UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
SCHEDULE 14C INFORMATION
Information Statement
Pursuant to Section 14(c) of the
Securities Exchange Act
of 1934
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Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2)) |
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Definitive Information Statement |
NETWORK CN INC.
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(Name of Registrant as
Specified In Its Charter)
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Network CN Inc.
Unit 705B, 7th FL,
New East Ocean Centre, 9 Science Museum Road, TST, KLN, Hong Kong
Tel: 852 9625 0097
INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO
SEND US A PROXY
To Our Stockholders:
This Information Statement is first being mailed
on or about January 8, 2024 to the holders of record of the outstanding common stock, $0.001 par value per share (the “Common Stock”)
of Network CN Inc., a Delaware corporation (the “Company”), as of the close of business on December 20, 2023 (the “Record
Date”), pursuant to Rule 14c-2 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
This Information Statement relates to actions taken by written consent in lieu of a meeting, December 20, 2023 (the “Written Consent”)
of the stockholders of the Company owning a majority of the outstanding shares of Common Stock of the Company (the “Majority Stockholders”)
as of the Record Date. Except as otherwise indicated by the context, references in this Information Statement to “Company,”
“we,” “us,” or “our” are references to Network CN Inc..
The Written Consent:
| 1. | approved the re-election of three (3) current members of the Board of Directors, to hold office until
the next annual meeting of stockholders or until their respective successors are duly elected and qualified; and |
| 2. | ratified the selection of Gries & Associates, LLC, as the Company’s independent registered
public accounting firm, in accordance with the Sarbanes-Oxley Act of 2002, to audit the consolidated financial statements of the Company
and its subsidiaries and variable interest entity for the fiscal year ended December 31, 2022, and the pre-approval of all auditing services
and all audit related, tax or other services not prohibited under Section 10A(g) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), to be performed for the Company by Gries & Associates, LLC, subject to the de minimis exception
described in Section 10A(i)(1)(B) of the Exchange Act; and |
| 3. | approved the compensation of our named executive officers; and |
| 4. | approved to amend the Company's Certificate of Incorporation, as amended, to increase the total number
of authorized shares of Preferred Stock from 5,000,000 to 10,000,000 (the "Authorized Shares Increase"). A copy of the Amendment
is attached as Exhibit A to this Information Statement. |
The Written Consent constitutes the consent of
a majority of the total number of shares of outstanding Common Stock and is sufficient under the General Corporation Law of the State
of Delaware (“DGCL”) and our Bylaws to approve the actions described herein. Accordingly, they are not presently being submitted
to our other stockholders for a vote. Pursuant to Rule 14c-2 under the Securities Exchange Act of 1934, as amended, the actions described
herein will not be implemented until a date at least 20 days after the date on which this Information Statement has been first mailed
to the stockholders.
PLEASE NOTE THAT THIS IS NOT A NOTICE OF A
MEETING OF STOCKHOLDERS AND NO STOCKHOLDERS MEETING WILL BE HELD TO CONSIDER THE MATTERS DESCRIBED HEREIN. THIS INFORMATION STATEMENT
IS BEING FURNISHED TO YOU SOLELY FOR THE PURPOSE OF INFORMING STOCKHOLDERS OF THE MATTERS DESCRIBED HEREIN PURSUANT TO SECTION 14(C) OF
THE EXCHANGE ACT AND THE REGULATIONS PROMULGATED THEREUNDER, INCLUDING REGULATION 14C.
By Order of the Board of Directors,
/s/ Earnest Leung
Earnest Leung
Chief Executive Officer
GENERAL INFORMATION
This Information Statement is being first mailed
on or about January 8, 2024, to stockholders of the Company by the Board of Directors to provide material information regarding corporate
actions that have been approved by the Written Consent of the Majority Stockholders.
Only one copy of this Information Statement is
being delivered to two or more stockholders who share an address unless we have received contrary instruction from one or more of such
stockholders. We will promptly deliver, upon written or oral request, a separate copy of the Information Statement to a security holder
at a shared address to which a single copy of the document was delivered. If you would like to request additional copies of the Information
Statement, or if in the future you would like to receive multiple copies of information statements or proxy statements, or annual reports,
or, if you are currently receiving multiple copies of these documents and would, in the future, like to receive only a single copy, please
so instruct us by writing to the corporate secretary at the Company’s executive offices at the address specified above.
PLEASE NOTE THAT THIS IS NOT A REQUEST FOR
YOUR VOTE OR A PROXY STATEMENT, BUT RATHER AN INFORMATION STATEMENT DESIGNED TO INFORM YOU OF THE MATTERS DESCRIBED HEREIN.
The entire cost of furnishing this Information
Statement will be borne by the Company. We will request brokerage houses, nominees, custodians, fiduciaries and other like parties to
forward this Information Statement to the beneficial owners of the Common Stock held of record by them.
AUTHORIZATION BY THE BOARD OF DIRECTORS
AND THE MAJORITY STOCKHOLDERS
Under the DGCL and the Company’s Bylaws,
any action that can be taken at an annual or special meeting of stockholders may be taken without a meeting, without prior notice and
without a vote, if the holders of outstanding stock having not less than the minimum number of votes that will be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon were present and voted consent to such action in writing.
The approval of the (1) re-election of our directors, (2) ratification of appointment of our independent registered public accounting
firm, (3) compensation received by our named executive officers and (4) the filing of a Certificate of Amendment to effect the increase
in authorized shares of our Preferred Stock require the affirmative vote or written consent of a majority of the issued and outstanding
shares of Common Stock. Each Stockholder is entitled to one vote per share of Common Stock held of record on any matter which may properly
come before the stockholders.
On the Record Date, the Company had 22,487,859
shares of Common Stock issued and outstanding with the holders thereof being entitled to cast one vote per share.
On December 20, 2023, the Majority Stockholders
unanimously adopted resolutions approving the (1) re-election of our directors, (2) ratification of appointment of our independent registered
public accounting firm (3) compensation received by our named executive officers (4) the filing of a Certificate of Amendment to effect
the increase in authorized shares of our Preferred Stock.
CONSENTING STOCKHOLDERS
On December 20, 2023, the Majority Stockholders
being the record holders of 15,138,101 shares of our Common Stock, constituting approximately 67.32% of the issued and outstanding shares
of our Common Stock, consented in writing to (1) re-elect our directors, (2) ratify the appointment of our independent registered public
accounting firm (3) approve the compensation received by our named executive officers and (4) the filing of a Certificate of Amendment
to effect the increase in authorized shares of our Preferred Stock (together, the “Stockholder Actions”).
We are not seeking written consent from any other
stockholder, and the other stockholders will not be given an opportunity to vote with respect to the foregoing Stockholder Actions. All
necessary corporate approvals have been obtained. This Information Statement is furnished solely for the purposes of advising stockholders
of the action taken by Written Consent and giving stockholders notice of such actions taken as required by the Exchange Act.
As the Stockholder Actions were taken by Written
Consent, there will be no security holders’ meeting and representatives of the principal accountants for the current year and for
the most recently completed fiscal year will not have the opportunity to make a statement if they desire to do so and will not be available
to respond to appropriate questions from our stockholders.
DISSENTER’S RIGHTS
Under Delaware law, holders of our Common Stock
are not entitled to dissenter’s rights of appraisal with respect to the Stockholder Actions.
INTEREST OF CERTAIN PERSONS IN OR OPPOSITION
TO MATTERS TO BE ACTED UPON
No person who has been our officer or director
since January 1, 2023, or to our knowledge, any of their associates, has any substantial interest, direct or indirect, by security holdings
or otherwise in any matter to be acted upon. None of our directors opposed the actions to be taken by the Company.
OUR MANAGEMENT
Directors and Executive Officers
The following table sets forth the names, ages
and positions held with respect to each Director and Executive Officer of the Company as of December 20, 2023.
| Name |
Age |
Position |
Director Since
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| Earnest Leung |
66 |
Chief Executive Officer and Chairperson of the Board |
2009 |
| Shirley Cheng |
45 |
Chief Financial Officer, Corporate Secretary and Director |
2015 |
| Frederick Wong |
56 |
Director |
2022 |
Remarks:
Each Director serves until our 2024 annual stockholders
meeting and until their respective successors are duly elected and qualified or earlier resignation or removal.
Earnest Leung has served as the Company’s
director since May 11, 2009, and as Chief Executive Officer and Chairperson of the Board of the Company since July 15, 2009. Dr. Leung
has over 30 years’ experience in the investment banking industry. Since November 2004, he has worked as a financial advisor
and consultant in Hong Kong and currently serves as a director of Keywin Holdings Limited, an investment company owned and controlled
by Dr. Leung. From June 2009 to August 2011, he also served as a director and chief executive officer of China Boon Holdings Limited,
which is listed on Hong Kong Main Board engaging in the distribution of consumer electronic products and home appliances as well as trading
of scrap metals and leather and extending its business to cemetery business in 2009. Prior to that, Dr. Leung served, from
September 1994 to October 2004, as Senior Director and Head of Investment, Asia for American Express Bank. Dr. Leung also held
various senior investment positions with BNP International Financial Services (HK) Limited, New Zealand Insurance and Bank of America
Trust. Dr. Leung holds an honorary doctor degree from International American University. Dr. Leung was appointed as a director because
of his extensive knowledge of capital markets through his various senior positions in financial institutions and because of his in-depth
business management experience.
Shirley Cheng has served as the Company’s
Chief Financial Officer and Corporate Secretary, since April 1, 2012. She has served as the Finance Manager of NCN Group Management Limited,
the Company’s subsidiary, since March 2008. Prior to that, Ms. Cheng served from 2004 to 2008 as an auditor with PricewaterhouseCoopers,
an international firm of certified public accountants. Ms. Cheng holds a Bachelor’s Degree in Business Administration with a major
in Accountancy from the Hong Kong Baptist University and is an associate member of the Hong Kong Institute of Certified Public Accountants.
Frederick Wong was appointed as our independent
director since January 1, 2022. Mr. Wong has almost 30 years’ experience in accounting, internal control, financial control and
capital markets. He currently serves as chief financial officer of Intelligent Living Application Group Inc. (Stock Code: ILAG.Nasdaq)
since June 1, 2020. Mr. Wong also currently serves as an independent non-executive director for Prime Intelligence Solutions Group Limited
(Stock Code: 8379.HK) since June 17, 2022 and Top Standard Corporation (Stock Code: 8510.HK) since January 24, 2020. Previously, Mr. Wong
has served as an independent non-executive director for On Real International Holdings Limited (formerly known as Shanyu Group Holdings
Company Limited) (Stock Code: 8245.HK) from March 31, 2016 to April 22, 2022 and for Cocoon Holdings Limited (formerly known as Huge China
Holdings Limited) (Stock Code: 428.HK) from May 2015 to June 2018. He has served as compliance officer for China Finance Investment Holdings
Limited (Stock Code: 0875.HK) from November 1, 2018 to May 31, 2020. From September 2017 to August 2018, Mr. Wong was the chief financial
officer of O Media Limited, a Macau media company in gaming. He was a director of Network CN, Inc. September 2015 and July 2017, and the
authorised representative and company secretary of China Oil Gangran Energy Group Holdings Limited (Stock Code: 8132.HK) from December
2015 to November 2016 and continued acting as the authorised representative until January 2017. Mr. Wong is a CPA of Hong Kong, CPA of
Canada, CPA of Australia and fellow member of Hong Kong Institute of Taxation. Mr. Wong received a Bachelor of Business Administration
from the Chinese University of Hong Kong in 1989, a Bachelor of Business from the University of Southern Queensland, Australia, in 1992
and studied EMBA courses offered by the Troy University (formerly known as Troy State University), Alabama, U.S. from 1999 to 2000.
Identification of Certain Significant Employees
We have no employees who are not executive officers,
but who are expected to make a significant contribution to our business.
Family Relationships
There are no family relationships between any
directors or officers of the Company.
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors
or executive officers has, during the past ten years:
| 1. | had any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either
at the time of the bankruptcy or within two years prior to that time; |
| 2. | been convicted in a criminal proceeding or is a named subject to a pending criminal (excluding traffic violations and other minor
offenses); |
| 3. | been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, futures,
commodities or banking activities; or |
| 4. | been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission 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. |
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of
1934, as amended, requires our executive officers, directors and beneficial owner of more than 10% of a registered class of our equity
securities to file with the Securities and Exchange Commission statements of ownership and changes in ownership. The same persons are
required to furnish us with copies of all Section 16(a) forms they file. We believe that, during fiscal 2022, all of our executive officers,
directors and beneficial owner of more than 10% of a registered class of our equity securities complied with the applicable filing requirements.
In making these statements,
we have relied upon examination of the copies of all Section 16(a) forms provided to us and the written representations of our executive
officers, directors and beneficial owner of more than 10% of a registered class of our equity securities.
CORPORATE GOVERNANCE
Our current corporate governance practices and
policies are designed to promote stockholder value and we are committed to the highest standards of corporate ethics and diligent compliance
with financial accounting and reporting rules. Our Board provides independent leadership in the exercise of its responsibilities. Our
management oversees a system of internal controls and compliance with corporate policies and applicable laws and regulations, and our
employees operate in a climate of responsibility, candor and integrity.
Board Leadership Structure
Our Board leadership structure is currently composed
of combined Chairperson of the Board of Directors and Chief Executive Officer, Chief Financial Officer and the other members of our Board
of Directors are non-executive members. The Board has three outstanding committees: (1) Audit Committee; (2) Remuneration Committee and
(3) Nomination Committee. All these committees are composed of non-executive directors only.
Our Board of Directors has also determined a lead
independent director is not necessary and has not appointed one at this time. In making these determinations, the Board of Directors considered
the relative size of the Company, the size of the Board of Directors and the fact that all the other members of the Board of Directors
are non-executive directors. The Board of Directors believes that Dr. Earnest Leung serves as both Chairperson of the board and Chief
Executive Officer is in the best interest of the Company and its stockholders. Dr. Leung is the director most familiar with the PRC environment
and our business, possess in-depth diverse business management experience, and is most capable of effectively identifying strategic priorities
and leading the discussion and execution of strategy. The current combined position of Chairperson and Chief Executive Officer promotes
a unified direction and leadership for the Board and gives a single, clear focus for the chain of command for our organization, strategy
and business plans. The Board of Directors also believes that our overall corporate governance policies and practices adequately address
any governance concerns raised by the dual chairperson and chief executive officer role.
Board Committees
Our board of directors currently has three standing
committees which perform various duties on behalf of and report to the board of directors: (i) audit committee, (ii) remuneration committee
and (iii) nominating committee. From time to time, the board of directors may establish other committees. Each of the three standing committees
is comprised entirely of independent directors as follows:
| Name of Director |
Audit |
Nominating |
Remuneration
|
| Frederick Wong |
C |
C |
C |
C = Chairperson
The Board of Directors has adopted a written charter for each of these
committees, copies of which can be found on our website at www.ncnmedia.com .
Audit Committee
Our board of directors established an Audit Committee
in September 2007. Our Audit Committee currently consists of one member: Mr. Frederick Wong. The
Company does not have a qualified financial expert at this time because it has not been able to hire a qualified candidate. Further, the
Company believes that it has inadequate financial resources at this time to hire such an expert. The Company intends to continue to search
for a qualified individual for hire. Mr. Frederick Wong serves as the chairperson of the Audit Committee.
The Audit Committee oversees our accounting, financial
reporting and audit processes; appoints, determines the compensation of, and oversees, the independent auditors; pre-approves audit and
non-audit services provided by the independent auditors; reviews the results and scope of audit and other services provided by the
independent auditors; reviews the accounting principles and practices and procedures used in preparing our consolidated financial statements;
and reviews our internal controls.
The Audit Committee works closely with management
and our independent auditors. The Audit Committee also meets with our independent auditors without members of management present on regularly
basis to review the results of their work. The Audit Committee also meets with our independent auditors to approve the annual scope and
fees for the audit services to be performed.
Remuneration Committee
Our board of directors established a Remuneration
Committee in September 2007. Our Remuneration Committee consists of one member: Mr. Frederick Wong.
The Remuneration Committee (i) oversees and
makes general recommendations to the Board of Directors regarding our compensation and benefits policies; (ii) oversees, evaluates
and approves cash and stock compensation plans, policies and programs for our executive officers; and (iii) oversees and sets compensation
for the Board of Directors. Our Chief Executive Officer may not be present at any meeting of our compensation committee during which his
compensation is deliberated.
All the compensation packages for executive officers
and directors including both employee directors and non-employee directors are recommended and proposed by the Remuneration Committee.
In determining compensation for executive officers other than the Chief Executive Officer, the Remuneration Committee considers, among
other things, the recommendations of the Chief Executive Officer. However, the full Board of Directors determines all such compensation
packages.
The Remuneration Committee may, in its discretion,
delegate all or a portion of its duties and responsibilities to a sub-committee of the Remuneration Committee consisting of one or more
members of the Committee. The Remuneration Committee has no current intention to delegate any of its authority to any subcommittee. Also,
the Remuneration Committee did not engage any compensation consultants in determining or recommending the amount or form of executive
and director compensation in the past.
Nominating Committee
Our board of directors established a Nominating Committee in September
2007. Our Nominating Committee currently consists of one member: Mr. Frederick Wong.
The Nominating Committee (i) considers and
periodically reports on matters relating to the identification, selection and qualification of the Board of Directors and candidates nominated
to the Board of Directors and its committees; (ii) develops and recommends governance principles applicable to the Company; and (iii) oversees
the evaluation of the Board of Directors and management from a corporate governance perspective.
Although our bylaws do not contain provisions
which specifically address the process by which a stockholder may nominate an individual to stand for election to the Board of Directors
at our annual meeting of stockholders, the Nominating Committee will consider director candidates recommended by stockholders. In evaluating
candidates submitted by stockholders, the Nominating Committee will consider (in addition to the criteria applicable to all director candidates
described below) the needs of the Board and the qualifications of the candidate, and may also take into consideration the number of shares
held by the recommending stockholder and the length of time that such shares have been held. In general, to have a candidate considered
by the Nominating Committee, a stockholder must submit the recommendation in writing and must include the following information:
| 1. | The name of the stockholder and evidence of the person’s ownership
of Company stock, including the number of shares owned and the length of time of ownership; and |
| 2. | The name of the candidate, the candidate’s resume or a listing of
his or her qualifications to be a director of the Company and the person’s consent to be named as a director if selected by the
Nominating Committee and nominated by the Board. |
The stockholder recommendation and information
described above must be sent to the Corporate Secretary at Network CN Inc., Unit 705B, 7th FL, New East Ocean Centre, 9 Science Museum
Road, TST, KLN, Hong Kong.
For a candidate to be considered for nomination
by the Nominating Committee at an annual meeting, a stockholder recommendation must be received not less than 120 days prior to the
anniversary date of the Company’s most recent annual meeting of stockholders.
The Nominating Committee does not have any formal
criteria for director nominees; however, it believes that director nominees should have certain minimum qualifications, including the
highest personal and professional integrity and values, an inquiring and independent mind, practical wisdom and mature judgment. In evaluating
director nominees, the Nominating Committee also considers an individual’s skills, character, leadership experience, business experience
and acumen, familiarity with relevant industry issues, national and international experience, and other relevant criteria that may contribute
to our success. This evaluation is performed in light of the skill set and other characteristics that would most complement those
of the current directors, including the diversity, maturity, skills and experience of the board as a whole, with the objective of recommending
a group of persons that can best implement our business plan, develop our business and represent shareholder interests.
As described above, the Nominating Committee will
consider candidates recommended by shareholders. It will also receive suggestions of candidates from current Board members, the Company’s
executive officers or other sources, which may be either unsolicited or in response to requests from the Nominating Committee.
After a person has been identified by the Nominating
Committee as a potential candidate, the Nominating Committee may collect and review publicly available information regarding the person
to assess whether the person should be considered further. The Nominating Committee members may contact the person if the person should
be considered further. Generally, the Nominating Committee may request information from the candidate, review the person’s accomplishments
and qualifications and may conduct one or more interviews with the candidate and members of the committee or other Board members. In certain
instances, Nominating Committee members or other Board members may contact one or more references provided by the candidate or may contact
other members of the business community or other persons that may have first-hand knowledge of the candidate’s accomplishments.
The Nominating Committee’s evaluation process does not vary based on whether or not a candidate is recommended by a shareholder,
although, as stated above, in the case of such a candidate the Board may take into consideration the number of shares held by the recommending
shareholder and the length of time that such shares have been held.
The Board’s Role in Risk Oversight
Our Board of Directors recognizes that, although
risk management is a primary responsibility of the Company’s management, the Board plays a critical role in oversight of risk. The
Board, in order to more specifically carry out this responsibility, has assigned certain task focusing on reviewing different areas including
strategic, operational, financial and reporting, compensation, compliance, corporate governance and other risks to the relevant Board
Committees as summarized above. Each Committee then reports to the full Board ensuring the Board’s full involvement in carrying
out its responsibility for risk management.
Board Meetings and Committees; Annual Meeting Attendance
During fiscal year 2023, the Board of Directors held four (4) meetings
and acted by written consent four (4) time. The number of meetings held by the three standing committees during fiscal 2023 was as follows:
| Committee |
No. of meetings |
| Audit Committee |
2 |
| Remuneration Committee |
1 |
| Nominating Committee |
1 |
All of our directors attended at least 75% of
the aggregate of the total number of meetings of the Board of Directors and the committees on which they served during fiscal 2023.
Communications with the Board of Directors
Although we do not have a formal policy regarding
communications with the Board of Directors, stockholders may communicate with the Board of Directors by submitting an email to info@ncnmedia.com
or by writing to us at Network CN Inc., Attention: Investor Relations, Unit 705B, 7th FL, New East Ocean Centre, 9 Science Museum Road,
TST, KLN, Hong Kong. Stockholders who would like their submission directed to a member of the Board of Directors may so specify. All communications
will be reviewed by our Chief Executive Officer.
Code of Business Conduct and Ethics
A Code of Business Conduct and Ethics is a written
standard designed to deter wrongdoing and to promote (a) honest and ethical conduct, (b) full, fair, accurate, timely and understandable
disclosure in regulatory filings and public statements, (c) compliance with applicable laws, rules and regulations, (d) prompt reporting of
violations of the code to an appropriate person and (e) accountability for adherence to the Code. We are not currently subject to any
law, rule or regulation requiring that we adopt a Code of Business Conduct and Ethics. However, we have adopted a code of business conduct
and ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or
persons performing similar functions. Such code of business conduct and ethics is filed as Exhibit 14.1 to our Form 10-K/A filed on September
28, 2023, and is also available on our corporate website at www.ncnmedia.com .
EXECUTIVE COMPENSATION
Persons Covered
As of December 31, 2022, there were only two Executive
Officers including Chief Executive Officer and Chief Financial Officer in the Company. The Company’s Chief Executive Officer and
Chief Financial Officer during fiscal year 2022 and the Company’s executive officer as of December 31, 2022, or the Named Executive
Officers are set forth below:
| Name |
Position |
| Earnest Leung |
Chief Executive Officer and Chairperson of the Board |
| Shirley Cheng |
Chief Financial Officer and Corporate Secretary |
Compensation Discussion and Analysis
Overview
The Company’s executive compensation program
is generally designed to align the interests of executives with the interests of shareholders and to reward executives for achieving the
Company’s objectives. The executive compensation program is also designed to attract and retain the services of qualified executives.
All the compensation packages for executive officers
are recommended and proposed by the Remuneration Committee. In determining compensation for executive officers, the Remuneration Committee
considers the officers’ current compensation, the level of executive compensation packages for similarly situated companies, changes
in cost of living, our financial condition, our operating results and individual performance. However, the full Board of Directors determines
all such compensation packages.
Executive compensation generally consists of base
salary, bonuses and long-term incentive equity compensation such as stock grants or additional options to purchase shares of the
Company’s common stock as well as various health and welfare benefits. The Board has determined that both the base salary and
long-term incentive equity compensation should be the principal component of executive compensation. The Board has not adopted a formal
bonus plan, and all bonuses are discretionary.
Elements of Compensation
The executive compensation for (i) the Company’s
Chief Executive Officer and Chief Financial Officer and (ii) the Company’s compensated executive officer who were serving as executive
officers (collectively “Named Executive Officers”) for fiscal year 2022 primarily consisted of base salary, long term
incentive equity compensation, income tax reimbursement, and other compensation and benefit programs generally available to other employees,
Base Salary. The Board establishes base
salaries for the Company’s Named Executive Officers based on the scope of their responsibilities, taking into account competitive
market compensation paid by other companies in the Company’s peer group for similar positions. Generally, the Board believes that
executive base salaries should be targeted near the median of the range of salaries for executives in similar positions and with similar
responsibilities at comparable companies in line with our compensation philosophy. Base salaries are reviewed annually and may be
adjusted to realign salaries with market levels after taking into account individual responsibilities, performance and experience.
Bonuses. Bonuses are intended to compensate
the Named Executive Officers for achieving the Company’s financial performance and other objectives established by the Board each
year. The Board currently does not adopt a formal bonus plan and all bonuses are discretionary.
Long-Term Incentive Equity Compensation.
The Board believes that stock-based awards promote the long-term growth and profitability of the Company by providing executive officers
with incentives to improve shareholder value and contribute to the success of the Company and by enabling the Company to attract, retain
and reward the best available persons for executive officer positions. The Named Executive Officers were eligible to receive certain number
of shares of common stock of the Company. The Company cannot currently determine the number or type of additional awards that may be granted
to eligible participants under the long-term incentive equity compensation plan in the future. Such determination will be made from time
to time by the Remuneration Committee (or Board).
Income Tax Reimbursement. Dr. Earnest Leung
were fully reimbursed by the Company for their Hong Kong personal income taxes resulting from their employment under the employment
agreement dated July 15, 2009.
Change-In-Control and Termination Arrangements.
The employment agreements with current Named Executives may be terminated by giving the other party three-month advanced notice, except
Ms. Shirley Cheng may be terminated with one-month advance notice. Other than as disclosed above, the Company does not have change-in-control
arrangements with any of its current Named Executives, and the Company is not obligated to pay severance or other enhanced benefits to
executive officers, unless otherwise stated in Hong Kong Employment Ordinance, upon termination of their employment.
Summary Compensation Table
The following table sets forth information concerning
all compensation awarded to, earned by or paid during fiscal years 2022 and 2021, to the Named Executive Officers:
Name and Principal Position | |
Year | | |
(1) Salary ($) | | |
(2) Bonus ($) | | |
(3) Stock Awards ($) | | |
Options Awards ($) | | |
Non-Equity Incentive Plan Compensation ($) | | |
Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | | |
(4) All Other Compensation ($) | | |
Total ($) | |
Earnest Leung,
Chief Executive
Officer and
Director | |
2022 | | |
- | | |
- | | |
- | | |
- | | |
- | | |
- | | |
- | | |
- | |
| | |
2021 | | |
- | | |
- | | |
- | | |
- | | |
- | | |
- | | |
- | | |
- | |
Shirley Cheng,
Chief Financial
Officer and
Corporate
Secretary | |
| 2022 | | |
53,846 | | |
- | | |
- | | |
- | | |
- | | |
- | | |
2,308 | | |
56,154 | |
| | |
| 2021 | | |
13,462 | | |
- | | |
- | | |
- | | |
- | | |
- | | |
577 | | |
14,039 | |
______
| (1) | The Company withheld 12 months’ salary totaled HK$720,000 (approximately $92,308) to Dr. Earnest
Leung during the fiscal years ended December 31, 2022 and 2021 respectively. As of December 31, 2022 and 2021, the accrued salary to Dr.
Leung was $1,009,828 and $917,520, respectively. |
| (2) | No bonus was paid to the Named Executive
Officers in fiscal 2022 and 2021. |
| (3) | As required by SEC rules, amounts in the
column “Stock Awards” present the aggregate grant date fair value of awards made each year computed in accordance with Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification™ 718 Compensation—Stock Compensation
(“FASB ASC 718”). The grant date fair value of each of the executives’ award is measured based on the closing price
of our common stock on the date of grant. |
These amounts do not reflect whether the recipient has actually realized
or will realize a financial benefit from the awards. Under generally accepted accounting principles, compensation expense with respect
to stock awards granted to our employees, executives and directors is generally recognized over the requisite services period. The SEC’s
disclosure rules previously required that we present stock award information based on the amount recognized during the corresponding year
for financial statement reporting purposes with respect to these awards. However, the recent changes in the SEC’s disclosure rules
require that we now present stock award amounts using the grant date fair value of the awards granted during the corresponding year.
The aggregate number of stock awards vested to
each of the Named Executive Officers for his/her service rendered in each fiscal period was summarized as follows:
| Named Executive Officer | |
2022 | | |
2021 | |
| Earnest Leung | |
- | | |
- | |
| Shirley Cheng | |
- | | |
- | |
As of December 31, 2022, all the above stocks were issued to each of
Named Executive Officers.
| (4) | All other compensation only represents the followings: |
(a) A monthly contribution paid by the
Company into a mandatory provident fund for the benefit of each of the Named Executive Officers;
(b) Monthly cash allowance of HK$40,000
(approximately $5,128) paid to Dr. Earnest Leung. The Company withheld 12 months’ totaled HK$480,000 cash allowance payment for
Dr. Leung during the fiscal years ended December 31, 2022 and 2021; As of December 31, 2022 and 2021, the accrued cash allowance to Dr.
Leung was $556,619 and $495,083 respectively; and
(c) Income tax reimbursement paid to
Dr. Earnest Leung during each fiscal year. As of December 31, 2022, the accrued income tax reimbursement to Dr. Leung and Ms. Cheng was
$180,644 and $nil respectively.
There is no item that is not a perquisite or personal benefit (such
as tax reimbursements and contributions to the mandatory provident fund) whose value exceeds $10,000 for each Named Executives.
Employment Contracts
On July 15, 2009, the Company entered into an
executive employment agreement with Dr. Earnest Leung in connection with their services to the Company as our Chief Executive Officer. Under
the terms of the agreements, each of Dr. Leung will receive a monthly salary of HK$60,000 (approximately $7,692) and monthly cash allowance
of HK$40,000 (approximately $5,128) and we have agreed to grant Dr. Leung 6 million shares for their first two years of service to the
Company. We will fully reimburse them for their Hong Kong personal income taxes resulting from their employment under the agreements.
Each of the executives has also agreed to customary non-competition and confidentiality provisions and the agreements may be terminated
by the Company at any time without notice or payment, in the event that any of the executives engage in misconduct or dereliction of duty.
On October 15, 2021, the Company entered into
a new executive employment agreement with Ms. Cheng in connection with their services to the Company as our Chief Financial Officer. Under
the terms of the agreements, Ms. Cheng will receive a monthly salary of HK$35,000 (approximately $4,487). The employment may be terminated
by the Company at any time without notice or payment, in the event that any of the executives engage in misconduct or dereliction of duty.
Retirement Benefits
Currently, we do not provide any employees, including
our named executive officers any company sponsored retirement benefits other than a state pension scheme in which all of our employees
in China participate.
Grants of Plan-Based Awards
The following table sets forth information regarding
grants of awards to the Named Executive Officers during the year ended December 31, 2022:
| Name | |
| Grant
Date | | |
All Other Stock Awards: Number of Shares of Stock or Units (#) | |
| | | |
All Other Option Awards: Number of Securities Underlying Options (#) (1) | |
| | | |
| Exercise or Base Price of Option Awards ($/share) | | |
| |
Grant Date Fair Value of Stock and Options Awards | |
| |
Closing Price on Grant Date ($/share) |
| Earnest Leung | |
| - | | |
| |
| - | | |
| |
| - | | |
| | | |
- | |
| |
- | |
| |
- |
| Shirley Cheng | |
| - | | |
| |
| - | | |
| |
| - | | |
| | | |
- | |
| |
- | |
| |
- |
No stock awards were granted to the Company’s Named Executive
Officers during fiscal year 2022.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth the equity awards outstanding at December
31, 2022 for each of the named executive officers.
| Option Awards |
|
|
Stock Awards |
|
| Name |
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable |
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable |
|
|
Option Exercise
Price ($) |
|
|
Option
Expiration
Date |
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested (#) |
|
|
Market Value
of Shares or
Units of Stock
That Have
Not Vested
($) |
|
| Earnest Leung |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Shirley Cheng |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Potential Payments upon Termination or Change-in Control
The employment agreements with current Named Executives
may be terminated by giving the other party three-month advanced notice, except Ms. Shirley Cheng may be terminated with one-month advance
notice. Other than as disclosed above, the Company does not have change-in-control arrangements with any of its current Named Executives,
and the Company is not obligated to pay severance or other enhanced benefits to executive officers, unless otherwise stated in Hong Kong
Employment Ordinance, upon termination of their employment. Accordingly, there is no potential payments payable to our current Named Executive
Officers upon termination or change-in control.
DIRECTOR COMPENSATION
Overview
Cash compensation On February 2015, the
Remuneration Committee proposed the monthly cash compensation for each director decreased to $1,000 from July 2014 to Jun 30, 2015, which
was approved by the Board. On August 28, 2015, the Remuneration Committee proposed the monthly cash compensation for each director remain
unchanged, which was approved by the Board.
Long-Term Incentive Equity Compensation. The
Board believes that stock-based awards promote the long-term growth and profitability of the Company by providing directors with incentives
to improve shareholder value and contribute to the success of the Company. Our Board determined the number of stock to be granted to directors
for their service by considering the aggregate fair value as at the grant date of the past stock awards given to non-employee director
and the Company’s performance. On December 30, 2021, Earnest Leung, Shirley Cheng and Wong Wing Kong were granted an award of 52,172
shares, 50,000 shares and 15,000 shares at a fair value of $83,475, $80,000 and $24,000 respectively at the date of grant and vested on
same date, for their service for fiscal 2021. The shares granted were not yet issued.
For the year ended December 31, 2022, both the
employee directors and non-employee directors were entitled to a monthly cash compensation of $1,000. The Company withheld 12 monthly
cash compensation during the fiscal year ended December 31, 2022.
The following table provides information about the compensation earned
by directors who served during fiscal year 2022:
| Name of director(3) |
|
Fees Earned
or Paid(1)
in Cash
($) |
|
|
Stock
Awards(2)
($) |
|
|
Option
Awards
($) |
|
|
Non-Equity
Incentive Plan
Compensation
($) |
|
|
Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings($) |
|
|
All Other
Compensation
($) |
|
|
Total
($) |
|
| Earnest Leung |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Shirley Cheng |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Frederick Wong * |
|
|
12,820 |
|
|
|
24,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
36,820 |
|
*On December 31, 2021, the Company’s
Board of appointed Mr. Frederick Wong as independent director of the Company’s Board. Mr. Frederick Wong’s appointment will
become effective on January 1, 2022.
______
(1)
For the service periods from January 2022 to December 2022, both the employee directors and non-employee directors were entitled to a
monthly cash compensation of $1,000. The Company withheld 12 monthly cash compensation during the fiscal year ended December 31, 2022.
Total of HK$100,000 ($12,820) was paid to Frederick Wong for the director’s fee from the service period from 2015 to 2016.
| (2) | As required by SEC rules, amounts in the column “Stock Awards” present the aggregate grant
date fair value of awards made each year computed in accordance with ASC Topic 718. The grant date fair value of each of the directors’
award is measured based on the closing price of our common stock on the date of grant. These amounts do not reflect whether the recipient
has actually realized or will realize a financial benefit from the awards. Under generally accepted accounting principles, compensation
expense with respect to stock awards granted to our employees, executives and directors is generally recognized over the requisite services
period. |
Remuneration Committee Interlocks and Insider Participation
The current member of the Remuneration Committee
is non-executive director, and all past members were independent directors at all times during their service on such Committee. None of
the past or present members of our Remuneration Committee are present or past employees or officers of ours or any of our subsidiaries.
No member of the Remuneration Committee has had any relationship with us requiring disclosure under Item 404 of Regulation S-K under the
Securities Exchange Act of 1934, as amended. None of our executive officers has served on the Board or Remuneration Committee (or other
committee serving an equivalent function) of any other entity, one of whose executive officers served on our Board or Remuneration Committee.
Limitation of Liability and Indemnification of Officers and Directors
Our bylaws provide for the indemnification of
our present and prior directors and officers or any person who may have served at our request as a director or officer of another corporation
in which we own shares of capital stock or of which we are a creditor, against expenses actually and necessarily incurred by them in connection
with the defense of any actions, suits or proceedings in which they, or any of them, are made parties, or a party, by reason of being
or having been director(s) or officer(s) of us or of such other corporation, in the absence of negligence or misconduct in the performance
of their duties. This indemnification policy could result in substantial expenditure by us, which we may be unable to recoup.
Insofar as indemnification by us for liabilities
arising under the Securities Exchange Act of 1934, as amended, may be permitted to our directors, officers and controlling persons pursuant
to provisions of the Articles of Incorporation and Bylaws, or otherwise, we have been advised that in the opinion of the SEC, such indemnification
is against public policy and is, therefore, unenforceable. In the event that a claim for indemnification by such director, officer or
controlling person of us in the successful defense of any action, suit or proceeding is asserted by such director, officer or controlling
person in connection with the securities being offered, we will, unless in the opinion of our counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed
in the Act and will be governed by the final adjudication of such issue.
At the present time, there is no pending litigation
or proceeding involving a director, officer, employee or other agent of ours in which indemnification would be required or permitted.
We are not aware of any threatened litigation or proceeding which may result in a claim for such indemnification.
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following tables
set forth information as of December 20, 2023, regarding the beneficial ownership of our common stock (a) by each stockholder who is known
by the Company to own beneficially in excess of 5% of our outstanding common stock; (b) by each of the Company’s officers and directors;
(c) and by the Company’s officers and directors as a group. Except as otherwise indicated, all persons listed below have (i) sole
voting power and investment power with respect to their shares of common stock, except to the extent that authority is shared by spouses
under applicable law, and (ii) record and beneficial ownership with respect to their shares of stock. Unless otherwise identified, the
address of the directors and officers of the Company listed above is Unit 705B, 7th FL, New East Ocean Centre, 9 Science Museum Road,
TST, KLN, Hong Kong
| Title of Class |
|
Name and Address of
Beneficial Owner |
|
Office, If Any |
|
Amount & Nature
of
Beneficial
Ownership (1) |
|
Percent of
Class (2) |
| Common Stock |
|
Earnest Leung |
|
CEO and Director |
|
13,749,017 |
|
61.14 |
| Common Stock |
|
Shirley Cheng |
|
CFO and director |
|
- |
|
- |
| Common Stock |
|
Frederick Wong |
|
Director |
|
- |
|
- |
|
All Officers and Directors as a group |
|
|
|
|
|
13,749,017 |
|
|
| Common Stock |
|
Keywin Holdings Limited (3)
Office A, 18/F., Lucky Plaza, Nos. 315-321 Lockhart Road, Wanchai,
Hong Kong |
|
5% Security Holder |
|
44,707 (3) |
|
0.20 |
| Common Stock |
|
Sino Portfolio International Ltd(4)
P.O. Box 1239, Offshore Incorporations Centre, Victoria, Seychelles |
|
5% Security Holder |
|
1,835,753 |
|
8.16 |
| Common Stock |
|
Wong Yuk Chor |
|
5% Security Holder |
|
1,344,478 |
|
5.98 |
| Common Stock |
|
Yang Wu Qiang |
|
5% Security Holder |
|
1,131,960 |
|
5.03 |
|
Total Shares Owned by Persons Named above |
|
|
|
|
|
18,105,915 |
|
|
(1) Beneficial
ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities.
(2) A
total of 22,487,859 shares of our common stock outstanding are considered to be outstanding pursuant to SEC Rule 13d-3(d)(1) as of December
20, 2023. For each beneficial owner above, any options exercisable within 60 days have been included in the denominator.
(3) Dr.
Earnest Leung, its director and shareholder, and Ms. Pui Chu Tang, its director (Dr. Leung’s spouse), have voting and dispositive
control over the shares held by Keywin Holdings Limited.
(4) Ms.
Angela Chan, its sole director, and Mrs. Chen Yang Foo Oi, its shareholder, have voting and dispositive control over the shares held by
Sino Portfolio International Ltd.
Changes in Control
There are no arrangements known to us, including
any pledge by any person of our securities, the operation of which may at a subsequent date result in a change in control of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Related Party Transactions
Except as set forth below, during our last two
fiscal years, we have not entered into any material transactions or series of transactions that would be considered material in which
any director or executive officer or beneficial owner of 5% or more of any class of our capital stock, or any immediate family member
of any of the preceding persons, had a direct or indirect material interest:
In April 2009, in connection with debt restructuring,
Statezone Ltd. of which Dr. Earnest Leung, the Company’s Chief Executive Officer and a Director (being appointed on July 15, 2009
and May 11, 2009, respectively) was the sole director, provided agency and financial advisory services to the Company. Accordingly, the
Company paid an aggregate service fee of $350,000, of which $250,000 has been recorded as issuance costs for 1% Convertible Promissory
Notes and $100,000 has been recorded as prepaid expenses and other current assets, net since April 2009. Such $100,000 is refundable unless
the Keywin Option is exercised and completed. On October 28, 2021, Keywin exercised its option and $100,000 was recorded in general and
administrative expenses during the year ended December 31, 2021.
On July 1, 2009, the Company and Keywin, of which
the Company’s chief executive officer and director is the director and his spouse is the sole shareholder, entered into an Amendment,
pursuant to which the Company agreed to extend the exercise period for the Keywin Option under the Note Exchange and Option Agreement
between the Company and Keywin, to purchase an aggregate of 1,637,522 shares of our common stock for an aggregate purchase price of $2,000,000,
from a three-month period ended on July 1, 2009, to a six-month period ended October 1, 2009. The exercise period for the Keywin option
was subsequently further extended to a nine-month period ended January 1, 2010, pursuant to the Second Amendment. On January 1, 2010,
the Company and Keywin entered into the third Amendment, pursuant to which the Company agreed to further extend the exercise period to
an eighteen-month period ended on October 1, 2010, and provide the Company with the right to unilaterally terminate the exercise period
upon 30 days’ written notice. On September 30, 2010, the exercise price was extended at various times from September 1, 2010 to
December 31, 2017 and the Keywin Option was further extended to a hundred and twenty-nine-month period ending on January 1, 2020 and the
exercise price changed to $0.99. On December 31, 2019, the latest exercise period for the Keywin Option was further extended to a hundred
and fifty-three-month period ending on January 1, 2022. On June 1, 2021, the Company and Keywin, of which the Company’s chief executive
officer and director is the director and his spouse is the sole shareholder, entered into an Amendment, pursuant to which the Company
agreed Keywin to purchase an aggregate of 11,764,756 shares of the Company’s common stock for an aggregate purchase price of $2,000,000.
The fair value of the purchase option was determined utilizing Black-Scholes option pricing model on the date before the modification
and after modification, accordingly, the Company recorded $nil and $3,544,430 as dividend for the year ended December 31, 2022 and 2021,
respectively.
On October 28, 2021, Keywin exercised its option
to purchase an aggregate of 11,764,756 shares of the Company’s common stock for an aggregate purchase price of $2,000,000 which
for setting off against the Company’s obligation to repay part of the short term loan interest payable, there was no cash proceeds
from the exercise of Keywin option.
As of December 31, 2022 and 2021, the Company
recorded an aggregated amount of $1,037,167 and $2,845,006 of short-term loans from a shareholder that the loans are unsecured, bear a
monthly interest of 1.5% and repayable on demand, respectively. However, according to the agreements, the Company shall have the option
to shorten or extend the life of those short-term loans if the need arises and the Company has agreed with the shareholder to extend the
short-term loans on the due date. As of December 31, 2022 and 2021, the Company recorded an interest payable recorded in accounts payable,
accrued expenses and other payables of $167,468 and $470,315, respectively. The interest expenses of the short-term loans for the years
ended December 31, 2022 and 2021 amounted to $192,247 and $512,101, respectively.
On January 18, 2022, the Company entered into
a Subscription Agreement under which the Subscriber agreed to purchase the 1% Senior Unsecured Convertible Note Agreement from the Company
for an agreement purchase price of two million five hundred thousand US Dollars ($2,500,000). The issuance of convertible note is for
setting off against the Company’s obligation to repay part of the short-term loan $2,005,000 and interest payable $495,000, there
was no cash proceeds from the issuance of convertible notes.
Related Party Transaction Policy
Our Company has adopted a written Related Party
Transaction Policy, or the Policy, for the purpose of describing the procedures used to identify, review, approve and disclose, if necessary,
any transaction in which (i) the Company is a participant and (ii) a related person has or will have a direct or indirect material
interest.
Once a related party transaction in which the
aggregate amount involved will or may be expected to exceed $120,000 in any calendar year has been identified, the Audit Committee must
review the transaction for approval or ratification. In determining whether to approve or ratify a related party transaction, the Audit
Committee shall consider all relevant facts and circumstances, including the following factors:
| l | the benefits to the Company of the transaction; |
| l | the nature of the related party’s interest
in the transaction; |
| l | whether the transaction would impair the judgment
of a director or executive officer to act in the best interest of the Company and its stockholders; |
| l | the potential impact of the transaction on a
director’s independence; and |
| l | any other matters the Audit Committee deems appropriate. |
No director may participate in any discussion,
approval or ratification of a transaction in which he or she is a related person.
RE-ELECTION AND APPOINTMENT OF DIRECTORS
The Board of Directors is currently comprised
of three (3) directors. On December 20,2023, the Board of Directors recommended the re-election of Earnest Leung, Shirley Cheng and Frederick
Wong to the stockholders. The re-election each of Earnest Leung, Shirley Cheng and Frederick Wong were approved pursuant to the Written
Consent and each of them will serve as a director until our next annual stockholders’ meeting and until their respective successors
are duly elected and qualified or earlier resignation or removal.
Information about our Directors
Set forth below is information regarding our elected directors as of
December 20, 2023:
| Name |
Age |
Position |
Director Since
|
| Earnest Leung |
66 |
Chief Executive Officer and Chairperson of the Board |
2009 |
| Shirley Cheng |
45 |
Chief Financial Officer, Corporate Secretary and Director |
2015 |
| Frederick Wong |
56 |
Director |
2022 |
________
Remarks:
Each Director serves until our next annual stockholders
meeting and until their respective successors are duly elected and qualified or earlier resignation or removal.
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC
ACCOUNTING FIRM
The Board has pre-approved Gries
& Associates, LLC, independent registered public accounting firm, to audit the consolidated financial statements of the Company
and its subsidiaries and variable interest entity for the fiscal year ended December 31, 2022, and to perform all auditing services and
all audit related, tax or other services not prohibited under Section 10A(g) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), subject to the de minimis exception described in Section 10A(i)(1)(B) of the Exchange Act.
Such pre-approval was ratified pursuant to the
Written Consent. Although action by stockholders is not required by law, the Board has determined that it is desirable to seek ratification
of this pre-approval by the stockholders. Notwithstanding the appointment, the Board, in its discretion, may direct the appointment of
new independent registered public accounting firms at any time during the year, if the Board feels that such a change would be in the
best interest of the Company and its stockholders.
Principal Accounting Fees and Services
Gries & Associates, LLC is our Principal Independent
Registered Public Accountants engaged to audit our financial statements for the fiscal years ended December 31, 2022 and 2021, respectively.
The following table shows the fees that we paid or accrued for the audit and other services provided by Gries & Associates, LLC, for
the fiscal years ended December 31, 2022 and 2021.
| Fee Category | |
2022 | | |
2021 | |
| Audit Fees | |
$ | 27,000 | | |
$ | 15,000 | |
| Audit-Related Fees | |
$ | -- | | |
$ | -- | |
| Tax Fees | |
$ | -- | | |
$ | -- | |
| All Other Fees | |
$ | -- | | |
$ | -- | |
Audit Fees
This category consists of fees for professional
services rendered by our principal independent registered public accountant for the audit of our annual consolidated financial statements,
review of consolidated financial statements included in our quarterly reports and services that are normally provided by the independent
registered public accounting firms in connection with statutory and regulatory filings or engagements for those fiscal years.
Audit-Related Fees
This category consists of fees for assurance and
related services by our principal independent registered public accountant that are reasonably related to the performance of the audit
or review of our consolidated financial statements and are not reported above under “Audit Fees”. The services for the fees
disclosed under this category include consultations concerning financial accounting and reporting standards.
Tax Fees
This category consists of fees for professional
services rendered by our principal independent registered public accountant for tax compliance, tax advice, and tax planning.
All Other Fees
This category consists of fees for services provided
by our principal independent registered public accountant other than the services described above.
Policy on Pre-Approval of Audit Services
The Audit Committee pre-approves all services,
including both audit and non-audit services, provided by our independent registered public accounting firm. All audit services (including
statutory audit engagements as required under local country laws) must be accepted by the Audit Committee before the audit commences.
Each year, management and the independent registered
public accounting firm will jointly submit a pre-approval request, which will list each known and/or anticipated audit and non-audit service
for the upcoming calendar year and which will include associated budgeted fees. The Audit Committee will review the requests and approve
a list of annual pre-approved non-audit services.
All services provided by Gries & Associates,
LLC during the fiscal years ended December 31, 2022 and 2021 were pre-approved by the Audit Committee.
AMENDMENT OF OUR CERTIFICATE
OF INCORPORATION
GENERAL
The Board of Directors of the Company has adopted
a resolution to amend the articles of incorporation so as to increase the number of shares of Preferred Stock authorized for issuance
by the Board of Directors from 5,000,000 to 10,000,000. The Majority Shareholders have given their written consent
to the resolution.
Under Delaware corporation law, the consent of
the holders of a majority of the voting power is effective as shareholders’ approval. We will file the Amendment with the Secretary
of State of Delaware on or after January 8, 2024, and it will become effective on the date of such filing. The Amendment to the Certificate
of Incorporation will provide that the authorized shares of capital stock of the Company will consist of 100,000,000 shares
of common stock with a par value of $0.001 per share, and 10,000,000 shares of Preferred Stock with a par value of $0.001 per share.
REASONS
The Board of Directors and the Majority Shareholders
have approved the amendment to the articles of incorporation in order to provide the Company with flexibility in pursuing its long-term
business objectives.
As a result of the increase in authorized Preferred
stock, there will be approximately 10,000,000 Preferred Stock available for issuance. The Board of Directors will be authorized to issue
the additional Preferred Stock without having to obtain the approval of the Company’s shareholders. Delaware law requires that the
Board use its reasonable business judgment to assure that the Company obtains “fair value” when it issues shares. Nevertheless,
the issuance of the additional shares would dilute the proportionate interest of current shareholders in the Company. The issuance of
the additional shares could also result in the dilution of the value of shares now outstanding, if the terms on which the shares were
issued were less favorable than the contemporaneous market value of the Company’s common stock.
The increase in the number of Preferred shares
available for issuance is not being done for the purpose of impeding any takeover attempt. Nevertheless, the power of the Board of Directors
to provide for the issuance of shares of common stock without shareholder approval has potential utility as a device to discourage or
impede a takeover of the Company. In the event that a non-negotiated takeover were attempted, the private placement of stock into “friendly”
hands, for example, could make the Company unattractive to the party seeking control of the Company. This would have a detrimental effect
on the interests of any stockholder who wanted to tender his or her shares to the party seeking control or who would favor a change in
control.
NO APPRAISAL RIGHTS
Under Delaware law, our Stockholders are not entitled
to appraisal rights in connection with the Authorized Shares Increase.
WHEN THE INCREASE WILL GO INTO EFFECT
The Authorized Shares Increase will become effective
on the date that we file the Certificate of Amendment to the Articles of Incorporation of the Company (the “Amendment”)
with the Secretary of State of the State of Delaware. We intend to file the Amendment with the Secretary of State of the State of Delaware
promptly after the twentieth (20th) day following the date on which this Information Statement is mailed to the Stockholders.
Notwithstanding the foregoing, we must first notify
FINRA of the intended Authorized Shares Increase by filing the Issuer Company Related Action Notification Form no later than ten (10)
days prior to the anticipated record date of such action. Our failure to provide such notice may constitute fraud under Section 10 of
the Exchange Act.
We currently expect to file the Amendment on or
about January 8,2024.
OTHER MATTERS
As of the date of this Information Statement,
the Board of Directors knows of no other matters other than those described in this Information Statement that have been approved or considered
by the holders of a majority of our issued and outstanding voting securities.
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
Network CN Inc. is subject to the informational
requirements of the Securities Exchange Act of 1934, and in accordance therewith files reports and other information with the Securities
and Exchange Commission. Such reports and other information and a copy of the registration statement and the exhibits and schedules that
were filed with the registration statement may be inspected without charge at the public reference facilities maintained by the SEC in
100 F Street, N.E., Washington, D.C. 20549. Statements made in this prospectus regarding the contents of any contract, agreement or other
document that is filed as an exhibit to the registration statement are not necessarily complete, and we refer you to the full text of
the contract or other document filed as an exhibit to the registration statement. Copies of all or any part of the registration statement
may be obtained from the SEC upon payment of the prescribed fee. Information regarding the operation of the public reference rooms may
be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains a web site that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the SEC. The address of the site is http://www.sec.gov.
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BY ORDER OF THE BOARD OF DIRECTORS |
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/s/ Earnest Leung |
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Earnest Leung, Chief Executive Officer |
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January 4, 2024 |
Exhibit A
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION
OF
NETWORK CN INC.
(Pursuant to Section 242 of the Delaware General
Corporation Law)
NETWORK CN INC., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the Amended and Restated Certificate
if Incorporation of the Corporation is amended by replacing the entire content of the Article thereof numbered “FOURTH” with
the following text:
“The total number of shares
of stock which the corporation is authorized to issue is 110,000,000 shares, of which 100,000,000 shall be shares
of common stock, par value $0.001 per share (the “Common Stock”) and 10,000,000 shares shall be shares of preferred stock,
par value $0.001 per share (the “Preferred Stock”). The shares of Common Stock and Preferred Stock may be issued by the corporation
from time to time as approved by the board of directors of the corporation without the approval of the stockholders, except as otherwise
provided by applicable law. The powers, designations, preferences and relative, participating, optional and other rights of the Preferred
Stock shall be provided for in a resolution or resolutions adopted by the board of directors of the corporation and set forth in a certificate
of designations executed, acknowledged and filed as provided in Section 151(g) of the General Corporation Law of the State of Delaware,
amending this Article Fourth.
SECOND: This Certificate of
Amendment has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware
by the joint written consent of all of the members of the Board of Directors of the Corporation and the holder of a majority of the Corporation’s
issued and outstanding common stock pursuant to Sections 141(f) and 228 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this
Certificate to be executed this ___ day of _____, 2023.
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By |
/s/ Earnest Leung |
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Earnest Leung |
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Chief Executive Officer |
20
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