UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10−Q (Mark One) For the quarterly period ended: For the transition period from ____________ to _____________ Commission File Number: 000-30264 NETWORK CN INC. (Exact Name of Registrant as Specified in Its Charter) 90-0370486 (State or other jurisdiction of incorporation or organization) Office A, 18/F., (Address of principal executive offices, Zip Code) (852) (Registrant’s telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x Indicate by check mark whether the registrant has submitted electronically, Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or, an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. If an emerging growth company, 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. Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o Securities registered pursuant to Section 12(b) of the Act: The number of shares outstanding of each of the issuer’s classes of common stock, as of PART I FINANCIAL INFORMATION PART II OTHER INFORMATION PART I FINANCIAL INFORMATION NETWORK CN INC. CONSOLIDATED FINANCIAL STATEMENTS NETWORK CN INC. As of March 31, 2021 As of December 31, 2020 The accompanying notes are an integral part of the NETWORK CN INC. The accompanying notes are an integral part of the NETWORK CN INC. (UNAUDITED) The accompanying notes are an integral part of the NETWORK CN INC. FINANCIAL STATEMENTS Network CN Inc. was originally incorporated on September 10, 1993 in Delaware with headquarters in the Hong Kong Special Administrative Region of the People’s Republic of China (“PRC” or “China”). Since August 2006, the Company has been principally engaged in the provision of out-of-home advertising in China through the operation of a network of roadside LED digital video panels, mega-size LED digital video billboards and light boxes in major cities. Details of the Company’s principal subsidiaries and variable interest entities as of Identification of New projects On January 14, 2020, the Company entered into a Letter of Intent with Earthasia Worldwide Holdings Limited (“EWHL”) that the Company will acquire 100% of the EWHL’s issued and outstanding stock owned by the shareholders of the EWHL and the EWHL will become a wholly owned subsidiary of the Company. On July 23, 2020, the Company entered into Share Exchange Agreement with Ease Global Limited (“Ease Global”), the shareholder of Trade More Global Limited (‘Trade More”) that the Company will purchase, One Thousand and One Hundred (1,100) currently issued shares of common stock of Trade More from Ease Global and in exchange for Forty-nine Million (49,000,000) shares of newly-issued shares of common stock of the Company. The closing of the Exchange shall occur on other date as agreed by the parties of the Share Exchange Agreement. Upon completion of the Exchange, 78% of issued shares of common stock of the Company shall be held by the Ease Global while all of the shares of capital stock of Trade More shall be held by the Company. EWHL is a wholly owned subsidiary of Trade More. The closing of Exchange was not completed on September 2, 2020 and was postponed due to the progress of audit. Due to the delay of completion, the Company will re-evaluate the acquisition until Ease Global can fulfill the revenue target and the internal controls over financial reporting required by the SEC. The Company will proceed to negotiate and seek approval from the board of directors and shareholders for the new share exchange terms and conditions. Increase of authorized capital On April 28, 2020, the Board of Directors and Majority of stockholders of the Company approved to increase the total number of authorized shares of Common Stock from 26,666,667 to 100,000,000,000. Going Concern The Company has experienced recurring net losses In response to current financial conditions, the Company has undergone a drastic cost-cutting exercise, including reduction of the Company’s workforce, office rentals and other general and administrative expenses. The Company has actively explored new prominent media projects in order to provide a wider range of media and advertising services and improve our financial performance. If the project can start to operate, the Company expects that the project will improve the Company’s future financial performance. The Company expects that the new project can generate positive cashflow. The existing cash (A) Basis of Presentation and Preparation The accompanying unaudited The unaudited The accompanying unaudited (B) Principles of Consolidation The unaudited (C) Use of Estimates In preparing unaudited (D) Issuance of 1% Convertible Promissory Note On The Company determined the 1% convertible promissory notes to be conventional convertible instruments under ASC Topic 815, Derivatives and Hedging. Its embedded conversion option qualified for equity classification. The embedded beneficial conversion feature was recognized and measured by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital. The debt discount resulting from the allocation of proceeds to the beneficial conversion feature is amortized over the term of the 1% convertible promissory notes from the respective dates of issuance using the effective interest method. (E) Revenue Recognition In accordance with ASC The Company recognize revenue when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration we expect to be entitled to receive in exchange for such services. To achieve this core principle, we apply the following five steps: 1) Identify the contract(s) with a customer - A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to those goods or services, (ii) the contract has commercial substance and, (iii) we determine that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. We apply judgment in determining the customer’s ability and intention to pay, which 2) Identify the performance obligations in the contract - Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both (i) capable of being distinct, whereby the customer can benefit from the good or service either on its own or together with other resources that are readily available from third parties or from us, and (ii) are distinct in the context of the We typically do not include options that would result in 3) Determine the transaction price - The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring goods or services to the customer. Our contract prices may include fixed amounts, variable amounts or a combination of 4) Allocate the transaction price to the performance obligations in the contract - If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of 5) Recognize revenue when (or as) we satisfy a performance obligation: we satisfy performance obligations either over time or at a point-in-time as discussed in further detail below. Revenue is recognized when the related performance obligation is satisfied by transferring control of The Company has yet to (F) Recently Adapted Accounting Pronouncements In (G) Recent Accounting Pronouncements In In October 2020, the FASB issued ASU 2020-10, “Codification Improvements,” this ASU affects a wide variety of Topics in the Codification. They apply to all reporting entities within the scope of the affected accounting guidance. More specifically, this ASU, among other things, contains amendments that improve the consistency of the Codification by including all disclosure guidance in the appropriate Disclosure Section (Section 50). Many of the amendments arose because the FASB provided an option to give certain information either on the face of the financial statements or in the notes to financial statements and that option only was included in the Other Presentation Matters Section (Section 45) of the Codification. The option to disclose information in the notes to financial statements should have been codified in the Disclosure Section as well as the Other Presentation Matters Section (or other Section of the Codification in which the option to disclose in the notes to financial statements appears). Those amendments are not expected to change current practice. The amendments are effective for annual periods beginning after December 15, 2021, and interim periods within Details of the Company’s principal subsidiaries and variable interest entities as of Place of Incorporation Ownership/Control interest attributable to the Company * The subsidiary’s registration license has been revoked. Remarks: 1) Variable interest entity which the Company exerted 100% control through a set Prepaid expenses and other current assets, net as of As of March 31, 2021 As of December 31, 2020 The Company recorded no allowance for doubtful debts for prepaid expenses and other current assets as of March 31, 2021 and 2020. Accounts payable, accrued expenses and other payables as of As of March 31, 2021 As of December 31, 2020 As of The interest expenses of the short-term loans for the three months ended Issuance of New 1% Convertible Promissory Notes in On January 14, 2020, the Company entered into a Subscription Agreement with Tsang Wai Yee Terri (“the Subscriber”) under which the Subscriber agreed to purchase the 1% Senior Unsecured Convertible Convertible promissory notes, net as of As of March 31, 2021 As of December 31, 2020 Interest Expense The interest expenses of the 1% Convertible Promissory Notes for the three months ended Contingencies The Company accounts for loss contingencies in accordance with ASC Topic 450 and other related guidelines. As of Restriction on payment of dividends The Company has not declared any dividends since incorporation. For instance, the Except as set forth below, during the In April 2009, in connection with debt restructuring, Statezone Ltd. of which Dr. Earnest Leung, the Company’s Chief Executive Officer and a Director (being appointed on July 15, 2009 and May 11, 2009 respectively) was the sole director, provided agency and financial advisory services to the Company. Accordingly, the Company paid an aggregate service fee of $350,000 of which $250,000 has been recorded as issuance costs for 1% Convertible Promissory Notes and $100,000 has been recorded as prepaid expenses and other current assets, net since April 2009. Such $100,000 is refundable unless Keywin Option is exercised and completed. On July 1, 2009, the Company and Keywin, of which the Company’s chief executive officer and director is the director and his spouse is the sole shareholder, entered into an Amendment, pursuant to which the Company agreed to extend the exercise period for the Keywin Option under the Note Exchange and Option Agreement between the Company and Keywin, to purchase an aggregate of 1,637,522 shares of our common stock for an aggregate purchase price of $2,000,000, from a three-month period ended on July 1, 2009, to a six-month period ended October 1, 2009. The exercise period for the Keywin option was subsequently further extended to a nine-month period ended January 1, 2010, pursuant to the Second Amendment. On January 1, 2010, the Company and Keywin entered into the third Amendment, pursuant to which the Company agreed to further extend the exercise period to an eighteen-month period ended on October 1, 2010, and provide the Company with the right to unilaterally terminate the exercise period upon 30 days’ written notice. On September 30, 2010, the exercise The Company considered the payment of the outstanding payables have not been claimed and it is in the best interests of Company to write off the long-aged payables. The Company have resolved that they are of the opinion that the obligation for future settlement of accrued long-aged payables are remote, therefore the related accruals of $386,772 have been written off and included in gain from write-off of long-aged payables in the consolidated statements of operations and comprehensive loss for three months ended March 31, 2020. Net The diluted net Income is subject to taxation in various countries in which the Company and its subsidiaries operate or are incorporated. The (loss)/profit before income taxes by geographical locations for the three months ended March 31, 2021 and 2020 were summarized as follows: Other than the United States, the Company is subject to taxation in Hong Kong and PRC. Under Hong Kong tax laws, deferred tax assets are recognized for tax loss carried forward to the extent that the realization of the related tax benefit through future taxable profits is probable. These tax losses do not expire under current Hong Kong tax legislation. Under PRC tax laws, tax losses may be carried forward for 5 years and no carry-back is allowed. At March 31, 2021, the Company does not have available tax losses in the Hong Kong and PRC to utilize for future taxable profits. The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was enacted on March 27, 2020. There are several different provisions with the CARES Act that impact income taxes for corporations. The Company has evaluated the tax implications and believes these provisions did not have a material impact to the financial statements. At March 31, 2021, the Company had an unused net operating loss carryforward of approximately $16,421,705 for income tax purposes. This net operating loss carryforward may result in future income tax benefits of approximately $3,448,559, which will expire on various from 2024 through 2037 as follows: The realization of net operating loss carryforward is uncertain at this time, a valuation allowance in the same amount has been established. Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax liabilities and assets of March 31, 2021 and December 31, 2020 are as follows: Movement of valuation allowance: Special Note Regarding Forward Looking Statements This Quarterly Report on Form 10-Q, including the following “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include, among others, those concerning our expected financial performance and strategic and operational plans, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and that a number of risks and uncertainties could cause actual results of the Company to differ materially from those anticipated, expressed or implied in the forward-looking statements. The words “believe”, “expect”, “anticipate”, “project”, “targets”, “optimistic”, “intend”, “aim”, “will” or similar expressions are intended to identify forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Risks and uncertainties that could cause actual results to differ materially from those anticipated include risks related to our potential inability to raise additional capital; changes in domestic and foreign laws, regulations and taxes; uncertainties related to China’s legal system and economic, political and social events in China; Securities and Exchange Commission regulations which affect trading in the securities of “penny stocks”; changes in economic conditions, including a general economic downturn or a downturn in the securities markets; and any of the factors and risks mentioned in the “Risk Factors” sections of our Annual Report on Form 10-K for fiscal year ended December 31, COVID-19 Pandemic In December 2019, an outbreak of COVID-19 was identified in China and was subsequently recognized as a global pandemic by the World Health Organization (“WHO”) on March 11, 2020. Since that time, COVID-19 has spread around the world and throughout the United States, including in the regions and countries in which we operate. Federal, state and local governments in the U.S and around the world have imposed restrictions on travel and business operations and are advising or requiring individuals to limit or eliminate time outside of their homes. Temporary closures of businesses have also been ordered in certain jurisdictions, and other businesses have temporarily closed voluntarily. These actions expanded significantly in March and April of 2020 throughout the U.S. Consequently, the COVID-19 outbreak has severely restricted the level of economic activity in the U.S. and around the world. The outbreak has resulted in authorities implementing numerous measures to try to contain the virus, such as quarantines and shelter in place orders. These measures may remain in place for a significant period of time and adversely affect our business, operations and financial condition as well as the business, operations and financial conditions of our business partners. The spread of the virus has also caused us to modify our business practices (including employee work locations and cancellation of physical participation in meetings) in ways that may be detrimental to our business (including working remotely and its attendant cybersecurity risks). We may take further actions as may be required by government authorities or that we determine are in the best interests of our employees. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus or otherwise be satisfactory to government authorities. There has been no material adverse impact on the Company’s first quarter 2021 results of operations to date. The effect of COVID-19 and related events, those not yet known or knowable, could have a negative effect on the stock price, business prospects, financial condition, and results of operations of the Company, including as a result of quarantines, market volatility, market downturns and business closures. For the reasons discussed above, the Company cannot reasonably estimate with any degree of certainty the future impact COVID-19 may have on the Company’s results of operations, financial position, and liquidity. Notwithstanding any actions by national, state, and local governments to mitigate the impact of COVID-19 or by the Company to address the adverse impacts of COVID-19, there can be no assurance that any of the foregoing activities will be successful in mitigating or preventing significant adverse effects on the Company. Use of Terms Except as otherwise indicated by the context, references in this report to: Overview of Our Business Our mission is to become a nationwide leader in providing out-of-home advertising in China, primarily serving the needs of branded corporate customers. Our business direction to not just selling air-time for its media panels but also started working closely with property developers in media planning for the property at the very early stage. As a media planner we share the advertising profits with the property developers without paying significant rights fees, so we expect to achieve a positive return from these projects. To address these unfavorable market conditions, we continue to implement cost-cutting measures, including reductions in our workforce, office rentals, selling and marketing related expenses and other general and administrative expenses. We have also re-assessed the commercial viability of each of our concession rights contracts and have terminated those of our concession rights that we determined were no longer commercially viable due to high annual fees. Management has also successfully negotiated some reductions in advertising operating rights fees under remaining contracts. For more information relating to our business, please refer to Part I, “Item 1 - Business” of our Annual Report on Form 10-K for the fiscal year ended December 31, Recent Development Issuance of On January 14, 2020, the Company entered into a Subscription Agreement with Tsang Wai Yee Terri (“the Subscriber”) under which the Subscriber agreed to On January 14, 2020, the On July 23, 2020, the Company Increase of authorized capital On April 28, 2020, the Board of Directors and Majority of stockholders of the Company approved to Results of Operations The following results of operations is based upon and should be read in conjunction with the Company’s unaudited Comparison of Three Months Ended General and Administrative Expenses Gain from write-off of long aged payables – Gain from write-off of long-aged payables for the Interest and Other Debt-Related Expenses Income Taxes Net Liquidity and Capital Resources As of The following table sets forth a summary of our cash flows for the periods indicated: Operating Activities Net cash Our cash flow projections indicate that our current assets and projected revenues from our existing project will not be sufficient to fund operations over the next twelve months. This raises substantial doubt about our ability to continue as a going concern. We intend to rely on Keywin’s exercise of its outstanding option to purchase $2 million in shares of our common stock or on the issuance of additional equity and debt securities as well as on our note holders’ exercise of their conversion option to convert our notes to our common stock, in order to fund our operations. However, it may be difficult for us to raise funds in the current economic environment. We cannot give assurance that we will be able to generate sufficient revenue or raise new funds, or that Keywin will exercise its option before its expiration and our note holders will exercise their conversion option before the note is due. In any such case, we may not be able to continue as a going concern. Investing Activities Net cash used in investing activities for the Financing Activities Net cash provided by financing activities was Short-term Loan As of Capital Expenditures During the Contractual Obligations and Commercial Commitments The following table presents certain payments due under contractual obligations with minimum firm commitments as of Due in 2021 Due in 2022–2023 Due in 2023-2024 (a) Debt Obligations (b) Short Term Loan. Recent Accounting Pronouncements The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the Off Balance Sheet Arrangements We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our investors. Not applicable. Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure that information that would be required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including to our Chief Executive Officer and Interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As required by Rule 13a-15 under the Exchange Act, our management evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of Changes in Internal Control Over Financial Reporting We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes. There has been no change to our internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. PART II OTHER INFORMATION From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these, or other matters, may arise from time to time that may harm our business. There have been no material changes to the risk factors disclosed in Item 1A of our Form 10-K for the fiscal year ended December 31, 2020, other than as disclosed below. Additional risks and uncertainties, including risks and uncertainties not presently known to us, or that we currently deem immaterial, could also have an adverse effect on our business, financial condition and/or results of operations. The ongoing COVID-19 pandemic could adversely affect our business, results of operations and financial condition. The outbreak of COVID-19 was declared a pandemic by the World Health Organization on March 11, 2020. Since that time, COVID-19 has spread around the world and throughout the United States, including in the regions and communities in which we operate. Federal, state and local governments in the U.S and around the world have imposed restrictions on travel and business operations and are advising or requiring individuals to limit or eliminate time outside of their homes. Temporary closures of businesses have also been ordered in certain jurisdictions, and other businesses have temporarily closed voluntarily. These actions expanded significantly in March and April of 2020 throughout the U.S. Consequently, the COVID-19 outbreak has severely restricted the level of economic activity in the U.S. and around the world. The outbreak has resulted in authorities implementing numerous measures to try to contain the virus, such as quarantines and shelter in place orders. The spread of the virus has caused us to modify our business practices (including employee work locations and cancellation of physical participation in meetings) in ways that may be detrimental to our business (including working remotely and its attendant cybersecurity risks). We may take further actions as may be required by government authorities or that we determine are in the best interests of our employees. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus or otherwise be satisfactory to government authorities. Our existing cash together with highly liquid current assets are insufficient to fund the Company’s operations for the next twelve months. The Company will need to rely upon some combination of cash generated from the Company’s operations, the proceeds from the potential exercise of the outstanding option held by Keywin Holdings Limited (“Keywin”) to purchase $2 million in shares of the Company’s common stock, or proceeds from the issuance of the Company’s equity and debt securities as well as the exercise of the conversion option by the Company’s note holders to convert the notes to the Company’s common stock, in order to maintain the Company’s operations. However, it may be difficult for us to raise funds in the current economic environment. If adequate capital is not available to us, our operations and financial condition could be adversely impacted. The effect of COVID-19 and related events, including those described above and those not yet known or knowable, could have a negative effect on our stock price, business prospects, financial condition, and results of operations. We have not sold any equity securities during the quarter ended None. Not applicable. Not applicable. The following exhibits are filed as part of this report or incorporated by reference: * Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Act of 1934, as amended, and otherwise are not subject to liability under those sections. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. (Principal Financial Officer and Principal Accounting Officer 23☒xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 September 30, 2017☐oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (I.R.S. Employer Identification No.) 3F.D.J. Securities Building, 171 Hoi BunLucky Plaza, Nos. 315-321 Lockhart Road, Kwun Tong, Kowloon,Wanchai, Hong Kong (Address2833-21869625-0097(Former name, former address and former fiscal year, if changed since last report)☐ No o☒ 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). Yes x☒ No o☐☐oAccelerated filer ☐Non-accelerated filer ☐☒x(Do not check if smaller reporting company)Emerging growth company ☐oNon-accelerated filer o ☐o☐ No x☒Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.001 par value NWCN OTC market November 10, 2017May 14, 2021 is as follows: Class of Securities Shares Outstanding Common Stock, $0.001 par value 8,041,9958,774,263PART IFINANCIAL INFORMATIONItem 1. 3 Item 2. 1716Item 3. 20 Item 4. Controls and Procedures 20 Item 1. Legal Proceedings 21 Item 4.21PART IIOTHER INFORMATIONItem 1.22Item 1A.2221Item 2. 2221Item 3. 2221Item 4. 22 Item 5. 22 Item 6. 2322PART IFINANCIAL INFORMATIONNETWORK CN INC.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 2 ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS Page 4 5 6 7 3 AS AT SEPTEMBER 30, 2017 (UNADUITED) AND DECEMBER 31, 2016(AUDITED) Note Current Assets Cash $ 6,439 $ 8,512 Prepaid expenses and other current assets 5 102,751 101,829 Total Current Assets 109,190 110,341 Equipment, Net 2,925 896 TOTAL ASSETS $ 112,115 $ 111,237 Current Liabilities Accounts payable, accrued expenses and other payables 6 $ 6,446,798 $ 5,775,653 1% convertible promissory note, net 7 5,000,000 5,000,000 Total Current Liabilities 11,446,798 10,775,653 TOTAL LIABILITIES 11,446,798 10,775,653 COMMITMENTS AND CONTINGENCIES 8 - - STOCKHOLDERS’ DEFICIT 8,042 Additional paid-in capital 123,706,741 123,706,741 Accumulated deficit (136,752,357 ) (136,083,041 ) Accumulated other comprehensive income 1,702,891 1,703,842 TOTAL STOCKHOLDERS’ DEFICIT 9 (11,334,683 ) (10,664,416 ) TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT $ 112,115 $ 111,237 (Unaudited) ASSETS Current Assets Cash $ 6,073 $ 5,967 Prepaid expenses and other current assets, net 100,000 100,000 Total Current Assets 106,073 105,967 Equipment, Net 547 599 TOTAL ASSETS $ 106,620 $ 106,566 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current Liabilities Accounts payable, accrued expenses and other payables $ 4,457,354 $ 4,261,650 Short term loan 2,973,211 2,973,211 Total Current Liabilities 7,430,565 7,234,861 Non-Current Liabilities 1% convertible promissory note due 2025, net 645,000 645,000 Total Non- Current Liabilities 645,000 645,000 TOTAL LIABILITIES 8,075,565 7,879,861 COMMITMENTS AND CONTINGENCIES - - STOCKHOLDERS’ DEFICIT Preferred stock, $0.001 par value, 5,000,000 shares authorized
None issued and outstanding - - Common stock, $0.001 par value, 26,666,667 shares authorize
Shares issued and outstanding: 8,774,263 and 8,774,263 as of
March 31, 2021 and December 31, 2020, respectively 8,773 8,773 Additional paid-in capital 124,209,441 124,209,441 Accumulated deficit (133,891,381 ) (133,695,748 ) Accumulated other comprehensive income 1,704,222 1,704,239 TOTAL STOCKHOLDERS’ DEFICIT (7,968,945 ) (7,773,295 ) TOTAL LIABILITIES AND STOCKHOLDERS’
DEFICIT $ 106,620 $ 106,566 condensed consolidated financial statements.4 AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 Three Months Ended Nine Months Ended Note REVENUES Advertising services $ - $ - $ - $ - COST OF REVENUES Cost of advertising services - - - - GROSS LOSS - - - - OPERATING EXPENSES General and administrative (89,604 ) (100,852 ) (263,391 ) (304,074 ) Stock based compensation for services - - - (20,000 ) Gain from disposal of subsidiaries 25 - 25 - Total Operating Expenses (89,579 ) (100,852 ) (263,366 ) (324,074 ) LOSS FROM OPERATIONS (89,579 ) (100,852 ) (263,366 ) (324,074 ) Interest expense 6 & 7 (137,077 ) (129,571 ) (405,950 ) (382,580 ) (137,077 ) (129,571 ) (405,950 ) (382,580 ) (226,656 ) (230,423 ) (669,316 ) (706,654 ) Income taxes - - - - NET LOSS $ (226,656 ) $ (230,423 ) $ (669,316 ) (706,654 ) 53 (26 ) (951 ) (61 ) 53 (26 ) (951 ) (61 ) COMPREHENSIVE LOSS $ (226,603 ) $ (230,449 ) $ (670,267 ) $ (706,715 ) 11 $ (0.0282 ) $ (0.0287 ) $ (0.083 ) (0.088 ) 11 8,041,995 8,041,995 8,041,995 8,041,995 Three Months Ended March 31, 2021 March 31, 2020 REVENUES Advertising services $ - $ - COST OF REVENUES - - Cost of advertising services - - GROSS LOSS - - OPERATING EXPENSES General and administrative (65,680 ) (77,204 ) Total Operating Expenses (65,680 ) (77,204 ) LOSS FROM OPERATIONS (65,680 ) (77,204 ) OTHER INCOME Gain from write-off of long aged payables - 386,772 Total Other Income - 386,772 INTEREST AND OTHER DEBT-RELATD EXPENSES Interest expense (129,953 ) (142,903 ) Total Interest and Other Debt-Related Expenses (129,953 ) (142,903 ) NET (LOSS)/PROFIT BEFORE INCOME TAXES (195,633 ) 166,665 Income taxes - - NET (LOSS)/PROFIT $ (195,633 ) $ 166,665 OTHER COMPREHENSIVE INCOME Foreign currency translation loss (17 ) (148 ) Total Other Comprehensive Loss (17 ) (148 ) COMPREHENSIVE (LOSS)/INCOME $ (195,650 ) $ 166,517 NET (LOSS)/PROFIT PER COMMON SHARE – BASIC AND
DILUTED $ (0.02 ) $ 0.02 WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING – BASIC AND DILUTED 8,774,263 8,774,263 condensed consolidated financial statements.5 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 Nine Months Ended CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (669,316 ) $ (706,654 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization: Equipment 603 9,647 Gain from disposal of subsidiaries (25 ) - Stock-based compensation for service - 20,000 Changes in operating assets and liabilities: Prepaid expenses and other current assets (922 ) (1,728 ) Accounts payable, accrued expenses and other payables 543,389 568,173 Net cash used in operating activities (126,271 ) (110,562 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of equipment (2,632 ) - Net cash used in investing activities (2,632 ) - CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from short-term loan 127,756 121,719 Repayment of capital lease obligation - (9,704 ) Proceeds from disposal of subsidiaries 1 - Net cash provided by financing activities 127,757 112,015 EFFECT OF EXCHANGE RATE CHANGES ON CASH (927 ) (61 ) NET (DECREASE)/INCREASE IN CASH (2,073 ) 1,392 CASH, BEGINNING OF PERIOD 8,512 6,790 CASH, END OF PERIOD $ 6,439 $ 8,182 Cash paid during the period for: Income taxes $ - $ - Interest paid $ - $ 681 Three Months Ended March 31, 2021 March 31, 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss)/profit $ (195,633 ) $ 166,665 Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 52 219 Gain from write-off of long aged payables - (386,772 ) Changes in operating assets and liabilities: Accounts payable, accrued expenses and other payables 195,704 (424,983 ) Net cash provided by/(used in) operating activities 123 (644,871 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from convertible promissory note - 645,000 Net cash provided by financing activities - 645,000 EFFECT OF EXCHANGE RATE CHANGES ON CASH (17 ) (148 ) NET INCREASE/(DECREASE) IN CASH 106 (19 ) CASH, BEGINNING OF PERIOD 5,967 5,510 CASH, END OF PERIOD $ 6,073 $ 5,491 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Income taxes $ - $ - Interest paid $ - $ 615,000 condensed consolidated financial statements.6 (UNAUDITED)NOTE 1. INTERIM FINANCIAL STATEMENTSThe accompanying unaudited condensed consolidated financial statements of Network CN Inc., its subsidiaries and variable interest entities (collectively “NCN” or the “Company” “we”, “our” or “us”) have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of our financial position and results of operations.The unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2017 and 2016 were not audited. It is management’s opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair presentation of financial statements. The results for the interim period are not necessarily indicative of the results to be expected for the full fiscal year. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, previously filed with the Securities and Exchange Commission on April 14, 2017.NOTE 2.ORGANIZATION AND PRINCIPAL ACTIVITIES September 30, 2017,March 31, 2021, are described in Note 43 – Subsidiaries and Variable Interest Entities.of $669,316 and $706,654$195,633 for the ninethree months ended September 30, 2017 and 2016, respectively. Additionally, the Company has net cash used in operating activities of $126,271 and $110,562 for the nine months ended September 30, 2017 and 2016, respectively.March 31, 2021. As of September 30, 2017March 31, 2021, and December 31, 2016,2020, the Company has stockholders’ deficit of $11,334,683$7,968,945 and $10,664,416,$7,773,295, respectively. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s plans regarding those concerns are addressed in the following paragraph. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.7 and cash equivalents together with highly liquid current assets are insufficient to fund the Company’s operations for the next twelve months. The Company will need to rely upon some combination of cash generated from the Company’s operations, the proceeds from the potential exercise of the outstanding option held by Keywin Holdings Limited (“Keywin”) to purchase $2 million in shares of the Company’s common stock, or proceeds from the issuance of the Company’s equity and debt securities as well as the exercise of the conversion option by the Company’s note holders to convert the notes to the Company’s common stock, in order to maintain the Company’s operations. Based on the Company’s best estimates, the Company believes that there are sufficient financial resources to meet the cash requirements for the coming twelve months and the consolidated financial statements have been prepared on a going concern basis. However, there can be no assurance the Company will be able to continue as a going concern.NOTE 32SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (A)Basis of Presentation and Preparation condensed consolidated financial statements of Network CN Inc., its subsidiaries and variable interest entities (collectively “NCN” or the Company“Company” “we”, “our” or “us”) have been prepared in conformityaccordance with GAAP.Thesegenerally accepted accounting principles in the United States (“GAAP”) and the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of our financial position and results of operations. condensed consolidated financial statements for the three months ended March 31, 2021 and 2020 were prepared onnot audited. It is management’s opinion, however, that all material adjustments (consisting of normal recurring adjustments or a going concern basis. The Company has determined that the going concern basis of preparation is appropriate based on its estimates and judgments of future performancedescription of the Company, future eventsnature and projected cash flows. At eachamount of any adjustments other than normal recurring adjustments) have been made which are necessary for a fair presentation of financial statements. The results for the interim period are not necessarily indicative of the results to be expected for the full fiscal year. The year-end consolidated balance sheet date, the Company evaluates its estimates and judgments as part of its going concern assessment. Based on its assessment, the Company believes there are sufficientdata was derived from audited financial and cash resources to finance the Company as a going concern in the next twelve months. Accordingly, management has prepared thestatements, but does not include all disclosures required by GAAP. condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on a going concern basis. condensed consolidated financial statements include the financial statements of Network CN Inc., its subsidiaries and its variable interest entities for which it is the primary beneficiary. A variable interest entity is an entity in which the Company, condensed consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Differences from those estimates are reported in the period they become known and are disclosed to the extent they are material to the unaudited condensed consolidated financial statements taken as a whole. CashCash includes cash on hand, cash accounts, and interest bearing savings accounts placed with banks and financial institutions. For the purposes of the statements of cash flows, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. There were no cash equivalents balance as of September 30, 2017 and December 31, 2016.(E) Equipment, NetEquipment is stated at cost less accumulated depreciation and impairment losses, if any. Depreciation is provided on a straight-line basis, less estimated residual values over the assets’ estimated useful lives. The estimated useful lives are as follows:Office equipment3 - 5 yearsFurniture and fixtures3 - 5 yearsMotor vehicles5 yearsWhen equipment is retired or otherwise disposed of, the related cost, accumulated depreciation and provision for impairment loss, if any are removed from the respective accounts, and any gain or loss is reflected in the unaudited condensed consolidated statements of operations. Repairs and maintenance costs on equipment are expensed as incurred.(F) Impairment of Long-Lived AssetsLong-lived assets, such as equipment, are reviewed for impairment whenever events or changes in circumstance indicate that the carrying amount of the assets may not be recoverable. An impairment loss is recognized when the carrying amount of a long-lived asset exceeds the sum of the undiscounted cash flows expected to be generated from the asset’s use and eventual disposition. An impairment loss is measured as the amount by which the carrying amount exceeds the fair value of the asset calculated using a discounted cash flow analysis. There was no impairment of long-lived assets during the period. (G) Convertible Promissory Notes1) Debt Restructuring and April 2, 2009,January 14, 2020, the Company issued 1% unsecured senior convertible promissory notes to the previous 3% convertible promissory note holders who agreed to cancel these 3% convertible promissory notes inan individual with the principal amount of $5,000,000 (including all accrued and unpaid interest thereon), and all of the warrants, in exchange for the 1% unsecured senior convertible promissory notes in the principal amount of $5,000,000.$645,000. The 1% convertible promissory notes bore interest at 1% per annum, payable semi-annually in arrears, matured on April 1, 2012,January 13, 2025, and were convertible at any time into shares of the Company’s common stock at a fixed conversion price of $1.7445$1.00 per share, subject to customary anti-dilution adjustments. Pursuant to ASC Topic 470, Debt, the Company determined that the original convertible notes and the 1% convertible notes were with substantially different terms and hence the exchange was recorded as an extinguishment of original notes and issuance of new notes.8 2) Extension of 1% Convertible Promissory NoteThe 1% convertible promissory notes matured on April 1, 2012 and on the same date, the Company and the note holders agreed to the following: 1) extension of the maturity date of the 1% convertible promissory notes for a period of two years and 2) modification of the 1% convertible promissory notes to be convertible at any time into shares of the Company’s common stock at a conversion price of $1.3956 per share, subject to customary anti-dilution adjustments. In all other respects not specifically mentioned, the terms of the 1% convertible promissory notes remain the same and are fully enforceable in accordance with their terms. Subsequently, the Company issued to the note holders new 1% convertible promissory notes with a maturity date of April 1, 2014. Pursuant to ASC Topic 470, the Company determined that the modification is substantially different and hence the modification was recorded as an extinguishment of notes and issuance of new notes. The Company allocated the amount of the reacquisition price to the repurchased beneficial conversion feature using the intrinsic value of that conversion feature at the extinguishment date and the residual amount was allocated to the convertible security. Thus, the Company recorded a gain on extinguishment of debt. The 1% Convertible Promissory Notes were scheduled to mature on April 1, 2014 and on March 12, 2014, the Company and the respective holders agreed to extend the maturity date of the 1% Convertible Promissory Notes for a period of two years. In all other respects not specifically mentioned, the terms of the 1% Convertible Promissory Notes shall remain the same and shall be fully enforceable in accordance with its terms. Subsequently, the Company issued to the note holders new 1% convertible promissory notes which matured on April 1, 2016. The Company allocated the amount of the reacquisition price to the repurchased beneficial conversion feature using the intrinsic value of that conversion feature at the extinguishment date and the residual amount was allocated to the convertible security. Thus, the Company recorded no gain or loss on extinguishment of debt.The Company determined the modified new 1% convertible promissory notes to be conventional convertible instruments under ASC Topic 815. Its embedded conversion option qualified for equity classification. The embedded beneficial conversion feature was recognized and measured by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital. The debt discount resulting from the allocation of proceeds to the beneficial conversion feature is amortized over the term of the new 1% convertible promissory notes from the respective dates of issuance using the effective interest method.On April 29, 2016, the Company received a reservation of rights letter from the note holders to reserves all of its powers, rights and privileges.(H)The Company recognizes revenue in the period when advertisements are either aired or published. The Company does not expect to generate any revenue for the period.(I) Stock-based CompensationThe Company complies with ASC Topic 718, Compensation – Stock Compensation, using a modified prospective application transition method, which establishes accounting for stock-based awards in exchange for employee services. Under this application, the Company is required to record stock-based compensation expense for all awards granted. It requires that stock-based compensation cost is measured at grant date, based on the fair value of the award, and recognized as expense over the requisite services period.Common stock, stock options and warrants issued to other than employees or directors in exchange for services are recorded on the basis of their fair value. Topic 505, Equity,606, Revenue From Contracts with Customers, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the non-employee stock optionsconsideration the entity expects to receive in exchange for those goods or warrantsservices. To determine revenue recognition for arrangements that are measured at their fair value by usingwithin the Black-Scholes option pricing model asscope of the earlierstandard, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The standard requires disclosure of the date atnature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The standard also includes criteria for the capitalization and amortization of certain contract acquisition and fulfillment costs.a commitment for performance to earn the equity instruments is reached (“performance commitment date”) or the date at which performance is complete (“performance completion date”). The stock-based compensation expenses are recognizedbased on a straight-line basis overvariety of factors including the shortercustomer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. The contract term for contracts that provide a right to terminate a contract for convenience without significant penalty will reflect the term that each party has enforceable rights under the contract (the period through the earliest termination date). If the termination right is only provided to the customer, the unsatisfied performance obligations will be evaluated as customer options as discussed below.period over whichcontract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. If these criteria are not met the promised goods or services are accounted for as a combined performance obligation. Certain of our contracts (under which we deliver multiple promised services) require us to be received or the vesting period. Accounting for non-employee stock options or warrants which involve only performance conditions when no performance commitment date or performance completion date has occurred as of reporting date requires measurement at the equity instruments then-current fair value. Any subsequent changes in the market value of the underlying common stock are reflected in the expense recorded in the subsequent period in which that change occurs.(J) Income TaxesThe Company accounts for income taxes under ASC Topic 740. Under ASC Topic 740, deferred tax assets and liabilities are provided for the future tax effects attributableperform integration activities where we bear risk with respect to temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases, and for the expected future tax benefits from items including tax loss carry forwards.Deferred tax assets and liabilities are measured using enacted tax rates expectedintegration activities. Therefore, we must apply judgment to apply to taxable income in the years in which those temporary differences are expected to be recovered or reversed. Under ASC Topic 740, the expense or benefit related to adjusting deferred tax assets and liabilitiesdetermine whether as a result of a change in tax rates is recognized in income or loss inthose integration activities and risks, the period that includes the enactment date.(K) Comprehensive Income (Loss)The Company follows ASC Topic 220 for the reporting and display of its comprehensive income (loss) and related components in the financial statements and thereby reports a measure of all changes in equity of an enterprise that results from transactions and economic events other than transactions with the shareholders. Items of comprehensive income (loss)promised services are reported in the unaudited condensed consolidated statements of operations and comprehensive loss.Accumulated other comprehensive income as presenteddistinct on the condensed consolidated balance sheets consistedcontext of the accumulative foreign currency translation adjustment at period end.(L) Earnings (Loss) Per Common ShareBasic earnings (loss) per common share are computedcontract.accordance with ASC Topic 260 by dividing the net income (loss) attributablea material right. If options to holders of common stock by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares including the dilutive effect of common share equivalents then outstanding.The diluted net loss per share is the same as the basic net loss per share for the nine months ended September 30, 2017 and 2016, as all potential ordinary shares including stockpurchase additional services or options and warrants are anti-dilutive and are therefore excluded from the computation of diluted net loss per share. (M) Foreign Currency TranslationThe assets and liabilities of the Company’s subsidiaries and variable interest entity denominated in currencies other than U.S. dollars are translated into U.S. dollars using the applicable exchange rates at the balance sheet date. For unaudited condensed consolidated statements of operations’ items, amounts denominated in currencies other than U.S. dollars were translated into U.S. dollars using the average exchange rate during the period. Equity accounts were translated at their historical exchange rates. Net gains and losses resulting from translation of foreign currency financial statementsto renew are included in customer contracts, we evaluate the statements of stockholders’ equityoption in order to determine if our arrangement include promises that may represent a material right and needs to be accounted for as accumulated other comprehensive income (loss). Foreign currency transaction gains and losses are reflecteda performance obligation in the unaudited condensed consolidated statementscontract with the customer.operations.both fixed and variable amounts. To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. When determining if variable consideration should be constrained, management considers whether there are factors outside our control that could result in a significant reversal of revenue. In making these assessments, we consider the likelihood and magnitude of a potential reversal of revenue. These estimates are re-assessed each reporting period as required.9 (N) Fair ValueFinancial InstrumentsASC Topic 820 defines fair value asthe transaction price to each performance obligation based on a relative standalone selling price (SSP) basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct good or service that forms part of a single performance obligation. For most performance obligations, we determine standalone selling price based on the price that would be received fromat which the performance obligation is sold separately. Although uncommon, if the standalone selling an asset or paid to transfer a liability in an orderly transaction betweenprice is not observable through past transactions, we estimate the standalone selling price taking into account available information such as market participants at the measurement date. When determining the fair value measurements for assetsconditions and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use wheninternally approved pricing the asset or liability.ASC Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significantguidelines related to the fair value measurement. ASC Topic 820 establishes three levelsperformance obligations.inputs that may be useda promised good or service to measure fair value:Level 1 - Level 1 appliesa customer.assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.Level 2 - Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observablegenerate revenue from operations for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.Level 3 - Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.The carrying value of the Company’s financial instruments, which consist of cashperiods ended March 31, 2021 and cash equivalents, prepaid expenses and other current assets, accounts payable, accrued expenses and other payables, and convertible promissory notes approximates fair value due to the short-term maturities. (O) Recent2020.January 2016,December 2019, the FASB issued ASU 2016-01 "Recognition and Measurement of Financial Assets and Financial Liabilities" to enhance2019-12, Income Taxes (Topic 740): Simplifying the reporting modelAccounting for financial instruments to provide users of financial statements with more decision-useful information. Income Taxes (“ASU 2016-01 particularly relates2019-12”), which eliminates certain exceptions to the fair value and impairment of equity investments, financial instruments measured at amortized cost,existing guidance for income taxes related to the approach for intra-period tax allocations, the methodology for calculating income taxes in an interim period and the userecognition of deferred tax liabilities for outside basis differences. This ASU also simplifies the exit price notion when measuringaccounting for income taxes by clarifying and amending existing guidance related to the fair valueeffects of financial instruments for disclosure purposes.enacted changes in tax laws or rates in the effective tax rate computation, the recognition of franchise tax and the evaluation of a step-up in the tax basis of goodwill, among other clarifications. ASU 2016-01 is effective for fiscal years and interim periods beginning after December 15, 2017. Early adoption is only permitted for certain particular amendments within ASU 2016-01, where financial statements have2019-12, which the Company adopted during the first quarter of 2021, did not yet been issued. The adoption of this guidance is not expected to have a material impacteffect on the Company’s consolidated financial statements.February 2016,January 2020, the FASB issued ASU 2016-02 "Leases"2020-01, “Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815),” an amendment clarifying the interaction between accounting standards related to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 creates a new Accounting Standards Codification Topic 842 "Leases" to replace the previous Topic 840 "Leases." ASU 2016-02 affects both lessees and lessors, although for the latter the provisions are similar to the previous model, but updated to align with certain changes to the lessee model and also the new revenue recognition provisions contained in ASU 2014-09 (see above). ASU 2016-02 is effective for fiscal years and interim periods beginning after December 15, 2018. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.In June 2016, the FASB issued ASU 2016-13 "Financial Instruments - Credit Losses" to introduce new guidance for the accounting for credit losses on instruments within its scope. ASU 2016-13 requires among other things, the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU 2016-13 amends the accounting for credit losses on available-for-sale debtequity securities, and purchased financial assets with credit deterioration. ASU 2016-13 is effective for fiscal years and interim periods beginning after December 15, 2019. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.In August 2016, the FASB issued ASU 2016-15 "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments", to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. It addresses the following eight specific cash flow issues: debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (COLIs) (including bank-owned life insurance policies (BOLIs)); distributions received from equity method investees; beneficial interests in securitization transactions;investments, and separately identifiable cash flows and application of the predominance principle.certain derivative instruments. The amendments areguidance is effective for fiscal years beginning after December 15, 2017,2020. ASU 2020-01 will become effective for the Company in fiscal 2022. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.those fiscal years with early adoption permitted.annual periods beginning after December 15, 2022. Early application of the amendments is permitted for and varies based on the entity. The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable to applyretrospectively and at the amendments retrospectively for somebeginning of the issues,period that includes the amendments for those issues would be applied prospectively as of the earliest date practicable. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.In January 2017, the FASB issued ASU 2017-01 "Business Combinations (Topic 805): Clarifying the Definition of a Business”, to clarify the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments are intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments of this ASU are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.In May 2017, the FASB issued ASU 2017-09 “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting”, to provide guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. The amendments are effective for fiscal years and interim periods beginning after December 15, 2017. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.In July 2017, the FASB issued ASU 2017-11 “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception”, to simplify the accounting for certain financial instruments with down round features. The amendments require companies to disregard the down round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification. Companies that provide earnings per share (EPS) data will adjust their basic EPS calculation for the effect of the feature when triggered (i.e., when the exercise price of the related equity-linked financial instrument is adjusted downward because of the down round feature) and will also recognize the effect of the trigger within equity. The amendments also address navigational concerns within the FASB Accounting Standards Codification® related to an indefinite deferral available to private companies with mandatorily redeemable financial instruments and certain noncontrolling interests, one that created significant “pending content” in the Codification. The FASB decided to reclassify the indefinite deferral as a scope exception, which does not have an accounting effect. The amendments are effective for fiscal years and interim periods beginning after December 15, 2018. Early adoption is permitted.date. The Company is currently assessingevaluating the impact of ASU 2017-11the new guidance on its consolidated financial position, results of operations and cash flows.10 NOTE 4.3.SUBSIDIARIES AND VARIABLE INTEREST ENTITIES September 30, 2017March 31, 2021 and December 31, 2020 were as follows:Name Principal activities NCN Group Limited BVI 100% Investment holding NCN Media Services Limited BVI 100% Investment holding Cityhorizon Limited Hong Kong 100% Investment holding NCN Group Management Limited Hong Kong 100% Provision of administrative and management services Crown Eagle Investment Limited Hong Kong 100% Dormant Crown Winner International Limited Hong Kong 100% Investment holding NCN Huamin Management Consultancy (Beijing)
Company Limited *PRC 100% Dormant Huizhong Lianhe Media Technology Co., Ltd. * PRC 100% Dormant Beijing Huizhong Bona Media Advertising Co.,
Ltd.*PRC 100% (1) Dormant Xingpin Shanghai Advertising Limited PRC 100% (1) Dormant Chuanghua Shanghai Advertising Limited PRC 100% Dormant Jiahe Shanghai Advertising Limited PRC 100% DormantNCN Group (HK) LimitedPRC0% (2)Dormant Business Boom Investments LimitedPRC0% (2)Investment holding1) of commercial arrangements.2)During the period ended September 30, 2017, the Company’s subsidiary, NCN Media Services Limited, disposed of its entire 100% equity interests of NCN Group (HK) Limited and Business Boom Investments Limited which was dormant, to an individual at $1 consideration. Accordingly, the Company recorded a gain from disposal of subsidiaries of $25 for the period ended September 30, 2017.NOTE 5.4.PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET September 30, 2017March 31, 2021 and December 31, 20162020 were as follows: Prepaid expenses $ 102,549 $ 101,627 Other deposits 202 202 Total $ 102,751 $ 101,829 Prepaid expenses $ 100,000 $ 100,000 Less: allowance for doubtful debts - - Total $ 100,000 $ 100,000 NOTE 6.5.ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER PAYABLES September 30, 2017March 31, 2021 and December 31, 20162020 were as follows: Accrued staff benefit and related fees $ 1,796,863 $ 1,749,401 Accrued professional fees 43,367 47,266 Accrued interest expenses 2,500,826 2,370,872 Other accrued expenses 44,883 41,461 Other payables 71,415 52,650 Total $ 4,457,354 $ 4,261,650 11 Accrued staff benefit and related fees $ 1,618,286 $ 1,461,237 Accrued professional fees 141,600 166,382 Accrued interest expenses 1,798,063 1,391,699 Other accrued expenses 94,410 89,652 Short-term loans 1) 2,784,608 2,656,852 Other payables 9,831 9,831 Total $ 6,446,798 $ 5,775,653 1) NOTE 6. SHORT-TERM LOANS September 30, 2017,March 31, 2021 and December 31, 2020, the Company recorded an aggregated amount of $2,784,608$2,973,211 of short-term loans. Those loans were borrowed from an unrelated individual. Thoseindividuals. Except for loan of $128,205 that are unsecured, bearing yearly interest of 1% and are repayable on demand, the remaining loans are unsecured, bear a monthly interest of 1.5% and shall beare repayable in one month.on demand. However, according to the agreement, the Company shall have the option to shorten or extend the life of those short-term loans if the need arises and the Company has agreed with the lender to extend the short-term loans on the due date. As of the date of this report, those loans have not yet been repaid.September 30, 2017March 31, 2021 and 20162020 were $124,473 $128,346 and $116,798, while for the nine months ended September 30, 2017 and 2016 amounted to $368,553 and $344,502,$129,197, respectively.NOTE 7. CONVERTIBLE PROMISSORY NOTES AND WARRANTS (1) Debt Restructuring and Issuance of 1% Convertible Promissory NotesOn November 19, 2007, the Company entered into a Note and Warrant Purchase Agreement, as amended (the “Purchase Agreement”) with Shanghai Quo Advertising Co. Ltd and affiliated investment funds of Och-Ziff Capital Management Group (the “Investors”) pursuant to which it agreed to issue in three tranches, 3% Senior Secured Convertible Promissory Notes due June 30, 2011, in the aggregate principal amount of up to $50,000,000 (the “3% Convertible Promissory Notes”) and warrants to acquire an aggregate amount of 457,143 shares of the Company’s Common Stock (the “Warrants”). Between November 19 - 28, 2007, the Company issued 3% Convertible Promissory Notes in the aggregate principal amount of $15,000,000, Warrants to purchase shares of the Company’s common stock at $187.5 per share and Warrants to purchase shares of the Company’s common stock at $262.5 per share. On January 31, 2008, the Company amended and restated the previously issued 3% Convertible Promissory Notes and issued to the Investors 3% Convertible Promissory Notes in the aggregate principal amount of $50,000,000 (the “Amended and Restated Notes”), Warrants to purchase shares of the Company’s common stock at $187.5 per share and Warrants to purchase shares of the Company’s common stock at $262.5 per share. In connection with the Amended and Restated Notes, the Company entered into a Security Agreement, dated as of January 31, 2008 (the “Security Agreement”), pursuant to which the Company granted to the collateral agent for the benefit of the Investors, a first-priority security interest in certain of the Company’s assets, and 66% of the equity interest in the Company.On April 2, 2009, the Company entered into a new financing arrangement with the previous holders of the Amended and Restated Notes (the “Note Holders”), and Keywin.Pursuant to a note exchange and option agreement, dated April 2, 2009 (the “Note Exchange and Option Agreement”), between the Company and Keywin, Keywin exchanged its Amended and Restated Note in the principal amount of $45,000,000, and all accrued and unpaid interest thereon, for 4,093,806 shares of the Company’s common stock and an option to purchase an aggregate of 1,637,522 shares of the Company’s common stock, for an aggregate purchase price of $2,000,000 (the “Keywin Option”). The Keywin Option was originally exercisable for a three-month period which commenced on April 2, 2009, but pursuant to several subsequent amendments, the exercise period has been extended to a one hundred and five-months period ending on January 1, 2018 and the exercise price changed to $0.99, subject to the Company’s right to unilaterally terminate the exercise period upon 30 days’ written notice. As of September 30, 2017, the Keywin Option has not been exercised.Pursuant to a note exchange agreement, dated April 2, 2009, among the Company and the Note Holders, the parties agreed to cancel their Amended and Restated Notes in the principal amount of $5,000,000 (including all accrued and unpaid interest thereon), and all of the warrants, in exchange for the Company’s issuance of the 1% unsecured senior convertible promissory notes due 2012 in the principal amount of $5,000,000 (the “1% Convertible Promissory Notes”). The 1% Convertible Promissory Notes bear interest at 1% per annum, are payable semi-annually in arrears, mature on April 1, 2012, and are convertible at any time by the holder into shares of the Company’s common stock at an initial conversion price of $1.7445 per share, subject to customary anti-dilution adjustments. In addition, in the event of a default, the holders will have the right to redeem the 1% Convertible Promissory Notes at 110% of the principal amount, plus any accrued and unpaid interest. The parties also agreed to terminate the Security Agreement and release all security interests arising out of the Purchase Agreement and the Amended and Restated Notes.2) Extension of 1% Convertible Promissory Notes and 2012The2020Promissory Notes matured on April 1, 2012Note Agreement from the Company for an agreement purchase price of six hundred and onforty-five thousand US Dollars ($645,000). On the same date, the Company signed the 1% Senior Unsecured Convertible Note Agreement under which the Company may sell and the Note Holders agreedissue to the following: (1) extensionSubscriber up to an aggregate maximum amount of the maturity date$645,000 in principal amount of the 1%Convertible Notes prior to January 13, 2025. The Convertible Promissory Notes for a period of two years and (2) modification ofissued to the 1% Convertible Promissory Notes to beInvestor are convertible at any timethe holder’s option into shares of the Company’sCompany common stock at a conversion price of $1.3956$1.00 per share, subject to customary anti-dilution adjustments. In all other respects not specifically mentioned, the terms of the 1% Convertible Promissory Notes shall remain the same and shall be fully enforceable in accordance with its terms. Subsequently, the Company issued new 1% convertible promissory notes (the “New 1% Convertible Promissory Notes”) to the Note Holders. The New 1% Convertible Promissory Notes bear interest at 1% per annum, are payable semi-annually in arrears, mature on April 1, 2014, and are convertible at any time by the Note Holders into shares of the Company’s common stock at an initial conversion price of $1.3956 per share, subject to customary anti-dilution adjustments. In addition, in the event of a default, the Note Holders will have the right to redeem the New 1% Convertible Promissory Notes at 110% of the principal amount, plus any accrued and unpaid interest.Gain on extinguishment of debtPursuant to ASC Topic 470-20-40-3, the Company allocated the amount of the reacquisition price to the repurchased beneficial conversion feature using the intrinsic value of that conversion feature at the extinguishment date and the residual amount was allocated to the convertible security. Thus, the Company recognized a gain on extinguishment of debt of $1,877,594 at the date of extinguishment and included in the statements of operations for the year ended December 31, 2012.3) Extension of 1% Convertible Promissory Notes and Issuance of New 1% Convertible Promissory Notes in 2014The 1% Convertible Promissory Notes matured on April 1, 2014 and on March 12, 2014, the Company and the respective holders agreed to extend the maturity date of the 1% Convertible Promissory Notes for a period of two years until April 1, 2016. In all other respects not specifically mentioned, the terms of the 1% Convertible Promissory Notes shall remain the same and shall be fully enforceable in accordance with its terms.Pursuant to ASC Topic 470-50 and ASC Topic 470-50-40, the Company determined that the original convertible notes and the modified convertible notes had substantially different terms and hence the fair value of the embedded beneficial conversion feature of the modified convertible notes, which would be recognized and measured by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital and any debt discount will be amortized over the term of the modified convertible notes from the effective date of the new agreement using the effective interest method. As of April 1, 2014, the Company determined the fair value of the embedded beneficial conversion feature of the modified convertible notes is $nil.No gain or loss on extinguishment of debtPursuant to ASC Topic 470-20-40-3, the Company allocated the amount of the reacquisition price to the repurchased beneficial conversion feature using the intrinsic value of that conversion feature at the extinguishment date and the residual amount was allocated to the convertible security. Thus, the Company recognized no gain or loss on extinguishment of debt at the date of extinguishment for the year ended December 31, 2014.4)No extension of 1% Convertible Promissory Notes at the maturity date on April 1, 2016On April 29, 2016, the Company received a reservation of rights letter from the note holders to reserves all of its powers, rights and privileges.September 30, 2017March 31, 2021 and December 31, 20162020 were as follows: Gross carrying value $ 5,000,000 $ 5,000,000
feature - - Add: Accumulated amortization of debt discount - - 5,000,000 5,000,000 Less: Current portion - - Non-current portion $ 5,000,000 $ 5,000,000 Gross carrying value $ 645,000 $ 645,000 Less: Allocated intrinsic value of beneficial conversion
feature - - Add: Accumulated amortization of debt discount - - $ 645,000 $ 645,000 Current portion $ - $ - Non-current portion 645,000 645,000 $ 645,000 $ 645,000 September 30, 2017March 31, 2021 and 20162020 were $12,603$1,607 and $12,603, respectively, while for the nine months ended September 30, 2017 and 2016 amounted to $37,397 and $37,397,$13,706, respectively.NOTE 8. COMMITMENTS AND CONTINGENCIES September 30, 2017March 31, 2021 and December 31, 2016,2020, the Company’s management is of the opinion that there are no commitments and contingencies to account for.NOTE 9. STOCKHOLDERS’ DEFICIT (A) Stock, Options and Warrants Issued for ServicesIn August 2015,Boardterms of Directors granted an aggregatethe outstanding promissory notes issued January 14, 2020 contain restrictions on the payment of 53,332 sharesdividends. The dividend restrictions provide that the Company or any of common stock toits subsidiaries shall not declare or pay dividends or other distributions in respect of the directorsequity securities of such entity other than dividends or distributions of cash which amounts during any 12-month period that exceed ten percent (10%) of the consolidated net income of the Company for their services rendered during the year from July 1, 2015 to June 30, 2016. Each director was granted shares ofbased on the Company’s common stock subject to a vesting period of twelve monthsmost recent audited consolidated financial statements disclosed in the following amounts: Earnest Leung, 13,333 shares; Wong Wing Kong, 13,333 shares; Frederick Wong, 13,333 sharesCompany’s annual report on Form 10-K (or equivalent form) filed with the U.S. Securities and Shirley Cheng, 13,333 shares. In connection with these stock grants and in accordance with ASC Topic 718, the Company recognized $nil of non-cash stock-based compensation included in general and administrative expenses on the unaudited condensed consolidated statements of operation for the three months ended September 30, 2017 and 2016, while during the nine months ended September 30, 2017 and 2016 such amounts were $nil and $20,000, respectively.Exchange Commission.12 NOTE 10. RELATED PARTY TRANSACTIONS ninethree months ended September 30, 2017March 31, 2021 and 2016,2020, the Company did not enter into any material transactions or series of transactions that would be considered material in which any officer, director or beneficial owner of 5% or more of any class of the Company’s capital stock, or any immediate family member of any of the preceding persons, had a direct or indirect material interest.periodprice was extended at various times from September 1, 2010 to December 31, 2015,2017 and the Keywin Option was further extended to a hundred and twenty-nine-month period ending on January 1, 2020 and the exercise price changed to $0.99. On December 31, 2019, the latest exercise period for the Keywin Option was further extended to a one hundred and five-monthsfifty-three-month period ending on January 1, 2018 and the exercise price changed to $0.99.NOTE 11. GAIN FROM WRITE-OFF OF LONG-AGED PAYABLES NOTE 12. NET LOSS(LOSS)/PROFIT PER COMMON SHAREloss(loss)/profit per common share information for the three and nine months ended September 30, 2017March 31, 2021 and 20162020 was as follows: Three Months Ended Nine Months Ended
2017
2016
2017
2016 Numerator:
common stockholders $ (226,656 ) (230,423 ) $ (669,316 ) (706,654 )
shares outstanding, basic 8,041,995 8,041,995 Effect of dilutive securities - - - - Options and warrants - - - -
shares outstanding, diluted 8,041,995 8,041,995
basic and diluted+ $ (0.0282 ) (0.0287 ) $ (0.083 ) (0.088 ) Three Months Ended March 31,
2021 March 31,
2020 Numerator: Net (loss)/profit attributable to NCN common stockholders $ (195,633 ) $ 166,665 Denominator: Weighted average number of shares outstanding, basic 8,774,263 8,774,263 Effect of dilutive securities - - Options and warrants - - Weighted average number of shares outstanding, diluted 8,774,263 8,774,263 Net (loss)/profit per common share – basic and diluted $ (0.02 ) $ 0.02 loss(loss)/profit per common share is the same as the basic net loss(loss)/profit per common share for the three and nine months ended September 30, 2017March 31, 2021 and 20162020 as all potential common shares including stock options and warrants are anti-dilutive and are therefore excluded from the computation of diluted net loss(loss)/profit per common share. TheThere were no securities that could potentially dilute basic net loss(loss)/profit per common share in the future that were not included in the computation of diluted net loss(loss)/profit per common share because of anti-dilutive effect as of September 30, 2017for the three months ended March 31, 2021 and 20162020.13 NOTE 13. INCOME TAXES Three Months Ended March 31, 2021 2020 (Consolidated and
unaudited) United States $ (23,631 ) $ 39,637 Foreign (172,002 ) 127,028 $ (195,633 ) $ 166,665 2024 to 2028 $ 2,279,147 2029 to 2033 892,375 2034 to 2037 217,937 Indefinitely 59,100 $ 3,448,559 Three Months EndedNine Months Ended September 30,2017September 30,2016September 30,2017September 30,2016Potential common equivalent shares:Stock warrants for services*----Conversion feature associated withconvertible promissory notes to commonstock----Common stock to be granted toconsultants for services (including non-vested shares)*----Stock options granted to Keywin----Total----14 March 31, December 31, 2021 2020 Deferred tax liabilities $ - $ - Deferred tax assets: Effect of net operating loss carried forward 3,448,559 3,443,596 Less: valuation allowance (3,448,559 ) (3,443,596 ) Net deferred tax assets $ - $ - March 31, December 31, 2021 2020 At the beginning of the period/year $ 3,443,596 $ 4,549,144 Additions/(Deductions) 4,963 (1,105,548 ) At the end of the period/year $ 3,448,559 $ 3,443,596 15 Remarks: * As of September 30, 2017 and September 30, 2016, the number of potential common equivalent shares associated with warrants issued for services was nil, which was related to a warrant to purchase 1,333 shares of common stock issued by the Company to a consultant in 2006 for service rendered at an exercise price of $52.5, which was expired in August 2016.20162020 and subsequent SEC filings.in Part 2, Item 1A of this Form 10-Q. The Company assumes no obligation and does not intend to update any forward-looking statements, except as required by law.16 l “BVI” are references to the British Virgin Islands; l “China” and “PRC” are to the People’s Republic of China; l the “Company”, “NCN”, “we”, “us”, or “our”, are references to Network CN Inc., a Delaware corporation and its direct and indirect subsidiaries: NCN Group Limited, or NCN Group, a BVI limited company; NCN Media Services Limited, a BVI limited company; NCN Group Management Limited, or NCN Group Management, a Hong Kong limited company; Crown Winner International Limited, or Crown Winner, a Hong Kong Limited company, and its subsidiary, and its variable interest entity, Xingpin Shanghai Advertising Limited; Crown Eagle Investments Limited, a Hong Kong limited company;; Cityhorizon Limited, or Cityhorizon Hong Kong, a Hong Kong limited company, and its subsidiary, Huizhong Lianhe Media Technology Co., Ltd., or Lianhe, a PRC limited company; Chuanghua Shanghai advertising Limited, a PRC limited company; NCN Huamin Management Consultancy (Beijing) Company Limited, or NCN Huamin, a PRC limited company; and the Company’s variable interest entity, Beijing Huizhong Bona Media Advertising Co., Ltd., or Bona, a PRC limited company; l “NCN Management Services” are references to NCN Management Services Limited, a BVI limited company; l “RMB” are to the Renminbi, the legal currency of China; l the “Securities Act” are to the Securities Act of 1933, as amended; and the “Exchange Act” are to the Securities Exchange Act of 1934, as amended; and l “U.S. dollar”, “$” and “US$” are to the legal currency of the United States. 2016.IdentificationPotential ProjectsWe have extended our business directionConvertible Promissory Notenot just selling air-timepurchase the 1% Senior Unsecured Convertible Note Agreement from the Company for its media panels but started working closely with property developersan agreement purchase price of six hundred and forty-five thousand US Dollars ($645,000). On the same date, the Company signed the 1% Senior Unsecured Convertible Note Agreement under which the Company may sell and issue to the Subscriber up to an aggregate maximum amount of $645,000 in media planning forprincipal amount of Convertible Notes prior to January 13, 2025. The Convertible Promissory Notes issued to the propertyInvestor are convertible at the very early stage. By doing so, we are able to attract several property developers to grant us media rights withinholder’s option into shares of Company common stock at $1.00 per share.17 whole property. TheseCompany entered into a Letter of Intent with Earthasia Worldwide Holdings Limited (“EWHL”) that the Company will include exhibitionacquire 100% of the EWHL’s issued and conference centres, shopping malls, etc. This new business model will create a closer working relationship betweenoutstanding stock owned by the property ownersshareholders of the EWHL and the EWHL will become a wholly owned subsidiary of the Company.asentered into Share Exchange Agreement with Ease Global Limited (“Ease Global”), the property owners welcome a more thorough and well-planned media layout in their property at an early stage. Under this approach, we believeshareholder of Trade More Global Limited (‘Trade More”) that the property owners are more eager to work with us and even more ready to invest in the installation of media panels.The Company will continually explore new media projectspurchase, One Thousand and One Hundred (1,100) currently issued shares of common stock of Trade More from Ease Global and in orderexchange for Forty-nine Million (49,000,000) shares of newly-issued shares of common stock of the Company. The closing of the Exchange shall occur on September 2, 2020 or such other date as agreed by the parties of the Share Exchange Agreement. Upon completion of the Exchange, 78% of issued shares of common stock of the Company shall be held by the Ease Global while all of the shares of capital stock of Trade More shall be held by the Company. EWHL is a wholly owned subsidiary of Trade More.provide a wider rangeincrease the total number of media and advertising services, rather than focusing primarily on LED media. The Company has identified several such potential projects which it intendsauthorized shares of Common Stock from 26,666,667 to aggressively pursue in the coming year. condensed consolidated financial statements and the notes thereto included in Part I – Financial Information, “Item 1. Financial Statement.” All amounts are expressed in U.S. dollars.September 30, 2017March 31, 2021 and September 30, 2016September 30, 2017March 31, 2021 decreased by 11%14.9% to $89,604,$65,680, as compared to $100,852$77,204 for the corresponding prior year period. The decrease in general and administrative expenses was mainly due to our continuous cost cutting measures compare to 2016.Gain from disposal of subsidiaries – Gain from disposal of subsidiaries was $25 for the three months ended September 30, 2017. DuringMarch 2021 compared to March 31, 2020 was due to decrease in salary.periodthree months ended September 30, 2017,March 31, 2020 was $386,772, compared to $nil for the Company’s subsidiary, NCN Media Services Limited, disposed of its entire 100% equity interests of NCN Group (HK) Limitedthree months ended March 31, 2021. We believe the obligation for future settlement for such long-aged payables is remote and Business Boom Investments Limited which was dormant, to an individual at $1 consideration.September 30, 2017 increasedMarch 31, 2021 decreased to $137,077,$129,953, or by 6%9%, as compared to $129,571$142,903 for the corresponding prior year period. The increasedecrease was mainly due to increase the decreased in interest to convertible note result from the abandonment of short term loan.September 30, 2017March 31, 2021 and 2016,2020, because the Company and all of its subsidiaries and variable interest entity operated at a taxable loss during the respective periods.Net Loss –The Company incurred a net loss of $226,656 for the three months ended September 30, 2017, a decrease of 1.6%, as compared to $230,423 for the corresponding prior year period. The decrease in net loss was primarily due to decrease in general and administrative expenses set off by the increase in interest expenses from short term loan.Comparison of Nine Months Ended September 30, 2017 and September 30, 2016General and Administrative Expenses– General and administrative expenses for the nine months ended September 30, 2017 decreased by 13% to $263,391, compared to $304,074 for the corresponding prior year period. The decrease in general and administrative expenses was mainly due to continuous cost cutting measures.Gain from disposal of subsidiaries – Gain from disposal of subsidiaries was $25 for the nine months ended September 30, 2017. During the period ended September 30, 2017, the Company’s subsidiary, NCN Media Services Limited, disposed of its entire 100% equity interests of NCN Group (HK) Limited and Business Boom Investments Limited which was dormant, to an individual at $1 consideration.Stock based compensation for services – Stock-based compensation for services is stock granted to directors, executive officers and employees for services rendered calculated in accordance with Accounting Standards Codification, or ASC, Topic 718. Stock-based compensation for services was $nil for the nine months ended September 30, 2017. This decreased by 100%, as compared to $20,000 for the corresponding prior year period. The decrease in the stock-based compensation was due to no more stock being granted for services rendered during the nine months ended September, 2017.Interest and Other Debt-Related Expenses– Interest expense and other debt-related expenses for the nine months ended September 30, 2017 increased to $405,950, or by 6%, compared to $382,580 for the corresponding prior year period. The increase was mainly due to increase of short term loan.Income Taxes– The Company derives all of its income in the PRC and is subject to income tax in the PRC. No income tax was recorded during the nine months ended September 30, 2017 and 2016 as the Company and all of its subsidiaries and its variable interest entities operated at a taxable loss during the respective periods.(Loss) IncomeLoss –$669,316$195,633 for the ninethree months ended September 30, 2017,March 31, 2021, as compared to a net profit of $706,654$166,665 for the corresponding prior year period. The result was driven by the decrease in net loss was primarily due to decrease in general and administrative expenses set off by the increase in interest expensesgain from short term loan.September 30, 2017,March 31, 2021, we had cash of $6,439,$6,073, as compared to $8,512$5,967 as of December 31, 2016, the decrease2020, an insignificant increase of $2,073 mainly attributable to the cash utilized by operating activities.$106.18 Nine Months Ended September 30, 2017 September 30, 2016 Net cash used in operating activities $ (126,271 ) $ (110,562 ) Net cash used in investing activities (2,632 ) - Net cash provided by financing activities 127,757 112,015 Effect of exchange rate changes on cash (927 ) (61 ) Net (decrease)/increase in cash (2,073 ) 1,392 Cash, beginning of period 8,512 6,790 Cash, end of period $ 6,439 $ 8,182 Three Months Ended March 31, 2021 March 31, 2020 Net cash provided by/(used in) operating activities $ 123 $ (644,871 ) Net cash provided by financing activities - 645,000 Effect of exchange rate changes on cash (17 ) (148 ) Net (decrease)/increase in cash 106 (19 ) Cash, beginning of period 5,967 5,510 Cash, end of period $ 6,073 $ 5,491 used inprovided by operating activities for the ninethree months ended September 30, 2017March 31, 2021 was $126,271,$123, as compared to net cash used in operating activities amounting to $110,562$644,871 for the corresponding prior year period. This was mainly attributable to increase in paymentrepayment for expensesaccrued short term loan interest during the ninethree months ended September 30, 2017.ninethree months ended September 30, 2017March 31, 2021 and 2020 was $2,632 which was related to purchase of fixed assets.$127,757 $nil for the ninethree months ended September 30, 2017,March 31, 2021, as compared to $112,015 $645,000 for the corresponding prior year period. The increasedecrease was mainly due to increase inno proceeds from short-term loans for financing our operationsconvertible promissory note during the ninethree months ended September 30, 2017.September 30, 2017,March 31, 2021, the Company recorded an aggregated amount of $2,784,608$2,973,211 short-term loans. Those loans were borrowed from an unrelated individual.individuals. Those loans with an aggregate amount of $2,845,006 are unsecured, bear a monthly interest of 1.5% and shall be repayable in one month and loan with an aggregate amount of $128,205 is unsecured, bear a yearly interest of 1% and shall be repayable in one month. However, according to the agreement, the Company shall have the option to shorten or extend the life of those short-term loans if the need arises and the Company has agreed with the lender to extend the short-term loans on the due date. Up to the date of this report, those loans have not yet been repaid.ninethree months ended September 30, 2017,March 31, 2021 and 2020, we acquired equipment amount of $2,632.September 30, 2017:March 31, 2021: Payments due by period Total Thereafter Debt Obligations (a) $ 645,000 $ - $ - $ - $ 645,000 Short Term Loan (b) 2,973,211 2,973,211 - - - 19 Payments due by period Total
2019 Thereafter Debt Obligations (a) $ 5,000,000 $ 5,000,000 $ - $ - $ - Short Term Loan (b) 2,784,608 2,784,608 - - - $5,000,000$645,000 in 1% Convertible Promissory Notes in April 2009January 2020 to our investors and such 1% Convertible Promissory Notes matured on April 1, 2016.in January 2025. For details, please refer to the Note 7 of the consolidated financial statements.agreementagreements with unrelated individuals. Those loans with an unrelated individual. Those loansaggregate amount of $2,845,006 are unsecured, bear a monthly interest of 1.5% and shall be repayable on demand or have due date in one month and loan with an aggregate amount of $128,205 is unsecured, bear a yearly interest of 1% and shall be repayable in one month. However, according to the agreement, the Company shall have the option to shorten or extend the life of those short-term loans if the need arises and the Company has agreed with the lender to extend the short-term loans on the due date. Up to the date of this report, those loans have not yet been repaid.In January 2016,FASB issued ASU 2016-01 "Recognition and Measurement of Financial Assets and Financial Liabilities" to enhance the reporting model for financial instruments to provide users ofconsolidated financial statements with more decision-useful information. ASU 2016-01 particularly relates to the fair valueunless otherwise disclosed, and impairment of equity investments, financial instruments measured at amortized cost, and the use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes. ASU 2016-01 is effective for fiscal years and interim periods beginning after December 15, 2017. Early adoption is only permitted for certain particular amendments within ASU 2016-01, where financial statementswe do not believe that there are any other new accounting pronouncements that have not yet been issued. The adoption of this guidance is not expected toissued that might have a material impact on the Company’s consolidated financial statements.In February 2016, the FASB issued ASU 2016-02 "Leases" to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 creates a new Accounting Standards Codification Topic 842 "Leases" to replace the previous Topic 840 "Leases." ASU 2016-02 affects both lessees and lessors, although for the latter the provisions are similar to the previous model, but updated to align with certain changes to the lessee model and also the new revenue recognition provisions contained in ASU 2014-09 (see above). ASU 2016-02 is effective for fiscal years and interim periods beginning after December 15, 2018. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.In June 2016, the FASB issued ASU 2016-13 "Financial Instruments - Credit Losses" to introduce new guidance for the accounting for credit losses on instruments within its scope. ASU 2016-13 requires among other things, the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 is effective for fiscal years and interim periods beginning after December 15, 2019. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.In August 2016, the FASB issued ASU 2016-15 "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments", to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. It addresses the following eight specific cash flow issues: debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (COLIs) (including bank-owned life insurance policies (BOLIs)); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years with early adoption permitted. The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.In January 2017, the FASB issued ASU 2017-01 "Business Combinations (Topic 805): Clarifying the Definition of a Business”, to clarify the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments are intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments of this ASU are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.In May 2017, the FASB issued ASU 2017-09 “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting”, to provide guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. The amendments are effective for fiscal years and interim periods beginning after December 15, 2017. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.In July 2017, the FASB issued ASU 2017-11 “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception”, to simplify the accounting for certain financial instruments with down round features. The amendments require companies to disregard the down round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification. Companies that provide earnings per share (EPS) data will adjust their basic EPS calculation for the effect of the feature when triggered (i.e., when the exercise price of the related equity-linked financial instrument is adjusted downward because of the down round feature) and will also recognize the effect of the trigger within equity. The amendments also address navigational concerns within the FASB Accounting Standards Codification® related to an indefinite deferral available to private companies with mandatorily redeemable financial instruments and certain noncontrolling interests, one that created significant “pending content” in the Codification. The FASB decided to reclassify the indefinite deferral as a scope exception, which does not have an accounting effect. The amendments are effective for fiscal years and interim periods beginning after December 15, 2018. Early adoption is permitted. The Company is currently assessing the impact of ASU 2017-11 on its consolidatedour financial position or results of operations and cash flows.September 30, 2017.March 31, 2021. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of September 30, 2017,March 31, 2021, and as of the date that the evaluation of the effectiveness of our disclosure controls and procedures was completed, our disclosure controls and procedures were effective to satisfy the objectives for which they are intended.20 Not applicable.ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. September 30, 2017March 31, 2021 which sale was not previously disclosed in a current report on Form 8-K filed during that period.None.21 ITEM 4. Exhibit No. Description 31.1 31.2 32.1 32.2 101 * Financial statements and footnotes of Network CN Inc. for the fiscal quarter ended September 30, 2017,March 31, 2021, formatted in XBRL (eXtensible Business Reporting Language) pursuant to Rule 405 of Regulation S-T (furnished herewith)22 Date: November 13, 2017May 14, 2021NETWORK CN INC. By: ) By: , Chief Financial Officer 24