trading contract trading services via our 24-hour electronic trading platform and telephone transaction system in Hong Kong. Our electronic trading platform provides our customers with CGSE price quotations on gold and silver precious metal price trading contracts, on a Loco London basis, as well as information updates on the gold and silver market, based on an evaluation of third-party market pricing sources such as M-Finance and Bloomberg. In addition to our retail customers, we also trade precious metal price trading contracts of precious metals with other third-party providers of precious metal price trading contract services in Hong Kong. See details regarding our services under the “Our Products, Services and Customers” heading in this report.

We face daily fluctuations in the price of gold and silver, foreign exchange rates, as well as interest rates. Although we have not done so since incorporation, through our client agreement with Goldenway HK, an entity owned and controlled by Goldenway Investments, our majority stockholder, we may engage in the trade of futures contracts and other derivative instruments to hedge against these market risks. Goldenway HK holds a Type 1, Type 2 and Type 3 licenses approved by the Securities and Futures Commission, SFC, which enables Goldenway HK to deal in futures contracts as defined under Hong Kong’s Securities and Futures Ordinance, SFO. Through our client agreement we are also able to ensure our ability to cover any excess customer demand for gold and silver.

Our revenue is generated from contracts traded on our electronic trading platform, including rollover interest charges on unliquidated contracts, from the revaluation of precious metals, and from the provision of foreign exchange brokerage services to active retail customers globally. Our total revenue increased by $19.1 million, or 47.5%, to $59.2 million for 2012, from $40.1 million for 2011, and our net income increased to $14.2 million in fiscal year 2012, as compared to $12.7 million in fiscal year 2011. During the respective periods revenues generated from contracts traded on the electronic trading platform accounted for approximately 98.8% and 99.1% of our revenues in fiscal year 2012 and 2011, respectively (including rollover interest charges); revenue generated from realized and revaluation of precious metals accounted for 0.3% and 0.4% of our revenues; and revenue generated from foreign exchange brokerage services, accounted for 0.8% and 0.4% of our revenues.

2012 Financial Performance Highlights

The following summarizes certain key financial information for 2012:

• Revenues: Our revenues were $59.2 million for 2012, an increase of $19.1 million, or 47.5%, from $40.1 million for 2011.

• Net income: Net income was $14.2 million for 2012, an increase of $1.5 million, or approximately 12.0%, from $12.7 million for 2011.

• Fully diluted net income per share: Fully diluted net income per share was approximately $0.97 for 2012, as compared to approximately $0.87 for 2011.

Principal Factors Affecting Our Financial Performance

Our operating results are primarily affected by the following factors:

Dependence on Overall Market Conditions – Changes in the global financial markets, global economic conditions and political events affect levels of trading volumes in ways that we may not be able to predict. For example, in times of turmoil, people fear that their assets may be seized and that the currency may become worthless and the demand for gold rises. If the return on bonds, equities and real estate is not adequately compensating for risk and inflation then the demand for gold and other alternative investments such as commodities increases. Variations in trading levels caused by unpredictable market trends may cause our revenues and operating results to vary significantly from period to period, and period to period comparisons of our revenues and operating results may not be meaningful. A slowdown and subsequent stagnation in trading volume in the global financial markets, or a systemic problem affecting any financial market, could have a material adverse effect on our revenues and profitability.

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Dependence on Self-developed Technology – Our success is highly dependent on our sophisticated technology that has been available only to us. If our technology were to become available to our competitors, or if our competitors adopt or develop similar or more advanced technologies, our operating results may be adversely affected. Further, we may not be able to keep up with rapid changes in technology, evolving industry standards and changing trading systems, practices and techniques to remain competitive in our industry.

Computer System Failures – The success of our business depends on the efficient and uninterrupted operations of our computer and communications hardware and software systems. Our service has occasionally experienced system interruptions in the past due to various reasons, some of which were beyond our control. We expect to experience occasional system interruptions from time to time in the future, which may have an adverse effect on our business.

Results of Operations

Year Ended December 31, 2012 Compared to Year Ended December 31, 2011

The following table sets forth key components of our results of operations during the fiscal years ended December 31, 2012 and 2011, both in dollars and as a percentage of our net sales.

		For the Fiscal
		Year Ended
		December 31,				December 31,
		2012				2011
		Amount		% of		Amount		% of
				Total				Total
REVENUES				Revenue				Revenue
Trading revenue	$	60,453,220			$	38,772,785
Foreign exchange brokerage services		491,284				178,742
Gain from sales of precious metals		394,511				-
Investment loss		(3,547,342	)			-
Interest income from customers’ trading accounts		1,615,865				1,017,221
Fair value change of precious metals		(190,249	)			174,685
Total revenues		59,217,289				40,143,433
EXPENSES
Management fees		1,242,856		2.1%		6,399,912		15.9%
Trading expenses and commissions		12,554,273		21.2%		11,057,629		27.5%
Employee compensation and benefit		7,574,196		12.8%		2,457,346		6.1%
General and administrative expenses		3,178,156		5.4%		1,978,229		4.9%
Advertising expenses		10,781,589		18.2%		1,146,155		2.9%
Bad debt expenses		1,795,356		3.0%		-		-%
Occupancy expenses		1,358,817		2.3%		732,480		1.8%
Depreciation and amortization		1,158,290		2.0%		579,993		1.4%
Data processing and service fees		1,759,724		3.0%		274,146		0.7%
Foreign exchange loss		514,284		0.8%		-		-%
Total expenses		41,917,541				24,625,890		61.3%
Other income		50,047		0.1%		193,727		0.5%
INCOME BEFORE INCOME TAXES		17,349,795		29.3%		15,711,270		39.1%
INCOME TAXES
Provision for income taxes		2,737,981		4.6%		2,537,319		6.3%
Deferred income tax provision (recovery )		399,190		0.7%		485,620		1.2%
		3,137,171		5.3%		3,022,939		7.5%
NET INCOME		14,212,624		24.0%		12,688,331		31.6%
OTHER COMPREHENSIVE INCOME
Foreign currency translation		87,998		0.1%		(7,718	)	0.1%
COMPREHENSIVE INCOME	$	14,300,622		24.1%	$	12,680,613		31.5%

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Revenue. Our revenue is generated from contracts traded on our electronic trading platform, including rollover interest charges on unliquidated contracts, from the revaluation of precious metals, and from the provision of foreign exchange brokerage services to active retail customers globally. Our total revenue increased by $19.1 million, or 47.5%, to $59.2 million for the fiscal year ended December 31, 2012, from $40.1 million for December 31, 2011. This net increase was primarily due to (i) an increase in trading volume, which was in line with the increase in the number of speculative customers as well as an increase in income from adjustments included in our price formulation, the net difference between the prices at which we buy and sell, or sell and buy, Loco London Gold and Silver contracts, which accounted for 113.7% of the net increase; (ii) an increase in commission income earned by Goldenway UK for introducing trading customers to principal(s), which accounted for 1.6% of the net increase; (iii) an increase in rollover interest revenue, which is one of our carrying costs, on customers’ open positions on trading contracts of precious metals upon exceeding the daily cutoff period (mainly caused by the changes in the amount and the length of period for unliquidated contracts), which accounted for 3.1% of the net increase; and (iv) an increase in fair value change of trading precious metals, which accounted for 0.2% of the net decrease. Commissions to Goldenway UK are determined by the number and size of transactions executed by the customers and is recognized currently in income and on a trade date basis.

Revenue from our electronic trading platform is comprised of net revenues from serving as the counterparty to transactions executed by our customers, and revenues from the assessment of rollover interest charges on all contracts that remain unliquidated beyond one calendar day after initiation. In our experience, revenues from rollover interest charges generally remain at less than 3% of our revenues which coincides with the short-term trading behavior of our customers. During the years ended December 31, 2012 and 2011, revenue generated from our electronic trading platform accounted for approximately $58.5 million and $39.8 million, or 98.8% and 99.1% of our revenues, respectively. Revenues from our electronic trading platform included rollover interest charges for the years ended December 31, 2012 and 2011 of $1.6 million, or 2.7% of revenues, and $1.0 million, or 2.5% of our revenues, respectively.

Although we sometimes incur net losses from contract liquidations on a given day, we usually experience net gains in the aggregate by adjusting our markup and markdown prices. This is primarily because we mitigate the risk associated with serving as the counterparty to customer transactions by including an absolute mark-up amount for buy side contracts and mark-down amount for sell side contracts. We also occasionally adjust the ratio of this absolute amount included in the markup and markdown price if, after close monitoring of customer trading, we determine that there is an unequal balance of either buy side or sell side contracts. In such cases we adjust the ratio on our markup and markdown prices for new buy and sell side contracts keeping within the same aggregate adjustment range, until our aggregated net position returns to a balanced position.

During the respective periods revenues generated from realized and revaluation of precious metals accounted for 0.3% and 0.4% of our revenues; and revenue generated from foreign exchange brokerage services, accounted for 0.8% and 0.4% of our revenues.

Expenses. During the year ended December 31, 2012, the expenses were comprised of Management fee, Trading expenses and commissions, Employee compensation and benefit, General and administrative expenses, Advertising expenses, Bad debt expenses, Occupancy expenses, Depreciation and amortization, and Data processing and service fees. Expenses increased by $17.3 million, or 70.2%, to $41.9 million, as compared to $24.6 million, mainly due to our increase in size of operation. The respective analysis of increase/decrease of expense items are as follows:

Management fee. Management fee was $1.2 million for the year ended December 31, 2012, compared to $6.4 million for the year ended December 31, 2011. Management fee expenses were comprised of rental, entertainment, travel and employment expenses, and the net decrease was mainly attributable to our amendment of the management fee agreement with Goldenway Investments during the 2011 fourth quarter, to remove the mark-up rate component and to apportion operating costs based on the number of employees engaged in activities for the Company so that the Company could incur cost, such as employee remunerations, directly.

Trading expenses and commissions. Trading expenses and commissions increased by $1.5 million, or 13.5%, to $12.6 million for the year ended December 31, 2012, compared to $11.1 million for the year ended December 31, 2011. The increase was mainly driven by the increase in trading volume, which led to an increase in the collection fee for customer deposits and commission to agents. Our collection fees and agency fees increased by $1.2 million, or 12%, from $10.0 million in fiscal year 2011 to $11.2 million in fiscal year 2012, which accounted for 80% of our increase in trading expenses and commission.

Employee compensation and benefit. Employee compensation and benefit increased by $5.1 million, or 208.2%, to $7.6 million for the year ended December 31, 2012, compared to $2.5 million for the year ended December 31, 2011. The increase was primarily due to an increase in the number of new employees for continuous business expansion. Our number of staff increased from 105 as of December 31, 2011, to 135 as of December 31, 2012 in connection with our amendment of the management fee agreement with Goldenway Investments, as well as in connection with the fulfillment of the necessary vacancies for the newly-developed functions, such as dealing and IT audit etc.. Also, our bonus increased significantly from approximately $0.3 million to approximately $0.6 million, as a result of improved business performance during 2012.

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General and administrative expenses and foreign exchange loss. General and administrative expenses and foreign exchange loss increased by $1.7 million, or 86.7%, to $3.7 million for the year ended December 31, 2012, as compared to $2.0 million for the year ended December 31, 2011. The increase was primarily due to (i) unfavorable exchange rates applied on RMB by our payment agents on us, which we lost $0.5 million in fiscal year 2012 (ii) the increase in professional fees relating to the SOX consultation fee of $0.1 million, (iii) legal consultation fee for a proposed restructure, and tax planning fee of $0.7 million; and (iv) the increase in professional insurance expense of $0.1 million.

Advertising expenses. Advertising expenses increased by $9.6 million, or 840.7%, to $10.8 million for the year ended December 31, 2012, as compared to $1.2 million for the year ended December 31, 2011. The net increase was primarily due to our expenses on online promotions. We incurred approximately $7.9 million in online promotion during 2012, of which (1) $4.9 million was incurred for advertising in Yahoo, Google, Baidu, Youdao, Sosou, Sogou-Online and other famous search engine websites; (2) $2.8 million was incurred for email promotion services; and (3) $0.2 million was incurred on data analysis and other online promotion services. Our significant expenses on online promotion resulted in improved performance in fiscal year 2012.

Occupancy expenses. Occupancy expenses increased by $0.6 million, or 85.5%, to $1.4 million for the year ended December 31, 2012, as compared to $0.7 million for the year ended December 31, 2011. The increase was primarily due to (i) renting a whole floor of office as compared to renting several business office units in fiscal year 2012; and (ii) rental expense of our new subsidiary, Goldenway UK.

Depreciation and amortization. Depreciation and amortization increased by $0.6 million, or 99.7%, to $1.2 million for the year ended December 31, 2012, as compared to $0.6 million for the year ended December 31, 2011. This increase was primarily due to the acquisition of new trading platforms during fiscal 2012 and a full year’s depreciation of our motor vessel, which the motor vessel had only depreciated for 4 months in fiscal year 2011.

Data processing and service fee. Data processing and service fee increased by $1.5 million, or 541.9%, to $1.8 million for the year ended December 31, 2012, as compared to $0.3 million for the year ended December 31, 2011. The net increase was primarily due to (i) the increase in IT service fees paid to Gateway and Goldenway Investment, which increased from Nil in fiscal 2011 to $0.5 million in fiscal 2012, as we have more trading platforms in fiscal 2012; (ii) the increase in number of customers which caused the increase in rental fee for the occupation of more proxy servers for the year, which resulted in an increase in our computer expenses from $0.2 million in fiscal 2011 to $1.0 million in fiscal 2012, represented a 302.9% increase.

Income before income taxes. Income before income taxes increased by $1.6 million, or 10.4%, to $17.3 million for the year ended December 31, 2012, as compared to $15.7 million for the year ended December 31, 2011. This increase was primarily contributed by the increase in our customer base, resulting in an increase of trading revenue and total expenses of $19.1 million and $17.3 million, respectively, for the year ended December 31, 2012.

Income taxes. Income taxes increased by $0.1 million, or 3.8%, to $3.1 million for the year ended December 31, 2012, as compared to $3.0 million for the year ended December 31, 2011, the income tax expenses did not increase significantly with income before income taxes mainly due to less non-deductible expenses incurred in fiscal 2012 when compared with that of 2011. We incurred $0.5 million non-deductible expenses in fiscal 2012, when compared with $1.2 million in fiscal 2011, decreased $0.7 million or 56.9% .

Net income. For the foregoing reasons, we generated a net income of $14.2 million for the year ended December 31, 2012, an increase of $1.5 million, or 12.0%, from $12.7 million for the year ended December 31, 2011.

Comprehensive income. Our comprehensive income was $14.3 million for the year ended December 31, 2012, compared with comprehensive income of $12.7 million for the year ended December 31, 2011. The balance comprised of the operating income, in the ordinary course of business, and the foreign currency translation, which is the exchange rate fluctuations from translation of the Company’s Hong Kong and UK subsidiaries’ accounts from Hong Kong dollars (“HKD” or “HK$”) and Great British Pound (“GBP” or “£”), our functional currencies, to United States dollars (“USD” or “US$”), our reporting currency.

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Liquidity and Capital Resources

To date, we have financed our operations primarily through cash flows from operations and equity contributions by our stockholders. We are not aware of any other restrictions that will significantly impact our ability to transfer cash within our corporate structure or restrict the net assets of our subsidiaries, Goldenway Precious Metals and Goldenway UK. As of December 31, 2012, we had cash and cash equivalents of $24.2 million, primarily consisting of cash on hand and demand deposits.

The following table provides detailed information about our net cash flow for all financial statement periods presented in this report:

Cash Flows

(all amounts in millions of U.S. dollars)

		Fiscal Year Ended
		December 31,
		2012			2011
Net cash provided by operating activities	$	23.2		$	14.1
Net cash used in investing activities		(9.3	)		(11.8	)
Net cash provided by financing activities		-			-
Effect of exchange rate changes on cash		-			-
Net increase in cash and cash equivalents		13.9			2.3
Cash, beginning of the year		10.3			8.0
Cash, end of the year	$	24.2		$	10.3

As a member of the CGSE, we are also subject to working capital and minimum asset requirements. Under the requirements, the minimum required working capital, defined as cash plus precious metals, is approximately $193,000 and the minimum required asset is $645,000. We were in compliance with these requirements as of December 31, 2012.

The FSA requires Goldenway UK to maintain a regulatory basic capital (“Pillar 1 required capital”) of the greater of (i) £100,000 (approximately, $150,000); or (ii) the sum of its credit and market risk requirements of approximately £13,000 (approximately, $20,000); or (iii) Goldenway UK’s fixed overhead requirement (“FOR”) of approximately £475,000 (approximately, $713,000), and a Pillar 2 capital requirement of £475,000 (approximately, $713,000). Capital is managed through budgeting, forecasting and daily and monthly entity and consolidated capital reporting. Goldenway UK is in compliance with these requirements as of December 31, 2012.

As of December 31, 2012, we had $24.2 million in cash and $0.2 million in gold and silver, and $10.3 million and $1.7 million, respectively, as of December 31, 2011. As of December 31, 2012 and 2011, we had $57.5 million and $28.7 million, respectively, in total assets.

Operating Activities

Net cash provided by operating activities was $23.2 million for the year ended December 31, 2012, as compared to $14.1 million for the year ended December 31, 2011, an increase of $9.0 million. The increase was due to the higher net income which outweighed adjustments to reconcile net income to net cash provided by operating activities for the year ended December 31, 2012 as compared to the year ended December 31, 2011. For the year ended December 31, 2012, (i) change in cash, held for customers/restricted cash by the Company resulted in a cash outflow of $0.6 million, when compared with $0.1 million of inflow for the year ended December 31, 2011(ii) change in accounts receivable held by the Company resulted in a cash outflow of $0.7 million, compared to $0.5 million for the year ended December 31, 2011; (iii) change in other receivables resulted in a cash inflow of $0.5 million for the year ended December 31, 2012, compared to a cash outflow of $0.5 million for the year ended December 31, 2011; (iv) change in trading precious metals resulted in a cash inflow of $1.2 million for the year ended December 31, 2012, compared to a cash outflow of $0.7 million for the year ended December 31, 2011; (v) change in deposits and prepaid expenses resulted in a cash outflow of $7.3 million for the year ended December 31, 2012, compared to $2.4 million for the year ended December 31, 2011; (vi) change in accounts payable resulted in a cash inflow of $2.3 million for the year ended December 31, 2012, compared to $1.0 million for the year ended December 31, 2011; (vii) change in accrued expenses and other liabilities resulted in a cash inflow of $3.9 million for the year ended December 31, 2012, compared to a cash outflow of $0.1 million for the year ended December 31, 2011; (viii) change in customer deposits resulted in a cash inflow of $8.1 million for the year ended December 31, 2012, compared to $4.0 million for the year ended December 31, 2011; and (ix) change in income taxes payable resulted in a cash outflow of $1.0 million for the year ended December 31, 2012, compared to a cash inflow of $0.3 million for the year ended December 31, 2011.

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Investing Activities

Net cash used in investing activities was $9.3 million for the year ended December 31, 2012, as compared to $11.8 million for the year ended December 31, 2011, a decrease of $2.5 million. The decrease is mainly due to decreases in (i) purchases of property and equipment and intangible assets amounted to $3.2 million during the year ended December 31, 2012, compared to $4.8 million in cash used for such purpose during the year ended December 31, 2011; (ii) cash outflow from balances due from the majority stockholder Goldenway Investment, changed from a cash outflow of $4.8 million fiscal 2011 to a cash inflow of $0.2 million in fiscal 2012; and (iii) net cash outflow from acquisition of Goldenway UK of $2.2 million in fiscal 2011, while there was no business acquisition during fiscal year 2012.

During fiscal 2012, the Company recorded a cash outflow of $6.4 million for a deposit to acquire potentially 40% of HXPM Holdings Limited, a company incorporated in Hong Kong, which is engaged in the trading and brokerage of bullion and is also a member of CGSE (“HXPM deposit”). Notwithstanding, the HXPM deposit of $6.4 million, the Company recorded a decrease in cash outflow from investing activities of $2.5 million, from $11.8 million in fiscal year 2011 to $9.3 million in fiscal year 2012.

Financing Activities

There were no significant cash flows arising from financing activities in fiscal year 2012 and 2011.

Operating Lease Commitments

The Company leases its office space under non-cancelable operating lease agreements that expire on various dates through 2015. Future annual minimum lease payments, including maintenance and management fees, for non-cancelable operating leases, are as follows:

Year ending December 31,		(in‘000	)
2013	$	1,738
2014		1,653
2015		855
	$	4,246

Obligations under Material Contracts

• Pursuant to a Software Development Contract, dated August 1, 2012, between Goldenway Precious Metals and Shenzhen Gateway, we are obligated to pay fees to Gateway in exchange for IT maintenance services through July 31, 2013. As of December 31, 2012, we had a prepayment of $0.05 million in IT maintenance fees to Gateway under this agreement.

• Pursuant to a Data Analysis Management Services Contract, dated August 1, 2012, between Goldenway Precious Metals and Shenzhen Gateway, we are obligated to pay fees to Gateway in exchange for data analysis management services through July 31, 2013. As of December 31, 2012, we had a prepayment of $0.04 million in data analysis fees to Gateway under this agreement.

• During fiscal year 2012, the Company purchased online precious metal trading platforms for $1.4 million from Gateway. As of December 31, 2012, the Company was obligated to pay approximately $0.6 million to Gateway for the online trading platforms.
  

• The Company entered into a service agreement with Goldenway Asset Management, a company owned and controlled by the Company’s controlling stockholder, Goldenway Investments whereby the Company is obligated to pay approximately $31,000 annually for investment related marketing material. As of December 31, 2012, the Company prepaid approximately $5,000 to Goldenway Asset Management.

• Goldenway Investments is the former parent of Goldenway Precious Metals and is now our majority stockholder. On January 1, 2010, Goldenway Precious Metals entered into a management fee agreement with Goldenway Investments, pursuant to which Goldenway Investments provides management services to Goldenway Precious Metals in exchange for management fees based on the actual operating cost incurred by Goldenway Investments, plus a mark-up rate on certain operational costs. The management fee is payable on an annual basis or on demand after provision of management services by Goldenway Investments. Since October 1, 2011, the management fee agreement was amended to eliminate the mark-up rate component and apportion operating costs based on the number of employees engaged in activities for the Company. The management fee is payable on a monthly basis or on demand after a provision of service by Goldenway Investments. Management fee was $1.2 million for the year ended December 31, 2012, compared to $6.4 million for the year ended December 31, 2011.

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• The Company and Goldenway Investments are also party to a maintenance and service agreement, dated January 1, 2012, pursuant to which the Company is obligated pay a monthly fee of HKD 120,000 (approximately, $0.02 million) from January 2012 to September 2012 and increased to HKD300,000 (approximately, $0.04 million), (due to the additional two more platforms are required to maintain) to Goldenway Investments in exchange for precious metals trading platform maintenance services. Fees incurred under the maintenance and service agreement totaled $0.3 million for the year ended December 31, 2012.

• The Company is party to a marketing and advertising service agreement, dated October 1, 2009, between the Company and Goldenway Investments (HK) Limited, or Goldenway HK, a Goldenway Investments subsidiary, whereby the Company is obligated to pay a monthly fee of HKD600,000 (approximately $0.1 million) to Goldenway HK, in exchange for marketing and advertising consulting services. The contract is subject to annual renewal. Fees incurred under the marketing and advertising service agreement totaled $0.9 million and $0.7 million the years ended December 31, 2012 and 2011, respectively.

Off-Balance Sheet Arrangements

On December 8, 2011 and February 29, 2012, our trading system was seriously attacked by unknown actors and its business and operations were temporarily disrupted, which led to quoting errors. As of the date of this report, we have not been notified of any claim against us alleging any harm caused to third parties by this disruption, and our customers have continued to actively place precious metals trading orders through their respective trading accounts. In view of this, our management has determined that no provision should be provided for these incidents, however, management can provide no assurance that we will not receive any claims in connection with this disruption in the future.

Except with respect to the foregoing, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on their financial condition or results of operations.

Critical Accounting Policies

Basis of Accounting

The Company’s consolidated financial statements are prepared in accordance with U.S.GAAP.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Changes in these estimates are recorded when known.

Significant estimates made by management include:

• Valuation of assets and liabilities requiring fair value estimates;
• The allowance for doubtful accounts and bad debt expense;
• The realization of deferred tax assets;
• Useful lives of property and equipment;
• The carrying amount of intangible assets and the amortization period of intangible assets with definite lives;
• Future cash flows associated with impairment testing for tangible and intangible assets; and
• Other matters that affect the reported amounts and disclosure of contingencies in the consolidated financial statements.

Actual results could differ from those estimates.

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Revenue Recognition

Revenue is recognized in accordance with the standard, “Revenue Recognition ("Staff Accounting Bulletin ("SAB") No. 104, Revenue Recognition”). The Company, through GPML, generates revenue from precious metal price contracts trading. SAB 104 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the seller’s price to the buyer is fixed and determinable; and (4) collectability is reasonably assured.

Precious metal trading contracts generally involve the settlement of precious metal prices at market rates. Profits or losses are realized when customer transactions are liquidated and are recorded net as trading revenue on the consolidated statements of operations and comprehensive income. Unrealized profits or losses on open contracts are revalued at prevailing precious metal price (the difference between contract price and market price) at the date of the balance sheets are included in unrealized profits and losses, respectively, on the consolidated balance sheets. Changes in net unrealized profits or losses amounted to a gain of $1,067,207 and $1,588,146 during the fiscal years 2012 and 2011, respectively, and are recorded in trade revenue on the consolidated statements of operations and comprehensive income.

The Company, through its wholly-owned subsidiary, Goldenway UK, is engaged in the provision of foreign exchange brokerage services. Goldenway UK follows SAB 104 and recognizes revenues when Goldenway UK and customers enter brokerage service agreement, services rendered, the brokerage service fee is fixed and determinable and collectability is reasonably assured.

The Company is also engaged in trading of precious metal price contracts with other trading companies. Profits or losses are realized when our transactions are liquidated and are recorded net as trading revenue on the consolidated statements of operations and comprehensive income.

Unrealized profits or losses on open contracts are revalued at prevailing precious metal price (the difference between contract price and market price) at the date of the balance sheets are included in unrealized profits and losses, respectively, on the consolidated balance sheets.

The Company also holds physical precious metals for trading. The precious metals were marked to market at each year end date. The changes in fair value of these precious metals are recorded as fair value change of precious metals on the consolidated statements of operations and comprehensive income.

The Company earns interest income on unliquidated contract amounts. The interest is accrued and calculated based on agreed upon annual rate of 0.75% to 1.25% .

Advertising

Advertising costs are incurred for the production and communication of advertising, as well as other marketing activities. The Company expenses the cost of advertising as incurred. The Company did not capitalize any production costs associated with advertising for 2012 or 2011.

Cash and Cash Equivalents

Cash is comprised of cash on hand and unrestricted deposits. Cash equivalents include highly liquid investments with maturities of three months or less when purchased. Cash equivalents are recorded at fair value.

Cash, Held for Customers

Cash, held for customers represents cash held in-trust for the customers. The balance arises primarily from cash deposited by customers and net realized gains from customer trading activity in Goldenway UK. The Company records a corresponding liability in connection with this amount that is included in customer deposits in the consolidated statements of financial condition. A portion of the balance is not available for general use due to legal restrictions in accordance with certain jurisdictional regulatory requirements. These legally restricted balances were $576,779 and $nil as of December 31, 2012 and 2011, respectively.

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Fair Value of Financial Instruments

The standard, “Disclosures about Fair Value of Financial Instruments”, defines financial instruments and requires fair value disclosures for those instruments. The standard, “Fair Value Measurements”, defines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for cash, cash, held for customers, accounts receivable, due from major stockholder, other receivables, accounts payable, accrued expenses and other liabilities qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.

The standard establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy defined by the standard are as follows:

Level 1	Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, listed equities and U.S. government treasury securities.
Level 2	Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry- standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category include non-exchange-traded derivatives such as over the counter forwards, options and repurchase agreements.
Level 3	Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value from the perspective of a market participant. Level 3 instruments include those that may be more structured or otherwise tailored to customers’ needs.

Accounts Receivable

The Company has agreements with several payment transfer agents who assist the customers to transfer funds to their trading accounts with the Company. The balance represents funds collected by the agents from the customers and to be remitted to the Company and the income receivable from the provision of foreign exchange brokerage services.

Allowance for Doubtful Accounts

The Company records an increase in the allowance for doubtful accounts when the prospect of collection becomes doubtful. Management specifically analyzes accounts receivable and historical bad debt experience when evaluating the adequacy of the allowance for doubtful accounts. Should any of these factors change, the estimates made by management will also change, which could affect the level of our future provision for doubtful accounts.

Other Receivables

Other receivables represent miscellaneous receivables from various third parties.

Trading Precious Metals

The Company holds physical precious metals for trade. The precious metals were marked to market at each balance sheet date.

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Deposits and Prepaid Expenses

The Company records goods and services paid for but not to be received until a future date as prepaid assets. These include payments for advertising and occupancy related expenses. Any prepaid expense to be realized beyond the next 12 months is classified as non-current.

Property and Equipment

Property and equipment are stated at cost. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its present working condition and locations for its intended use. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets.

Property and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets as follows:

Office equipment	5 years
Furniture and fixtures	5 years
Leasehold improvements	over the lease term
Computer equipment	4 years
Motor vehicles	4 years
Motor vessel	10 years

Expenditure for maintenance and repairs is charged to expense as incurred. Additions, renewals and betterments are capitalized.

The gain or loss on disposal of property and equipment is the difference between the net sales proceeds and the carrying amount of the relevant assets, and, if any, is recognized in the consolidated statements of operation and comprehensive income.

Intangible Assets and Goodwill

The standard, “Intangibles — Goodwill and Other”, requires purchased intangible assets other than goodwill to be amortized over their useful lives unless their lives are determined to be indefinite.

Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible and intangible assets acquired and liabilities assumed.

The Company has two membership licenses issued by CGSE to trade precious metal price contracts and physical precious metals. In addition, upon the acquisition of Goldenway UK, a license of the FSA has been recognized as an identifiable intangible asset. All licenses, which are subject to renewal periodically, are not amortized and have an indefinite useful life because the management believes the Company will be able to continuously renew the license in the future.

The Company compares the recorded value of its indefinite life intangible assets and goodwill to their fair values on an annual basis and whenever circumstances arise that indicates that impairment may have occurred. The Company performs goodwill impairment test for each reporting unit. If the fair value of the reporting unit exceeds the carrying value of the reporting unit, goodwill is not impaired.

The Company accounts for costs to acquire its trading platform and related software in accordance with the standard, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use”. The standard requires that such technology be capitalized in the application and infrastructure development stages. Costs related to training, administration and non-value-added maintenance are charged to expense as incurred. Capitalized software development costs are being amortized over the useful life, which the Company has estimated at 5 years.

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Reporting Currency and Foreign Currency Translation

As of December 31, 2012 and 2011, the accounts of the Company and its subsidiaries are maintained in their functional currencies, the U.S. dollar (“USD”), the Hong Kong dollar ("HK$") and the Great British Pound (“GBP”) for Goldenway, Inc., GPML and Goldenway UK, respectively. The consolidated financial statements of the Company have been translated into U.S. dollars in accordance with the accounting standard on foreign currency translation. All assets and liabilities of the Company are translated at the exchange rate on the balance sheet date, shareholders’ equity is translated at the historical rates and the consolidated statements of operations and comprehensive income, and consolidated statements of cash flows are translated at the weighted average exchange rate for the year. The resulting translation adjustments are reported under comprehensive income and as a separate component of shareholders’ equity.

	December 31,	December 31,
	2012	2011
Period end USD/HK$ exchange rate	7.7507	7.7663
Average USD/HK$ exchange rate	7.7569	7.7841
Period end USD/GBP exchange rate	0.6149	0.6436
Average USD/GBP exchange rate	0.6308	N/A
November and December 2011 Average
USD/GBP exchange rate	N/A	0.6371

Long-Lived Assets

In accordance with the standard, “Property, Plant and Equipment”, the Company periodically evaluates the carrying value of long-lived assets when events and circumstances warrant such review. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such an asset is separately identifiable and is less than the carrying value. In that event, a loss is recognized in the amount by which the carrying value exceeds the fair market value of the long-lived asset. The Company has identified no such impairment losses.

Asset Retirement Obligations

In accordance with the standard, “Asset Retirement Obligations”, the Company recognizes an estimated liability for future costs associated with the restoration of the leased office space. No assets are legally restricted for purposes of settling asset retirement obligations. A liability for the fair value of an asset retirement obligation and corresponding increase to the carrying value of the related leasehold improvements are recorded at the time the leasehold improvements are acquired. The increase in carrying value is included in property and equipment in the accompanying consolidated balance sheets. The Company depreciates the amount added to the related leasehold improvements and recognizes expense in connection with the accretion of the discounted liability over the remaining lease term.

The following table provides a reconciliation of the changes in the estimated asset retirement obligations from January 1, 2011 through December 31, 2012.

		December 31,			December 31,
		2012			2011
Beginning asset retirement obligations	$	66,312		$	50,122
Additional liability incurred		114,177			16,058
Asset obligation retirement		(45,766	)		-
Currency translation adjustment		188			132
Ending asset retirement obligations	$	134,911		$	66,312

As of December 31, 2012, the Company had recorded the asset retirement obligation in accrued expenses and other liabilities on the accompanying consolidated balance sheets.

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Accounts Payable

The balance represents commission payable to agents, withdrawals requested by customers and other payables to various vendors.

Customer Deposits

Customer deposits include amounts due on cash and margin transactions. These transactions include deposits adjusted for profits or losses arising from settled trades in customer accounts.

Unrealized Profits or Losses on Open Contracts

Unrealized profits or losses on open contracts revalued at prevailing precious metal price (the difference between contract price and market price) at the date of the balance sheets are included in unrealized profits or losses on open contracts.

Accumulated Other Comprehensive Income

The Company’s accumulated other comprehensive income, consists of foreign currency translation from the Company’s subsidiaries’ functional currencies, HK$ and GBP, to reporting currency, U.S. dollars.

Income Taxes

The Company utilizes the standard, "Accounting for Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company adopted the provisions of the interpretation, "Accounting for Uncertainty in Income Taxes”. The Company did not have any material unrecognized tax benefits and there was no effect on its financial condition or results of operations as a result of implementing the interpretation. The Company does not believe there will be any material changes in its unrecognized tax positions over the next 12 months.

Earnings per Share

The Company computes earnings per share (“EPS”) in accordance with the Financial Accounting Standards Board (the “FASB”), Accounting Standards Codification (“ASC”) 260 “Earnings Per Share”. FASB ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the year.

Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of contracts to issue ordinary common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. The computation of diluted earnings per share includes the estimated impact of the exercise of contracts to purchase common stocks using the treasury stock method and the potential shares of converted common stock associated with the convertible debt using the if-converted method.

Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

The Company does not have any securities that may potentially dilute the basic earnings per share.

Comprehensive Income

Comprehensive income is comprised of net income and other comprehensive income. Other comprehensive income includes unrealized profits or losses resulting from currency translations of foreign subsidiaries.

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Consolidated Statement of Cash Flows

In accordance with the standard, "Statement of Cash Flows", cash flows from the Company’s operations are calculated based upon the local currencies translated at the weighted average exchange rate for the year. As a result, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.

Segment reporting

Reportable segments are identified based on operating segments which are determined based on the Company’s internal organization, management requirements and internal reporting system. An operating segment is a component of the Company that meets the following respective conditions:

a.	Engage in business activities from which it may earn revenues and incur expenses;
b.	Whose operating results are regularly reviewed by the Group’s management to make decisions about resource to be allocated to the segment and assess its performance; and
c.	For which financial information regarding financial position, results of operations and cash flows are available.

Business Combinations

The Company applies ASC 805, Business Combinations to all its business combinations. The Company accounts for acquisitions of entities that include inputs and processes and have the ability to create outputs as business combinations. The purchase price of the acquisition is allocated to tangible assets, liabilities, and identifiable intangible assets acquired based on their estimated fair values. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses and restructuring costs are expensed as incurred. While the Company uses its best estimates and assumptions as a part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the business combination date, these estimates and assumptions are inherently uncertain and subject to refinement. As a result, during the preliminary purchase price allocation period, which may be up to one year from the business combination date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. After the preliminary purchase price allocation period, the Company records adjustments to assets acquired or liabilities assumed subsequent to the purchase price allocation period in its operating results in the period in which the adjustments were determined.

Recently Adopted Accounting Standards

In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This standard results in a common requirement between the FASB and the International Accounting Standards Board (IASB) for measuring fair value and for disclosing information about fair value measurements. ASU 2011-04 is effective for fiscal years and interim periods beginning after December 15, 2011. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In June, 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. ASU 2011-05 requires entities to present net income and other comprehensive income in either a single continuous statement or in two separate, but consecutive, statements of net income and other comprehensive income. ASU 2011-05 is effective for fiscal years and interim periods beginning after December 15, 2011. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

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In September 2011, the FASB issued ASU 2011-08, Intangibles Goodwill and Other (Topic 350): The amendments in this Update will allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under these amendments, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amendments include a number of events and circumstances for an entity to consider in conducting the qualitative assessment. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In December 2011, the FASB issued ASU 2011-12, “Comprehensive income”. The amendments are being made to allow FASB time to re- deliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. While FASB is considering the operational concerns about the presentation requirements for reclassification adjustments and the needs of financial statement users for additional information about reclassification adjustments, entities should continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before ASU 2011-05. ASU No. 2011-12 is effective for the Company on January 1, 2012. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

In August 2012, the FASB issued ASU No. 2012-03, “Technical Amendments and Corrections to SEC Sections – Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 114. Technical Amendments Pursuant to SEC Release No. 33-9230, and Corrections Related to FASB Accounting Standards Update 2010-22, which amends various SEC paragraphs pursuant to the issuance of SAB No. 114. This ASU became effective on issuance, and the adoption of the ASU had no impact on the Company’s financial position or results of operations.

Recently Issued Accounting Standards

In December 2011, the FASB issued ASU 2011-11, “Balance Sheet”. The amendments in this Update require an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. Entities are required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. This scope would include derivatives, sale and repurchase agreements and reverse sale and repurchase agreements, and securities borrowing and securities lending arrangements. ASU 2011-05 is effective for fiscal years and interim periods beginning after December 15, 2012. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

On July 27, 2012, the FASB issued ASU No. 2012-02 under which an entity has the option first to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount. An entity also has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the quantitative impairment test. An entity will be able to resume performing the qualitative assessment in any subsequent period. The amendments are effective for annual and interim impairment tests performed for fiscal periods beginning after September 15, 2012 or January 1, 2013 for the Company. Early adoption is permitted. The adoption of ASU No. 2012-02 is not expected to have a material impact on the Company’s consolidated financial statements.

On October 2012, the FASB issued ASU No. 2012-04, Technical Amendments and Corrections. The updates to current guidance make the codification easier to understand and the fair value measurement guidance easier to apply by eliminating inconsistencies and providing needed clarification. ASU No. 2012-04 is effective for fiscal periods beginning after December 15, 2012. The adoption of ASU No. 2012-04 is not expected to have a material effect on the Company’s consolidated financial statements.

In January 2013, the FASB issued ASU 2013-01, “Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” (“ASU 2013-01”), which clarifies that the scope of ASU 2011-11 applies to derivatives accounted for in accordance with ASU Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

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In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”). This standard requires companies to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, companies are required to present, either on the face of the statement where net income is presented or in the accompanying notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, but only if the amount reclassified is required to be reclassified to net income in its entirety in the same reporting period. For amounts that are not required to be reclassified in their entirety to net income, companies are required to cross-reference to other disclosures that provide additional detail on those amounts. ASU 2013-02 is effective prospectively for reporting periods beginning after December 15, 2012. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

In March 2013, the FASB issued ASU 2013-05, Foreign Currency Matters (Topic 830) Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (“ASU 2013-05”). ASU 2013-05 updates accounting guidance related to the application of consolidation guidance and foreign currency matters. This guidance resolves the diversity in practice about what guidance applies to the release of the cumulative translation adjustment into net income. This guidance is effective for interim and annual periods beginning after December 15, 2013. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Market Risk

Market risk is the risk of losses in on- and off-balance sheet positions arising from movements in market prices. As we operate predominantly on an agency model with the exception of certain trades of our customers, we are not exposed to the market risk of a position moving up or down in value.

Liquidity Risk

In normal conditions, our business of providing electronic trading precious metals and related services is self financing as we generate sufficient cash flows to pay our expenses as they become due. As a result, we generally do not face the risk that we will be unable to raise cash quickly enough to meet our payment obligations as they arise. Our cash flows, however, are influenced by customer trading volume and the income we derive on that volume. These factors are directly impacted by domestic and international market and economic conditions that are beyond our control. In an effort to manage this risk, we maintain a substantial pool of liquidity. As of December 31, 2012, the percentage of cash to total assets was 42.1%, as compared to 35.8% as of December 31, 2011.

Operational Risk

Our operations are subject to various risks resulting from technological interruptions, failures, or capacity constraints in addition to risks involving human error or misconduct. We are heavily dependent on our technology infrastructure, among other functions, to operate our trading platform. Our ability to facilitate transactions successfully and provide high quality customer service depends on the efficient and uninterrupted operation of our computer and communications hardware and software systems. Our systems are vulnerable to damage or interruption from human error, natural disasters, power loss, telecommunication failures, break-ins, sabotage, computer viruses, intentional acts of vandalism, computer denial-of-service attacks and other similar events. If our systems fail to perform, we could experience periodic interruptions and disruptions in operations, slower response times or decreased customer satisfaction.

Our systems have in the past experienced disruptions in operations, which we believe will continue to occur from time to time. On December 8, 2011 and February 29, 2012, our trading system was seriously attacked by unknown actors and our business and operations were temporarily disrupted, which led to quoting errors. As of the date of this report, we have not been notified of any claim against us alleging harm caused to third parties by this disruption, and our customers have continued to actively place precious metals trading orders through their respective trading accounts, but we can provide no assurance that we will not receive any claims in the future in connection with this disruption.

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Our IT department is working with IT security consultants to strengthen and protect our network from intentional attacks. We have also established a separate department to monitor our networks and to indemnify and minimize human errors, such as clerical mistakes and incorrectly placed trades, as well as intentional misconduct, such as unauthorized trading, mischief and fraud. Furthermore, we seek to mitigate the impact of any operational issues by maintaining insurance coverage for various contingencies. Despite any precautions we may take, any systems failure that causes an interruption in our services or decreases the responsiveness of our services could, among other consequences, impair our reputation, damage our brand name and materially adversely affect our business, financial condition and results of operations and cash flows.

Regulatory Capital Risk

Various domestic and foreign government bodies and self-regulatory organizations responsible for overseeing our business activities require that we maintain specified minimum levels of regulatory capital in our operating subsidiaries. If not properly monitored or adjusted, our regulatory capital levels could fall below the required minimum amounts set by our regulators, which could expose us to various sanctions ranging from fines and censure to the imposition of partial or complete restrictions on our ability to conduct business. To mitigate this risk, we continuously evaluate the levels of regulatory capital at each of our operating subsidiaries and adjust the amounts of regulatory capital in each operating subsidiary as necessary to ensure compliance with all regulatory capital requirements.

These may increase or decrease as required by regulatory authorities from time to time. We also maintain excess regulatory capital to provide liquidity during periods of unusual or unforeseen market volatility, and we intend to continue to follow this policy. In addition, we monitor regulatory developments regarding capital requirements to be prepared for increases in the required minimum levels of regulatory capital that may occur from time to time in the future. As of December 31, 2012 and 2011, the Company’s capital position were $27.8 million and $13.7 million, respectively, including all financial assets and liabilities.

The FSA requires Goldenway UK to maintain a regulatory basic capital (“Pillar 1 required capital”) of the greater of (i) £100,000 (approximately, $150,000); or (ii) the sum of its credit and market risk requirements of approximately £13,000 (approximately, $20,000); or (iii) Goldenway UK’s fixed overhead requirement (“FOR”) of approximately £475,000 (approximately, $713,000), and a Pillar 2 capital requirement of £475,000 (approximately, $713,000). Capital is managed through budgeting, forecasting and daily and monthly entity and consolidated capital reporting. As of December 31, 2012 and 2011, Goldenway UK had net assets of $0.8 million and $1.0, respectively, which made the Company in compliance with these requirements as of such date.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The full text of our audited consolidated financial statements as of December 31, 2012 and 2011 begins on page F-1 of this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure that information that would be required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including to our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15 under the Exchange Act, our management, including our Chief Executive Officer, Mr. Ricky Wai Lam Lai, and our Chief Financial Officer or CFO, Mr. Yue Yuen Chan, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2012. Based on our assessment, Mr. Lai and Mr. Chan determined that, as of December 31, 2012, and as of the date that the evaluation of the effectiveness of our disclosure controls and procedures was completed, because of the material weaknesses in our internal control over financial reporting described below, our disclosure controls and procedures were not effective.

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Internal Controls over Financial Reporting

Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting refers to the process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP, and includes those policies and procedures that:

(1)	pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
(2)	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management and directors; and
(3)	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2012. In making this assessment, management used the framework set forth in the report entitled Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, our management concluded that our internal control over financial reporting, as of December 31, 2012, our management determined that our accounting personnel lacked the sufficient skill and experience in the application of U.S. generally accepted accounting principles (GAAP) necessary to fulfill the our public reporting obligations in accordance with U.S. GAAP and the SEC’s rules and regulations. While our accounting personnel had several years of accounting and audit experience, none of them were trained in the U.S. or held a U.S. CPA designation at the time.

Management has begun to make the changes necessary to remediate these material weaknesses including the recruitment and hiring of qualified executive accounting personnel with sufficient experience and training in U.S. GAAP to cure this material weakness. We have also a continued to train our financial and accounting personnel so that they may attain the requisite knowledge of and experience with U.S. GAAP.

Because the Company is a smaller reporting company, this annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm.

Changes in Internal Controls over Financial Reporting

We expect our continuous training of our financial and accounting personnel in U.S. GAAP will have a materially beneficial effect on, and will cure the material weakness in, our internal control over financial reporting.

There were no changes in its internal controls over financial reporting in the fourth quarter of 2012 that would materially affect, or are reasonably likely to materially affect our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION

We have no information to disclose that was required to be in a report on Form 8-K during the period covered by this report, but was not reported. There have been no material changes to the procedures by which security holders may recommend nominees to our board of directors.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

The following sets forth information about our directors and executive officers as of the date of this report:

Name	Age	Position
Ricky Wai Lam Lai	49	Chief Executive Officer and Director
Yue Yuen Chan	37	Chief Financial Officer, Treasurer and Corporate Secretary
Jian Qin Huang (1)	49	Director
Tak Wah Tam	47	Director
Chi Man Lo	50	Director
Yousuf Rashed Al Marshoudi (1)	32	Director
Sultan Mohamed R. Alshara (1)	35	Director
Kelvin Hey Wah Tang (2)	40	Director

(1)	On February 15, 2013, each of Mr. Jian Qin Huang, Mr. Sultan Mohamed R. Alshara and Mr. Yousuf Rashed Al Marshoudi resigned from their respective position as, a director of the Company effective as of February 28, 2013. The resignations of them were tendered to facilitate a reduction in the size of the Company’s board of directors and not due to any disagreement with the Company.
(2)	On March 29, 2012 the Board of Directors appointed Mr. Kelvin Hey Wah Tang to serve as a director of the Company, effective immediately. The Board of Directors also determined that Mr. Tang meets the requirements of “independent” as defined in the Listing Rules of The Nasdaq Stock Market, Inc.

Mr. Ricky Wai Lam Lai: Mr. Lai was appointed to serve as our Director, effective as of November 7, 2011, and appointed to serve as our Chief Executive Officer, effective from December 20, 2011. He has served as a Director of Goldenway Precious Metals since December 2009. Prior to this, he was responsible for the setup and management of stock brokerage operations for Grand Capital Asia Ltd in February 2008. From July 2006 until February 2008, he was Director of the Wealth management Department for Prudential Brokerage. From 1986 until 2006, Mr. Lai, held various stock broking and securities trading position with various Companies. Mr. Lai obtained his Master of Science in Accounting and Finance from London School of Economics & Political Science in 1990. He also holds a Bachelor degree in Social Sciences from the University of Hong Kong. Since 2003, Mr. Lai is a Chartered International Investment Analyst.

Mr. Yue Yuen Chan: Mr. Chan has been our Chief Financial Officer since September 30, 2011. Prior to this employment he served as Group Finance Director for ASA Holding Limited, responsible for the full service of financial services from the period of December 2009 until June 2011. From August 2007 until November 2009, Mr. Chan was the head of group Finance and Risk for Sunshine Partners Financial Holdings Limited, a Hong Kong Listed Company. Mr. Chan obtained his Master degree in Practicing Accounting at the Monash University in 2000. Mr. Chan is an International Affiliate of the Hong Kong Institute of Certified Public Accountants. He is also a member of the Taxation Institute of Hong Kong and Certified Tax Adviser.

Mr. Jian Qin Huang: Mr. Huang was appointed to serve as our Director, as of November 7, 2011 and has served as a Director of Goldenway Precious Metals since February 2011. Prior to this, he served as a consultant at Citistar Financial from 2002 until 2011. From 1983 until 1989, he was the operation Controller for Guangzhou Huang Pu Power Station. Mr. Huang holds a degree in Electrical Engineering and it Automation from Hon Hai University.

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Mr. Tak Wah Tam: Mr. Tam became a member of our board of directors as of November 7, 2011. He is a fellow member of the Hong Kong Institute of Certified Public Accountants and a fellow member of the Association of Chartered Certified Accountants of the United Kingdom. Mr. Tam has over 20 years of experience in accounting, corporate finance and corporate development. From September 2009, Mr Tam is an executive director of New Smart Energy Group Limited, independent non-executive director of Siberian Mining Group Company Limited and Tech Pro Technology Development Limited, all companies are listed on the Main Board of the Stock Exchange and was an independent non-executive director of National Arts Holdings Limited, a company listed on the GEM Board of the Stock Exchange during the period from November 2004 to June 2009. Prior to this, from July 2006 until August 2009, Mr Tam was the Investment Director for Wo Cheong Holding Limited, a private company engaged in direct investment and M&A in the People’s Republic of China.

Mr. Chi Man Lo: Mr. Lo became a member of our board of directors as of November 7, 2011. Mr. Lo is a certified public accountant (practicing) in Hong Kong and was the sole proprietor of Daniel C M Lo & Co from 1991 until its 2009 merger with Akin CPA Limited where he now serves as the senior partner of the combined firm. Mr. Lo is a fellow member of the Association of Chartered Certified Accountants (1989) and the fellow member of the Hong Kong Institute of Certified Public Accountants (1989). He is also a fellow member of the Taxation Institute of Hong Kong (2010). He also holds a degree of Bachelor of Laws from the Beijing University, the peoples’ Republic of China (1997). Mr. Lo has been the Company Secretary of Vedan International (Holdings) Limited (#2317), a company listed on the Main Board in Hong Kong since 2003.

Mr. Yousuf Rashed Al Marshoudi: Mr. Al Marshoudi became a member of our board of directors as of November 7, 2011. Since September 2009, Mr. Al Marshoudi is a Senior Manager of Ajman Bank in Dubai, leading and mentoring a team of staff of a complete branch of the bank. Prior this, he was a branch Manager for the Emirates Bank for the Dubai and Fujairah Branch from December 2004 until January 2009. Mr. Al Marshoudi holds Bachelor degree in Business Information Systems from Bedhordshire University in the United Kingdom.

Mr. Sultan Mohamed R. Alshara: Mr. Alshara became a member of our board of directors as of November 7, 2011. He is currently a branch coordinator for the Abu Dhabi Securities Market, since January 2003. He is also a community coordinator of the Fujairah Women’s college since May 2003. Mr. Sultan Mohamed R. Alshara holds a Masters Degree in Strategic Marketing, and a Bachelors Degree in Finance and Banking from the UAE University. He has been a Certified Financial Consultant with the USA Institute of Financial Consultants since January 2005.

Mr. Kelvin Hey Wah Tang: Mr. Tang became a member of our board of directors as of March 29, 2012. Mr. Tang has over 13 years’ experience in auditing, commercial accounting, financial statement management and reporting. Mr. Tang has served since March, 2005 as a secretary of WLG Inc, an international logistics company. He has also served as the corporate finance manager of its operating subsidiary, Wako Express (HK) Co. Ltd. since June 2004 and became the finance director – China from September 2010, where he was responsible for preparing consolidated accounts and financial statements under US GAAP, overseeing all accounting matters and setting up internal control and identifying risks and remedies. Before joining WLG Inc, Mr. Tang has been working in public accounting firms and he has been an audit supervisor of CCIF CPA Ltd where he was responsible for supervising audit team and completed statutory audit for listed and other companies. Mr. Tang holds a Master Degree in Corporate Finance from Hong Kong Polytechnics University and a Bachelor’s Degree in Science from the University of Hong Kong. Mr. Tang has been a member of Association of Chartered Certified Accountants since 2001.

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Qualifications, Attributes, Skills and Experience Represented on the Board

The Board has identified particular qualifications, attributes, skills and experience that are important to be represented on the Board as a whole, in light of the Company’s current needs and business priorities, the Board believes that a diversity of professional experiences in the information technology, investment and stock trading industries, and knowledge of U.S. capital markets and of U.S. accounting and financial reporting standards should be represented on the Board. Set forth below is a tabular disclosure summarizing some of the specific qualifications, attributes, skills and experiences of our directors.

Director	Titles	Material Qualifications
Ricky Wai Lam Lai	Chief Executive Officer and	•	Master of Science in Accounting and Finance
	Director	•	Experience in business management
		•	Over 15 years’ experience in stock trading and brokerage services
		•	Knowledge of U.S. accounting and financial reporting
			standards
Jian Qin Huang (1)	Director	•	Expertise in business management
		•	Knowledge of the financial industry
Tak Wah Tam	Director	•	Independent director of several Hong Kong listed companies
		•	Over 20 years’ experience in accounting, corporate finance and corporate development
Chi Man Lo	Director	•	Expertise in business management
		•	Knowledge of Hong Kong Stock Exchange (HKSE) compliance procedures gained as secretary of a HKSE listed company
		•	Knowledge of accounting
Yousuf Rashed Al Marshoudi (1)	Director	•	Bachelor degree in Business Information Systems
		•	Experience in the financial industry
Sultan Mohamed R. Alshara (1)	Director	•	Master’s degree in strategic marketing
		•	Experience in the financial industry and knowledge of U.S. capital markets
Kelvin Hey Wah Tang (2)	Director	•	Master degree in Corporate Finance
		•	Member of Association of Chartered Certified Accountants
		•	Experience in auditing, commercial accounting, financial statement management and reporting
		•	Knowledge of US GAAP and internal control

(1)	On February 15, 2013, each of Mr. Jian Qin Huang, Mr. Sultan Mohamed R. Alshara and Mr. Yousuf Rashed Al Marshoudi resigned from their respective position as, a director of the Company effective as of February 28, 2013. The resignations of them were tendered to facilitate a reduction in the size of the Company’s board of directors and not due to any disagreement with the Company.
(2)	On March 29, 2012 the Board of Directors appointed Mr. Kelvin Hey Wah Tang to serve as a director of the Company, effective immediately. The Board of Directors also determined that Mr. Tang meets the requirements of “independent” as defined in the Listing Rules of The Nasdaq Stock Market, Inc.

Family Relationships

There are no family relationships among any of our officers or directors.

Involvement in Certain Legal Proceedings

To the best of our knowledge, none of our directors or executive officers has, during the past ten years:

• been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

• had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;

• been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;

• been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

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• been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

• been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self- regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Except as set forth in our discussion below in “Certain Relationships and Related Transactions, and Director Independence –Transactions with Related Persons”, none of our directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation Table — Fiscal Years Ended December 31, 2012 and 2011

The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the named persons for services rendered in all capacities during the noted periods. None of our executive officers received total annual salary and bonus compensation in excess of $100,000.

Name and Principal Position	Fiscal Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Other (1) ($)	Total ($)
Ricky Wai Lam Lai, CEO and Director	2012	108,703	-	-	-	18,906	127,609
	2011	107,912	-	-	-	33,582	141,494
Yue Yuen Chan, CFO	2012	88,953	-	-	-	11,731	100,684
	2011	41,752	-	-	-	1,156	42,908

(1) The balance represented the travelling allowance and other disbursements relating to business purpose.

Employment Agreements

On December 20, 2011, we entered into an employment agreement with Ricky Wai Lam Lai to serve as our Chief Executive Officer. Pursuant to the Employment Agreement, Mr. Lai is entitled to receive an annual base salary of $100,000, and is eligible to receive an annual cash bonus equal to his annual base salary, payable by January 15^th of the subsequent year, provided that he remained employed as of December 15^th of the calendar year in which such bonus is earned. Mr. Lai is also eligible to receive other compensation and participate in any equity incentive plans, as determined by and at the discretion of the Company’s board of directors. The term of Mr. Lai’s Employment Agreement will be automatically extended for additional one-year periods unless it is terminated by the Company without cause (as defined in Section 5.3 of the Employment Agreement) or in the event of Mr. Lai’s death or permanent disability.

On September 30, 2011, we entered into a two-year employment agreement with Yue Yuen Chan to serve as our Chief Financial Officer. The agreement provides for an annual base salary of not less than HKD600,000 (approximately, $77,101) and is eligible to earn an annual bonus and warrants, in such amount, if any, is subject to be determined by the Board of Directors.

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Outstanding Equity Awards at Fiscal Year End

For the year ended December 31, 2012, no director or executive officer has received compensation from us pursuant to any compensatory or benefit plan. There is no plan or understanding, express or implied, to pay any compensation to any director or executive officer pursuant to any compensatory or benefit plan.

Compensation of Directors

The following table sets forth the total director compensation earned by our directors during our fiscal year ended December 31, 2012:

Name	Fees earned or paid in cash ($)	Stock awards ($)	Option awards ($)	All other compensation ($)	Total ($)
Ricky Wai Lam Lai	36,107	-	-	-	36,107
Jian Qin Huang (1)	30,000	-	-	-	30,000
Tak Wah Tam	30,000	-	-	-	30,000
Chi Man Lo	30,000	-	-	-	30,000
Yousuf Rashed Al Marshoudi(1)	30,000	-	-	-	30,000
Sultan Mohamed R. Alshara(1)	30,000	-	-	-	30,000
Kelvin Hey Wah Tang (2)	22,500	-	-	-	22,500

(1)	On February 15, 2013, each of Mr. Jian Qin Huang, Mr. Sultan Mohamed R. Alshara and Mr. Yousuf Rashed Al Marshoudi resigned from their respective position as, a director of the Company effective as of February 28, 2013. The resignations of them were tendered to facilitate a reduction in the size of the Company’s board of directors and not due to any disagreement with the Company.
(2)	On March 29, 2012 the Board of Directors appointed Mr. Kelvin Hey Wah Tang to serve as a director of the Company, effective immediately. The Board of Directors also determined that Mr. Tang meets the requirements of “independent” as defined in the Listing Rules of The Nasdaq Stock Market, Inc.

Narrative to Director Compensation Table

During the 2012 fiscal year, we paid our directors approximately $28,000 per month compensation for their services as our directors. In the future, we may adopt a policy of paying independent directors a fee for their attendance at board and committee meetings. We also reimburse our directors for reasonable travel expenses related to their duties as our directors.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information regarding beneficial ownership of our common stock as of December 31, 2012 (i) by each person who is known by us to beneficially own more than 5% of our common stock; (ii) by each of our officers and directors; and (iii) by all of our officers and directors as a group. Unless otherwise specified, the address of each of the persons set forth below is in care of the Company, 28/F, Tower 2, The Gateway, Harbour City, Tsim Sha Tsui, Kowloon, Hong Kong.

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Name and Address of Beneficial Owner	Office, If Any	Title of Class	Amount and Nature of Beneficial Ownership(1)	Percent of Class(2)
Officers and Directors
Yue Yuen Chan	Chief Financial Officer	Common stock, $0.001 par value	0	0
Jian Qin Huang(3) (5)	Director	Common stock, $0.001 par value	718,340	4.9%
Ricky Wai Lam Lai	Chief Executive Officer and Director	Common stock, $0.001 par value	0	0
Tak Wah Tam	Director	Common stock, $0.001 par value	0	0
Chi Man Lo	Director	Common stock, $0.001 par value	0	0
Yousuf Rashed Al Marshoudi (5)	Director	Common stock, $0.001 par value	0	0
Sultan Mohamed R. Alshara (5)	Director	Common stock, $0.001 par value	0	0
Kelvin Hey Wah Tang (6)	Director	Common stock, $0.001 par value	0	0
All officers and directors as a group (8 persons named above)		Common stock, $0.001 par value	11,126,641	75.9%
5% Security Holders
Hao Tang(4)	--	Common stock, $0.001 par value	10,408,301	71%
Goldenway Investments Holdings Limited (4)	--	Common stock, $0.001 par value	10,408,301	71%

(1)	Beneficial Ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Each of the beneficial owners listed above has direct ownership of and sole voting power and investment power with respect to the shares of our common stock.
(2)	Based on 14,660,029 shares of common stock issued and outstanding after giving effect to a 1-for-0.481752 share reverse split on December 9, 2011.
(3)	Represents shares held directly by Ten Bright Investments Limited, a British Virgin Islands company owned and controlled by Mr. Huang.
(4)	Represents shares held by Goldenway Investments Holdings Limited (“GIHL”), an entity 100% controlled by Fenton Capital Inc. (“Fenton”) which is in turn 100% controlled by SMP Trustees (NZ) Limited as trustee of The Fenton Trust, of which Hao Tang is the sole beneficiary.
(5)	On February 15, 2013, each of Mr. Jian Qin Huang, Mr. Sultan Mohamed R. Alshara and Mr. Yousuf Rashed Al Marshoudi resigned from their respective position as, a director of the Company effective as of February 28, 2013. The resignations of them were tendered to facilitate a reduction in the size of the Company’s board of directors and not due to any disagreement with the Company.
(6)	On March 29, 2012 the Board of Directors appointed Mr. Kelvin Hey Wah Tang to serve as a director of the Company, effective immediately. The Board of Directors also determined that Mr. Tang meets the requirements of “independent” as defined in the Listing Rules of The Nasdaq Stock Market, Inc.

Changes in Control

We do not currently have any arrangements which if consummated may result in a change of control of our Company.

Securities Authorized for Issuance under Equity Compensation Plans

We do not have any compensation plans in effect under which our equity securities are authorized for issuance.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Transactions with Related Persons

The following includes a summary of transactions since the beginning of the year of 2011, or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years, and in which any related person had or will have a direct or indirect material interest (other than compensation described under “Executive Compensation”). We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.

• Pursuant to a Software Development Contract, dated August 1, 2012, between Goldenway Precious Metals and Shenzhen Gateway, we are obligated to pay fees to Gateway in exchange for IT maintenance services through July 31, 2013. As of December 31, 2012, we had a prepayment of $0.05 million in IT maintenance fees to Gateway under this agreement.

• Pursuant to a Data Analysis Management Services Contract, dated August 1, 2012, between Goldenway Precious Metals and Shenzhen Gateway, we are obligated to pay fees to Gateway in exchange for data analysis management services through July 31, 2013. As of December 31, 2012, we had a prepayment of $0.04 million in data analysis fees to Gateway under this agreement.

• During fiscal year ended December 31, 2012 and 2011, we earned $0.5 million and $nil, respectively, in commissions from Goldenway NZ. As of December 31, 2012 and 2011, the Company had $206,525 and $nil, balance due to Goldenway NZ.

• The Company entered into a service agreement with Goldenway Asset Management, whereby the Company is obligated to pay approximately $31,000 annually for investment related marketing material. The agreement is subject to annual renewal. During the year ended December 31, 2012, the Company incurred $15,482 (2011 - $nil) for this service. As of December 31, 2012, the Company prepaid approximately $5,000 to Goldenway Asset Management.

• During the fiscal year 2012, the Company purchased online precious metal platforms for $1.4 million from Gateway. As of December 31, 2012, the Company was obligated to pay approximately $0.6 million to Gateway.

• Goldenway Investments is the former parent of Goldenway Precious Metals and is now our majority stockholder. On January 1, 2010, Goldenway Precious Metals entered into a management fee agreement with Goldenway Investments, pursuant to which Goldenway Investments provides management services to Goldenway Precious Metals in exchange for management fees based on the actual operating cost incurred by Goldenway Investments, plus a mark-up rate on certain operational costs. The management fee is payable on an annual basis or on demand after provision of management services by Goldenway Investments. Since October 1, 2011, the management fee agreement was amended to eliminate the mark-up rate component and apportion operating costs based on the number of employees engaged in activities for the Company. The management fee is payable on a monthly basis or on demand after a provision of service by Goldenway Investments. Management fee was $1.2 million for the year ended December 31, 2012, compared to $6.4 million for the year ended December 31, 2011.

• The Company and Goldenway Investments are also party to a maintenance and service agreement, dated January 1, 2012, pursuant to which the Company is obligated pay a monthly fee of HKD 120,000 (approximately, $0.02 million) from January 2012 to September 2012 and increased to HKD300,000 (approximately, $0.04 million), (due to the additional two more platforms are required to maintain) to Goldenway Investments in exchange for precious metals trading platform maintenance services. Fees incurred under the maintenance and service agreement totaled $0.05 million and $0.3 million for the year ended December 31, 2012.

• The Company is party to a marketing and advertising service agreement, dated October 1, 2009, between the Company and Goldenway Investments (HK) Limited, or Goldenway HK, a Goldenway Investments subsidiary, whereby the Company is obligated to pay a monthly fee of HKD600,000 (approximately $0.1 million) to Goldenway HK, in exchange for marketing and advertising consulting services. The contract is subject to annual renewal. Fees incurred under the marketing and advertising service agreement totaled $0.9 million the year ended December 31, 2012.

All balances with related parties are non-interest bearing and have no fixed terms of repayments.

Interested Transactions Policy and Procedures

Since our acquisition of Goldenway Precious Metals, we have established policies and procedures for the review, approval, or ratification of any transaction with related persons. On January 1, 2012, our Board of Directors adopted the Goldenway, Inc. Interested Transactions Policy and Procedures (the “Policy”). Under the Policy, all Interested Transactions are subject to approval or ratification in accordance with the procedures set forth in the Policy and summarized below. The Policy defines an “Interested Transaction” as any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which (1) the aggregate amount involved will or may be expected to exceed $100,000 in any calendar year, (2) the Company is a participant, and (3) any Related Party has or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10 percent beneficial owner of another entity). A “Related Party” is defined as any (a) person who is or was (since the beginning of the last fiscal year for which the Company has filed a Form 10-K, proxy statement or other disclosure including the information required by Form 10, even if they do not presently serve in that role) an executive officer, director or nominee for election as a director, (b) greater than 5 percent beneficial owner of the Company’s common stock, or (c) immediate family member of any of the foregoing.

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Under the Policy, the Board of Directors, or a committee established by the Board of Directors, must review the material facts of all Interested Transactions that require approval or ratification under the Policy and either approve or disapprove entry into the Interested Transaction, subject to the exceptions described below. If advance Board approval of an Interested Transaction is not feasible, then the Interested Transaction shall be considered and, if the Board determines it to be appropriate, ratified at the Board’s next regularly scheduled meeting.

In determining whether to approve or ratify an Interested Transaction, the Board will take into account, among other factors it deems appropriate, whether the Interested Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the Related Party’s interest in the transaction. Under the Policy, no director may participate in any discussion or approval of an Interested Transaction for which he or she is a Related Party, except that such director may provide all material information concerning the Interested Transaction to the Board.

If an Interested Transaction will be ongoing, the Board may establish guidelines for our management to follow in its ongoing dealings with the Related Party. Thereafter, the Board, on at least an annual basis, must review and assess ongoing relationships with the Related Party to see that they are in compliance with the Board’s guidelines and that the Interested Transaction remains appropriate.

Standing Pre-Approval for Certain Interested Transactions

The Board has reviewed the types of Interested Transactions described below and determined that each of the following Interested Transactions shall be deemed to be pre-approved by the Board, even if the aggregate amount involved will exceed $100,000.

a.       Employment of Executive Officers. Any employment by the Company of an executive officer if (a) the related compensation is required to be reported in our proxy statement under Item 402 of the SEC’s compensation disclosure requirements; or (b) the executive officer is not an immediate family member of another executive officer or director of the Company, the related compensation would be reported in our proxy statement under Item 402 of the SEC’s compensation disclosure requirements if the executive officer was a “named executive officer,” and the Board or a compensation;

b.       Director Compensation. Any compensation paid to a director if the compensation is required to be reported in our proxy statement under Item 402 of the SEC’s compensation disclosure requirements;

c.       Certain Transactions with other Companies. Any transaction with another company at which a Related Party’s only relationship is as an employee (other than an executive officer), director or beneficial owner of less than 10% of that company’s shares, if the aggregate amount involved does not exceed the greater of $1,000,000, or 2 percent of that company’s total annual revenues;

d.       Certain Company Charitable Contributions. Any charitable contribution, grant or endowment by the Company to a charitable organization, foundation or university at which a Related Party’s only relationship is as an employee (other than an executive officer) or a director, if the aggregate amount involved does not exceed the lesser of $1,000,000, or 2 percent of the charitable organization’s total annual receipts;

e.       Transactions Where All Shareholders Receive Proportional Benefits. Any transaction where the Related Party’s interest arises solely from the ownership of our common stock and all holders of our common stock received the same benefit on a pro rata basis (e.g. dividends);

f.       Transactions Involving Competitive Bids. Any transaction involving a Related Party where the rates or charges involved are determined by competitive bids;

g.       Regulated Transactions. Any transaction with a Related Party involving the rendering of services as a common or contract carrier, or public utility, at rates or charges fixed in conformity with law or governmental authority; and

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h.       Certain Banking-Related Services. Any transaction with a Related Party involving services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture, or similar services.

In addition to the foregoing Interested Transactions, the board of directors has delegated to the Chief Financial Officer and Chief Executive Officer the authority to pre-approve or ratify (as applicable any Interested Transaction with a Related Party in which the aggregate amount involved is expected to be less than $250,000. In connection with each regularly scheduled meeting of the Board, a summary of each new Interested Transaction pre-approved by the Chief Financial Officer and Chief Executive Officer must be provided to the Board for its review.

Promoters and Certain Control Persons

We did not have any promoters at any time during the past five fiscal years.

Director Independence

Each of Tak Wah Tam, Chi Man Lo, Yousuf Rashed Al Marshoudi and Sultan Mohamed R. Alshara were appointed to serve on our board of directors, effective November 7, 2011. Each of Messrs. Tam, Lo, Marshoudi and Alshara are independent directors, as the term “independent” is defined by the rules of the Nasdaq Stock Market.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Independent Auditors’ Fees

The following is a summary of the fees billed to the Company for professional services rendered for the fiscal years ended December 31, 2012 and 2011:

		Year Ended December 31,
		2012		2011
Audit Fees	$	329,667	$	202,075
Audit-Related Fees		-		-
Tax Fees		5,003		3,905
All Other Fees		94,178		118,377
TOTAL	$	428,848	$	324,357

“Audit Fees” consisted of fees billed for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our Form 10-K and 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements.

“Audit-Related Fees” consisted of fees billed for assurance and related services by the principal accountant that were reasonably related to the performance of the audit or review of our financial statements and are not reported under the paragraph captioned “Audit Fees” above.

“Tax Fees” consisted of fees billed for professional services rendered by the principal accountant for tax returns preparation.

“All Other Fees” consisted of fees billed for products and services provided by the principal accountant, other than the services reported above under other captions of this Item 14.

Pre-Approval Policies and Procedures

Under the Sarbanes-Oxley Act of 2002, all audit and non-audit services performed by our auditors must be approved in advance by our board of directors to assure that such services do not impair the auditors’ independence from us. In accordance with its policies and procedures, our board of directors pre-approved the audit service performed by MSCM LLP for our financial statements as of and for the year ended December 31, 2012.

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     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

Financial Statements and Schedules

The financial statements are set forth under Item 8 of this annual report on Form 10-K. Financial statement schedules have been omitted since they are either not required, not applicable, or the information is otherwise included.

Exhibit List

The list of exhibits included in the attached Exhibit Index is hereby incorporated herein by reference.

Exhibit	Description
No.
2.1	Share Exchange Agreement, dated September 30, 2011, by and among, Cyber Informatix, Inc., Goldenway Precious Metals Limited, Goldenway Investments Holdings Limited and the Majority stockholders of Cyber Informatix, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K/A filed on January 31, 2012)
3.1	Articles of Incorporation of the Company, as amended on December 9, 2011 (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on February 2, 2012).
3.2	Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Form S-1 filed on October 22, 2008).
10.1	Tenancy Agreement, dated March 30, 2010, between Wide Harvest Investment Limited and Goldenway Precious Metals  Limited (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K/A filed on January 31, 2012)
10.2	Tenancy Agreement, dated June 29, 2009, between Harbour City Estates Limited and Goldenway Precious Metals (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K/A filed on January 31, 2012)
10.3	Tenancy Agreement, dated November 15, 2010, between Harbour City Estates Limited and Goldenway Precious Metals  Limited (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K/A filed on January 31, 2012)
10.4	Client agreement, dated September 30, between Goldenway Precious Metals Limited and Goldenway Investment (HK)  Limited (incorporated by reference to Exhibit 10.4 to the Company’s Form 8-K/A filed on January 31, 2012)
10.5	English translation of Software Development Contract, dated March 26, 2010, between Goldenway Precious Metals Limited and Shenzhen Gateway Technology Co., Ltd. (incorporated by reference to Exhibit 10.5 of the Company’s current report on Form 8-K filed on October 6, 2011)
10.6	Executive Employment Agreement, dated September 30, 2011, between Cyber Informatix, Inc. and Hao Tang (incorporated by reference to Exhibit 10.6 of the Company’s current report on Form 8-K filed on October 6, 2011)
10.7	Executive Employment Agreement, dated September 30, 2011, between Cyber Informatix, Inc. and Yue Yue Chan (incorporated by reference to Exhibit 10.7 of the Company’s current report on Form 8-K filed on October 6, 2011)
10.8	English Translation of Prolocutor Contract, dated October 16, 2009, between Simon Yam and Goldenway Investments Holdings Limited (incorporated by reference to Exhibit 10.8 of the Company’s current report on Form 8-K filed on October 6, 2011)
10.9	Employment Agreement, dated December 20, 2011, between Goldenway, Inc. and Ricky Wai Lam Lai (incorporated by reference to Exhibit 10.1 of the Company’s current report on Form 8-K filed on February 2, 2012)
10.10	Share Purchase Agreement, dated November 1, 2011, between Goldenway Precious Metals Limited, Goldenway Voltrex Investments Limited, Individual Sellers and VFX Financial PLC (incorporated by reference to Exhibit 10.10 of the Company’s annual report on Form 10-K filed on March 29, 2012)
10.11	Management Fee Agreement, dated October 1, 2011, between Goldenway Precious Metals Limited and Goldenway Investments Holdings Limited (incorporated by reference to Exhibit 10.11 of the Company’s annual report on Form 10- K filed on March 29, 2012)
14.1	Code of Ethics (incorporated by reference to the Company’s Annual Report on Form 10-K filed on September 22, 2011)
21	List of Subsidiaries (incorporated by reference to Exhibit 21 of the Company’s annual report on Form 10-K filed on March 29, 2012)

55

31.1*	Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certifications of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certifications of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101** Interactive data files pursuant to Rule 405 of Regulation S-T

______________________
*Filed herewith

**Filed with this Form 10-K for Goldenway, Inc. Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or for purposes of Section 18 of the Securities Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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 hereunto duly authorized.

Dated: March 29, 2013

GOLDENWAY, INC.

By: /s/ Ricky Wai Lam Lai

Ricky Wai Lam Lai, Chief Executive Officer

(Principal Executive Officer)

By: /s/ Yue Yuen Chan

Yue Yuen Chan, Chief Financial Officer

(Principal Financial Officer and Principal Accounting

Officer)

In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Ricky Wai Lam Lai	Chief Executive Officer and Director	March 29, 2013
Ricky Wai Lam Lai	(Principal Executive Officer)
/s/ Yue Yuen Chan	Chief Financial Officer and Secretary	March 29, 2013
Yue Yuen Chan	(Principal Financial and Accounting
	Officer)
/s/ Tak Wah Tam	Director	March 29, 2013
Tak Wah Tam
/s/ Chi Man Lo	Director	March 29, 2013
Chi Man Lo
/s/ Kelvin Hey Wah Tang	Director	March 29, 2013
Kelvin Hey Wah Tang

56

GOLDENWAY, INC.
For the Years Ended
December 31, 2012 and 2011

Table of Contents

For the years ended December 31, 2012 and 2011

Consolidated Financial Statements	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations and Comprehensive Income	F-4
Consolidated Statements of Shareholders’ Equity	F-5
Consolidated Statements of Cash Flows	F-6
Notes to Consolidated Financial Statements	F-7

Report of Independent Registered Public Accounting Firm

To the Board of Directors and
Stockholders of Goldenway, Inc.

We have audited the accompanying consolidated balance sheets of Goldenway, Inc. (the “Company”) as of December 31, 2012 and 2011, and the related consolidated statements of operations and comprehensive income, shareholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2012. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2012 and 2011, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2012 in conformity with accounting principles generally accepted in the United States of America.

/s/ MSCM LLP

MSCM LLP
Toronto, Canada
March 29, 2013

Goldenway, Inc.

Consolidated Balance Sheets

As of December 31, 2012 and 2011

(Expressed in US dollars)

	Note		2012		2011
ASSETS
Cash		$	24,174,929	$	10,267,457
Cash, held for customers			576,779		-
Accounts receivable, net of allowance for doubtful accounts ($1,081,397 for December 31, 2012 and $nil for December 31, 2011)			1,229,247		2,358,677
Unrealized profits on open contracts	4		2,961,444		1,837,642
Other receivables	5		185,152		722,607
Trading precious metals	4		248,848		1,674,077
Deposits and prepaid expenses	6		9,763,106		1,965,475
Deferred income tax assets	14		426,188		449,234
Total current assets			39,565,693		19,275,169
Property and equipment, net	7		5,599,190		4,828,890
Intangible assets, net	8		4,497,932		2,585,422
Goodwill	3 & 8		427,136		427,136
Deposits and prepaid expenses - non-current	6		7,025,544		1,105,441
Due from a majority stockholder	13		339,544		494,732
Total assets		$	57,455,039	$	28,716,790
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	9 & 13	$	4,516,928	$	1,564,918
Customer deposits			16,533,235		8,389,460
Unrealized losses on open contracts	4		134,936		245,856
Accrued expenses and other liabilities	10		5,722,140		1,870,947
Income taxes payable			969,102		1,921,033
Due to a sister company	13		206,525		-
Deferred income tax liabilities	14		35,125		35,054
Total current liabilities			28,117,991		14,027,268
Non-current liabilities
Deferred income tax liabilities - non-current	14		1,315,368		968,464
Total liabilities			29,433,359		14,995,732
Shareholders' Equity
Common stock, $0.001 par value, 75,000,000 shares authorized, 14,660,029 (2011 – 14,660,029) shares issued and outstanding	11		14,660		14,660
Additional paid-in capital			12,877,163		12,877,163
Retained earnings			15,101,684		889,060
Accumulated other comprehensive loss			28,173		(59,825	)
Total shareholders' equity			28,021,680		13,721,058
Total liabilities and stockholders' equity		$	57,455,039	$	28,716,790

Commitments (notes 2 and 5)
Contingencies (note 18)
Subsequent events (note 19)

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

F-3

Goldenway, Inc.

Consolidated Statements of Operations and Comprehensive Income

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

	Note		2012			2011
REVENUES
Trading revenue		$	60,453,220		$	38,772,785
Foreign exchange brokerage services	13		491,284			178,742
Gain from sales of precious metals			394,511			-
Investment loss			(3,547,342	)		-
Interest income from customers’ trading accounts			1,615,865			1,017,221
Fair value change of precious metals			(190,249	)		174,685
Total revenues			59,217,289			40,143,433
EXPENSES
Management fees paid to related party	13		1,242,856			6,399,912
Trading expenses and commission			12,554,273			11,057,629
Employee compensation and benefits			7,574,196			2,457,346
General and administrative expenses			3,178,156			1,978,229
Advertising expenses			10,781,589			1,146,155
Bad debt expense			1,795,356			-
Occupancy expenses			1,358,817			732,480
Depreciation and amortization	7&8		1,158,290			579,993
Data processing and service fees	14		1,759,724			274,146
Foreign exchange loss			514,284			-
Total expenses			41,917,541			24,625,890
Other income			50,047			193,727
INCOME BEFORE INCOME TAXES			17,349,795			15,711,270
TAXES
Provision for income taxes – current			2,737,981			2,537,319
– deferred			399,190			485,620
	13		3,137,171			3,022,939
NET INCOME			14,212,624			12,688,331
OTHER COMPREHENSIVE INCOME
Foreign currency translation			87,998			(7,718	)
COMPREHENSIVE INCOME		$	14,300,622		$	12,680,613
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic and diluted	12		14,660,029			14,660,029
BASIC AND DILUTED EARNINGS PER COMMON SHARE
Basic and diluted	12	$	0.97		$	0.87

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

F-4

Goldenway, Inc.

Consolidated Statements of Shareholders’ Equity

As of December 31, 2012 and 2011

(Expressed in US dollars)

	Common Stock
										Accumulated
					Additional					Other			Total
	Number of		Par		Paid-in		Retained			Comprehensive			Shareholders'
	Shares		Value		Capital		Earnings			Income			Equity
BALANCE, December 31, 2010 (Note 11)	14,660,029	$	14,660	$	12,876,917	$	6,443,043		$	(52,107	)	$	19,282,513
Net income for the year	-		-		-		12,688,331			-			12,688,331
Foreign currency translation adjustments	-		-		-		-			(7,718	)		(7,718	)
Dividend declared	-		-		-		(18,242,314	)		-			(18,242,314	)
Effect of reverse merger	-		-		246		-			-			246
BALANCE, December 31, 2011	14,660,029		14,660		12,877,163		889,060			(59,825	)		13,721,058
Net income for the year	-		-		-		14,212,624			-			14,212,624
Foreign currency translation adjustments	-		-		-		-			87,998			87,998
BALANCE, December 31, 2012	14,660,029	$	14,660	$	12,877,163	$	15,101,684		$	28,173		$	28,021,680

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

F-5

Goldenway, Inc.

Consolidated Statement of Cash Flows

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

		2012			2011
CASH FLOW FROM OPERATING ACTIVITIES
Net income	$	14,212,624		$	12,688,331
Adjustments to reconcile net income to net cash provided          by operating activities:
Net unrealized profit		(1,234,722	)		(662,198	)
Loss on disposal of property and equipment		1,177			-
Depreciation and amortization		1,158,290			579,993
Deferred income tax		399,190			485,620
Change in fair value of trading precious metals		190,249			(174,685	)
Bad debt expense		1,795,356			-
Changes in assets and liabilities:
(Increase) decrease in assets -
Restricted cash		-			128,518
Cash, held for customers		(576,779	)		-
Accounts receivable		(665,926	)		(479,947	)
Other receivables		537,455			(509,799	)
Trading precious metals		1,234,980			(715,902	)
Deposits and prepaid expenses		(7,271,860	)		(2,413,149	)
Increase (decrease) in liabilities -
Accounts payable		2,348,414			988,656
Accrued expenses and other liabilities		3,851,193			(84,266	)
Customer deposits		8,143,775			4,007,851
Income taxes payable		(951,931	)		289,845
Net cash provided by operating activities		23,171,485			14,128,868
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(1,711,681	)		(4,835,124	)
Purchase of intangible assets		(1,497,342	)		-
Due from a majority stockholder		155,188			(4,755,481	)
Acquisition of a subsidiary, net of cash acquired		-			(2,236,566	)
Deposits paid for a potential acquisition		(6,445,874	)		-
Due to a fellow subsidiary		206,525			-
Net cash used in investing activities		(9,293,184	)		(11,827,171	)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash acquired from reverse merger		-			246
Net cash provided by financing activities		-			246
NET INCREASE IN CASH		13,878,301			2,301,943
EFFECT OF EXCHANGE RATE CHANGES ON CASH		29,171			(10,138	)
Cash, beginning of year		10,267,457			7,975,652
Cash, end of year	$	24,174,929		$	10,267,457

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:

Interest received	$	1,665,912	$	1,017,173
Non-cash investing activities:
Purchase of property and equipment in accounts payable	$	603,596	$	-

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

F-6

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

1. Nature of Operations and Basis of Presentation

Goldenway, Inc. (formerly Cyber Informatix, Inc. (“CII”)) was organized under the laws of the State of Nevada on September 10, 2007, as a software design and e-commerce company. From September 10, 2007 (date of incorporation) through to the date of the reverse acquisition discussed below, CII was a development stage company, engaged in the business of distributing economically-priced downloadable application software via the Internet, but with minimal operations.

On September 30, 2011, CII closed a share exchange agreement (the “Share Exchange Agreement”), with Goldenway Precious Metals Limited (“GPML”), its sole shareholder, Goldenway Investments Holding Limited (“GIHL”), and Mr. Terry G. Bowering, CII’s majority stockholder, pursuant to which CII acquired 100% of the issued and outstanding capital stock of GPML in exchange for 24,587,299 shares of CII’s common stock, par value $0.001, which constituted 80.80% of CII’s issued and outstanding capital stock on a fully-diluted basis as of and immediately after the consummation of the transactions contemplated by the Share Exchange Agreement. This transaction was recorded as a reverse merger and recapitalization ("RTO") for accounting purposes whereby CII (the legal acquirer) is considered the accounting acquiree and GPML (the legal acquiree) is considered the accounting acquirer and the historical operations are those of the accounting acquirer. As a result of this transaction, GPML is deemed to be a continuation of the business of CII. Accordingly, the accompanying consolidated financial statements are those of GPML. The assets and liabilities of GPML have been brought forward at their book value and no goodwill has been recognized. The historical shareholders’ equity of CII prior to the share exchange has been retroactively restated for the equivalent number of shares received as if the share exchange occurred as of the beginning of the first period presented.

Subsequent to the RTO, CII changed its name to Goldenway, Inc. (the “Company”).

GPML was incorporated in Hong Kong on April 7, 2009. GPML has obtained licenses from the Chinese Gold & Silver Exchange Society (the “CGSE”) and is involved in the trading of precious metals trading contracts, through its electronic trading platform, and precious metals. GPML is one of the CGSE’s recognized E-Trading members.

Goldenway Global Investments (UK) Limited (“Goldenway UK”) was incorporated in United Kingdom on July 14, 1997. Goldenway UK obtained a license from the London Financial Services Authority (“FSA”) and is involved in the provision of foreign exchange brokerage services.

On August 14, 2012, Goldenway, Inc. established Goldenway Financial Holdings Limited (“Goldenway Financial”) as its wholly-owned Hong Kong subsidiary, for the purpose of a merger and reorganization with Goldenway, Inc. As of the date of this report, Goldenway Financial remains inactive and the reorganization is not yet effective.

On August 30, 2012, GPML acquired a 100% equity interest in Goldtop Success Limited (“Goldtop”), an inactive Hong Kong company, for an aggregate purchase price of HK$600 (approximately $77), pursuant to a purchase and sale agreement, dated August 30, 2012. Goldtop was incorporated in Hong Kong on June 26, 2012 by an employee of the Company, for the purpose of promoting the Company but has been inactive since its formation.

On August 28, 2012, the Company entered into an Agreement and Plan of Merger and Reorganization (the “Plan of Merger”), dated August 28, 2012, between the Company and Goldenway Financial Holdings Limited (“Goldenway Financial”), a Hong Kong limited company and the Company’s wholly-owned subsidiary formed for that purpose. Pursuant to the Plan of Merger, the Company planned to change its jurisdiction of incorporation from Nevada to Hong Kong by merging with and into Goldenway Financial. Pursuant to the terms of the Plan of Merger, Goldenway Financial would be the surviving entity and the issued and outstanding shares of the Company’s Common Stock would automatically be converted into shares of Goldenway Financial ordinary shares, at the rate of one ordinary share of Goldenway Financial for each single share of the Company’s Common Stock. After the effective date of the merger, Goldenway Financial would own and conduct the Company’s business and would be managed by the same Board of Directors and executive officers who currently manage the Company. However, the Memorandum and Articles of Association of Goldenway Financial would become the governing instruments of the Company and would differ in several respects from the current Articles of Incorporation and Bylaws of the Company.

The parties to the Plan of Merger had filed a registration statement on Form F-4 to register the ordinary shares to be issued to the Company’s shareholders in the merger. However, the parties are discussing a possible restructuring of the transaction and have filed a withdrawal request subsequent to the Company’s year end with the SEC with respect to the registration statement.

F-7

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

1. Nature of Operations and Basis of Presentation (continued)

The accompanying consolidated financial statements include the accounts of the Goldenway, Inc., GPML, Goldenway Global Investments (UK) Limited (“Goldenway UK”), Goldtop and Goldenway Financial (collectively referred as the “Company”, “we”, “our” or “us”). All inter-company balances and transactions have been eliminated on consolidation. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

2. Summary of Significant Accounting Policies

Basis of Accounting
The Company’s consolidated financial statements are prepared in accordance with U.S. GAAP.

Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Changes in these estimates are recorded when known.

Significant estimates made by management include:

- Valuation of assets and liabilities requiring fair value estimates;

- The allowance for doubtful accounts and bad debt expense;

- The realization of deferred tax assets;

- Useful lives of property and equipment;

- The carrying amount of intangible assets and the amortization period of intangible assets with definite lives;

- Future cash flows associated with impairment testing for tangible and intangible assets including goodwill; and

- Other matters that affect the reported amounts and disclosure of contingencies in the consolidated financial statements.

Actual results could differ from those estimates.

Revenue Recognition
Revenue is recognized in accordance with the standard, “Revenue Recognition ("Staff Accounting Bulletin ("SAB") No. 104, Revenue Recognition”). The Company, through GPML, generates revenue from precious metal price contracts trading. SAB 104 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the seller’s price to the buyer is fixed and determinable; and (4) collectability is reasonably assured.

F-8

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

2. Summary of Significant Accounting Policies (continued)

Precious metal trading contracts generally involve the settlement of precious metal prices at market rates. Profits or losses are realized when customer transactions are liquidated and are recorded net as trading revenue on the consolidated statements of operations and comprehensive income. Unrealized profits or losses on open contracts are revalued at prevailing precious metal price (the difference between contract price and market price) at the date of the balance sheets are included in unrealized profits and losses, respectively, on the consolidated balance sheets. Changes in net unrealized profits or losses amounted to a gain of $1,067,207 and $1,588,146 during the fiscal years 2012 and 2011, respectively, and are recorded in trading revenue on the consolidated statements of operations and comprehensive income.

The Company, through its wholly-owned subsidiary, Goldenway UK, is engaged in the provision of foreign exchange brokerage services. Goldenway UK follows SAB 104 and recognizes revenues when Goldenway UK and customers enter brokerage service agreement, services rendered, the brokerage service fee is fixed and determinable and collectability is reasonably assured.

The Company is also engaged in trading of precious metal price contracts with other trading companies. Profits or losses are realized when the transactions are liquidated and are recorded net as trading revenue on the consolidated statements of operations and comprehensive income.

Unrealized profits or losses on open contracts are revalued at prevailing precious metal prices (the difference between contract price and market price) at the date of the balance sheets and are included in unrealized profits and losses, respectively, on the consolidated balance sheets. There were no unrealized profits or losses from open position as of December 31, 2012 and 2011. The realized losses of $3,547,342 and nil, respectively, for the fiscal years ended December 31, 2012 and 2011 are recorded as investment loss on the consolidated statements of operations and comprehensive income.

The Company also holds physical precious metals for trading. The precious metals were marked to market at each year end date. The changes in fair value of these precious metals are recorded as fair value change of precious metals on the consolidated statements of operations and comprehensive income.

The Company earns interest income on unliquidated contract amounts. The interest is accrued and calculated based on agreed upon annual rate of 0.75% to 1.25% .

Advertising
Advertising costs are incurred for the production and communication of advertising, as well as other marketing activities. The Company expenses the cost of advertising as incurred. The Company did not capitalize any production costs associated with advertising for 2012 or 2011. The total amount charged to advertising expense was $10,781,589 and $1,146,155 for the years ended December 31, 2012 and 2011, respectively.

Cash and Cash Equivalents
Cash is comprised of cash on hand and unrestricted deposits. Cash equivalents include highly liquid investments with maturities of three months or less when purchased. Cash equivalents are recorded at fair value.

Cash, Held for Customers
Cash, held for customers represents cash held in-trust for the customers. The balance arises primarily from cash deposited by customers and net realized gains from customer trading activity in Goldenway UK. The Company records a corresponding liability in connection with this amount that is included in customer deposits in the consolidated balance sheets. A portion of the balance is not available for general use due to legal restrictions in accordance with certain jurisdictional regulatory requirements. These legally restricted balances were $576,779 and $nil as of December 31, 2012 and 2011, respectively.

F-9

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

2. Summary of Significant Accounting Policies (continued)

Fair Value of Financial Instruments
The standard, “Disclosures about Fair Value of Financial Instruments”, defines financial instruments and requires fair value disclosures for those instruments. The standard, “Fair Value Measurements”, defines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for cash, cash, held for customers, accounts receivable, due from major stockholder, other receivables, accounts payable, accrued expenses and other liabilities qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.

The standard establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy defined by the standard are as follows:

Level 1	Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange- traded derivatives, listed equities and U.S. government treasury securities.
Level 2	Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry- standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category include non-exchange-traded derivatives such as over the counter forwards, options and repurchase agreements.
Level 3	Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value from the perspective of a market participant. Level 3 instruments include those that may be more structured or otherwise tailored to customers’ needs.

Accounts Receivable
The Company has agreements with several payment transfer agents who assist customers in transfering funds to their trading accounts with the Company. The balance represents funds collected by the agents from customers to be remitted to the Company and amounts receivable from the provision of foreign exchange brokerage services.

Allowance for Doubtful Accounts
The Company records an increase in the allowance for doubtful accounts when the prospect of collection becomes doubtful. Management specifically analyzes accounts receivable and historical bad debt experience when evaluating the adequacy of the allowance for doubtful accounts. Should any of these factors change, the estimates made by management will also change, which could affect the level of our future provision for doubtful accounts.

F-10

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

2. Summary of Significant Accounting Policies (continued)

Other Receivables
Other receivables represent miscellaneous receivables from various third parties.

Trading Precious Metals
The Company holds physical precious metals for trade. The precious metals are marked to market at each balance sheet date.

Deposits and Prepaid Expenses
The Company records goods and services paid for but not to be received until a future date as prepaid expenses. These include payments for advertising and occupancy related expenses. Any prepaid expense to be realized beyond the next 12 months is classified as non-current.

Property and Equipment
Property and equipment are stated at cost. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its present working condition and locations for its intended use. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets.

Property and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets as follows:

Office equipment	5 years
Furniture and fixtures	5 years
Leasehold improvements	over the lease term
Computer equipment	4 years
Motor vehicles	4 years
Motor vessel	10 years

Expenditure for maintenance and repairs is charged to expense as incurred. Additions, renewals and betterments are capitalized.

The gain or loss on disposal of property and equipment is the difference between the net sales proceeds and the carrying amount of the relevant assets, if any, and is recognized in the consolidated statements of operation and comprehensive income.

Intangible Assets and Goodwill
The standard, “Intangibles — Goodwill and Other”, requires purchased intangible assets other than goodwill to be amortized over their useful lives unless their lives are determined to be indefinite.

Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible and intangible assets acquired and liabilities assumed.

The Company has two membership licenses issued by CGSE to trade precious metal price contracts and physical precious metals. In addition, upon the acquisition of Goldenway UK, a license of the FSA has been recognized as an identifiable intangible asset. All licenses, which are subject to renewal periodically, are not amortized and have an indefinite useful life because management believes the Company will be able to continuously renew the license in the future.

F-11

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

2. Summary of Significant Accounting Policies (continued)

Intangible Assets and Goodwill (continued)
The Company compares the recorded value of its indefinite life intangible assets and goodwill to their fair values on an annual basis and whenever circumstances arise that indicates that impairment may have occurred. The Company performs a goodwill impairment test for each reporting unit. If the fair value of the reporting unit exceeds the carrying value of the reporting unit, goodwill is not impaired. There was no impairment of intangible assets and goodwill during the years ended December 31, 2012 and 2011.

The Company accounts for costs to acquire its trading platform and related software in accordance with the standard, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use”. The standard requires that such technology be capitalized in the application and infrastructure development stages. Costs related to training, administration and non-value-added maintenance are charged to expense as incurred. Capitalized software development costs are being amortized over their useful life, which the Company has estimated at 5 years.

Reporting Currency and Foreign Currency Translation
As of December 31, 2012 and 2011, the accounts of the Company and its subsidiaries are maintained in their functional currencies, the U.S. dollar (“USD”), the Hong Kong dollar ("HK$") and the Great British Pound (“GBP”) for Goldenway, Inc., GPML and Goldenway UK, respectively. The consolidated financial statements of the Company have been translated into U.S. dollars in accordance with the accounting standard on foreign currency translation. All assets and liabilities of the Company are translated at the exchange rate on the balance sheet date, shareholders’ equity is translated at the historical rates and the consolidated statements of operations and comprehensive income, and consolidated statements of cash flows are translated at the weighted average exchange rate for the year. The resulting translation adjustments are reported under comprehensive income and as a separate component of shareholders’ equity.

	December 31,	December 31,
	2012	2011
Period end USD/HK$ exchange rate	7.7507	7.7663
Average USD/HK$ exchange rate	7.7569	7.7841
Period end USD/GBP exchange rate	0.6149	0.6436
Average USD/GBP exchange rate	0.6308	N/A
November and December 2011 Average
USD/GBP exchange rate	N/A	0.6371

Long-Lived Assets
In accordance with the standard, “Property, Plant and Equipment”, the Company periodically evaluates the carrying value of long-lived assets when events and circumstances warrant such review. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such an asset is separately identifiable and is less than the carrying value. In that event, a loss is recognized in the amount by which the carrying value exceeds the fair market value of the long-lived asset. The Company has identified no such impairment losses.

F-12

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

2. Summary of Significant Accounting Policies (continued)

Asset Retirement Obligations
In accordance with the standard, “Asset Retirement Obligations”, the Company recognizes an estimated liability for future costs associated with the restoration of the leased office space. No assets are legally restricted for purposes of settling asset retirement obligations. A liability for the fair value of an asset retirement obligation and corresponding increase to the carrying value of the related leasehold improvements are recorded at the time the leasehold improvements are acquired. The increase in carrying value is included in property and equipment in the accompanying consolidated balance sheets. The Company depreciates the amount added to the related leasehold improvements and recognizes expense in connection with the accretion of the discounted liability over the remaining lease term.

The following table provides a reconciliation of the changes in the estimated asset retirement obligations from January 1, 2011 through December 31, 2012.

		December 31,			December 31,
		2012			2011
Beginning asset retirement obligations	$	66,312		$	50,122
Additional liability incurred		114,177			16,058
Asset obligation retirement		(45,766	)		-
Currency translation adjustment		188			132
Ending asset retirement obligations	$	134,911		$	66,312

As of December 31, 2012, the Company had recorded the asset retirement obligation in accrued expenses and other liabilities on the accompanying consolidated balance sheets. The balance of the recorded assets for the asset retirement obligations as of December 31, 2012 was $96,230 (December 31, 2011 - $17,731).

Accounts Payable
The balance represents commission payable to agents, withdrawals requested by customers and other payables to various vendors.

Customer Deposits
Customer deposits include amounts due on cash and margin transactions. These transactions include deposits adjusted for profits or losses arising from settled trades in customer accounts.

Unrealized Profits or Losses on Open Contracts
Unrealized profits or losses on open contracts revalued at prevailing precious metal price (the difference between contract price and market price) at the date of the balance sheets are included in unrealized profits or losses on open contracts.

Accumulated Other Comprehensive Income
The Company’s accumulated other comprehensive income, consists of foreign currency translation from the Company’s subsidiaries’ functional currencies, HK$ and GBP, to reporting currency, U.S. dollars.

F-13

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

2. Summary of Significant Accounting Policies (continued)

Income Taxes
The Company utilizes the standard, "Accounting for Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company adopted the provisions of the interpretation, "Accounting for Uncertainty in Income Taxes”. The Company did not have any material unrecognized tax benefits and there was no effect on its financial condition or results of operations as a result of implementing the interpretation. The Company does not believe there will be any material changes in its unrecognized tax positions over the next 12 months.

Earnings per Share
The Company computes earnings per share (“EPS”) in accordance with the Financial Accounting Standards Board (the “FASB”), Accounting Standards Codification (“ASC”) 260 “Earnings Per Share”. FASB ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the year.

Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of contracts to issue ordinary common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. The computation of diluted earnings per share includes the estimated impact of the exercise of contracts to purchase common stocks using the treasury stock method and the potential shares of converted common stock associated with the convertible debt using the if-converted method.

Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

The Company does not have any securities that may potentially dilute the basic earnings per share.

Comprehensive Income
Comprehensive income is comprised of net income and other comprehensive income. Other comprehensive income includes unrealized profits or losses resulting from currency translations of foreign subsidiaries.

Consolidated Statement of Cash Flows
In accordance with the standard, "Statement of Cash Flows", cash flows from the Company’s operations are calculated based upon the local currencies translated at the weighted average exchange rate for the year. As a result, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.

Segment reporting
Reportable segments are identified based on operating segments which are determined based on the Company’s internal organization, management requirements and internal reporting system. An operating segment is a component of the Company that meets the following respective conditions:

a.	Engage in business activities from which it may earn revenues and incur expenses;
b.	Whose operating results are regularly reviewed by the Group’s management to make decisions about resource to be allocated to the segment and assess its performance; and
c.	For which financial information regarding financial position, results of operations and cash flows are available.

F-14

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

2. Summary of Significant Accounting Policies (continued)

Business Combinations
The Company applies ASC 805, Business Combinations to all its business combinations. The Company accounts for acquisitions of entities that include inputs and processes and have the ability to create outputs as business combinations. The purchase price of the acquisition is allocated to tangible assets, liabilities, and identifiable intangible assets acquired based on their estimated fair values. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses and restructuring costs are expensed as incurred. While the Company uses its best estimates and assumptions as a part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the business combination date, these estimates and assumptions are inherently uncertain and subject to refinement. As a result, during the preliminary purchase price allocation period, which may be up to one year from the business combination date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. After the preliminary purchase price allocation period, the Company records adjustments to assets acquired or liabilities assumed subsequent to the purchase price allocation period in its operating results in the period in which the adjustments were determined.

Recently Adopted Accounting Standards
In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This standard results in a common requirement between the FASB and the International Accounting Standards Board (IASB) for measuring fair value and for disclosing information about fair value measurements. ASU 2011-04 is effective for fiscal years and interim periods beginning after December 15, 2011. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In June, 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. ASU 2011-05 requires entities to present net income and other comprehensive income in either a single continuous statement or in two separate, but consecutive, statements of net income and other comprehensive income. ASU 2011-05 is effective for fiscal years and interim periods beginning after December 15, 2011. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In September 2011, the FASB issued ASU 2011-08, Intangibles Goodwill and Other (Topic 350): The amendments in this Update will allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under these amendments, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amendments include a number of events and circumstances for an entity to consider in conducting the qualitative assessment. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In December 2011, the FASB issued ASU 2011-12, “Comprehensive income”. The amendments are being made to allow FASB time to re- deliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. While FASB is considering the operational concerns about the presentation requirements for reclassification adjustments and the needs of financial statement users for additional information about reclassification adjustments, entities should continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before ASU 2011-05. ASU No. 2011-12 is effective for the Company on January 1, 2012. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

In August 2012, the FASB issued ASU No. 2012-03, “Technical Amendments and Corrections to SEC Sections – Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 114. Technical Amendments Pursuant to SEC Release No. 33-9230, and Corrections Related to FASB Accounting Standards Update 2010-22, which amends various SEC paragraphs pursuant to the issuance of SAB No. 114. This ASU became effective on issuance, and the adoption of the ASU had no impact on the Company’s financial position or results of operations.

F-15

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

2. Summary of Significant Accounting Policies (continued)

Recently Issued Accounting Standards
In December 2011, the FASB issued ASU 2011-11, “Balance Sheet”. The amendments in this Update require an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. Entities are required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. This scope would include derivatives, sale and repurchase agreements and reverse sale and repurchase agreements, and securities borrowing and securities lending arrangements. ASU 2011-05 is effective for fiscal years and interim periods beginning after December 15, 2012. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

On July 27, 2012, the FASB issued ASU No. 2012-02 under which an entity has the option first to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount. An entity also has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the quantitative impairment test. An entity will be able to resume performing the qualitative assessment in any subsequent period. The amendments are effective for annual and interim impairment tests performed for fiscal periods beginning after September 15, 2012 or January 1, 2013 for the Company. Early adoption is permitted. The adoption of ASU No. 2012-02 is not expected to have a material impact on the Company’s consolidated financial statements.

On October 2012, the FASB issued ASU No. 2012-04, Technical Amendments and Corrections. The updates to current guidance make the codification easier to understand and the fair value measurement guidance easier to apply by eliminating inconsistencies and providing needed clarification. ASU No. 2012-04 is effective for fiscal periods beginning after December 15, 2012. The adoption of ASU No. 2012-04 is not expected to have a material effect on the Company’s consolidated financial statements.

In January 2013, the FASB issued ASU 2013-01, “Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” (“ASU 2013-01”), which clarifies that the scope of ASU 2011-11 applies to derivatives accounted for in accordance with ASU Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”). This standard requires companies to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, companies are required to present, either on the face of the statement where net income is presented or in the accompanying notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, but only if the amount reclassified is required to be reclassified to net income in its entirety in the same reporting period. For amounts that are not required to be reclassified in their entirety to net income, companies are required to cross-reference to other disclosures that provide additional detail on those amounts. ASU 2013-02 is effective prospectively for reporting periods beginning after December 15, 2012. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

In March 2013, the FASB issued ASU 2013-05, Foreign Currency Matters (Topic 830) Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (“ASU 2013-05”). ASU 2013-05 updates accounting guidance related to the application of consolidation guidance and foreign currency matters. This guidance resolves the diversity in practice about what guidance applies to the release of the cumulative translation adjustment into net income. This guidance is effective for interim and annual periods beginning after December 15, 2013. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

F-16

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

3. Acquisition of Goldenway UK

On September 16, 2011, the Company received the approval of the London Financial Services Authority (the “FSA”) to complete the acquisition of Goldenway Global Investments (UK) Limited, formerly Goldenway Voltrex Investments Limited, a company registered in the United Kingdom. Pursuant to a share purchase agreement (“Share Purchase Agreement”) dated November 1, 2011, GPML acquired a 90.5% controlling interest in Goldenway UK, for an aggregate purchase price of £1,301,978 (approximately, $2,076,134). On the same day, the Company acquired the remaining interest of 9.5% from GIHL for £145,225 (approximately $231,623). GPML acquired this interest from Goldenway UK’s original shareholders in May 2011 at the same cost. Goldenway UK was formed on July 14, 1997, to engage in the provision of foreign exchange brokerage services in the United Kingdom.

The acquisition was accounted for as a business combination and the purchase price was allocated to the identifiable assets and liabilities assumed based on their estimated fair values.

Purchase price	$	2,307,757
Value assigned to assets and liabilities
Assets:
Cash	$	71,191
Accounts receivable		1,399,195
Other receivables		69,753
Computer equipment		5,399
FSA license		1,529,578
Goodwill		427,136
Assets acquired		3,502,252
Liabilities:
Accounts payable		320,820
Accrued expenses and other liabilities		451,901
Income taxes payable		54,675
Deferred income tax liability		367,099
Liabilities assumed		1,194,495
Net assets acquired	$	2,307,757

F-17

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

3. Acquisition of Goldenway UK (continued)

The goodwill represents assembled workforce and residual that do not qualify for separate intangible asset recognition. The goodwill is not expected to be deductible for tax purposes.

According to the Share Purchase Agreement, the operational control of Goldenway UK passed to the Company effective November 1, 2011, and accordingly, the result of Goldenway UK’s operations were included in the Company’s consolidated statements of operations and comprehensive income from that date.

The Company incurred approximately $539,620 consulting and professional fees in relation to the acquisition of Goldenway UK and recorded the amount as general and administrative expenses in the Company’s consolidated statements of operations and comprehensive income.

F-18

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

4. Fair Value Measurement

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis and the related hierarchy levels as of December 31, 2012 and 2011:

		Fair Value Measurements on a Recurring Basis
				As of December 31, 2012
		Level 1		Level 2		Level 3		Total
Assets:
Unrealized profits on open contracts	$	-	$	2,961,444	$	-	$	2,961,444
Trading precious metals		248,848		-		-		248,848
	$	248,848	$	2,961,444	$	-	$	3,210,292
Liabilities:
Unrealized losses on open contracts	$	-	$	134,936	$	-	$	134,936

		Fair Value Measurements on a Recurring Basis
				As of December 31, 2011
		Level 1		Level 2		Level 3		Total
Assets:
Unrealized profits on open contracts	$	-	$	1,837,642	$	-	$	1,837,642
Trading precious metals		1,674,077		-		-		1,674,077
	$	1,674,077	$	1,837,642	$	-	$	3,511,719
Liabilities:
Unrealized losses on open contracts	$	-	$	245,856	$	-	$	245,856

Level 1 Financial Assets
The Company has investments in gold and silver that are Level 1 financial instruments and are recorded based upon listed or quoted gold and silver market prices. The investments in gold and silver are recorded in Trading precious metals.

Level 2 Financial Assets and Liabilities
The Company has open trading contracts that are Level 2 financial instruments and are recorded based on the difference in market price of the underlying precious metal of the open trading contracts between the date when the contracts are entered and the balance sheet date. This difference is recorded in Unrealized profits on open contracts and Unrealized losses on open contracts.

F-19

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

5. Other Receivables

Other receivables consisted of the following as of December 31, 2012 and 2011:

		2012		2011
Funds in transit	$	16,875	$	81,868
CGSE rebate receivable		141,084		611,750
Staff loan		27,193		28,989
	$	185,152	$	722,607

Funds in transit represent the amount transferred from agents but have yet to be received by the Company as of December 31, 2012. Funds in transit were received subsequent to the year-end date (i.e. January 2013). Normally funds in transit will be received within 5 business days.

CGSE charges the Company a fee for each precious metal price trading transaction and issues rebates based on the transaction volume.

6. Deposits and Prepaid Expenses

Deposits and prepaid expenses consisted of the following as of December 31, 2012 and 2011:

		2012		2011
Deposit in Hantec Bullion Limited (a)	$	-	$	475,708
Prepaid advertising expenses (b)		1,661,046		481,912
Funds to transfer agents for customer withdrawals		7,437,261		590,817
Legal and professional fee		-		437,078
Other deposits and prepaid expenses (c)		1,239,312		1,085,401
Deposits paid for a potential acquisition(d)		6,451,031		-
Deposits and prepaid expenses	$	16,788,650	$	3,070,916
Represented by:
Deposits and prepaid expenses – current	$	9,763,106	$	1,965,475
Deposits and prepaid expenses – non-current		7,025,544		1,105,441
	$	16,788,650	$	3,070,916

(a)	The Company executed trading of precious metal trading contracts through Hantec Bullion Limited (“Hantec”), a private precious metal trading company in Hong Kong. All the deposits with Hantec were to be used for future trading or withdrawn at the Company’s discretion.
(b)	Prepaid advertising expenses include $5,000 prepaid to Goldenway Asset Management Limited (“GAML”) under the Service Agreement (note 13).
(c)	The balance mainly represented the deposits for utility, e-trading fees, other miscellaneous prepaid expenses for daily operations and data processing and service fees prepaid to Shenzhen Gateway Technology Limited (“Gateway”) (note 13) .
(d)	On October 4, 2012, GPML signed a non-binding memorandum of understanding (the “MOU”) with Denling Limited and its sole shareholder, Ms. Yeung Yin, to acquire 20,000 ordinary shares, representing 40% of the issued share capital of HXPM Holdings Limited, a company incorporated under the laws of British Virgin Islands, and its wholly-owned Hong Kong subsidiary, HXPM Limited (“HXPM”). HXPM is engaged in the trading and brokering of bullion and is also a member of CGSE. The Company paid a non-interest bearing and fully refundable deposit of HK$50 million (approximately $6.5 million). The completion of the potential acquisition is subject to the completion of an independent valuation of, and the due diligence conducted on HXPM. The deposit is personally guaranteed by the controlling shareholder of the Company’s majority stockholder (notes 13 and 19).

F-20

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

7. Property and Equipment

Property and equipment, including leasehold improvements, consisted of the following as of December 31, 2012 and 2011:

		2012			2011
Office equipment	$	128,069		$	23,106
Computer equipment		699,368			411,772
Leasehold improvements		884,751			363,194
Furniture and fixtures		145,518			44,503
Motor vehicles		424,677			80,127
Motor vessel		4,540,559			4,516,244
		6,824,954			5,438,946
Less: Accumulated depreciation		(1,223,752	)		(610,056	)
Property and equipment, net	$	5,599,190		$	4,828,890

Depreciation expense was $898,346 and $451,523 for the years ended December 31, 2012 and 2011, respectively, and was recorded as depreciation and amortization in the Company’s consolidated statements of operations and comprehensive income.

8. Intangible Assets and Goodwill

Intangible assets and goodwill consisted of the following as of December 31, 2012 and 2011:

		2012			2011
Precious metal price trading licenses (i)	$	638,651		$	637,369
Precious metal trading platform (ii)		2,815,640			643,807
FSA license (iii)		1,529,578			1,529,578
Intangible assets		4,983,869			2,810,754
Less: accumulated amortization		(485,937	)		(225,332	)
Intangible assets, net	$	4,497,932		$	2,585,422
		2012			2011
Goodwill arising on consolidation(iii)	$	427,136		$	427,136

(i)	The Company acquired a precious metal price trading license from an unrelated party in 2009 and a physical precious metal trading license from another unrelated party in 2010. These licenses allow the Company to engage in the precious metal price trading activities with the public in Hong Kong, as a result, the Company became a member of CGSE, and can engage in trading of physical precious metals.
	Both licenses can be traded freely with no expiration date and hence, considered to have indefinite useful lives.
(ii)	During the year ended December 31, 2012, the Company purchased a) another online trading platform from GIHL; b) software development for the online precious metal trading platform from Gateway; and c) a license for new trading software for trading platform in a) from MetaQuotes. The newly-acquired intangible assets are being amortized over their useful lives of 5 years. Details of a) and b) are set out in Note 13 to the consolidated financial statements. The Company did not have any additions to the trading platform during 2011.
(iii)	These are FSA license and goodwill recognized from the acquisition of Goldenway UK of $427,136. Further details are set out in the Note 3 to the consolidated financial statements.

Amortization expense was $259,944 and $128,470 for the years ended December 31, 2012 and 2011, respectively, and was recorded as depreciation and amortization in the Company’s consolidated statements of operations and comprehensive income.

The estimated amortization expense for the next 5 years is as follow:

2013	$	525,888
2014		673,962
2015		658,847
2016		532,461
2017 and thereafter		561,884

F-21

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

9. Accounts Payable

Accounts payable consisted of the following as of December 31, 2012 and 2011:

		2012		2011
Commissions payable to agents	$	917,478	$	1,143,573
Withdrawals requested by customers		14,159		215,135
Investment loss payable		2,969,732		-
Other vendors		615,559		206,210
	$	4,516,928	$	1,564,918

As of December 31, 2012, balance with other vendors includes a balance of $604,079 (2011 - $54,382) payable to a company whose director is also a director of Goldenway UK.

10. Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following as of December 31, 2012 and 2011:

		2012		2011
Customer deposit held (a)	$	1,242,160	$	1,239,665
Advertising expenses accruals		3,076,785		-
Employee compensation and benefit accrual		603,624		310,849
Asset retirement obligation		134,911		66,312
Other		664,660		254,121
	$	5,722,140	$	1,870,947

(a) In 2011, the Company was informed that there were purported offences committed by a couple in the People’s Republic of China (“PRC”), who misappropriated funds and transferred those funds to their personal bank account then traded through the Company’s trading platform. The PRC police had procured to freeze the funds in transit to the Company from this couple. The investigation against this couple is still ongoing and there have been no claims against the Company. As of December 31, 2012, the accumulated funds received from this couple amounted to $1,242,160 (December 31, 2011 - $1,239,665, change in 2012 is due to foreign currency translation). Even though this couple lost all funds through their trading activities, the Company did not recognize any revenue from this couple’s trades and included the funds received from this couple in other liabilities.

11. Stockholders’ Equity

On September 30, 2011, the Company acquired GPML from its sole shareholder, GIHL, whereby the Company acquired 100% of the issued and outstanding capital stock of GPML, in exchange for 24,587,299 shares of the Company’s common stock, par value $0.001, which constituted 80.80% of the issued and outstanding capital stock on a fully-diluted basis as of and immediately after the consummation of transactions contemplated by the Share Exchange Agreement. As a result, the Company’s common shares that were issued and outstanding increased to 30,457,299 shares.

The 24,587,299 shares exchanged were issued and outstanding given the effectiveness of the Share Exchange Agreement on September 30, 2011. The actual issuance of the shares is dated October 18, 2011.

As part of the Share Exchange Agreement, the Company canceled 26,674 shares and a 1-for-0.481752 share reverse split was executed, which effectively reduce the number of outstanding shares by 15,770,596 shares.

The Company incurred approximately $428,382 in relation to the RTO and recorded the amount as general and administrative expenses in the Company’s consolidated statements of operations and comprehensive income.

F-22

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

11. Stockholders’ Equity (continued)

The following is a reconciliation of the restatement of the Company’s common stock and additional paid-in capital as of December 31, 2010 as a result of the RTO:

	Common stock
	Number of						Additional Paid-in
	Shares			Par Value			Capital
BALANCE, DECEMBER 31, 2010	100,000,000		$	12,891,577		$	-
Common stock of GWPL exchanged for common stock of CII	(100,000,000	)		(12,891,577	)		12,891,577
Common stock of CII issued for common stock of GWPL	24,587,299			24,587			(24,587	)
Common stock of CII upon RTO	5,870,000			5,870			(5,870	)
Cancellation of shares upon RTO	(26,674	)		(27	)		27
Effect of 1-for-0.481752 share reverse split	(15,770,596	)		(15,770	)		15,770
BALANCE, DECEMBER 31, 2010	14,660,029		$	14,660		$	12,876,917

The authorized number of shares of common stock as of December 2012, 2011 and 2010 was 75,000,000.

The common stock and the additional paid-in capital are restated to take into effect the RTO and the 1-for-0.481752 share reverse split during the fiscal 2011.

F-23

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

12. Earnings Per Share

Earnings per share (“EPS”) information for the years ended December 31, 2012 and 2011 were determined by dividing net income attributable to the shareholders for the year by the weighted average number of both basic and diluted shares of common stock and common stock equivalents outstanding.

As of December 31, 2012 and 2011, the Company did not have any securities that may potentially dilute the basic earnings per share. Therefore the basic and diluted earnings per share for the respective years are equal.

		2012		2011
Numerator
Net income attributable to common shareholders	$	14,212,624	$	12,688,331
Denominator
Weighted average shares of common stock		14,660,029		14,660,029
Basic and diluted earnings per common stock	$	0.97	$	0.87

13. Related Party Transactions and Balances

The Company has engaged in related party transactions with certain companies controlled by majority stockholders, directors and officers of the Company as described below. Management believes that the transactions described below and in the related notes were completed on terms substantially equivalent to those that could prevail in arm’s-length transactions.

Entities under common control are:

Entities	Business	Relationship
Gateway	IT services	Affiliated Company - Controlled by
		Mr. Hao Tang
GIHL	Investment	Majority Stockholder
Goldenway Global Investments (New Zealand) Limited (“GWNZ”)	Foreign exchange trading and related brokerage services	GIHL Subsidiary or Sister Company
Goldenway Investments (HK) Limited (“HK”)	Securities and futures broker	GIHL Subsidiary or Sister Company
GAML	Securities and asset management	GIHL Subsidiary or Sister Company
	advisors
Mr. Hao Tang	N/A	Controlling Party of Majority
		Stockholder
Keen Ocean Technology Limited (“Keen Ocean”)	Inactive	Affiliated Company – Controlled by
		Mr. Jian Qin Huang, a director of
		the Company
Goldenway Global Investors L.P. (“GGILP”)	Investment holding	Partnership partly-owned by
		Majority Stockholder

F-24

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

13. Related Party Transactions and Balances (continued)

- Gateway

During fiscal year ended December 31, 2012, the Company purchased an online precious metal trading platform for $1,446,357 from Gateway. The online trading platform was recorded as intangible assets. No such purchases were made during fiscal 2011. During the year, the Company also incurred $193,531 (2011 - $nil) of software developments costs for the online precious metal trading platforms (Note 8(ii)). As of December 31, 2012, the Company was obligated to pay approximately $603,596 to Gateway for the online trading platform which has been included in accounts payable.

The Company entered into an IT maintenance service agreement with Gateway whereby Gateway provides IT services for an annual fee of approximately $128,000. The agreement is subject to annual renewal. During the year, the Company incurred $368,409 of IT service fees to Gateway (2011 - $69,586), for which the expense was recorded as a data processing and service fee in the consolidated statements of operations and comprehensive income. In addition, the Company incurred $197,871 during the year in service fees in relation to data analysis to Gateway (2011 - $nil), which were recorded as advertising expenses in the consolidated statements of operations and comprehensive income.

As of December 31, 2012, the Company prepaid $94,751 to Gateway for future IT services (2011 - $91,206) and recorded the amounts as other deposits and prepaid expenses (Note 6(c)).

- GWNZ

During fiscal years ended December 31, 2012 and 2011, the Company earned $491,284 and $nil, respectively, in commissions from GWNZ. As of December 31, 2012 and 2011, the Company had $206,525 and $nil, balance due to GWNZ.

- GIHL

A management fee agreement between the Company, and affiliated companies that are 100% owned by GIHL. GIHL provides management service charges to the Company and the affiliated companies based on the actual operating costs incurred by the GIHL whereby GIHL plus a mark-up rate on certain operation costs on a pro-rated bases. Since October 1, 2011, the management fee agreement was amended to eliminate the mark-up rate component and operating costs are proportionally shared, based on the number of related labors employed by different subsidiaries. The management fee shall be payable on a monthly basis or on demand after a provision of service by the GIHL.

During fiscal year ended December 31, 2012, the Company incurred $1,242,856 (2011 - $6,399,912) management fees to GIHL. As of December 31, 2012, the Company has $339,544 (2011- $494,732) net receivable from the GIHL.

In addition, during the fiscal year ended December 31, 2012, the Company incurred approximately $258,000 of set up fees for its online trading platforms purchased during the year. The fees were capitalized as intangible assets (Note 8(ii)).

The Company and GIHL are also a party to a maintenance and service agreement, dated January 1, 2012, pursuant to which the Company is obligated to pay a monthly fee of HK$120,000 (approximately $15,400) from January 2012 to September 2012 and HK$300,000 (approximately $38,500) from October 2012 to December 2012 to GIHL in exchange for precious metals trading platform maintenance services. Fees incurred under the maintenance and services agreement amounted to $255,461 for the year ended December 31, 2012.

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

13. Related Party Transactions and Balances (continued)

- HK

The Company entered into a marketing and advertising service agreement with HK whereby HK provides marketing and advertising consulting services for an annual fee of approximately $909,595. The agreement is subject to annual renewal. During fiscal year ended December 31, 2012, the Company incurred $909,595 (2011 - $693,722) for consultancy fee to HK for advertising services and recorded the expenses as advertising expenses under the consolidated statement of operations and comprehensive income.

- GAML

The Company entered into a service agreement with GAML, whereby the Company is obligated to pay approximately $31,000 annually for investment related marketing material. The agreement is subject to annual renewal. During the year ended December 31, 2012, the Company incurred $15,482 (2011 - $nil) for this service, which was recorded as advertising expenses in the consolidated statements of operations and comprehensive income. As of December 31, 2012, the Company prepaid approximately $5,000 to GAML which has been included in other deposits and prepaid expenses (Note 6(b)).

- Dividend

On June 30, 2011 and September 30, 2011, prior to the closing of the share exchange transaction, GPML declared a dividend of $14,005,862 and $4,236,452 issued to GIHL. No such dividends were paid during fiscal 2012.

- Mr. Hao Tang

Mr. Hao Tang, the major shareholder and an officer of the Company, has a trading account on the Company’s trading platform as of December 31, 2012. No trading activity was made by Mr. Tang during the fiscal year ended December 31, 2012 and 2011. His deposit balance in the trading account with the Company as of December 31, 2012 was $857 (December 31, 2011 - $56,857). Mr. Tang also guaranteed the deposit paid for the potential acquisition of HXPM (Note 6 (d)).

- Keen Ocean

In May 2012, the Company acquired a license for a new trading software for trading platform of $140,666 (Note 8(ii)) through Keen Ocean.

- GGILP

During the year ended December 31, 2012, the Company sold 10 taels of gold bars for $18,669 to GGILP (2011 – Nil), in the ordinary course of business.

All balances with related parties are unsecured, non-interest bearing and have no fixed terms of repayments.

F-26

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

14. Income Taxes

GPML, the Hong Kong operating subsidiary of the Company, is subject to income taxes, which is governed by the Hong Kong Profits Tax Law. Under Hong Kong Profits Tax Law, GPML is subject to profits tax at a statutory rate of 16.5% on income reported in the statutory financial statements after appropriate tax adjustments.

Goldenway UK, the United Kingdom of Great Britain and Northern Ireland operating subsidiary of the Company, is subject to income taxes, which is governed by the United Kingdom of Great Britain and Northern Ireland Income Tax Act (“UK Tax Act”). Under UK Tax Act, Goldenway UK is subject to profits tax at a statutory rate of 24% on income reported in the statutory financial statements after appropriate tax adjustments.

Reconciliation of income tax expenses to the amount computed by the current statutory rate to income before income taxes is as follows:

		2012			2011
Income before income taxes	$	17,349,795		$	15,711,270
US statutory rate of 34%	$	5,898,986		$	5,341,830
Foreign income not recognized in US		(5,898,986	)		(5,347,696	)
Foreign income taxed at 16.5% in HK and 24% in UK		2,731,488			2,636,912
Foreign non-deductible expenses		85,759			199,111
Foreign non-taxable income		(2,069	)		(122	)
Tax rate change		26,508			-
Change in valuation allowance		458,858			62,128
Other		(163,373	)		130,776
Total provision for income taxes	$	3,137,171		$	3,022,939

Significant components of the Company’s deferred tax assets and liabilities at December 31, 2012 and 2011 were as follows:

		2012			2011
Deferred income tax assets
Property and equipment	$	-		$	15,458
Intangible assets		-			23,901
Customer deposits		426,188			425,332
Loss carry forward		617,138			142,822
		1,043,326			607,513
Valuation allowance		(617,138	)		(158,279	)
Deferred income tax assets	$	426,188		$	449,234
Deferred income tax liabilities
Allowance for doubtful accounts	$	15,379		$	15,348
Balances with related parties		19,746			19,706
Property and equipment		948,269			601,365
Intangible assets		367,099			367,099
Deferred income tax liabilities	$	1,350,493		$	1,003,518

Tax losses carried forward from Goldenway UK of $2,745,734, as of December 31, 2012 can be carried forward indefinitely.

F-27

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

15. Commitments

Service agreements- The Company had entered into agreements with a related party from August 1, 2012 to July 31, 2013 for monthly software maintenance in the amount of approximately $55,500 a month and for monthly data analysis services in the amount of approximately $39,000 a month.

Leases commitments- The Company leases office space under non-cancellable operating lease agreements that expire on various dates through 2015. Future annual minimum lease payments, including maintenance and management fees, for non-cancellable operating leases, are as follows:

Year ending December 31,:-
2013	$	1,738,115
2014		1,652,570
2015		855,373
	$	4,246,058

16. Regulatory Requirements

The Company, as a member of CGSE, is subject to working capital and asset requirements. Under the requirements, the minimum required working capital, defined as cash plus precious metals, is approximately $193,000 (HK$ 1.5 million) and the minimum required assets are $645,000 (HK$ 5 million).

As of December 31, 2012, GPML has $23,401,565 and $248,848 cash and trading precious metals, respectively (2011-$9,845,686 and $1,674,077).

GPML’s total assets are $58,615,800 as of December 31, 2012 (December 31, 2011- $28,645,454).

In addition, Goldenway UK is subject to certain Pillar 1, 2 and 3 FSA capital requirements. Goldenway UK is in compliance with these requirements as of December 31, 2012.

F-28

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

17. Segment Information

The Company has two reportable segments: i) Foreign Exchange Brokerage Services and Others segment and ii) Precious Metals segment. The Foreign Exchange Brokerage Services and Others segment consists of Goldenway UK and CII, while the Precious Metals segment represents GPML. These two segments offer different products and services. The reportable segments are managed separately because they provide distinct products and provide different services.

Financial information with respect to the reportable segments and reconciliation to the amounts reported in the Company’s consolidated financial statements for the years ended December 31, 2012 and 2011 are as follows:

Year ended December 31, 2012

		Foreign
		Exchange
		Brokerage
		Services and
		Others			Precious Metal			Elimination			Consolidated
Revenue from foreign exchange brokerage services	$	491,284		$	-					$	491,284
Trading revenue		-			60,453,220						60,453,220
Gains from sales of precious metal		-			394,511						394,511
Interest income from customers’ trading accounts		-			1,615,865						1,615,865
Investment loss		-			(3,547,342	)					(3,547,342	)
Fair value change of trading precious metals		-			(190,249	)					(190,249	)
Total revenues	$	491,284		$	58,726,005					$	59,217,289
Segment (loss)/profits	$	(1,750,249	)	$	19,059,650					$	17,309,401
Operating expenses		(9,653	)		-						(9,653	)
Other income (expenses)		173			49,874						50,047
Income before income taxes		(1,759,729	)		19,109,524					$	17,349,795
Income taxes		-			3,137,171					$	3,137,171
Depreciation		51,361			846,985					$	898,346
Amortization of intangibles		-			259,944					$	259,944
Capital expenditures		98,269			3,714,350					$	3,812,619
Goodwill		427,136			-					$	427,136
Intangibles		1,529,378			2,968,354					$	4,497,732
Total assets		1,556,972			58,615,800		$	(2,717,733	)	$	57,455,039

F-29

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

17. Segment Information (continued)

Year ended December 31, 2011

		Foreign
		Exchange
		Brokerage
		Services and
		Others			Precious Metal		Elimination			Consolidated
Revenue from foreign exchange brokerage services	$	178,742		$	-				$	178,742
Trading revenue		-			38,772,785					38,772,785
Interest income from customers’ trading accounts		-			1,017,221					1,017,221
Fair value change of trading precious metals		-			174,685					174,685
Total revenues	$	178,742		$	39,964,691				$	40,143,433
Segment (loss)/profits	$	(500,081	)	$	16,034,870				$	15,534,789
Operating expenses		(17,246	)		-					(17,246	)
Other income (expenses)		-			193,727					193,727
Income before income taxes		(517,327	)		16,228,597				$	15,711,270
Income taxes		15,458			3,007,481				$	3,022,939
Depreciation		-			451,523				$	451,523
Amortization of intangibles		-			128,470				$	128,470
Capital expenditures		-			4,835,124				$	4,835,124
Goodwill		427,136			-				$	427,136
Intangibles		1,529,578			1,055,844				$	2,585,422
Total assets		1,266,526			28,645,454	$	(1,195,190	)	$	28,716,790

F-30

Goldenway, Inc.

Notes to consolidated financial statements

For the Years Ended December 31, 2012 and 2011

(Expressed in US dollars)

18. Banking facilities

As of December 31, 2012, our subsidiary Goldenway UK had general banking facilities with Barclays Bank Plc of GBP130,000 (the “Barclay Facilities”), for business master online facility, card facility and BACS facility . As of December 31, 2012, we had not utilized the Barclay Facilities.

19. Contingencies

Dispute with vendor

The Company is currently disputing a claim totaling £96,480 (approximately $145,000) for services provided to the Company which considers to have caused by cessation of the relevant agreement during the period. The Company counter offered a settlement of £20,720 (approximately $31,000) and the other party counter offered a settlement of £50,000 (approximately $75,000). The Company believes that the final settlement will be within the range of £20,720 to £50,000. However, no settlement amount is a better estimate than any other amount within the range. Therefore, the minimum amount of £20,720 (approximately $31,000) in the range is included in accrued expenses and other liabilities on the Company’s consolidated balance sheets as required by ASC 450-20-30-1.

20. Subsequent Events

We have evaluated subsequent events through March 29, 2013, the date the consolidated financial statements were issued.

Acquisition

On October 4, 2012, GPML signed a non-binding memorandum of understanding (the “MOU”) with Denling Limited and its sole shareholder, Ms. Yeung Yin, to explore the potential acquisition by the Company of 20,000 ordinary shares, representing 40% of the issued share capital of HXPM Holdings Limited, a company incorporated under the laws of British Virgin Islands, and its wholly-owned Hong Kong subsidiary, HXPM Limited (“HXPM”). HXPM is engaged in the trading and brokering of bullion and is also a member of CGSE. The Company is assessing the potential acquisition of HXPM minority interests for a price of up to HK$110 million (approximately $14.2 million), subject to the completion of an independent valuation of, and the due diligence conducted on HXPM. See Note 6 (d)).

Banking facilities

In order to finance GPML’s daily operation, on January 2, 2013, the Company, through its wholly-owned subsidiary GPML, obtained an overdraft banking facility of approximately $6,410,000 (or HK$50,000,000) from Bank of China (Hong Kong) Limited (“BOCHK”) by pledging a fixed deposit of $6,410,000 or HK$50,000,000 ("Supporting Deposits") in BOCHK. The overdraft facility charges interest at a rate of 1.3% per annum over the HIBOR, or 1% over the interest rate of supporting deposit, whichever is higher. HIBOR is currently 0.7% .

F-31

EXHIBIT INDEX

Exhibit	Description
No.
2.1	Share Exchange Agreement, dated September 30, 2011, by and among, Cyber Informatix, Inc., Goldenway Precious Metals Limited, Goldenway Investments Holdings Limited and the Majority stockholders of Cyber Informatix, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K/A filed on January 31, 2012)
3.1	Articles of Incorporation of the Company, as amended on December 9, 2011 (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on February 2, 2012).
3.2	Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Form S-1 filed on October 22, 2008).
10.1	Tenancy Agreement, dated March 30, 2010, between Wide Harvest Investment Limited and Goldenway Precious Metals  Limited (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K/A filed on January 31, 2012)
10.2	Tenancy Agreement, dated June 29, 2009, between Harbour City Estates Limited and Goldenway Precious Metals (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K/A filed on January 31, 2012)
10.3	Tenancy Agreement, dated November 15, 2010, between Harbour City Estates Limited and Goldenway Precious Metals Limited (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K/A filed on January 31, 2012)
10.4	Client agreement, dated September 30, between Goldenway Precious Metals Limited and Goldenway Investment (HK)  Limited (incorporated by reference to Exhibit 10.4 to the Company’s Form 8-K/A filed on January 31, 2012)
10.5	English translation of Software Development Contract, dated March 26, 2010, between Goldenway Precious Metals Limited and Shenzhen Gateway Technology Co., Ltd. (incorporated by reference to Exhibit 10.5 of the Company’s current report on Form 8-K filed on October 6, 2011)
10.6	Executive Employment Agreement, dated September 30, 2011, between Cyber Informatix, Inc. and Hao Tang (incorporated by reference to Exhibit 10.6 of the Company’s current report on Form 8-K filed on October 6, 2011)
10.7	Executive Employment Agreement, dated September 30, 2011, between Cyber Informatix, Inc. and Yue Yue Chan (incorporated by reference to Exhibit 10.7 of the Company’s current report on Form 8-K filed on October 6, 2011)
10.8	English Translation of Prolocutor Contract, dated October 16, 2009, between Simon Yam and Goldenway Investments Holdings Limited (incorporated by reference to Exhibit 10.8 of the Company’s current report on Form 8-K filed on October 6, 2011)
10.9	Employment Agreement, dated December 20, 2011, between Goldenway, Inc. and Ricky Wai Lam Lai (incorporated by reference to Exhibit 10.1 of the Company’s current report on Form 8-K filed on February 2, 2012)
10.10	Share Purchase Agreement, dated November 1, 2011, between Goldenway Precious Metals Limited, Goldenway Voltrex Investments Limited, Individual Sellers and VFX Financial PLC (incorporated by reference to Exhibit 10.10 of the Company’s annual report on Form 10-K filed on March 29, 2012)
10.11	Management Fee Agreement, dated October 1, 2011, between Goldenway Precious Metals Limited and Goldenway Investments Holdings Limited (incorporated by reference to Exhibit 10.11 of the Company’s annual report on Form 10- K filed on March 29, 2012)
14.1	Code of Ethics (incorporated by reference to the Company’s Annual Report on Form 10-K filed on September 22, 2011)
21	List of Subsidiaries (incorporated by reference to Exhibit 21 of the Company’s annual report on Form 10-K filed on March 29, 2012)
31.1*	Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certifications of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certifications of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101**	Interactive data files pursuant to Rule 405 of Regulation S-T

________________________
*Filed herewith

**Filed with this Form 10-K for Goldenway, Inc. Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or for purposes of Section 18 of the Securities Act of 1934, as amended, and otherwise are not subject to liability under those sections.