UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
CHINESEWORLDNET.COM INC.
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¨
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REGISTRATION
STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
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OR
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x
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended
December 31, 2017
OR
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¨
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
OR
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¨
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SHELL
COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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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.
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Title of each class
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Name of each exchange on which registered
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Not Applicable
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Not Applicable
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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, a non-accelerated filer, or an emerging growth company. See definition of
“large accelerated filer,"accelerated filer,” and "emerging growth company" in Rule 12b-2 of the Exchange
Act.
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Large accelerated filer
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Accelerated filer
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x
Non-accelerated filer
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¨
Emerging growth company
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If an emerging growth company that
prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to
use the extended transition period for complying with any new or revised financial accounting standards† provided
pursuant to Section 13(a) of the Exchange Act.
¨
† The term “new or revised
financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting
Standards Codification after April 5, 2012.
Indicate by check mark which basis of accounting
the registrant has used to prepare the financial statements included in this filing:
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x
U.S.
GAAP
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International
Financial Reporting Standards as issued by the International Accounting Standards Board
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Other
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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 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 2017” are to our fiscal year ended December 31, 2017, 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
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ITEM
1.
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IDENTITY
OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
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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.
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ITEM
2.
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OFFER
STATISTICS AND EXPECTED TIMETABLE
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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.
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A.
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Selected
Financial Data
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The following table sets forth selected
financial information from our financial statements prepared in accordance with US GAAP for our two most recently completed fiscal
periods consisting of the years ended December 31, 2017, 2016 and 2015. The information 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”
.
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Year Ended December 31
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2017
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2016
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2015
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Statements of Operations:
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Net loss for the year
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(231,953
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)
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(37,706
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)
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(167,809
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)
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Loss per share – basic
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(0.02
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(0.00
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(0.02
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Loss per share – diluted
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(0.02
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(0.00
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(0.02
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Weighted average common shares outstanding – basic
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10,950,000
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10,950,000
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10,950,000
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Weighted average common shares outstanding – diluted
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10,950,000
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10,950,000
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10,950,000
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Balance Sheets:
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Total assets
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$
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409,045
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$
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646,373
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$
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673,204
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Total current liabilities
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49,912
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55,287
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44,412
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Total stockholders’ equity
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359,133
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591,086
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628,792
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No dividends have
been declared or paid in Fiscal 2017, Fiscal 2016, and Fiscal 2015.
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B.
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Capitalization
and Indebtedness
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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.
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C.
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Reasons
for the Offer and Use of Proceeds
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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.
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ITEM
4.
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INFORMATION
ON THE COMPANY
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A.
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History
and Development of the Company
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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
2014, Fiscal 2015 and Fiscal 2016, 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 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:
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1.
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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;
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2.
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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
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3.
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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.
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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.
CORPORATE STRATEGY AND STRATEGIC BUSINESS PLAN
As at December 31, 2017, ChineseWorldNet.com
Inc. does not have any operating businesses. The Company is now looking for opportunities to acquire or invest in other business
opportunities.
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C.
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Organizational
Structure
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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.
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D.
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Property,
Plants and Equipment
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We do not own any real property.
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ITEM
4A.
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UNRESOLVED
STAFF COMMENTS
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Not applicable.
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ITEM
5.
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OPERATING
AND FINANCIAL REVIEW AND PROSPECTS
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This discussion and analysis is of our
operating results and our financial position for the fiscal years ended December 31, 2016 and 2015 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, 2017 and 2016
For the year ended December 31, 2017 (“Fiscal
2017”), we recorded a net loss of $231,953 attributable to common stockholders ($0.02 loss per common share), compared to
a net loss of $37,706 for the year ended December 31, 2016 (“Fiscal 2016”) attributable to common stockholders ($0.00
loss per common share). The increase of net loss of $194,247 was mainly due to of $32,051 (2016 – foreign exchange
gain $25,950), imputed interest income of $42,044 (2016: $77,660) and loss on loan exchange of $249,110 (2016: $83,517).
For the year ended December 31, 2016 (“Fiscal
2016”), we recorded a net loss of $37,706 attributable to common stockholders ($0.00 loss per common share), compared to
a net loss of $167,809 attributable to common stockholders ($0.02 loss per common share) for the year ended December 31, 2015 (“fiscal
2015”). The decrease of net loss of $130,103 was mainly due to foreign exchange gain of $25,950 (2015 – foreign
exchange loss $128,606) and imputed interest income of $77,660 (2015: $Nil).
YEAR ENDED DECEMBER 31, 2017 COMPARED TO YEAR ENDED DECEMBER
31, 2016
In Fiscal 2017, the Company no longer had
any revenue sources after disposal of all subsidiaries.
Revenues
There were no revenues
recorded in Fiscal 2017 and Fiscal 2016.
Expenses
For Fiscal 2017,
we recorded operating expenses of $56,958 compared to operating expenses of $57,805 for Fiscal 2016.
Audit and Legal
Audit and legal
expenses were $16,464 in Fiscal 2017, compared to $14,992 in Fiscal 2016.
Directors’ Remuneration
Directors’
remuneration expenses were $36,000 in Fiscal 2017, compared to $36,000 in Fiscal 2016.
Office and Miscellaneous
Office and miscellaneous
expenses were $4,494 in Fiscal 2017, compared to $6,813 in Fiscal 2016.
Other Income
(Loss)
We recorded other
loss of $174,994 in Fiscal 2017, compared to other income of $20,099 in Fiscal 2016. The substantial decrease of other
income of $154,895 was primarily due to foreign exchange gain of $32,051 (2016 – foreign exchange gain $25,950), imputed
interest income of $42,044 (2016: $77,660) and loss on loan exchange of $249,110 (2016: $83,517).
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.
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B.
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Liquidity
and Capital Resources
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As of December 31, 2017, we had cash and
cash equivalents of $129,564 (2016: $43,407). We had a working capital of $87,681 at December 31, 2017, compared to working capital
deficiency of $6,790 at December 31, 2016.
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C.
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Research
and Development, Patents and Licenses
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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.
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E.
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Off-Balance
Sheet Arrangements
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We do not have any off-balance sheet arrangements.
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ITEM
6.
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DIRECTORS,
SENIOR MANAGEMENT AND EMPLOYEES
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A.
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Directors
and Senior Management
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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.
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Name
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Age
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Office Held Since
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Offices and Positions Held in CWN
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Chi Cheong Liu (1)
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58
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January 12, 2000
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Director, President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer
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Chi Kong Liu (1)
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57
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January 12, 2000
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Director
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Fong Szeto
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70
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April 28, 2014
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Director
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(1)
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Chi
Cheong Liu and Chi Kong Liu are related parties.
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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 to the directors and executive officers of the Company during Fiscal 2017.
|
|
|
Annual Compensation in Fiscal 2017
|
|
|
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
|
|
|
|
12,000
|
|
Chi Kong Liu (2)
Director
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
12,000
|
|
Fong Szeto (3)
Director
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
12,000
|
|
|
|
(1)
|
Mr.
Liu is a shareholder and does not receive salary. The company paid Mr. Liu director fee of $12,000 in 2017 and
$12,000 in 2016.
|
|
|
(2)
|
Mr.
Liu is a shareholder and does not receive salary. The company paid Mr. Liu director fee of $12,000 in 2017 and
$12,000 in 2016.
|
|
|
(3)
|
Mr.
Szeto is a shareholder and does not receive salary. The company paid Mr. Szeto director fee of $12,000 in 2017 and $12,000 in
2016.
|
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, 2017, 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 2017. The percentage owned is based on 10,950,000 shares outstanding as at April 23, 2018.
|
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,
2017, we had no options issued or outstanding.
|
|
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 23,
2018. The percentage owned is based on 10,950,000 shares outstanding as at April 23, 2018.
|
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, 2017, the Company has
non-interest bearing loan from the stockholders and directors in the amount of $38,628 [2016 - $38,628].
As at December 31, 2017, the Company accrued
director fees in the amount of $36,000 [2016 - $36,000 ].
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 financial statements for the years ended December 31, 2017 and 2016, including our balance sheets as of December
31, 2017 and 2016, and the statements of shareholders’ equity, operations and cash flows for the years ended December 31,
2017 and 2016, and the related notes to those statements and the auditors’ reports thereon. Reference is made
to these documents commencing at Page 23 of this Report.
As of April 28, 2014, we have sold all
subsidiaries and business units. The core business activities and operations remain discontinued as at December 31, 2017.
|
|
ITEM
9.
|
THE
OFFER AND LISTING
|
|
|
A.
|
Offer
and Listing Details
|
Our common shares
are currently quoted on the OTC Pink under the symbol
“
CWNOF
”
. 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 2017
|
|
$
|
0.04
|
|
|
$
|
0.03
|
|
|
Fiscal 2016
|
|
$
|
0.13
|
|
|
$
|
0.01
|
|
|
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 2018
|
|
|
|
|
|
|
|
|
|
1Q-2017
(1)
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2017
|
|
|
|
|
|
|
|
|
|
1Q-2017
(1)
|
|
$
|
0.04
|
|
|
$
|
0.03
|
|
|
2Q-2017
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
3Q-2017
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
4Q-2017
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2016
|
|
|
|
|
|
|
|
|
|
1Q-2016
(1)
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
2Q-2016
|
|
$
|
0.13
|
|
|
$
|
0.02
|
|
|
3Q-2016
|
|
$
|
0.13
|
|
|
$
|
0.01
|
|
|
4Q-2016
|
|
$
|
0.04
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
Most Recent 6 months from October 2017 through March 2018
|
|
|
|
|
|
|
|
|
|
March 2018
(1)
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
February 2018
(1)
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
January 2018
(1)
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
December 2017
(1)
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
November 2017
(1)
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
October 2017
(1)
|
|
|
|
|
|
|
|
|
|
|
(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 Pink operated by the Financial Industry Regulatory Authority under the symbol
“
CWNOF
”
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 16, 2017, the Company signed a debt settlement agreement with Ningbo International Limited for the outstanding promissory note receivable. Ningbo International Limited shall repay the Company in the following schedule:
|
|
|
|
|
|
|
|
·
|
CDN $150,000 (US $111,720) on or before April 30, 2017 (paid)
|
|
|
|
|
|
|
|
|
·
|
CDN $100,000 (US $77,480) on or before December 31, 2018
|
|
|
|
|
|
|
|
|
·
|
CDN $100,000 (US $77,480) on or before December 31, 2019
|
|
|
|
|
|
|
|
|
·
|
The remaining principal amount of CDN$481,031 (US $358,272) will be payable on or before December 31, 2020.
|
|
|
·
|
On April 28, 2016, the Company
entered into an extension agreement with Ningbo International Limited, extending the promissory loan by 2 years and imposed an
8% per annum interest rate payable on the repayment date of the principal amount.
|
|
|
|
|
|
|
·
|
On April 28, 2015, the Company entered into an extension agreement with Ningbo International Limited, extending the promissory loan by 1 year.
|
|
|
|
|
|
|
·
|
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 CDN$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.
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, 2017,
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, 2017, 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, 2017 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 Fiscal 2017 and Fiscal 2016. 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,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
Audit Fees(1)
|
|
$
|
9,000
|
|
|
$
|
9,000
|
|
|
Audit-Related Fees(2)
|
|
|
—
|
|
|
|
—
|
|
|
Tax Fees(3)
|
|
|
—
|
|
|
|
—
|
|
|
All Other Fees
|
|
|
—
|
|
|
|
—
|
|
|
Total
|
|
$
|
9,000
|
|
|
$
|
9,000
|
|
|
|
(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 2017.
|
|
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 Financial Statements and
the related Notes thereto are filed as part of this Report, commencing at Page 22 to 31 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
|
|
(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: April 23, 2018
|
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.:
Opinion on the Financial Statements
We have audited the accompanying balance
sheets of Chineseworldnet.com Inc. (the “Company”) as of December 31, 2017 and 2016, and the related statements of
stockholders' equity, operations and comprehensive loss, and cash flows for each of the years in the three-year period ended December
31, 2017 and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements
present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results
of its operations and its cash flows for each of the years in the three-year period ended December 31, 2017, in conformity with
accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required
to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with
the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have,
nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required
to obtain an understanding of internal control over financial reporting, 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.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to
those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis
for our opinion.
The accompanying financial statements referred
to above have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the 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 financial statements do not include any adjustments that might result from the outcome of this uncertainty.
|
|
|
|
|
|
We have served as the Company’s auditor since 2006.
|
|
|
|
|
|
Vancouver, BC, Canada
|
|
|
|
|
|
April 23, 2018
|
|
Chineseworldnet.Com Inc.
BALANCE SHEETS
As at December 31
(Expressed in U.S. Dollars)
|
|
|
2017
|
|
|
2016
|
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
129,564
|
|
|
|
43,407
|
|
|
Prepaid expenses and deposits
|
|
|
8,029
|
|
|
|
5,090
|
|
|
Note receivable
[note 3]
|
|
|
35,927
|
|
|
|
—
|
|
|
Total current assets
|
|
|
173,520
|
|
|
|
48,497
|
|
|
|
|
|
|
|
|
|
|
|
|
Note receivable
[note 3]
|
|
|
235,525
|
|
|
|
597,876
|
|
|
Total assets
|
|
|
409,045
|
|
|
|
646,373
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
11,284
|
|
|
|
16,659
|
|
|
Due to related parties, non-interest bearing
[note 5]
|
|
|
38,628
|
|
|
|
38,628
|
|
|
Total current liabilities
|
|
|
49,912
|
|
|
|
55,287
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity
[note 4]
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
|
|
|
|
|
Authorized
|
|
|
|
|
|
|
|
|
|
100,000,000 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
|
|
|
4,183,129
|
|
|
|
4,183,129
|
|
|
Deficit
|
|
|
(3,834,946
|
)
|
|
|
(3,602,993
|
)
|
|
Total stockholders’ equity
|
|
|
359,133
|
|
|
|
591,086
|
|
|
Total liabilities and stockholders’ equity
|
|
|
409,045
|
|
|
|
646,373
|
|
|
Nature
of operation [note 1]
|
|
|
|
|
|
|
|
|
|
Going concern [note 1]
|
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of these financial statements
Chineseworldnet.Com Inc.
STATEMENTS OF STOCKHOLDERS’ EQUITY
Years ended December 31
(Expressed in U.S. Dollars)
|
|
|
Common stock
|
|
|
Additional
paid-in
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
capital
|
|
|
(Deficit)
|
|
|
Total
|
|
|
|
|
#
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2014
|
|
|
10,950,000
|
|
|
|
10,950
|
|
|
|
4,182,073
|
|
|
|
(3,397,478
|
)
|
|
|
795,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
1,056
|
|
|
|
—
|
|
|
|
1,056
|
|
|
Net loss for the year
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(167,809
|
)
|
|
|
(167,809
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2015
|
|
|
10,950,000
|
|
|
|
10,950
|
|
|
|
4,183,129
|
|
|
|
(3,565,287
|
)
|
|
|
628,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(37,706
|
)
|
|
|
(37,706
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2016
|
|
|
10,950,000
|
|
|
|
10,950
|
|
|
|
4,183,129
|
|
|
|
(3,602,993
|
)
|
|
|
591,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(231,953
|
)
|
|
|
(231,953
|
)
|
|
Balance, December 31, 2017
|
|
|
10,950,000
|
|
|
|
10,950
|
|
|
|
4,183,129
|
|
|
|
(3,834,946
|
)
|
|
|
359,133
|
|
The accompanying
notes are an integral part of these financial statements
Chineseworldnet.Com Inc.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
Year ended December
31
(Expressed in U.S. Dollars)
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit and legal
|
|
|
16,464
|
|
|
|
14,992
|
|
|
|
30,817
|
|
|
Directors’ remuneration
|
|
|
36,000
|
|
|
|
36,000
|
|
|
|
—
|
|
|
Office and miscellaneous
|
|
|
4,472
|
|
|
|
6,813
|
|
|
|
7,341
|
|
|
Stock based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
1,056
|
|
|
|
|
|
56,936
|
|
|
|
57,805
|
|
|
|
39,214
|
|
|
Other income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange gain (loss)
|
|
|
32,051
|
|
|
|
25,950
|
|
|
|
(124,965
|
)
|
|
Interest income
|
|
|
42,042
|
|
|
|
77,666
|
|
|
|
(3,630
|
)
|
|
Loss on notes receivable
|
|
|
(249,110
|
)
|
|
|
(83,517
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss and comprehensive loss for the year
|
|
|
(231,953
|
)
|
|
|
(37,706
|
)
|
|
|
(164,809
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share
|
|
|
(0.02
|
)
|
|
|
(0.00
|
)
|
|
|
(0.02
|
)
|
|
Weighted average number of common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- basic and diluted
|
|
|
10,950,000
|
|
|
|
10,950,000
|
|
|
|
10,950,000
|
|
The accompanying
notes are an integral part of these financial statements
Chineseworldnet.Com Inc.
STATEMENTS OF CASH FLOWS
Year ended December 31
(Expressed in U.S. Dollars)
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year
|
|
|
(231,953
|
)
|
|
|
(37,706
|
)
|
|
|
(167,809
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange (gain) or loss
|
|
|
(30,642
|
)
|
|
|
(21,349
|
)
|
|
|
124,965
|
|
|
Loss on note receivable
|
|
|
249,110
|
|
|
|
83,517
|
|
|
|
3,641
|
|
|
Imputed interest income
|
|
|
(42,044
|
)
|
|
|
(77,660
|
)
|
|
|
—
|
|
|
Stock based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
1,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in non-cash working capital items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and deposits
|
|
|
(2,939
|
)
|
|
|
(176
|
)
|
|
|
(32
|
)
|
|
Accounts payable and accrued liabilities
|
|
|
(5,375
|
)
|
|
|
(25,125
|
)
|
|
|
(41,979
|
)
|
|
Due to related parties, non-interest bearing [note 5]
|
|
|
—
|
|
|
|
36,000
|
|
|
|
—
|
|
|
Net cash used in operating activities
|
|
|
(63,843
|
)
|
|
|
(42,499
|
)
|
|
|
(80,158
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from note receivable
|
|
|
150,000
|
|
|
|
—
|
|
|
|
—
|
|
|
Net cash provided by investing activities
|
|
|
150,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effects of exchange rate changes on cash and cash equivalents
|
|
|
—
|
|
|
|
—
|
|
|
|
(20,693
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) in cash and cash equivalents
|
|
|
86,157
|
|
|
|
(42,499
|
)
|
|
|
(100,851
|
)
|
|
Cash and cash equivalents, beginning of year
|
|
|
43,407
|
|
|
|
85,906
|
|
|
|
186,757
|
|
|
Cash and cash equivalents, end of year
|
|
|
129,564
|
|
|
|
43,407
|
|
|
|
85,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest, net of interest capitalized
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Cash paid for income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
The accompanying
notes are an integral part of these financial statements
|
|
1.
|
NATURE OF OPERATIONS AND GOING CONCERN
|
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 $831,031 with 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 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. As
at December 31, 2017, the Company has a working capital of $123,608 (2016: working capital deficiency of $6,790).
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. There
can be no assurance that a viable business opportunity that can be adequately financed will be identified and available to the
Company. Additional equity and/or debt financing is subject to the global financial markets and prevailing economic conditions,
which have recently been volatile and distressed. These factors will likely make it more challenging to obtain financing for the
Company going forward. These matters and conditions indicate the existence of a material uncertainty that may cast significant
doubt about the Company’s ability to continue as going concern.
|
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES
|
Basis of presentation
These financial statements have been prepared
in conformity with generally accepted accounting principles in the United States of America (“US GAAP”) and are expressed
in United States dollars, unless otherwise noted. All adjustments considered necessary for a fair presentation of financial position,
results of operations and cash flows as at December 31, 2017 have been included.
Use of estimates
The preparation of financial statements
in conformity with US GAAP 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.
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 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, 2017 (2016 and 2015 - $Nil).
|
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES (cont’d.)
|
Foreign currency translations
The Company’s functional currency
is the U.S. dollar. Transactions in other currencies are recorded in U.S. dollars at the rates of exchange prevailing when the
transactions occur. Monetary assets and liabilities denominated in other currencies are translated into U.S. dollars at rates of
exchange in effect at the balance sheet dates. Exchange gains and losses are recorded in the statements of operations and comprehensive
loss.
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, 2017, 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 (loss)
The Company accounts for comprehensive
income (loss) 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.
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,
due to related parties and accounts payable and accrued liabilities approximates their fair value because of the short-term nature
of these instruments. The fair value of long term notes receivable is estimated using discounted cash flow model (refer to Note
3).
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 is exposed to foreign currency
risk on fluctuations related to the note receivable which is denominated in Canadian dollars.
|
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES (cont’d.)
|
Fair value of financial instruments
Fair Value of Financial Instruments –
the Company adopted SFAS ASC 820-10-50, “Fair Value Measurements”. This guidance defines fair value, establishes a
three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures.
The three levels are defined as follows:
|
|
·
|
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 years ended December 31, 2017 and
2016, the Company's financial instruments include cash and cash equivalents, accounts payable, and amounts due to related parties.
The carrying values of these financial instruments approximate their fair values due to their relatively short periods to maturity;
and the fair value of notes receivable are recognized in the balance sheets as level three per the fair value hierarchy.
Earning (Loss) per share
Basic loss per share is computed on the
basis of the weighted average number of common shares outstanding during each period.
Diluted loss per share is computed on the
basis of the weighted average number of common shares and dilutive securities outstanding.
Stock-based compensation
The Company has adopted the fair value
method of accounting for stock-based compensation as recommended by ASC 718
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.
Recently Adopted Accounting Pronouncements
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 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 has adopted the methodologies prescribed by this ASU by the date required and there is no material impact on the Company’s
financial statements.
On March 30, 2016,
the FASB issued ASU 2016-09, Improvements to Employee ShareBased Payment Accounting, which amends ASC Topic 718, Compensation
– Stock Compensation. The ASU simplifies several aspects of the accounting for employee share-based payment transactions.
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 has adopted the methodologies prescribed by this ASU by the date
required and there is no material impact on the Company’s financial statements.
|
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES (cont’d.)
|
Recently Issued Accounting Pronouncements
In August 2016, the FASB issued ASU 2016-15,
Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new guidance is intended to
reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective
for public business entities for fiscal years beginning after 15 December 2017, and interim periods within those years. For all
other entities, it is effective for fiscal years beginning after 15 December 2018, and interim periods within fiscal years beginning
after 15 December 2019. Early adoption is permitted. Entities will have to apply the guidance retrospectively, but if it is impracticable
to do so for an issue, the amendments related to that issue would be applied prospectively. The Company does not anticipate the
adoption to have a significant impact on its financial statement.
On November 17, 2016, the FASB issued ASU
2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. Entities will be required to show the changes in the total of cash,
cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, entities will no
longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement
of cash flows. ASU 2016-18 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim
periods within those fiscal years. The Company does not anticipate the adoption to have a significant impact on its financial statement.
In March 2017, the FASB issued ASU 2017-08,
Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.
The amendments in this Update shorten the amortization period for certain callable debt securities held at a premium. Specifically,
the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change
for securities held at a discount; the discount continues to be amortized to maturity. For public business entities, ASU 2017-08
is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is
currently evaluating the impact of the adoption of this guidance on its financial statements, if any.
In May 2017, the FASB issued ASU 2017-09,
Compensation—Stock Compensation (Topic 718): The amendments in this Update provide guidance about which changes to the terms
or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. An entity should
account for the effects of a modification unless all the following are met:
|
|
1.
|
The fair value (or calculated value or intrinsic value,
if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or
intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award
is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the
award, the entity is not required to estimate the value immediately before and after the modification.
|
|
|
2.
|
The vesting conditions of the modified award are the
same as the vesting conditions of the original award immediately before the original award is modified.
|
|
|
3.
|
The classification of the modified award as an equity
instrument or a liability instrument is the same as the classification of the original award immediately before the original award
is modified.
|
The current disclosure requirements in
Topic 718 apply regardless of whether an entity is required to apply modification accounting under the amendments in this Update.
The amendments in this Update are effective for all entities for annual periods, and interim periods within those annual periods,
beginning after December 15, 2017. The Company does not anticipate the adoption to have a significant impact on its financial
statement.
As at April 28, 2014, the Company received
a promissory note of CAD $831,031 (US $618,952) from Ningbo International Limited, a non-related party, as result of the disposal
all the issued and outstanding shares in NAI, all the issued and outstanding shares of CWN HK and 23.8% of the issued and outstanding
shares of CWN Capital. The promissory note is non-interest bearing unsecured with a maturity date of one year and the option to
extend upon mutual agreement. On April 28, 2015, the Company extended the payment date of the promissory note to April 28, 2016.
On April 28, 2016, the Company further extended the payment date to April 28, 2018 and imposed an 8% per annum interest rate payable
on the repayment date of the principal amount. On April 16, 2017, the Company amended the promissory note to a non-interest bearing
and changed the payment schedule as follows:
|
|
·
|
CDN $150,000 on or before April 30, 2017;
|
|
|
·
|
CDN $100,000 on or before December 31, 2018;
|
|
|
·
|
CDN $100,000 on or before December 31, 2019;
|
|
|
·
|
The remaining principal amount of CDN$481,031 will be payable on or
before December 31, 2020.
|
As at December 31, 2017, the note receivable
balance is recorded at a fair value of $271,452 (2016: $597,876 and 2015: 582,384). The note is valued using a discounted cash
flow model.
The Company recognized loss on note receivable
of $249,110 (2016: $83,517 and 2015: $Nil), and interest income on the note receivable of $42,044, $38,324 and $Nil in fiscal years
2017, 2016 and 2015 respectively. The effective interest rate of the note receivable is 17.09%. During the year ended December
31, 2017, the Company recorded foreign exchange gain of $30,642 (2016 - foreign exchange gain: $21,349 and 2015 - foreign exchange
loss: 124,965).
Share Capital
The Company has authorized 100,000,000
common shares at par value of $0.001 per share. As at December 31, 2017, the Company has 10,950,000 common shares issued and outstanding.
|
|
5.
|
RELATED PARTY TRANSACTIONS
|
As at December 31, 2017, the Company has
amounts due to stockholders and directors of $38,628 [2016 - $38,628 and 2015 - $2,628]. These amounts are non-interest bearing
and are due on demand.
As at December 31, 2017, the Company accrued
director fees in the amount of $36,000 [2016 - $36,000 and 2015 - $Nil].
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:
|
|
|
2017
$
|
|
|
2016
$
|
|
|
2015
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year
|
|
|
(231,953
|
)
|
|
|
(37,706
|
)
|
|
|
(167,809
|
)
|
|
Statutory Cayman Islands corporate tax rate
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
Expected tax recovery
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
As at December 31, 2017, the Company has
$Nil unrecognized deductible temporary differences.
ChineseWorldNet com (PK) (USOTC:CWNOF)
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