ii
INTRODUCTION AND USE OF CERTAIN TERMS
ChineseWorldNet.Com Inc. is a corporation incorporated under theCompany Law (1998 revision) of the Cayman Islands on January 12, 2000. Except as the context otherwise requires, all references in this annual report (the “Report”) on Form 20-F to“we,” “us,” “our,” “CWN,” and the“Company” are to ChineseWorldNet.Com Inc. and, where applicable, our former subsidiaries, including NAI Interactive Ltd. (“NAI”), a company incorporated under the laws of British Columbia, ChineseWorldNet.com (Hong Kong) Ltd. (“CWN HK”), a company incorporated under the laws of Hong Kong, 85% owned interest in ChineseWorldNet.com (Shanghai) Ltd. (“CWN China”), a company incorporated under the laws of People’s Republic of China, and 85% owned interest in Weihai Consulting Investment Ltd. (“Weihai”), a company incorporated under the laws of People’s Republic of China.
Our financial statements are prepared in accordance with the United States generally accepted accounting principles (“US GAAP”) and are presented in United States dollars (“US dollars”). All monetary amounts contained in this Report are in US dollars unless otherwise indicated. References to “Fiscal 2018”2021” are to our fiscal year ended December 31, 2018,2021, and other fiscal years of the Company are referred to in a corresponding manner. References to “Common Shares” are to our Common Shares, par value of US$0.001 per share.
Our registered office and principal executive office is located at Appleby, Clifton House, 75 Fort Street, P.O. Box 190, Grand Cayman, Cayman Islands KY1-1104.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This Report contains forward-looking statements that reflect the management’s current expectations and assumptions with respect to the general economic and business conditions, our operation and business strategies, products, services and competition, future financial position and results, and various other factors, both referenced and not referenced in this Report. All statements made in this Report other than statements of historical fact, including, among others, statements that address operating performance, events, circumstances, or developments that the management expects or anticipates will or may occur in the future, statements related to revenue and volume growth, profitability, new sales and marketing channels, adequacy of and ability to raise additional funding for operations, and statements expressing general optimism about future operating results and non-historical information, are forward-looking statements. In particular, the words“believe,” “expect,” “intend,” “anticipate,” “estimate,” “plan,” “target,” “may,” variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements and their absence does not mean that statements are not forward-looking.
These forward-looking statements are subject to risks and uncertainties that could cause our actual financial position and results to differ materially from those expressed in, anticipated or implied by these forward-looking statements for many reasons, including the risks and statements described in more detail under “Item 3. Key Information – D. Risk Factors” and“Item 5.Operating and Financial Review and Prospects” included elsewhere in this Report. We do not undertake any obligation to revise or update these forward-looking statements to reflect new information, future events or circumstances unless required by applicable legislation or regulation. These forward-looking statements contained in this Report are expressly qualified by this cautionary statement.
PART I
ITEM 1.IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
This Report on Form 20-F is being filed as an annual report under the Securities Exchange Act of 1934 (the “Exchange Act”) and, as such, there is no requirement to provide any information under this item.
ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLE
This Report on Form 20-F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
ITEM 3.KEY INFORMATION
| A. | Selected Financial Data |
The following table sets forth selected financial information from our financial statements prepared in accordance with US GAAP for our two most recently completed fiscal periods consisting of the years ended December 31, 2018, 20172021, 2020 and 2016.2019. The information have been extracted from our audited consolidated financial statements and the related notes included herein and should be read in conjunction with such in “Item 5 – Operating and Financial Review and Prospects”.
| Year Ended December 31 | |||||||||||||||||||||
| 2018 | 2017 | 2016 | |||||||||||||||||||
| | | | | | | | | | ||||||||||||
| | Year Ended December 31 | |||||||||||||||||||
|
| 2021 |
| 2020 |
| 2019 | |||||||||||||||
| Statements of Operations: |
| |
|
| |
|
| |
| ||||||||||||
| Net loss for the year | (5,603 | ) | (231,953 | ) | (37,706 | ) | |||||||||||||||
| Loss per share – basic | (0.00 | ) | (0.02 | ) | (0.00 | ) | |||||||||||||||
| Loss per share – diluted | (0.00 | ) | (0.02 | ) | (0.00 | ) | |||||||||||||||
Net income (loss) for the year |
| | (40,955) |
| | (45,570) |
| | 34,894 | ||||||||||||
Income (loss) per share – basic |
| | 0.00 |
| | 0.00 |
| | 0.00 | ||||||||||||
Income (loss) per share – diluted |
| | 0.00 |
| | 0.00 |
| | 0.00 | ||||||||||||
| Weighted average common shares outstanding – basic | 10,950,000 | 10,950,000 | 10,950,000 |
| | 10,950,000 |
| | 10,950,000 |
| | 10,950,000 | |||||||||
| Weighted average common shares outstanding – diluted | 10,950,000 | 10,950,000 | 10,950,000 |
| | 10,950,000 |
| | 10,950,000 |
| | 10,950,000 | |||||||||
| | | | | | | | | | ||||||||||||
| Balance Sheets: |
| |
|
| |
|
| |
| ||||||||||||
| Total assets | $ | 403,093 | $ | 409,045 | $ | 646,373 | | $ | 526,352 | | $ | 504,071 | | $ | 491,921 | ||||||
| Total current liabilities | 49,563 | 49,912 | 55,287 | |
| 224,453 | |
| 161,217 | |
| 103,497 | |||||||||
| Total stockholders’ equity | 353,530 | 359,133 | 591,086 | |
| 301,899 | |
| 342,854 | |
| 388,424 | |||||||||
No dividends have been declared or paid in Fiscal 2018,2021, Fiscal 2017,2020, and Fiscal 2016.2019.
| B. | Capitalization and Indebtedness |
This Report on Form 20-F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
| C. | Reasons for the Offer and Use of Proceeds |
This Report on Form 20-F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
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| D. | Risk Factors |
The following discussion in this Report on Form 20-F contains forward-looking statements regarding our business, prospects and results of operations that involve risks and uncertainties. Our actual results may differ materially from the results that may be anticipated by such forward-looking statements and discussed elsewhere in this Report. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below, as well as those discussed under the heading “Item 4– Information on the Company” and “Item 5– Operating and Financial Review and Prospects” and those discussed elsewhere in this Report. In evaluating our business, prospects and results of operations, readers should carefully consider the following factors in addition to other information presented in this Report and in our other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect our business, prospects and results of operations. See “Cautionary Notice Regarding Forward Looking Statements” above.
Trading of our common shares may be restricted by the Securities and Exchange Commission’s penny stock regulations which may limit a shareholder’s ability to buy and sell our common shares
The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our common shares are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the Securities and Exchange Commission which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common shares.
Our shareholders may face difficulties in protecting their interests because we are incorporated under Cayman Islands law.
Our corporate affairs are governed by our memorandum and articles of association, by theCompany Law (1998 Revision) and the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by minority shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands.
Under the common law of the Cayman Islands, the fiduciary relationship of a director is to the Company and a director, therefore, does not usually owe a fiduciary duty to individual shareholders. As a result, it may be difficult for a shareholder to take action against the directors for breach of fiduciary duty.
The common law in the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands and from English common law, the decisions of whose courts are of persuasive authority but are not binding on a court in the Cayman Islands. Cayman Islands law in this area may conflict with jurisdictions in the United States and/or other jurisdictions. As a result, our public shareholders may face more difficulties in protecting their interests in the face of actions against the management, directors or our controlling shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.
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There is uncertainty as to our shareholders’ ability to enforce civil liabilities in the Cayman Islands.
We are a Cayman Islands company and have no assets located in the United States. All of our directors and officers are nationals and/or residents of countries other than the United States. All or a substantial portion of the assets of these persons are located outside the United States. As a result, it may be difficult to effect service of process within the United States upon these persons. In addition, there is uncertainty as to whether the courts of the Cayman Islands and other jurisdictions would recognize or enforce judgments of United States courts obtained against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state thereof, or be competent to hear original actions brought in the Cayman Islands or other jurisdictions against us or such persons predicated upon the securities laws of the United States or any of our state.
ITEM 4.INFORMATION ON THE COMPANY |
| A. | History and Development of the Company |
ChineseWorldNet.Com Inc. was incorporated on January 12, 2000 under theCompany Law (1998 revision) of the Cayman Islands. The address of our registered and principle executive office is that of our agent, Appleby, being: Clifton House, 75 Fort Street, P.O. Box 190, Grand Cayman, Cayman Islands KY1-1104, telephone number is (345) 949-4900.
In August 2009, we incorporated CWN Capital Inc. (“CWN Capital ”)”) under the BVI Business Companies Act, with a registered address at Morgan & Morgan Building, Pasea Estate, Road Town, Tortola, British Virgin Islands, focusing on capital markets businesses. CWN Capital provided a vehicle for expanding the scope of our businesses into the capital markets. On October 1, 2010, CWN Capital completed a non-brokered private placement and issued 25,000 of its common shares at a subscription price of $0.01 per share to Silver Lake Investment Partners, Ltd., resulted in CWN diluted down to a 50% ownership in CWN Capital. On December 18, 2010, CWN Capital completed another non-brokered private placement and issued 55,000 of its common shares at a subscription price of $1.00 per share to Goldpac Investments Partners Ltd., resulted in CWN a diluted down to 23.8% ownership in CWN Capital. As a result, we deconsolidated CWN Capital on December 18, 2010 and recorded our interest in CWN Capital as an equity interest. Silver Lake Investment Partners, Ltd. and Goldpac Investments Partners Ltd. were companies controlled by two directors of our company.
On September 8, 2009, CWN China funded and incorporated Weihai as a local entity for the purpose of carrying out certain business operations in the Greater China. Weihai has the same address as CWN China. Through CWN China, we had a 85% controlling interest in Weihai.
On February 1, 2008, CWN HK and Shanghai Compass Venture Capital Investment Company Limited (“Shanghai Compass”) signed an Agreement to Establish CWN China Co., Ltd., a Chinese-Foreign Joint Venture Limited Liability Company. In April 2008, the two parties incorporated CWN China with CWN HK having a 70% controlling interest in CWN China. In March 2011, we completed substantially all of the regulatory procedures and processes with Shanghai Compass, the other shareholder of CWN China and invested further 5,000,000 Renminbi to CWN China. CWN HK is required to contribute the additional registered capital of 5,000,000 Renminbi by paying cash within two years from August 19, 2011. During the year ended December 31, 2011, CWN HK paid cash of $400,000 which result of our financial interest increased from 70% to 80%. During the year ended December 31, 2012, CWN HK further paid cash of $200,000 which resulted in our financial interest increasing from 80% to 83.67%. During the fiscal year 2013, CWN HK further invested an amount of $187,200 to CWN China and the Company’s effective ownership of equity interest increased from 83.67% to 85% in CWN China. During Fiscal 2016,2019, Fiscal 20172020 and Fiscal 2018,2021, we made no purchases of property and equipment. There are currently no major capital projects or divestitures in progress.
SALE OF SUBSIDIARIES
On April 28, 2014, the Company completed the sale of all shares that the Company owned in the capital of its subsidiaries to Ningbo International Limited (the“Purchaser”) in exchange for a cash payment of CDN$263,969 and a non-interest bearing promissory note in the principal amount of CDN$831,031 with a maturity date of one year with the option to extend upon mutual agreement (the“Transaction”), pursuant to a share purchase agreement dated March 19, 2014 (the“Share Purchase Agreement”). The Transaction amounted to the sale of substantially all of the assets of the Company.
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Pursuant to the Share Purchase Agreement, the Company sold its right, title and interest in and to all shares that the Company owned in the capital of its subsidiaries as follows:
| 1. | 100 shares in the capital of NAI Interactive Ltd. (“NAI”), which shares represent all of the issued and outstanding shares in the capital of NAI; |
| 2. | 990 shares in the capital of ChineseWorldNet.com (Hong Kong) Ltd. (“CWN HK”) and 10 shares in the capital of CWN HK owned by Chi Cheong Liu, a director and major shareholder of the Company, on the Company’s behalf, which shares, together, represent all of the issued and outstanding shares in the capital of CWN HK; and |
| 3. | 25,000 shares in the capital of CWN Capital Inc. (“CWN Capital”), which shares represent 23.8% of the issued and outstanding shares in the capital of CWN Capital. |
The shareholders of the Company approved the Share Purchase Agreement at the extraordinary general meeting of the shareholders of the Company held on April 18, 2014.
CHANGE OF DIRECTORS AND OFFICERS
In connection with the closing of the Share Purchase Agreement, on April 28, 2014, Chi Cheong Liu was appointed as President, Chief Executive Officer, Chief Financial Officer and Secretary of the Company and Fong Szeto was appointed as a director.
| B. | Business Overview |
Prior to April 28, 2014, we had four principal businesses operated by NAI, CWN HK and CWN China: (1) the financial web portal (“Portal”) business, conducted under the ChineseWorldNet.com brand via the “www.chineseworldnet.com” website; (2) the investor relations and public relations (“IR/PR”) business, conducted under the NAI500 brand via a number of media channels including the “www.nai500.com” and “en.nai500.com” websites, as well as certain other promotional services; (3) the North America and Greater China cross-border business partnering conferences (“Conference”) business, conducted via the brand of Global Chinese Financial Forum and its “www.gcff.ca” website; and (4) the financial content and information distribution business.
As of April 28, 2014, we had no principal businesses. The Company is currently seeking opportunities to acquire or invest in other business opportunities.
CORPORATE STRATEGY AND STRATEGIC BUSINESS PLAN
As at December 31, 2018,2021, ChineseWorldNet.com Inc. does not have any operating businesses. The Company is now looking for opportunities to acquire or invest in other business opportunities.
| C. | Organizational Structure |
ChineseWorldNet.Com Inc. (“CWN”) was incorporated under theCompany Law (1998 revision) of the Cayman Islands on January 12, 2000. Our registered and principal executive office is located at Appleby, Clifton House, 75 Fort Street, P.O. Box 190, Grand Cayman, Cayman Islands KY1-1104.
As a result of the sale of its subsidiaries to Ningbo International Limited on April 28, 2014, CWN has no subsidiaries.
| D. | Property, Plants and Equipment |
We do not own any real property.
ITEM 4A.UNRESOLVED STAFF COMMENTS |
Not applicable.
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ITEM 5.OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
This discussion and analysis is of our operating results and our financial position for the fiscal years ended December 31, 20182021 and 20172020 should be read in conjunction with the consolidated financial statements and the related notes thereto provided at “Item 18 – Financial Statements”.
| A. | Results of Operations |
The Company is inactive since April 28, 2014. Prior to the sale of our subsidiaries on April 28, 2014, we generated revenue from our Portal, IR/PR and Conference businesses. Our annual and quarterly operating results were primarily affected by the level of our sales and costs of operations over these three businesses.
YEARS ENDED DECEMBER 31, 20182021, 2020 and 2017
2019
For the year ended December 31, 20182021 (“Fiscal 2018”2021”), we recorded a net loss of $5,603$40,955 attributable to common stockholders ($0.00 lossloss) per common share), compared to a net loss of $231,953$45,570 for the year ended December 31, 20172020 (“Fiscal 2017”) attributable to common stockholders ($0.02 loss per common share). The decrease of net loss of $226,350 was mainly due to imputed interest income of $79,655 (2017: $42,042) and no loss on loan receivables (2017: loss of $249,110).
For the year ended December 31, 2017 (“Fiscal 2017”), we recorded a net loss of $231,953 attributable to common stockholders ($0.02 loss per common share), compared to a net loss of $37,706 for the year ended December 31, 2016 (“Fiscal 2016”2020”) attributable to common stockholders ($0.00 loss per common share). The increasedecrease of net loss of $194,247$4,615 was mainly due to imputed interest income of $19,464 (2020: $63,209), foreign exchange gain of $32,051 (2016: $25,950)$1,004 (2020: gain of $7,038) and net loss from note receivable $nil (2020: $57,485).
For the year ended December 31, 2020 (“Fiscal 2020”), we recorded a net loss of 45,570 attributable to common stockholders ($0.00 income per common share), compared to a net income of $34,894 for the year ended December 31, 2019 (“Fiscal 2019”) attributable to common stockholders ($0.00 loss per common share). The decrease of net loss of 80,464 was mainly due to imputed interest income of $42,042 (2016: $43,341)$63,209 (2019: $68,869), foreign exchange gain of $7,038 (2019: gain of $18,781) and net loss on loan receivables of $249,110 (2016: loss of $83,517)from note receivable $57,485 (2019:nil).
YEAR ENDED DECEMBER 31, 20182021 COMPARED TO YEAR ENDED DECEMBER 31, 20172020
In Fiscal 2018, the Company no longer had any revenue sources after disposal of all subsidiaries.
Revenues
There were no revenues recorded in Fiscal 20182021 and Fiscal 2017.2020.
Expenses
For Fiscal 2018,2021, we recorded operating expenses of $57,446$ 61,605 compared to operating expenses of $56,936$ 58,621 for Fiscal 2017. 2020.
Professional fees
Audit and Legal
Audit and legal expensesProfessional fees were $16,733$ 19,413 in Fiscal 2018,2021, compared to $16,464$17,928 in Fiscal 2017. 2020.
Directors’ Remuneration
Directors’ remuneration expenses were $36,000 in Fiscal 2018,2021, compared to $36,000 in Fiscal 2017.2020.
Office and Miscellaneous
Office and miscellaneous expenses were $4,713$ 6,192 in Fiscal 2018,2021, compared to $4,472$ 4,693 in Fiscal 2017. 2020.
Other Income (Loss)
We recorded other gainincome of $51,843$20,650 in Fiscal 2018,2021, compared to other lossincome of $175,017$13,051 in Fiscal 2017.2020. The substantial increase of other income of $226,860$7,599 was primarily due to imputed interest income of $79,655 (2017: $42,042)$19,646 (2020: $63,290), foreign exchange gain of $1,004 (2020: gain of $7,038) and no loss on loan exchange (2017: loss of $249,110)from note receivable $nil (2020: 57,485).
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CURRENCY
We maintain our accounting records in US dollars.
Foreign currency fluctuations may have an impact on our financial condition. However, we do not engage in any foreign currency hedge transactions.
INFLATION
We do not believe that inflation will have a material adverse effect on our financial condition.
| B. | Liquidity and Capital Resources |
As of December 31, 2018,2021, we had cash and cash equivalentsheld in trust of $216,506 (2017: $129,564)$226,178 (2020: $ 226,178). We had a working capital of $175,157$ 301,899 at December 31, 2018,2021, compared to working capital of $123,608$ 71,707 at December 31, 2017. 2020.
| C. | Research and Development, Patents and Licenses |
We have not engaged in research and development activities for the last three fiscal years, and have no patents and licenses.
| D. | Trend Information |
As a result of the sale of our subsidiaries on April 28, 2014, we do not currently know of any trends that would be material to our operations.
| E. | Off-Balance Sheet Arrangements |
We do not have any off-balance sheet arrangements.
ITEM 6.DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
| A. | Directors and Senior Management |
The following table sets forth all directors and executive officers of CWN. Each director’s term of office expires at the next annual general meeting of shareholders.
Name | Age | Office Held Since | Offices and Positions Held in CWN | ||||
Chi Cheong Liu (1) | | 62 | | January 12, 2000 | | Director, President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer | |
Chi Kong Liu (1) | | 61 | | January 12, 2000 | | Director | |
Fong Szeto | | 74 | | April 28, 2014 | | Director | |
| (1) | Chi Cheong Liu and Chi Kong Liu are related parties. |
The business background and principal occupations of each of CWNs director and executive officer for the preceding five years are as follows:
Chi Cheong Liu
Mr. Liu has been a director and treasurer of CWN since January 2000. Mr. Liu has been President of Chigo Engineering Company, a security engineering firm, for the last 1819 years. Mr. Liu is a venture capitalist specializing in biotechnology and technology investments.
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Chi Kong Liu
Mr. Liu has been a director of CWN since January 2000. Mr. Liu is President and owner of S & B Trading Company Limited, a diamond and jewelry wholesaler. Mr. Liu is a venture capitalist specializing in biotechnology and technology investments.
Fong Szeto
Mr. Szeto has been a director of CWN since April 28, 2014. Mr. Szeto is an experienced international businessman with expertise in the People’s Republic of China and Hong Kong SAR.
| B. | Compensation |
The following table provides information regarding direct and indirect remuneration to the directors and executive officers of the Company during Fiscal 2018.2021.
| | | | | | | ||||
| | Annual Compensation in Fiscal | ||||||||
| | | | | | Other Annual | ||||
| | Salary | | Bonus | | Compensation | ||||
Name and Respective Office and Position Held |
| ($) |
| ($) |
| ($) | ||||
Chi Cheong Liu (1) | | | | |||||||
Director, President and Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer | | Nil | | Nil | | 12,000 | ||||
Chi Kong Liu (2) | | | | |||||||
Director | | Nil | | Nil | | 12,000 | ||||
Fong Szeto (3) | | | | |||||||
Director | | Nil | | Nil | | 12,000 | ||||
| (1) | Mr. Liu is a shareholder and does not receive salary. Mr. Liu incurred director fee of $12,000 in |
| (2) | Mr. Liu is a shareholder and does not receive salary. Mr. Liu incurred director fee of $12,000 in |
| (3) | Mr. Szeto is a shareholder and does not receive salary. Mr. Szeto incurred director fee of $12,000 in |
PENSION PLANS
We do not provide pension, retirement or similar benefits for directors, senior management or employees.
| C. | Board Practices |
Directors hold office for a term of one year or until the next annual general meeting of shareholders at which directors are elected. Two of the current directors have served our company since January 12, 2000 and a third was appointed on April 28, 2014. Our officers are appointed by the board and serve at the board’s discretion.
We have not entered into service contracts with any of our directors.
We do not have an audit committee or remuneration committee, but our entire board of directors acts in such capacities.
| D. | Employees |
As of December 31, 2018,2021 and 2020, there were no employees of the Company.
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| E. | Share Ownership of Directors and Senior Management |
The following table sets forth certain information regarding the ownership of our Common Shares by each of the persons who were directors and members of senior management during Fiscal 2018.2021. The percentage owned is based on 10,950,000 shares outstanding as at April 25, 2019.29, 2022.
| | | | | | ||||||||
| Name and Respective Office and Position Held | Share Ownership | % Share Ownership |
| Share Ownership |
| % Share Ownership |
| ||||||
| Chi Cheong Liu (1) | 1,730,000 | 15.80 | % |
| 1,730,000 |
| 15.80 | % | |||||
| Chi Kong Liu | 580,000 | 5.30 | % |
| 580,000 |
| 5.30 | % | |||||
| Fong Szeto | 30,000 | 0.27 | % |
| 30,000 |
| 0.27 | % | |||||
| Total | 2,340,000 | 21.37 | % |
| 2,340,000 |
| 21.37 | % | |||||
| (1) | Goldpac Investment Partners Ltd., for which Mr. Liu is principal, owned 1,166,667 Common Shares of our company. Goldpac Investments Ltd., for which Mr. Liu is principal, owned 200,000 Common Shares of our company. Total direct and indirect share ownership was 3,096,667 Common Shares or 28.28% of the total Common Shares of our company. |
Stock Options
Our board of directors (the “Board”) adopted the 2007 Stock Option Plan (the “2007 Plan”) on October 11, 2007, under which we issued incentive stocks options with the right to purchase up to 550,000 Common Shares to our directors, officers, and employees. All of these options granted on October 11, 2007 have an exercise price of $1.08 per share and a vesting period of 1 to 5 years, and a term of 5 years expiring on October 11, 2012. We had not grant options to individual consultants or advisors.
The Board further adopted the 2010 Stock Option Plan (the “2010 Plan”) on June 10, 2010, under which we issued incentive stocks options with the right to purchase up to 1,090,000 Common Shares to our directors, officers, and employees. All of these options granted on June 10, 2010 have an exercise price of $0.60 per share and a vesting period of 1 to 5 years, and a term of 5 years expiring on June 10, 2015. We had not grant options to individual consultants or advisors.
As at December 31, 2018,2021 and 2020, we had no options issued or outstanding.
ITEM 7.MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
| A. | Major Shareholders |
To the knowledge of our directors and senior officers, the following table sets forth the persons or companies who beneficially own, directly or indirectly, or exercise control or direction over shares carrying 5% or more of the voting rights attached to the total outstanding Common Shares as at April 25, 2019.29, 2022. The percentage owned is based on 10,950,000 shares outstanding as at April 25, 2019.29, 2022.
| | | | | | ||||||||
| | Number of | | Percentage of Shares | | ||||||||
| Name of Shareholder | Number of Common Shares | Percentage of Shares Beneficially Owned |
| Common Shares |
| Beneficially Owned |
| ||||||
| Chi Cheong Liu (1) | 3,096,667 | 28.28 | % | | 3,096,667 | | 28.28 | % | |||||
CEDE & Co |
| 1,827,000 |
| 16.68 | % | ||||||||
| Vcanland China Holdings Ltd. | 1,500,000 | 13.70 | % |
| 1,500,000 |
| 13.70 | % | |||||
| Datacom Venture Limited | 600,000 | 5.48 | % |
| 600,000 |
| 5.48 | % | |||||
| Chi Kong Liu | 580,000 | 5.30 | % |
| 580,000 |
| 5.30 | % | |||||
| Monica Law | 570,000 | 5.21 | % |
| 570,000 |
| 5.21 | % | |||||
| Total | 6,346,667 | 57.97 | % |
| 6,346,667 |
| 94.65 | % | |||||
| (1) | Mr. Liu owns 1,730,000 Common Shares. Goldpac Investment Partners Ltd., for which Mr. Liu is principal, owns 1,166,667 Common Shares. Goldpac Investments Ltd., for which Mr. Liu is a principal, owns 200,000 Common Shares. |
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Unless otherwise indicated by footnote, we believe that the beneficial owners of the Common Shares listed above, based on information furnished by such owners, have sole investment and voting power with respect to such Common Shares, subject to community property laws where applicable. Beneficial ownership is determined in accordance with the rules of the United States Securities and Exchange Commission and generally includes voting or investment power with respect to securities. As far as it is known to us, except as disclosed herein, we are not directly or indirectly owned or controlled by another corporation, by any foreign government or any other person or entity. The shareholders, who own five percent or more of our Common Shares, do not have voting rights which are different than our other shareholders who own our Common Shares.
| B. | Related Party Transactions |
As at December 31, 2018,2021, the Company has non-interest bearing loan from the stockholders and directors in the amount of $38,628 [2017$ 207,473 [2020 - $38,628]$ 150,282].
As at December 31, 2018,2021, the Company accrued director fees in the amount of $36,000 [2017$ 144,000 [2020 - $36,000].$ 108,000], which has been included in the balances above.
During the year ended December 31, 2021, all of the Company’s cash and cash equivalent has been held by a director of the Company, on behalf of the Company.
All related party transactions were entered into in the normal course of business and are recorded at the exchange amount established and agreed to between the related parties.
| C. | Interests of Experts and Counsel |
This Report on Form 20-F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
ITEM 8.FINANCIAL INFORMATION |
| A. | Financial Statements |
This Report on Form 20-F includes our audited financial statements for the years ended December 31, 20182021 and 2017,2020, including our balance sheets as of December 31, 20182021 and 2017,2020, and the statements of shareholders’ equity, operations and cash flows for the years ended December 31, 20182021 and 2017,2020, and the related notes to those statements and the auditors’auditor’s reports thereon. Reference is made to these documents commencing at Page 25 of this Report.
| B. | Significant Changes |
As of April 28, 2014, we have sold all subsidiaries and business units. The core business activities and operations remain discontinued as at December 31, 2018.2021.
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ITEM 9.THE OFFER AND LISTING |
| A. | Offer and Listing Details |
Our common shares are currently quoted on the OTC Pink under the symbol“CWNOF” “CWNOF”. For the periods indicated, the following table sets forth the high and low market prices of our common shares, as reported by the OTC Bulletin Board. These prices represent inter-dealer quotations without retail markup, markdown, or commission and may not necessarily represent actual transactions.
| Periods | High | Low | ||||||
| Fiscal 2018 | $ | 0.03 | $ | 0.03 | ||||
| Fiscal 2017 | $ | 0.04 | $ | 0.03 | ||||
| Fiscal 2016 | $ | 0.13 | $ | 0.01 | ||||
| Fiscal 2015 | $ | 0.08 | $ | 0.02 | ||||
| Fiscal 2014 | $ | 0.07 | $ | 0.05 | ||||
| Fiscal 2013 | $ | 0.55 | $ | 0.05 | ||||
| Fiscal 2012 | $ | 1.34 | $ | 0.12 | ||||
| Fiscal 2011 | $ | 1.40 | $ | 0.12 | ||||
| Fiscal 2010 | $ | 0.75 | $ | 0.25 | ||||
| Fiscal 2019 | ||||||||
| 1Q-2019 | $ | 0.03 | $ | 0.02 | ||||
| Fiscal 2018 | ||||||||
| 1Q-2018(1) | $ | 0.03 | $ | 0.03 | ||||
| 2Q-2018(1) | $ | 0.03 | $ | 0.03 | ||||
| 3Q-2018(1) | $ | 0.03 | $ | 0.03 | ||||
| 4Q-2018(1) | $ | 0.03 | $ | 0.03 | ||||
| Fiscal 2017 | ||||||||
| 1Q-2017(1) | $ | 0.04 | $ | 0.03 | ||||
| 2Q-2017 | $ | 0.03 | $ | 0.03 | ||||
| 3Q-2017 | $ | 0.03 | $ | 0.03 | ||||
| 4Q-2017 | $ | 0.03 | $ | 0.03 | ||||
| Fiscal 2016 | ||||||||
| 1Q-2016(1) | $ | 0.02 | $ | 0.02 | ||||
| 2Q-2016 | $ | 0.13 | $ | 0.02 | ||||
| 3Q-2016 | $ | 0.13 | $ | 0.01 | ||||
| 4Q-2016 | $ | 0.04 | $ | 0.04 | ||||
| Fiscal 2015 | ||||||||
| 4Q-2015(1) | $ | 0.02 | $ | 0.02 | ||||
| 3Q-2015(1) | $ | 0.02 | $ | 0.02 | ||||
| 2Q-2015 | $ | 0.02 | $ | 0.02 | ||||
| 1Q-2015 | $ | 0.08 | $ | 0.02 | ||||
| Most Recent 6 months from October 2018 through March 2019 | ||||||||
| March 2019(1) | $ | 0.02 | $ | 0.02 | ||||
| February 2019(1) | $ | 0.02 | $ | 0.02 | ||||
| January 2019 | $ | 0.03 | $ | 0.02 | ||||
| December 2018(1) | $ | 0.03 | $ | 0.03 | ||||
| November 2018(1) | $ | 0.03 | $ | 0.03 | ||||
| October 2018(1) | $ | 0.03 | $ | 0.03 | ||||
| | | | | | |
Periods |
| High |
| Low | ||
Fiscal 2021 | | $ | 0.17 | | $ | 0.002 |
Fiscal 2020 | | $ | 0.002 | | $ | 0.002 |
Fiscal 2019 | | $ | 0.03 | | $ | 0.02 |
Fiscal 2018 | | $ | 0.03 | | $ | 0.03 |
Fiscal 2017 | | $ | 0.04 | | $ | 0.03 |
Fiscal 2016 | | $ | 0.13 | | $ | 0.01 |
Fiscal 2015 | | $ | 0.08 | | $ | 0.02 |
Fiscal 2014 | | $ | 0.07 | | $ | 0.05 |
Fiscal 2013 | | $ | 0.55 | | $ | 0.05 |
Fiscal 2012 | | $ | 1.34 | | $ | 0.12 |
Fiscal 2011 | | $ | 1.40 | | $ | 0.12 |
Fiscal 2010 | | $ | 0.75 | | $ | 0.25 |
| | | | | | |
Fiscal 2022 | |
|
| |
|
|
1Q-2022 | | $ | 0.20 | | $ | 0.17 |
| | | | | | |
Fiscal 2021 | |
|
| |
|
|
1Q-2021 | | $ | 0.020 | | $ | 0.002 |
2Q-2021 | | $ | 0.12 | | $ | 0.02 |
3Q-2021 | | $ | 0.12 | | $ | 0.063 |
4Q-2021 | | $ | 3.00 | | $ | 0.0577 |
| | | | | | |
Fiscal 2020 | |
|
| |
|
|
1Q-2020 | | $ | 0.015 | | $ | 0.002 |
2Q-2020(1) | | $ | 0.002 | | $ | 0.002 |
3Q-2020(1) | | $ | 0.002 | | $ | 0.002 |
4Q-2020 | | $ | 0.002 | | $ | 0.002 |
| | | | | | |
Fiscal 2019 | |
|
| |
|
|
1Q-2019 | | $ | 0.03 | | $ | 0.02 |
2Q-2019 | | $ | 0.02 | | $ | 0.02 |
3Q-2019(1) | | $ | 0.02 | | $ | 0.02 |
4Q-2019(1) | | $ | 0.02 | | $ | 0.02 |
| | | | | | |
Most Recent 6 months from October 2021 through March 2022 | |
|
| |
|
|
March 2021 | | $ | 0.20 | | $ | 0.20 |
February 2021(1) | | $ | 0.20 | | $ | 0.20 |
January 2021 | | $ | 0.201 | | $ | 0.17 |
December 2020 | | $ | 3.00 | | $ | 0.063 |
November 2020 (1) | | $ | 0.063 | | $ | 0.0577 |
October 2020 (1) | | $ | 0.063 | | $ | 0.0577 |
| (1) | There were no trades of our common shares during this period. |
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| B. | Plan of Distribution |
This Report on Form 20-F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
| C. | Markets |
Our common shares are quoted on the OTC Pink operated by the Financial Industry Regulatory Authority under the symbol “CWNOF”
| D. | Selling Shareholders |
This Report on Form 20-F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
| E. | Dilution |
This Report on Form 20-F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
| F. | Expenses of the Issue |
This Report on Form 20-F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
Our common shares are quoted on the OTC Pink operated by the Financial Industry Regulatory Authority under the symbol“CWNOF”
This Report on Form 20-F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
This Report on Form 20-F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
This Report on Form 20-F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
ITEM 10.ADDITIONAL INFORMATION |
| A. | Share Capital |
This Report on Form 20-F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
| B. | Memorandum and Articles of Association |
There have been no changes to the Memorandum, Articles of Association, or Cayman Islands Law with respect to rights and powers of directors and shareholders since our 20-F Registration Statement (SEC file no. 000-33051) filed on July 3, 2002. Such discussion is hereby incorporated by reference into this Report.
| C. | Material Contracts |
TheThere were no material contracts entered into by us during the last two years, other than those contracts entered into in the ordinary course of business, are as follows:years.
Share purchase agreement dated March 19, 2014 with Ningbo International Limited. See Item 4.A.History and Development of the Company.
CAYMAN ISLANDS
We are organized under the laws of the Cayman Islands. We do not believe there are any decrees or regulations under the laws of the Cayman Islands applicable to us restricting the import or export of capital or affecting the remittance of dividends or other payments to non-resident holders of our common stock. There are no restrictions under CWN’s Articles of Association or Memorandum of Association or under Cayman Islands law as dividends thereon. There is uncertainty as to whether the Courts of Cayman Island would (i) enforce judgments of United States Courts obtained against us or our directors and officers predicated upon the civil liability provisions of the federal securities laws of the United States or (ii) entertain original actions brought in Cayman Island Courts against us or such persons predicated upon the federal securities laws of the United States. There is no treaty in effect between the United States and Cayman Island providing for such enforcement.
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| E. | Taxation |
CAYMAN ISLAND INCOME TAX CONSEQUENCES
CWN is organized under the laws of Cayman Islands. At present, there is no Cayman Islands profit tax, withholding tax, capital gains tax, capital transfer tax, estate duty or inheritance tax payable by our United States shareholders, except shareholders ordinarily resident in the Cayman Islands. There is currently no reciprocal tax treaty between Cayman Islands and the United States regarding withholding taxes.
| F. | Dividends and Paying Agents |
This Report on Form 20-F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
| G. | Statement by Experts |
This Report on Form 20-F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
| H. | Documents on Display |
Any documents referred to in this Report on Form 20-F may be inspected at our principal office located at Appleby, Clifton House, 75 Fort Street, P.O. Box 190, Grand Cayman, Cayman Islands KY1-1104 during normal business hours.
Our filings with the Securities and Exchange Commission, and the exhibits thereto, are available for inspection and copying at the public reference facilities maintained by the Securities and Exchange Commission in 100 F. St., NE, Washington, D.C., 20549. Copies of these filings may be obtained from these offices after the payment of prescribed fees. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the public reference rooms. These filings are also available on the Securities and Exchange Commission'sCommission’s website at www.sec.gov.
| I. | Subsidiary Information |
Prior to their sale on April 28, 2014, we had 4 subsidiaries, including NAI Interactive Ltd., a company incorporated under the lawsAs of British Columbia (“NAI”), ChineseWorldNet.com (Hong Kong) Ltd., a company incorporated under the laws of Hong Kong (“CWN HK”), 85% owned interest in ChineseWorldNet.com (Shanghai) Ltd., a company incorporated under the laws of PRC (“CWN China”),December 31, 2021 and 85% owned interest in Weihai Consulting Investment Ltd., a company incorporated under of PRC (“Weihai”). As a result of their sale on April 28, 2014,2020, we do not have any subsidiaries.
ITEM 11.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a small business issuer as defined in Section 230.405 of the Securities Act of 1933 and Section 240.12b-2 of the Exchange Act and, as such, there is no requirement to provide any information under this item.
ITEM 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
This Report on Form 20-F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
PART II
ITEM 13.DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
There has not been a material default in the payment of principal, interest, a sinking or purchase fund installment, or any other material default not cured within 30 days, relating to any indebtedness of us or any of our significant subsidiaries. No payment of dividends is in arrears.
- 15 -
ITEM 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
There has been no modification of the instruments defining the rights of holders of any class of our registered securities. There has been no modification or qualification of the rights evidenced by any class of our registered securities by issuing or modifying any other class of securities. There are no assets securing any class of our registered securities. There has been no change in the last financial year to the trustee of our registered securities.
ITEM 15.CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
As required by Rule 13a-15 under the Securities Exchange Act of 1934, our management, with the participation of our principal executive officer and principal financial officer, evaluated our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this annual report.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to our principal executive officer and principal financial officer to allow timely decisions regarding required disclosure.
MANAGEMENT’S REPORT ON INTERNAL CONTROLS OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) under the Exchange Act. Our management evaluated the effectiveness of our internal control over financial reporting as of December 31, 2013 based on criteria for effective internal control over financial reporting described inInternal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its evaluation, our management concluded that our internal control over financial reporting was not effective as of December 31, 2018,2021, as per the five components of the Framework: Control Environment, Risk Assessment, Control Activities, Information and Communication and Monitoring.
During its assessment of internal control over financial reporting, management identified the following deficiencies.material weakness: insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines. Based on the context in which the deficiencies occur, management believes that theseidentified below significant deficiencies individually represent significant deficiencies:
| 1. | Inadequate segregation of duties over certain information system access controls. Although there were no major error or incident noted during the evaluation, the control deficiency carries significant risk of management overrides and unauthorized and approved transactions. |
| 2. | There was no human resources department in our company; the monthly salary calculations were conducted by the accounting department instead of human resources. The lack of segregation of duties would not ensure the calculation of salary’s accuracy, and possibilities for staff receiving payment for work not attended. There was also the potential risk of management override. |
| 3. | Purchase requisitions and purchase orders were not prepared, only oral indication was given by management. Purchases could be initiated and executed for other uses or purchased goods or services could be misappropriated for other uses. There was also the potential risk of fraud for these purchases. |
- 16 -
Based only on these facts, management has determined that the combination of these significant deficiencies represents a material weakness. Individually, these deficiencies were evaluated as representing a more than remote likelihood that a misstatement that was more than inconsequential, but less than material, could occur. However, each of these significant deficiencies affects the same set of accounts. Taken together, these significant deficiencies represent a more than remote likelihood that a material misstatement could occur and not be prevented or detected. Therefore, in combination, these significant deficiencies represent a material weakness.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) during the year ended December 31, 20182021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 16.[RESERVE] |
ITEM 16A | AUDIT COMMITTEE FINANCIAL EXPERT |
Our board of directors serves as our audit committee. The board has determined that it does not have an audit committee financial expert. We believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted given that we sold all of our subsidiaries.
ITEM 16B. | CODE OF ETHICS |
On October 29, 2004, we adopted a Code of Ethics (the“Code of Ethics”). A copy of our Code of Ethics was filed as an exhibit to the Report on Form 20-F filed with the Securities Exchange Commission on December 3, 2004. Our Code of Ethics will be made available in print, free of charge, to any person requesting a copy in writing from our secretary at Appleby, Clifton House 75 Fort Street, PO Box 190, Grand Cayman E9 KY1-1104.
ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
The following table sets forth the aggregate fees billed by our auditors, MNP LLP, in Fiscal 20182021 and Fiscal 2017.2020. Our board of directors has considered these fees and professional services rendered compatible with maintaining the independence of that firm.
| For year ending December 31, | ||||||||||||||
| 2018 | 2017 | |||||||||||||
| | | | | | | ||||||||
| | For year ending December 31, | ||||||||||||
|
| 2021 |
| 2020 | ||||||||||
| Audit Fees(1) | $ | 9,000 | $ | 9,000 | | $ | 8,676 | | $ | 7,854 | ||||
| Audit-Related Fees(2) | — | — | |
| — | |
| — | ||||||
| Tax Fees(3) | — | — | |
| — | |
| — | ||||||
| All Other Fees | — | — | |
| — | |
| — | ||||||
| Total | $ | 9,000 | $ | 9,000 | | $ | 8,676 | | $ | 7,854 | ||||
| (1) | Audit Fees consist of fees for the audit of our annual financial statements and review in connection with our statutory and regulatory filings. |
| (2) | Audit-Related Fees consist of fees related to assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees”. |
| (3) | Tax Fees consist of fees related to tax compliance, tax advice and tax planning. |
| ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
There are no applicable disclosures required by Exchange Act Rule 10a-3(d) regarding an exemption from the listings standards for audit committees.
- 17 - | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
Neither our Company, nor any affiliated purchaser of our Company, has purchased any of our securities during Fiscal 2018.2021.
ITEM 16F. | CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT |
None.
ITEM 16G. | CORPORATE GOVERNANCE |
We are not listed on a national securities exchange and, as such, there is no requirement to provide any information under this item.
ITEM 16H. | MINE SAFETY DISCLOSURE |
Not applicable.
PART III
ITEM 17. | FINANCIAL STATEMENTS |
Not applicable.
ITEM 18. | FINANCIAL STATEMENTS |
The following Financial Statements and the related Notes thereto are filed as part of this Report, commencing at Page 25 to 33 of this Report:
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ITEM 19.EXHIBITS
*Filed herewith |
| (1) | Incorporated by reference to Exhibits of Registrant’s Registration Statement on Form 20-F (file no. 000-33051) filed on July 3, 2002. |
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| (2) | Incorporated by reference to Exhibits of Registrant’s Annual Report on Form 20-F (file no. 000-33051) filed on December 3, 2004. |
| (3) | Incorporated by reference to Exhibits of Registrant’s Annual Report on Form 20-F (file no. 000-33051) filed on June 30, 2005. |
| (4) | Incorporated by reference to Exhibits of Registrant’s Annual Report on Form 20-F (file no. 000-33051) filed on June 30, 2008. |
| (5) | Incorporated by reference to Exhibits of Registrant’s Annual Report on Form 20-F (file no. 000-33051) filed on June 30, 2009. |
| (6) | Incorporated by reference to Exhibits of Registrant’s Annual Report on Form 20-F (file no. 000-33051) filed on May 13, 2011. |
| (7) | Incorporated by reference to Exhibits of Registrant’s Annual Report on Form 20-F (file no. 000-33051) filed on April 30, 2012. |
| (8) | Incorporated by reference to Exhibits of Registrant’s Annual Report on Form 20-F (file no. 000-33051) filed on April 30, 2013. |
| (9) | Incorporated by reference to Schedule “A” to Exhibit 99.4 of Registrant’s Form 6-K (file no. 000-33051) filed on March 24, 2014. |
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SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F, and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
Dated: April 25, 201929, 2022
ChineseWorldNet.com Inc., | ||
a Cayman Islands Corporation | ||
/s/ CHI CHEONG LIU | ||
CHI CHEONG LIU | ||
Director, President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer | ||
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Chineseworldnet.com Inc.:
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Chineseworldnet.com Inc. (the Company) as of December 31, 20182021 and 2017,2020, and the related statements of stockholders’ equity, operations and comprehensive loss,income (loss), and cash flows for each of the years in the three-year period ended December 31, 20182021 and the related notes (collectively referred to as the financial statements).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20182021 and 2017,2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2018,2021, in conformity with accounting principles generally accepted in the United States of America.
Material Uncertainty Related to Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discusseddescribed in Note 1 toof the financial statements, the Company has suffered recurringaccumulated losses fromsince its inception and requires additional funds to maintain and expand its intended business operations has not attained profitable operations and is dependent upon obtaining adequate financing to fulfill its operating activities. These factorsthat raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. This matter is also described in the “Critical Audit Matter” section of our report.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.
Going Concern – Refer to Note 1
Accounting principles generally accepted in the United States require the Company to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. If conditions or events raise substantial doubt, management should consider whether its plans that are intended to mitigate the conditions or events will alleviate the substantial doubt.
Conclusions on going concern considerations involve significant estimates and management judgment, including prospective financial information. Given the complexity and the subjective nature of such information, evaluating management’s judgments related to their going concern analysis required extensive audit effort and a high degree of auditor judgment.
Audit Response
Our audit procedures related to testing management’s assessment of the ability of the Company to continue as a going concern included the following:
| • | We |
| o | Developing an understanding of management’s plans for obtaining additional financing through discussions with management and review of board meeting minutes. |
| o | Developing an understanding of management’s expectations for future changes in expenses through discussions with management and review of budgets. |
| o | Comparing forecasted expenses to historical results. |
| o | Evaluating the impact of the Company’s | ||
| existing financing arrangements on their ability to continue as a going concern |
| o | Reviewing financial statements disclosure to ensure it is appropriate. |
Chartered Professional Accountants
We have served as the Company’s auditor since 2006
Vancouver, BC, Canada
April 29, 2022
BALANCE SHEETS
As at December 31
(Expressed in U.S. Dollars)
| 2018 | 2017 | |||||||
| $ | $ | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | 216,506 | 129,564 | ||||||
| Prepaid expenses and deposits | 8,214 | 8,029 | ||||||
| Note receivable[note 3] | - | 35,927 | ||||||
| Total current assets | 224,720 | 173,520 | ||||||
| Non-current assets | ||||||||
| Note receivable[note 3] | 178,373 | 235,525 | ||||||
| Total assets | 403,093 | 409,045 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | 10,935 | 11,284 | ||||||
| Due to related parties, non-interest bearing[note 5] | 38,628 | 38,628 | ||||||
| Total current liabilities | 49,563 | 49,912 | ||||||
| Stockholders’ equity[note 4] | ||||||||
| Common stock | ||||||||
| Authorized | ||||||||
| 100,000,000 common shares with a par value of $0.001 per share | ||||||||
| Issued and outstanding 10,950,000 common shares | 10,950 | 10,950 | ||||||
| Additional paid-in capital | 4,183,129 | 4,183,129 | ||||||
| Deficit | (3,840,549 | ) | (3,834,946 | ) | ||||
| Total stockholders’ equity | 353,530 | 359,133 | ||||||
| Total liabilities and stockholders’ equity | 403,093 | 409,045 | ||||||
Nature of operation [note 1] | ||||||||
| Going concern [note 1] | ||||||||
| | | | |
| | 2021 | | 2020 |
|
| $ |
| $ |
ASSETS | |
| | |
Current assets | |
| |
|
Cash and cash equivalents [note 5] |
| — | | 226,178 |
Cash held in trust [note 5] | | 226,178 | | — |
Prepaid expenses and deposits |
| 8,447 | | 6,746 |
Note receivable [note 3] |
| 291,727 | | 0 |
Total current assets |
| 526,352 | | 232,924 |
|
|
| |
|
Non-current assets |
|
| |
|
Note receivable [note 3] |
| 0 | | 271,147 |
Total assets |
| 526,352 | | 504,071 |
|
|
| |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
| |
|
Current liabilities |
|
| |
|
Accounts payable and accrued liabilities | | 16,980 | | 10,935 |
Due to related parties, non-interest bearing [note 5] |
| 207,473 | | 150,282 |
Total current liabilities |
| 224,453 | | 161,217 |
|
|
| |
|
Stockholders’ equity [note 4] |
|
| |
|
Common stock |
|
| |
|
Authorized |
|
| |
|
100,000,000 common shares with a par value of $0.001 per share Issued and outstanding 10,950,000 common shares |
| 10,950 | | 10,950 |
Additional paid-in capital |
| 4,183,129 | | 4,183,129 |
Deficit |
| (3,892,180) | | (3,851,225) |
Total stockholders’ equity |
| 301,899 | | 342,854 |
Total liabilities and stockholders’ equity |
| 526,352 | | 504,071 |
Nature of operation [note 1] |
|
| |
|
Going concern [note 1] | | | | |
The accompanying notes are an integral part of these financial statements
- 24 -
STATEMENTS OF STOCKHOLDERS’ EQUITY
Years ended December 31
(Expressed in U.S. Dollars)
| Common stock | Additional paid-in | |||||||||||||||||||
| Shares | Amount | capital | (Deficit) | Total | ||||||||||||||||
| # | $ | $ | $ | $ | ||||||||||||||||
| Balance, January 1, 2016 | 10,950,000 | 10,950 | 4,183,129 | (3,565,287 | ) | 628,792 | ||||||||||||||
| Net loss for the year | — | — | — | (37,706 | ) | (37,706 | ) | |||||||||||||
| Balance, December 31, 2016 | 10,950,000 | 10,950 | 4,183,129 | (3,602,993 | ) | 591,086 | ||||||||||||||
| Net loss for the year | — | — | — | (231,953 | ) | (231,953 | ) | |||||||||||||
| Balance, December 31, 2017 | 10,950,000 | 10,950 | 4,183,129 | (3,834,946 | ) | 359,133 | ||||||||||||||
| Net loss for the year | — | — | — | (5,603 | ) | (5,603 | ) | |||||||||||||
| Balance, December 31, 2018 | 10,950,000 | 10,950 | 4,183,129 | (3,840,549 | ) | 353,530 | ||||||||||||||
| | | | | | | | | | |
| | | | | | Additional | | | |
|
| | Common stock | | paid-in | | | |
| ||
| | Shares | | Amount | | capital | | (Deficit) | | Total |
|
| # |
| $ |
| $ |
| $ |
| $ |
Balance, January 1, 2019 | | 10,950,000 | | 10,950 |
| 4,183,129 |
| (3,840,549) |
| 353,530 |
| |
| |
|
|
|
|
|
|
|
Net loss for the year | | 0 | | 0 |
| 0 |
| 34,894 |
| 34,894 |
| |
| |
|
|
|
|
|
|
|
Balance, December 31, 2019 | | 10,950,000 | | 10,950 |
| 4,183,129 |
| (3,805,655) |
| 388,424 |
| |
| |
|
|
|
|
|
|
|
Net income for the year | | 0 | | 0 |
| 0 |
| (45,570) |
| (45,570) |
| |
| |
|
|
|
|
|
|
|
Balance, December 31, 2020 | | 10,950,000 | | 10,950 | | 4,183,129 | | (3,851,225) | | 342,854 |
| | | | | | | | | | |
Net loss for the year | | 0 | | 0 | | 0 | | (40,955) | | (40,955) |
Balance, December 31, 2021 | | 10,950,000 | | 10,950 | | 4,183,129 | | (3,892,180) | | 301,899 |
The accompanying notes are an integral part of these financial statements
- 25 -
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
INCOME (LOSS)
Years ended December 31
(Expressed in U.S. Dollars)
| 2018 | 2017 | 2016 | ||||||||||
| $ | $ | $ | ||||||||||
| Expenses | ||||||||||||
| Audit and legal | 16,733 | 16,464 | 14,992 | |||||||||
| Directors’ remuneration | 36,000 | 36,000 | 36,000 | |||||||||
| Office and miscellaneous | 4,713 | 4,472 | 6,813 | |||||||||
| 57,446 | 56,936 | 57,805 | ||||||||||
| Other income (loss) | ||||||||||||
| Foreign exchange gain (loss) | (27,812 | ) | 32,051 | 25,950 | ||||||||
| Interest income | - | - | 34,325 | |||||||||
| Accretion income | 79,655 | 42,042 | 43,341 | |||||||||
| Loss on notes receivable | — | (249,110 | ) | (83,517 | ) | |||||||
| Net loss and comprehensive loss for the year | (5,603 | ) | (231,953 | ) | (37,706 | ) | ||||||
| Basic and diluted net loss per common share | (0.00 | ) | (0.02 | ) | (0.00 | ) | ||||||
| Weighted average number of common shares outstanding | ||||||||||||
| - basic and diluted | 10,950,000 | 10,950,000 | 10,950,000 | |||||||||
| | | | | | |
|
| 2021 | | 2020 | | 2019 |
|
| $ |
| $ |
| $ |
Expenses | |
|
|
|
|
|
Professional fees | | 19,413 |
| 17,928 |
| 17,213 |
Directors’ remuneration [note 5] | | 36,000 |
| 36,000 |
| 36,000 |
Office and miscellaneous | | 6,192 |
| 4,693 |
| 742 |
| | 61,605 |
| 58,621 |
| 53,955 |
Other income (loss) | |
|
|
|
|
|
Foreign exchange gain | | 1,004 |
| 7,038 |
| 18,781 |
Interest income | | 0 |
| 208 |
| 1,199 |
Accretion income [note 3] | | 19,646 |
| 63,290 |
| 68,869 |
Loss on note receivable [note 3] | | — |
| (57,485) |
| — |
| | 20,650 |
| 13,051 |
| 88,849 |
Net income (loss) and comprehensive income (loss) for the year | | (40,955) |
| (45,570) |
| 34,894 |
| | |
| |
| |
Basic and diluted net income (loss) per common share | | (0.00) |
| 0.00 |
| (0.00) |
Weighted average number of common shares outstanding | | |
| |
| |
- basic and diluted | | 10,950,000 |
| 10,950,000 |
| 10,950,000 |
The accompanying notes are an integral part of these financial statements
- 26 -
STATEMENTS OF CASH FLOWS
Years ended December 31
(Expressed in U.S. Dollars)
| 2018 | 2017 | 2016 | ||||||||||
| $ | $ | $ | ||||||||||
| OPERATING ACTIVITIES | ||||||||||||
| Net loss for the year | (5,603 | ) | (231,953 | ) | (37,706 | ) | ||||||
| Adjustment to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Foreign exchange (gain) or loss | 24,991 | (30,642 | ) | (21,349 | ) | |||||||
| Loss on note receivable | — | 249,110 | 83,517 | |||||||||
| Imputed interest income | (79,339 | ) | (42,044 | ) | (77,660 | ) | ||||||
| Changes in non-cash working capital items: | ||||||||||||
| Prepaid expenses and deposits | (885 | ) | (2,939 | ) | (176 | ) | ||||||
| Accounts payable and accrued liabilities | 351 | (5,375 | ) | (25,125 | ) | |||||||
| Due to related parties, non-interest bearing [note 5] | — | — | 36,000 | |||||||||
| Net cash used in operating activities | (60,485 | ) | (63,843 | ) | (42,499 | ) | ||||||
| INVESTING ACTIVITIES | ||||||||||||
| Proceeds from note receivable | 147,427 | 150,000 | — | |||||||||
| Net cash provided by investing activities | 147,427 | 150,000 | — | |||||||||
| Increase (Decrease) in cash and cash equivalents | 86,942 | 86,157 | (42,499 | ) | ||||||||
| Cash and cash equivalents, beginning of year | 129,564 | 43,407 | 85,906 | |||||||||
| Cash and cash equivalents, end of year | 216,506 | 129,564 | 43,407 | |||||||||
| | | | | | |
| | 2021 | | 2020 | | 2019 |
|
| $ |
| $ |
| $ |
OPERATING ACTIVITIES | |
|
|
|
|
|
Net income (loss) for the year | | (40,955) |
| (45,570) |
| 34,894 |
| | |
| |
| |
Adjustment to reconcile net income (loss) to net cash provided (used) by operating activities: | | |
| |
| |
Foreign exchange (gain) or loss | | (934) |
| (7,628) |
| (10,472) |
Loss on note receivable | | 0 |
| 57,485 |
| 0 |
Imputed interest income | | (19,646) |
| (63,290) |
| (68,869) |
| |
|
|
|
|
|
Changes in non-cash working capital items: | |
|
|
|
|
|
Prepaid expenses and deposits | | (1,701) |
| 1,490 |
| (22) |
Accounts payable and accrued liabilities | | 6,045 |
| 0 |
| 0 |
Due to related parties, non-interest bearing [note 5] | | 57,191 |
| 57,720 |
| 53,934 |
Net cash provided (used) by operating activities | | — |
| 207 |
| 9,465 |
| |
|
|
|
|
|
INVESTING ACTIVITIES | |
|
|
|
|
|
Proceeds from note receivable | | 0 |
| 0 |
| 0 |
Net cash provided by investing activities | | 0 |
| 0 |
| 0 |
| | | | | | |
FINANCING ACTIVITIES | | | | | | |
Cash transfer to trust account [note 5] | | (226,178) | | — | | — |
| | (226,178) | | — | | — |
| |
|
|
|
|
|
Increase (Decrease) in cash and cash equivalents | | (226,178) |
| 207 |
| 9,465 |
Cash and cash equivalents, beginning of year | | 226,178 |
| 225,971 |
| 216,506 |
Cash and cash equivalents, end of year | | — |
| 226,178 |
| 225,971 |
The accompanying notes are an integral part of these financial statements
- 27 -
1. NATURE OF OPERATIONS AND GOING CONCERN
The Company was incorporated under the laws of Cayman Islands on January 12, 2000. On January 15, 2000 the Company acquired 100% of the issued and outstanding shares of NAI Interactive Ltd. (“NAI”), a company incorporated under the laws of British Columbia, Canada. The Company also has a dormant wholly-owned subsidiary ChineseWorldNet.com HK Limited (“CWN HK”) incorporated under the laws of Hong Kong. ChineseWorldNet.com (Shanghai) Ltd. (“CWN China”) was incorporated under the laws of People’s Republic of China in April 2008. In fiscal year 2012, the Company’s ownership interests in CWN China increased from 80% to 83% after CWN HK invested an amount of $200,000 to CWN China’s registered capital. During the fiscal year 2013, the Company’s ownership interests in CWN China further increased from 83% to 85% after CWN HK invested an amount of $187,200 to CWN China’s registered capital. CWN China has a wholly-owned subsidiary, Weihai Consulting Investment Ltd (“Weihai”), a company incorporated under the laws of People’s Republic of China in September 2009. In year 2014, the Company received shareholder approval and sold all issued and outstanding shares in NAI, all issued and outstanding shares of CWN HK and 23.8% of issued and outstanding shares of CWN Capital. For the consideration, the Company received an aggregate of CAD $263,968 in funds and one non-interest bearing promissory notes in the aggregate principal amount of CAD $831,031 with a maturity date of one year with the option to extend upon mutual agreement.
After disposal of all subsidiaries and long-term investment on April 28, 2014, the core business activities and operations were discontinued. The Company is currently inactive with limited operations and is in the process of seeking new business opportunities.
These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has accumulated losses since its inception and requires additional funds to maintain and expand its intended business operations. As at December 31, 2018,2021, the Company has a working capital of $175,157 (2017: $123,608)$301,899 (2020: $71,707).
Management’s plans in this regard are to raise debt or equity financing as required which the Company has been able to finance the operations through a series of equity and debt financings and additional funds is still required to fund the Company’s anticipated business expansion. There can be no assurance that a viable business opportunity that can be adequately financed will be identified and available to the Company. Additional equity and/or debt financing is subject to the global financial markets and prevailing economic conditions, which have recently been volatile and distressed. These factors will likely make it more challenging to obtain financing for the Company going forward. These matters and conditions indicate the existence of a material uncertainty that causes substantial doubt about the Company’s ability to continue as going concern.
Early in 2020, there was a global outbreak of COVID-19 (coronavirus). This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn. At this time, it is unknown the extent of the impact the COVID-19 outbreak may have on the Company as this will depend on future developments that are highly uncertain and that cannot be predicted with confidence. These uncertainties arise from the inability to predict the ultimate geographic spread of the disease, and the duration of the outbreak, including the duration of travel restrictions, business closures or disruptions, and quarantine/isolation measures that are currently, or may be put, in place by Canada and other countries to fight the virus. The Company has beenminimally affected by COVID19 in terms of business activities.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
These financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“US GAAP”) and are expressed in United States dollars, unless otherwise noted. All adjustments considered necessary for a fair presentation of financial position, results of operations and cash flows as at December 31, 20182021 have been included.
- 28 -
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.)
Use of estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Estimates and underlying assumptions are reviewed at each period end. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Significant areas requiring the use of management estimates relate to fair value of financial instruments, deferred income tax assets and liabilities and stock based compensation.
instruments.
Cash and cash equivalents
Cash equivalents usually consist of highly liquid investments which are readily convertible into cash with maturity of three months or less when purchased. The Company had no0 cash equivalents as of December 31, 2018 (20172021 (2020 - $Nil)$Nil).
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.)
Foreign currency translations
The Company’s functional currency is the U.S. dollar. Transactions in other currencies are recorded in U.S. dollars at the rates of exchange prevailing when the transactions occur. Monetary assets and liabilities denominated in other currencies are translated into U.S. dollars at rates of exchange in effect at the balance sheet dates. Exchange gains and losses are recorded in the Statements of Operations and Comprehensive Loss.
Income (Loss).
Income taxes
Income taxes are accounted for under the liability method of accounting for income taxes. Under the liability method, deferred tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the amounts reported in the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply when the asset is realized or the liability is settled. The effect of a change in income tax rates on deferred tax liabilities and assets is recognized in income in the period in which the change occurs. Deferred tax assets are recognized to the extent that they are considered more likely than not to be realized.
Per FASB ASC 740 “Income taxes” under the liability method, it is the Company’s policy to provide for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. At December 31, 2018,2021, the Company believes it has appropriately accounted for any unrecognized tax benefits. To the extent the Company prevails in matters for which a liability for an unrecognized benefit is established or is required to pay amounts in excess of the liability, the Company’s effective tax rate in a given financial statement period may be affected. Interest and penalties associated with the Company’s tax positions are recorded as Interest Expense.
Comprehensive income (loss)
The Company accounts for comprehensive income (loss) under the provisions of ASC Topic 220-10, Comprehensive Income - Overall, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. The Company is disclosing this information on its Statements of Operations and Comprehensive Loss.Income (Loss).
- 29 -
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.)
Financial instruments and concentration of risks
Fair value of financial instruments is made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values.
The carrying value of cash and cash equivalents,held in trust, due to related parties and accounts payable and accrued liabilities approximates their fair value because of the short-term nature of these instruments. The fair value of long term notes receivable is estimated using discounted cash flow model that utilizes a discount rate that reflects the Company’s current pricing for loans with similar characteristics and maturity, adjusted by liquidity premium and companyborrower’s specific premium at the balance sheet date (refer to Note 3).
The Company is exposed to interest rates risk on itsCompany’s cash and cash equivalents. Management does not believe that the impact of interest rate fluctuate will be significant.
The Company has cash and cash equivalents with various financial institutions, which may exceed insured limits throughout the year. The Companyheld in trust is exposed to credit loss for amounts in excess of insured limitsthe entire amount in the event of non-performance bydefault from the institution.trust holder. However, the Company does not anticipate non-performance.
such default.
The Company is exposed to foreign currency risk on fluctuations related to the note receivable and accounts payable and accrued liabilities which is denominated in Canadian dollars.
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.)
Fair value of financial instruments
Fair Value of Financial Instruments – the Company adopted SFAS ASC 820-10-50, “Fair Value Measurements”. This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:
For the years ended December 31, 20182021 and 2017,2020, the Company'sCompany’s financial instruments include cash and cash equivalents,held in trust, accounts payable, and amounts due to related parties. The carrying values of these financial instruments approximate their fair values due to their relatively short periods to maturity; and the fair value of notes receivable are recognized in the balance sheets as level three per the fair value hierarchy (refer to note 3). The carrying value of note receivable are approximate its fair value due to the market interest rate used.
Earning (Loss) per share
Basic lossearning (loss) per share is computed on the basis of the weighted average number of common shares outstanding during each period.
Diluted lossearning (loss) per share is computed on the basis of the weighted average number of common shares and dilutive securities outstanding.
- 30 -
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.)
Stock-based compensation
The Company has adopted the fair value method of accounting for stock-based compensation as recommended by ASC 718Compensation –Stock Compensation. The Company has granted stock options to directors and certain employees for services provided to the Company under this method. The Company recognizes compensation expense for stock options awarded based on the fair value of the options at the grant date using the Black-Scholes option pricing model. The fair value of the options is amortized over the vesting period.
Recently Adopted Accounting Pronouncements
adopted accounting pronouncements
In January 2016,2020, the FASB issued ASU 2016-01, Financial Instruments2020-01, Investments - Overall (Subtopic 825-10): RecognitionEquity Securities (Topic 321), Investments - Equity Method and MeasurementJoint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) (“ASU 2020-01”), which is intended to clarify the interaction of Financial Assetsthe accounting for equity securities under Topic 321 and Financial Liabilities. The amendments toinvestments accounted for under the guidance enhanceequity method of accounting in Topic 323 and the reporting modelaccounting for financial instruments, which includes amendments to address aspects of recognition, measurement, presentation,certain forward contracts and disclosure.purchased options accounted for under Topic 815. ASU 2020-01 is effective for the Company beginning January 1, 2021. The Company has adopted of the methodologies prescribed by this ASU sincenew guidance for the fiscal year beginning January 1, 20182021 and there isthe adoption has no 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. The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. Entities will have to apply the guidance retrospectively, but if it is impracticable to do so for an issue, the amendments related to that issue would be applied prospectively. The Company has adopted the methodologies prescribed by this ASU by the date required and there is no material impact on the Company’s financial statements.
On November 17, 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. Entities will be required to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. ASU 2016-18 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company has adopted the methodologies prescribed by this ASU by the date required and there is no material impact on the Company’s financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.)
In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): The amendments provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. An entity should account for the effects of a modification unless all the following are met:
The current disclosure requirements in Topic 718 apply regardless of whether an entity is required to apply modification accounting under the amendments. The amendments are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The Company has adopted the methodologies prescribed by this ASU by the date required and there is no material impact on the Company’s financial statements.
Recently Issued Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Among other things, these amendments require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact of the adoption of this guidance on its financial statements, if any.
In March 2017, the FASB issued ASU 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The amendments in this Update shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. For public business entities, ASU 2017-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact of the adoption of this guidance on its financial statements, if any.
In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. These amendments expand the scope of Topic 718, Compensation—Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The ASU supersedes Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees. This standard is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. The Company is currently evaluating the potential impact this guidance will have on the financial statements, if any.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. For all entities, amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted. An entity is permitted to early adopt any removed or modified disclosures upon issuance of ASU No. 2018-13 and delay adoption of the additional disclosures until their effective date. The Company is currently evaluating the potential impact this guidance will have on the financial statements, if any.
3. NOTES RECEIVABLE
As at April 28, 2014, the Company received a promissory note of CAD $831,031 (US $618,952) from Ningbo International Limited, a non-related party, as result of the disposal all the issued and outstanding shares in NAI, all the issued and outstanding shares of CWN HK and 23.8% of the issued and outstanding shares of CWN Capital. The promissory note is non-interest bearing, unsecured with a maturity date of one year, and the option to extend upon mutual agreement. On April 28, 2015, the Company extended the payment date of the promissory note to April 28, 2016. On April 28, 2016, the Company further extended the payment date to April 28, 2018 and imposed an 8% per annum interest rate payable on the repayment date of the principal amount. On April 16, 2017, the Company amended the promissory note to a non-interest bearing and changed the payment schedule as follows:
| CDN $150,000 on or before April 30, 2017; |
| CDN $100,000 on or before December 31, 2018; |
| CDN $100,000 on or before December 31, 2019; |
| The remaining principal amount of |
During the year endedAs at December 31, 2018, the Company received payment of CAD $200,000 (USD $147,000)$404,360 from Ningbo International Limited. NaN repayment was received in 2019 and 2020. On November 27, 2020, Ningbo has entered an Amendment of the Agreement (the “Amendment”) with the Company. In relation to this Amendment, the remaining promissory note balance of CAD$426,671 shall be repaid on or before December 31, 2022.
As at December 31, 2018,2021, the note receivable balance is recorded at a fair value of $178,373 (2017: $271,452$291,727 (2020: $271,147 and 2016: $597,876)2019: $257,714). The note is valued using a discounted cash flow model that utilizes a discount rate that reflects the Company’s current pricing for loans with similar characteristics and maturity, adjusted by liquidity premium and company specific premium at the balance sheet date.
The Company recognized $Nil$NaN loss on note receivable [2017[2020 - $249,110loss of $57,485 and 20162019 - $83,517]$NaN], interest income on the note receivable of $Nil (2017: $Nil$Nil (2020: $Nil and 2016: $34,325)2019: $Nil) and accretion income of $79,655 [2017$19,646 [2020 - $42,042$63,290 and 20162019 - $43,341]$68.869]. The effective interest rate of the note receivable is 19.02%11%. During the year ended December 31, 2018,2021, the Company recorded foreign exchange lossgain of $24,991 [2017$933 [2020 - foreign exchange gain: $30,643$7,628 and 20162019 - foreign exchange gain: 21,349]$10,472].
4. STOCKHOLDERS’ EQUITY
Share Capital
The Company has authorized 100,000,000 common shares at par value of $0.001 per share. As at December 31, 20182021 and 2017,2020, the Company has 10,950,000 common shares issued and outstanding.
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5. RELATED PARTY TRANSACTIONS
As at December 31, 2018,2021, the Company has amounts due to stockholders and directors of $38,628 [2017$207,473 [2020 - $38,628 and 2016 - $38,628]$150,282]. These amounts are non-interest bearing, unsecured, and are due on demand.
As atFor the year ended December 31, 2018,2021, the Company accrued director fees in the amount of $36,000 [2017[2020 - $36,000 and 20162019 - $36,000].
During the year ended December 31, 2021, all of the Company’s cash and cash equivalent has been held by a director of the Company, on behalf of the Company.
6. INCOME TAXES
The Company is subject to the tax laws of Cayman Islands and the tax rate is 0%. The Company’s former subsidiaries were subject to tax at various rates in the jurisdictions in which they operated. The reconciliation of the income tax expense is as follows:
2018 $ | 2017 $ | 2016 $ | ||||||||||
| Net (loss) for the year | (5,603 | ) | (231,953 | ) | (37,706 | ) | ||||||
| Statutory Cayman Islands corporate tax rate | 0 | % | 0 | % | 0 | % | ||||||
| Expected tax recovery | — | — | — | |||||||||
| | | | | | | |
| | 2021 | | 2020 | | 2019 | |
|
| $ |
| $ |
| $ | |
Net income (loss) for the year |
| (40,955) | | (45,570) | | 34,894 | |
Statutory Cayman Islands corporate tax rate |
| 0 | % | 0 | % | 0 | % |
Expected tax expense (recovery) |
| 0 | | 0 | | 0 | |
As at December 31, 2018,2021, the Company has $Nil$Nil unrecognized deductible temporary differences.
7. RECLASSIFICATION OF PRIOR YEAR PRESENTATION
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Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operation.