UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

¨	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2008
OR
¨	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ___________________________ to ________________________________
¨	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	Date of event requiring this shell company report ___________________________
	For the transition period from ___________________________ to ________________________________

PART I

 

I TEM 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.

 

 

-4-

---

 

ITEM 3.   K EY INFORMATION

---

  A.   Selected Financial Data

 

The following table sets forth selected consolidated financial information which has been derived from our consolidated financial statements prepared in accordance with US GAAP for our most recently completed fiscal periods consisting of the years ended December 31, 2008, 2007, 2006, 2005 and 2004. The financial data should be read in conjunction with our consolidated financial statements and notes thereto and “Results of Operations” under “Item 5 - Operating and Financial Review and Prospects.”

		Year ended December 31,
		2008				2007				2006				2005				2004
Income Statements:
Operating revenues		$	1,011,322			$	1,325,994			$	643,370			$	533,521			$	487,710
Operating profit (loss) before income taxes and non controlling interest			(950,223	)			54,133				(209,883	)			(78,030	)			(95,946	)
Net loss			(950,123	)			108,354				(209,883	)			(78,030	)			(95,946	)
Earning (loss ) per share - basic			(0.09	)			0.01				(0.03	)			(0.01	)			(0.01	)
Earning (loss) per share - diluted			(0.09	)			0.01				(0.03	)			(0.01	)			(0.01	)
Weighted Average Common shares outstanding – basic			10,700,000				9,012,328				8,200,000				8,200,000				8,004,384
Weighted Average Common shares outstanding - diluted			10,700,000				9,103,713				8,200,000				8,200,000				8,004,384
Consolidated Balance Sheets:
Total assets		$	2,104,383			$	2,780,226			$	226,896			$	312,053			$	366,623
Equipment			46,526				22,001				22,677				16,767				22,421
Total current liabilities			221,251				373,870				439,278				170,469				119,766
Stockholders’ (deficiency) equity			1,483,311				2,200,694				(212,382	)			(8,416	)			66,857

 

No dividends have been declared or paid in 2008.

 

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.

 

D.   Risk Factors

 

The following discussion in this annual 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 captions “Item 4 - Information on the Company” and “Item 5- Operating and Financial Review and Prospects” as well as 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.

 

 

-5-

---

 

Risk Factors Relating to Our Company and Our Business

The ongoing market turmoil arising from the Global Financial Crisis of 2008 may continue to affect our financial performance, the demand of financial related services and investor relation services, and our client and user base.

 

The Global Financial Crisis has already shown to have a negative effect on our business as shown in our declining revenues, client base and conference attendance and sales in the latter half of 2008.  If the global economic environment remains in turmoil, the company may continue facing difficulties in its business if new strategies and business models are not developed and implemented.

 

Our limited operating history in certain activities makes it difficult for investors to judge our prospects.

 

Although we have an operating history of 10 years, we may have a limited history in terms of certain aspects of our operation. Potential investors should be aware of the risks associated with such, and expect that most of our revenues in the foreseeable future be applied towards building the company. We offer a suite of services through our financial portals, which require partnerships and collaborations with external parties. There is no guarantee that we will be able to enter into successful partnerships or collaborations. In light of this, we may not achieve profitability.

 

We may not be able to successfully implement our growth strategies.

 

We are pursuing a number of growth strategies. Internally, we require constant expansion and development of our content and knowledge base. Externally, we endeavor to create sustainable partnerships, joint ventures and acquisitions with providers of financial products and services. Primarily, we seek out relationships with companies with customers in North America and Asia, offering new services for which there are no established markets, or services where we lack experience and expertise. In light of this, we cannot guarantee that said new services will be commercially viable or delivered in a timely manner.

In addition to premium subscription services to generate revenue on our various websites, we intend to increase website-related revenue through online banner advertising. To date, we have had limited success with online banner advertisement customers, which we attribute to a low number of website content contributors. We intend to increase online banner advertisements by increasing the number of website content contributors. Furthermore, we intend to increase revenue through NAI and CWN China investment seminars and conferences. In order to achieve our aims, we will need to hire additional employees, as well as incur costs related to increasing online advertising and conference revenues. Costs associated with said projects may impede our financial condition and operation results, with no guarantee of success or increase in revenue.

 

Unforeseen development difficulties with our technological infrastructure may hinder our efforts.

 

We have undertaken measures to enhance our design and technological infrastructure in order to improve our websites, and intend to continue doing so in the foreseeable future. In the past, we have experienced unexpected web traffic, leading to slow upload times or other problems. While we have worked towards resolving these problems, it can be expected to occur again in the future, hence our continual efforts to upgrade and improve our websites. Unforeseeable developmental difficulties could prevent us from implementing improvements or lead to higher than anticipated costs, and repeated problems in accessing our website can deter visitors from future use. All these, and possibly other problems, will affect our business, its operations and financial condition, unfavorably.

 

Our business could be materially and adversely affected if we fail to develop or introduce new features and research tools.

 

Currently, we offer premium subscribers a number of service packages with personalized features and functionalities. If we fail to offer new features or tools on a regular basis, or if such features and tools are not favorably received, our premium subscribers may choose to discontinue their subscription. Alternately, if we fail to offer service packages that provide value, potential subscribers may turn to our competitors rather than use our services. In developing new features and tools, it is probable that we will experience challenges that could delay or prevent launching these new services. Furthermore, said new services may contain errors that are discovered only after launch. Our business could be affected adversely in the aforementioned scenarios.

 

-6-

---

 

Our revenues could decline if we fail to attract sufficient numbers of premium subscribers to our personalized service packages or if we fail to retain our existing subscribers.

 

We depend on the sale of our premium service packages such as MyCWN for a portion of our revenues, where premium subscribers pay a monthly subscription fee of $9.95 or an annual fee of $59.95. We also offer real-time streaming of stock quotes at different levels ranging from $30 to $40 per month. As our premium service packages become more comprehensive and higher priced, we expect that our future revenues and revenue growth will increasingly depend on sales of our premium service packages to a much greater extent than other streams of revenue such as banner advertising. If we fail to attract a sufficient number of subscribers to our premium service packages, our revenues could decline. Moreover, our financial success depends on our ability migrate free subscribers to our premium service packages. We may not be able to continue to develop newer service packages that appeal to subscribers. If we are fail to develop new premium services packages that appeal to our users, or if our users continue to use our free services rather than purchase premium services, our revenues could decline.

A failure to establish and maintain strategic relationships with other companies could decrease our subscriber and reader base, which may harm our business

 

We depend on establishing and maintaining content syndication and headline indexing relationships with high-traffic websites for a portion of our current subscriber and reader base. There is intense competition for relationships with these firms and placement on these sites, and we may have to pay significant fees to establish additional content syndication and headline indexing relationships or maintain existing relationships in the future. We may be unable to enter into or successfully renew relationships with these firms or sites on commercially reasonable terms. These relationships may not attract significant numbers of subscribers or readers.

 

Many companies that we may approach for a strategic relationship or who already have strategic relationships with us also receive financial news and information from other sources. As a result, these companies may be reluctant to enter into or maintain strategic relationships with us. Our business, results of operations and financial condition could be materially adversely affected if we do not establish additional, and maintain existing, strategic relationships on commercially reasonable terms or if any of our strategic relationships do not result in an increase in the number of subscribers or readers of our websites.

 

A failure to establish and maintain partnerships with content providers in Greater China to supply our clients and readers with news and information about the Greater Chinese markets.

 

We depend on establishing and maintaining content of the financial markets, economy and company trends in Greater China as a key aspect of a number of our businesses.  These content include blogs, expert analysis, news articles and commentaries.  A failure to maintain the quality of such content or to develop the content through partnerships may negatively affect our client and readership base.

Difficulties associated with our brand development may harm our ability to attract subscribers and readers.

 

We believe that a general increase in competition for online financial services has elevated the importance of brand building and brand awareness. We also believe that maintaining and generating awareness about our websites, www.chineseworldnet.com and  www.nai500.com, as well as their associate brands are important aspects in our efforts to continue to attract users. Our planned products and services may not be widely recognized, and we will need to increase awareness amongst potential users. Despite continued efforts to generate brand awareness, it may be ineffective cost-wise or unsuccessful in reaching potential users. Potential users may not be receptive to our advertising campaigns and/or other efforts. Accordingly, our efforts may be unsuccessful in raising awareness of our websites and their associate brands or in persuading potential users to subscribe to our products or visit our sites.

 

Our ability to maintain and increase our readership depends on the continued growth in use and efficient operation of the Internet.

 

The web-based information market is rapidly evolving. Our business would be adversely affected materially if web usage does not continue to grow or grows slowly. Web usage may be inhibited for a number of reasons beyond our control, such as: 

·    inadequate network infrastructure;

 

·    security and privacy concerns;

 

·    inconsistent quality of service; and

 

-7-

---

 

 

·    unavailability of cost-effective, high-speed access to the Internet.

 

Our readers depend on Internet service providers, online service providers and other website operators for access to our websites. Many of these companies providing such services have filed for bankruptcy. Many have experienced significant service outages in the past and could experience service outages, delays and other difficulties unrelated to our systems. These occurrences could cause our readers to perceive the web in general or our websites in particular as an unreliable medium and, therefore, cause them to use other media to obtain their financial news and information. We also depend on a number of information providers to deliver information and data feeds on a timely basis. Our websites could experience disruptions or interruptions in service due to the failure or delay in the transmission or receipt of this information, which could materially and adversely affect our business, results of operations and financial condition.

 

We may be held liable for information retrieved from our website and such potential liability could harm our business.

 

Because our services can be used to download and distribute information to others, there is a risk that claims may be made against us for defamation, negligence, copyright or trademark infringement or other claims based on the nature and content of that material, such as violation of censorship laws in the PRC. In addition, we do not carry any liability insurance to indemnify us for all liability that may be imposed. Any imposition of liability could have a material adverse effect on our business, results of operations and financial condition.

 

We may be liable for the content of our electronic and hard copy publishing and such potential liability could harm our business.

 

We are paid by companies to produce company reviews, which are distributed to target investors by email, mail and published on our website. Our users may request and receive directly from us a hard copy of any such review. We make no recommendation for the purchase of securities in any of our public company clients’ securities and each report contains a disclaimer to that effect. We do not send out unsolicited copies of the reports on our client companies’ behalf. We receive a fee from the client company for preparing the report but receive no underlying interest in the client company’s securities nor do we take any position in those securities.

 

Although we have a disclaimer on each review, it may be perceived by users that we are endorsing our client companies as an investment. Potential liability issues may arise should our users invest in these companies and lose money based upon an inaccurate perception that we have endorsed such an investment. Liability issues include the defense of a lawsuit that could be brought by a user seeking compensation for the losses it has suffered which could involve us in costly and time-consuming litigation in defending such a suit. We have no liability insurance in place to protect us against such a potential suit.

A failure of our internal security measures or breach of our privacy protections could cause us to lose subscribers and subject us to liability.

 

 Users who subscribe to our premium subscription-based products are required to supply certain personal information which we use to administer our services. We also require users of some of our free products and features to provide us with certain personal information. Additionally, we rely on security and authentication technology licensed from third parties to perform real-time credit card authorization and verification, and at times rely on third parties, including technology consulting firms, to help protect its infrastructure from security threats. In this regard, our users depend on us to keep their personal information safe and private from third parties. If users perceive that we are not protecting their privacy, or if the technology developed by these third parties does not function as anticipated and our information security measures are breached, our users could be discouraged from registering to use our services, which could have a material adverse effect on our business, results of operations and financial condition.

 

-8-

---

 

Our business is dependent on the level of trading activity in PRC ’ s securities markets. Volatility in PRC ’ s securities markets cou ld dampen investors ’ interest in such markets and adversely affect our revenue and profitability.   

Our business is dependent on user demand for market intelligence on various securities markets, including PRC’s securities markets. The demand for investment in PRC’s securities markets has fluctuated with the level of trading activity there. In the last several years, PRC’s securities markets have experienced significant decline. On June 6, 2005, the Shanghai Stock Exchange Index reached its lowest level since March 1997, and over the past five years both the Shanghai Stock Exchange A-Share Index and the Shenzhen Stock Exchange Index have experienced significant decline in index value. If the PRC’s securities markets continue to weaken, and if investors’ interest in PRC’s securities markets continues to decline, our business could be significantly and adversely affected.

 

A substantial amount of our revenues are billed on a fixed-price basis which may be subject to cost over-runs and we may incur a loss as a result.

 

A substantial percentage of our IR/PR business and the planned Portal business, which are explained in more detail under Item 4 - “Information on the Company,” are individual and short-term projects billed on a fixed-price basis as distinguished from a method of billing on a time and materials basis. Our failure to obtain new business in any given quarter or estimate accurately the resources and time required for an engagement, to manage client expectations effectively regarding the scope of services to be delivered for the estimated fees or to complete fixed-price engagements within budget, on time and to clients’ satisfaction could expose us to risks associated with cost over-runs, which could have a material adverse effect on our business.

 

A failure to attract individual investors to our investment seminars and conferences could decrease the attendance of presenting companies at our seminars and conferences, which may adversely affect our revenues.

 

As part of NAI and CWN China’s investor relations and public relations services, the organization of Chinese investment seminars represent a significant portion of total revenue. Currently, presenting companies are charged a fee of $4,000 and standard exhibit spaces costs $2,500, while individual investors are invited to attend free of charge. Presenting companies and exhibitors typically attend for the purpose of meeting individual investors, and it is to all parties’ advantage to offer free admission to individual investors. The success of our seminars is dependent upon the number of individual investors that attend, failing to achieve this would result in a decline of presenting companies and exhibitors, thereby affecting the overall revenue of NAI and CWN China. The existing price to presenting companies and exhibitors may increase in the future, which may also cause a decline in participating companies and exhibitors, thereby affecting our financial condition as a whole.

 

A failure of implementing the changes planned for the conferencing business could decrease attendance of presenting companies, corporate delegates, and in general, paying participants for the conferences in Toronto and Shanghai.

 

The Global Chinese Financial Forum financial conferencing model will undergo changes in 2009 to address the current financial environment.  These changes include the repositioning of the Toronto Conference and the Shanghai Conference away from the traditional focus on the capital markets and towards a more general, partnering business for selected industries related to cross border business between North America and Greater China.  Because 2009 will be the first year of these changes, the success of the conferences is, by no means, secure.  Problems may arise from inexperience of company personnel with the focus industries chosen and may negatively affect the revenue from paying participants for the conferencing business.

A failure of the new IR/PR business model to meet its sales goals may adversely affect our revenues

The NAI IR/PR business has undergone significant changes in the year 2008, leading to its renaming as NAI 500.  The changes also include a new model and goals for attracting public companies for its services that are unproven and may realize losses in the investment to implement these changes.

A failure to maintain strategic relationship with partner companies in organizing financial seminars in PRC may adversely affect our business.

 

In expanding our financial seminars in PRC, we may depend on establishing and maintaining the partnerships with local companies in PRC, such as agents, internet platform partners, consulting companies, project event organizers, in various disciplines such as marketing our company and/or events, seminar organization and coordination. We may be unable to enter into or successfully renew relationships with these companies or partners on commercially reasonable terms.

 

-9-

---

 

Many companies that we may approach for a strategic relationship or who already have strategic relationships with us will have financial commitments and responsibilities involved with our company. Failure to establish or maintain relationships with said companies would significantly affect our business.

 

  We do not own the URLs for our principal websites. If we lose the right to use our two principal website addresses or URLs, our business could be seriously harmed.

 

Our two principal website addresses or Uniform Resource Locators (URLs), www.chineseworldnet.com and www.nai500.com , are currently licensed from Register.com on a yearly basis. As per the Service Agreement with Register.com, there is no guarantee that we can renew the licensing agreement with regard to the two principal website addresses or URLs. If we lose the right to use the  www.chineseworldnet.com and  www.nai500. com domain names, they may become property of our competitors or other parties, either of which would have a material adverse effect on our business, prospects, financial condition, results of operation and share price.

If we are not able to respond succe ssfully to technological or industry developments, our business may be materially and adversely affected.  

The online financial data and information services market is characterized by rapid advancements in technology, evolving industry standards and changes in customer needs. New services or technologies may render our existing services or technologies less competitive or obsolete. Responding and adapting to technological developments and standard changes in our industry, the integration of new technologies or industry standards, or the upgrading of our networks may require substantial time, effort and capital investment. In the event that we are unable to respond successfully to technological industry developments, this may materially and adversely affect our business, results of operations and competitiveness.

 

Our business would be adversely affected if we do not continue to expand and maintain an effective customer support force.  

 

We offer subscribers customer support in English, Cantonese and Mandarin through a North American toll free telephone number. The purpose of customer support is to resolve subscriber issues as well as explain our Company’s service offerings. Many staff members involved in customer support are relatively new to the Company, and may not have the training or experience to effectively serve our clients. We will need to increase our customer support force as our business expands, as well as provide adequate training. We may not be able to hire and retain employees without short-term disruptions to our operations, and locating multilingual workers is a challenge. Failure to maintain a working customer support team may adversely affect our business.

 

Our future performance is dependent on our ability to retain key personnel.

 

Our performance is substantially dependent on the performance of our senior management and key technical personnel. In particular, our success depends on the continued efforts of our senior management team. In addition, we intend to grant stock options to many of our employees in lieu of salary raise. Due to potential fluctuation of our future share price, our employees may have options at strike prices far above the then current share price. As a result, many of our employees may not consider their options to be valuable compensation, and we may need to provide additional compensation, in the form of additional salary, bonuses or equity, in an effort to retain existing employees. Our inability to retain employees, particularly our senior officers, and key sales, technical, marketing and other service personnel in our key revenue producing businesses could have a material adverse effect on our prospects, business, operations, financial conditions and share price.

 

Our long-term liquidity and capital resources are uncertain.

 

We believe revenues generated through our current operations, combined with our cash resources, are adequate to fund our current marketing programs in North America. However, we anticipate the need to secure additional financing in order to implement our planned expansion in Asia. We have yet to enter into agreements with respect to additional financing, but expect to raise funds through debt or stock offerings to accredited investors. In the event that an opportunity for acquisition arises, or additional funds are required, we may not be successful in raising the additional capital needed for this purpose. See Item 4 “Information on the Company”.

 

-10-

---

 

We face significant competition which could adversely affect our business, financial condition and results of operations .

The online financial data and information services market for the Chinese community in North America is relatively new, with few substantial barriers to entry and is competitive and rapidly changing. The number of financial news and information sources competing for consumers’ attention and spending has increased since we commenced operations and we expect that competition will continue to intensify. We currently compete, directly and indirectly, for paying subscribers and viewers with companies in the business of providing financial data and information services, including publishers and distributors of traditional media, Internet portals providing information on business, finance and investing, dedicated financial information websites, personal stock research software vendors and stock brokerage companies, especially stock brokerage companies with online trading capabilities.

 

Many of our existing competitors, as well as a number of potential new competitors, have longer operating histories, greater name recognition, larger customer bases and significantly greater financial, technical and marketing resources than we do. This may allow them to adopt our business model and devote greater resources than we can to the development and promotion of service offerings similar to or more advanced than our own. These competitors may also engage in more extensive research and development, undertake more far-reaching marketing campaigns, and adopt more aggressive pricing policies and offer products and services that achieve greater market acceptance than ours. They may also undercut us by making more attractive offers to our existing and potential employees, content providers and sponsors. New and increased competition could result in price reductions for our research tools, reduced margin or loss of market share, any of which could materially and adversely affect our business, results of operations and financial condition.

 

In addition, a number of companies in PRC offer stock quotes, economic and company-specific news, historical stock performance statistics, online chatting regarding individual securities and other features for free over the Internet. If users determine that the information available for free over the Internet is sufficient for their investing needs, they would be unlikely to pay for subscription to our services, thus reducing our revenues and net income and forcing us to develop a new business model. Furthermore, the amount and quality of information available for free over the Internet may expand in the future, reducing the attractiveness of our services and forcing us to spend additional money to develop more sophisticated services in order to compete. There can be no assurance that we would be successful in developing a new business model or more advanced services in response to either of the above challenges. Failure to do so would lead to significant declines in our number of subscribers, revenues and net income.

 

We may be involved in future litigation over our use of technology rights.

 

We currently own and license technology from third parties. As we continue to introduce new services that require new technology, we anticipate that we may need to license additional third-party technology. These existing and additional technology licenses may not be available to us on commercially reasonable terms, if at all. In addition, it is possible that in the course of using new technology, we may inadvertently breach the technology rights of third parties and face liability. Our inability to obtain these technology licenses or avoid breaching third party technology rights could delay or compromise our introduction of new services and could materially and adversely affect our business and financial condition.

 

We cannot be certain that our website content and online services and tools do not or will not infringe upon patents, valid copyrights or other intellectual property rights held by third parties. We may become subject to legal proceedings and claims from time to time relating to the intellectual property of others in the ordinary course of our business. If found to have violated the intellectual property rights of others, we may be banned from using such intellectual property, and we may incur licensing fees or be forced to develop alternatives. In addition, we may incur substantial expenses in defending against these third party infringement claims, regardless of their merit. Successful infringement or licensing claims against us may result in substantial monetary liabilities, which may materially and adversely affect our business.

 

-11-

---

 

We enter into confidentiality agreements with our employees and consultants, and control access to and distribution of our documentation and other licensed information. In spite of these precautions, it may be possible for such persons to breach such precautions or controls or a third-party to copy or otherwise obtain and use our licensed services or technology without authorization, or to develop and apply similar technology independently. In addition, effective copyright, trademark and trade secret protection may be unavailable or limited, and the global nature of the Internet and the media makes it practically impossible to control the ultimate destination of our products. Policing the unauthorized use of our licensed technology is difficult as are the steps necessary to prevent the misappropriation or infringement of our licensed technology. In addition, litigation may be necessary to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others, which could result in substantial cost to us, divert our resources and have a material adverse effect on our business, results of operations and financial condition.

Our expansions to Greater China, particularly our joint venture with Compass Shanghai Compass Venture Capital Investment Company Limited leading to the CWN China subsidiary may not be successful.

 

We have acquired an operation in Greater China for the purpose of expanding our networks and functions in Greater China as well as build further value into our conferencing business.  The acquisition has resulted in the use of significant amounts of cash and operations in China may not result in tangible gains for our business.

 

Our strategy of expansion through acquisitions has been and will continue to be costly and may not be effective, and we may realize losses on our investments.

 

We have acquired, and intend to continue to acquire, companies and assets that we believe will enhance our revenue growth, operations and profitability. Our acquisitions may result in the use of significant amounts of cash, dilutive issuances of our common shares and amortization expenses related to goodwill and other intangible assets, each of which could materially and adversely affect our business. These acquisitions involve significant risks, including:

 

·

the difficulties of integrating, assimilating and managing the operations, technologies, intellectual property, products and personnel of the acquired business;

·

the diversion of management attention from other business concerns;

·

the reduced availability of favorable financing for future acquisitions;

·

the additional expense associated with acquired contingent liabilities;

·

our inability to manage adequately the currency, interest rate and equity price fluctuations relating to our acquisitions and investments;

·

the loss of key employees in acquired businesses;

·

the risk of being sued by terminated employees and contractors; and

·

our lack of familiarity with local market and other conditions and business practices.

 

If we acquire another business, we would need to integrate, manage and protect our interests in our acquired businesses successfully, and failure to do so could have a material adverse effect on our business, results of operations and financial condition.

 

If economic and other conditions further deteriorate, or if market or other values continue to fluctuate, we may need to provide for further decreases in value or increased unrealized losses. Our results of operations, financial condition, prospects and share price could be adversely and materially affected, particularly if we are unable to hedge or adequately hedge our exposure to reduced valuations.

 

-12-

---

 

Our strategy of expansion through acquisitions may affect our ability to receive favorable financing terms.

 

Our future acquisitions may result in the use of significant amounts of cash, dilutive issuances of our common shares and amortization expenses related to goodwill and other intangible assets, each of which could materially and adversely affect our financial condition. In addition, there is no guarantee that those acquisitions will actually enhance our revenues, operations and profitability. If those benefits do not materialize as expected, our financial conditions may worsen to include lower cash balance, lower profitability, higher debt level and lower credit rating. These will likely affect our ability to receive favorable debt or equity financing. As a result, we may need to accept a less than favorable financing such as issuing debt at a higher interest rate or issuing common shares at below book value or market value, should we require additional capital for our operations.

Failure to maintain profitability and cash flow may lead to a failure of the business.

 

With the year 2008 having a net loss in revenues, the Company may face risks in continued failures to maintain profitability and dwindling cash flows.  The failure of the Companies various models to increase revenues may lead to failure of the Company as a whole.

  Risks Relating to Our Industry

Intense competition could reduce our market share and harm our financial performance.

 

A number of financial news and information sources compete for consumers’ and advertisers’ attention and spending. We compete for advertisers, readers, staff and outside contributors with many types of companies, including:

 

·   English Content:

 

-

online services or websites focused on business, finance and investing, such as CBS.MarketWatch.com, CNBC on MSN Money, CNNfn.com, The Wall Street Journal Online, TheStreet.com, Globeinvestor.com, TheNewYorkTimes.com, DowJones.com, SmartMoney.com, and The Motley Fool;

-

publishers and distributors of traditional media, including print, radio and television, such as The Wall Street Journal, Fortune, Bloomberg Business Radio and CNBC;

-

providers of terminal-based financial news and data, such as Bloomberg Business News, Reuters News Service and Dow Jones Markets;

-

web “portal” companies, such as Yahoo! MSN.com, and America Online; and

-

online brokerage firms, many of which provide financial and investment news and information, such as Charles Schwab, E*TRADE and TD Waterhouse.

·

Chinese Content:

-

web “portal” companies, such as Yahoo! China, Yahoo! Hong Kong, baidu.com, China.com, Taiwan.com, Sina.com, Sohu.com, HongKong.com, Tom.com, 36.com, Netease.com, Yam, and Hinet;

-

publishers and distributors of traditional media, including print, radio and television, such as Apple Daily, MingPao Daily, SingTao Daily, ChinaByte and Xinhua News Agency;

-

online brokerage firms, many of which provide financial and investment news and information, such as whsb.com, Cash Online, Pt123.com; and

-

online services or websites focused on business, finance and investing, such as Chinesefn.com , HKNasdaq.com , Chinese.wsj.com ,  www.cnyes.com , and www.jrj.com .

 

-13-

---

 

 

Our ability to compete depends on many factors, including the originality, timeliness, insightfulness and trustworthiness of our content and that of our competitors, the ease of use of services developed either by us or our competitors and the effectiveness of our sales and marketing efforts.

 

Many of our existing competitors, as well as a number of potential new competitors, have longer operating histories, greater name recognition, larger customer bases and significantly greater financial, technical and marketing resources than we do. This may allow them to devote greater resources than we can to the development and promotion of their services. These competitors may also engage in more extensive research and development, undertake more far-reaching marketing campaigns, adopt more aggressive pricing policies (including offering more of their financial news and commentary for free) and make more attractive offers to existing and potential employees, outside contributors, strategic partners and advertisers. Our competitors may develop content that is equal or superior to our content or that achieves greater market acceptance than our content. It is also possible that new competitors may emerge and rapidly acquire significant market share. We may not be able to compete successfully for advertisers, readers, staff or outside contributors, which could materially adversely affect our business, results of operations and financial condition. Increased competition could result in price reductions, reduced margins or loss of market share, any of which could materially and adversely affect our business, results of operations and financial condition.

 

We also compete with other websites, television, radio and print media for a share of advertisers’ total advertising budgets. If advertisers perceive the Internet or our websites to be a limited or an ineffective advertising medium, they may be reluctant to devote a portion of their advertising budget to Internet advertising or to advertising on our websites.

 

Furthermore, we are experiencing increased competition with a growing number of companies in the United States and Canada with respect to our conference and seminar business and IR/PR services. There is a growing trend for these companies to put on trade shows and conferences regarding investing in China, which competes with our business. If we are not able to effectively compete with these companies for the limited marketing budgets of participants, our business may be adversely affected and our financial performance may be harmed.

  Computer equipment problems and failures co uld adversely affect our business .

 

Problems or failures in our Internet-related equipment, including our file servers, computers and software could result in interruptions or slow response times on our websites, which could reduce the attractiveness of our websites to advertisers and users. Equipment problems and failures could result from a number of causes, including but not limited to an increase in the number of users of our websites, computer viruses, outside programmers penetrating and disrupting our software systems, human errors, fires, floods, power and telecommunications failures, and internal breakdowns. In addition, any disruption in Internet access provided by third parties could have an adverse effect on our ability to provide the services that it proposes to offer to our members which in turn may have an adverse effect on the number of members we are able to attract to our websites.

 

Our computer network is vulnerable to hacking, viruses and other disruptions .

 

Inappropriate use of our Internet services or errors or omissions in processing instructions or data available in our computer system or databases could jeopardize the security of confidential information stored in our computer system, which may cause us to lose key clients, expose us to liability for our clients’ losses and prevent us from securing future business, any of which could have a material adverse effect on our prospects, business, financial condition, results of operations and share price.

 

Inappropriate use of the Internet includes attempting to gain unauthorized access to information or systems—commonly known as cracking or hacking. Our current policies, procedures and configurations for managing our systems, including our computer servers, may not be adequate to protect our facilities and the integrity of our user and customer information. Although we intend to implement security measures to protect our facilities and the integrity of our user and customer information, such measures could be ineffective or circumvented. Alleviating problems caused by computer viruses or other inappropriate uses or security breaches may require interruptions, delays or cessation in our services, in addition to the outages that occur in our systems from time to time for various reasons, including power interruptions, errors in instructions, equipment inadequacy, capacity and other technical problems. We do not carry errors and omissions or other insurance covering losses or liabilities caused by computer viruses or security breaches. Compromises or breaches in the security or integrity of our facilities or customer or user information, or inappropriate use of our Internet services, could subject us to litigation and could adversely affect our customer base, business, prospects, share price, results of operation and financial condition.

 

-14-

---

 

 

Existing and future laws and regulations may increase our costs of doing business and our legal compliance expenditures, and could decrease our readership.

 

Existing domestic and international laws or regulations and private industry guidelines specifically regulate communications or commerce on the web. Furthermore, laws and regulations that address issues such as user privacy, pricing, online content regulations, taxation of electronic commerce transactions and the characteristics and quality of online products and services are under consideration by federal, state, local and foreign governments and agencies and by private industry groups. Several telecommunications companies have petitioned the Federal Communications Commission to regulate Internet service providers and online services providers in a manner similar to the regulation of long distance telephone carriers and to impose access fees on such companies. The governments of other states or foreign countries might attempt to regulate our transmissions or levy sales or other taxes relating to our activities. These regulations, if imposed, could increase the cost of transmitting data over the web.

 

In addition, the growth and development of the market for Internet commerce may prompt calls for more stringent consumer protection laws, both in the United States and abroad, that may impose additional burdens on companies conducting business over the Internet. Our business, results of operations and financial condition could be materially and adversely affected by the adoption or modification of laws or regulations relating to the Internet.

 

The interpretation and application of existing securities laws to web-based financial news providers, including laws governing investment advisors, investment companies and broker/dealers, by the Securities and Exchange Commission and state securities regulators, is a developing area. If, as this area matures, our activity is interpreted as subjecting it to regulation, we could be subject to liability, and our business, results of operations and financial condition could be materially and adversely affected.

 

We are also subject to various federal and state regulations concerning the collection and use of information regarding individuals. These laws include the Children’s Online Privacy Protection Act, and state laws which limit or preclude the use of voter registration and drivers’ license information, as well as other laws that govern the collection and use of consumer credit and financial information, including the Gramm-Leach-Bliley Act. Although our compliance with applicable federal and state laws, regulations and industry guidelines has not had a material adverse effect on our business, governments, trade associations and industry self-regulatory groups may enact more burdensome laws, regulations and guidelines, including antitrust and consumer privacy laws, for us and our customers. The U.S. federal and various state governments have been investigating certain Internet companies regarding their use of personal information and have recently proposed limitations on the collection and use of information regarding Internet users. The European Union has enacted its own privacy regulations that may result in limits on the collection and use of certain information from users in Europe. We could incur additional expenses if any new regulations regarding the use of personal information are introduced or if these agencies chose to investigate our privacy practices. Also, as a consequence of governmental legislation or regulation or enforcement efforts or evolving standards of fair information collection practices, we may be required to make changes to our products or services in ways that could diminish the effectiveness of the product or service or our attractiveness to potential customers, which could materially and adversely affect our business, financial condition or results of operations. Any new laws or regulations relating to the web, or certain application or interpretation of existing laws, could decrease the growth in the use of the web, decrease the demand for our websites or otherwise materially and adversely affect our business.

 

Laws and regulations directly applicable to Internet communications, commerce and advertising are becoming more prevalent, and new laws and regulations are under consideration by the U.S. Congress and state legislatures. Any legislation enacted or restrictions arising from current or future government investigations or policy could dampen the growth in use of the Internet generally and decrease the acceptance of the Internet as a communication, commercial and advertising medium. The laws governing the Internet remain largely unsettled, even in areas where there has been some legislative action. Moreover, it may take years to determine the extent to which existing laws relating to issues such as intellectual property ownership and infringement, libel, obscenity and personal privacy apply to the Internet and Internet advertising.

 

-15-

---

 

Concerns about the security of electronic commerce transactions and confidentiality of information on the Internet may reduce use of our network and impede our growth.

 

A significant barrier to electronic commerce and communications over the Internet in general has been a public concern over security and privacy, especially the transmission of confidential information. If these concerns are not adequately addressed, they may inhibit the growth of the Internet and other online services generally, especially as a means of conducting commercial transactions. If a well-publicized Internet breach of security were to occur, general Internet usage could decline, which could reduce traffic to our destination sites and impede our growth.

 

Doing business outside of the United States may subject us to additional risks .

A substantial portion of our business is conducted outside of the United States and as a result, our operations could be subject to various risks such as the possibility of the loss of revenue, property or equipment due to expropriation, nationalization, war, insurrection, terrorism or civil disturbance, the instability of foreign economies, currency fluctuations and devaluations, adverse tax policies and governmental activities that may limit or disrupt markets, restrict payments or the movement of funds or result in the deprivation of contract rights. Additionally, our ability to compete could be adversely affected by foreign governmental regulations that encourage or mandate the hiring of local contractors, or by regulations that require foreign contractors to employ citizens of, or purchase supplies from vendors in a particular jurisdiction. We could also be subject to taxation in a number of jurisdictions, and the final determination of our tax liabilities might involve the interpretation of the statutes and requirements of various domestic and foreign taxing authorities.

  We may rely on electronic commerce as a significant part of our future revenue, but the Internet has not yet been proven as an effective commerce medium in the Greater China region.

 

Our revenue growth also depends on the increasing acceptance and use of electronic commerce in the region comprised of the PRC, Hong Kong and Taiwan (referred in this annual report as “Greater China”). The Internet may not become a viable commercial marketplace in Asia for various reasons, many of which are beyond our control, including inexperience with the Internet as a sales and distribution channel; inadequate development of the necessary infrastructure to facilitate electronic commerce; concerns about security, reliability, cost, ease of deployment, administration and quality of service associated with conducting business over the Internet; and inexperience with credit card usage or with other means of electronic payment in the PRC.

 

If the Internet does not become more widely accepted as a medium for electronic commerce, our ability to generate increased revenue will be negatively affected.

 

The ability to block Internet advertising could prevent the expansion of online advertising in Asia.

 

The development of Web software that blocks Internet advertisements before they appear on a user’s screen may hinder the growth of online advertising. The expansion of ad blocking on the Internet may decrease our revenues because when an ad is blocked, it will not be downloaded from our ad server, which means these advertisements will not be tracked as a delivered advertisement. In addition, advertisers may choose not to advertise on the Internet or on our advertising network because of the use of Internet advertisement blocking software. The use of software that blocks Internet advertisements may materially and adversely affect our business.

 

The Greater China and Asian Internet industry is a developing market and is not a proven effective commercial medium

 

The market for Internet services in Greater China and Asia has only recently begun to develop. Since the Internet is an unproven medium for advertising and other commercial services, our future operating results from online advertising and electronic business solutions services will depend substantially upon the increased use of the Internet for information, publication, distribution and commerce and the emergence of the Internet as an effective advertising medium in Greater China and Asia. Many of our customers will have limited experience with the Internet as an advertising medium or sales and distribution channel, and will not have devoted a significant portion of their advertising expenditures or other available funds to Web-based advertising or website development and may not find the Internet to be effective for promoting their products and services relative to traditional print and broadcast media.

 

Critical issues concerning the commercial use of the Internet in Greater China and elsewhere in Asia, including:

-

security;

-	reliability;

 

-16-

---

 

-

cost;

-	ease of deployment;

-	administration; and

-	quality of service

may affect the adoption of the Internet to solve business needs. For example, the cost of access, penetration rate or availability of access to technology, hardware and software may prevent potential users in Asia from using the Internet. Also, the use of credit cards in sales transactions is not common in parts of Asia. Until the use of credit cards, or another viable alternative means of electronic payment, becomes more prevalent, the development of electronic commerce through our portal network will be seriously impeded. In addition, even if suitable payment methods are widely adopted in Asia, consumers will have to be confident that adequate security measures are taken to protect electronic sale transactions conducted over the Internet and prevent fraud.

Our entry into the Chinese Internet market depends on the establishment of an adequate telecommunications infrastructure in the PRC by the Chinese government

 

Unlike Taiwan and Hong Kong, where the telecommunications infrastructure is comparable to U.S. standards where private companies compete as ISPs, the telecommunications infrastructure in PRC is not as well developed. In addition, access to the Internet in PRC is accomplished primarily by means of the government’s backbone of separate national interconnecting networks that connect with the international gateway to the Internet. This gateway is owned and operated by the Chinese government, and is the only means of connection to the international Internet network. Although private sector ISPs exist in PRC, almost all access to the Internet is accomplished through ChinaNet, PRC’s primary commercial network, which is owned and operated by the Chinese government. We will rely on this backbone enterprise and telecom companies to provide data communications capacity primarily through local telecommunications lines. As a result, we will continue to depend on the Chinese government to establish and maintain a reliable Internet infrastructure to reach a broader Internet user base in PRC. We will have no means of accessing alternative networks and services in PRC, on a timely basis or at all, in the event of any disruption or failure. The Internet infrastructure in PRC may not support the demands associated with continued growth. If the necessary infrastructure standards or protocols or complementary products, services or facilities are not developed by the Chinese government, our business could be materially and adversely affected.

 

Political and economic conditions in Greater China are unpredictable and may disrupt our operations if these conditions become unfavorable to our business.

 

We expect to derive a substantial percentage of our revenues from the Greater China market. Changes in political or economic conditions in the region are difficult to predict and could adversely affect our operations or cause the Greater China market to become less attractive to advertisers, which could reduce our revenues. We intend to maintain a strong local identity and presence in each of the regions in the Greater China market, although we may not be able to maintain effectively this local identity if political conditions were to change.

 

In addition, economic reforms in the region could affect our business in ways that are difficult to predict. Since the late 1970s, the Chinese government has been reforming the Chinese economic system to emphasize enterprise autonomy and the utilization of market mechanisms. Although we believe that these reform measures have had a positive effect on the economic development in PRC, they may not be effective or benefit our business.

 

 

-17-

---

 

There are economic risks associated with doing business in Greater China.

PRC . The Chinese government has been reforming its economic system since the late 1970s. The economy of PRC has historically been a planned economy, subject to governmental plans and quotas and has, in certain aspects, been transitioning to a more market-oriented economy. Although we believe the economic reform and the macroeconomic measures adopted by the Chinese government have had a positive effect on the economic reform and the macroeconomic measures adopted by the Chinese government have had a positive effect on the economic development of PRC, we cannot predict the future direction of these economic reforms or the effects these measures may have on our business, financial position or results of operations. In addition, the Chinese economy differs from the economies of most countries belonging to the Organization for Economic Cooperation and Development, or OECD.

These differences include:

 

		PRC		OECD
Economic structure:		Planned economy, but in a slow process of transition to a market economy		Market economy
Level of government involvement in the economy:		Very high		Low to moderate
Level of economic development:		Developing country		Developed countries
Control of foreign exchange:		Government controlled		Market driven
Methods of allocation resources:		Government controlled, but in the slow process of transition to a market economy		Market driven

 

 As a result of these differences, our business may not develop in the same way or at the same rate as might be expected if the Chinese economy were similar to those of the OECD member countries. Changes in the PRC’s political, economic and social conditions, adjustments in policies of the Chinese government or changes in the Chinese’s laws and regulations may adversely affect our results of operations and financial condition. The Chinese economy has experienced significant growth in the past decade, but this growth has been uneven across geographic and economic sectors and has recently been slowing. Such growth may not continue and any slow-down may have a negative effect on our business. The international financial markets in which the securities of the Chinese government, agencies and private entities are traded have experienced significant price fluctuations upon speculation that the Chinese government may devalue the renminbi which could increase our costs relative to our Chinese revenues.

 

Hong Kong. As part of our expansion plan, a small part of our business will be generated from Hong Kong. Hong Kong is a Special Administrative Region of the PRC (“SAR”) with its own government and legislature. Hong Kong enjoys a high degree of autonomy from PRC under the principle of one country, two systems, however, such autonomy may not continue. The Hong Kong dollar has remained relatively constant due to the U.S. dollar peg and currency board system that has been in effect in Hong Kong since 1983. However, in early 1999, the Hong Kong dollar was subject to currency speculation and the SAR government substantially supported the market for the Hong Kong dollar, both directly and indirectly through the large-scale purchase of securities listed on the Hong Kong Stock Exchange. The historical currency peg of the Hong Kong dollar to the U.S. dollar may not be maintained, and accordingly may adversely affect our business.

 

-18-

---

 

Taiwan. A small part of our future revenues may be derived from the Taiwan market. Taiwan has a unique international political status. The Chinese government asserts sovereignty over Taiwan and does not recognize the legitimacy of the Taiwan government. Although significant economic and cultural relations have been established in recent years between Taiwan and PRC, PRC has refused to renounce the possibility that it may at some point use force to gain control over Taiwan. Relations between Taiwan and PRC have been strained since mid-1999 as a result of then-President Lee Teng-Hui’s assertion that relations between the two sides should be conducted on a special state-to-state basis. During the Macau handover ceremony in 1999, President Jiang Zemin reiterated PRC position towards Taiwan, stating that he was confident that Taiwan would soon be reunified with PRC in order to complete PRC’s plans for national reunification. The election of pro-independence candidate Chen Shui-bian as the new President of Taiwan in early 2000, and Taiwan’s recent request to purchase strategic arms and defense technology from the United States have created additional uncertainty to the already tenuous relationship between PRC and Taiwan. Strained relations between Taiwan and PRC could adversely affect our business, results of operations or financial condition. Between late 1997 and early 1999, the NT dollar, the currency of Taiwan, experienced considerable volatility and depreciation as a result of the economic downturn in Asia. Continued volatility and depreciation of the NT dollar could adversely affect our business, results of operations and financial condition. Taiwan has recently experienced a recession primarily due to a reduction in exports due to weakened demand for imported goods in many Asian countries and a continued recession in Taiwan may materially affect our business.

 

The PRC’s regulation of content distributed on the Internet may adversely affect our business.

 

PRC has enacted regulations governing Internet access and the distribution of news and other information. The Ministry of Information Industry (the “MII”) has published implementing regulations that subject online information providers to potential liability for content included on their portals and the actions of subscribers and others using their systems, including liability for violation of Chinese laws prohibiting the distribution of content deemed to be socially destabilizing. Because many Chinese laws, regulations and legal requirements with regard to the Internet are relatively new and untested, their interpretation and enforcement of what is deemed to be socially destabilizing by Chinese authorities may involve significant uncertainty. Under the PRC’s regulations on telecommunications and Internet information services, Internet information service providers are prohibited from producing, duplicating, releasing or distributing any information which falls within one or more of nine stipulated categories of “undesirable content”. These categories cover any information which:

  

·

contravenes the basic principles enshrined in the PRC Constitution;

·

endangers the security or unity of the State;

·

undermines the State’s religious policies;

·

undermines public order or social stability; or

·

contains obscene, pornographic, violent or other illegal content or information otherwise prohibited by law.

Internet information service providers found to be disseminating information that falls under any of these categories must cease immediately, keep a record of the relevant information, and report to the appropriate government authority.

 

In addition, the Chinese legal system is a civil law system based on written statutes. Unlike common law systems, it is a system in which decided legal cases have little precedential value. As a result, it is difficult to determine the type of content that may result in liability. We cannot predict the effect of further developments in the Chinese legal system, particularly with regard to the Internet and the dissemination of news content, including the creation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the pre-emption of local regulations by national laws.

 

Periodically, the Ministry of Public Security has stopped the distribution of information over the Internet which it believes to be socially destabilizing. The Ministry of Public Security has the authority to cause any local ISP to block any website maintained outside of PRC at our sole discretion. Websites that are blocked in PRC include many major news-related websites such as www.cnn.com, www.latimes.com, www.nytimes.com and www.appledaily.com.hk .   The Chinese government has also expressed its intention to closely control possible new areas of business presented by the Internet, such as Internet telephony.

 

-19-

---

 

Violations or perceived violations of Chinese laws arising from information displayed, retrieved from or linked to our portals could result in significant penalties, including a temporary or complete cessation of our business in PRC. Chinese government agencies have recently announced restrictions on the transmission of state secrets through the Internet. State secrets have been broadly interpreted by Chinese governmental authorities in the past. We may be liable under these new pronouncements for content and materials posted or transmitted by users on our message boards, virtual communities, chat rooms or e-mails. If the Chinese government were to take any action to limit or eliminate the distribution of information through our portal network or to limit or regulate any current or future applications available to users on our portal network, this action could have a material adverse effect on our business, financial condition and results of operations.

 

We may be adversely affected by Chinese government regulation of Internet companies.

 

The Chinese government heavily regulates the Internet sector including the legality of foreign investment in the Chinese Internet sector, the existence and enforcement of content restrictions on the Internet and the licensing and permit requirements for companies in the Internet industry. Because these laws, regulations and legal requirements with regard to the Internet are relatively new, their interpretation and enforcement may involve significant uncertainty. In addition, the Chinese legal system is a civil law system in which decided legal cases have limited binding force as legal precedents. As a result, in many cases it is difficult to determine what actions or omissions may result in liability.

 

Issues, risks and uncertainties relating to the PRC government regulation of the Chinese Internet sector include the following:

 

·

China began its fourth year as a World Trade Organization (WTO) member on December 11, 2003 The problems that foreign telecom service providers have faced in accessing China's market should improve in year four as foreign companies will be permitted to establish joint venture operations in domestic or international data services without quantitative restrictions in Beijing, Guangzhou, and Shanghai—though the foreign investment share may not exceed 25 percent. Foreign companies will be able to invest up to 49 percent. Although, PRC was officially admitted to the WTO, it is still not clear how this agreement may be changed in future.

·

The numerous and often vague restrictions on acceptable content in the PRC subject us to potential civil and criminal liability, temporary blockage of our website or complete cessation of our website. For example, the State Secrecy Bureau, which is directly responsible for the protection of state secrets of all Chinese government and Chinese Communist Party organizations, is authorized to block any website it deems to be leaking state secrets or failing to meet the relevant regulations relating to the protection of state secrets in the distribution of online information.

 

The interpretation and application of existing Chinese laws and regulations, the stated positions of the MII and possible new laws or regulations have created substantial uncertainties regarding the legality of existing and future foreign investments in, and the businesses and activities of, Chinese Internet businesses, including our business.

 

If we do not comply with Chinese regulations relating to our scope of permitted business, Chinese regulators could cause us to discontinue our operations in the PRC.

 

The Chinese government regulates access to the Internet by imposing strict licensing requirements and requiring ISPs in PRC to use the international inbound and outbound Internet backbones. The Chinese government may require that we obtain a license for Internet access in the future based on new legislation or otherwise. We may not be able to obtain all necessary licenses required in the future, and any future changes in Chinese government policies may impose additional regulatory requirements on us or our service providers, intensify competition in PRC information industry or otherwise have a material adverse effect on our business, financial condition and results of operations.

 

We are uncertain as to whether the Chinese government will reclassify our business as a media or a retail company, due, among other things, to our acceptance of Internet advertising and electronic commerce related services fees as sources of revenue. Any reclassification could subject us to penalties or fines or significant restrictions on our business. We are also uncertain whether the Chinese government will reclassify our business as a telecommunications business, potentially resulting in significant restrictions on our business.

 

 

-20-

---

 

If we do not comply with Chinese government regulations relating to foreign investment prohibitions, the Chinese gover nment could cause us to discontinue our operations in China.

 

Chinese government policy prohibits foreign investment in the telecommunications services industry, which it has defined to include Internet-related businesses. We may not be in compliance with current Chinese government policies and the Chinese government may not view our intended business in the PRC as in compliance with these policies or any policies that may be made in the future. If we are not viewed as complying with these policies or any regulations that may be created relating to foreign ownership of Internet- related businesses, the Chinese government could block us from starting our development plan in PRC or take other actions that could harm our business.

 

Even if we are in compliance with Chinese governmental regulations relating to licensing and foreign investment prohibitions, the Chinese government may prevent us from distributing, and we may be subject to liability for, content that it believes is inappropriate.

 

The PRC has enacted regulations governing Internet access and the distribution of news and other information. In the past, the Chinese government has stopped the distribution of information over the Internet that it believes to violate Chinese law, including content that it believes is obscene, incites violence, endangers national security, is contrary to the national interest or is defamatory. In addition, we may not publish certain news items, such as news relating to national security, without permission from the Chinese government. Furthermore, the Ministry of Public Security has the authority to cause any local Internet service provider to block any website maintained outside PRC at our sole discretion. Even if we comply with Chinese governmental regulations relating to licensing and foreign investment prohibitions, if the Chinese government were to take any action to limit or prohibit the distribution of information through our network or to limit or regulate any current or future content or services available to users on our network, our business would be harmed.

 

We are also subject to potential liability for content on our websites that is deemed inappropriate and for any unlawful actions of our subscribers and other users of our systems under regulations promulgated by the MII. Furthermore, are required to delete content that clearly violates the laws of PRC and report content that we suspect may violate Chinese law. It is difficult to determine the type of content that may result in liability for us, and if we are wrong, we may be prevented from operating our websites.

 

If we do not comply with Chinese government regulations related to organizing public business and investment seminars and conferences, the Chinese government could cause us to discontinue our seminar services in China.

 

We typically work with local event organizers in China to help us establish seminars and conferences who we depend on to obtain proper permits in China for these events. However, if the Chinese government found that we are not compliant with their requirements to hold seminars and conferences in China, they may prohibit us from holding future events which would result in a significant restriction to our business and negatively impact our revenues.

 

Currency fluctuations and restrictions on currency exchange may adversely affect our business, including limiting our ability to convert Chinese renminbi into foreign currencies and, if renminbi were to decline in value, reducing our projected revenues in U.S. dollars.

 

We intend to generate revenues and incur expenses and liabilities in Chinese renminbi, Taiwan dollars, Hong Kong dollars, Canadian dollars and U.S. dollars. As a result, we are subject to the effects of exchange rate fluctuations with respect to any of these currencies. For example, the value of the renminbi depends to a large extent on PRC’s domestic and international economic and political developments, as well as supply and demand in the local market. Since July of 1995, the official exchange rate for the conversion of renminbi to U.S. dollars has been free floating and the renminbi has appreciated slightly against the U.S. dollar. So the renminbi may not continue to remain stable against the U.S. dollar or any other foreign currency. Our results of operations and financial condition may be affected by changes in the value of renminbi and other currencies in which our earnings and obligations are denominated. We have not entered into agreements or purchased instruments to hedge our exchange rate risks, although we may do so in the future.

 

-21-

---

 

Although Chinese governmental policies were introduced in 1996 to allow the convertibility of renminbi into foreign currency for current account items, conversion of renminbi into foreign exchange for capital items, such as foreign direct investment, loans or security, requires the approval of the State Administration of Foreign Exchange, or SAFE, which is under the authority of the People’s Bank of China. These approvals, however, do not guarantee the availability of foreign currency. We may not be able to obtain all required conversion approvals for our operations, and Chinese regulatory authorities may impose greater restrictions on the convertibility of the renminbi in the future. Because a significant amount of our future revenues may be in the form of renminbi, our inability to obtain the requisite approvals or any future restrictions on currency exchanges will limit our ability to utilize revenue generated in renminbi to fund our business activities outside the PRC.

 

Terrorist activities and resulting military and other actions could adversely affect our business.

 

The terrorist acts in New York, Washington, D.C. and Pennsylvania on September 11, 2001 have created an uncertain economic environment and we are unable to predict the impact these events, or the responses thereto, will have on our business. The continued threat of terrorism within the United States and abroad and military action and heightened security measures in response to such threat may cause significant economic disruptions throughout the world. Our business, results of operations and financial condition could be materially and adversely affected to the extent such disruptions result in our inability to effectively market and sell our services and software.

Risks Related to Our Common Shares and Shareholder Rights

 

We do not intend to pay cash dividends, so any return on investment to an investor must come from appreciation.

 

To date, we have not paid a dividend on our common shares and do not intend to do so in the foreseeable future, as we expect any excess funds will be reinvested in implementing our business plan. As a result, any return on investment in our common shares must come from increases in the fair market value and trading price of our common stock.

 

Our Common Shares became traded on the OTC Bulletin Board in October 2006 and it is considered a “penny stock” and a shareholder’s ability to buy and sell shares in the secondary market may be limited.

 

On September 25, 2006, we obtained the trading symbol of “CWNOF.OB” and began trading on the OTC Bulletin Board in October 2006. The liquidity of our common shares would continue to be limited, not only in the number of shares that are bought and sold, but also through delays in the timing of transactions, and the lack of coverage by security analysts and the news media of our company. In addition, any shares quoted on the OTC Bulletin Board would be subject to certain rules and regulations relating to “penny stock.” A “penny stock” is generally defined as any equity security that has a price less than $5.00 per share and that is not quoted on the Nasdaq Stock Market or a national securities exchange. Being a penny stock generally would mean that any broker who wanted to trade in our shares (other than with established customers and certain institutional investors) must comply with certain “sales practice requirements,” including delivery to the prospective purchaser of the penny stock a risk disclosure document describing the penny stock market and the risks associated therewith. In addition, broker-dealers must take certain steps prior to selling a “penny stock,” which steps include:

 

·

obtaining financial and investment information from the investor;

·

obtaining a written suitability questionnaire and purchase agreement signed by the investor; and

·

providing the investor a written identification of the shares being offered and the quantity of the shares.

 

If these penny stock rules are not followed by the broker-dealer, the investor has no obligation to purchase the shares. The application of these comprehensive rules could make it more difficult for broker-dealers to sell our common shares, and as a practical matter, these requirements may mean that brokers would be less likely to make recommendations on our shares to its general customers.

 

-22-

---

 

Shares eligible for future sale may have a substantial depressing effect on the stock pric e.

 

As of December 31 st , 2008, we have outstanding an aggregate of 10,700,000 shares of common stock, which includes 2,870,000 shares were freely transferable without restriction under the securities Act (excluding any shares purchased in the offering by any person who is or thereby becomes an “affiliate” of us). There were a total of 7,830,000 common stock as “restricted securities”, the term is defined in Rule 144 under the Securities Act.

 

We are unable to predict the effect that sales of the shares offered hereby, or sales under Rule 144 may have on the then prevailing market price of the shares, but such sales may have a substantial depressing effect on such market price.

 

All of our officers, directors and 5% or more stockholders have agreed not to, directly or indirectly, issue, agree or offer publicly to sell, grant an option for the purchase or sale of, assign, transfer, pledge, hypothecate, distribute or otherwise encumber or dispose of, any shares of the common stock or other equity securities of ours or other securities convertible unto or exercisable for such shares of the common stock or other equity securities except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company.

  The absence of a prior public market for the shares may lead to high volatility in the stock price.

 

Prior to our approval for trading there has been no public market for our common stock and there can be no assurance that an active public trading market for our common stock will develop or be sustained. The absence of an active trading market would adversely affect the liquidity of the shares and existing shareholders might have difficulty in selling their shares. In addition, the stock market is subject to price and volume fluctuations affecting the market price for public companies generally, which fluctuations maybe unrelated to the operating results or other circumstances of a particular company. Such fluctuations may adversely affect the liquidity of the shares, as well as the price that holders may achieve for the securities upon any future sale.

 

Our shareholders may face difficulties in protecting their interests because we are incorporated under Cayman Islands law

 

Our corporate affairs are governed by our memorandum and articles of association, by the Company Law (1998 Revision) and the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by minority shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands.

 

Under the common law of the Cayman Islands, the fiduciary relationship of a director is to us 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. As a result, our public shareholders may face more difficulties in protecting their interests in the face of actions against the management, directors or our controlling shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.

 

There is uncertainty as to our shareholders’ ability to enforce civil liabilities in the Cayman Islands, Hong Kong, Taiwan and PRC.

 

We are a Cayman Islands company have no assets located in the United States. A substantial portion of our current operations is conducted in Canada and we expect to expand to Hong Kong, Taiwan and PRC. In addition, 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 for you 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, Canada, Hong Kong, Taiwan and, PRC 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, Canada, Hong Kong, Taiwan, PRC or other jurisdictions against us or such persons predicated upon the securities laws of the United States or any of our state.

 

-23-

---

 

ITEM 4.   INFORMATION ON THE COMPANY  

---

 

A.   History and Development of CWN

 

ChineseWorldNet.Com Inc. was incorporated on January 12, 2000 under the Company Law (1998 revision) of the Cayman Islands and commenced business in 2000. We are principally based in the Cayman Islands and our operations are primarily conducted in North America and Asia. The address of our principal registered and executive head office is that of our agent, Appleby Spurling Hunter, being: Clifton House, P.O. Box 1350GT, Grand Cayman, Cayman Islands, Telephone (345) 949-4900. Our North American office and principal place of business is located at Suite 368- 1199 West Pender Street, Vancouver, British Columbia, Canada V6E 2R1, and our telephone is (604) 488-8878.

 

There are currently no employees stationed in Toronto. In 2005, we discontinued our lease of business center space in Toronto, which was used by our employees in Vancouver when they travelled to Toronto. Starting February 2005, we began renting a P.O. Box at The Toronto Board of Trade at P.O. Box 60, 1 First Canadian Place, Toronto, Ontario, M5X 1C1 which forwards our mail back to our Vancouver office.  During the year of 2008, we have cancelled our subscription to a P.O. Box.

 

On November 1, 2004, we also started operations in Hong Kong through our subsidiary, CWNHK, at their office located at Room 1101, St. George’s Building, 2 Ice House Street Central, Hong Kong. CWNHK provides us with a local operation base for CWN’s penetration and expansion plans in the Asian market. There are currently no employees of CWN stationed permanently in Hong Kong.

On July 1 of 2008, we started operations in Shanghai, China through a joint venture, Shanghai Compass Venture Capital Investment Company Limited (CWN China), at #1003, Eton Place Tower B, 555 Pudong Ave., Shanghai, PRC 200120.  The office in Shanghai provides CWN with the capabilities to penetrate and expand in the Greater China markets.  There are currently eleven employees stationed permanently in Shanghai, with duties ranging from translations, web design and technical support, to sales, business development and marketing.  The office also heads the Company’s efforts in holding events in the Greater China region.

 

As of December 31, 2008, we have updated our business model and currently consists of four principal businesses: (1) the Internet Financial Portal (“Portal”) business, conducted under the ChineseWorldnet.com brand via “www.chineseworldnet.com” website and (2) the Investor Relations / Public Relations (“IR/PR”) business conducted through NAI via a number of media channels including the internet “www.nai500.com” website, as well as promotional services, (3)the investment, Greater China/North America cross-border business partnering seminars/conferences (“Conference”) business conducted via the brand of Global Chinese Financial Forum, and (4) the “Online Platform” business conducted through the Rong Zhi Tong Online brand via “ www.rzto.com ” website. Our IR/PR business was the result of the acquisition of NAI-Interactive Ltd, a Canadian company incorporated under the laws of British Columbia, on January 15, 2000 from Ms. Tim Yee Lau, the wife of our President and Chief Executive Officer, Mr. Joe Tai. The purchase price was 112,500 of our common shares valued at $5,625. Our Conference business is the successful result of and had separated from our IR/PR business. Our Online Platform business was launched as of October 2006 and primarily served as a financing engine that connects professional service providers with small to medium size companies in Greater China regions.

 

Our plan was to first launch our Portal and IR/PR businesses in North America and then to expand all businesses into Hong Kong, the PRC and Taiwan. See “Corporate Strategy and Strategic Business Plan” below for details. We have launched the Portal and IR/PR businesses in North America. On October 26,2007, we completed a non-brokered private placement of 2,250,000 common shares at a price of $1.08 per share for total proceeds of $2,070,000 with the purpose of expanding all businesses into China in June of 2008, our plans of expanding have been met with the successful formation of the Chinese-Foreign Joint Venture ChineseWorldNet.com (Shanghai) Limited ("CWN China") resulting from the signing of a Definitive Joint-Venture Agreement between its subsidiary, ChineseWorldNet (Hong Kong) Ltd. ("ChineseWorldNet") and Shanghai Compass Venture Capital Investment Company Limited. The office of CWN China at Pudong in Shanghai has opened in the July of 2008.

As of June, 2009, there are no principal capital expenditures and divestitures in progress.

 

-24-

---

 

B.   Business Overview

 

Internet Financial Portal Business

 

Introduction

 

ChineseWorldNet.com, via our www.chineseworldnet.com website, is a financial web-based portal that provides up-to-date financial information and financial management tools in Chinese to our target audience, the Chinese community in North America. Our Portal provides financial news and information on North American blue chip and large cap S&P 500 public companies listed or quoted on the New York Stock Exchange, the American Exchange, NASDAQ and Toronto Stock Exchange, as well as Shanghai Stock Exchange and Shenzhen Stock Exchange and Taiwanese companies and market news by an in-house editorial team, with Hong Kong company and market news provided by our partners. When the Portal was in its development stage, all of the information or services provided through our www.chineseworldnet.com website were free of charge even though certain premium information and services such as premium articles and market commentary were only accessible by registered subscribers, who paid no subscription fee. After the official launch of the www.chineseworldnet.com website in October 2002, we introduced a new level of subscribers called “Premium Subscribers,” who are required to be registered as a subscriber and pay a fee to obtain certain premium and personalized products and services.

 

We generate direct revenues from a number of means through the www.chineseworldnet.com website including premium subscription fees and on-line advertising and marketing services. See “Revenue Model of the Portal Business” below for further details.

 

Current Product / Service Offering

 

Services

 

The following features are provided free of charge on the www.chineseworldnet.com website to all readers, other than the Premium Services described below for which we charge a fee. Readers are not required to register as subscribers at this time although we may in the future require registration before allowing access to the services described below.

 

1.  Company Profile

 

This section features a variety of interactive investment tools that enable users to conduct their own financial research, including:

 

·

Delayed stock quotes;

·

Summary company profiles;

·

Analysts’ buy/sell ratings;

·

Company news;

·

Insider trading information;

·

Intraday and Historical stock charts;

·

Financial Statement Summary; and

·

Foreign Exchange information.

 

-25-

---

 

2. Markets

 

This section, which features continuously updated market news stories from about 5 a.m. until 5 p.m. Pacific Standard Time each business day, covers the latest movements of the major indices, the most active stocks, news from foreign markets, earnings news, mergers and acquisitions news and other major market events.

 

3. Headlines

 

Throughout the day, we provide headlines and brief news stories that cover the various corporate announcements and news throughout the day.

 

4. Commentary

 

This section includes commentary prepared by employees or from outside contributors who write about topics such as money management, technical analysis, currency issues, industry analysis, macroeconomics, fundamental analysis, financial planning, mutual funds, initial public offerings, technology and international investing.

5.  Premium Services

 

These additional services are provided to Premium Subscribers, who currently pay a monthly subscription fee of $9.95. In addition to the monthly subscription fee, as of May 1, 2005, the annual subscription fee was implemented and is charged at $59.95 per annum. Please see “Corporate Strategy and Strategic Business Plan” section below for details.

 

a. Personalized Financial Services “MyCWN”

 

In addition to the provision of financial news and corporate information on public companies in North America and the Greater China region, our  www.chineseworldnet.com website also offers to our subscribers, through partnerships and affiliations, additional personalized services such as online investment tools and applications such as portfolio tracking. In October 2002, we launched a platform called “MyCWN” on our  www.chineseworldnet.com website that enables members to create a personalized portal to manage their stock portfolios. Registered users can customize their personal stock portfolio and view financial news and information, which will be automatically updated.

 

b. CWN Research Reports

 

Subscribers get access to weekly in-depth research reports written by our in-house editing team on individual stocks, the over all market trend, industry, other topics of interest.

 

c. Real-Time Stock Quotes

 

Starting in October 2002, we offered real-time streaming stock quotes as an additional premium service for registered users for which we charge a fee. This service is provided through a third-party supplier. The current fee is $30 per month per user for Level 1 real time quotes and $40 per month per user for Level 2 real time quotes as of May 1, 2005. Level 1 represents the basic real-time stock price while Level 2 quotes include the market depth of the trading activity also.

 

We are in the planning stage for other premium services, such as special investment tools and premium research reports, for the web portal.

 

-26-

---

 

Revenue Model for the Portal Business

 

1. Subscription Fees

 

Until October 2002, all of the information or services provided through our www.chineseworldnet.com website were offered free of charge even though certain premium information and services such as premium articles and market commentary were only accessible by registered subscribers, who were not required to pay a subscription fee. Since the official launch of the www.chineseworldnet.com website in October 2002, we introduced a new level of subscribers called “Premium Subscribers”, who are required to be registered as subscribers and to pay a subscription fee to obtain access to certain premium and personalized products and services. Basic monthly subscription fees were decreased from $14.95 per user per month to $9.95 per user per month starting June 2005. The Company wanted to attract more subscribers to our website and believed that the most effective way was opening more free content to free subscribers and reducing the monthly fee to paying subscribers. On May 1, 2005, the annual subscription fee was implemented and is charged at $59.95 per annum.

 

2. Banner Advertising

 

CWN intends to derive revenue from selling banner advertising to companies on the www.chineseworldnet.com website. The fee for six-month banner advertising ranges between $750 to $1,200 started in year 2007 and increased from $250 to $500 per month based on an estimated number of times the banner advertising will be seen by readers of the www.chineseworldnet.com website. The fee adjustment was a result of meeting the industry needs. We charge monthly flat fees for the services we provide, and revenue generated from banner advertising is recognized monthly, based on the terms committed by our customers. The amount of fees charged depends on the size and the location of the banner advertisement on our website. There is no adjustment to the monthly fee if the actual clicks differ from the estimated clicks.  In the year 2008, there were no changes of fees.

 

3. Marketing Services for Financial Services

 

It is our intention that our members will be able to access information on various financial products and service providers such as on-line brokerage, mutual funds, insurance and bonds through logging onto independent on-line Internet based trading platforms of our proposed partners. However, we will not be involved in effecting transactions in securities for the account of others such as the solicitation, negotiation or execution of the transactions. All trading transactions will be performed directly between the subscribers and the partner companies. In order to do so, our members would have to independently register with the on-line trading partner.

 

Our Portal business has derived no revenue from this services offering. We will not receive transaction-based compensation either from our subscribers or the partner companies. Instead, a flat marketing fee from partner companies will be paid to us based on the number of subscribers opening new accounts.

 

Investor Relations / Public Relations (“ IR/PR” ) Business

 

Introduction

 

Our IR/PR business was the result of the acquisition of NAI. NAI operates our IR/PR business currently focusing on providing IR/PR services for micro cap and small cap public companies targeting to the Chinese investor community in North America through various media such as the Internet ( www.na-investor.com   website), publications and investment seminars.  In 2008, plans have been made to rebrand NAI as NAI500 with a different website ( www.nai500.com ) and increasing the functionality of the company’s IR/PR services.  Unlike the www.chineseworldnet.com business model, client companies instead of individual investors pay a fee to NAI for the IR/PR services.  As of May 2009, NAI500 has been officially launched and all services previously provided through NAI will be provided through NAI500.

 

-27-

---

 

Current Product / Service Offering

 

1.

Internet website ( www.na i500 .com )

 

NAI500 operates the www.nai500.com website which provides IR/PR services to fee-paying North American public company clients who are listed or quoted on small and micro public markets in North America, such as the TSX Venture Exchange, the NASD OTC Bulletin Board and the Toronto Stock Exchange. All information on this website is in Chinese and the website also offers stock quotes, company reviews, newsletters and guide to investing in small and micro-cap companies to readers of the North American Chinese community. Currently, there are over 60,000 registered members for the  www.nai500.com website and it attracts over 1,500,000 readers each month.

Unlike www.chineseworldnet.com , www.nai500.com is not a financial portal for fee-paying members but an Internet based medium for the dissemination of information from fee-paying companies that want to increase their exposure in the Chinese investor community. There is no fee being charged to individual registered members of the  www.nai500.com website.

 

2.

Online Marketing Service

This service aims to increase the publicity and website traffic to targeted audiences for clients companies’ websites. Services include creation of search criteria for Internet based search engines to enable quick access to client companies’ websites, e-mail blasts to NAI500 members and other services like on-line promotional events that can help increase Internet traffic to client companies’ websites. The launch of “Mining Search Engine” was created in November 2006 to focus the promotion of client companies particularly from the mining sector. This services aims to provide and promote companies’ information and news to investors and increase publicity. NAI500 e-mail blast services currently charge $1,000 to $1,500 per blast and have a reach of over 60,000 members.

3.

Chinese Webpage Design, Hosting and Maintenance

NAI500 can assist client companies to create a Chinese web page for companies that have existing websites in English and would like to have link to a version of their websites in Chinese. These Chinese web pages will also be linked to the www.na-investor.com website in the featured company section. NAI500 charges a one-time set-up fee plus 12-month maintenance fee in total of $2,400 for this service. Due to the various demand of clients’ needs and the customized services that we provide to client companies; as of January 1, 2006 the fees for this service had been changed to range from $2,000 to $5,000 based on the customized services we arranged in contracts.

 

4.

Translation Service

NAI also provides translation services for client companies who want to translate promotional or financial materials from English into Chinese. NAI charges $100 per page for the translation services.

 

5.

Miscellaneous IR/PR Services

NAI also provides other miscellaneous IR/PR services to client companies such as design and printing of promotional materials and financial reports. This includes translation services for client companies who want to translate promotional or financial materials from English into Chinese. NAI charges $100 per page for the translation services.

 

6.

Investment Guides

NAI started to publish specialty investment publications in 2002. Its first investment handbook was on the mining sector. Companies pay $2,000 each to be profiled in the Chinese language handbook. The handbook is sold through our offices, on-line, and in selected bookstores for CDN$13.80 Canadian. In 2005, we published the Mining Investment Guide, Vol 3. and Chinese stock Investment Guide, Vol 1. In 2006, we published the Mining Investment Guide, Vol 4, and is sold for CDN$29.50 Canadian due to the increased in content. In 2007, we published the Mining Investment Guide, Vol 5, and is sold for USD$29.95, and Chinese Theme Stocks Investment Guide Vol 2 - A New Chapter of Success, and is sold for USD$29.95. In 2008, we published the Resource Investment Guide, Vol 6, a renamed iteration of the Mining Investment Guide, and is sold for USD$29.95. The Chinese Theme Stocks Investment Guide was not published in 2008.

 

-28-

---

 

 

Future Product / Service Offering

 

Currently, our IR/PR services are focused on introducing and promoting North American client companies to the Chinese investor community in North America. NAI plans to adopt the same model and expand it to other market segments such as, promoting client companies from Asia to the Chinese investor community of North America and Asian and North American client companies to the Chinese investor community in Asia. In year 2007, NAI had successfully established client base in the mining /recourses sector; and plans to diversify into other sectors such as life science, technology, and industrials. In 2008, NAI was in the initial stages of being rebranded as NAI500, with a redesigned website, “www.nai500.com”.  See “Corporate Strategy and Strategic Business Plan.”.  By late 2008, plans for NAI500 have been completed and implementation of phase 1 has been completed as of April 2009.  Plans for phase 2 of adding functionality to NAI500 will be implemented in the latter half of 2009.

Revenue Model of the IR/PR Business

 

The IR/PR business is marketed via the brand name of NAI500.  Sources of revenue for the IR/PR business are from each of the current product/service offerings mentioned above such as on-line marketing service, Chinese webpage design, hosting and maintenance, translation services and miscellaneous IR/PR services.

 

Conference Business

 

Introduction & History

Originally, the conference organizing services established by the company was an integrated aspect of the products and services provided by our IR/PR business. However, because of the success of the conference series in 2006, the conference organizing services were made into a separate aspect of the business model.

Beginning in 2000, NAI has marketed and organized 2 to 4 Chinese investment seminars a year during which, private and public companies pay a sponsorship fee to NAI in order to make presentations about their companies to individual Chinese investors who attend the seminars. While it is free for individual investors to attend the investment seminars, NAI charges a fee of $4,000 per presenting company for organizing these seminars. Similarly, the attendees of the Investment Seminar are notified that it is a client company-sponsored event. Seminars have been held in Vancouver, Toronto, and San Francisco.

 

In 2003 and 2005, NAI organized several conferences. In 2003, the conferences were named Chinese Financial Forum and in 2004, the Global Chinese Financial Forum to reflect the international nature of the event. In 2004, we filed for trademark protection for the name Global Chinese Financial Forum in Canada. The investment seminar and conference website is www.gcff.ca.   As of year 2006, Global Chinese Financial Forum (“GCFF”) had segregated from the IR/PR business. Revenue generated through GCFF is recorded under the revenue model of NAI.

 

Current Product / Service Offering

 

GCFF aims to be the largest series of bilingual (Chinese/English) financial and business related functions in North America with the purpose of providing networking environment and opportunities between client companies and participants. The format of GCFF is conducted through exhibition booths and presentation sessions. While client companies can purchase a booth area to showcase and promote their companies, they can also conduct corporate presentations in the industry related topics determined beforehand.  A new function, beginning with the conference held in the city of Dalian, China on October 30 th to November 1 st of 2008 was the Privately Arranged Meetings service which provides participants with meetings with other groups arranged by GCFF through criteria agreed upon by all parties prior to the event.  The Privately Arranged Meetings product was originally a service designed to add value to our events for participants, however, planning for the Toronto Conference 2009, to be held on October 16 th to 18 th of 2009, have made the Privately Arranged Meetings service a major pillar of its industrial themed event on the first day of the Conference.

General sponsorship opportunities are available for all conferences. Sponsorship is divided into several categories for interested parties to participate and sponsor our conferences. These categories include Platinum, Gold, Silver, Corporate, Media, as well as the Global Corporate Sponsorship program. Conference specific sponsorships are also provided with specific functions related to the specific theme of the events. While media sponsorships are offered without any fee, the four levels of sponsorship fees are ranged from $4,000 to $25,000. Conference specific sponsorship fees currently range from $4,000 to $10,000 as well.  Currently, individual investor attendees are not charged for admission and registration for attending the conferences. However, when the conferences have reached an appropriate scale, we may begin charging entrance fees to attendees.

Future Product / Service Offering

 

Currently, GCFF has been held in North American cities such as Vancouver, Toronto, and San Francisco, mainly servicing clientele from North America. In July 2007, GCFF had successfully launched the first China-focus conference in Shanghai, China and provided a network for both service providers and China companies. GCFF plans for the continued success on conferences organized at cities in China. GCFF also plans to improve the format and focus on institutional clients as well as establish its own brand name in both North America and Asia. By late 2008 and early 2009, plans to increase the GCFF’s focus on providing cross-border partnership opportunities between North American and Greater Chinese companies have also been implemented.  The Toronto Conference 2009 will have its first of three days focus entirely on hosting an event focusing on servicing companies interested in such cross border business activities.  Depending on its performance at the Toronto Conference 2009, the Privately Arranged Meetings service may also become an increasingly important service provided by the GCFF.  For 2009, we will not be holding an event in San Francisco due to the market situation affecting the United States of America.  However, we may hold conferences in the United States at later dates.  See “Corporate Strategy and Strategic Business Plan.”

 

Revenue Model for the Conference Business

 

CWN initially charges $2,000 for a basic exhibition booth per company, as well as sponsorship fees ranging from $4,000 to $10,000. Starting second quarter of 2007, prices for exhibition booths and sponsorships have increased to $2,500 per exhibition booth and sponsorship fees range from $6,000 to $20,000. In 2008, charges for exhibition booths were maintained a similar level.  However, plans for 2009 will feature increased prices to $2,800 for exhibition at GCFF retail level events while new revenue models will be implemented for the GCFF industrial, cross-border related event in Toronto, with corporate delegate package fees at $6,000 and individual delegate package fees at $399.  Greater number of sponsorship packages will be implemented for industrial, cross-border related events with fees ranging from $4,000 to $10,000.

 

Online Platform Business

 

Introduction

 

Rong Zhi Tong Online (“RZTO”) is a platform serving the fast-growing number of private Chinese companies seeking listing and access to capital in North American markets. The official launch of RZTO during October 2006 has initially undertaken our plan to enter the Greater China market. RZTO is based on a membership model where both Chinese companies and North American financial service providers will register to connect, access new projects, share ideas and business opportunities.

 

Up until December 31, 2007, membership for RZTO was free of charge. Members types range from private and public companies, investment bankers and research analysts, investor relations and stockbrokers, lawyers and accountants, as well as professionals from exchanges and other sectors. Each member is required to provide their company information through a registration form and their company profile is generated from their imputed data. Membership information including names, locations, and brief company descriptions is available to public; while contact information, personnel, financial and detail business information are keep confidential and only registered members have access to the database. As of 2008, development of the RZTO platform has been placed on hold as the Company reevaluates its various business models to adjust to the ongoing financial crisis.

 

Current Product / Service Offering

 

The platform offers search functions, news update, events announcement, and knowledge exchange to help members network with each other and build an online financing community. RZTO offer the following search functions free of charge and in future might add on more valuable search engines for members.

(1)

Service Providers - This section includes the search of financial service firms and financial service professionals, which are classified under different types as well as the location in either North America or Greater China.

 

(2)

China Companies - This section includes the search functions in “Search Companies Seeking Financing”, “Search Investors”, and “Search Public Companies”. While members can search for companies from various industry sectors listed in the search box for all three of the search functions; they can also search through a number of criteria to narrow their search. These criteria includes: net assets, sales, financing scale, and 3-year sales growth in percentage. We might increase the number of search criteria or improve the search engine functions in the future.

 

(3)

Projects - This section includes search functions divided into “Financing Projects” and “Investment Projects”. Members not only can search through industry sectors but also the kind of financing strategies as well as the financing or investing scale.

 

(4)

Professional Candidates - This search function provides members an opportunity to find individual professionals members for human resources purpose. The data for individual professional candidates is generated from the registration information required to be a member of RZTO, and we will not undertake verification or investigation of any such information.

 

(5)

News - This section currently is under development.

 

(6)

Knowledge – This section provides articles and links on industry knowledge. Member companies mostly post articles on a non-regular basis and some articles are posted by our in-house editing team.

 

Revenue Model for the Platform Business

 

Starting from October 2006, all members registered with RZTO are on a trial basis and is free of charge. RZTO intends to derive revenue from the membership model, and might arrange a membership fee schedule in the future.

 

The overall revenues for ChineseWorldNet.com, Inc for the years ended December 31, 2008, 2007 and 2006 were as follows. All our revenues from all businesses are recognized mostly in our 100 % owned operating subsidiary NAI Interactive Ltd, which is based in Vancouver, BC in Canada and partly in CWN China, which in PuDong District of Shanghai in China. 

 

Corporate Strategy and Strategic Business Plan

 

Our goal is to become a global leader in communication and information gateways between investors and service providers worldwide. We offer the Internet-based financial community by providing a diverse range of financial information and news on public companies to Chinese investors in North America and Asia. Through our infrastructure and reader base, we strive to be a partner for various providers of financial products and services for marketing to Chinese investors in North America and Asia. We believe that we have already built a strong foundation with our current and planned product and service offerings of both the Portal and IR/PR businesses. However, we believe that the IR/PR business has limited potential in Hong Kong and China because these markets are different than the North American markets and are more competitive. Our conferencing business, named Global Chinese Financial Forum, had evolved into a stand-alone business started from 2006 and established forums in major cities in North America and China. By providing a business to business networking environment to companies and service providers, we connect them together by the various services we offer. We strive to primarily penetrate the Greater China market and gradually expand towards other cities in Asia. The official launch of RZTO, a platform serving the fast growing number of private companies in China in connection with North American service providers, had initiated more products and services that our Company can offer to clients. Together, all four businesses enable us to enter the next phase of our strategic plan which is to expand the reach of our businesses and services to users in Asia with a focus on the Greater China region. We believe that one of the biggest advantages of running an Internet-based business is that we can leverage our existing infrastructure to reach a broader range of target customers without a significant capital requirement. Based on this principle, we intend to maintain the operation of our businesses from our Vancouver office in Canada. However, we may consider other expansion options such as partnering with local partners or establishing a direct presence in certain markets.

As part of our proposed expansion into Asia, we have established partnerships with local Chinese companies in year 2008. We had entered into a joint venture agreement with Shanghai Compass Venture Capital Investment Limited Company on February 1, 2008, which led to the successful formation of Chinese-Foreign Joint Venture ChineseWorldNet.com (Shanghai) Limited (“CWN China”). The CWN China has a physical office located at Eton Place, Pudong Avenue, 555 Suite 1005, Pudong District, Shanghai, P.R. China. CWN China serves three main purposes: (1) It helps us to build channels to capture the financial information business. (2) It would assist in organizing and coordinating regional marketing activities, such as our Global Chinese Financial Forum (GCFF).The Toronto Conference 2009, scheduled on October 16 th to 18 th , 2009 will be relying on the networks gained through the Shanghai Joint Venture to bring in governmental agencies, public and private companies, industrial associations and other business professionals and experts in order to create the Greater China portion of the cross-border partnering services for its industrial level event.  The Shanghai Conference 2009, scheduled on December 4 th to 6 th 2009 will also be largely coordinated through the Shanghai Joint Venture. (3) This joint-venture will seek other business opportunities including the development of investor relations/public relations business and to create a basis for potential acquisition opportunities and to further the digital financial media business in the Greater China region.

Details of our historical expansion strategy of our services into other markets are as follows:

 

There were no significant developments with partners established in 2006. Our major focus during this time was opening up 80% of our paid content to our free subscribers which resulted in a dramatic increase to the traffic of our website  www.chineseworldnet.com . Our agreements with PR Newswire and Tanrich Financial Group are service-to service connections which do not directly generate fees. We provide a news channel to PR Newswire for online news media in return for PR Newswire’s content and trademark to be posted on our website. Similarly, Tanrich Financial Group provides the Hong Kong market sector news to us for marketing purposes and in return we provide a link on our website to access the Tanrich Financial website. In 2007, we established a new partnership with FMFOREX in order to obtain foreign exchange data and news, while providing complimentary ad space on our website. Our agreements with FMFOREX are service-to-service connections which do not generate revenue for the company.  In 2008, we initiated agreements with IRAsia to provide Hong Kong stock market information and financial news as well as Daily FX to provide foreign exchange data, news and articles in order to diversify the knowledge provided from our site.

 

Technology

 

None of our application technologies are proprietary to us. The technologies used by us are incorporated from different commercially available software programs. CWN’s application technology includes a collaborative authoring environment to enable different users such as CWN’s in-house programs to work together on creating and managing content for our websites. It enables those who use CWN’s communication applications and content management applications to work together on creating and managing content to CWN’s websites. All users have their own accounts and can belong to any number of sites.

 

We have two servers to serve our websites in North America.   If one of the servers malfunctions, all other traffic is re-directed to the other server. Both servers synchronize with each other every 30 seconds.

 

Our Primary Markets

 

The Internet

The number of Internet users in the Asia-Pacific region has continued to increase at an unprecedented rate and has reached nearly 657 million according to the data published by Internet World Stats in March 2009.   This figure already surpassed the figures in the whole North America.

 

By July of 2008, China’s estimated number of internet users surpassed the United States with approximately 280 million users.  The growth of Internet users in China from 2000-2007 is 833.3% compared to 115.7% in United States.

Hong Kong has a well educated, technologically savvy population. In December 2005, Internet World Statistics reported that there were 4,878,713 Internet users in Hong Kong (representing 69.2% of the population), up from 4,661,589 in May 2004. According to Nielsen/NetRatings, the active web usage in Hong Kong was 2,733,220 in July 2004, while the estimated active digital media universe is 4,878,713.

 

According to the Internet Subscriber Survey conducted by the FIND team of the Advanced Institute (ACI), Institute for Information Industry (III), under the support of Department of Industrial Technology (DOIT) and Ministry of Economic Affairs (MOEA), it was estimated that there were 15.4 million Internet users in Taiwan as of December 2007. The Internet penetration rate was 67.4%; compared to the same time period in 2000, there was a significant increase and the growth rate is 146%.  

 

In terms of the Chinese market in North America, based upon the surveys described below, we believe that the Chinese population has greater purchasing power than the overall market. According to the independent survey done by ACNielsen at the end of year 2000 of residents in Vancouver, British Columbia, 46% of Chinese adults age 18 and over own a single-detached home. Furthermore, 72% of Chinese immigrants purchase new automobiles and 77% paid in cash for their new automobiles. We believe that these statistics indicate the affluence of Chinese immigrants to North America. Although the survey was only done in Vancouver, we believe this may indicate a trend throughout the major cities in North America. We believe that one of the key statistics is that, as of 2000, 86% of the Vancouver Chinese adults owned a home computer compared to only 50% of the total Canadian population. We believe this justifies the feasibility of a Chinese internet market in North America and their level of disposable income. Another significant market statistic is that of the top 10 media penetration in the Vancouver Chinese population, only one of the media outlets is in the mainstream English language market at 9 th   place. This suggests that most Chinese immigrants focus more on media in their native Chinese language.

 

Internet Advertising Market

 

In December 2002, eMarketer's "Media Spending Outlook 2003" predicted that in contrast to the steady decline seen in U.S. online advertising spending in 2001 and 2002, 2003 online spending would rise slightly to $6.70 billion, up 6.3% from $6.3 billion in 2002. This projected increase would likely be assisted by the general easing of the economic recession. Also, eMarketer estimates that online advertising would make up 2.5% of total US media spending in 2002, rising to 2.8% by 2005.

The actual full year 2003 Internet advertising revenue in the United States was just under $7.3 billion, according to the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) in their Internet Advertising Revenue Report released on April 21, 2004. This represented an overall growth of approximately 21% from 2002.

The Internet advertising market is expected to grow in the coming year. According to data released at the Jupiter/IAB Advertising forum in New York in October 2002, the industry is predicted to grow to $14 billion by 2007. Factors that are cited as driving forces behind increased spending include: continual growth in the online population, growing broadband adoption and smarter inventory control among online publishers. Further, according to the Jupiter Research report, "Online Advertising: Traditional Advertisers, Classifieds Pave Road to Recovery," in 2002, media represented 20% of online advertising spending, financial services contributed 17% and computer hardware and software contributed 12%. For year 2006, eMarketer’s article had quoted data from Internet Advertising Bureau of Canada’s (IAB’s) “2006-07 Canadian Internet Advertising Revenue Report” indicated advertising revenues reached C$1.01 billion. Based on this data, we believe that our services and offerings are well positioned in a market that is continuing to grow.

 

Investor Relations (“IR”) Market

 

For the other part of our business, the Investor Relations and Public Relations business, we can refer to a membership survey done by the CIRI (Canadian Investor Relations Institute) in 2000, which reported that the average annual IR budget for a company with a market capitalization below $99 million and between $100 million to $499 million was $257,000 CDN and $485,000 CDN, respectively. There are about 15,000 public companies in North America, and based on these numbers, we estimate the total IR market in North American to be $2.5 billion annually.

The IR/PR market in Greater China is not well-established yet. However, that means that we could become one of the industry leaders in this area due to our existing infrastructure. A main problem of the Hong Kong Growth Enterprise Market (“GEM”), the stock exchange for micro-small cap start-up companies, is that there is very limited liquidity in terms of stock trading due to low market awareness of companies listed in GEM. With the number of listed companies increasing in the PRC and the existing well-established financial systems and markets in Hong Kong and Taiwan, we believe that the IR/PR business potential in the Greater China region is favorable.

Conference / Seminar Market

Because our conference business targets Chinese companies seeking to invest and establish business connections with North American servicing firms, we believe our market will grow substantially with the increasing number of Chinese outward direct investments (“ODI”). For year 2005 figure by the Commerce Ministry, China’s ODI rose 26% to US$6.9 billion, and the PRC’s policy on economic development had attracted investments from North American firms.

According to the annual survey that was done jointly by the Asia Pacific Foundation of Canada (“APF Canada”) and the China Council for the Promotion of International Trade (“CCPIT”) on December 2006, there have been an increasing number of companies from China that involve ODI. In which over 40 percent of the surveyed companies are intend to invest overseas within the next 3 to 5 years period. The survey result also indicated the existing ODI targets foreign markets, and merging with and acquiring foreign firms is becoming one of the options for Chinese companies’ ODI. In particular, the three most preferred method of future Chinese ODI are establishing sales offices, setting up equity joint ventures with local firms and merging and acquiring foreign assets or firms. With the growing figures of overseas investments and the economic development between North America and Asia, we believe the growth of our conference business will be substantial in both scale and scope.

 

Competition

 

The Internet based financial services industry is very competitive. The Greater China and Asian Internet markets have an increasing number of entrants because Internet start-up costs are low. In addition, the Internet industry is relatively new and subject to continuing definition. As a result, many of our competitors may better position themselves to compete in the market as the Internet market matures. We believe that, taken separately, each of our services has competition from companies with longer operating histories in the Internet market, greater name recognition, larger customer bases and databases and significantly greater financial, technical and marketing resources. Any of our present or future competitors may provide products and services that provide significant performance, price, creative or other advantages over those offered by us. We may not be able to compete successfully against our current or future competitors.

 

There are three primary competitors offering websites that contain financial services in Chinese (as well as other services) although neither is offering exactly the same-targeted financial services.

 

·  Chineseinvestors.com Inc. operates the  www.chinesefn.com website, is a leading financial portal that provides US stock market information and news. This company’s main business model is the online advertising revenue from financial services corporations such as Scottrade, E*Trade, Charles Schwab, Sutton Online or internet related companies like AT&T and GYC Telecom. Chineseinvestors.com does not have an established IR/PR business model that can generate on-going revenues for the company.

 

·   Sina.com is the most established Chinese news and media website, with over one million registered users. Sina.com offers websites for Chinese in North America, Taiwan, PRC and Hong Kong, as well as news, information on finance, life, shopping, chat, e-mail, games, horoscope and a search engine.

 

·   China Finance Online Inc., based in the PRC, serves investors in China by providing news, research reports, commentaries, streaming data, quotes of the China’s Stock Market. Their principal website is  www.jrj .com.cn with over 1 million paid subscribers.

 

Additionally, our competition with respect to user traffic, ease of use and functionality also include Chinese language based web search and retrieval companies such as Yahoo! China, Sina.com, Netease, Sohu, Shanghai Online, ChinaByte and Netvigator (which is owned by PCCW). Our competition with respect to strategic expertise, technical knowledge and problem solving skills for web design include, as well as many unknown smaller companies who may offer this service, Internet integrators and website design and development companies such as iXL Inc., Modem Media, Proxicom, Inc., One to One Media Limited, Eureka Digital Limited, Dragon Creative International and Core Solutions Limited.

 

Our competitors may be able to undertake more extensive marketing campaigns, adopt more aggressive pricing policies and make more attractive offers to qualified personnel, distribution partners, advertisers and content providers. Further, ISP’s, web browsers and web content providers may be perceived by advertisers as having more desirable websites for placement of advertisements. Additionally, some or all of these competitors may develop web search and retrieval services that are equal or superior to those we offer our users and may achieve greater market acceptance than our offerings in the area of performance, ease of use and functionality.

 

Intellectual Property, Government Approvals and Regulations

 

Our application technology is not protected by any patents or copyrights nor do we intend to seek any such protection. Without patent or copyright protection, we may not be able to prevent duplication or use of our technology by competitors. There are currently no material effects of government regulations on our business.

C.   O rganizational Structure

 

 

ChineseWorldNet.Com Inc. (“CWN”) was incorporated under the Company Law (1998 revision) of the Cayman Islands on January 12, 2000. Our principal executive and registered office is located at Appleby Spurling Hunter Group, Clifton House, P.O. Box 1350, Grand Cayman, Cayman Islands. Our North American office and principal place of business is located at Suite 368 – 1199 West Pender Street, Vancouver, British Columbia, Canada V6E 2R1.

 

CWN is a holding company which owns 100% of NAI Interactive Ltd. (“NAI”) and 99% of Chineseworldnet.com (Hong Kong) Limited (“CWNHK”). 1% of CWNHK is owned by Mr. Lui Chi Cheong, a director and major shareholder of CWN. Our portal business is operated under CWN with our associated brand, ChineseWorldNet.com and website www.chineseworldnet.com , while our IR/PR business is operated under NAI. In addition, NAI employees are engaged to build the www.chineseworldnet.com website including our content for CWN.

 

NAI is a British Columbia company incorporated on November 13, 1998. We acquired NAI on January 15, 2000 from Ms. Tim Yee Lau, the wife of our President and Chief Executive Officer, Mr. Joe Tai, for a purchase price of 112,500 of our common shares valued at $5,625. NAI’s head office is located at #368-1199 West Pender Street, Vancouver, B.C., V6E 2R1.

 

CWNHK is a Hong Kong company incorporated on December 22, 1999. CWNHK is 99% owned by us with 1% owned by one of our directors. Since June 2004, CWNHK’s office has been located to Room 1101, St. George’s Building, 2 Ice House Street Central, Hong Kong. CWNHK provides us with   a local operation base for CWN’s penetration and expansion plans in the Asian market.

ChineseWorldNet.com (Shanghai) Ltd. (“CWN China”) is a company incorporated under the law of the PRC in 2008 which the Company has a 70% interest through its subsidiary of CWN HK.  CWN China was incorporated as part of the Company’s expansion to the Chinese market.

 

At December 31, 2008, we had a total of 13 full-time employees hired by NAI. Our President and CEO is the only employee directly hired by CWN. All employees are located in the Vancouver office in Canada except Kelvin Szeto and Kaibei Yang who monitor the operations in the CWN China office.

 

As part of our proposed expansion into Asia, on October 13, 2000, we purchased 100,000 common shares in the capital of Technology City Holdings Limited (“TCHL”), a Hong Kong incorporated company, representing 4.167% of the then issued and outstanding shares of TCHL, for US$100,000. TCHL is a multi-media, Internet-based financial information provider focusing on listed securities in Hong Kong. The purpose of this investment was to provide content supply from TCHL to the www.chineseworldnet.com website. This includes market and content information focusing on public companies listed on the GEM in Hong Kong. On December 31, 2002, we determined that the recovery of the investment in relation to future projected cash flows from the investment in TCHL was doubtful and there was no market available to liquidate the subscribed shares. We therefore wrote down the value of our investment to a nominal value of $1.

 

On November 2, 2000, we completed a private placement with certain individuals who purchased 2,000,000 of our common shares at a price of $0.40 per common share for gross proceeds of $800,000. The proceeds from this private placement were used for general working capital purposes. On May 31, 2004, we raised $150,000 through issuing 3 year, 5% convertible debentures.

On October 29, 2004, we issued 200,000 new shares to acquire the remaining assets of TCHL, which included HK$540,000 in cash and equipment, from Marrick Investments Limited. Marrick Investments Limited nominated its sister company, Datacom Venture Limited to be the record owner the shares. Datacom Venture is a majority shareholder of ChineseWorldNet.com. See Item 7 - Major Shareholders and Related Party Transactions.

 

On September 25, 2006, we obtained the trading symbol of “CWNOF.OB” and our common stock has been approved for trading on the OTC Bulletin Board. The company contains 8,200,000 outstanding shares as at December 31, 2006, and 8,450,000 fully diluted shares in the share price of USD $1.00.

 

On January 18, 2007, the 3 year 5% convertible debentures (2004) had been converted into common shares. On March 1, 2007, we raised $250,000 through issuing 3 year, 6% convertible note with warrants. On October 11, 2007, we completed a private placement with certain individuals and issued 2.25 million shares at $1.08 per common share for the gross proceeds of $2.43 million.

No new common shares and stock options were issued during 2008.

 

D.   Property, Plants and Equipment

We do not own any real property. As of December 31, 2008 we owned $18,533 (2007: $14,235 and 2006: $15,541) in computer equipment and computer software and $10,229 (2007: $7,766 and 2006: $7,136) in office furniture. We have a lease agreement for the Vancouver office with an address at #368 - 1199 West Pender Street, Vancouver, British Columbia, Canada V6E 2R1.