UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
CHINESEWORLDNET.COM INC.
| ¨ |
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
| x |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended
December 31, 2014
OR
| ¨ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from
to
OR
| ¨ |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Date of event requiring this
shell company report ______________________
Commission file number 000-33051
CHINESEWORLDNET.COM INC.
(Exact name of Registrant as specified
in its charter)
CAYMAN ISLANDS
(Jurisdiction of incorporation or organization)
Appleby, Clifton House 75 Fort Street,
PO Box 190, Grand Cayman E9 KY1-1104
(Address of principal executive offices)
Mr. Chi Cheong Liu
President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer
Tel: +1 (345) 814-2743 Email: info@chineseworldnet.com
Appleby, Clifton House 75 Fort Street, PO Box 190, Grand Cayman E9 KY1-1104
(Name, Telephone, Email and/or Facsimile
number and Address of Company Contact Person)
| Securities registered or to be registered pursuant to Section 12(b) of the Act. |
| Title of each class |
Name of each exchange on which registered |
| Not Applicable |
Not Applicable |
| |
|
| Securities registered or to be registered pursuant to Section 12(g) of the Act. |
Common Shares, Par Value of US$0.001 Per Share
|
| (Title of Class) |
| |
|
| Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. |
| Not Applicable |
| (Title of Class) |
Indicate the number of outstanding shares
of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 10,950,000
common shares
Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
If this report is an annual or transaction
report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
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.
Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer
and large accelerated filer” in Rule 12b-2 of the Exchange Act.
| ¨ Large accelerated filer |
|
¨ Accelerated filer |
|
x Non-accelerated filer |
| |
|
|
|
|
Indicate by check mark which basis of accounting
the registrant has used to prepare the financial statements included in this filing:
| x U.S. GAAP |
|
¨ International Financial Reporting Standards as issued by the International Accounting Standards Board |
|
¨ Other |
| |
|
|
|
|
If “Other” has been checked
in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
If this is an annual report, indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
TABLE OF CONTENTS
INTRODUCTION AND USE OF CERTAIN TERMS
ChineseWorldNet.Com Inc. is a corporation
incorporated under the Company Law (1998 revision) of the Cayman Islands on January 12, 2000. Except as the context
otherwise requires, all references in this annual report (the “Report”) on Form 20-F to “we,”
“us,” “our,” “CWN,” and the “Company” are to ChineseWorldNet.Com Inc.
and, where applicable, our former subsidiaries, including NAI Interactive Ltd. (“NAI”), a company incorporated
under the laws of British Columbia, ChineseWorldNet.com (Hong Kong) Ltd. (“CWN HK”), a company incorporated
under the laws of Hong Kong, 85% owned interest in ChineseWorldNet.com (Shanghai) Ltd. (“CWN China”), a company
incorporated under the laws of People’s Republic of China, and 85% owned interest in Weihai Consulting Investment Ltd. (“Weihai”),
a company incorporated under the laws of People’s Republic of China.
Our consolidated financial statements are
prepared in accordance with the United States generally accepted accounting principles (“US GAAP”) and are presented
in United States dollars (“US dollars”). All monetary amounts contained in this Report are in US dollars
unless otherwise indicated. References to “Fiscal 2014” are to our fiscal year ended December 31, 2014, and other
fiscal years of the Company are referred to in a corresponding manner. References to “Common Shares” are to our
Common Shares, par value of US$0.001 per share.
Our registered office and principal executive
office is located at Appleby, Clifton House, 75 Fort Street, P.O. Box 190, Grand Cayman, Cayman Islands KY1-1104.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING
STATEMENTS
This Report contains forward-looking statements
that reflect the management’s current expectations and assumptions with respect to the general economic and business conditions,
our operation and business strategies, products, services and competition, future financial position and results, and various other
factors, both referenced and not referenced in this Report. All statements made in this Report other than statements of historical
fact, including, among others, statements that address operating performance, events, circumstances, or developments that the management
expects or anticipates will or may occur in the future, statements related to revenue and volume growth, profitability, new sales
and marketing channels, adequacy of and ability to raise additional funding for operations, and statements expressing general optimism
about future operating results and non-historical information, are forward-looking statements. In particular, the words
“believe,” “expect,” “intend,” “anticipate,” “estimate,” “plan,”
“target,” “may,” variations of such words, and similar expressions identify forward-looking statements,
but are not the exclusive means of identifying such statements and their absence does not mean that statements are not forward-looking.
These forward-looking statements are subject
to risks and uncertainties that could cause our actual financial position and results to differ materially from those expressed
in, anticipated or implied by these forward-looking statements for many reasons, including the risks and statements described in
more detail under “Item 3. Key Information – D. Risk Factors” and “Item 5. Operating and Financial
Review and Prospects” included elsewhere in this Report. We do not undertake any obligation to revise or update
these forward-looking statements to reflect new information, future events or circumstances unless required by applicable legislation
or regulation. These forward-looking statements contained in this Report are expressly qualified by this cautionary statement.
Part I
| Item 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS |
This Report on Form 20-F is being filed
as an annual report under the Securities Exchange Act of 1934 (the “Exchange Act”) and, as such, there is no
requirement to provide any information under this item.
| Item 2. | OFFER STATISTICS AND EXPECTED TIMETABLE |
This Report on Form 20-F is being filed
as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
| A. | Selected Financial Data |
The following table sets forth selected
consolidated financial information from our consolidated financial statements prepared in accordance with US GAAP for our five
most recently completed fiscal periods consisting of the years ended December 31, 2014, 2013, 2012, 2011 and 2010. The information
for the last three fiscal years ended December 31, 2014, 2013, 2012 and 2011, have been extracted from our audited consolidated
financial statements and the related notes included herein and should be read in conjunction with such in “Item 5 –
Operating and Financial Review and Prospects”. Information for the year ended December 31, 2010 has been extracted
from audited consolidated financial statements not disclosed elsewhere and presented below.
| | |
Year ended December 31, | |
| | |
2014 | | |
2013 | | |
2012 | | |
2011 | | |
2010 | |
| Consolidated Statements of Operations: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Revenue | |
$ | 158,752 | | |
| 937,781 | | |
| 1,243,638 | | |
| 1,675,875 | | |
| 1,733,329 | |
| Net income (loss) for the year | |
| (606,346 | ) | |
| (521,394 | ) | |
| (128,931 | ) | |
| 138,040 | | |
| 296,604 | |
| Net income (loss) attributable to non-controlling interest | |
| (10,352 | ) | |
| (31,156 | ) | |
| (43,843 | ) | |
| (60,926 | ) | |
| 107,858 | |
| Net income (loss) attributable to common stockholders | |
| (595,994 | ) | |
| (490,238 | ) | |
| (85,088 | ) | |
| 198,966 | | |
| 188,746 | |
| Earning (loss) per share – basic | |
| (0.05 | ) | |
| (0.05 | ) | |
| (0.01 | ) | |
| 0.01 | | |
| 0.02 | |
| Earning (loss) per share – diluted | |
| (0.05 | ) | |
| (0.05 | ) | |
| (0.01 | ) | |
| 0.01 | | |
| 0.02 | |
| Weighted average common shares outstanding – basic | |
| 10,950,000 | | |
| 10,950,000 | | |
| 10,950,000 | | |
| 10,950,000 | | |
| 10,873,288 | |
| Weighted average common shares outstanding – diluted | |
| 10,950,000 | | |
| 10,950,000 | | |
| 10,950,000 | | |
| 11,404,862 | | |
| 10,873,288 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Consolidated Balance Sheets: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total assets | |
$ | 884,935 | | |
| 3,164,476 | | |
| 2,571,264 | | |
| 3,182,417 | | |
| 2,171,219 | |
| Equipment | |
| - | | |
| 14,853 | | |
| 23,515 | | |
| 36,519 | | |
| 50,521 | |
| Total current liabilities | |
| 89,390 | | |
| 1,679,145 | | |
| 546,060 | | |
| 1,123,354 | | |
| 384,673 | |
| Total stockholders’ equity (deficiency) | |
| 795,545 | | |
| 1,485,331 | | |
| 2,025,204 | | |
| 2,059,063 | | |
| 1,786,546 | |
No dividends have
been declared or paid in Fiscal 2014, Fiscal 2013 and Fiscal 2012.
| B. | Capitalization and Indebtedness |
This Report on Form 20-F is being filed
as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
| C. | Reasons for the Offer and Use of Proceeds |
This Report on Form 20-F is being filed
as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
The following discussion in this Report
on Form 20-F contains forward-looking statements regarding our business, prospects and results of operations that involve risks
and uncertainties. Our actual results may differ materially from the results that may be anticipated by such forward-looking
statements and discussed elsewhere in this Report. Factors that could cause or contribute to such differences include, but are
not limited to, those discussed below, as well as those discussed under the heading “Item 4 – Information on
the Company” and “Item 5 – Operating and Financial Review and Prospects” and those discussed elsewhere
in this Report. In evaluating our business, prospects and results of operations, readers should carefully consider the following
factors in addition to other information presented in this Report and in our other reports filed with the Securities and Exchange
Commission that attempt to advise interested parties of the risks and factors that may affect our business, prospects and results
of operations. See “Cautionary Notice Regarding Forward Looking Statements” above.
Trading of
our common shares may be restricted by the Securities and Exchange Commission’s penny stock regulations which may limit a
shareholder’s ability to buy and sell our common shares
The Securities and Exchange Commission
has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as
defined) of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our common
shares are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to
persons other than established customers and “accredited investors”. The term “accredited investor” refers
generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by
the Securities and Exchange Commission which provides information about penny stocks and the nature and level of risks in the penny
stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation
of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny
stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information,
must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing
before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure
requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject
to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities.
We believe that the penny stock rules discourage investor interest in and limit the marketability of our common shares.
Our shareholders
may face difficulties in protecting their interests because we are incorporated under Cayman Islands law.
Our corporate affairs are governed by our
memorandum and articles of association, by the Company Law (1998 Revision) and the common law of the Cayman Islands.
The rights of shareholders to take action against our directors, actions by minority shareholders and the fiduciary responsibilities
of our directors under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands.
Under the common law of the Cayman Islands,
the fiduciary relationship of a director is to the Company and a director, therefore, does not usually owe a fiduciary duty to
individual shareholders. As a result, it may be difficult for a shareholder to take action against the directors for breach
of fiduciary duty.
The common law in the Cayman Islands is
derived in part from comparatively limited judicial precedent in the Cayman Islands and from English common law, the decisions
of whose courts are of persuasive authority but are not binding on a court in the Cayman Islands. Cayman Islands law in this
area may conflict with jurisdictions in the United States and/or other jurisdictions. As a result, our public shareholders
may face more difficulties in protecting their interests in the face of actions against the management, directors or our controlling
shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.
There is uncertainty
as to our shareholders’ ability to enforce civil liabilities in the Cayman Islands.
We are a Cayman Islands company and have
no assets located in the United States. All of our directors and officers are nationals and/or residents of countries other
than the United States. All or a substantial portion of the assets of these persons are located outside the United States.
As a result, it may be difficult to effect service of process within the United States upon these persons. In addition, there
is uncertainty as to whether the courts of the Cayman Islands and other jurisdictions would recognize or enforce judgments of United
States courts obtained against us or such persons predicated upon the civil liability provisions of the securities laws of the
United States or any state thereof, or be competent to hear original actions brought in the Cayman Islands or other jurisdictions
against us or such persons predicated upon the securities laws of the United States or any of our state.
| Item 4. | INFORMATION ON THE COMPANY |
| A. | History and Development of the Company |
ChineseWorldNet.Com Inc. was incorporated
on January 12, 2000 under the Company Law (1998 revision) of the Cayman Islands. The address of our registered
and principle executive office is that of our agent, Appleby, being: Clifton House, 75 Fort Street, P.O. Box 190, Grand Cayman,
Cayman Islands KY1-1104, telephone number is (345) 949-4900.
In August 2009, we incorporated CWN Capital
Inc. (“CWN Capital”) under the BVI Business Companies Act, with a registered address at Morgan & Morgan
Building, Pasea Estate, Road Town, Tortola, British Virgin Islands, focusing on capital markets businesses. CWN Capital provided
a vehicle for expanding the scope of our businesses into the capital markets. On October 1, 2010, CWN Capital completed a
non-brokered private placement and issued 25,000 of its common shares at a subscription price of $0.01 per share to Silver Lake
Investment Partners, Ltd., resulted in CWN diluted down to a 50% ownership in CWN Capital. On December 18, 2010, CWN Capital
completed another non-brokered private placement and issued 55,000 of its common shares at a subscription price of $1.00 per share
to Goldpac Investments Partners Ltd., resulted in CWN a diluted down to 23.8% ownership in CWN Capital. As a result we deconsolidated
CWN Capital on December 18, 2010 and recorded our interest in CWN Capital as an equity interest. Silver Lake Investment Partners,
Ltd. and Goldpac Investments Partners Ltd. were companies controlled by two directors of our company.
On September 8, 2009, CWN China funded
and incorporated Weihai as a local entity for the purpose of carrying out certain business operations in the Greater China.
Weihai has the same address as CWN China. Through CWN China, we had a 85% controlling interest in Weihai.
On February 1, 2008, CWN HK and Shanghai
Compass Venture Capital Investment Company Limited (“Shanghai Compass”) signed an Agreement to Establish CWN
China Co., Ltd., a Chinese-Foreign Joint Venture Limited Liability Company. In April 2008, the two parties incorporated CWN
China with CWN HK having a 70% controlling interest in CWN China. In March 2011, we completed substantially all of the regulatory
procedures and processes with Shanghai Compass, the other shareholder of CWN China and invested further 5,000,000 Renminbi to CWN
China. CWN HK is required to contribute the additional registered capital of 5,000,000 Renminbi by paying cash within two years
from August 19, 2011. During the year ended December 31, 2011, CWN HK paid cash of $400,000 which result of our financial interest
increased from 70% to 80%. During the year ended December 31, 2012, CWN HK further paid cash of $200,000 which resulted in our
financial interest increasing from 80% to 83.67%. During the fiscal year 2013, CWN HK further invested an amount of $187,200 to
CWN China and the Company‘s effective ownership of equity interest increased from 83.67% to 85% in CWN China. CWN China has
an office located at #1003, Eton Place Tower B, 555 Pudong Ave., Shanghai, PRC 200120. CWN China provided us with the capabilities
and resources to penetrate and expand particularly in the Greater China markets. As of April 28, 2014, we have no employees
in Shanghai, China.
During Fiscal 2012, Fiscal 2013 and Fiscal
2014, we made no purchases of property and equipment. There are currently no major capital projects or divestitures in progress.
Sale
of Subsidiaries
On April 28, 2014, the Company completed
the sale of all shares that the Company owned in the capital of its subsidiaries to Ningbo International Limited (the “Purchaser”)
in exchange for a cash payment of CDN$263,968.90 and a non-interest bearing promissory note in the principal amount of CDN$831,031.10
with a maturity date of one year with the option to extend upon mutual agreement (the “Transaction”), pursuant
to a share purchase agreement dated March 19, 2014 (the “Share Purchase Agreement”). The Transaction amounted
to the sale of substantially all of the assets of the Company.
Pursuant to the Share Purchase Agreement,
the Company sold its right, title and interest in and to all shares that the Company owned in the capital of its subsidiaries as
follows:
| 1. | 100 shares in the capital of NAI Interactive Ltd. (“NAI”), which shares represent
all of the issued and outstanding shares in the capital of NAI; |
| 2. | 990 shares in the capital of ChineseWorldNet.com (Hong Kong) Ltd. (“CWN HK”)
and 10 shares in the capital of CWN HK owned by Chi Cheong Liu, a director and major shareholder of the Company, on the Company’s
behalf, which shares, together, represent all of the issued and outstanding shares in the capital of CWN HK; and |
| 3. | 25,000 shares in the capital of CWN Capital Inc. (“CWN Capital”), which shares
represent 23.8% of the issued and outstanding shares in the capital of CWN Capital. |
The shareholders of the Company approved
the Share Purchase Agreement at the extraordinary general meeting of the shareholders of the Company held on April 18, 2014.
CHANGE OF DIRECTORS AND OFFICERS
In connection with the closing of the Share
Purchase Agreement, on April 28, 2014, Joe K.F. Tai resigned as President, Chief Executive Officer and a director of the Company,
Andy S.W. Lam resigned as a director of the Company, Kelvin Szeto resigned as Chief Financial Officer and Chief Operating Officer
of the Company, Gilbert Chan resigned as Senior Vice President, Marketing and Investor Relations of the Company and Terry Wong
resigned as Financial Expert of the Company. In addition, on April 28, 2014, Chi Cheong Liu was appointed as President, Chief Executive
Officer, Chief Financial Officer and Secretary of the Company and Fong Szeto was appointed as a director.
Prior to April 28, 2014, we had four principal
businesses operated by NAI, CWN HK and CWN China: (1) the financial web portal (“Portal”) business, conducted
under the ChineseWorldNet.com brand via the “www.chineseworldnet.com” website; (2) the investor relations and public
relations (“IR/PR”) business, conducted under the NAI500 brand via a number of media channels including the
“www.nai500.com” and “en.nai500.com” websites, as well as certain other promotional services; (3) the North
America and Greater China cross-border business partnering conferences (“Conference”) business, conducted via
the brand of Global Chinese Financial Forum and its ”www.gcff.ca” website; and (4) the financial content and information
distribution business.
As of April 28, 2014, we had no principal
businesses. The company is currently seeking opportunities to acquire or invest in other business opportunities.
Financial
Web Portal (“Portal”) Business
Overview
NAI’s www.chineseworldnet.com website
is a web-based portal that provides up-to-date financial content and information and financial management tools in the Chinese
language targeting the Chinese investor community in North America. The Portal business provides financial news and covers
corporate information of more than 98% of the listed stocks on major North American exchange markets, including New York Stock
Exchange (“NYSE”), American Stock Exchange (“AMEX”), NASDAQ Stock Market (“NASDAQ
”), OTC Bulletin Board (“OTCBB”), Toronto Stock Exchange (“TSX”), and Toronto Venture
Exchange (“TSX-V”). The Portal business also provides certain coverage of the financial markets in China,
Hong Kong and Taiwan. All information and services that are provided through the www.chineseworldnet.com website are free
of charge, except certain premium and personalized information and services such as premium articles and market commentary accessible
only by “Premium Subscribers” who are required to register as a subscriber and pay a subscription fee.
Current Product / Service Offering
The Portal business provides an abundant
of resources and investor’s tools on a variety of items including: Stocks, Forex, Options, Futures, ETF (exchange-traded
funds), Financial Services and Financial Products. The following contents and features are provided free of charge on the
www.chineseworldnet.com website to all readers, other than the Premium Services described below for which a subscription fee is
charged.
Company Profile
This section features a variety of interactive
investment tools that enable users to conduct their own financial research of companies, including delayed stock quotes, summary
company profiles, analysts’ buy/sell ratings, company news, insider trading information, intraday and historical stock charts,
and financial statements summary.
Headlines and Market News
Throughout the day, the Portal provides
headlines and news stories in brief covering various corporate announcements. The Portal also provides continuous update
of market news from 5 a.m. to 5 p.m. Pacific Time on each business day covering the latest movements of the major indices, the
most active stocks, news from foreign markets, earnings news, mergers and acquisitions news, and other major market events.
Commentary
This section features commentary prepared
by in-house editorial team and external contributors who comment on topics such as money management, technical analysis, currency
issues, industry analysis, macroeconomics, fundamental analysis, financial planning, mutual funds, initial public offerings, technology,
and international investing.
Premium Services
In addition to the provision of financial
news and corporate information of public companies in North America and the Greater China region, our www.chineseworldnet.com website
also offers to Premium Subscribers, through partnerships and affiliations, personalized services such as online investment tools
and applications such as portfolio tracking. The following “Premium Services” are provided to Premium
Subscribers, who currently pay a monthly subscription fee of $9.95 or an annual subscription fee of $59.95.
| a. | Personalized Financial Services “MyCWN”: |
“MyCWN” is a platform
on the www.chineseworldnet.com website that allows Premium Subscribers to create a personalized portal to customize and manage
their own personal stock portfolios. They can also easily access and view news and information of companies in their particular
portfolios.
Premium Subscribers get access
to weekly in-depth research reports prepared by the in-house editorial team on individual stocks, overall market trends, industry,
and other topics of interest.
Future Product / Service Offering
Readers are not required to register as
subscribers at this time.
During fiscal 2011, www.chineseworldnet.com
website was upgraded to provide a new layout that focuses on user friendliness.
Revenue Model of the Portal Business
Premium Subscription Fees
All information and services provided through
the www.chineseworldnet.com website are free of charge, except certain premium and personalized information and services such as
premium articles and market commentary accessible only by Premium Subscribers who are required to register as a subscriber and
pay a subscription fee. Currently, Premium Subscribers pay a monthly subscription fee of $9.95 or an annual subscription
fee of $59.95.
Banner Advertising
NAI derived revenue from selling banner
advertising space on the www.chineseworldnet.com website. The fee for a six-month banner ad ranges from $750
to $1,980 per month. The amount of fees charged depends on the size and the location of the banner ad on the website.
There is no price adjustment to the monthly fees if the actual clicks differ from the estimated clicks.
Online Marketing and Intermediary Service
It was our intention that its subscribers
be able to access information on various financial products and service providers such as online brokerage, mutual funds, insurance
and bonds by logging onto its partnering companies’ independent Internet-based trading platforms through its web portal.
However, the Company was not involved in executing any types of transactions for the account of others. All trading transactions
are performed directly between the subscribers and partnering companies. In order to do so, the subscribers have to independently
register with partnering companies.
The Portal business derives no revenue
from subscribers through this service offering.
Investor Relations
and Public Relations (“IR/PR”) Business
Overview
The IR/PR business was the result of the
acquisition of NAI. NAI operates the IR/PR business focusing on providing IR/PR services for fast growing public companies
trading on the North American exchange markets to reach the Chinese investor community in North America through various media such
as its www.nai500.com website, publications, and various web and online marketing services. In May 2009, NAI rebranded its
business model and launched “NAI 500” which provides the 500 fastest growing companies from 10 different sectors generated
from NAI’s market intelligence and street-smart expertise accumulated through its 10 plus years of operations and experience.
NAI also added a road show business component in 2009, providing face-to-face meeting opportunities for public companies and institutional
and retail investors.
Current Product / Service Offering
www.nai500.com and NAI 500
NAI operates the www.nai500.com website
(formerly www.na-investor.com) which provides IR/PR services to fee-paying North American public company clients who are listed
or quoted on the small or micro public markets in North America, such as the TSX, TSX-V, NASDAQ and OTCBB. The website offers
stock quotes, company reviews, newsletters and guide to investing of these client companies in the Chinese language to readers
in the Chinese investor community in North America. Currently, there are over 64,000 registered members on the www.nai500.com
website which attracts over 1,800,000 viewers each month.
In May 2009, NAI launched an English version
of the www.nai500.com website, the en.nai500.com website, in order to meet the needs of a broader reader base including those who
prefer the English language.
Also in May 2009, NAI rebranded its business
model and launched “NAI 500” which provides the 500 fastest growing companies from 10 different sectors including:
Mining and Resources; Oil and Gas; Clean Tech; Life Science; Industrial Products; Software and IT Services; Technology; Consumer
Products and Services; China-theme Stocks; and Special Industries. This is generated from NAI’s market intelligence
and street-smart expertise accumulated through its 10 plus years of operations and experience, and is being updated monthly.
In October 2010, NAI launched the “NAI
500 iPhone App”, which is a mobile phone application designed for iPhone users to access NAI 500 content and information
from their iPhone including delayed stock quotes and updates, daily top stories, press releases etc., available in both Chinese
and English, downloadable from the Internet for free.
Unlike www.chineseworldnet.com, www.nai500.com
is not a financial portal for registered members or readers but an Internet-based medium for the dissemination of information from
fee-paying client companies to increase exposure in the Chinese investor community. NAI charges its client companies an annual
fee of $4,500 to $6,800 for these services. There is no fee being charged to individual registered members or readers of
the www.nai500.com website. The company is launching the new upgraded version of NAI500.com by middle of the year 2013 to accommodate
the growing needs of investors in Asia to look for online investment info in North America. New version will add more functionality
and interactive capability to enhance the user experience at the platform of both the client companies and individual members.
This new version will be marketed to attract US listed client companies where such market is currently untapped for the company.
Road Show Business
During fiscal 2010, NAI started the Road
Show Business where it creates and provides face-to-face meeting opportunities for its North American public company clients and
their representatives to meet with potential institutional and high net worth individual investors in Greater China. NAI
operates its Road Show Business in two separate models: firstly, multi-client road shows and secondly, tailor made road shows for
individual clients. NAI arranges everything from top to bottom and brings its client companies together in Greater China and provides
an environment (e.g. private meetings, presentations, luncheons, dinners etc.) for them to meet with potential investors, and charged
the participating companies for fees and expenses accordingly, ranges from $20,000 to $25,000. NAI operates this through
collaboration with various investment groups in China in addition to partnership with a top local brokerage firm that has a client
base and network of over 3 million potential investors. NAI focused on working with Mining companies listed on TSX or TSX
Venture in the past 3 years but has expanded more to the oil & as sector beginning in 2013. NAI expects to continue to expand
its Road Show Business in 2014 by continuing the same format.
Design, Printing and Translation Services
NAI provides various IR/PR services to
its client companies such as the design and printing of promotional materials and financial reports. NAI also provides translation
service to its client companies translating promotional materials and financial reports from English into Chinese. NAI charges
$100 to $150 per page for its translation service.
Chinese Webpage Design, Hosting and
Maintenance
NAI offers assistance to client companies
to translate their English websites into Chinese. These Chinese web pages are linked to the featured company section on the
www.nai500.com website. NAI charges a one-time set-up fee plus a 12-month maintenance fee for our services ranging from $2,000
to $5,000 based on the scope of services as agreed with each client.
Online Marketing Service
This service aims to increase the publicity
and website traffic of client companies’ websites. Our range of online marketing service includes the creation of search
criteria for Internet-based search engines to enable quick access to client companies’ websites, e-mail blasts to NAI members
and other services such as online promotional events to help increasing Internet traffic to client companies’ websites.
In particular, our “Mining Search Engine” was launched in November 2006 focusing on the promotion of client companies
from the mining sector. This service aims to provide and promote the mining companies’ information and news to potential
investors and at the same time increasing such companies’ publicity in the community. NAI currently charges its e-mail
blast service at $600 to $1,200 per blast which reaches over 64,000 of our registered members.
Publication Service
NAI began publishing specialty investment
publications in 2002. The first investment handbook was focused on the mining sector, selling for CDN$13.80 Canadian dollars each.
In 2005, NAI published the Mining Investment Guide, Vol. 3 and the Chinese Theme Stocks Investment Guide, Vol. 1, both selling
for CDN$13.80 Canadian dollars each. In 2006, NAI published the Mining Investment Guide, Vol. 4, selling at an increased
price of CDN$29.50 Canadian dollars each due to content increase. In 2007, NAI published the Mining Investment Guide, Vol.
5 and the Chinese Theme Stocks Investment Guide, Vol. 2 – A New Chapter of Success, both selling for $29.95 each. In
2008, NAI published the Resource Investment Guide, Vol. 6, a renamed iteration of the Mining Investment Guide, selling for $29.95
each. In 2009, NAI published the Resource Investment Guide, Vol. 7 and the China Theme Stocks Investment Guide 2009/2010,
both selling for $29.95 each. In 2010, NAI published the Resource Investment Guide 2010/2011, Vol. 8, selling for $29.95
each. In 2011, NAI published the Resource Investment Guide Vol 9 - 2011/2012 selling for the same price again. For 2012,
NAI distributed the Resource Investment Guide through paid distribution channels, such as book stores, in both North America and
China, and NAI also intend to increase the price of the Resource Investment Guide to $39.95. In 2013, NAI published the Gold Book,
which was sold for USD$49.99. NAI charge client companies ranged at $500 to $2,000 each to be profiled in the publications.
The publications are sold through NAI’s and CWN HK’s offices, online and in selected bookstores. In 2013, the company
launched various investment guides with more sector focus: gold, uranium, specialty metals and energy.
NAI Membership
NAI Membership program is a new feature
started in late 2012 as a result of growing interests from individual investors to gain more knowledge and attend more our private
investor meetings and luncheons. Each membership is sold at CDN$50 yearly to earn priority seating at our investor events, a copy
of our Resource investment Guide, and subscribe to our weekly newsletter “Resource Weekly”. This newsletter is a 6-8
page weekly summary of the market news and activities in the global resource market. It is written in English and translated then
into Chinese. Both versions were being distributed at the beginning of each week.
Future Product / Service Offering
With the sale of NAI in April 2014, the
Company has no further involvement with future products and service offerings of the IR/PR business.
Revenue Model of the IR/PR Business
The IR/PR business is marketed via the
brand name of NAI 500. Sources of revenue for the IR/PR business are from each of the current product / service offering
mentioned above.
Conference
(“Conference”) Business
Overview
NAI’s conference business was originally
an integrated aspect of products and services provided by NAI under our IR/PR business model. Because of the success of our
conference series in 2006, the conference business has grown to become an individual component of our business model.
NAI organizes and markets its conferences
in the name of Global Chinese Financial Forum (“GCFF”) in the North America and China and operates the investment
seminar and conference website www.gcff.ca. GCFF provides a networking environment for local private and public companies and services
providers in China. Since 2008, GCFF has increased its focus and efforts on providing cross-border partnership opportunities
in the capital markets in North America and Greater China. The GCFF aims to be the largest series of bilingual (Chinese/English)
financial and business related functions connecting participants and client companies including individual potential investors,
public and private companies, service providers, and various industry associations. Revenue generated through GCFF is recorded
under the revenue model of NAI 500. In 2013, NAI successfully held two Global Resource Investment Conferences in China in the cities
of Shanghai and Shenzhen. The strategy is to build GCFF series in different cities of Canada, US or Greater China to serve the
local market. As of April 28, 2014, NAI has successfully hosted GCFF events in Vancouver, Toronto, Shenzhen, Shanghai, and Hong
Kong..
Current Product / Service Offering
The format of GCFF is conducted through
exhibition booths and presentation sessions, held in various cities in North America and China. While client companies can pay
a fee to rent an exhibition booth area to showcase and promote their companies, they can also conduct corporate presentations in
the industry related topics determined beforehand. Since 2008, GCFF has established itself to serve for two distinctive purposes:
(1) the retail investment services to bring together the Chinese-speaking retail investors and the players in the financial markets
at its Retail Events, and (2) the cross-border (North America and Greater China) capital market and strategic investment services
at its Institutional Events. With respect to its Institutional Events, GCFF offers its client companies the Privately Arranged
Meetings service, which provides them and the participants the opportunities to meet together through the arrangement of GCFF based
on criteria set upon by all parties prior to the events. The Privately Arranged Meetings service has become a major pillar
of the GCFF business, which took major spotlights in our previous conferences.
General sponsorship opportunities are available
for all conferences for a fee. There are several categories of sponsorship for interested parties to participate and sponsor our
conferences. These categories include Platinum, Gold, Silver, Corporate and Media, in addition to the Global Corporate Sponsorship
program. Conference specific sponsorship opportunities are also available for a fee with a focus on specific functions and
themes of the events.
Future Product / Service Offering
With the sale of NAI in April 2014, the
Company has no further involvement with future products and service offerings of the GCFF conferences.
Revenue Model of the Conference Business
NAI charges $3,000 for a standard exhibition
booth at GCFF retail level events. With respect to the GCFF industrial, cross-border related events, individual delegate
passes were charged between $980 and $1680. NAI also earned revenue from sponsorships. Conference specific sponsorship fees
ranged from $5,000 to $30,000. As of Fiscal 2014, complimentary admission is offered for individual investors pre-registering
for the conferences. Drop-in attendees were required to pay an admission fee ranging from $15 to 25 depending on the conferences.
FINANCIAL
CONTENT AND INFORMATION DISTRIBUTION BUSINESS
Overview
During fiscal 2010, we had restructured
our business model and focused our resources on the development as a financial content and information provider targeting potential
investors in the Greater China; in addition to building our network with various content and information distribution channels
in the region. Through the various products and services offered, we have accumulated substantial and valuable corporate information
and financial data in our database, including companies publicly listed in North America, market news, investors’ tools and
commentaries etc. We translate such information and data into Chinese and collaborate with local Greater China distribution channels
to distribute and disseminate the contents and information. In March 2010, we have signed a Distributorship Agreement with MegaHub
Limited, a fast growing player in financial data distribution in the Greater China providing us with exposure to various financial
institutions and over 100 million active investors in the region. We are also actively engaging other joint venture opportunities
as part of our efforts in this new endeavor.
Current Product / Service Offering
We provided and licensed proprietary financial
content and data to clients electronically for publishing, distribution, and broadcasting. Our financial content includes North
American public company fundamental information, financial information, sector and industry analysis, stock information, and various
tools for assisting investors, all of which is produced in Chinese.
Future Product / Service Offering
With the sale of NAI, CWN HK and CWN China
in April 2014, the Company has no further involvement with future products and service offerings of the financial content and information
distribution business.
Revenue Model of the Financial Content
and Information Distribution Business
NAI charged $2,000 to $4,000 per month
for clients of our financial content and information distribution business.
Revenue Breakdown
The breakdown of the revenue sources for
the year up to April 2014 and the years ended December 31, 2013, and 2012 is as follows:
| | |
Up to April 28, | | |
Year ended December 31, | |
| Revenue Breakdown | |
2014 | | |
2013 | | |
2012 | |
| GCFF Conference Business | |
$ | 31,205 | | |
$ | 430,377 | | |
$ | 513,715 | |
| Road Show Business | |
| - | | |
| 87,396 | | |
| 153,461 | |
| Various IR/PR Service | |
| 12,708 | | |
| 61,177 | | |
| 97,706 | |
| Chinese Webpage Design, Hosting and Maintenance | |
| 21,937 | | |
| 115,373 | | |
| 137,911 | |
| Online Marketing Service | |
| - | | |
| 28,683 | | |
| 73,135 | |
| Banner Advertising | |
| - | | |
| 3,122 | | |
| 1,740 | |
| Publication Service | |
| - | | |
| 16,825 | | |
| 11,478 | |
| CWN Membership and Online Service | |
| 631 | | |
| 2,643 | | |
| 2,844 | |
| Translation Service (Company Review, Company Newsletter) | |
| 3,867 | | |
| 4500 | | |
| 9,464 | |
| Other Revenues | |
| 88,404 | | |
| 187,685 | | |
| 242,184 | |
| Total | |
$ | 158,752 | | |
$ | 937,781 | | |
$ | 1,243,638 | |
| | |
| | | |
| | | |
| | |
The breakdown of the revenue sources by
geographic market for the years ended December 31, 2014, 2013,and 2012 is as follows. A majority of our revenues was generated
from our wholly-owned subsidiary NAI based in Vancouver in Canada, and partly is generated from CWN China based in Shanghai in
China.
| | |
Year ended December 31, | | |
| |
| Revenue Breakdown | |
2014 | | |
2013 | | |
2012 | |
| Canada | |
| 158,333 | | |
| 923,350 | | |
| 1,227,285 | |
| China | |
| 419 | | |
| 14,431 | | |
| 16,353 | |
Corporate
Strategy and Strategic Business Plan
As of April 28, 2014, ChineseWorldNet.com
Inc. did not have any operating businesses. The Company is now looking for opportunities to acquire or invest in other business
opportunities.
Internet Content
Partners
Through NAI, the Company had agreements
in place with the following Internet content partners:
| Company Name |
|
Services Provided |
| |
|
|
| |
|
|
| InterFax |
|
InterFax is a news agency in China that provides business news and stories to various different publications and media worldwide. We publish its contents to a section of our www.chineseworldnet.com website in return for RMB$8,000 per year. |
| IRAsia |
|
IRAsia provides financial news and articles of the stock market in Hong Kong. |
| PR Newswire |
|
PR Newswire provides news releases of companies in North America, China, Hong Kong, and Taiwan which we disseminate on our www.chineseworldnet.com website. |
| Quote123.com |
|
Quote123.com provides news and market commentaries in North America on our website. |
Our agreements with PR Newswire, and FMFOREX
were all service-to-service connections which did not incur any direct fees on us. We provide a channel to PR Newswire for
dissemination of press releases in return for PR Newswire’s content and trademark to be provided on our website.
With the sale of NAI on April 28, 2014,
the Company is no longer involved in the agreements.
| C. | Organizational Structure |
ChineseWorldNet.Com Inc. (“CWN”)
was incorporated under the Company Law (1998 revision) of the Cayman Islands on January 12, 2000. Our registered and
principal executive office is located at Appleby, Clifton House, 75 Fort Street, P.O. Box 190, Grand Cayman, Cayman Islands KY1-1104.
As a result of the sale of its subsidiaries
to Ningbo International Limited on April 28, 2014, CWN has no subsidiaries.
| D. | Property, Plants and Equipment |
We do not own any real property.
| ITEM 4A. | UNRESOLVED STAFF COMMENTS |
Not applicable.
| Item 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
This discussion and analysis is of our
operating results and our financial position for the fiscal years ended December 31, 2014, 2013, and 2012 should be read in conjunction
with the consolidated financial statements and the related notes thereto provided at “Item 18 – Financial Statements”.
The company has no operations
after April 28, 2014. Prior to the sale of our subsidiaries on April 28, 2014, we generated revenue from our Portal, IR/PR and
Conference businesses. Our annual and quarterly operating results were primarily affected by the level of our sales and costs
of operations over these three businesses.
YEARS ENDED DECEMBER 31, 2014, 2013, and
2012
For
the year ended December 31, 2014 (“fiscal 2014”), we recorded a net loss of $606,346 with a net loss of $595,994 attributable
to common stockholders (($0.05) per common share), compared to a net loss of $521,394 of which $490,238 was attributable to common
stockholders ($0.05 per common share) for the year ended December 31, 2013 (“fiscal 2013”). The increase of net
loss of $84,952 was primarily due to the loss of $422,565 from disposal of subsidiaries and the foreign exchange loss of $85,799. In
fiscal 2014, we recorded revenue of $158,752 compared to $937,781 in fiscal 2013. The decrease of revenue of $779,029 was
primarily due to the sale of all business operations on April 28, 2014. The revenue of subsidiaries in fiscal 2014 was included
and recorded in loss from discontinuing operations.
For the year ended December 31, 2013 (“Fiscal
2013”), we recorded a net loss of $521,394 with a net loss of $490,238 attributable to common stockholders (($0.05) per Common
Share), compared to a net income of $128,931 of which $85,088 was attributable to common stockholders ($0.01 per Common Share)
for the year ended December 31, 2012 (“Fiscal 2012”). The decrease of net income of $392,463 was primarily due
to the decrease revenue, the increase loss from foreign exchange and the consolidation of the operation loss from CWN Capital despite
the fact that the company reduced expenses on salary, costs of conferencing events and travelling & entertainment expenditures. In
Fiscal 2013, we recorded revenue of $937,781 compared to $1,243,638 in Fiscal 2012. The decrease of revenue of $305,857 was
primarily the large drop of core business in North American because adverse global economic conditions persisted in 2013.
For the year ended December 31, 2012 (“Fiscal
2012”), we recorded a net loss of $128,931 with a net loss of $85,088 attributable to common stockholders (($0.01) per
Common Share), compared to a net income of $138,040 of which $198,966 was attributable to common stockholders ($0.01 per Common
Share) for the year ended December 31, 2011 (“Fiscal 2011”). The decrease of net income of $266,971 was
primarily due to the decrease revenue and the increase of salary, office expenses and travelling & entertainment expenditures. In
Fiscal 2012, we recorded revenue of $1,243,638 compared to $1,675,875 in Fiscal 2011. The decrease of revenue of $432,237
was primarily the large drop of core business in North American because of bad global economic conditions in 2012.
Year Ended
December 31, 2014 Compared to Year Ended December 31, 2013
In Fiscal 2014, the Company divested its
various subsidiaries and business units. From April 2014 onward, the Company had no longer had any revenue sources, including the
GCFF Conference Business, Road Show Business, various IR/PR services, Chinese Webpage Design, Hosting and Maintenance, and Online
Marketing Service.
Revenues
GCFF Conference
Business
Revenue generated from GCFF Conference
Business was $31,205 in Fiscal 2014, compared to $430,377 in Fiscal 2013. The decrease of revenue by $399,172 was due to
discontinuing operations of core businesses after sale of subsidiaries on April 28, 2014.
Road Show Business
Revenue generated from Road Show Business
was $Nil in Fiscal 2014, compared to $87,396 in Fiscal 2013. No revenue was generated before discontinuing operations of core
businesses after sale of subsidiaries on April 28, 2014.
Various IR/PR
Service
Revenue from Various IR/PR Service was
$12,708 in Fiscal 2014, compared to $61,177 in Fiscal 2013. The decrease of revenue by $48,469 was due to the sale of the
Company’s businesses on April 28, 2014
Chinese Webpage
Design, Hosting and Maintenance
Revenue from Chinese Webpage Design was
$21,937 in Fiscal 2014, Hosting and Maintenance was, compared $115,373 in Fiscal 2013. The decrease of revenue by $93,436
was due to the sale of the Company’s businesses in April 28, 2014.
Online Marketing
Service
Revenue from Online Marketing Service was
$Nil in Fiscal 2014, compared was $28,683 in Fiscal 2013 No revenue was generated before discontinuing operations of core businesses
after sale of subsidiaries on April 28, 2014.
Banner Advertising
Revenue from Banner Advertising was $Nil
in Fiscal 2014, compared was $3,122 in Fiscal 2013 No revenue was generated before discontinuing operations of core businesses
after sale of subsidiaries on April 28, 2014.
Publication Service
Revenue
from Publication Service was $Nil in Fiscal 2014, compared was $16,825 in Fiscal 2013 No revenue was generated before discontinuing
operations of core businesses after sale of subsidiaries on April 28, 2014.
CWN Membership and Online Service
Revenue we generated from CWN Membership
and Online Service decreased $2,012 from $2,643 in Fiscal 2013 to $631 in Fiscal 2014. The decrease of revenue was due to
the sale of the Company’s businesses after April 28, 2014.
Translation Service
Translation Service was $3,867 in Fiscal
2014, compared to $4,500 in Fiscal 2013. The decrease of revenue by $633 was due to the sale of the Company’s businesses
after April 28, 2014.
Other Revenues
Other Revenues was $88,404 in Fiscal 2014,
compared to $187,685 in Fiscal 2013. The decrease of revenue by $99,281 was due to the sale of the Company’s businesses
after April 28, 2014.
Expenses
For fiscal 2014, we recorded operating
expenses of $301,050 compared to operating expenses of $1,195,775 for Fiscal 2013. The decrease of expenses by $894,725 was
due to the sale of subsidiaries on April 28, 2014.
Advertising and Promotion
Advertising and promotion expenses were
$14,647 in fiscal 2014, compared to $82,907 in fiscal 2013. The decrease of expenses by $68,260 was due to the sale of subsidiaries
on April 28, 2014.
Audit and Legal
Audit and legal expenses were $60,973 in
fiscal 2014, compared to $82,014 in fiscal 2013. The decrease of $21,041 was primarily due to the decrease of legal fees
in Fiscal 2014 as compared to Fiscal 2013.
Consulting Fees
Consulting fees expenses were $30,062 in
Fiscal 2014, compared to $90,000 in Fiscal 2013. The decrease was primarily due to termination of consulting contract on April
30, 2014 and no new contract was signed from May 2014.
Directors’
Remuneration
Directors’ remuneration expenses
were $Nil in Fiscal 2014 compared to $12,000 in Fiscal 2013. There was no fee paid to directors in Fiscal 2014.
Office and Miscellaneous
Office and miscellaneous expenses were
$50,551 in Fiscal 2014, compared to $72,142 in Fiscal 2013. The significant decrease of $21,591 was primarily due to the
sale of the Company’s businesses after April 28, 2014.
Printing
Printing expenses were $1,408 in Fiscal
2014, compared to $8,068 in Fiscal 2013. The significant decrease of $6,660 was primarily due to the sale of the Company’s
businesses after April 28, 2014.
Provision for bad and doubtful debts
Provision for bad and doubtful debts was
$Nil in Fiscal 2014 as compared to $51,112 in Fiscal 2013. No expenses had been incurred by CWN itself in Fiscal 2014.
Rent and Operating
Rent and operating expenses were $44,692
in Fiscal 2014, compared to $145,356 in Fiscal 2013. The significant decrease of $100,664 was primarily due to the sale of
the Company’s businesses after April 28, 2014.
Salaries and Benefits
Salaries and benefits expenses were $150,922
in Fiscal 2014, compared to $491,519 in Fiscal 2013 The significant decrease of $340,597 was primarily due to the sale of the Company’s
businesses after April 28, 2014.
Stock-based Compensation
Stock-based compensation expenses recorded
a credit of $74,955 in Fiscal 2014 compared to $25,841 in Fiscal 2013. The decrease was due to the 820,000 stock options granted
Jun 10, 2010 was cancelled after sale of subsidiaries on April 28, 2014.
Telephone
Telephone expenses were $3,795 in Fiscal
2014, compared to $13,747 in Fiscal 2013. The significant decrease of $9,952 was primarily due to the sale of the Company’s
businesses after April 28, 2014.
Travel and Entertainment
Travel and entertainment expenses were
$23,809 in Fiscal 2014, compared to $113,293 in Fiscal 2013. The significant decrease of $89,484 was primarily due to
the sale of the Company’s businesses after April 28, 2014.
Other Income (Loss)
We recorded other loss of $464,048 in Fiscal
2014, compared to other loss of $259,543 in Fiscal 2013. The substantial increase of other loss of $204,505 was primarily
due to the sale of the Company’s businesses after April 28, 2014 and recorded a loss of $422,565 on disposal.
Year Ended
December 31, 2013 Compared to Year Ended December 31, 2012
In
Fiscal 2013, the Company saw continued uncertainty in the western economy and capital markets, reflected in the volatility seen
in the mining exploration industry. In light of the continued uncertainty in the markets, the Company has taken measures to reduce
operating costs. We generated revenue from our Portal, and NAI’s IR/PR and Conference businesses. Our revenue
sources came from these products and services that NAI offered – GCFF Conference Business, Road Show Business, various IR/PR
Service, Chinese Webpage Design, Hosting and Maintenance, and Online Marketing Service. Other revenue sources included Banner
Advertising, Publication Service, CWN Membership and Online Service, Translation Service, and others.
Revenue Growth
Trend
The weakened western capital markets and
the lack of capitalization of Canadian junior mining exploration companies, which is the main clientele of the NAI’s products,
have had a negative impact on our businesses in Fiscal 2013 as shown in our decreased revenues, client base and conference attendance
and sales. Sales of conference exhibition spaces have been notably impacted as potential clients faced tighter budgets.
Our business development strategies in the Greater China region, while showing success in terms of the attraction of varied and
sizable investors to our events, have not significantly impacted our revenues as these investors are not a major client base for
our products.
Revenues
GCFF Conference
Business
Revenue generated from GCFF Conference
Business was $430,377 in Fiscal 2013, compared to $513,715 in Fiscal 2012. The decrease of revenue by $83,338 was due to
the decrease of presenting companies and exhibitors’ sponsorship in our conferences in North American and China during Fiscal
2013 as compared to Fiscal 2012.
Road Show Business
Revenue generated from Road Show Business
was $87,396 in Fiscal 2013, compared to $153,461 in Fiscal 2012. The substantial decrease of revenue by $66,065 in Fiscal
2013 as compared with Fiscal 2012 was due to the reduction of the number of companies that participated for the events in 2013
.
Various IR/PR
Service
Revenue from Various IR/PR Service was
$61,177 in Fiscal 2013, compared to $97,706 in Fiscal 2012. The decrease of revenue by $36,529 was mainly due to drop on
client companies participated our IR/PR services as compared to Fiscal 2012.
Chinese Webpage
Design, Hosting and Maintenance
Revenue from Chinese Webpage Design, Hosting
and Maintenance was $115,373 in Fiscal 2013, compared to $137,911 in Fiscal 2012. The decrease of $22,538 was primarily due
to less client companies interested in our Chinese micro-site development and hosting services as compared to Fiscal 2012.
Online Marketing
Service
Revenue from Online Marketing Service was
$28,683 in Fiscal 2013, compared to $73,135 in Fiscal 2012. The significant decrease of $44,452 was primarily due to large
decrease of client companies subscribed our online data providing services and E-mail blast services in Fiscal 2013 as compared
to Fiscal 2012.
Banner Advertising
Revenue we generated from Banner Advertising
increased to $3,122 in Fiscal 2013 from $1,740 in Fiscal 2012. No significant difference in Fiscal 2013 as compared with
Fiscal 2012 on client companies’ frequency of placing advertisements on our websites.
Publication Service
Revenue we generated from Publication Service
slightly increased by $5,347 from $11,478 in Fiscal 2012 to $16,825 in Fiscal 2013. This was primarily due to the increase
in number of sponsorship of our client companies in Fiscal 2013.
CWN Membership
and Online Service
Revenue we generated from CWN Membership
and Online Service decreased $201 from $2,844 in Fiscal 2012 to $2,643 in Fiscal 2013. This was primarily due to slightly
decrease in the number of Premium Subscribers of our websites as compared to a year ago.
Translation Service
Translation Service was $4,500 in fiscal
2013, compared to $9,464 in fiscal 2012. The decrease of $4,964 was due to less translation projects as compared to a year
ago.
Other Revenues
Other Revenues was $187,685 in fiscal 2013,
compared to $242,184 in fiscal 2012. The large decrease of $54,499 was mainly due to the substantial reduction of consulting
fee revenue as compared to a year ago.
Expenses
For fiscal 2013, we recorded operating
expenses of $1,195,775 compared to operating expenses of $1,613,282 for fiscal 2012. The large decrease of operating expenses
of $417,507 was primarily due to decrease of expenditures on salary, seminar and conference related expenses, travel and entertainment
and stock based compensation in Fiscal 2013 as compared to fiscal 2012.
Advertising and Promotion
Advertising and promotion expenses were
$82,907 in fiscal 2013, compared to $212,930 in Fiscal 2012. Substantial decrease on expenses of $130,023 was primarily due
to the resources that were allocated in operating our conferencing events were further reduced in Fiscal 2013 as compared with
Fiscal 2012. The size of events greatly contracted and the expenses, such as hotel rentals and advertisements, were diminished
accordingly in Fiscal 2013 in light of adverse market conditions.
Audit and Legal
Audit and legal expenses were $82,014 in
fiscal 2013, compared to $84,354 in Fiscal 2012. The slightly decrease of $2,340 was primarily due to the decrease of legal
fees in Fiscal 2013 as compared to Fiscal 2012.
Consulting Fees
Consulting fees expenses were $90,000 in
Fiscal 2012 and 2013. No new contracts were signed in Fiscal 2013 and fee of $90,000 was remained unchanged.
Depreciation
Depreciation expenses were $7,776 in Fiscal
2013 compared to $15,216 in Fiscal 2012. The difference was mainly due to the adjustment done for depreciation method on fixed
assets in CWN Shanghai in Fiscal 2013.
Directors’
Remuneration
Directors’ remuneration expenses
were $12,000 in Fiscal 2013, which is the same as that in Fiscal 2012. There were no changes on the directors’ fees
paid to each director during Fiscal 2013 and 2012.
Office and Miscellaneous
Office and miscellaneous expenses were
$72,142 in Fiscal 2013, compared to $82,316 in Fiscal 2012. The decrease of $10,174 was primarily due to decreases on expenditures
of web site and server maintenance and other sundry expenses in Fiscal 2013.
Printing
Printing expenses were $8,068 in Fiscal
2013, compared to $17,579 in Fiscal 2012. The decrease of $9,511 was primarily due to less promotional material being printed for
advertising and conferences in Fiscal 2013 as compared to Fiscal 2012. The number of mining investment guides printed in Fiscal
2013 was further reduced as compared to Fiscal 2012.
Provision for
bad and doubtful debts
Provision for bad and doubtful debts was
$51,112 in Fiscal 2013 as compared to a credit of $30,472 in Fiscal 2012. The increase was mainly due to provision for bad doubtful
debts for one customer which was uncollectible in Fiscal 2013.
Rent and Operating
Rent and operating expenses were $145,356
in Fiscal 2013, compared to $139,509 in Fiscal 2012. There was no change on the rent in Fiscal 2013, as compared to Fiscal
2012. The increase of $5,847 was mainly due to extra strata fees paid by NAI in Fiscal 2013.
Salaries and Benefits
Salaries and benefits expenses were $491,519
in Fiscal 2013, compared to $695,639 in Fiscal 2012. The large decrease of $204,120 was primarily due to a reduction
on numbers of employee in NAI during Fiscal 2013.
Stock-based Compensation
Stock-based compensation expenses decreased
$33,563 from $59,404 in Fiscal 2012 to $25,841 in Fiscal 2013. There was no new stock incentive options granted during Fiscal 2013.
Telephone
Telephone expenses were $13,747 in Fiscal
2013, compared to $18,808 in Fiscal 2012. The substantial decrease of $5,061 was primarily due to lesser expenditure
on telephone charges by signing a cheaper contract with service provider in Fiscal 2013.
Travel and Entertainment
Travel and entertainment expenses were
$113,293 in Fiscal 2013, compared to $215,379 in Fiscal 2012. The substantial decrease of $102,086 was primarily due
to lesser travelling allowances spent on keynote speakers for our conferences in Fiscal 2013 as compared with Fiscal 2012. Also,
management and business development teams travelled to Asia and met a greater number of potential clients were lesser in Fiscal
2013 as compared with Fiscal 2012.
Other Income (Loss)
We recorded other loss of $259,543 in Fiscal
2013, compared to other income of $289,997 in Fiscal 2012. The substantial increase of other loss of $549,540 was primarily
due to loss of $89,108 on foreign exchange in Fiscal 2013, as compared with gain of $35,294 in Fiscal 2012. The company recorded
an equity loss of $197,276 in Fiscal 2013, as compared with an equity income of $166,735 in Fiscal 2012. In Fiscal 2013, we recorded
a profit on short-term investment of $6,451, as compared gain of $50,193 in Fiscal 2012.
Currency
We maintain our accounting records in US
dollars.
Foreign currency fluctuations may have
an impact on our financial condition. However, we do not engage in any foreign currency hedge transactions.
Inflation
We do not believe that inflation will have
a material adverse effect on our financial condition. Traditionally, Canada has not been a country that experienced
a substantial increase in inflation. As of December 31, 2014, the annual average rate of inflation in Canada was 1.47
%.
| B. | Liquidity and Capital Resources |
As of December 31, 2014, we had cash and
cash equivalents of $186,757. We had a working capital of $795,545 at December 31, 2014, compared to $1,322,672 at December 31,
2013.
| C. | Research and Development, Patents and Licenses |
We have not engaged in research and development
activities for the last three fiscal years, and have no patents and licenses.
As a result of the sale of our subsidiaries
on April 28, 2014, we do not currently know of any trends that would be material to our operations.
| E. | Off-Balance Sheet Arrangements |
We do not have any off-balance sheet arrangements.
| F. | Tabular Disclosure of Contractual Obligations |
| |
|
Payments due by period ($) |
|
Contractual Obligations
as of December 31, 2014 |
|
Total |
|
|
Less than
1 year |
|
|
1-3 years |
|
|
3-5 years |
|
|
More than
5 years |
|
| Long-Term Debt Obligations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Capital (Finance) Lease Obligations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Operating Lease Obligations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Purchase Obligations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Other Long-Term Liabilities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Total |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Item 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
| A. | Directors and Senior Management |
The following table sets forth all directors
and executive officers of CWN. Each director’s term of office expires at the next annual general meeting of shareholders.
| Name |
|
Age |
|
Office Held Since |
|
Offices and Positions Held in CWN |
| Chi Cheong Liu(1) |
|
55 |
|
January 12, 2000 |
|
Director, President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer |
| Chi Kong Liu(1) |
|
54 |
|
January 12, 2000 |
|
Director |
| Fong Szeto |
|
67 |
|
April 28, 2014 |
|
Director |
| (1) | Chi Cheong Liu and Chi Kong Liu are related parties. |
The business background and principal occupations
of each of CWNs director and executive officer for the preceding five years are as follows:
Chi Cheong Liu
Mr. Liu has been a director and treasurer
of CWN since January 2000. Mr. Liu has been President of Chigo Engineering Company, a security engineering firm, for
the last 18 years. Mr. Liu is a venture capitalist specializing in biotechnology and technology investments.
Chi Kong Liu
Mr. Liu has been a director of CWN since January 2000. Mr. Liu is President and owner of S
& B Trading Company Limited, a diamond and jewelry wholesaler. Mr. Liu is a venture capitalist specializing in biotechnology
and technology investments.
Fong Szeto
Mr. Szeto has been a director of CWN since
April 28, 2014. Mr. Szeto is an experienced international businessman with expertise in the People’s Republic of China and
Hong Kong SAR.
The following table provides information
regarding direct and indirect remuneration paid to the directors and executive officers of CWN and its subsidiaries during Fiscal
2014.
| | |
Annual Compensation in Fiscal 2014 | |
| Name and Respective Office and Position Held | |
Salary ($) | | |
Bonus ($) | | |
Other Annual Compensation ($) | |
Chi Cheong Liu(1)
Director, President and Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer | |
| Nil | | |
| Nil | | |
| | |
Chi Kong Liu(2)
Director | |
| Nil | | |
| Nil | | |
| | |
Fong Szeto(3)
Director | |
| Nil | | |
| Nil | | |
| | |
| (1) | Mr. Liu is a shareholder and does not receive salary. The
company paid Mr. Liu director fee of $Nil in 2014, $3,000 per year in 2012, and $3,000 per year in 2011. |
| (2) | Mr. Liu is a shareholder and does not receive salary. The
company paid Mr. Liu director fee of $Nil in 2014, $3,000 per year in 2012, and $3,000 per year in 2011. |
| (3) | Mr. Szeto is a shareholder and does not receive salary. The company paid Mr. Szeto director fee
of $Nil in 2014. |
Pension Plans
We do not provide pension, retirement or
similar benefits for directors, senior management or employees.
Directors hold office for a term of one
year or until the next annual general meeting of shareholders at which directors are elected. Two of the current directors
have served our company since January 12, 2000 and a third was appointed on April 28, 2014. Our officers are appointed
by the board and serve at the board’s discretion.
We have not entered into service contracts
with any of our directors.
We do not have an audit committee or remuneration
committee, but our entire board of directors acts in such capacities.
As of December 31, 2014, there were no
employees of the Company.
| E. | Share Ownership of Directors and Senior Management |
The following table sets forth certain
information regarding the ownership of our Common Shares by each of the persons who were directors and members of senior management
during Fiscal 2014. The percentage owned is based on 10,950,000 shares outstanding as at April 29, 2015.
| Name and Respective Office and Position Held | |
Share Ownership | | |
% Share Ownership | |
| Joe K.F. Tai (1)(2) | |
| 250,000 | | |
| 2.28 | % |
| Chi Cheong Liu (3) | |
| 1,730,000 | | |
| 15.80 | % |
| Chi Kong Liu (4) | |
| 580,000 | | |
| 5.30 | % |
| Andy S.W. Lam (5) | |
| — | | |
| — | |
| Kelvin Szeto (5) | |
| 150,000 | | |
| 1.37 | % |
| Gilbert Chan (5) | |
| 50,000 | | |
| 0.46 | % |
| Fong Szeto (5) | |
| 30,000 | | |
| 0.27 | % |
| Total | |
| 2,790,000 | | |
| 25.48 | % |
| (1) | Ms. Tim Yee Lau, a related party to Mr. Tai, owned 112,500 Common Shares of our company. Goldpac
Investments Ltd., for which Mr. Tai is Managing Director, owned 200,000 Common Shares of our company. Total direct and
indirect share ownership was 562,500 Common Shares or 5.14% of the total Common Shares of our company. |
| (2) | Goldpac Investment Partners Ltd., for which Mr. Liu is principal, owned 1,166,667 Common Shares
of our company. Total direct and indirect share ownership was 2,896,667 Common Shares or 26.45% of the total Common
Shares of our company. |
| (3) | Mr. Liu owns 100,000 stock options exercisable at an exercise price of $0.60 per share until June
10, 2015. |
| (4) | Mr. Liu owns 100,000 stock options exercisable at an exercise price of $0.60 per share until June
10, 2015. |
| (5) | In connection with the closing of the Share Purchase Agreement, on April 28, 2014, Joe K.F. Tai
resigned as President, Chief Executive Officer and a director of the Company, Andy S.W. Lam resigned as a director of the Company,
Kelvin Szeto resigned as Chief Financial Officer and Chief Operating Officer of the Company, Gilbert Chan resigned as Senior Vice
President, Marketing and Investor Relations of the Company and Terry Wong resigned as Financial Expert of the Company. In addition,
on April 28, 2014, Chi Cheong Liu was appointed as President, Chief Executive Officer, Chief Financial Officer and Secretary of
the Company and Fong Szeto was appointed director of the Company. |
Stock Options
Our board of directors (the “Board”)
adopted the 2007 Stock Option Plan (the “2007 Plan”) on October 11, 2007, under which we issued incentive stocks
options with the right to purchase up to 550,000 Common Shares to our directors, officers, and employees. All of these
options granted on October 11, 2007 have an exercise price of $1.08 per share and a vesting period of 1 to 5 years, and a term
of 5 years expiring on October 11, 2012. We had not grant options to individual consultants or advisors.
The Board further adopted the 2010 Stock
Option Plan (the “2010 Plan”) on June 10, 2010, under which we issued incentive stocks options with the right
to purchase up to 1,090,000 Common Shares to our directors, officers, and employees. All of these options granted on
June 10, 2010 have an exercise price of $0.60 per share and a vesting period of 1 to 5 years, and a term of 5 years expiring on
June 10, 2015. We had not grant options to individual consultants or advisors.
As at December 31, 2014, we had 200,000
options issued and outstanding, of which 160,000 options were fully vested.
| Item 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
To the knowledge of our directors and senior
officers, the following table sets forth the persons or companies who beneficially own, directly or indirectly, or exercise control
or direction over shares carrying 5% or more of the voting rights attached to the total outstanding Common Shares as at April 29,
2014. The percentage owned is based on 10,950,000 shares outstanding as at April 29, 2014.
| Name of Shareholder | |
Number of Common Shares | | |
Percentage of Shares Beneficially Owned | |
| Chi Cheong Liu(1) | |
| 2,896,667 | | |
| 26.45 | % |
| Vcanland China Holdings Ltd. | |
| 1,500,000 | | |
| 13.70 | % |
| Datacom Venture Limited | |
| 600,000 | | |
| 5.48 | % |
| Chi Kong Liu | |
| 580,000 | | |
| 5.30 | % |
| Monica Law | |
| 570,000 | | |
| 5.21 | % |
| Joe K.F. Tai (2) | |
| 562,500 | | |
| 5.14 | % |
| Total | |
| 6,709,167 | | |
| 61.28 | % |
| (1) | Mr. Liu owns 1,730,000 Common Shares. Goldpac Investment Partners Ltd., for which Mr.
Liu is principal, owned 1,166,667 Common Shares. |
| (2) | Mr. Tai owns 250,000 Common Shares. Ms. Tim Yee Lau, a related party to Mr. Tai, owns
112,500 Common Shares. Goldpac Investments Ltd., for which Mr. Tai is Managing Director, owns 200,000 Common Shares. |
As at April 29, 2014, there were five registered
shareholders in the U.S. with holdings of 2,170,833 Common Shares representing 19.82% of the total issued and outstanding Common
Shares.
Unless otherwise indicated by footnote,
we believe that the beneficial owners of the Common Shares listed above, based on information furnished by such owners, have sole
investment and voting power with respect to such Common Shares, subject to community property laws where applicable. Beneficial
ownership is determined in accordance with the rules of the United States Securities and Exchange Commission and generally includes
voting or investment power with respect to securities. As far as it is known to us, except as disclosed herein, we are
not directly or indirectly owned or controlled by another corporation, by any foreign government or any other person or entity. The
shareholders, who own five percent or more of our Common Shares, do not have voting rights which are different than our other shareholders
who own our Common Shares.
| B. | Related Party Transactions |
In 2014, the Company incurred $22,890 [2013
- $90,000 and 2012 - $90,000] in consulting fees to a company related to a former director of the Company, of which $Nil [2013
- $22,500] was outstanding included in accounts payable and accrued liabilities as at December 31, 2014.
As at December 31, 2014, the Company has
non-interest bearing loan from the stockholders in the amount of $2,628 [2013 - $12,444].
In 2014, the Company incurred $Nil [2013
- $12,000 and 2012 - $12,000] in director fees, of which $Nil [2013 - $12,000] was outstanding and included in accounts payable
and accrued liabilities as at December 31, 2014.
In 2014, the Company provided service for
a total of $36,467 [2013 - $115,093 and 2012 - $270,810] to CWN Capital, of which $Nil [2012 - $115,093] was outstanding and included
in receivable from a related party as at December 31, 2014. The balance of receivable from a related party in the amount of $Nil
[2013 - $57,147] represents costs incurred on behalf of CWN Capital by the Company.
As at April 28, 2014, the Company provided
no service [2013 - $11,653 and 2012 - $14,043] to CWN Mining Acquisition, a company in which CEO of the Company has significant
influence.
All related party transactions were entered
into in the normal course of business and are recorded at the exchange amount established and agreed to between the related parties.
| C. | Interests of Experts and Counsel |
This Report on Form 20-F is being filed
as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
| Item 8. | FINANCIAL INFORMATION |
This Report on Form 20-F includes
our audited consolidated financial statements for the years ended December 31, 2014, 2013, and 2012, including our consolidated
balance sheets as of December 31, 2014, and 2013, and the consolidated statements of shareholders’ equity, operations and
cash flows for the years ended December 31, 2014, 2013, and 2012, and the related notes to those statements and the auditors’
reports thereon. Reference is made to these documents commencing at Page 34 of
this Report.
As of April 28, 2014, we have sold all
subsidiaries and business units. The core business activities and operations have been discontinued.
| Item 9. | THE OFFER AND LISTING |
| A. | Offer and Listing Details |
Our common shares are currently quoted
on the OTC Bulletin Board under the symbol “CWNOF.OB”. For the periods indicated, the following
table sets forth the high and low market prices of our common shares, as reported by the OTC Bulletin Board. These prices
represent inter-dealer quotations without retail markup, markdown, or commission and may not necessarily represent actual transactions.
| Periods | |
High | | |
Low | |
| Fiscal 2014 | |
$ | 0.07 | | |
$ | 0.05 | |
| Fiscal 2013 | |
$ | 0.55 | | |
$ | 0.05 | |
| Fiscal 2012 | |
$ | 1.34 | | |
$ | 0.12 | |
| Fiscal 2011 | |
$ | 1.40 | | |
$ | 0.12 | |
| Fiscal 2010 | |
$ | 0.75 | | |
$ | 0.25 | |
| Fiscal 2009 | |
$ | 0.25 | | |
$ | 0.13 | |
| Fiscal 2008 | |
$ | 1.30 | | |
$ | 0.20 | |
| Fiscal 2007 | |
$ | 1.50 | | |
$ | 1.00 | |
| | |
| | | |
| | |
| Fiscal 2015 | |
| | | |
| | |
| 1Q-2015 | |
$ | 0.07 | | |
$ | 0.02 | |
| | |
| | | |
| | |
| Fiscal 2014 | |
| | | |
| | |
| 4Q-2014(1) | |
$ | 0.07 | | |
$ | 0.07 | |
| 3Q-2014 | |
$ | 0.07 | | |
$ | 0.06 | |
| 2Q 2014 | |
$ | 0.06 | | |
$ | 0.05 | |
| 1Q 2014(1) | |
$ | 0.05 | | |
$ | 0.05 | |
| | |
| | | |
| | |
| Fiscal 2013 | |
| | | |
| | |
| 4Q-2013(1) | |
| $ 0. 25 | | |
$ | 0.05 | |
| 3Q-2013(1) | |
$ | 0.25 | | |
$ | 0.25 | |
| 2Q 2013 | |
$ | 0.25 | | |
$ | 0.25 | |
| 1Q 2013 | |
$ | 0.55 | | |
$ | 0.12 | |
| | |
| | | |
| | |
| Fiscal 2012 | |
| | | |
| | |
| 4Q-2012 | |
$ | 1.16 | | |
$ | 0.12 | |
| 3Q-2012 | |
$ | 1.34 | | |
$ | 0.12 | |
| 2Q-2012(1) | |
| $ N/A | | |
| $ N/A | |
| 1Q-2012(1) | |
| $ N/A | | |
| $ N/A | |
| | |
| | | |
| | |
| Most Recent 6 months from January 2015 through June 2015 | |
| | | |
| | |
| June 2015(1) | |
$ | 0.02 | | |
$ | 0.02 | |
| May 2015(1) | |
$ | 0.02 | | |
$ | 0.02 | |
| April 2015(1) | |
$ | 0.02 | | |
$ | 0.02 | |
| March 2015(1) | |
$ | 0.02 | | |
$ | 0.02 | |
| February 2015(1) | |
$ | 0.02 | | |
$ | 0.02 | |
| January 2015 | |
$ | 0.07 | | |
$ | 0.02 | |
| (1) | There were no trades of our common shares during this period. |
This Report on Form 20-F is being filed
as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
Our common shares are quoted on the OTC
Bulletin Board operated by the Financial Industry Regulatory Authority under the symbol “CWNOF.OB”.
This Report on Form 20-F is being filed
as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
This Report on Form 20-F is being filed
as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
This Report on Form 20-F is being filed
as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
| Item 10. | ADDITIONAL INFORMATION |
This Report on Form 20-F is being filed
as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
| B. | Memorandum and Articles of Association |
There have been no changes to the Memorandum,
Articles of Association, or Cayman Islands Law with respect to rights and powers of directors and shareholders since our 20-F Registration
Statement (SEC file no. 000-33051) filed on July 3, 2002. Such discussion is hereby incorporated by reference into this
Report.
The material contracts entered into by
us during the last two years, other than those contracts entered into in the ordinary course of business, are as follows:
| · | On April 18, 2014, the company received shareholder approval for a share purchase agreement for
the sale of all issued and outstanding shares in NAI, all issued and outstanding shares of CWN HK and 23.8% of issued and outstanding
shares of CWN Capital. As part of the contract, we will receive an aggregate of $263,968.90 in funds and one or more non-interest
bearing promissory notes in the aggregate principal amount of $831,031.10 with a maturity date of one year with the option to extend
upon mutual agreement. |
| · | Share purchase agreement dated March 19, 2014 with Ningbo International Limited. See Item 4.A.
History and Development of the Company. |
Cayman Islands
We are organized under the laws of the
Cayman Islands. We do not believe there are any decrees or regulations under the laws of the Cayman Islands applicable to us restricting
the import or export of capital or affecting the remittance of dividends or other payments to non-resident holders of our common
stock. There are no restrictions under CWN’s Articles of Association or Memorandum of Association or under Cayman
Islands law as dividends thereon. There is uncertainty as to whether the Courts of Cayman Island would (i) enforce judgments
of United States Courts obtained against us or our directors and officers predicated upon the civil liability provisions of
the federal securities laws of the United States or (ii) entertain original actions brought in Cayman Island Courts against us
or such persons predicated upon the federal securities laws of the United States. There is no treaty in effect between
the United States and Cayman Island providing for such enforcement.
Cayman Island
Income Tax Consequences
CWN is organized under the laws of Cayman
Islands. At present, there is no Cayman Islands profit tax, withholding tax, capital gains tax, capital transfer tax,
estate duty or inheritance tax payable by our United States shareholders, except shareholders ordinarily resident in the Cayman
Islands. There is currently no reciprocal tax treaty between Cayman Islands and the United States regarding withholding
taxes.
| F. | Dividends and Paying Agents |
This Report on Form 20-F is being filed
as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
This Report on Form 20-F is being filed
as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
Any documents referred to in this Report
on Form 20-F may be inspected at our principal office located at Appleby, Clifton House, 75 Fort Street, P.O. Box 190, Grand Cayman,
Cayman Islands KY1-1104 during normal business hours.
Our filings with the Securities and Exchange
Commission, and the exhibits thereto, are available for inspection and copying at the public reference facilities maintained by
the Securities and Exchange Commission in 100 F. St., NE, Washington, D.C., 20549. Copies of these filings may be obtained
from these offices after the payment of prescribed fees. Please call the Securities and Exchange Commission at 1-800-SEC-0330
for further information on the public reference rooms. These filings are also available on the Securities and Exchange Commission's
website at www.sec.gov .
Prior to their sale on April 28, 2014,
we had 4 subsidiaries, including NAI Interactive Ltd., a company incorporated under the laws of British Columbia “NAI”),
ChineseWorldNet.com (Hong Kong) Ltd., a company incorporated under the laws of Hong Kong (“CWN HK”), 85% owned
interest in ChineseWorldNet.com (Shanghai) Ltd., a company incorporated under the laws of PRC (“CWN China”),
and 85% owned interest in Weihai Consulting Investment Ltd., a company incorporated under of PRC (“Weihai”).
As a result of their sale on April 28, 2014, we do not have any subsidiaries.
| Item 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK |
We are a small business issuer as defined
in Section 230.405 of the Securities Act of 1933 and Section 240.12b-2 of the Exchange Act and, as such, there is no requirement
to provide any information under this item.
| Item 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
This Report on Form 20-F is being filed
as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
Part II
| Item 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
There has not been a material default in
the payment of principal, interest, a sinking or purchase fund installment, or any other material default not cured within 30 days,
relating to any indebtedness of us or any of our significant subsidiaries. No payment of dividends is in arrears.
| Item 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS
AND USE OF PROCEEDS |
There has been no modification of the instruments
defining the rights of holders of any class of our registered securities. There has been no modification or qualification
of the rights evidenced by any class of our registered securities by issuing or modifying any other class of securities. There
are no assets securing any class of our registered securities. There has been no change in the last financial year to
the trustee of our registered securities.
| Item 15. | CONTROLS AND PROCEDURES |
Disclosure
Controls and Procedures
As required by Rule 13a-15 under the Securities
Exchange Act of 1934, our management, with the participation of our principal executive officer and principal financial officer,
evaluated our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) as of the
end of the period covered by this annual report.
Disclosure controls and procedures are
controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted
under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in
the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures
designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 is
accumulated and communicated to our principal executive officer and principal financial officer to allow timely decisions regarding
required disclosure.
Based on its evaluation, our management,
with the participation of our principal executive officer and principal financial officer concluded that as of December 31, 2014,
our disclosure controls and procedures were not effective. The ineffectiveness of our disclosure controls and procedures was due
to a material weakness described below.
MANAGEMENT’S
REPORT ON INTERNAL CONTROLS OVER FINANCIAL REPORTING
Our management is responsible for establishing
and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) under the Exchange Act. Our
management evaluated the effectiveness of our internal control over financial reporting as of December 31, 2013 based on criteria
for effective internal control over financial reporting described in Internal Control-Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission . Based on its evaluation, our management concluded that
our internal control over financial reporting was not effective as of December 31, 2014, as per the five components of the Framework:
Control Environment, Risk Assessment, Control Activities, Information and Communication and Monitoring.
During its assessment of internal control
over financial reporting, management identified the following deficiencies. Based on the context in which the deficiencies
occur, management believes that these deficiencies individually represent significant deficiencies:
| 1. | Inadequate segregation of duties over certain information system access controls. Although
there were no major error or incident noted during the evaluation, the control deficiency carries significant risk of management
overrides and unauthorized and approved transactions. |
| 2. | There was no human resources department in our company; the monthly salary calculations were conducted
by the accounting department instead of human resources. The lack of segregation of duties would not ensure the calculation
of salary’s accuracy, and possibilities for staff receiving payment for work not attended. There was also the
potential risk of management override. |
| 3. | Purchase requisitions and purchase orders were not prepared, only oral indication was given by
management. Purchases could be initiated and executed for other uses or purchased goods or services could be misappropriated
for other uses. There was also the potential risk of fraud for these purchases. |
Based only on these facts, management has
determined that the combination of these significant deficiencies represents a material weakness. Individually, these
deficiencies were evaluated as representing a more than remote likelihood that a misstatement that was more than inconsequential,
but less than material, could occur. However, each of these significant deficiencies affects the same set of accounts. Taken together,
these significant deficiencies represent a more than remote likelihood that a material misstatement could occur and not be prevented
or detected. Therefore, in combination, these significant deficiencies represent a material weakness.
CHANGES IN
INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes to our internal control
over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) during
the year ended December 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
| ITEM 16A | AUDIT COMMITTEE FINANCIAL EXPERT |
Our board of directors serves as our audit
committee. The board has determined that it does not have an audit committee financial expert. We believe
that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly
and burdensome and is not warranted given that we sold all of our subsidiaries.
On October 29, 2004, we adopted a Code
of Ethics (the “Code of Ethics”). A copy of our Code of Ethics was filed as an exhibit to the Report
on Form 20-F filed with the Securities Exchange Commission on December 3, 2004. Our Code of Ethics will be made available
in print, free of charge, to any person requesting a copy in writing from our secretary at Appleby, Clifton House 75 Fort Street,
PO Box 190, Grand Cayman E9 KY1-1104.
| ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
The following table sets forth the aggregate
fees billed by our auditors, MNP LLP, in 2014 and 2013. Our board of directors has considered these fees and professional
services rendered compatible with maintaining the independence of that firm.
| | |
For year ending December 31, | |
| | |
2014 | | |
2013 | |
| Audit Fees(1) | |
$ | 40,000 | | |
$ | 55,000 | |
| Audit-Related Fees(2) | |
| — | | |
| — | |
| Tax Fees(3) | |
| | | |
| 1,500 | |
| All Other Fees | |
| — | | |
| — | |
| Total | |
$ | 40,000 | | |
$ | 56,500 | |
| (1) | Audit Fees consist of fees for the audit of our annual
financial statements and review in connection with our statutory and regulatory filings. |
| (2) | Audit-Related Fees consist of fees related to assurance
and related services that are reasonably related to the performance of the audit or review of our financial statements and are
not reported under “Audit Fees”. |
| (3) | Tax Fees consist of fees related to tax compliance,
tax advice and tax planning. |
| ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
COMMITTEES |
There are no applicable disclosures required
by Exchange Act Rule 10a-3(d) regarding an exemption from the listings standards for audit committees.
| ITEM 16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND
AFFILIATED PURCHASERS |
Neither our company, nor any affiliated
purchaser of our company, has purchased any of our securities during Fiscal 2014.
| ITEM 16F. | CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT |
None.
| ITEM 16G. | CORPORATE GOVERNANCE |
We are not listed on a national securities
exchange and, as such, there is no requirement to provide any information under this item.
| ITEM 16H. | MINE SAFETY DISCLOSURE |
Not applicable.
Part III
| Item 17. | FINANCIAL STATEMENTS |
Not applicable.
| Item 18. | FINANCIAL STATEMENTS |
The following Consolidated Financial Statements
and the related Notes thereto are filed as part of this Report, commencing at Page 34 to 51 of this Report:
Exhibit
No. |
|
Document Description |
| |
|
|
| 1 |
(1) |
Articles of Association, Memorandum of Association and Certificate of Incorporation of CWN |
| 2.1 |
(2) |
Form of Convertible Debenture dated May 31, 2004 |
| 4.1 |
(4) |
Stock Option Plan Agreement dated October 1, 2007 |
| 4.2 |
(6) |
Stock Option Plan Agreement dated June 10, 2010 |
| 4.3 |
(5) |
Agreement to Establish [CWN China Co., Ltd.], a Chinese – Foreign Joint Venture Ltd. Liability Company |
| 4.4 |
(6) |
Consulting Agreement between Chineseworldnet.Com Inc. and Goldpac Investments Ltd. dated January 1, 2010 |
| 4.5 |
(6) |
Consulting Agreement between Chineseworldnet.Com Inc. and Silver Lake Investment Partners, Ltd. dated January 1, 2010 |
| 4.6 |
(7) |
Consulting Agreement between Chineseworldnet.Com Inc. and Goldpac Investments Ltd. dated January 1, 2011 |
| 4.7 |
(7) |
Consulting Agreement between Chineseworldnet.Com Inc. and Silver Lake Investment Partners, Ltd. dated January 1, 2011 |
| 4.8 |
(8) |
Consulting Agreement between Chineseworldnet.Com Inc. and Goldpac Investments Ltd. dated January 1, 2012 |
| 4.9 |
(9) |
Share purchase agreement dated March 19, 2014 with Ningbo International Limited |
| 11 |
(3) |
Code of Ethics |
| 12.1 |
* |
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 13.1 |
* |
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 101.INS |
* |
XBRL Instance Document |
| 101.SCH |
* |
XBRL Taxonomy Extension Schema Document |
| 101.CAL |
* |
XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF |
* |
XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB |
* |
XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE |
* |
XBRL Taxonomy Extension Presentation Linkbase Document |
| * |
Filed herewith |
| (1) |
Incorporated by reference to Exhibits of Registrant’s Registration Statement on Form 20-F (file no. 000-33051) filed on July 3, 2002. |
| (2) |
Incorporated by reference to Exhibits of Registrant’s Annual Report on Form 20-F (file no. 000-33051) filed on December 3, 2004. |
| (3) |
Incorporated by reference to Exhibits of Registrant’s Annual Report on Form 20-F (file no. 000-33051) filed on June 30, 2005. |
| (4) |
Incorporated by reference to Exhibits of Registrant’s Annual Report on Form 20-F (file no. 000-33051) filed on June 30, 2008. |
| (5) |
Incorporated by reference to Exhibits of Registrant’s Annual Report on Form 20-F (file no. 000-33051) filed on June 30, 2009. |
| (6) |
Incorporated by reference to Exhibits of Registrant’s Annual Report on Form 20-F (file no. 000-33051) filed on May 13, 2011. |
| (7) |
Incorporated by reference to Exhibits of Registrant’s Annual Report on Form 20-F (file no. 000-33051) filed on April 30, 2012. |
| (8) |
Incorporated by reference to Exhibits of Registrant’s Annual Report on Form 20-F (file no. 000-33051) filed on April 30, 2013. |
| (9) |
Incorporated by reference to Schedule “A” to Exhibit 99.4 of Registrant’s Form 6-K (file no. 000-33051) filed on March 24, 2014. |
| |
|
|
SIGNATURES
The registrant hereby certifies that it
meets all of the requirements for filing on Form 20-F, and that it has duly caused and authorized the undersigned to sign this
annual report on its behalf.
Dated: June 29, 2015
| ChineseWorldNet.com Inc., |
| a Cayman Islands Corporation |
| |
| /s/ CHI CHEONG LIU |
| CHI CHEONG LIU |
Director, President, Chief Executive Officer, Chief
Financial Officer, Secretary and Treasurer |
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of Directors and Stockholders
of Chineseworldnet.Com Inc.:
We have audited the accompanying consolidated
balance sheets of Chineseworldnet.Com Inc. and subsidiaries (the “Company”) as of December 31, 2014 and 2013, and the
related consolidated statements of operations and comprehensive income (loss), stockholders’ equity and cash flows for the
year ended December 31, 2014, 2013 and 2012. The Company’s management is responsible for these consolidated 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 consolidated 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,
2014 and 2013, and the results of its operations and its cash flows for the year ended December 31, 2014, 2013 and 2012 in conformity
with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial
statements referred to above have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to
the consolidated financial statements, the Company incurred losses from operations since inception, has not attained profitable
operations and is dependent upon obtaining adequate financing to fulfill its operating activities. These factors raise substantial
doubt about the Company's ability to continue as a going concern. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Vancouver, Canada MNP LLP, Chartered
Accountants
June 29, 2015
Chineseworldnet.Com Inc.
CONSOLIDATED BALANCE SHEETS
As at December 31
(Expressed in U.S. Dollars)
| | |
2014 | | |
2013 | |
| | |
$ | | |
$ | |
| | |
| | |
| |
| ASSETS | |
| | | |
| | |
| Current assets | |
| | | |
| | |
| Cash and cash equivalents [note 2] | |
| 186,757 | | |
| 1,715,300 | |
| Available-for-sale securities [note 4] | |
| - | | |
| 974,639 | |
| Accounts receivable [note 5] | |
| - | | |
| 73,489 | |
| Receivable from a related party [note 11] | |
| - | | |
| 172,240 | |
| Note receivable [note 6] | |
| 693,296 | | |
| - | |
| Prepaid expenses and deposits | |
| 4,882 | | |
| 66,149 | |
| Total current assets | |
| 884,935 | | |
| 3,001,817 | |
| | |
| | | |
| | |
| Equipment [note 7] | |
| - | | |
| 14,853 | |
| Long term investments [note 8] | |
| - | | |
| 147,806 | |
| Total assets | |
| 884,935 | | |
| 3,164,476 | |
| | |
| | | |
| | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| | | |
| | |
| Current liabilities | |
| | | |
| | |
| Accounts payable and accrued liabilities | |
| 86,762 | | |
| 300,022 | |
| Due to related parties, non-interest bearing [note 11] | |
| 2,628 | | |
| 24,444 | |
| Deferred revenue | |
| - | | |
| 75,677 | |
| Bank loans [note 9] | |
| - | | |
| 1,279,002 | |
| Total current liabilities | |
| 89,390 | | |
| 1,679,145 | |
| | |
| | | |
| | |
| Stockholders’ equity [note 10] | |
| | | |
| | |
| Common stock | |
| | | |
| | |
| Authorized | |
| | | |
| | |
| 100,000,000,000 common shares with a par value of $0.001 per share | |
| | | |
| | |
| Issued and outstanding 10,950,000 common shares | |
| 10,950 | | |
| 10,950 | |
| Additional paid-in capital | |
| 4,182,073 | | |
| 4,257,028 | |
| Accumulated other comprehensive income | |
| - | | |
| (19,521 | ) |
| Deficit | |
| (3,397,478 | ) | |
| (2,801,484 | ) |
| Equity attributable to shareholders of the Company | |
| 795,545 | | |
| 1,446,973 | |
| Non-controlling interests | |
| - | | |
| 38,358 | |
| Total stockholders’ equity | |
| 795,545 | | |
| 1,485,331 | |
| Total liabilities and stockholders’ equity | |
| 884,935 | | |
| 3,164,476 | |
| Nature of operation [note 1] | |
| | | |
| | |
| Subsequent events [note 14] | |
| | | |
| | |
See accompanying notes
Chineseworldnet.Com Inc.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’
EQUITY
Years ended December 31
(Expressed in U.S. Dollars)
| | |
Common stock | | |
Additional paid-in | | |
| | |
Accumulated other comprehensive | | |
Total equity (deficiency) attributable to common | | |
Non controlling | | |
| |
| | |
Shares | | |
Amount | | |
capital | | |
(Deficit) | | |
Income | | |
stockholders | | |
interest | | |
Total | |
| | |
# | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | |
| Balance, December
31, 2012 | |
| 10,950,000 | | |
| 10,950 | | |
| 4,255,550 | | |
| (2,311,246 | ) | |
| 26,015 | | |
| 1,981,269 | | |
| 43,935 | | |
| 2,025,204 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock based compensation | |
| — | | |
| — | | |
| 25,841 | | |
| — | | |
| — | | |
| 25,841 | | |
| — | | |
| 25,841 | |
| Change of ownership in CWN china | |
| — | | |
| — | | |
| (24,363 | ) | |
| — | | |
| — | | |
| (24,363 | ) | |
| 24,363 | | |
| — | |
| Components of comprehensive income (loss): | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| Unrealized gain or loss on Available-for-sale
securities | |
| — | | |
| — | | |
| — | | |
| — | | |
| (16,284 | ) | |
| (16,284 | ) | |
| — | | |
| (16,284 | ) |
| Foreign currency translation adjustment | |
| — | | |
| — | | |
| — | | |
| — | | |
| (29,252 | ) | |
| (29,252 | ) | |
| 1,216 | | |
| (28,036 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income (loss)
for the year | |
| — | | |
| — | | |
| — | | |
| (490,238 | ) | |
| — | | |
| (490,238 | ) | |
| (31,156 | ) | |
| (521,394 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance, December 31, 2013 | |
| 10,950,000 | | |
| 10,950 | | |
| 4,257,028 | | |
| (2,801,484 | ) | |
| (19,521 | ) | |
| 1,446,973 | | |
| 38,358 | | |
| 1,485,331 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock based compensation | |
| — | | |
| — | | |
| (74,955 | ) | |
| — | | |
| — | | |
| (74,955 | ) | |
| — | | |
| (74,955 | ) |
| Change of ownership in CWN china | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| Components of comprehensive income (loss): | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| Unrealized gain or loss on Available-for-sale
securities | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| Foreign currency translation adjustment on deconsolidation
of subsidiary | |
| — | | |
| — | | |
| — | | |
| — | | |
| 19,521 | | |
| 19,521 | | |
| — | | |
| 19,521 | |
| Deconsolidation of non-controlling interest | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (38,358 | ) | |
| (38,358 | ) |
| Net income (loss) for the
year | |
| — | | |
| — | | |
| — | | |
| (595,994 | ) | |
| — | | |
| (595,994 | ) | |
| — | | |
| (595,994 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance,
December 31, 2014 | |
| 10,950,000 | | |
| 10,950 | | |
| 4,182,073 | | |
| (3,397,478 | ) | |
| — | | |
| 795,545 | | |
| — | | |
| 795,545 | |
See accompanying notes
Chineseworldnet.Com Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
Year ended December
31
(Expressed in U.S.
Dollars)
| | |
2014 | | |
2013 | | |
2012 | |
| | |
$ | | |
$ | | |
$ | |
| | |
| | |
| | |
| |
| Revenue | |
| 158,752 | | |
| 937,781 | | |
| 1,243,638 | |
| | |
| | | |
| | | |
| | |
| Expenses | |
| | | |
| | | |
| | |
| Advertising and promotion | |
| 14,647 | | |
| 82,907 | | |
| 212,930 | |
| Audit and legal | |
| 60,973 | | |
| 82,014 | | |
| 84,354 | |
| Consulting fees | |
| 30,062 | | |
| 90,000 | | |
| 90,000 | |
| Depreciation | |
| (4,854 | ) | |
| 7,776 | | |
| 15,216 | |
| Directors’ remuneration | |
| - | | |
| 12,000 | | |
| 12,000 | |
| Office and miscellaneous | |
| 50,551 | | |
| 72,142 | | |
| 82,316 | |
| Printing | |
| 1,408 | | |
| 8,068 | | |
| 17,579 | |
| Provision for bad and doubtful debts | |
| - | | |
| 51,112 | | |
| (30,472 | ) |
| Rent and operating | |
| 44,692 | | |
| 145,356 | | |
| 139,509 | |
| Salaries and benefits | |
| 150,922 | | |
| 491,519 | | |
| 695,639 | |
| Seminar operating expense | |
| - | | |
| — | | |
| 620 | |
| Stock based compensation | |
| (74,955 | ) | |
| 25,841 | | |
| 59,404 | |
| Telephone | |
| 3,795 | | |
| 13,747 | | |
| 18,808 | |
| Travel and entertainment | |
| 23,809 | | |
| 113,293 | | |
| 215,379 | |
| | |
| (301,050 | ) | |
| (1,195,775 | ) | |
| (1,613,282 | ) |
| Other income (loss) | |
| | | |
| | | |
| | |
| Interest and sundry income | |
| 2,446 | | |
| 20,390 | | |
| 37,775 | |
| Gain (loss) on available-for-sale securities | |
| - | | |
| 6,451 | | |
| 50,193 | |
| Foreign exchange gain (loss) and other losses | |
| (85,799 | ) | |
| (89,108 | ) | |
| 35,294 | |
| Equity pick up | |
| (3,896 | ) | |
| (197,276 | ) | |
| 166,735 | |
| Imputed interest income | |
| 45,766 | | |
| - | | |
| - | |
| Gain (loss) on disposal of subsidiaries [note 3] | |
| (422,565 | ) | |
| - | | |
| - | |
| Other income (loss), net | |
| (464,048 | ) | |
| (259,543 | ) | |
| 289,997 | |
| | |
| | | |
| | | |
| | |
| Loss before income taxes | |
| (606,346 | ) | |
| (517,537 | ) | |
| (79,647 | ) |
| Deferred tax recovery (expense) | |
| - | | |
| (3,857 | ) | |
| (49,284 | ) |
| | |
| | | |
| | | |
| | |
| Net loss for the year | |
| (606,346 | ) | |
| (521,394 | ) | |
| (128,931 | ) |
| Other comprehensive income (loss) | |
| | | |
| | | |
| | |
| Unrealized gain or loss on available –for-sale securities | |
| - | | |
| (45,536 | ) | |
| 22,309 | |
| Currency translation adjustments | |
| - | | |
| 1,216 | | |
| 13,359 | |
| Comprehensive income (loss) | |
| (606,346 | ) | |
| (44,320 | ) | |
| 35,668 | |
| | |
| | | |
| | | |
| | |
| Net income (loss) attributable to: | |
| | | |
| | | |
| | |
| Common stockholders | |
| (595,994 | ) | |
| (490,238 | ) | |
| (85,088 | ) |
| Non-controlling interests | |
| (10,352 | ) | |
| (31,156 | ) | |
| (43,843 | ) |
| | |
| (606,346 | ) | |
| (521,394 | ) | |
| (128,931 | ) |
| Net comprehensive income (loss) attributable to: | |
| | | |
| | | |
| | |
| Common stockholders | |
| (595,994 | ) | |
| (535,774 | ) | |
| (49,722 | ) |
| Non-controlling interests | |
| (10,352 | ) | |
| (29,940 | ) | |
| (43,541 | ) |
| | |
| (606,346 | ) | |
| (565,714 | ) | |
| (93,263 | ) |
| | |
| | | |
| | | |
| | |
| Earning (loss) per share – basic | |
| (0.05 | ) | |
| (0.05 | ) | |
| (0.01 | ) |
| Earning (loss) per share – diluted | |
| (0.05 | ) | |
| (0.05 | ) | |
| (0.01 | ) |
| Weighted average number of common shares outstanding | |
| | | |
| | | |
| | |
| - basic | |
| 10,950,000 | | |
| 10,950,000 | | |
| 10,950,000 | |
| - diluted | |
| 10,950,000 | | |
| 10,950,000 | | |
| 10,950,000 | |
See accompanying notes
Chineseworldnet.Com Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31
(Expressed in U.S.
Dollars)
| | |
2014 | | |
2013 | | |
2012 | |
| | |
$ | | |
$ | | |
$ | |
| | |
| | |
| | |
| |
| OPERATING ACTIVITIES | |
| | | |
| | | |
| | |
| Net income (loss) for the year | |
| (606,346 | ) | |
| (521,394 | ) | |
| (128,931 | ) |
| | |
| | | |
| | | |
| | |
| Adjustment to reconcile net loss to net cash used in operating activities: | |
| | | |
| | | |
| | |
| Depreciation | |
| (4,854 | ) | |
| 7,776 | | |
| 15,216 | |
| Deferred tax recovery | |
| - | | |
| 3,857 | | |
| 49,284 | |
| Stock based compensation | |
| (74,955 | ) | |
| 25,841 | | |
| 59,404 | |
| Equity interest pick up | |
| 3,896 | | |
| 197,276 | | |
| (166,735 | ) |
| Gain on short term investment | |
| (5,492 | ) | |
| - | | |
| (50,193 | ) |
| Write-down equipments | |
| - | | |
| 506 | | |
| - | |
| Imputed interest | |
| (8,051 | ) | |
| - | | |
| - | |
| Loss on deconsolidation of subsidiaries | |
| 422,565 | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | |
| Changes in non-cash working capital items: | |
| | | |
| | | |
| | |
| Accounts receivable | |
| (21,278 | ) | |
| (12,230 | ) | |
| 46,825 | |
| Prepaid expenses and deposits | |
| 5,127 | | |
| (18,481 | ) | |
| (3,767 | ) |
| Accounts payable and accrued liabilities | |
| 31,851 | | |
| (6,747 | ) | |
| 69,656 | |
| Deferred revenue | |
| (16,200 | ) | |
| (15,520 | ) | |
| (42,449 | ) |
| Net cash provided by (used in) operating activities | |
| (273,737 | ) | |
| (339,116 | ) | |
| (151,690 | ) |
| | |
| | | |
| | | |
| | |
| FINANCING ACTIVITIES: | |
| | | |
| | | |
| | |
| Short term loan | |
| (1,279,002 | ) | |
| (1,178,746 | ) | |
| (602,610 | ) |
| Due to related parties | |
| (20,223 | ) | |
| 331,125 | | |
| (190,448 | ) |
| Net cash provided by financing activities | |
| (1,299,225 | ) | |
| 1,509,871 | | |
| (793,058 | ) |
| | |
| | | |
| | | |
| | |
| INVESTING ACTIVITIES: | |
| | | |
| | | |
| | |
| Purchase of equipment | |
| - | | |
| - | | |
| (1,726 | ) |
| Short term investments | |
| 556,223 | | |
| (274,778 | ) | |
| (19,944 | ) |
| Cash received from deconsolidation of subsidiary | |
| 239,427 | | |
| - | | |
| - | |
| Cash reduced upon deconsolidation of subsidiary | |
| (751,512 | ) | |
| - | | |
| - | |
| Net cash provided by (used in) investing activities | |
| 44,138 | | |
| (274,778 | ) | |
| (21,670 | ) |
| | |
| | | |
| | | |
| | |
| Effect of exchange rate changes on cash and cash equivalents | |
| 281 | | |
| 13,449 | | |
| 631 | |
| | |
| | | |
| | | |
| | |
| Increase (decrease) in cash and cash equivalents | |
| (1,528,543 | ) | |
| 909,426 | | |
| (965,787 | ) |
| Cash and cash equivalents, beginning of year | |
| 1,715,300 | | |
| 805,874 | | |
| 1,771,661 | |
| Cash and cash equivalents, end of year | |
| 186,757 | | |
| 1,715,300 | | |
| 805,874 | |
| | |
| | | |
| | | |
| | |
| Supplemental disclosure of cash flow information | |
| | | |
| | | |
| | |
| Cash paid for interest, net of interest capitalized | |
| — | | |
| — | | |
| — | |
| Cash paid for income taxes | |
| — | | |
| — | | |
| — | |
See accompanying notes
1. NATURE OF OPERATIONS
The Company was incorporated under the
laws of Cayman Islands on January 12, 2000. On January 15, 2000 the Company acquired 100% of the issued and outstanding shares
of NAI Interactive Ltd. (“NAI”), a company incorporated under the laws of British Columbia, Canada. The Company also
has a dormant wholly-owned subsidiary ChineseWorldNet.com HK Limited (“CWN HK”) incorporated under the laws of Hong
Kong. ChineseWorldNet.com (Shanghai) Ltd. (“CWN China”) was incorporated under the laws of People’s
Republic of China in April 2008. In fiscal year 2012, the Company’s ownership interests in CWN China increased from
80% to 83% after CWN HK invested an amount of $200,000 to CWN China’s registered capital. During the fiscal year 2013,
the Company’s ownership interests in CWN China further increased from 83% to 85% after CWN HK invested an amount of $187,200
to CWN China’s registered capital. CWN China has a wholly-owned subsidiary, Weihai Consulting Investment Ltd (“Weihai”),
a company incorporated under the laws of People’s Republic of China in September 2009. During the year, the company
received shareholder approval and sold all issued and outstanding shares in NAI, all issued and outstanding shares of CWN HK and
23.8% of issued and outstanding shares of CWN Capital on April 28, 2014. For the consideration, the company received an aggregate
of CAD $263,968 in funds and one non-interest bearing promissory notes in the aggregate principal amount of CAD $831,031with a
maturity date of one year with the option to extend upon mutual agreement.
The Company’s business is to provide
online internet services through its Chinese world-wide website. The online internet services comprise banner advertisements, web
page hosting and maintenance, online promotion for customers, translation services, investment seminars, investment handbooks,
website contest events, and subscription fees. The Company, through its subsidiary, NAI, is also in the business of providing investor
relations and public relations (IR/PR) services to public companies. The IR/PR services are comprised of investment conferences
in North America and China, company road shows, investor outreach events, publication of industry related handbooks, online marketing
through its proprietary website, and e-mail marketing. These services are considered as one segment based upon the Company’s
organizational structure, the way in which these operations are managed and evaluated by management, the availability of separate
financial results and materiality considerations. After disposal of all subsidiaries and long term investment on April 28, 2014,
the core business activities and operations were discontinued. The Company is currently in the process of seeking business
opportunities.
These consolidated financial statements
have been prepared in accordance with generally accepted accounting principles in the United States of America applicable to a
going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course
of business. The Company has accumulated losses since its inception and requires additional funds to maintain and expand its intended
business operations. Management’s plans in this regard are to raise debt or equity financing as required which
the Company has been able to finance the operations through a series of equity and debt financings and additional funds is still
required to fund the Company’s anticipated business expansion.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of consolidation
These consolidated financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America and include the
accounts of the Company and its wholly former owned subsidiaries and subsidiaries which the Company owns 85% interests and its
investment in CWN Capital Inc through April 28, 2014(the date of deconsolidation of the subsidiaries). All material inter-company
accounts and transactions have been eliminated upon consolidation.
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.)
Use of estimates
The preparation of consolidated financial
statements in conformity with generally accepted accounting principles in the United States of America requires management to make
estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results
could differ from those estimates and would impact the results of operations and cash flows.
Estimates and underlying assumptions are
reviewed at each period end. Revisions to accounting estimates are recognized in the period in which the estimates are revised
and in any future periods affected. Significant areas requiring the use of management estimates relate to the determination of
the net recoverable value of assets, fair value of financial instruments, allowance for doubtful accounts, asset impairment, deferred
income tax assets and liabilities and stock based compensation.
Equipment
Equipment is recorded at cost, net of accumulated
amortization.
Depreciation on equipment is provided on
a declining-balance basis over its expected useful lives at the following annual rates:
| Furniture and fixtures | |
| 20 | % |
| Computer equipment | |
| 30 | % |
| Vehicle | |
| 25 | % |
Equipments are written down to net realizable
value when management determines there has been a change in circumstances which indicates its carrying amount may not be recoverable.
No write-downs have been necessary to date.
Cash and cash equivalents
Cash equivalents usually consist of highly
liquid investments which are readily convertible into cash with maturity of three months or less when purchased. As at December
31, 2014, the Company held a $Nil [2013 - $Nil] term deposit.
Accounts receivable
Accounts receivable are recorded at face
value, less an allowance for doubtful accounts. The allowance for doubtful accounts is an estimate calculated based on an analysis
of current business and economic risks, customer credit-worthiness, specific identifiable risks such as bankruptcies, terminations
or discontinued customers, or other factors that may indicate a potential loss. The allowance is reviewed on a regular basis, at
least annually, to ensure that it adequately provides for all reasonably expected losses in the receivable balances. An account
may be determined to be uncollectible if all collection efforts have been exhausted, the customer has filed for bankruptcy and
all recourse against the account is exhausted, or disputes are unresolved and negotiations to settle are exhausted. This uncollectible
amount is written off against the allowance. As of December 31, 2014, the company had no Accounts receivable after disposal
of assets of all subsidiaries.
Foreign currency translations
The Company, NAI, CWN HK, CWN China and
Weihai maintain their accounting records in their functional currencies of U.S. dollars, Canadian dollars, HK dollars, Chinese
Renminbi and Chinese Renminbi, respectively. However, the Company reports in U.S. dollars. Foreign currency transactions in the
foreign subsidiaries are translated into their functional currency using the exchange rate in effect at that date for assets, liabilities,
revenues and expenses. At the period end, monetary assets and liabilities denominated in the foreign currency are re-evaluated
into the functional currency by using the exchange rate in effect for the period end. The resulting foreign exchange gains and
losses are included in operations.
Assets and liabilities of the foreign subsidiaries
are translated into the reporting U.S. dollars at exchange rates in effect at the balance sheet date. Revenues and expenses are
translated at the average exchange rates. Gain and losses from such translations are included in stockholders’ equity, as
a component of other comprehensive income.
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.)
Allowance for Doubtful Accounts
The Company provides an allowance for doubtful
accounts when management estimates collectibility to be uncertain. Accounts receivable are continually reviewed to determine which,
if any, accounts are doubtful of collection. In making the determination of the appropriate allowance amount, the Company considers
current economic and industry conditions, relationships with each significant customer, overall customer credit-worthiness and
historical experience.
Income taxes
The Company accounts for income taxes under
the provisions of Accounting Standards Codification (“ASC”) 740 (formerly Statement of Financial Accounting Standards
(“SFAS”) No. 109), Accounting for Income Taxes, which requires the Company to recognize deferred tax liabilities
and assets for the expected future tax consequences of events that have been recognized in the Company’s financial statements
or tax returns using the liability method. Under this method, deferred tax liabilities and assets are determined based on the temporary
differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years
in which the differences are expected to reverse. The effect on deferred income tax assets and liabilities of a change in income
tax rates is included in the period that includes the enactment date. Valuation allowances are established when necessary to reduce
deferred income tax assets to the amount expected to be realized.
On January 1, 2007 the Company adopted
FAS Interpretation No. 48, “Accounting for Uncertainty in Income Taxes— an interpretation of FASB Statement No. 109
("FIN 48")”, codified into ASC 740. FIN 48 clarifies the accounting for uncertainty in income taxes recognized
in an enterprise's financial statements in accordance with SFAS No. 109, Accounting for Income Taxes. FIN 48 describes a recognition
threshold and measurement attribute for the recognition and measurement of tax positions taken or expected to be taken in a tax
return and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure
and transition.
Comprehensive income
The Company accounts for comprehensive
income under the provisions of ASC 220 (formerly SFAS 130), Reporting Comprehensive Income, which establishes standards
for reporting and display of comprehensive income, its components and accumulated balances. The Company is disclosing this information
on its Statement of Stockholders’ Equity. The Company’s comprehensive income (loss) consists of net earnings (loss)
for the year, foreign currency translation adjustments and unrealized gain (loss) on available-for-sale securities.
Financial instruments and concentration
of risks
Fair value of financial instruments is
made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As
these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined
with precision. Changes in assumptions can significantly affect estimated fair values.
The carrying value of cash and cash equivalents,
accounts payable and accrued liabilities, and notes receivable approximates their fair value because of the short-term nature of
these instruments. The Company is exposed to interest rates risk on its cash and cash equivalents. Management does not believe
that the impact of interest rate fluctuate will be significant.
The Company has cash and cash equivalents
with various financial institutions, which may exceed insured limits throughout the year. The Company is exposed to credit loss
for amounts in excess of insured limits in the event of non-performance by the institution. However, the Company does not anticipate
non-performance.
The Company operates and incurs significant
expenditures outside of the United States of America and is exposed to foreign currency risks due to the currency exchange fluctuation
between the subsidiaries’ functional currency and the Company’s reporting currency.
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.)
Fair value of financial instruments
The Company has adopted the provisions
of ASC Topic 820, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value in
GAAP, and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, but provides
guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. The fair
value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions
(unobservable inputs). The hierarchy consists of three levels:
| · |
Level one – Quoted market prices in active markets for identical assets or liabilities; |
| · |
Level two – Inputs other than level one inputs that are either directly or indirectly observable; and |
| · |
Level three – Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use. |
For the period ended December 31, 2014
and 2013, the fair value of cash and cash equivalents and public traded securities, marketable funds and bank loans are recognized
on the balance sheets as level one per the fair value hierarchy; and the fair value of share options and notes receivable are recognized
in the balance sheets as level three per the fair value hierarchy.
Available-for-sale securities
Available-for-sale securities represent
securities and other financial instruments that are non- strategic and neither held for trading, nor held to maturity. Available-for-sale
securities are recorded at market value. Unrealized holding gains and losses on available-for-sale securities are excluded from
income and charged to Accumulated other comprehensive income as a separate component of stockholders’ equity until
realized.
Investments in Companies Accounted for
Using the Equity Method
Investments in equity method investees
are accounted for using the equity method based upon the level of ownership and/or the Company’s ability to exercise significant
influence over the operating and financial policies of the investee. Investments of this nature are recorded at original cost and
adjusted periodically to recognize the Company’s proportionate share of the investees’ net income or losses after the
date of investment. When net losses from and investment accounted for under the equity method exceed its carrying amount, the investment
balance is reduced to zero. The Company resumes accounting for the investment under the equity method if the entity subsequently
reports net income and the Company’s share of that net income exceeds the share of the net losses not recognized during the
period the equity method was suspended. Investments are written down only when there is clear evidence that a decline in value
that is other than temporary has occurred. When an investment accounted for using the equity method issues its own shares, the
subsequent reduction in the Company’s proportionate interest in the investee is reflected in income as a deemed dilution
gain or loss on disposition. The Company evaluates its investments in companies accounted for the equity or cost method for impairment
when there is evidence or indicators that a decrease in value may be other than temporary.
Deconsolidation
The Company accounts for deconsolidation of
subsidiaries in accordance with ASC Topic 810 “Consolidation”.
In accordance with ASC Topic 810-10-40-5,
the parent shall account for the deconsolidation of a subsidiary by recognizing a gain or loss in net income attributable to the
parent, measured as the difference between:
a. The aggregate of all of the following:
1. The fair value of any consideration received;
2. The fair value of any retained non-controlling
investment in the former subsidiary at the date the subsidiary is deconsolidated;
3. The carrying amount of any non-controlling
interest in the former subsidiary (including any accumulated other comprehensive income attributable to the non-controlling interest)
at the date the subsidiary is deconsolidated.
b. The carrying amount of the former subsidiary’s
assets and liabilities.
For the years ended December 31, 2014, the
Company incurred approximately US$0.40 million loss on disposal of its former subsidiaries.
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.)
Non-monetary transactions
The Company entered into agreements for
the supply of content for the Company’s websites in exchange for advertising, consisting primarily of links to the supplier’s
websites. The Company accounted for these transactions in accordance with ASC 845 (formerly Accounting Principles Board
No. 29) Nonmonetary Transactions and with ASC 605-20 (formerly Emerging Issues Task Force No. 99-17) Revenue Recognition
. No cash was exchanged between the parties in any of these transactions. These transactions have been recorded
at a zero value, being the carrying amount of the content supplied.
Revenue recognition
Revenue consists of two main sources:
| |
1. |
Fees from banner advertisement, webpage hosting and maintenance, on-line promotion and translation services, advertising and promotion fees for customers in the Company’s Chinese Investment Guides, sponsorship fees from investment seminars, road show and forums, all of which sales prices are fixed and determinable at the time the contracts are signed and there are no provisions for refunds contained in the contracts. These revenues are recognized when all significant contractual obligations have been satisfied and collection of the resulting receivable is reasonably assured. |
| |
2. |
Fees from membership subscriptions. These revenues are recognized over the term of the subscription. |
Fees received in advance and require continuing
performance obligation are deferred and recognized as revenue systematically over the period of services provided to customers.
Long-lived assets impairment
Long-term assets of the Company are reviewed
for impairment whenever events or changes in circumstances indicate that their carrying value has become impaired, in accordance
with the guidance established in ASC 360 (formerly SFAS144), Property, Plant and Equipment . An impairment loss would be recognized
when the carrying amount of an asset exceeds the estimated undiscounted future cash flows expected to result from the use of the
asset and its eventual disposition. The amount of the impairment loss to be recorded is calculated by the excess of the asset’s
carrying value over its fair value. Fair value is generally determined using a discounted cash flow analysis. There were no impairment
charges during the periods presented.
Stock-based compensation
The Company has adopted the fair value
method of accounting for stock-based compensation as recommended by ASC 718 (formerly SFAS 123R) Compensation –Stock Compensation.
The Company has granted stock options to directors and certain employees for services provided to the Company under this method.
The Company recognizes compensation expense for stock options awarded based on the fair value of the options at the grant date
using the Black-Scholes option pricing model. The fair value of the options is amortized over the vesting period.
Commitment and Contingencies
The Company
follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions
may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which
will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent
liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related
to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company
evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of
relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the
liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements.
If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible,
or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible
losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees
would be disclosed. Management does not believe, based upon information available at this time, that these matters
will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.
However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial
position, and results of operations or cash flows.
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.)
Earning (Loss)
per share
Earning (loss) per share is computed using
the weighted average number of common shares outstanding during the period. The Company has adopted ASC 260 (formerly SFAS128),
Earnings Per Share . Diluted earning (loss) per share is equal to basic loss per share because there is no potential dilutive
security.
Recent Accounting Pronouncements
In June 2014, under ASC 718, Compensation—Stock
Compensation, the FASB issued Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target
Could Be Achieved after the Requisite Service Period. These amendments apply to all reporting entities that grant their employees
share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after
the requisite service period. That is the case when an employee is eligible to retire or otherwise terminate employment before
the end of the period in which a performance target could be achieved and still be eligible to vest in the award if and when the
performance target is achieved. We are currently evaluating the impact on our consolidated financial statements of adopting this
guidance.
In August 2014, the FASB issued Presentation
of Financial Statements – Going Concern. This standard requires management to evaluate for each annual and interim reporting
period whether it is probable that the reporting entity will not be able to meet its obligations as they become due within one
year after the date that the financial statements are issued. If the entity is in such a position, the standard provides for certain
disclosures depending on whether or not the entity will be able to successfully mitigate its going concern status. This guidance
is effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15,
2016. Early application is permitted. We are currently evaluating the impact on our consolidated financial statements of adopting
this guidance.
3. Deconsolidation and Discontinued
Operations
During the year, the Company signed Share
Purchase Agreement (the “Agreement”) with Ningbo International Limited, a non related party to sell all issued and
outstanding shares in NAI, all issued and outstanding shares of CWN HK and 23.8% of issued and outstanding shares of CWN Capital.
For the consideration, the company received an aggregate of CAD $263,968 in funds and one non-interest bearing promissory notes
in the aggregate principal amount of CAD $831,031with a maturity date of one year with the option to extend upon mutual agreement.
The financial statements of NAI, CWN HK and its 85% owned subsidiaries CWN China and CWN Weihei and long term investment of CWN
Capital were deconsolidated from the consolidated financial statement of the Company effective April 28, 2014, because the Company
lost its ability to impose significant influence, and control of operations and assets of subsidiaries and long term investment.
As a result of the deconsolidation of the
subsidiaries and long term investment, the consolidated balance sheets as of December 31, 2014, reflect only the balances of the
Company. The consolidated statement of operations contains the results of the operations of the Company for the year ended December
31, 2014 and NAI, CWN HK, CWN China, CWN Weihai and CWN Capital from January 1, 2014 to April 28, 2014.
A loss of $422,565 was recognized on our
sale of the controlling interest and deconsolidation of subsidiaries and long term investment as follows:
| | |
$ | | |
$ | |
| Cash | |
| 239,427 | | |
| | |
| Fair value of promissory note | |
| 685,245 | | |
| | |
| Fair value of proceeds that resulted in loss of control | |
| 924,672 | | |
| | |
| Carrying value of non controlling interest in former subsidiary on the date the subsidiary was deconsolidated | |
| 27,716 | | |
| | |
| Subtotal | |
| | | |
| 952,388 | |
| Less: | |
| | | |
| | |
| Carrying value of NAI' s net assets | |
| (636,157 | ) | |
| | |
| Carrying value of CWN HK's net assets | |
| (1,145,495 | ) | |
| | |
| Carrying value of CWN Capital- long term investment | |
| 135,231 | | |
| | |
| Recognize realized foreign exchange gain or loss for disposal of subsidiary | |
| 33,566 | | |
| | |
| Intercompany balances | |
| 2,987,808 | | |
| | |
| | |
| | | |
| 1,374,953 | |
| Loss on deconsolidation of subsidiaries and long term investment | |
| | | |
| (422,565 | ) |
4. AVAILABLE-FOR-SALE SECURITIES
Available –for –sale securities
consist of marketable funds, marketable securities and stock options and are summarized as follows:
| | |
2014 | | |
2013 | |
| | |
| | |
Fair | | |
| | |
Fair | |
| | |
| | |
Market | | |
| | |
Market | |
| | |
Cost $ | | |
value $ | | |
Cost $ | | |
value $ | |
| | |
| | |
| | |
| | |
| |
| Public traded securities | |
| - | | |
| - | | |
| 1,177 | | |
| - | |
| Marketable funds | |
| - | | |
| - | | |
| 966,673 | | |
| 974,639 | |
| Stock options | |
| - | | |
| - | | |
| - | | |
| - | |
| Total | |
| - | | |
| - | | |
| 967,850 | | |
| 974,639 | |
The fair market value of public traded
securities and marketable funds are measured using quoted prices in active market for the identical assets, the total fair market
value is the published market price per share/unit multiplied by the number of shares/units held without consideration of transaction
costs.
As of December 31, 2014, the company had
no available –for –sale securities after disposal of assets of all subsidiaries.
5. ACCOUNTS RECEIVABLE
| | |
December 31, 2014 | | |
December 31, 2013 | |
| Accounts receivable | |
| _ | | |
| 214,661 | |
| Allowance for doubtful accounts | |
| _ | | |
| (141,172 | ) |
| Total | |
| _ | | |
| 73,489 | |
As of December 31, 2014, the company had
no accounts receivable after disposal of assets of all subsidiaries.
6. NOTES RECEIVABLE
As at April 28, 2014, the Company received
the promissory notes of CAD $831,031 from Ningbo International Limited, a non related party, as result of disposal all issued and
outstanding shares in NAI, all issued and outstanding shares of CWN HK and 23.8% of issued and outstanding shares of CWN Capital.
See note 3. The promissory note is non interest bearing with a maturity date of one year with the option to extend upon mutual
agreement. Subsequent to December 31, 2014, the Company extended the payment date of the notes receivable to April 28, 2016. During
the year ended December 31, 2014, the Company recorded imputed interest income of $45,766 and foreign exchange loss of $37,715
in relation to the note. The effective interest rate of the note receivable is 10%.
7. EQUIPMENT
| | |
| | |
Accumulated | | |
Net book | |
| | |
Cost | | |
amortization | | |
value | |
| | |
$ | | |
$ | | |
$ | |
| 2014 | |
| | | |
| | | |
| | |
| Furniture and fixtures | |
| _ | | |
| _ | | |
| _ | |
| Computer equipment | |
| _ | | |
| _ | | |
| _ | |
| Leasehold improvement | |
| _ | | |
| _ | | |
| _ | |
| Vehicle | |
| _ | | |
| _ | | |
| _ | |
| | |
| _ | | |
| _ | | |
| _ | |
| 2013 | |
| | | |
| | | |
| | |
| Furniture and fixtures | |
| 35,221 | | |
| 30,946 | | |
| 4,275 | |
| Computer equipment | |
| 92,016 | | |
| 87,653 | | |
| 4,363 | |
| Leasehold improvement | |
| 27,689 | | |
| 27,689 | | |
| _ | |
| Vehicle | |
| 37,817 | | |
| 31,602 | | |
| 6,215 | |
| | |
| 192,743 | | |
| 177,890 | | |
| 14,853 | |
As of December 31, 2014, the company had
no equipment after disposal of assets of all subsidiaries.
8. LONG TERM INVESTMENTS
The Company previously had a wholly-owned
subsidiary CWN Capital Inc. (“CWN Capital”), a company incorporated under the laws of British Virgin Islands in August
2009. On December 18, 2010, the Company’s ownership interests were diluted to 23.8% upon CWN Capital Inc. issued
80,000 common shares to two companies controlled by two directors of the Company. As the dilution has resulted in the
Company losing a controlling interest, the Company deconsolidated CWN Capital on December 18, 2010 and recorded its interest in
CWN Capital as an equity investment.
The dilution occurred on October 1, 2010
and December 18, 2010 when CWN Capital issued 25,000 and 55,000 common stocks at a price of $0.01 and $1.00 per share of its common
stock to a company controlled by a director of the Company and another company controlled by another director of the Company, respectively. The
above issuance of CWN Capital common stocks diluted the Company’s ownership interest in CWN Capital down to 50% and 23.8%,
respectively. Upon the issuance of 55,000 common stocks of CWN Capital on December 18, 2010, the Company has become a non-controlling
shareholder, which the Company (the former parent) deconsolidated CWN Capital from its consolidated financial statements in accordance
with ASC 810-10-65 (formerly SFAS 160 Non-controlling Interests in Consolidated Financial Statements – an amendment of ARB
No. 51), and subsequently the Company accounts for its investment in the CWN Capital under the equity method.
Pursuant to ASC 810-10-65 (formerly SFAS
160 Non-controlling Interests in Consolidated Financial Statements – an amendment of ARB No. 51), upon the deconsolidation
of CWN Capital, the Company’s retained non-controlling equity investment in the CWN Capital (former subsidiary) was initially
measured at the estimated fair value of $112,218 as of December 18, 2010. As a result, the Company recognized a dilution loss of
$128,356.
For the fiscal year 2010 consolidated financial
statements, the Company included the operations of CWN Capital for the period from January 1, 2010 to December 17, 2010 and recorded
an equity income of $13,897 for the period from December 18, 2010 to December 31, 2010, which resulted in a net investment of $126,115.
For the fiscal year 2011 consolidated financial
statements, the Company recorded an equity income of $192,399 for the period from January 1, 2011 to December 31, 2011, which resulted
in a net investment of $270,371 as of December 31, 2011.
For the fiscal year 2012 consolidated financial
statements, the Company recorded an equity income of $166,735 for the year from January 1, 2012 to December 31, 2012, which resulted
in a net investment of $372,860 as of December 31, 2012.
For the fiscal year 2013 consolidated financial
statements, the Company recorded an equity loss of $197,276 for the year from January 1, 2013 to December 31, 2013, which resulted
in a net investment of $147,806 as of December 31, 2013.
For the fiscal year 2014 consolidated financial
statements, the Company recorded an equity loss of $3,896 for the year from January 1, 2014 to April 28, 2014, which resulted in
a net investment of $135,231 as of April 28, 2014.
9. BANK LOANS
In July 27, 2012, the Company entered into
a $1million Revolving Credit Facility. The amount is subject to availability of Collateral Lending Value as assessed by the bank
from time to time. The Revolving Credit Facility includes both term loan and overdraft for up to 12 months maximum tenor each subject
to availability and bank’s discretion. The interest for current account overdraft will be charged monthly in arrears at the
bank’s appropriate funding rate plus 2% p.a. or advised by the bank from time to time. The interest for term loans will be
charged at 1% p.a. over bank’s cost of funds or as advised by the bank from time to time and payable upon end of the corresponding
interest periods and quarterly if the loan tenor exceeds three months. The Revolving Credit Facility will be subject to review
at any time at the bank’s discretion without prior notice to the Company. The Revolving Credit Facility is secured by the
Company’s total assets. As at December 31, 2014, the Company had $Nil (2013- $1,279,002) of term loan outstanding under the
Revolving Credit Facility.
Bank loans consisted of the following:
| | |
December 31, 2014 | | |
December 31, 2013 | |
| From Financial institutions | |
| Rate | | |
| Balance | | |
| Rate | | |
| Balance | |
| EFG Bank of Hong Kong | |
| | % | |
$ | | | |
| 1.17 | % | |
$ | 1,279,002 | |
| | |
| | | |
| | | |
| | | |
| | |
| Total | |
| | | |
$ | | | |
| | | |
$ | 1,279,002 | |
10. STOCKHOLDERS’ EQUITY
Stock Options
On October 11, 2007, the Company granted
key officers and directors 550,000 stock options, which expire on October 11, 2012 with each stock option entitling its holder
to purchase one common share at $1.08, which are vested 20% on the first anniversary of the grant date and remaining 80% shall
become vested in four equal yearly installments on each of the four anniversary dates of the grant date subsequent to the first
anniversary of the grant date.
On June 10, 2010, the Company granted key
officers and directors 1,090,000 stock options, which expire on June 10, 2015 with each stock option entitling its holder to purchase
one common share at $0.60, which are vested 20% on the first anniversary of the grant date and remaining 80% shall become vested
in four equal yearly installments on each of the four anniversary dates of the grant date subsequent to the first anniversary of
the grant date.
| | |
Number of Options | | |
Weighted Average
Exercise Price | |
| Balance, December 31, 2012 | |
| 1,040,000 | | |
$ | 0.60 | |
| Forfeited | |
| (20,000 | ) | |
| 0.60 | |
| Balance, December 31, 2013 | |
| 1,020,000 | | |
| 0.60 | |
| Forfeited | |
| (820,000 | ) | |
| 0.60 | |
| Balance, December 31, 2014 | |
| 200,000 | | |
$ | 0.60 | |
As at December 31, 2014, the Company has
200,000 stock options outstanding:
| Exercise price | | |
Outstanding as at December 31, 2014 | | |
Exercisable as at December 31, 2014 | |
| | | |
Number of
Options | | |
Weighted
Average
Exercise
Price | | |
Weighted
Average
Remaining
Contractual
Life (years) | | |
Number of
Options | | |
Weighted
Average
Exercise
Price | | |
Weighted
Average
Remaining
Contractual
Life (years) | |
| | | |
| | |
| | |
| | |
| | |
| | |
| |
| $ | 0.60 | | |
| 200,000 | | |
$ | 0.60 | | |
| 0.44 | | |
| 160,000 | | |
$ | 0.60 | | |
| 0.44 | |
| | | | |
| 200,000 | | |
$ | 0.60 | | |
| 0.44 | | |
| 160,000 | | |
$ | 0.60 | | |
| 0.44 | |
| Exercise price | | |
Outstanding as at December 31, 2013 | | |
Exercisable as at December 31, 2013 | | |
| |
| | | |
Number of
Options | | |
Weighted
Average
Exercise
Price | | |
Weighted
Average
Remaining
Contractual
Life (years) | | |
Number of
Options | | |
Weighted
Average
Exercise
Price | | |
Weighted
Average
Remaining
Contractual
Life (years) | |
| | | |
| | |
| | |
| | |
| | |
| | |
| |
| $ | 0.60 | | |
| 1,020,000 | | |
$ | 0.60 | | |
| 1.44 | | |
| 612,000 | | |
$ | 0.60 | | |
| 1.44 | |
| | | | |
| 1,020,000 | | |
$ | 0.60 | | |
| 1.44 | | |
| 612,000 | | |
$ | 0.60 | | |
| 1.44 | |
The fair value of each stock option granted
in the fiscal year 2010 was calculated as $0.30. The Company recorded stock based compensation expense of ($74,955) in fiscal year
2014 (2013- $27,879 and 2012-$59,404) for options granted in the previous years. The fair value of each option granted is estimated
on the date of the grant using the Black-Scholes option pricing model with weighted average assumptions for grants as follows:
| | |
2010 | |
| Risk-free interest rate | |
| 2.65 | % |
| Expected life of options | |
| 5 years | |
| Annualized volatility | |
| 76.71 | % |
| Dividend rate | |
| 0 | % |
There was no stock option granted in fiscal
year 2014 and 2013.
11. RELATED PARTY TRANSACTIONS
| [a] |
In 2014, the Company incurred $22,890 [2013 - $90,000 and 2012 - $90,000] in consulting fees to a company related to a former director of the Company, of which $Nil [2013 - $22,500] was outstanding included in accounts payable and accrued liabilities as at December 31, 2014. |
| [b] |
As at December 31, 2014, the Company has non-interest bearing loan from the stockholders in the amount of $2,628 [2013 - $12,444]. |
| [c] |
In 2014, the Company incurred $Nil [2013 - $12,000 and 2012 - $12,000] in director fees, of which $Nil [2013 - $12,000] was outstanding and included in accounts payable and accrued liabilities as at December 31, 2014. |
| [d] |
In 2014, the Company provided service for a total of $36,467 [2013 - $115,093 and 2012 - $270,810] to CWN Capital, of which $Nil [2012 - $115,093] was outstanding and included in receivable from a related party as at December 31, 2014. The balance of receivable from a related party in the amount of $Nil [2013 - $57,147] represents costs incurred on behalf of CWN Capital by the Company. |
| [e] |
As at April 28, 2014, the Company provided no service [2013 - $11,653and 2012 - $14,043] to CWN Mining Acquisition, a company in which CEO of the Company has significant influence. |
Also see note 8.
All related party transactions were entered
into in the normal course of business and are recorded at the exchange amount established and agreed to between the related parties.
12. INCOME TAXES
The parent company is subject to the tax
laws of Cayman Islands and the tax rate is 0%. NAI is a Canadian company and its income tax expense varies from the amount that
would be computed from applying the combined Canadian federal and provincial income tax rate at 26 %. CWN HK and CWN China are
taxed at 16.5% and 25% based on the Hong Kong and Chinese tax laws. The reconciliation of the income tax expense is as follows:
| | |
2014 $ | | |
2013 $ | | |
2012 $ | |
| | |
| | |
| | |
| |
| Net Income (loss) for the year | |
| (606,346 | ) | |
| (517,537 | ) | |
| (79,646 | ) |
| Statutory Cayman Islands corporate tax rate | |
| 0 | % | |
| 0 | % | |
| 0 | % |
| Anticipated tax recovery | |
| — | | |
| — | | |
| — | |
| | |
| | | |
| | | |
| | |
| Change in tax rates resulting from: | |
| | | |
| | | |
| | |
| Non-deductible items | |
| 1,667 | | |
| 8,962 | | |
| 15,250 | |
| Change in estimates | |
| | | |
| (2,268 | ) | |
| (7,259 | ) |
| Change enacted of tax rate | |
| | | |
| (2,702 | ) | |
| - | |
| Functional currency adjustments | |
| 2,050 | | |
| (10,985 | ) | |
| (2,022 | ) |
| Foreign tax rate differential | |
| | | |
| (53,640 | ) | |
| (84,074 | ) |
| Disposition of subsidiaries | |
| 410,964 | | |
| - | | |
| - | |
| Change in valuation allowance | |
| (414,681 | ) | |
| 64,490 | | |
| 127,389 | |
| Income tax expense (recovery) | |
| - | | |
| 3,857 | | |
| (49,284 | ) |
Deferred taxes reflect the tax effects
of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax
values. Deferred tax assets (liabilities) at December31, 2014 and 2013 are comprised of the following:
| | |
2014 $ | | |
2013 $ | |
| | |
| | |
| |
| Non-capital loss carryforwards | |
| | | |
| 413,959 | |
| Capital losses | |
| | | |
| - | |
| Equipment and furniture | |
| | | |
| 2,008 | |
| Others | |
| | | |
| (1,286 | ) |
| | |
| | | |
| 414,681 | |
| Valuation allowance | |
| | | |
| (414,681 | ) |
| Net deferred tax assets | |
| | | |
| - | |
The company is subject to the tax laws
of Cayman Islands and the tax rate is 0%. Often, differing opinions regarding legal interpretation exist both among and within
government ministries and organizations; thus, creating uncertainties and areas of conflict. Tax declarations are subject to review
and investigation by the authority, which are enabled by law to impose extremely severe fines, penalties and interest charges.
The risk remains that the relevant authorities could take differing positions with regard to interpretive issues and the effect
could be significant. The fact that a year has been reviewed does not close that year, or any tax declaration applicable to that
year, from further review.
13. GEOGRAPHIC INFORMATION
The Company’s head office is located
in Cayman Islands. The operations of the Company are primarily in two geographic areas: Canada and China. A summary of geographical
information for the Company’s assets and net loss for the years is as follows:
| Year ended December 31, 2014 | |
Canada | | |
China | | |
Total | |
| | |
| | |
| | |
| |
| Revenue from external customers | |
$ | 158,333 | | |
$ | 419 | | |
$ | 158,752 | |
| Net income (loss) | |
| (542,476 | ) | |
| (63,870 | ) | |
| (606,346 | ) |
| Total assets | |
$ | 884,935 | | |
$ | - | | |
$ | 884,935 | |
| Year ended December 31, 2013 | |
Canada | | |
China | | |
Total | |
| | |
| | |
| | |
| |
| Revenue from external customers | |
$ | 923,350 | | |
$ | 14,431 | | |
$ | 937,781 | |
| Net income (loss) | |
| (313,717 | ) | |
| (207,677 | ) | |
| (521,394 | ) |
| Total assets | |
$ | 3,128,054 | | |
$ | 48,422 | | |
$ | 3,176,476 | |
14. SUBSEQUENT EVENTS
| [a] |
As agreed by both parties, the maturity date of the promissory note between the company and Ningbo International Limited was extended to April 28, 2016. |
Also see note 7.
15. COMPARATIVE FIGURES
Certain of comparative figures have been
reclassified to conform with the presentation adopted in the current period.
EX-12.1
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT
OF 2002
I, Chi Cheong Liu, certify that:
| 1. | I have reviewed this annual report on Form 20-F of ChineseWorldNet.com Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as
of, and for, the periods presented in this report; |
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a–15(f) and 15d–15(f)) for the company and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under my supervision, to ensure that material information relating to the company, including its consolidated subsidiaries,
is made known to me by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the company’s disclosure controls and procedures and presented
in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the company’s internal control over financial reporting
that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially
affect, the company’s internal control over financial reporting; and |
| 5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting,
to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent
functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize
and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant
role in the company’s internal control over financial reporting. |
| Dated: June 30, 2015 |
|
| |
|
| |
|
| /s/ Chi Cheong Liu |
|
| Chi Cheong Liu |
|
| Director, President, Chief Executive Officer, Chief Financial Officer, and Treasurer |
|
EX-13.1
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT
OF 2002
The undersigned, Chi Cheong Liu, hereby
certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The annual report on Form 20-F of ChineseWorldNet.com Inc. for the year ended December 31, 2014
(the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial
condition and result of operations of ChineseWorldNet.com Inc. |
| Dated: June 30, 2015 |
|
| |
|
| |
|
| /s/ Chi Cheong Liu |
|
| Chi Cheong Liu |
|
| Director, President, Chief Executive Officer, Chief Financial Officer, and Treasurer |
|
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