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.
Indicate by check mark which basis of accounting
the registrant has used to prepare the financial statements included in this filing:
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).
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 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 2015” are to our fiscal year ended December 31, 2015, 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.
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, 2015, 2014, 2013, 2012 and 2011. The information
for the last three fiscal years ended December 31,2014, 2013 and 2012, 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, 2011 has been extracted from audited
consolidated financial statements not disclosed elsewhere and presented below.
|
|
|
Year ended December 31,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
Consolidated Statements of Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
|
158,752
|
|
|
|
937,781
|
|
|
|
1,243,638
|
|
|
|
1,675,875
|
|
|
Net income (loss) for the year
|
|
|
(167,809
|
)
|
|
|
(606,346
|
)
|
|
|
(521,394
|
)
|
|
|
(128,931
|
)
|
|
|
138,040
|
|
|
Net income (loss) attributable to non-controlling interest
|
|
|
-
|
|
|
|
(10,352
|
)
|
|
|
(31,156
|
)
|
|
|
(43,843
|
)
|
|
|
(60,926
|
)
|
|
Net income (loss) attributable to common stockholders
|
|
|
(167,809
|
)
|
|
|
(595,994
|
)
|
|
|
(490,238
|
)
|
|
|
(85,088
|
)
|
|
|
198,966
|
|
|
Earning (loss) per share – basic
|
|
|
(0.02
|
)
|
|
|
(0.05
|
)
|
|
|
(0.05
|
)
|
|
|
(0.01
|
)
|
|
|
0.01
|
|
|
Earning (loss) per share – diluted
|
|
|
(0.02
|
)
|
|
|
(0.05
|
)
|
|
|
(0.05
|
)
|
|
|
(0.01
|
)
|
|
|
0.01
|
|
|
Weighted average common shares outstanding – basic
|
|
|
10,950,000
|
|
|
|
10,950,000
|
|
|
|
10,950,000
|
|
|
|
10,950,000
|
|
|
|
10,950,000
|
|
|
Weighted average common shares outstanding – diluted
|
|
|
10,950,000
|
|
|
|
10,950,000
|
|
|
|
10,950,000
|
|
|
|
10,950,000
|
|
|
|
11,404,862
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
673,204
|
|
|
|
884,935
|
|
|
|
3,164,476
|
|
|
|
2,571,264
|
|
|
|
3,182,417
|
|
|
Equipment
|
|
|
-
|
|
|
|
-
|
|
|
|
14,853
|
|
|
|
23,515
|
|
|
|
36,519
|
|
|
Total current liabilities
|
|
|
44,412
|
|
|
|
89,390
|
|
|
|
1,679,145
|
|
|
|
546,060
|
|
|
|
1,123,354
|
|
|
Total stockholders’ equity (deficiency)
|
|
|
628,792
|
|
|
|
795,545
|
|
|
|
1,485,331
|
|
|
|
2,025,204
|
|
|
|
2,059,063
|
|
No dividends have
been declared or paid in Fiscal 2015, Fiscal 2014 and Fiscal 2013.
|
|
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. During Fiscal
2013, Fiscal 2014 and Fiscal 2015, 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.
Revenue Breakdown
The breakdown of the revenue sources for
the years ended December 31, 2015, 2014, and 2013 is as follows:
|
|
|
Year ended
December 31,
|
|
|
|
|
|
Revenue Breakdown
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
GCFF Conference Business
|
|
$
|
-
|
|
|
$
|
31,205
|
|
|
$
|
430,377
|
|
|
Road Show Business
|
|
|
-
|
|
|
|
-
|
|
|
|
87,396
|
|
|
Various IR/PR Service
|
|
|
-
|
|
|
|
12,708
|
|
|
|
61,177
|
|
|
Chinese Webpage Design, Hosting and Maintenance
|
|
|
-
|
|
|
|
21,937
|
|
|
|
115,373
|
|
|
Online Marketing Service
|
|
|
-
|
|
|
|
-
|
|
|
|
28,683
|
|
|
Banner Advertising
|
|
|
-
|
|
|
|
-
|
|
|
|
3,122
|
|
|
Publication Service
|
|
|
-
|
|
|
|
-
|
|
|
|
16,825
|
|
|
CWN Membership and Online Service
|
|
|
-
|
|
|
|
631
|
|
|
|
2,643
|
|
|
Translation Service (Company Review, Company Newsletter)
|
|
|
-
|
|
|
|
3,867
|
|
|
|
4500
|
|
|
Other Revenues
|
|
|
-
|
|
|
|
88,404
|
|
|
|
187,685
|
|
|
Total
|
|
$
|
-
|
|
|
$
|
158,752
|
|
|
$
|
937,781
|
|
The breakdown of the revenue sources by
geographic market for the years ended December 31, 2015, 2014,and 2013 is as follows. A majority of our revenues were 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
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
Canada
|
|
|
-
|
|
|
|
158,333
|
|
|
|
923,350
|
|
|
China
|
|
|
-
|
|
|
|
419
|
|
|
|
14,431
|
|
Corporate
Strategy and Strategic Business Plan
As at December 31, 2015, ChineseWorldNet.com
Inc. does not have any operating businesses. The Company is now looking for opportunities to acquire or invest in other business
opportunities.
|
|
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, 2015, 2014, and 2013 should be read in conjunction
with the consolidated financial statements and the related notes thereto provided at “
Item 18 – Financial Statements”
.
The company is inactive
since 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, 2015, 2014, and 2013
For
the year ended December 31, 2015 (“fiscal 2015”), we recorded a net loss of $167,809 attributable to common stockholders
(($0.02) per common share), compared to a net loss of $606,346 of which $595,994 was attributable to common stockholders ($0.05
loss per common share) for the year ended December 31, 2014 (“fiscal 2014”). The decrease of net loss of $438,537
was primarily due to the loss of $422,565 from disposal of subsidiaries in fiscal 2014. In fiscal 2015, we recorded revenue
of $Nil compared to $158,752 in fiscal 2014. No revenue recorded in fiscal 2015 was primarily due to the sale of all business
operations after April 28, 2014.
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.
Year Ended
December 31, 2015 Compared to Year Ended December 31, 2014
In Fiscal 2015, the Company no longer had
any revenue sources after disposal of all subsidiaries.
Revenues
GCFF Conference
Business
Revenue generated from GCFF Conference
Business was $Nil in Fiscal 2015, compared to $31,205 in Fiscal 2014. The decrease of revenue by $31,205 was due to discontinuing
operations of core businesses after sale of subsidiaries on April 28, 2014.
Various IR/PR
Service
Revenue from Various IR/PR Service was
$Nil in Fiscal 2015, compared to $12,708 in Fiscal 2014. The decrease of revenue by $12,708 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
$Nil in Fiscal 2015, Hosting and Maintenance was, compared $21,937 in Fiscal 2014. The decrease of revenue by $21,937 was
due to the sale of the Company’s businesses in April 28, 2014.
CWN Membership and Online Service
Revenue we generated from CWN Membership
and Online Service decreased $631 from $631 in Fiscal 2014 to $Nil in Fiscal 2015. The decrease of revenue was due to the
sale of the Company’s businesses after April 28, 2014.
Translation Service
Translation Service was $Nil in Fiscal
2015, compared to $3,867 in Fiscal 2014. The decrease of revenue by $3,867 was due to the sale of the Company’s businesses
after April 28, 2014.
Other Revenues
Other Revenues was $Nil
in Fiscal 2015, compared to $88,404 in Fiscal 2014. The decrease of revenue by $88,404 was due to the sale of the
Company’s businesses after April 28, 2014.
Expenses
For fiscal 2015, we recorded operating
expenses of $39,214 compared to operating expenses of $301,050 for Fiscal 2014. The decrease of expenses by $261,836 was
due to the sale of subsidiaries on April 28, 2014. Most of the expenses had been greatly reduced in Fiscal 2015 as compared with
Fiscal 2014.
Advertising and Promotion
Advertising and promotion expenses were
$Nil in fiscal 2015, compared to $14,647 in fiscal 2014. The decrease of expenses by $14,647 was due to the sale of subsidiaries
on April 28, 2014.
Audit and Legal
Audit and legal expenses were $37,865 in
fiscal 2015, compared to $60,973 in fiscal 2014. The decrease of $23,108 was primarily due to the decrease of audit and legal
fees in Fiscal 2015 as compared to Fiscal 2014.
Consulting Fees
Consulting fees expenses were $Nil in Fiscal
2015, compared to $30,062 in Fiscal 2014. The decrease was primarily due to termination of consulting contracts on April 30, 2014.
Directors’
Remuneration
No directors’ remuneration expenses
were paid in Fiscal 2014 & Fiscal 2015.
Office and Miscellaneous
Office and miscellaneous expenses were
$293 in Fiscal 2015, compared to $50,551 in Fiscal 2014. The significant decrease of $50,258 was primarily due to the sale
of the Company’s businesses after April 28, 2014.
Printing
Printing expenses were $Nil in Fiscal 2015,
compared to $1,408 in Fiscal 2014. The decrease of $1,408 was primarily due to the sale of the Company’s businesses after
April 28, 2014.
Rent and Operating
Rent and operating expenses were $Nil in
Fiscal 2015, compared to $44,692 in Fiscal 2014. The significant decrease of $44,692 was primarily due to the sale of the
Company’s businesses after April 28, 2014. No office spaces were rented in Fiscal 2015
Salaries and Benefits
Salaries and benefits expenses were $Nil
in Fiscal 2015, compared to $150,922 in Fiscal 2014 The significant decrease of $150,922 was primarily due to the sale of the Company’s
businesses after April 28, 2014. There were no employees hired in the Company.
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 $Nil in Fiscal
2015, compared to $3,795 in Fiscal 2014. The decrease of $3,795 was primarily due to the sale of the Company’s
businesses after April 28, 2014.
Travel and Entertainment
Travel and entertainment expenses were
$Nil in Fiscal 2015, compared to $23,809 in Fiscal 2014. The decrease of $23,809 was primarily due to the sale of the
Company’s businesses after April 28, 2014.
Other Income (Loss)
We recorded other loss of $128,595 in Fiscal
2015, compared to other loss of $464,048 in Fiscal 2014. The substantial decrease of other loss of $335,453 was primarily
due to the sale of the Company’s businesses after April 28, 2014 and recorded a loss of $422,565 on disposal in Fiscal 2014.
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.
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, 2015, the annual average rate of inflation in Canada was 1.20
%.
|
|
B.
|
Liquidity and Capital Resources
|
As of December 31, 2015, we had cash and
cash equivalents of $85,906. We had a working capital of $628,792 at December 31, 2015, compared to $795,545 at December 31, 2014.
|
|
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.
|
|
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)
|
|
56
|
|
January 12, 2000
|
|
Director, President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer
|
|
Chi Kong Liu(1)
|
|
55
|
|
January 12, 2000
|
|
Director
|
|
Fong Szeto
|
|
68
|
|
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
2015.
|
|
|
Annual Compensation in Fiscal 2015
|
|
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 2015, $Nil in 2014, and $3,000 per year in 2013.
|
|
|
(2)
|
Mr. Liu is a shareholder and does not receive salary. The
company paid Mr. Liu director fee of $Nil in 2015, $Nil in 2014, and $3,000 per year in 2013.
|
|
|
(3)
|
Mr. Szeto is a shareholder and does not receive salary.
The company paid Mr. Szeto director fee of $Nil in 2015 and 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, 2015, 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 2015. The percentage owned is based on 10,950,000 shares outstanding as at April 29, 2016.
|
Name and Respective Office and Position Held
|
|
Share Ownership
|
|
|
% Share Ownership
|
|
|
Chi Cheong Liu (1)
|
|
|
1,730,000
|
|
|
|
15.80
|
%
|
|
Chi Kong Liu
|
|
|
580,000
|
|
|
|
5.30
|
%
|
|
Fong Szeto
|
|
|
30,000
|
|
|
|
0.27
|
%
|
|
Total
|
|
|
2,340,000
|
|
|
|
21.37
|
%
|
|
|
(1)
|
Goldpac Investment Partners Ltd., for which Mr. Liu is principal, owned 1,166,667 Common Shares
of our company. Goldpac Investments Ltd., for which Mr. Liu is principal, owned 200,000 Common Shares of our company.
Total direct and indirect share ownership was 3,096,667 Common Shares or 28.28% of the total Common Shares of our 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, 2015, we had no options
issued and outstanding, of which 200,000 options
were fully vested and expired.
|
|
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,
2016. The percentage owned is based on 10,950,000 shares outstanding as at April 29, 2016.
|
Name of Shareholder
|
|
Number of
Common Shares
|
|
|
Percentage of Shares
Beneficially Owned
|
|
|
Chi Cheong Liu(1)
|
|
|
3,096,667
|
|
|
|
28.28
|
%
|
|
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
|
%
|
|
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, owns 1,166,667 Common Shares. Goldpac Investments Ltd., for which Mr. Liu is a principal, owns 200,000 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
|
As at December 31, 2015, the Company has
non-interest bearing loan from the stockholders in the amount of $2,628 [2014 - $2,628].
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 27 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 as at year ended 2015.
|
|
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 2015
|
|
$
|
0.08
|
|
|
$
|
0.02
|
|
|
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 2016
|
|
|
|
|
|
|
|
|
|
1Q-2016
(1)
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2015
|
|
|
|
|
|
|
|
|
|
4Q-2015
(1)
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
3Q-2015
(1)
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
2Q-2015
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
1Q-2015
|
|
$
|
0.08
|
|
|
$
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
Most Recent 6 months from November 2015 through April 2016
|
|
|
|
|
|
|
|
|
|
April 2016
(1)
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
March 2016
(1)
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
February 2016
(1)
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
January 2016
(1)
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
December 2015
(1)
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
November 2015
(1)
|
|
$
|
0.02
|
|
|
$
|
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 28, 2016, the company entered into an agreement with Ningbo extending the promissory loan
by 2 years. The loan bears an 8% per annum interest rate and is payable at any time within the 2 years.
|
|
|
·
|
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 .
|
|
I.
|
Subsidiary Information
|
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.
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. In year 2014, 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. 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.
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
inactive with limited operations and is 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, deferred income tax assets and liabilities and stock
based compensation.
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. The Company had
no cash equivalents as of December 31, 2015 (2014 - $nil) .
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.
Income taxes
Income taxes are accounted for under the
liability method of accounting for income taxes. Under the liability method, deferred tax liabilities and assets are recognized
for the estimated future tax consequences attributable to differences between the amounts reported in the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using
enacted income tax rates expected to apply when the asset is realized or the liability is settled. The effect of a change in income
tax rates on deferred tax liabilities and assets is recognized in income in the period in which the change occurs. Deferred tax
assets are recognized to the extent that they are considered more likely than not to be realized.
Per FASB ASC 740 “Income taxes”
under the liability method, it is the Company’s policy to provide for uncertain tax positions and the related interest and
penalties based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination
by tax authorities. At December 31, 2015, the Company believes it has appropriately accounted for any unrecognized tax benefits.
To the extent the Company prevails in matters for which a liability for an unrecognized benefit is established or is required to
pay amounts in excess of the liability, the Company’s effective tax rate in a given financial statement period may be affected.
Interest and penalties associated with the Company’s tax positions are recorded as Interest Expense.
Comprehensive income
The Company accounts for comprehensive
income under the provisions of ASC Topic 220-10, Comprehensive Income - Overall, which establishes standards for reporting and
display of comprehensive income, its components and accumulated balances. The Company is disclosing this information on its Statements
of Operations and Comprehensive Loss.
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.)
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.
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, 2015
and 2014, the fair value of cash and cash equivalents 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.
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 year 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.)
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.
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.
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.)
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.
In April 2014, the FASB issued Accounting
Standards Update ("ASU") 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment
(Topic 360): Reporting Discontinued operations and Disclosures of Disposals of Components of an Entity. The amendments in ASU 2014-08
change the criteria for reporting discontinued operations while enhancing disclosures in this area. They also address sources of
confusion and inconsistent application related to financial reporting of discontinued operations guidance in U.S. GAAP. Under the
new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those
strategic shifts should have a major effect on the entity's operations and financial results. Examples include a disposal of a
major geographic area, a major line of business, or a major equity method investment. In addition, the new guidance requires expanded
disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities,
income, and expenses of discontinued operations. The amendments in this ASU are effective for the first quarter of 2015 for public
entities with calendar year ends. The Company adopted ASU 2014-08 on January 1, 2015 and the adoption of this pronouncement did
not have a material effect on the Company's consolidated financial position or results of operations.
In May 2014, the Financial Accounting Standards
Board issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (ASU 2014-09). This accounting standard
supersedes all existing US GAAP revenue recognition guidance. Under ASU 2014-09, a company will recognize revenue when it transfers
the control of promised goods or services to customers in an amount that reflects the consideration which the company expects to
collect in exchange for those goods or services. ASU 2014-09 will require additional disclosures in the notes to the consolidated
financial statements and is effective for annual and interim reporting periods beginning after December 15, 2016. The Company is
evaluating the impact of ASU 2014-09 and an estimate of the impact to the consolidated financial statements cannot be made at this
time. In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a
Performance Target Could Be Achieved after the Requisite Service Period. The standard provides guidance that a performance target
that affects vesting of a share-based payment and that could be achieved after the requisite service condition is a
performance condition. As a result, the target is not reflected in the estimation of the award's grant date fair value.
Share-based compensation cost for such award would be recognized over the required service period, if it is probable that the performance
condition will be achieved. ASU 2014-12 is effective for annual reporting periods beginning after December 15, 2015. Early adoption
is permitted. The guidance should be applied on a prospective basis to awards that are granted or modified on or after the effective
date of the standard. Companies also have the option to apply the guidance on a modified retrospective basis for awards with performance
targets outstanding on or after the beginning of the first annual period presented after the effective date of the standard. The
Company is evaluating the impact of ASU 2014-12 and an estimate of the impact to the consolidated financial statements cannot be
made at this time.
In August 2014, the FASB issued ASU 2014-15,
Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability
to Continue as a Going Concern. The ASU provides guidance on determining when and how reporting entities must disclose going-concern
uncertainties in their financial statements. The new standard requires management to perform interim and annual assessments of
an entity's ability to continue as a going concern within one year of the date of issuance of the entity's financial statements
(or within one year after the date on which the financial statements are available to be issued, when applicable). Further, an
entity must provide certain disclosures if there is "substantial doubt about the entity's
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.)
Recent Accounting Pronouncements (continued)
ability to continue as a going concern."
The ASU is effective for annual periods
ending after December 15, 2016, and interim periods thereafter and early adoption is permitted. The Company is evaluating the impact
of ASU 2014-15 and an estimate of the impact to the consolidated financial statements cannot be made at this time.
In January 2015, the FASB issued ASU 2015-01,
Income Statement-Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the
Concept of Extraordinary Items, which eliminates the concept of extraordinary items. Under this new guidance, entities will no
longer be required to separately classify, present and disclose extraordinary events and transactions. The amendments in this update
are effective for annual and interim periods beginning after December 15, 2015. The Company is evaluating the impact of ASU 2015-01
and an estimate of the impact to the consolidated financial statements cannot be made at this time.
In February 2015, the FASB issued ASU No.
2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis"("ASU 2015-02"). ASU 2015-02
makes several modifications to the consolidation guidance for variable interest entities ("VIEs") and general partners'
investments in limited partnerships, as well as modifications to the evaluation of whether limited partnerships are VIEs or voting
interest entities. It is effective for annual and interim periods beginning after December 15, 2015. Early adoption is permitted.
In April 2015, FASB issued ASU 2015-03,
Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). In August 2015, FASB issued ASU 2015-15, Presentation
and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements (“ASU 2015-15”). ASU
2015-03 will require that debt issuance costs be presented in the balance sheet as a deduction from the carrying amount of the
debt. ASU 2015-15 allows an entity to present debt issuance costs associated with a revolving line of credit arrangement as an
asset, regardless of whether a balance is outstanding. The recognition and measurement guidance for debt issuance costs are not
affected by ASU 2015-03 or ASU 2015-15. These ASU’s are effective for annual reporting periods beginning after December 15,
2015, including interim periods within that reporting period, with early adoption permitted. ASU 2015-03 will require the Company
to reclassify its deferred financing costs associated with its long-term debt from other assets to long-term debt on a retrospective
basis. The new standard will not affect the Company’s results of operations or cash flows.
On March 30, 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting,
which amends ASC Topic 718, Compensation – Stock Compensation. The
ASU simplifies several aspects of the accounting for employee share-based payment transactions.
The ASU also contains
guidance under which nonpublic entities can use the simplified method to estimate the expected term of an award and make a one-time
election to switch from fair value measurement to intrinsic value measurement for liability-classified awards.
ASU 2016-09 is effective for public business entities for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period. Early adoption will be permitted in any interim or annual period, with any adjustments reflected
as of the beginning of the fiscal year of adoption.
The Company is evaluating the impact of
the amended guidance on its consolidated financial statements. There have been no other accountings pronouncements issued but not
yet adopted by the Company which are expected to have a material impact on the Company’s financial position, results of operations
or cash flows.
3. Deconsolidation and Discontinued
Operations
In year 2014, 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
|
)
|
5. 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.
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%. During the year ended December 31, 2015, the Company recorded foreign
exchange loss of $110,912.
6. STOCKHOLDERS’ EQUITY
Stock Options
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, 2013
|
|
|
1,020,000
|
|
|
$
|
0.60
|
|
|
Forfeited
|
|
|
(820,000
|
)
|
|
|
0.60
|
|
|
Balance, December 31, 2014
|
|
|
200,000
|
|
|
|
0.60
|
|
|
Expired
|
|
|
(200,000
|
)
|
|
|
0.60
|
|
|
Balance, December 31, 2015
|
|
|
-
|
|
|
$
|
-
|
|
As at December 31, 2015, there is no stock
option 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
|
|
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 $1,056 in fiscal year
2015 (2014 - $(74,955) and 2013 - $27,879) 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 2015 and 2014.
7. RELATED PARTY TRANSACTIONS
As at December 31, 2015, the Company has
non-interest bearing loan from the stockholders in the amount of $2,628 [2014 - $2,628].
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.
8. INCOME TAXES
The Company is subject to the tax laws
of Cayman Islands and the tax rate is 0%. The Company’s former subsidiaries were subject to tax at various rates in the jurisdictions
in which they operated. The reconciliation of the income tax expense is as follows:
|
|
|
2015
$
|
|
|
2014
$
|
|
|
2013
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (loss) for the year
|
|
|
(170,223
|
)
|
|
|
(606,346
|
)
|
|
|
(517,537
|
)
|
|
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
|
|
|
Change in estimates
|
|
|
|
|
|
|
-
|
|
|
|
(2,268
|
)
|
|
Change enacted of tax rate
|
|
|
|
|
|
|
-
|
|
|
|
(2,702
|
)
|
|
Functional currency adjustments
|
|
|
|
|
|
|
2,050
|
|
|
|
(10,985
|
)
|
|
Foreign tax rate differential
|
|
|
|
|
|
|
-
|
|
|
|
(53,640
|
)
|
|
Disposition of subsidiaries
|
|
|
-
|
|
|
|
410,964
|
|
|
|
-
|
|
|
Change in valuation allowance
|
|
|
-
|
|
|
|
(414,681
|
)
|
|
|
64,490
|
|
|
Income tax expense (recovery)
|
|
|
-
|
|
|
|
-
|
|
|
|
3,857
|
|
9.
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, 2015
|
|
Canada
|
|
|
China
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from external customers
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Net income (loss)
|
|
|
(167,809
|
)
|
|
|
-
|
|
|
|
(167,809
|
)
|
|
Total assets
|
|
$
|
673,204
|
|
|
$
|
-
|
|
|
$
|
673,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
10. SUBSEQUENT EVENTS
As agreed by both parties, the maturity
date of the promissory note between the company and Ningbo International Limited was extended further 2 years to April 28, 2018.
The effective interest rate of the note receivable is 8% per annum with repayment at any time without penalties.
Also see note 6.
11. COMPARATIVE FIGURES
Certain of comparative figures have been
reclassified to conform with the presentation adopted in the current period.