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 1934ORx
                    ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934 For the fiscal year ended December 31, 2008OR ̈
                    ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the transition period from ___________________________ to
      ________________________________ ̈
                    SHELL
      COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934Date
      of event requiring this shell company report
      ___________________________For
      the transition period from ___________________________ to
      ________________________________
  Commission
file number 000-33051
 
 CHINESEWORLDNET.COM
INC.
 (Exact
name of registrant as specified in our charter)
 Not
Applicable
 (Translation
of Registrant’s name into English)
 
 CAYMAN
ISLANDS
 (Jurisdiction
of incorporation or organization)
 
 APPLEBY
SPURLING HUNTER, CLIFTON HOUSE, P.O. BOX 1350GT, GRAND CAYMAN, CAYMAN
ISLANDS
 (Address
of principal executive offices)
 
 Securities
registered or to be registered pursuant to Section 12(b) of the
Act:
 Title
      of each class:
                NONEName
      of each exchange on which registered:
                NONE
  Securities
registered or to be registered pursuant to Section 12(g) of the
Act:
 
 Common
Shares, U.S. $0.001 Par Value
 (Title of
Class)
 
 Securities
for which there is a reporting obligation pursuant to Section 15(d) of the
Act: NONE
 
 Indicate
the number of outstanding shares of each of the issuer’s classes of capital or
common stock as of the close of the period covered by the annual report:
10,700,000 shares
  Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
 
 o Yes   x No
 
 If this
report is an annual or transaction report, indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
 
 o Yes   x
No
  Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
 
 o Yes   x No
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer.
 
 o Large accelerated
filer o
Accelerated filer  x Non-accelerated
filer
 
 If this
is an annual report, indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).
 
 o Yes   x No
  Indicate
by check mark which financial statement item the registrant has elected to
follow.
  x  Item 17
 o Item
18
  
  TABLE
OF CONTENTS
 
 CAUTIONARY
      NOTICE REGARDING FORWARD-LOOKING STATEMENTS
                    4PART
      I
                    
                    4ITEM
      1.
                    IDENTITY
      OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
                    4ITEM
      2.
                    OFFER
      STATISTICS AND EXPECTED TIMETABLE
                    4ITEM
      3.
                    KEY
      INFORMATION
                    5ITEM
      4.
                    INFORMATION
      ON THE COMPANY
                    24ITEM
      4A.
                    UNRESOLVED
      STAFF COMMENTS
                    39ITEM
      5.
                    OPERATING
      AND FINANCIAL REVIEW AND PROSPECTS
                    39ITEM
      6.
                    DIRECTORS,
      SENIOR MANAGEMENT AND EMPLOYEES
                    46ITEM
      7.
                    MAJOR
      SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
                    52ITEM
      8.
                    FINANCIAL
      INFORMATION
                    53ITEM
      9.
                    THE
      OFFER AND LISTING
                    53ITEM
      10.
                    ADDITIONAL
      INFORMATION
                    54ITEM
      11.
                    QUANTITATIVE
      AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
                    58ITEM
      12.
                    DESCRIPTION
      OF SECURITIES OTHER THAN EQUITY SECURITIES
                    58PART
      II
                    
                    58ITEM
      13.
                    DEFAULTS,
      DIVIDENDS ARREARS AND DELINQUENCIES
                    58ITEM
      14.
                    MATERIAL
      MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
      PROCEEDS
                    58ITEM
      15.
                    CONTROLS
      AND PROCEDURES
                    59ITEM
      16A.
                    AUDIT
      COMMITTEE FINANCIAL EXPERT
                    59ITEM
      16B.
                    CODE
      OF ETHICS
                    59ITEM
      16C.
                    PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
                    60ITEM
      16D.
                    EXEMPTIONS
      FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
                    60ITEM
      16E.
                    PURCHASES
      OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
    PURCHASERS
                    60
  
  PART
      III
                    61ITEM
      17.
                    FINANCIAL
      STATEMENTS
                    61ITEM
      18.
                    FINANCIAL
      STATEMENTS
                    61ITEM
      19.
                    EXHIBITS
                    62EX
      - 4(b)9
                    CONSULTING
      AGREEMENT BETWEEN CHINESEWORLDNET.COM INC. AND SILVER LAKE INVESTMENT
      PARTNERS, LTD.EX
      - 4(b)10
                    CONSULTING
      AGREEMENT BETWEEN CHINESEWORLDNET.COM INC. AND GOLDPAC INVESTMENTS
      LTD.EX
      - 4(c)1
                    STOCK
      OPTION PLAN AGREEMENT.EX.
      - 8.
                    LIST
      OF SUBSIDIARIESEX.
      - 10(i)
                    AGREEMENT
      TO ESTABLISH |CWN CHINA CO., LTD.|, A CHINESE-FOREIGN JOINT VENTURE
      LIMITED LIABILITY COMPANYEX.
      - 12.1.
                    CEO
      CERTIFICATIONEX.
      - 12.2.
                    CFO
      CERTIFICATIONEX.
      - 13.1.
                    CEO
      CERTIFICATION PURSUANT TO SECTION 906EX.
      - 13.2.
                    CFO
      CERTIFICATION PURSUANT TO SECTION 906
  
  INTRODUCTION
AND USE OF CERTAIN TERMS
  ChineseWorldNet.Com
Inc. is a corporation incorporated under theCompany Law (1998 revision)
of the Cayman Islands on January 12, 2000. Except as the context otherwise
requires, all references in this annual report on Form 20-F to “we,” “us,”
“our,” “CWN” and the “Company” are to ChineseWorldNet.Com Inc. and our
subsidiaries, including NAI Interactive Ltd., a company incorporated under the
laws of British Columbia (“NAI”), ChineseWorldNet.com (Hong Kong) Ltd., a
company incorporated under the laws of Hong Kong (“CWNHK”) , and 70% owned
interest in ChineseWorldNet.com (Shanghai) Limited (“CWN China”), a company
incorporated under the laws of PRC. Our consolidated financial statements are
prepared in accordance with United States generally accepted accounting
principles of United States of America (“US GAAP”) and are presented in United
States dollars. All monetary amounts contained in this annual report are in
United States dollars unless otherwise indicated.
  Our
registered and executive 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.
 
 CAUTIONARY
NOTICE REGARDING FORWARD-LOOKING STATEMENTS
  The
information set forth in this Form 20-F is as of December 31, 2008 unless
otherwise indicated.
  The
following discussion contains forward-looking statements that reflect
management’s current views and expectations with respect to our business,
strategies, products and services, future results and events and financial
performance. All statements made in this Report other than statements of
historical fact, including statements that address operating performance, events
or developments that management expects or anticipates will or may occur in the
future, including statements related to channels, volume growth, revenues,
profitability, new products, adequacy of funds from operations, statements
expressing general optimism about future operating results and non-historical
information, are forward looking statements are forward looking. In particular,
the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “may,”
“will,” variations of such words, and similar expressions identify
forward-looking statements, but are not the exclusive means of identifying such
statements and their absence does not mean that the statement is not
forward-looking.
  These
forward-looking statements are subject to risks and uncertainties that could
cause our actual results and financial position to differ materially from our
historical results, as well as those expressed in, anticipated or implied by
these forward-looking statements. These factors include, but are not limited to,
the fact that we are an Internet based provider of news and information on small
and micro-cap public companies, will need additional financing to develop
our activities and will be subject to certain technological and risks doing
business in the People’s Republic of China (the “PRC”). These and other factors
are set forth in more detail in the Section entitled “Risk Factors” at Item
3 and “Operating and Financial Review and Prospects” at Item 5, as well as
elsewhere in this Report. We do not undertake any obligation to revise or update
these forward-looking statements to reflect any future events or
circumstances.
  PART
I
  ITEM 1. IDENTITY OF DIRECTORS, SENIOR
MANAGEMENT AND ADVISORS
 
 This
Report on Form 20-F is being filed as an annual report under the Securities
Exchange Act of 1934 (the “Exchange Act”) and, as such, there is no requirement
to provide any information under this item.
  ITEM 2. OFFER STATISTICS AND EXPECTED
TIMETABLE
 
 This
Report on Form 20-F is being filed as an annual report under the Exchange Act
and, as such, there is no requirement to provide any information under this
item.
  -4-
 
 ITEM 3. KEY
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
                                      
                                      
                                      2004Income Statements:Operating
      revenues
                                      
                                      $
                                      1,011,322
                                      
                                      
                                      $
                                      1,325,994
                                      
                                      
                                      $
                                      643,370
                                      
                                      
                                      $
                                      533,521
                                      
                                      
                                      $
                                      487,710Operating
      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
                                      
                                      
                                      
                                      8,004,384Weighted
      Average Common shares outstanding - diluted
                                      
                                      
                                      10,700,000
                                      
                                      
                                      
                                      9,103,713
                                      
                                      
                                      
                                      8,200,000
                                      
                                      
                                      
                                      8,200,000
                                      
                                      
                                      
                                      8,004,384Consolidated Balance
Sheets:Total
      assets
                                      
                                      $
                                      2,104,383
                                      
                                      
                                      $
                                      2,780,226
                                      
                                      
                                      $
                                      226,896
                                      
                                      
                                      $
                                      312,053
                                      
                                      
                                      $
                                      366,623Equipment
                                      
                                      
                                      46,526
                                      
                                      
                                      
                                      22,001
                                      
                                      
                                      
                                      22,677
                                      
                                      
                                      
                                      16,767
                                      
                                      
                                      
                                      22,421Total
      current liabilities
                                      
                                      
                                      221,251
                                      
                                      
                                      
                                      373,870
                                      
                                      
                                      
                                      439,278
                                      
                                      
                                      
                                      170,469
                                      
                                      
                                      
                                      119,766Stockholders’
      (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 could 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 touse 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
andwww.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
successfully 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 conditionand 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 could 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 outsideof 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 aneffective
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
                  
                  OECDEconomic
      structure:
                  
                  Planned
      economy, but in a slow process of transition to a market
      economy
                  
                  Market
      economyLevel of
      government involvement in the economy:
                  
                  Very
      high
                  
                  Low
      to moderateLevel
      of economic development:
                  
                  Developing
      country
                  
                  Developed
      countriesControl
      of foreign exchange:
                  
                  Government
      controlled
                  
                  Market
      drivenMethods
      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
government 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
price.
  As of
December 31st, 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
theCompany Law (1998
Revision) and the common law of the Cayman Islands. The rights of shareholders
to take action against our directors, actions by minority shareholders and the
fiduciary responsibilities of our directors under Cayman Islands law are to a
large extent governed by the common law of the Cayman Islands.
  Under the
common law of the Cayman Islands, the fiduciary relationship of a director is to
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 theCompany 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 ourwww.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 thewww.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 thewww.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 thewww.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 thewww.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
thewww.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
thewww.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.nai500.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.comis 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 30th to
November 1st 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 16th to
18th
of 2009, have made the Privately Arranged Meetings service a major pillar of its
industrial themed event on the first day of the Conference.


-29-





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.


-30-





(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.


-31-







Revenues
                                        
                                        Year ended
                                          Dec 31, 2008
                                        
                                        
                                        Year ended
                                          Dec 31, 2007
                                        
                                        
                                        Year ended
                                          Dec.31, 2006Banner Advertisement
                                        
                                        $
                                        28,570
                                        
                                        
                                        $
                                        26,436
                                        
                                        
                                        $
                                        17,514Translation
      Service
                                        
                                        
                                        20,878
                                        
                                        
                                        
                                        5,090
                                        
                                        
                                        
                                        3,420Chinese
      Webpage Design, Hosting and Maintenance
                                        
                                        
                                        130,107
                                        
                                        
                                        
                                        169,097
                                        
                                        
                                        
                                        71,052Computer
      Consultation Service
                                        
                                        
                                        0
                                        
                                        
                                        
                                        0
                                        
                                        
                                        
                                        0CWN
      Membership, Online Service
                                        
                                        
                                        9,473
                                        
                                        
                                        
                                        15,556
                                        
                                        
                                        
                                        8,524Online
      Marketing Service
                                        
                                        
                                        39,427
                                        
                                        
                                        
                                        25,826
                                        
                                        
                                        
                                        14,880Miscellaneous
      IR/PR Service
                                        
                                        
                                        100,147
                                        
                                        
                                        
                                        223,006
                                        
                                        
                                        
                                        170,489Investment
      Guides
                                        
                                        
                                        60,822
                                        
                                        
                                        
                                        85,245
                                        
                                        
                                        
                                        78,921GCFF
      Conference Service
                                        
                                        
                                        602,538
                                        
                                        
                                        
                                        775,738
                                        
                                        
                                        
                                        251,735Others
                                        
                                        
                                        19,360
                                        
                                        
                                        
                                        0
                                        
                                        
                                        
                                        26,835TOTAL
      REVENUE
                                        
                                        $
                                        1,011,322
                                        
                                        
                                        $
                                        1,325,994
                                        
                                        
                                        $
                                        643,370





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 16th to
18th, 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
4th
to 6th 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.


-32-





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


Geographic
                  Market
                
                Target
      Launch Date of the
                
                Local
      PresencePortal
                  Business
                
                IR/PR
                  Business
                
                Online
                  Platform
                  Business
                
                Conferencing
                  BusinessCanada
      and the United States
                
                Launched
      in October 2002
                
                Launched
      in 2001
                
                Launched
      in October 2006
                
                Launched
      in May 2003
                
                The
      main operation of both businesses is from the Vancouver
      office.Hong
      Kong
                
                Launched
      in 4th
      Quarter of 2004
                
                Not
      Available
                
                Not
      Available
                
                Not
      Available
                
                We
      have already established a local presence in Hong Kong by incorporating
      ChineseWorldNet.com (Hong Kong) Limited on December 22, 1999.
      ChineseWorldNet.com (Hong Kong) Limited is 99% owned by us with 1% owned
      by one of our directors. We established a new office in Hong Kong on
      November 1, 2004.
                  The
      market for IR/PR business at Hong Kong has not reach a mature stage and
      yet difficult for market penetration.PRC
                
                2nd
      Quarter of 2005
                
                Not
      Available
                
                3rd
      Quarter of 2007
                
                3rd
      Quarter of 2007
                
                We
      have established a direct presence in the PRC through a joint venture
      agreement with Shanghai Compass Venture Capital Investment Limited Company
      on February 1, 2008.
                  The
      market for IR/PR business at PRC has not reach a mature stage and yet
      difficult for market penetration.Taiwan
                
                3rd
      Quarter of 2005
                
                Not
      Available
                
                Not
      Available
                
                Not
      Available
                
                We
      may establish a direct presence or seek strategic partners locally to
      launch the services.
                  We
      seek to establish a strong foundation in PRC prior entrance into other
      markets.




Internet
Content Partners:




Through
NAI, we have agreements in place with the following internet content
partners:


-33-





Company
      Name
                                    Services ProvidedALPHATRADE.COM
                                    ALPHATRADE.COM
      provides our subscribers real-time streaming stock information for a
      monthly fee.PR
      Newswire
                                    We
      disseminate PR Newswire Chinese news releases for companies in North
      America, China, Hong Kong, and Taiwan on our www.chineseworldnet.com
      website. This information is free for viewers.Tanrich
      Financial Group
                                    Tanrich
      provides information on the Hong Kong future market and stock market to us
      in exchange for our commentaries and news on the North American stock
      markets.Quote123.com
                                    Quote123
      will provide news and market commentaries in North America to our
      website.FMFOREX
                                    FMFOREX
      provides foreign exchange data, news, and articles to our
      websiteIRAsia
                                    IRAsia
      provides financial news and articles on the Hong Kong Stock
      MarketDaily
      FX
                                    Daily
      FX provides foreign exchange data, news, and articles to our
      website





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.


-34-





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 9th  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.


-35-





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.


-36-




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.


-37-





C. Organizational
Structure









ChineseWorldNet.Com
Inc. (“CWN”) was incorporated under theCompany 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
websitewww.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.


-38-





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.





ITEM 4A. UNRESOLVED STAFF COMMENTS




The
Company is not an accelerated filer, a large accelerated filer or a well-known
seasoned issuer and, as such there is no requirement to provide any information
under this item.




ITEM 5. OPERATING AND FINANCIAL
REVIEW AND PROSPECTS




This
discussion and analysis is of our operating results and our financial position
for the fiscal years ended December 31, 2008, 2007 and 2006, and should be read
in conjunction with the Consolidated Financial Statements and the related Notes
thereto provided at Item 17.




A. Results of
Operations




Years
Ended December 31, 2008, 2007 and 2006




For the
year ended December 31, 2008, net loss was $950,223 on revenues of $1,011,322.
Overall, revenues in 2008 decreased 24% from 2007 levels, while net loss was
$950,223 in 2008 as compared with net income of $54,133 in 2007. For the year
ended December 31, 2007, net income was $54,133 on revenues of $1,325,994.
Overall, revenues in 2007 increased from 2006 levels and the net income was
$54,133 in 2007 as compared with net loss of $ 209,883 in 2006.





Year
ended December 31, 2008 compared to year ended December 31, 2007





Revenues





The
decreasing number of publicly listed companies from the mining industry sector
in 2008 due to an adverse market condition, and our business environment towards
conference business are the main factors for the decrease in our overall
revenues. Our core services includes: Banner Advertisements, Chinese Webpage
Design and Hosting, Miscellaneous IR/PR Service, and GCFF Conference Services,
from which we derived most of our revenues in 2008. As compared with the
performance in 2007, revenues were down for our core services due to a lack of
funds by our corporate clients, the unfavorable financial markets giving
potential clients doubt over the ability of any IR/PR service to raise funds and
companies and investors being less willing to expend their
funds.


-39-





Revenue
Growth Trend


With the
improvement and recovery of overall economic markets after the Global Financial
Crisis, we expect our revenue will turn to grow as we focus on core services
expansion and adaptation to the current financial environment. Primarily, we
intend to concentrate our resources on expanding our sales and marketing force
with respect to our Conference service in China and IR/PR services as well as
diversify the services and content provided by our events and online financial
portals to attract new client markets, which we anticipate will produce
increased revenue growth for our operations.





Banner
Advertisement


The
slight increase in revenues for Banner Advertisement from $26,436 for
fiscal year 2007 to $28,570 for the fiscal year 2008 is due to the increase in
frequency of placing advertising on our website.





Translation
Service


The
number of translation projects had much increased for the fiscal year of 2008,
thus revenue increased from $5,090 from year 2007 to $20,878 for year 2008. More
customers are using our services in 2008.





Chinese
Webpage Design, Hosting and Maintenance


The
revenues for Chinese Webpage Design - Hosting and Maintenance decreased
substantially from $169,097 in fiscal 2007 to $130,107 in fiscal 2008. This is
primarily due to the significant decrease of client companies involved in
Chinese micro-site development and hosting in 2008. An appreciation of US
currency also affects the drop of revenue quoted in US Dollars.





CWN
Membership, Online Services


CWN
Membership & Online service revenues substantially decreased from $15,556
from fiscal 2007 to $9,473 in fiscal 2008. This is due to the great decrease in
number of membership subscribers of our website in 2008.





Miscellaneous
IR/PR services


Revenues
from IR/PR services substantially decreased from $223,006 in fiscal 2007 to
$100,147 in fiscal 2008. The drop in revenues is due to the decreasing number of
our feature companies having subscribed to our premium services under the
establishment of NAI Interactive Ltd. This group of high-profile clients was not
willing to spend more in fees in order to market their companies to the Chinese
market due to the adverse market condition in 2008.





Investment
Guides


The
decrease in revenues of our Investment Guides business from $85,245 in fiscal
2007 to $60,822 in fiscal 2008 is due to the appreciation of US currency in 2008
and the decrease of business generated from sponsorship of investment guides in
2008.





GCFF
Conference Service


The
revenues generated from Conference business had decreased from $775,738 in
fiscal 2007 to $602,538 in fiscal 2008. This is due to the significant decrease
of exhibitors’ sponsorship in our conferences due to the financial crisis in
2008. Companies are willing to spend money on promoting their companies and
cancelled to attend after they registered. We anticipate the revenues generated
from the Conference service will improve and rise as the scale and scope of
conferences continue to grow in 2009.





Other
Revenues


Other
revenue items were $39,427 and $19,360 in fiscal 2008 compared to $25,826 and $0
in fiscal year 2007 for online marketing service and interest and others,
respectively.





Expenses





Total
expenses for fiscal 2008 were $1,791,091 and increase from $1,269,431 in fiscal
2007. Expenses related to travel and entertainment and operating increased
greatly. The substantial increase in our operating expenses is principally from
an increase in our advertising and promotion of our GCFF event fees such as
speakers’ fees, consulting fees, salaries and travel & entertainment fees,
bad provision cost and stock based compensation. We expect our operating
expenses will continue to increase for the foreseeable future, while the
rate of increase will depend on our business expansion in advertising and
promotion, as well as our human resource requirements. Since we intend to focus
on expanding our sales and marketing staff for our Conference business in
Canada & China and our promotional efforts for our IP/PR Services, we expect
that it will be these specific expenses which will have the largest
increases.


-40-





Advertising
and Promotion


Our
advertising and promotional expenses decreased greatly from $286,439 in fiscal
2007 to $144,906 in fiscal 2008 mainly due to the decreased sales in GCFF
conferences in 2008.





Accounting
and Legal


Our
accounting and legal fees slightly increased from $58,022 in fiscal 2007 to
$75,289 in fiscal 2008. The increase resulted from the increase of auditor fees
in fiscal 2008 and a decrease in seeking the services from our legal
firm.





Printing


Printing
expenses decreased to $33,688 for fiscal 2008 from $39,972 for fiscal 2007
primarily associated with the printing of publication and promotional materials.
Our printing expenses mainly involved printing of Mining Investment Guide, as
well as the promotional materials for conference business expansion such as
brochures and pamphlets.





Rent
and Operating


The
office rental cost increased from $72,427 in fiscal 2007 to $114,428 fiscal 2008
mainly due to the lease of office space for CWN China in Shanghai in
2008.





Salaries
and benefits


Salaries
and benefit expenses increased substantially to $599,354 in fiscal 2008 from
$465,494 in fiscal 2007 primarily due to the increase in the number of staffs
and compensation payments in NAI and the setup of China team in our CWN China
office in Shanghai, China during 2008.





Travel
and entertainment


Travel
expenses greatly increased to $183,369 in fiscal 2008 from $136,344 in fiscal
2007 due to business development activity expansion in Asia for the purpose of
increasing our business overseas, and management making numerous associated
trips to Asia and within North America in 2008. The cost of travel expenses was
increased much in 2008.





Other
Expenses


Other
expenses, such as consulting fees, office and miscellaneous, and telephone fees
increased from $172,695 in fiscal 2007 to $182,565 in fiscal 2008. This is
mainly due to the increased levels of business development activity and greater
expenditures on information technology. Consulting fees paid to Goldpac
Investments Limited increased from a yearly charge of $60,000 in 2007 to $72,000
in 2008. The Company incurred accretion expenses of $31,265 in fiscal 2008
increased from $13,755 in fiscal 2007. Stock based compensation from stock
options granted to directors and employees during 2007 substantially increased
from $22,222 in fiscal 2007 to $222,745 in fiscal 2008.





Other
Income (Loss)


Our other
income (loss) line items primarily consist of interest and sundry income from
our liquid investments that are deposited with banks and other financial
institutions; as well as foreign exchange gain or loss derived from currency
exchange transactions. We generally deposit our excess cash in interest bearing
or mutual fund accounts and term deposits. As a result, the other loss in our
income statement greatly increased from $2,430 in fiscal 2007 to $170,454 in
fiscal 2008. We recorded a loss of $231,038 in 2008 (compared to a loss of
$35,522 in 2007) due to the appreciation of US currency during
2008.


-41-





Year
ended December 31, 2007 compared to year ended December 31, 2006





Revenues





The
increasing number of publicly listed companies from the mining industry sector,
and our business expansion towards conference business are the main factors for
the increase in our overall revenues. Our core services includes: Banner
Advertisements, Chinese Webpage Design and Hosting, Miscellaneous IR/PR Service,
and GCFF Conference Services, from which we derived most of our revenues and
revenue growth in 2007.





Revenue
Growth Trend


With the
improvement of overall economic markets and increase in the revenues from our
core services, we expect our revenue will continue to grow as we focus on core
services expansion. Primarily, we intend to concentrate our resources on
expanding our sales and marketing force with respect to our Conference service
in China and IR/PR services, which we anticipate will produce most of the
revenue growth for our operations.





Banner
Advertisement


The
increase in revenue for Banner Advertisement from $17,514 for fiscal year 2006
to $26,436 for fiscal year 2007 is due to the increase in advertising-related
business on our website.





Translation
Service


The
number of translation projects had slightly increased for the fiscal year of
2007, thus revenue increased from $3,420 from year 2006 to $5,090 for year
2007.





Chinese
Webpage Design, Hosting and Maintenance


The
revenues for Chinese Webpage Design - Hosting and Maintenance increased
substantially from $71,052 in fiscal 2006 to $169,097 in fiscal 2007. This is
primarily due to the significant increase of client companies involved in
Chinese micro-site development and hosting in 2007.





Computer
Consultation Services


Revenues
from Computer Consultation services were $0 in fiscal 2007, as we discontinued
this service in fiscal year of 2005.





CWN
Membership, Online Services


CWN
Membership & Online service revenues increased from $8,524 from fiscal 2006
to $15,556 in fiscal 2007. This is due to the increase in number of membership
subscribers.





Miscellaneous
IR/PR services


Revenues
from IR/PR services increased from $170,489 in fiscal 2006 to $223,006 in fiscal
2007. The revenue growth is due to the increasing number of our feature
companies having subscribed to our premium services under the establishment of
NAI Interactive Ltd. This group of high-profile clients was willing to spend
more in fees in order to market their companies to the Chinese
market.





Investment
Guides


The
increase in revenue in our Investment Guides business from $78,921 in fiscal
2006 to $85,245 in fiscal 2007 is primarily due to the depreciation of US
currency in 2007. The business generated from sponsorship of investment guides
in 2007 was approximately the same as 2006.





GCFF
Conference Service


The
revenues generated from Conference business had significantly increased from
$251,735 in fiscal 2006 to $775,738 in fiscal 2007. This is due to the
significant success of our annual events that were held in Shanghai. The GCFF
conference in China generated almost half of the total revenue from conferences.
While the number of conferences had remained the same, the number of client
companies and sponsors that exhibit at the conferences had increased
substantially. We anticipate the revenue generate from the conference service
will continue to rise as the scale and scope of the conference continues to
grow.





Other
Revenues


Other
revenue items, such as Online Marketing Services, were $25,826 in fiscal 2007 as
compared to $14,880 in fiscal 2006. The numbers of customers increase for our
online marketing services in the fiscal 2007 when compared to the fiscal
2006.


-42-





Expenses


Total
expenses for fiscal 2007 were $1,269,431, up from $861,894 in fiscal 2006.
Expenses related to travel and entertainment and operation increased with
increased revenues and activities. The substantial increase in our operating
expenses is principally from an increase in our advertising and
promotion of our GCFF event fees, consulting fees, salaries and travel
& entertainment fees, while our legal fees and bad provision cost decreased.
We expect our operating expenses will continue to increase for the foreseeable
future, while the rate of increase will depend on our business expansion in
advertising and promotion, as well as our human resource requirements. Since we
intend to focus on expanding our sales and marketing staff for our Conference
business in Canada & China and our promotional efforts for our IP/PR
Services, we expect that it will be these specific expenses which will have the
largest increases.





Advertising
and Promotion


Our
advertising and promotional expenses increased greatly from $49,836 in fiscal
2006 to $286,439 in fiscal 2007 mainly due to the increased sales in GCFF China
event in 2007.





Accounting
and Legal


Our
accounting and legal fees decreased from $97,742 in fiscal 2006 to $58,022 in
fiscal 2007. The decrease resulted from the change of our auditor in fiscal 2006
from Ernst & Young LLP to Chang Lee LLP, and the decrease in professional
fees for legal services work performed for us in 2007. The decrease was also
resulted from drafting of the response letters to the SEC in regards to the 20 F
amendment in 2006.





Printing


Printing
expenses stayed approximately the same from $39,972 for fiscal 2007 to $40,152
for fiscal 2006, which is primarily associated with the printing of publication
and promotional materials. Our printing expenses mainly involved
the  printing of Mining Investment Guide, as well as the promotional
materials for conference business expansion such as brochures and
pamphlets.





Rent
and Operating


The
office rental cost increased from $53,797 in fiscal 2006 to $72,427 fiscal 2007
due to the move to a larger office space from August 2006.





Salaries
and benefits


Salaries
and benefit expenses increased to $465,494 in fiscal 2007 from $347,990 in
fiscal 2006 primarily due to the increase in the number of staff and
compensation payments.





Travel
and entertainment


Travel
expenses increased to $136,344 in fiscal 2007 from $86,442 in fiscal 2006 due to
business development activity expansion in Asia for the purpose of increasing
our business overseas, and management making numerous associated trips to Asia
and within North America.





Other
Expenses


Other
expenses, such as consulting fees, office and miscellaneous, and telephone fees
increased from $83,559 in fiscal 2006 to $172,695 in fiscal 2007. This is mainly
due to the increased levels of business development activity and greater
expenditures on information technology. Another consulting agreement of yearly
fees of $60,000 is signed with Goldpac Investments Ltd. in 2007. The Company
incurred accretion expense of $13,755 from convertible debenture issued in 2007.
Stock options granted to directors and employees during 2007 also cost $22,222
under stock based compensation.





Other
Income (Loss)


Our other
income (loss) line items primarily consist of interest and sundry income from
our liquid investments that are deposited with banks and other financial
institutions; as well as foreign exchange gain or loss derived from currency
exchange transactions. We generally deposit our excess cash in interest bearing
or mutual fund accounts. As a result, the other income in our income statement
decreased to $(2,430) in 2007 from $8,641 in fiscal 2006.


-43-





For year ending December 31,2008
                                                                                                              
                                                                                                              
                                                                                                              2007RevenuesBanner
      Advertisement
                                                                                                              
                                                                                                              $
                                                                                                              28,570
                                                                                                              
                                                                                                              
                                                                                                              $
                                                                                                              26,436Translation
      Service(Company
      Review, Company Newsletter)
                                                                                                              
                                                                                                              
                                                                                                              20,878
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              5,090Chinese
      Webpage Design, Hosting and Maintenance
                                                                                                              
                                                                                                              
                                                                                                              130,107
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              169,097CWN
      Membership, Online Service
                                                                                                              
                                                                                                              
                                                                                                              9,473
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              15,556Online
      Marketing Service
                                                                                                              
                                                                                                              
                                                                                                              39,427
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              25,826Miscellaneous
      IR/PR Service
                                                                                                              
                                                                                                              
                                                                                                              100,147
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              223,006GCFF
      Conference Service
                                                                                                              
                                                                                                              
                                                                                                              602,538
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              775,738Investment
      Guides
                                                                                                              
                                                                                                              
                                                                                                              60,822
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              85,245Interest
      and others
                                                                                                              
                                                                                                              
                                                                                                              19,360TOTAL
      REVENUE
                                                                                                              
                                                                                                              $
                                                                                                              1,011,322
                                                                                                              
                                                                                                              
                                                                                                              $
                                                                                                              1,325,994ExpensesAdvertising
      and promotion
                                                                                                              
                                                                                                              $
                                                                                                              144,906
                                                                                                              
                                                                                                              
                                                                                                              $
                                                                                                              286,439Accounting
      and legal
                                                                                                              
                                                                                                              
                                                                                                              75,289
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              58,022Consulting
                                                                                                              
                                                                                                              
                                                                                                              95,900
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              84,000Depreciation
                                                                                                              
                                                                                                              
                                                                                                              14,229
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              6,923Accretion
      on convertible debenture
                                                                                                              
                                                                                                              
                                                                                                              31,265
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              13,755Directors’
      Remuneration
                                                                                                              
                                                                                                              
                                                                                                              8,000Non-cash
      compensation changesInterest
      (imputed) – related parties
                                                                                                              
                                                                                                              
                                                                                                              -
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              63Interest
      expense on long term debt
                                                                                                              
                                                                                                              
                                                                                                              15,000
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              12,500Office
      and miscellaneous
                                                                                                              
                                                                                                              
                                                                                                              65,096
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              69,622Printing
                                                                                                              
                                                                                                              
                                                                                                              33,688
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              39,972Provision
      (recovery) for Bad and doubtful debts
                                                                                                              
                                                                                                              
                                                                                                              13,410
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              (17,425
                                                                                                              )Rent
      and operating
                                                                                                              
                                                                                                              
                                                                                                              114,428
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              72,427Salaries
      and benefits
                                                                                                              
                                                                                                              
                                                                                                              599,354
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              465,494Seminar
      operating expense
                                                                                                              
                                                                                                              
                                                                                                              152,843Stock
      Based Compensation
                                                                                                              
                                                                                                              
                                                                                                              222,745
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              22,222Telephone
                                                                                                              
                                                                                                              
                                                                                                              21,569
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              19,073Travel
      and entertainment
                                                                                                              
                                                                                                              
                                                                                                              183,369
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              136,344TOTAL
      OPERATING EXPENSES
                                                                                                              
                                                                                                              $
                                                                                                              1,791,091
                                                                                                              
                                                                                                              
                                                                                                              $
                                                                                                              1,269,431Other
      Income (Loss)
                                                                                                              
                                                                                                              
                                                                                                              (170,454
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              (2,430
                                                                                                              )INCOME
      (LOSS) BEFORE INCOME TAXES ANDNON
      CONTROLLING INTEREST
                                                                                                              
                                                                                                              $
                                                                                                              (950,223
                                                                                                              )
                                                                                                              
                                                                                                              $
                                                                                                              54,133Deferred
      income taxes recovery (expense)
                                                                                                              
                                                                                                              
                                                                                                              (54,612
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              54,221Non
      controlling interest
                                                                                                              
                                                                                                              
                                                                                                              54,712
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              -NET
      INCOME (LOSS) FOR THE YEAR
                                                                                                              
                                                                                                              $
                                                                                                              (950,123
                                                                                                              )
                                                                                                              
                                                                                                              $
                                                                                                              108,354


-44-





Currency




We
maintain our accounting records in U.S. dollars. The functional currency of NAI,
CWN HK and CWN China is the Canadian dollar, Hong Kong dollar and Chinese
renminbi, respectively and the current rate method of translation was used. We
translate our assets and liabilities at the exchange rate prevailing as of the
balance sheet date. Revenues and expenses are translated at the average exchange
rate for the year. Foreign exchange gains and losses are deferred and shown
separately in shareholders’ equity.





Foreign
currency fluctuations may have an impact on our financial condition. However, we
do not engage in any foreign currency hedge transactions.




Inflation




We do not
believe that inflation will have a material adverse effect on our financial
condition. Traditionally, Canada has not been countries that experienced a
substantial increase in inflation.  As of December 2008, the inflation
rate in Canada was 1.2% from a 2.2% in January of that year.




B. Liquidity
and Capital Resources


As of
December 31, 2008, we had cash and cash equivalents of $684,232 and short-term
investments in the bank of $1,291,726. As of that date, we did not have any
outstanding debt or line of credit. We believe that our current cash, cash
equivalents, and cash flow are sufficient to satisfy our cash requirements to
further expand our business and other future development in Asia for the next
few years. Our primary cash requirements relate to our operational expenses. Our
principal sources of funding consist of advances from related parties in fiscal
2005 and fiscal 2003, and advances from non-related parties in fiscal 2004. In
fiscal 2007, we raised additional capital through private placement offerings of
common shares. The Company received net proceeds of $2,070,000 in connection
with the private placement. In March 2007, the Company also issued a convertible
debt in the amount of $250,000 at an interest rate of 6%. In the meantime, we
are less likely to seek debt financing from lending institutions or other
private lending. Our operational expenditures have been, and are expected to
continue to be, funded through our operations and existing capital financing
resources. Our uses of cash include general overhead and human resource costs,
such as salaries, promotional expenses and rental fees related to our seminars
and conferences and production costs of our publications. There were no
private placements or acquisitions completed in the year 2003, 2005 or 2006. In
2004, we completed a private placement financing of $150,000 by issuing three
year 5% convertible debentures. The debentures were fully converted into 250,000
common shares of the Company in January 2007.




C. Research
and Development, Patents and Licenses




We have
not engaged in research and development activities for the last three fiscal
years, and have no patents and licenses.




D. Trend
Information




The
Global Financial Crisis affecting the world capital markets, particularly with
public companies and investors may have a positive material impact on our
revenues including: the general financial market turnaround, which will increase
demand for financial information services and spending on investor
relations/public relations; increasing interest of Asian companies looking to
enter North American financial markets; and the increased attention to corporate
governance and disclosure. We believe these trends may lead to an increase
in demand for our services, which could lead to increase in sales of our
services. However, the investor relations/public relations area in Asia is still
in its development stage, which may affect the launch of our company’s investor
relations/public relations services in Asia. Continued growth in China and
interest in the Chinese markets is key to our future profitability and to
increasing revenues. There are no known trends with relation to the production
of our services.




E. Off-Balance
Sheet Arrangements




We do not
have any off-balance sheet arrangements.


-45-




F. Tabular
Disclosure of Contractual Obligations




Payments due by periodContractual Obligations
                              
                              Total
                              
                              
                              Less than 1 year
                              
                              
                              1-3 years
                              
                              
                              3-5 years
                              
                              More than 5
                                yearsLong-Term
      Debt Obligations
                              
                              $
                              250,000
                              
                              
                              
                              
                              
                              $
                              250,000Capital
      (Finance) Lease ObligationsOperating
      Lease Obligations
                              
                              $
                              177,556
                              
                              
                              $
                              70,784
                              
                              
                              $
                              106,772Purchase
      ObligationsOther
      Long-Term LiabilitiesTotal
                              
                              $
                              427,556
                              
                              
                              $
                              70,784
                              
                              
                              $
                              356,772
                              
                              
                              $0
                              
                              $0




ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND
EMPLOYEES





A. Directors
and Senior Management




The
following tables set forth all directors and executive officers of CWN and our
subsidiary NAI as of December 31, 2008, with each position and office held by
them in CWN. Each director’s term of office expires at the next annual general
meeting of shareholders.




CWN




– Directors
and Officers as of December 31, 2008





Name
                    
                    Age
                    
                    Office Held Since
                    
                    Position with CWNJoe
      K.F. Tai
                    
                    45
                    
                    January
      12, 2000
                    
                    President,
      Chief Executive Officer and DirectorKelvin
      Szeto(1)
                    
                    48
                    
                    June
      1, 2006
                    
                    Chief
      Operating Officer & Chief Financial OfficerChi Cheong
      Liu(2)
                    
                    49
                    
                    January
      12, 2000
                    
                    Treasurer
      and DirectorChi Kong
      Liu(2)
                    
                    48
                    
                    January
      12, 2000
                    
                    DirectorAndy S.W. Lam(3)
                    
                    59
                    
                    March
      8, 2004
                    
                    DirectorGilbert Chan(4)
                    
                    33
                    
                    April
      1, 2008
                    
                    Acting Corporate
      Secretary





(1)
            Kelvin
      Szeto became acting Chief Operating Officer and acting Chief Financial
      Officer of the Company on April 1, 2005. He was permanently appointed to
      the positions on June 1, 2006.





(2)
            Two
      of our Directors, Chi Cheong Liu and Chi Kong Liu are brothers. There are
      no other family relationships between our directors and
      executives.





(3)
            Andy
      Siu Wing Lam was appointed as a Director in March
  2004.





(4)
            Vivien
      Leung was appointed as a Corporate Secretary as of February 1, 2007 and
      resigned in April 2008. Gilbert Chan is temporarily responsible to this
      duty until we find the
replacement.


-46-





NAI





– Directors
and Officers as of December 31, 2008





Name
              
              Age
              
              Position with NAIKelvin
      Szeto
              
              48
              
              President,
      Secretary and DirectorGilbert
      Chan
              
              33
              
              Vice
      President – Marketing and Project
  Development




The
business background and principal occupations of CWN and NAI’s officers and
directors for the preceding five years are as follows:




ChineseWorldNet.com
Inc.




Joe
K. F. Tai


Mr. Tai
has served as President, Chief Executive Officer and a director of CWN since
January 12, 2000. Mr. Tai has 15 years of experience in international business
and has also served as Managing Partner of Goldpac Investments Ltd., a venture
capital company. Mr. Tai was also involved with a start-up of an
international computer manufacturing company with our corporate office in
Vancouver, British Columbia, sales office in Calgary, Alberta, and manufacturing
facilities in Hong Kong and PRC and annual sales exceeding Cdn$30 million. In
addition, Mr. Tai is a director of Medifocus Inc. and China Goldcorp Ltd., both
listed on the TSX Venture Exchange.




Kelvin
Szeto


Mr. Szeto
has served as Chief Operating Officer and Chief Financial Officer of CWN since
June 1, 2006. Between April 1, 2005 and June 1, 2006, Mr. Szeto was acting Chief
Operating Officer and acting Chief Financial Officer of CWN. Mr. Szeto has
served as NAI’s President, Secretary and Director since November 13, 2001. Prior
to the appointment as the President of NAI, Mr. Szeto served as the Secretary,
Director and Vice President Operation since January 12, 2000. Mr. Szeto was
involved in the start up of an international computer manufacturing company with
our corporate office in Vancouver, British Columbia, sales office in Calgary,
Alberta and manufacturing facilities in Hong Kong and PRC and annual sales
exceeding Cdn$30 million.




Chi Cheong
Liu


Mr. Liu
has been a director of CWN since January 2000. Mr. Liu has served as President
of Chigo Engineering Company, a security engineering firm, for the last 17
years. In addition, Mr. Liu is also a venture capitalist specializing in
biotechnology and technology investments.




Chi Kong
Liu


Mr. Liu
has been a director of CWN since January 2000. Mr. Liu served as President and
owner of S & B Trading Company Limited, a diamond and jewelry wholesaler. In
addition, Mr. Liu is also a venture capitalist specializing in biotechnology and
technology investments.





Andy
S. W. Lam


Mr. Lam
was appointed director of CWN on March 8, 2004. Mr. Lam is currently a director
of CWNHK. Mr. Lam is a Justice of the Peace appointed by the Hong Kong
Government. He is a successful businessman with over 19 years of experience in
strategic investment and planning. Mr. Lam has sat on the board of a number of
publicly listed companies on Hong Kong Stock Exchange and served on several
government committees and tribunals in Hong Kong. Mr. Lam is a CPA and holds a
MBA degree from Oklahoma City University.





NAI Interactive
Ltd.




Kelvin
Szeto


Mr. Szeto
has served as NAI’s President, Secretary and Director since November 13, 2001.
Prior to the appointment as the President of NAI, Mr. Szeto served as the
Secretary, Director and Vice President Operation since January 12, 2000. Mr.
Szeto was involved in the start up of an international computer manufacturing
company with our corporate office in Vancouver, British Columbia, sales office
in Calgary, Alberta and manufacturing facilities in Hong Kong and PRC and annual
sales exceeding Cdn$30 million. Mr. Szeto also serves as Chief Operating Officer
and Chief Financial Officer of CWN.


-47-





Gilbert
Chan


Mr. Chan
has acted as the Vice President -Marketing and Project Development for NAI since
June, 2000. Mr. Chan has extensive experience working as a project manager for
different websites. Mr. Chan holds a Bachelor Degree in Applied Science from
University of British Columbia.





B. Compensation




The
following table provides information regarding the direct or indirect
remuneration paid during the 2008 fiscal year to the directors and officers of
CWN, including our subsidiaries, in office as of December 31, 2008:





Annual CompensationName and Principal Position
                Year
                
                Salary
                
                Bonus
                
                Other Annual
                  CompensationJoe
      K. F. Tai (2)
                  President,
      Chief Executive Officer and Director
                2008
                
                Nil(1)
      (2)
                
                Nil
                
                
                62,000Chi
      Cheong Liu (1)
                  Treasurer
      and Director
                2008
                
                Nil(2)
                
                Nil
                
                
                2,000Chi Kong Liu(3)
                  Director
                2008
                
                Nil
                
                Nil
                
                
                26,000Andy S.W. Lam(6)
                  Director
                2008
                
                Nil
                
                Nil
                
                
                2,000Kelvin
      Szeto
                  Chief Operating Officer and
      Chief Financial Officer of CWN;(4)
                  President,
      Secretary and Director of NAI
                2008
                
                $
                40,499
                
                Nil
                
                NilGilbert
      Chan
                  VP
      Marketing and Project Development of NAI
                2008
                
                $
                39,861
                
                Nil
                
                NilLixin
      Yang (5)
                  VP
      Editing of NAI
                2008
                
                $
                30,414
                
                Nil
                
                Nil





(1)
            We
      have a consulting agreement with Goldpac Investment Partners Ltd. for
      2007, 2006 and 2005 for $24,000 per year. Goldpac Investment Partners Ltd.
      is a company owned by Chi Cheong Liu, one of our directors.  Chi
      Cheong Liu is a shareholder and does not receive salary. Starting from
      2008, CWN paid Chi Cheong Liu $2,000 as a directors’
  fee.





(2)
            We
      have a consulting agreement with Goldpac Investment Ltd. for 2008 and 2007
      for $60,000 per year. Joe Tai (one of directors) is a Managing Director of
      Goldpac Investment Ltd.  Joe Tai is a shareholder and does
      not receive salary. Starting from 2008, CWN paid Joe Tai $2,000 as a
      directors’ fee.




(3)
            We
      entered into a new consulting agreement with Silver Lake Investment
      Partners, Ltd. for 2008 for $24,000, a company controlled by Chi Kong Liu,
      one of our directors.  Chi Kong Liu is a shareholder and does
      not receive salary. Starting from 2008, CWN paid Chi Kong Liu $2,000 as a
      directors’ fee.





(4)
            Kelvin
      Szeto was appointed as Chief Operating Officer and Chief Financial Officer
      of CWN on June 1, 2006.





(5)
            Lixin
      Yang, as of December 23, 2008, has resigned from NAI. No other VP of
      Editing has since been appointed in
2008.


-48-





(6)
            Starting
      from 2008, CWN paid Andy Lam $2,000 as a directors’
  fee.




Pension
Plans




We do not
provide pension, retirement or similar benefits for directors, senior management
or employees.




C. Board
Practices




Directors
hold office for a term of one year or until the next annual meeting of
shareholders at which directors are elected. All of the current directors have
served since January 12, 2000, other than Andy S.W. Lam who was appointed to
the board in March 2004 following the resignation of Ken Cai in January 2004.
Our officers are appointed by the board and serve at the board’s
discretion.




We have
not entered into service contracts with any of our directors. However, we have
entered into consulting agreements with Goldpac Investments Ltd and Silver Lake
Investment Partners, Ltd., which are controlled by directors of the Company.
Currently, we have one consulting agreement with Silver Lake Investment
Partners, Ltd. in effect, and we extended the terms of this consulting agreement
to December 31, 2009. We have also entered into a consulting agreement with
Goldpac Investments Ltd., ending on December 31, 2009.





As of
2008, we have not renewed the consulting agreement with Goldpac Investment
Partners Ltd. for 2008. We have also entered into a new consulting agreement
with Silver Lake Investment Partners Ltd., operated by Chi Kong
Liu.




D. Employees




As of
December 31, 2008, we had a total of 13 employees in Vancouver, all full-time,
of which 13 are employees of NAI. Our President and Chief Executive Officer is
the only employee hired by CWN.   There are 10 employees in the
CWN China in Shanghai, China.  There are currently no full-time
employees in Hong Kong.





EmployeeBreakdown
                        
                        NAI (Vancouver)
                        
                        CWN China (Shanghai)Finance
      and Accounting
                        
                        2
                        
                        2Business
      Development
                        
                        4
                        
                        1Editorial
                        
                        2
                        
                        3IT
                        
                        2
                        
                        1Sales/Marketing
                        
                        3
                        
                        3





E. Share
Ownership of Directors and Senior Management





The
following table sets forth certain information regarding the ownership of our
common shares as of March 31, 2009 by each of the directors and members of
senior management in office as of March 31, 2009. The percentage owned is based
on 10,700,000 shares outstanding as of March 31, 2009.


-49-




As at March 31,
2009




Name and Title
                  
                  Share Ownership
                  
                  
                  % Share OwnershipJoe Tai(1)
                    President,
      CEO and Director
                  
                  
                  250,000
                  
                  
                  
                  2.33
                  %Chi
      Cheong Liu
                    Director
                  
                  
                  1,896,667
                  
                  
                  
                  17.73
                  %Chi
      Kong Liu
                    Director
                  
                  
                  580,000
                  
                  
                  
                  5.42
                  %Lixin Yang2)
                    Vice
      President, Editing of NAI (resigned)
                  
                  
                  10,000
                  
                  
                  
                  0.09
                  %Kelvin
      Szeto
                    Chief
      Operating Officer and Chief Financial
      Officer of CWN;(3)
                    President,
      Secretary and Director of NAI
                  
                  
                  150,000
                  
                  
                  
                  1.40
                  %Gilbert
      Chan
                    Vice
      President, Marketing and Project Development of NAI
                  
                  
                  50,000
                  
                  
                  
                  0.47
                  %Andy S.W. Lam(4)
                    Director
                  
                  
                  0
                  
                  
                  
                  —All
      Directors and Senior Management as a group
                  
                  
                  2,926,667
                  
                  
                  
                  27.35
                  %





(1)
            Includes
      112,500 common shares held by Ms. Tim Yee Lau, spouse of Joe Tai, which
      was acquired in exchange for all issued and outstanding shares of NAI
      Interactive Ltd.(2)
            Mr.
      Lixin Yang was appointed Vice President, Editing in March 2004 and has
      resigned since December 23 2008.(3)
            Mr.
      Kelvin Szeto was appointed Chief Operating Officer and Chief Financial
      Officer of CWNon June 1,
      2006.4)
            Mr.
      Andy S. W. Lam was appointed Director in March
  2004.




Stock
Options




We
adopted the 2007 Stock Option Plan, or the Plan, on October 11,2007, under
which we could issue share options with the right to purchase up to 550,000
ordinary shares to our directors, officers, and key employees. We did not grant
options to individual consultants and advisors.




As at
December 31, 2008, we had a total number of 396,000 options that are unvested.
All of the options we granted on October 11, 2007, with an exercise price of
$1.08 per share, will expire on October 11, 2012. All of the options granted
under the Plan to our directors and officers have a vesting period of 1 to 5
years.




A copy of
our Stock Option Plan is filed as an exhibit to this annual
report.


-50-





Key Employees
                                              
                                              
                                              Job Title
                                              
                                              
                                              Share GrantedJoe
      Tai
                                              
                                              
                                              President
      & CEO
                                              
                                              
                                              180,000Kelvin
      Szeto
                                              
                                              
                                              Senior
      Vice president of Operations
                                              
                                              
                                              100,000Gilbert
      Chan
                                              
                                              
                                              Senior
      Vice President of Marketing & Investors Relations
                                              
                                              
                                              50,000Board of DirectorsJoe
      Tai
                                              
                                              
                                              Director
                                              
                                              
                                              25,000Andy
      Lam
                                              
                                              
                                              Director
                                              
                                              
                                              25,000Liu
      Chi Cheong
                                              
                                              
                                              Director
                                              
                                              
                                              25,000Simon
      Liu
                                              
                                              
                                              Director
                                              
                                              
                                              25,000EmployeesFrank
      Feng Feng
                                              
                                              
                                              Systems
      Administrator
                                              
                                              
                                              20,000(Forfeited)Mary
      Weixin Zhang
                                              
                                              
                                              Editor
                                              
                                              
                                              10,000Jin
      Xu
                                              
                                              
                                              Editor
                                              
                                              
                                              10,000(Forfeited)Lixin
      Yang
                                              
                                              
                                              Vice-President
      of Editing
                                              
                                              
                                              15,000(Forfeited)Kai
      Bei Yang
                                              
                                              
                                              Business
      Development & Analyst
                                              
                                              
                                              15,000Fornia
      Wai Ting Lau
                                              
                                              
                                              Business
      Development Manager
                                              
                                              
                                              20,000Karl
      Por So
                                              
                                              
                                              Web
      Developer
                                              
                                              
                                              10,000Vivien
      Ka Ki Leung
                                              
                                              
                                              Corporate
      Secretary
                                              
                                              
                                              10,000
      (Forfeited)Kwok
      Keung Pang
                                              
                                              
                                              Accounting
      Officer
                                              
                                              
                                              10,000


-51-





ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY
TRANSACTIONS





A. Major
shareholders




The
following table sets forth, as at March 31 2009, certain information with
respect to the beneficial ownership of our common shares by each shareholder
known by us to be the beneficial owner of more than 5% of our outstanding common
shares. The percentage ownership is based on 10,700,000 shares outstanding as of
March 31 2009.




Unless
otherwise indicated by footnote, we believe that the beneficial owners of the
common shares listed below, based on information furnished by such owners, have
sole investment and voting power with respect to such common shares, subject to
community property laws where applicable. Beneficial ownership is determined in
accordance with the rules of the United States Securities and Exchange
Commission and generally includes voting or investment power with respect to
securities.




As
at March 31, 2009




NameofShareholder
                  
                  Number of
                    Common Shares
                  
                  
                  Percentage ofShares
                    Beneficially Owned (%)Chi
      Cheong Liu
                  
                  
                  1,730,000
                  
                  
                  
                  16.17
                  %Vcanland
      China Holdings Ltd.
                  
                  
                  1,500,000
                  
                  
                  
                  14.02
                  %Goldpac
      Investment Partners Ltd.
                  
                  
                  1,166,667
                  
                  
                  
                  10.90
                  %Datacom Venture Limited(1)
                  
                  
                  600,000
                  
                  
                  
                  5.61
                  %Chi
      Kong Liu
                  
                  
                  580,000
                  
                  
                  
                  5.42
                  %Monica
      Law
                  
                  
                  570,000
                  
                  
                  
                  5.33
                  %




(1)
200,000 shares were issued to Datacom Ventures, which is the nominee for Marrick
Investments, in connection with the purchase of the remaining assets of
Technology City Holdings Ltd.




In
the year 2008, there have been no issue of common shares, exercises in stock
options and no change in the percentage of shares beneficially owned. As
far as it is known to us, and except as disclosed herein, we are not directly or
indirectly owned or controlled by another corporation, by any foreign government
or any other person or entity. The shareholders, who own five percent or more of
our common shares, do not have voting rights which are different than our other
shareholders who own our common shares.




United
States Shareholders




As of
December 31, 2008, we had three registered shareholders with addresses in the
United States, holding less than 0.25% of the outstanding common
shares.





B. Related
party transactions




In 2008,
we renewed our consulting agreement for the period January 1 – December 31,
2008 and paid $24,000 ($2,000 per month) in consulting fees to Silver Lake
Investment Partners, Ltd., a company controlled by Chi Kong Liu, one of our
directors and a holder of 5.42% of our outstanding shares.




In 2008,
we signed a new consulting agreement for the period January 1 – December
31, 2008, and paid $60,000 ($5,000 per month) in consulting fees to Goldpac
Investments Ltd., a company partially own by Chi Cheong Liu, one of our
directors. Mr. Joe Tai is the Managing Partner of Goldpac Investments Ltd. and
Mr. Joe Tai also is our President and CEO. Goldpac
Investments Ltd. is a holder of 1.87% of our outstanding shares.




None of
our directors or senior officers and no associates or affiliates of any of them
is or has been indebted to us or our subsidiaries at any time.


-52-


C. Interests
of Experts and Counsel




This
Report on Form 20-F is being filed as an annual report under the Exchange Act
and, as such, there is no requirement to provide any information under this
item.




ITEM 8. FINANCIAL INFORMATION





A. Financial
Statements




This
annual report on Form 20-F includes our audited consolidated financial
statements for the years ended December 31, 2008, 2007 and 2006, including our
consolidated balance sheets as of December 31, 2008 and 2007, and the
consolidated statements of shareholders’ equity, operations and cash flows for
the years ended December 31, 2008, 2007 and 2006, and the notes to those
statements and the auditors’ reports thereon.




B. Significant
Changes




There
have been no significant changes in our business in the period from December 31,
2008 until the date of this document.




ITEM 9. THE OFFER AND LISTING




A. Offer and
Listing Details




Shares of
our common stock are currently quoted on the OTC Bulletin Board under the symbol
“CWNOF.OB.” For the periods indicated, the following table sets forth the high
and low bid prices per share of common stock, as reported by the OTC Bulletin
Board. These prices represent inter-dealer quotations without retail markup,
markdown, or commission and may not necessarily represent actual transactions.
On June 23, 2009, the closing bid price per share of our common stock was
$0.25.




Periods
                    
                    High
                    
                    
                    LowFiscal
      Year 2008Last
      Quarter (October 2008 December 2008)
                    
                    $
                    0.53
                    
                    
                    $
                    0.20Fiscal
      Year 2009First
      Quarter (January-March 2009)
                    
                    $
                    0.25
                    
                    
                    $
                    0.13Second
      Quarter (April – June 4, 2009)
                    
                    $
                    0.25
                    
                    
                    $
                    0.25Period
      from December 2008 through May 2009December
      2008
                    
                    $
                    0.21
                    
                    
                    $
                    0.19January
      2009
                    
                    $
                    0.25
                    
                    
                    $
                    0.13February
      2009
                    
                    $
                    0.25
                    
                    
                    $
                    0.25March
      2009
                    
                    $
                    0.25
                    
                    
                    $
                    0.25April
      2009
                    
                    $
                    0.25
                    
                    
                    $
                    0.25May
      2009
                    
                    $
                    0.25
                    
                    
                    $
                    0.25


-53-





B. Plan ofDistribution




This
Report on Form 20-F is being filed as an annual report under the Exchange Act
and, as such, there is no requirement to provide any information under this
item.




C. Markets




Our
common shares are quoted on the Over-the-Counter Bulletin Board of the National
Association of Securities Dealers, Inc. under the symbol
“CWNOF.OB.”




D. Selling
Shareholders




This
Report on Form 20-F is being filed as an annual report under the Exchange Act
and, as such, there is no requirement to provide any information under this
item.




E. Dilution




This
Report on Form 20-F is being filed as an annual report under the Exchange Act
and, as such, there is no requirement to provide any information under this
item.




F. Expenses
of the Issue




This
Report on Form 20-F is being filed as an annual report under the Exchange Act
and, as such, there is no requirement to provide any information under this
item.




ITEM 10. ADDITIONAL INFORMATION




A. Share
Capital




This
Report on Form 20-F is being filed as an annual report under the Exchange Act
and, as such, there is no requirement to provide any information under this
item.




B. Memorandum
and Articles of Association




There
have been no changes to the Memorandum or Articles of Association, or Cayman
Islands Law with respect to rights and powers of directors and shareholders
since our 20-F Registration Statement (SEC file no. 000-33051) filed on July 3,
2002. Such discussion is hereby incorporated by reference into this annual
report.




C. Material
Contracts




On June
06, 2006, we entered into an office lease agreement for our current offices
located at Suite 368 - 1199 West Pender Street, Vancouver, British Columbia,
Canada V6E 2R1. The term of the lease is for 5 years from August 2006. Monthly
payments are CAD$6,484.67 plus applicable taxes.





On May
07, 2008, we entered into a office lease agreement for our current offices
located at Room 1003, Area B, Eton Plaza,No.555 Pudong Avenue, Pudong District,
Shanghai, China. The term of the lease is for 2 years from June 2008. Monthly
payments are RMB$21,702.5 plus applicable taxes and maintenance
fee.




We also
entered in an Exchange Agreement with Marrick Investments in April 2004 to
acquire the remaining assets of Technology City Holdings Ltd. Under the Exchange
Agreement, we issued 200,000 new shares in October 2004 to Datacom Venture
Limited, nominee of Marrick Investments Ltd.




Please
see “Item 4 – Information on the Company” and the exhibits to this annual
report.


We
have not entered into other materials contracts other than in the ordinary
course of business during 2008.


-54-





D. Exchange
Controls




Cayman
Islands




We are
organized under the laws of the Cayman Islands. We do not believe there are any
decrees or regulations under the laws of the Cayman Islands applicable to us
restricting the import or export of capital or affecting the remittance of
dividends or other payments to non-resident holders of our common stock. There
are no restrictions under CWN’s Articles of Incorporation or Memorandum of
Association or under Cayman Islands law as currently in effect that limit the
right of non-resident owners to hold or vote our common shares or to receive
dividends thereon. There is uncertainty as to whether the Courts of Cayman
Island would (i) enforce judgments of United States Courts obtained against
us or our directors and officers predicated upon the civil liability provisions
of the federal securities laws of the United States or (ii) entertain original
actions brought in Cayman Island Courts against us or such persons predicated
upon the federal securities laws of the United States. There is no treaty in
effect between the United States and Cayman Island providing for such
enforcement.




Canada




There are
no governmental laws, decrees or regulations in Canada relating to restrictions
on the export or import of capital, or affecting the remittance of interest,
dividends or other payments to non-residents. Dividends paid to US residents,
however, are subject to a 15% withholding tax or a 5% withholding tax for
dividends if the shareholder is a corporation owning at least 10% of the
outstanding voting shares of the Company pursuant to Article X of the reciprocal
tax treaty between Canada and the US.




Except as
provided in theInvestment
Canada Act (the "ICA"), which has provisions that restrict the holding of
voting shares by non-Canadians, there are no limitations specific to the rights
of non-Canadians to hold or vote the common shares under the laws of Canada, or
in the charter documents of the Company or its subsidiaries.




The ICA
requires a person who is not a Canadian resident (a "non-Canadian") making an
investment, which would result establish a new Canadian business or which would
result in the acquisition of control of a Canadian business (i.e. the gross
value of the assets of which exceed a certain monetary threshold), to identify,
notify, or file an application for review with the Investment Review Division of
Industry Canada ("IRD"). The notification procedure involves a brief statement
of information about the investment on a prescribed form to be filed by the
investor within 30 days following implementation of the investment. Specific
investments are subject to review under the ICA. It is intention of the IRD that
investments requiring only notification will proceed without government
intervention.


-55-




The
following investments by non-Canadians are subject to review under the
ICA:




1.
            An
      investment is reviewable if there is an acquisition of a Canadian business
      and the asset value of the Canadian business being acquired equals or
      exceeds the following thresholds:(a)
            For
      non-World Trade Organization ("WTO") investors, the threshold is $5
      million for a direct acquisition and $50 million for an indirect
      acquisition; the $5 million threshold will apply however for an indirect
      acquisition if the asset value of the Canadian business being acquired
      exceeds 50% of the asset value of the global
  transaction;(b)
            Except
      as specified in paragraph (c) below, a threshold is calculated annually
      for reviewable direct acquisitions by or from WTO investors. The threshold
      for 2005 is $250 million. Pursuant to Canada's international commitments,
      indirect acquisitions by or from WTO investors are not
      reviewable;(c)
            The
      limits set out in paragraph (a) apply to all investors for acquisitions of
      a Canadian business that:(i)
            engages
      in the production of uranium and owns an interest in a producing uranium
      property in Canada;(ii)
            provides
      any financial service;(iii)
            provides
      any transportation services; or(iv)
            is
      a cultural business.2.
            Notwithstanding
      the above, any investment which is usually only notifiable, including the
      establishment of a new Canadian business, and which falls within a
      specific business activity, including the publication and distribution of
      books, magazines, newspapers, film or video recordings, audio or video
      music recordings, or music in print or machine-readable form may be
      reviewed if an Order-in-Council directing a review is made and a notice is
      sent to the Investor within 21 days following the receipt of a certified
      complete notification.




With
reference to 1 (a) above, generally speaking, an acquisition is direct if it
involves the acquisition of control of the Canadian business or of its direct or
indirect Canadian parent and an acquisition is indirect if it involves the
acquisition of control of a non-Canadian direct or indirect parent of an entity
carrying on the Canadian business. No change of voting control will be deemed to
have occurred if an investor acquires less than one-third of the voting control
of a Canadian corporation.




With
reference to 1(a) above, a WTO investor, as defined in the ICA, includes an
individual who is a national of a member country of the WTO or who has the right
of permanent residence in relation that WTO member, a government or government
agency of a WTO investor-controlled corporation, a limited partnership, trust or
joint venture that is neither WTO-investor controlled or Canadian
controlled of which two-thirds of its board of directors, general partners or
trustees, as the case may be, are any combination of Canadians and WTO
investors.




The ICA
exempts certain transactions from notification and review, including, among
others,




1.
              An
      acquisition of voting shares if the acquisition were made in the ordinary
      course of that persons' business as a trader or dealer in
      securities;


-56-


2.
              An
      acquisition of control of the company in connection with the realization
      of a security interest granted for a loan or other financial assistance
      and not for any purpose related to the provisions of the
    ICA;
  3.
              The
      acquisition of voting interests by any person in the ordinary course of a
      business carried on by that person that consists of providing, in Canada,
      venture capital on terms and conditions not inconsistent with such terms
      and conditions as may be fixed by the Minister;
  and
  4.
              Acquisition
      of control of the company by reason of an amalgamation, merger,
      consolidation or corporate reorganization, following which the ultimate
      direct or indirect control in fact of the company, through the ownership
      of voting interests, remains
unchanged.




Currently
approximately eighty percent of our operations are in Canadian
dollars.




Chinese
Currency




The
Chinese currency is the Renminbi (“RMB”). It is not freely convertible although
the Chinese government has emphasized that full convertibility is the long-term
goal. Full convertibility, probably after some transitional period, will be a
condition precedent to membership in the World Trade Organization, for which PRC
has applied. The People’s Bank of China, PRC’s central banking authority,
publishes the Renmini exchange rate against the U.S. dollar every day based on
the trading price between the two currencies of the previous day on the
Inter-Bank Foreign Exchange Market established in Shanghai in 1994. In addition,
the People’s Bank of China publishes the Renminbi exchange rates against other
major foreign currencies. Designated banks participate on the Inter-Bank
Foreign Exchange Market through a computer network connected with major cities
in the PRC.




Foreign
exchange is administered by the State Administration of Foreign Exchange
(“SAFE”), and its local branch offices, all of which are subject to the
supervision of the People’s Bank of China. SAFE has established regulations
relating to outward remittance by foreign investors of their share of net profit
or dividends and final repatriation of their investments, in foreign
currency. Subject to payment of applicable taxes, foreign investors may
remit out of PRC, in foreign exchange, profit or dividends derived from a source
within PRC. Swap centers have been established to assist foreign investment
enterprises to balance their foreign currency income and expenses by
converting surplus local currency earnings into foreign exchange and vice versa
without their having to wait for central allocation. The central foreign
exchange adjustment centre is in Beijing and other centers have been established
in the coastal cities, Special Economic Zones and other major cities,
municipalities and autonomous regions. Remittances by foreign investors of any
other amounts (including, for instance, principal and interest on debt and
proceeds of sale arising from a disposal by a foreign investor of any of our or
his investments in PRC) out of PRC is subject to the approval of the
SAFE.




E. Taxation




Cayman
Island Income Tax Consequences




CWN is
organized under the laws of Cayman Islands. At present, there is no Cayman
Islands profit tax, withholding tax, capital gains tax, capital transfer tax,
estate duty or inheritance tax payable by our United States shareholders, except
shareholders ordinarily resident in the Cayman Islands. There is currently no
reciprocal tax treaty between Cayman Islands and the United States regarding
withholding taxes.




F. Dividends
and Paying Agents




This
Report on Form 20-F is being filed as an annual report under the Exchange Act
and, as such, there is no requirement to provide any information under this
item.


-57-





G. Statement
by Experts




This
Report on Form 20-F is being filed as an annual report under the Exchange Act
and, as such, there is no requirement to provide any information under this
item.




H. Documents
on Display




Any
documents referred to in this annual report on Form 20-F may be inspected at our
principal office located at Suite 368 – 1199 West Pender Street, Vancouver,
British Columbia, Canada V6E 2R1 during normal business hours.




The
Company's filings with the Securities and Exchange Commission, and the exhibits
thereto, are available for inspection and copying at the public reference
facilities maintained by the Securities and Exchange Commission in 100 F. St.,
NE, Washington, D.C., 20549. Copies of these filings may be obtained from these
offices after the payment of prescribed fees. Please call the Securities and
Exchange Commission at 1-800-SEC-0330 for further information on the public
reference rooms. These filings are also available on the Securities and Exchange
Commission's website at www.sec.gov.




I. Subsidiary
Information




The
Company has 3 subsidiaries, including NAI Interactive Ltd., a company
incorporated under the laws of British Columbia (“NAI”), ChineseWorldNet.com
(Hong Kong) Ltd., a company incorporated under the laws of Hong Kong
(“CWNHK”) , and 70% owned interest in ChineseWorldNet.com (Shanghai)
Limited (“CWN China”), a company incorporated under the laws of
PRC.





ITEM 11. QUANTITATIVE AND QUALITATIVE
DISCLOSURE ABOUT MARKET RISK




The
Company is a small business issuer as defined in Section 230, 405 and Section
240, 23b-2 of the Exchange Act and, as such, there is no requirement to provide
any information under this item.




ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN
EQUITY SECURITIES




This
Report on Form 20-F is being filed as an annual report under the Exchange Act
and, as such, there is no requirement to provide any information under this
item.




PART
II




ITEM 13. DEFAULTS, DIVIDENDS ARREARS AND
DELINQUENCIES




There has
not been a material default in the payment of principal, interest, a sinking or
purchase fund installment, or any other material default not cured within 30
days, relating to any indebtedness of us or any of our significant subsidiaries.
No payment of dividends is in arrears.




ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF
SECURITY HOLDERS AND USE OF PROCEEDS




There has
been no modification of the instruments defining the rights of holders of any
class of the Company’s registered securities. There has been no modification or
qualification of the rights evidenced by any class of the Company’s registered
securities by issuing or modifying any other class of securities. There are no
assets securing any class of the Company’s registered securities. There has been
no change in the last financial year to the trustee of the Company’s registered
securities.


-58-





ITEM 15. CONTROLS AND PROCEDURES




Disclosure Controls and
Procedures.





In our
initial annual report on Form 20-F for the year ended December 31, 2008, we
reported that we performed an evaluation under the supervision and with the
participation of management, including our Chief Executive Officer/Chief
Financial Officer, as of December 31, 2008, of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934 (the “Exchange Act”)). Based on that evaluation, we
concluded our disclosure controls and procedures are effective to ensure that
information required to be disclosed in reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in SEC rules and forms and to ensure that information required
to be disclosed by us in the reports that we file under the Exchange Act is
accumulated and communicated to our management, including our principal
executive officer and principal financial officer, as appropriate to allow
timely decisions regarding required disclosure.




Changes in Internal Control
Over Financial Reporting




There
were no changes in our internal controls over financial reporting that occurred
during the period covered by this annual report that has materially affected, or
is reasonably likely to materially affect, our internal control over financial
reporting.





Our Chief
Executive Officer and Chief Financial Officer have evaluated our disclosure
controls and procedures currently in effect and concluded that we had and will
continue to implement the following procedures to ensure the effective of our
internal control. Including, (i) the intention of engaging of an outside
accountant as a consultant in the future to supplement our technical resources
and to provide technical support and guidance on accounting issues within the
Company, and (ii) the practice of bi-weekly meetings among management and
staff in the Company, including our corporate secretary, Chief Executive
Officer, Chief Financial Officer and other personnel, to review and evaluate our
internal controls and procedures and improve internal education with respect to
accounting reviews in order to ensure those involved in financial reporting
understand and apply appropriate accounting analysis.




ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT




The
Company’s board of directors serves as its audit committee. The board has
designated Mr. Andy S.W. Lam as its audit committee financial expert. Mr. Lam is
an independent audit committee member, as defined by the rules of the Nasdaq
Stock Market.




ITEM 16B. CODE OF ETHICS




On
October 29, 2004, the Company adopted a Code of Ethics (the “Code of Ethics”). A
copy of our Code of Ethics is filed as an exhibit to this annual report on Form
20-F filed with the securities Exchange Commission on December 4, 2004. Our Code
of Ethics will be made available in print, free of charge, to any person
requesting a copy in writing from our secretary at our North American
headquarters in Vancouver, British Columbia, Canada.


-59-





ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND
SERVICES




The
following table sets forth the aggregate fees billed by our auditors, Chang Lee
LLP in 2008 and 2007. In 2006, for professional services rendered to us during
the past two fiscal years ended December 31, 2008 and 2007, our Board of
Directors has considered these fees and services and has determined that the
provision of these services is compatible with maintaining the independence of
that firm.





Year Ended
                    December 31, 2008
                  
                  
                  Year Ended
                    December 31, 2007Audit
      Fees (1)
                  
                  $
                  45,000
                  
                  
                  $
                  30,000Audit-Related
      Fees (2)
                  
                  $
                  0
                  
                  
                  $
                  0Tax
      Fees (3)
                  
                  $
                  0
                  
                  
                  $
                  0All
      Other Fees
                  
                  $
                  0
                  
                  
                  $
                  0Totals
                  
                  $
                  45,000
                  
                  
                  $
                  30,000





(1)
            “Audit
      Fees” represent fees for the audit of our annual financial statements,
      review of our interim financial statements and review in connection with
      our statutory and regulatory
filings.





(2)
            “Audit-Related
      Fees” represent fees for assurance and related services that are related
      to the performance of the audit.





(3)
            “Tax
      Fees” represent fees for tax compliance, tax advice and tax
      planning.





ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS
FOR AUDIT COMMITTEES




There are
no applicable disclosures required by Exchange Act Rule 10A – 3(d) regarding an
exemption from the listings standards for audit committees.




ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE
ISSUER AND AFFILIATED PURCHASERS




Neither
the Company, nor any affiliated purchaser of the Company, has purchased any of
the Company’s securities during 2008.





ITEM 16F. CHANGES IN REGISTRANT’S CERTIFYING
ACCOUNTANT





The
Company did not change its principal accountant for the two most recent fiscal
years and, as such, there is no requirement to provide any information under
this item.





ITEM
16G. CORPORATE GOVERNANCE





The
Company is not listed on a national securities exchange and, as such, there is
no requirement to provide any information under this item.


-60-





PART
III




ITEM 17. FINANCIAL STATEMENTS




All
financial statements herein are stated in accordance with accounting principles
generally accepted in the United States. The following Financial Statements
pertaining to our consolidated financial statements are filed as part of this
annual report:





Page #Report
      of Independent Registered Public Accounting Firm
                F-2Year-end
      Consolidated Balance Sheets as of December 31, 2008 and
    2007
                F-3Year-end
      Consolidated Statements of Stockholders’ Equity for the years ended
      December 31, 2008, 2007 and 2006
                F-4 to F-5Year-end
      Consolidated Statements of Operations for the years ended December 31,
      2008, 2007 and 2006
                F-6Year-end
      Consolidated Statements of Cash Flows for the years ended December 31,
      2008, 2007 and 2006
                F-7Notes
      to Consolidated Financial Statements
                F-8 to F-21




ITEM 18. FINANCIAL STATEMENTS




We have
elected to provide financial statements pursuant to “Item 17 – Financial
Statements and Exhibits.”


-61-


ITEM 19. EXHIBITS





Exhibit No.
              
              
              
              Document Description1
              
              (1)
              
              Articles of
      Association, Memorandum of Association and Certificate of Incorporation of
      CWN2
              
              (2)
              
              Form
      of Convertible Debenture dated May 31, 20044(b)1
              
              (1)
              
              Content
      Partnership Agreement between NAI and Yahoo! Holdings (Hong Kong) Limited,
      dated January 1, 2001.4(b)2
              
              (1)
              
              Partnership
      Agreement between CWN and ALPHATRADE.COM, dated April 16,
      2002.4(b)
      3
              
              (2)
              
              Content
      Partnership Agreement with PR Newswire dated May 1,
    20044(b)
      4
              
              (2)
              
              On-Line
      Content Partnership Agreement with Tanrich Financial Management Ltd. dated
      July 12, 20044(b)
      5
              
              (2)
              
              Consulting
      Agreement between CWN and Goldpac Investment Partners Ltd. dated January
      1, 20034(b)
      6
              
              (2)
              
              Consulting
      Agreement between CWN and Goldpac Investment Partners Ltd. dated January
      1, 20044(b)
      7
              
              (2)
              
              Lease
      Agreement dated July 25, 2003 between Wertman Development Corporation and
      NAI4(b)
      8
              
              (2)
              
              Exchange
      Agreement between CWN and Marrick Investments
Ltd.4(b)
      9
              
              **
              
              Consulting
      Agreement between CWN and Goldpac Investment Partners Ltd. dated January
      1, 20074(b)
      10
              
              **
              
              Consulting
      Agreement between CWN and Goldpac Investments Ltd. dated January 1,
      20074(c)
      1
              
              **
              
              Stock
      Option Plan Agreement dated October 1, 20078
              
              **
              
              List
      of Subsidiaries10
      (i)
              
              **
              
              Agreement
      to Establish [CWN China Co., Ltd.], a Chinese – Foreign Joint Venture Ltd.
      Liability Company11.1
              
              (3)
              
              Code
      of Ethics12.1
              
              **
              
              Certification
      of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities
      Exchange Act of 193412.2
              
              **
              
              Certification
      of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities
      Exchange Act of
1934


-62-





13.1
              
              **
              
              Certification
      of Chief Executive Officer pursuant to Rule 13a-14(b) under the Securities
      Exchange Act of 193413.2
              
              **
              
              Certification
      of Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities
      Exchange Act of 1934





**
            Filed
      herewith





(1)
            Incorporated
      by reference to Exhibits of Registrant’s Registration Statement on Form
      20-F (file no. 000-33051) filed on July 3,
2002.





(2)
            Incorporated
      by reference to Exhibits of Registrant’s annual report on Form 20-F (file
      no. 000-33051) filed on June 30,
2005.





(3)
            Incorporated
      by reference to Exhibits of Registrant’s annual report on Form 20-F (file
      no. 000-33051) filed on December 3,
2004.


-63-





SIGNATURES





The
registrant hereby certifies that it meets all of the requirements for filing on
Form 20-F, and that it has duly caused and authorized the undersigned to sign
this annual report on its behalf.




Date:
 June [26], 2009





ChineseWorldNet.com Inc.,a Cayman Islands Corporation/s/Joe Kin Foon TaiJOE KIN FOON TAIPresident, Chief Executive Officer and Director


-64-




Consolidated
Financial Statements





Chineseworldnet.com
Inc. & Subsidiaries


(Expressed
in U.S. Dollars)


December
31, 2008 and 2007


F1


Chang
Lee LLP


Chartered Accountants


505-815
Hornby Street


Vancouver,
B.C., V6Z 2


Tel:
604-687-3776


Fax:  604-688-3373





REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To
the Board of Directors and Stockholders of





CHINESEWORLDNET.COM
INC. & SUBSIDIAIRES





We have
audited the accompany consolidated balance sheets of Chineseworldnet.com Inc. &
Subsidiaries(“the Company”) as at December 31, 2008 and 2007 and the
related consolidated statements of stockholders’ equity, operations and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management.  Our responsibility is to
express an opinion on these financial statements based on our
audits.




We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement.  We were not engaged to
perform an audit of the Company’s internal control over financial
reporting.  Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstance, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting.  Accordingly, we express no such opinion.  An
audit also includes examining, on a test basis, evidence supporting the amounts
and disclosure in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation.  We believe that our audit
provides a reasonable basis for our opinion.




In our
opinion, these consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as at
December 31, 2008 and 2007 and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles in the United States of America.




The
accompanying consolidated financial statements referred to above have been
prepared assuming that the Company will continue as a going
concern.  As discussed in Note 1 to the consolidated financial
statements, the Company has incurred recurring losses from inception and
requires additional financing for its intended business
operations.  These factors raise substantial doubt about its ability
to continue as a going concern.  Management’s plans in regard to these
matters are also described in Note 1.  The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.





Vancouver,
      CanadaMay
      29, 2009
              Chartered
      Accountants


F2


Chineseworldnet.Com
Inc. & Subsidiaries




CONSOLIDATED
BALANCE SHEETS





As at December 31
              (Expressed in U.S. Dollars)





2008
                                              
                                              
                                              2007$
                                              
                                              
                                              $ASSETSCurrent
      assetsCash
      and cash equivalents
                                              
                                              
                                              684,232
                                              
                                              
                                              
                                              2,638,614Short
      term investments
                                              
                                              
                                              1,291,726
                                              
                                              
                                              
                                              -Available
      for sale securities [note
3]
                                              
                                              
                                              3
                                              
                                              
                                              
                                              4Accounts
      receivable
                                              
                                              
                                              35,381
                                              
                                              
                                              
                                              36,183Prepaid
      expenses and deposits
                                              
                                              
                                              46,515
                                              
                                              
                                              
                                              24,101Deferred
      income tax assets [note
      6]
                                              
                                              
                                              -
                                              
                                              
                                              
                                              18,325Total
      current assets
                                              
                                              
                                              2,057,857
                                              
                                              
                                              
                                              2,717,227Equipment
      [note
      4]
                                              
                                              
                                              46,526
                                              
                                              
                                              
                                              22,001Deferred
      income tax assets [note
      6]
                                              
                                              
                                              -
                                              
                                              
                                              
                                              40,998Total
      assets
                                              
                                              
                                              2,104,383
                                              
                                              
                                              
                                              2,780,226LIABILITIES
      AND STOCKHOLDERS’ (DEFICIENCY) EQUITYCurrent
      liabilitiesAccounts
      payable and accrued liabilities
                                              
                                              
                                              159,841
                                              
                                              
                                              
                                              141,466Due
      to related parties, non-interest bearing [note8]
                                              
                                              
                                              128
                                              
                                              
                                              
                                              29,802Deferred
      revenue
                                              
                                              
                                              61,282
                                              
                                              
                                              
                                              202,602Total
      current liabilities
                                              
                                              
                                              221,251
                                              
                                              
                                              
                                              373,870Convertible
      debentures [note
      5]
                                              
                                              
                                              236,927
                                              
                                              
                                              
                                              205,662Total
      liabilities
                                              
                                              
                                              458,178
                                              
                                              
                                              
                                              579,532Non
      Controlling Interest
                                              
                                              
                                              162,894
                                              
                                              
                                              
                                              -Commitments
      [note
      9]Subsequent
      event [note 10]Stockholders’ equity[note7]Common
      stockAuthorized100,000,000,000
      common shares with a par value of $0.001 per shareIssued
      and outstanding 10,700,000 (2007 – 10,700,000) common
    shares
                                              
                                              
                                              10,700
                                              
                                              
                                              
                                              10,700Additional
      paid-in capital
                                              
                                              
                                              3,716,969
                                              
                                              
                                              
                                              3,494,224Accumulated
      other comprehensive income
                                              
                                              
                                              40,280
                                              
                                              
                                              
                                              30,285Deficit
                                              
                                              
                                              (2,284,638
                                              )
                                              
                                              
                                              (1,334,515
                                              )Total
      stockholders’ equity
                                              
                                              
                                              1,483,311
                                              
                                              
                                              
                                              2,200,694Total
      liabilities and stockholders’ equity
                                              
                                              
                                              2,104,383
                                              
                                              
                                              
                                              2,780,226


See
accompanying notes


F3


Chineseworldnet.Com
Inc. & Subsidiaries





CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ (DEFICIENCY) EQUITY





Year
      ended December 31
              (Expressed
      in U.S. Dollars)





Accumulated
                                              
                                              
                                              TotalAdditional
                                              
                                              
                                              Comprehensive
                                              
                                              
                                              
                                              
                                              
                                              other
                                              
                                              
                                              Stockholders’Common stock
                                              
                                              
                                              paid-in
                                              
                                              
                                              income
                                              
                                              
                                              
                                              
                                              
                                              comprehensive
                                              
                                              
                                              (deficiency)Shares
                                              
                                              
                                              Amount
                                              
                                              
                                              capital
                                              
                                              
                                              (loss)
                                              
                                              
                                              (Deficit)
                                              
                                              
                                              income (loss)
                                              
                                              
                                              equity#
                                              
                                              
                                              $
                                              
                                              
                                              $
                                              
                                              
                                              $
                                              
                                              
                                              $
                                              
                                              
                                              $
                                              
                                              
                                              $Balance,
      December 31, 2005
                                              
                                              
                                              8,200,000
                                              
                                              
                                              
                                              8,200
                                              
                                              
                                              
                                              1,195,168
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              (1,232,986
                                              )
                                              
                                              
                                              21,202
                                              
                                              
                                              
                                              (8,416
                                              )Imputed
      interest on amounts due to related parties
                                              
                                              
                                              —
                                              
                                              
                                              
                                              —
                                              
                                              
                                              
                                              1,178
                                              
                                              
                                              
                                              —
                                              
                                              
                                              
                                              —
                                              
                                              
                                              
                                              —
                                              
                                              
                                              
                                              1,178Components
      of comprehensive income (loss):Net
      loss for the year
                                              
                                              
                                              —
                                              
                                              
                                              
                                              —
                                              
                                              
                                              
                                              —
                                              
                                              
                                              
                                              (209,883
                                              )
                                              
                                              
                                              (209,883
                                              )
                                              
                                              
                                              —
                                              
                                              
                                              
                                              (209,883
                                              )Foreign
      currency translation adjustment
                                              
                                              
                                              —
                                              
                                              
                                              
                                              —
                                              
                                              
                                              
                                              —
                                              
                                              
                                              
                                              4,736
                                              
                                              
                                              
                                              —
                                              
                                              
                                              
                                              4,736
                                              
                                              
                                              
                                              4,736Change
      in net unrealized loss on available for sale
      securities
                                              
                                              
                                              —
                                              
                                              
                                              
                                              —
                                              
                                              
                                              
                                              —
                                              
                                              
                                              
                                              3
                                              
                                              
                                              
                                              —
                                              
                                              
                                              
                                              3
                                              
                                              
                                              
                                              3Comprehensive
      income (loss)
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              (205,144
                                              )Balance,
      December 31, 2006
                                              
                                              
                                              8,200,000
                                              
                                              
                                              
                                              8,200
                                              
                                              
                                              
                                              1,196,346
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              (1,442,869
                                              )
                                              
                                              
                                              25,941
                                              
                                              
                                              
                                              (212,382
                                              )


F4


Chineseworldnet.Com
Inc. & Subsidiaries





CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ (DEFICIENCY) EQUITY (cont’d.)




Year
      ended December 31
            (Expressed
      in U.S. Dollars)





Accumulated
                                          
                                          
                                          TotalAdditional
                                          
                                          
                                          Comprehensive
                                          
                                          
                                          
                                          
                                          
                                          other
                                          
                                          
                                          stockholders’Common stock
                                          
                                          
                                          paid-in
                                          
                                          
                                          income
                                          
                                          
                                          
                                          
                                          
                                          comprehensive
                                          
                                          
                                          (deficiency)Shares
                                          
                                          
                                          Amount
                                          
                                          
                                          capital
                                          
                                          
                                          (loss)
                                          
                                          
                                          (Deficit)
                                          
                                          
                                          income (loss)
                                          
                                          
                                          equity#
                                          
                                          
                                          $
                                          
                                          
                                          $
                                          
                                          
                                          $
                                          
                                          
                                          $
                                          
                                          
                                          $
                                          
                                          
                                          $Balance,
      December 31, 2006
                                          
                                          
                                          8,200,000
                                          
                                          
                                          
                                          8,200
                                          
                                          
                                          
                                          1,196,346
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          (1,442,869
                                          )
                                          
                                          
                                          25,941
                                          
                                          
                                          
                                          (212,382
                                          )Conversion
      of 250,000 common shares fromConvertible
      Debenture
                                          
                                          
                                          250,000
                                          
                                          
                                          
                                          250
                                          
                                          
                                          
                                          149,750
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          150,000Shares
      issued for private placement
                                          
                                          
                                          2,250,000
                                          
                                          
                                          
                                          2,250
                                          
                                          
                                          
                                          2,067,750
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          2,070,000Beneficiary
      conversion feature (Note 5)
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          29,047
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          29,047Share
      purchase warrants (Note 5)
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          29,046
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          29,046Stock
      options granted
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          22,222
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          22,222Imputed
      interest on amounts due to related parties
                                          
                                          
                                          —
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          63
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          63Components
      of comprehensive income (loss):Net
      income (loss) for the year
                                          
                                          
                                          —
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          108,354
                                          
                                          
                                          
                                          108,354
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          108,354Foreign
      currency translation adjustment
                                          
                                          
                                          —
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          4,344
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          4,344
                                          
                                          
                                          
                                          4,344Change
      in net unrealized loss on available for sale securities
                                          
                                          
                                          —
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          —Comprehensive
      income (loss)
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          (112,698
                                          )Balance,
      December 31, 2007
                                          
                                          
                                          10,700,000
                                          
                                          
                                          
                                          10,700
                                          
                                          
                                          
                                          3,494,224
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          (1,334,515
                                          )
                                          
                                          
                                          30,285
                                          
                                          
                                          
                                          2,200,694Stock
      based compensation
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          222,745
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          222,745Components
      of comprehensive income (loss):-Net
      income (loss) for the year
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          (950,123
                                          )
                                          
                                          
                                          (950,123
                                          )
                                          
                                          
                                          
                                          
                                          
                                          
                                          (950,123
                                          )-Foreign
      currency translation adjustment
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          9,995
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          9,995
                                          
                                          
                                          
                                          9,995Comprehensive
      income (loss)
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          (940,128
                                          )Balance,December 31, 2008
                                          
                                          
                                          10,700,000
                                          
                                          
                                          
                                          10,700
                                          
                                          
                                          
                                          3,716,969
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          (2,284,638
                                          )
                                          
                                          
                                          40,280
                                          
                                          
                                          
                                          1,483,311


See
accompanying notes


F5


Chineseworldnet.Com
Inc. & Subsidiaries





CONSOLIDATED
STATEMENTS OF OPERATIONS





Year
      ended December 31
              (Expressed
      in U.S. Dollars)





2008
                                                      
                                                      
                                                      2007
                                                      
                                                      
                                                      2006$
                                                      
                                                      
                                                      $
                                                      
                                                      
                                                      $Revenue
                                                      
                                                      
                                                      1,011,322
                                                      
                                                      
                                                      
                                                      1,325,994
                                                      
                                                      
                                                      
                                                      643,370ExpensesAdvertising
      and promotion
                                                      
                                                      
                                                      144,906
                                                      
                                                      
                                                      
                                                      286,439
                                                      
                                                      
                                                      
                                                      49,836Audit
      and legal
                                                      
                                                      
                                                      75,289
                                                      
                                                      
                                                      
                                                      58,022
                                                      
                                                      
                                                      
                                                      97,742Consulting
      fees
                                                      
                                                      
                                                      95,900
                                                      
                                                      
                                                      
                                                      84,000
                                                      
                                                      
                                                      
                                                      24,000Depreciation
                                                      
                                                      
                                                      14,229
                                                      
                                                      
                                                      
                                                      6,923
                                                      
                                                      
                                                      
                                                      6,271Directors’
      remuneration
                                                      
                                                      
                                                      8,000
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —Accretion
      on convertible debenture
                                                      
                                                      
                                                      31,265
                                                      
                                                      
                                                      
                                                      13,755
                                                      
                                                      
                                                      
                                                      —Interest
      (non-cash imputed interest - related parties)
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      63
                                                      
                                                      
                                                      
                                                      1,178Interest
      expense on long-term debt
                                                      
                                                      
                                                      15,000
                                                      
                                                      
                                                      
                                                      12,500
                                                      
                                                      
                                                      
                                                      7,500Office
      and miscellaneous
                                                      
                                                      
                                                      65,096
                                                      
                                                      
                                                      
                                                      69,622
                                                      
                                                      
                                                      
                                                      44,298Printing
                                                      
                                                      
                                                      33,688
                                                      
                                                      
                                                      
                                                      39,972
                                                      
                                                      
                                                      
                                                      40,152Provision
      (recovery) for bad and doubtful debts
                                                      
                                                      
                                                      13,410
                                                      
                                                      
                                                      
                                                      (17,425
                                                      )
                                                      
                                                      
                                                      87,427Rent
      and operating
                                                      
                                                      
                                                      114,428
                                                      
                                                      
                                                      
                                                      72,427
                                                      
                                                      
                                                      
                                                      53,797Salaries
      and benefits
                                                      
                                                      
                                                      599,354
                                                      
                                                      
                                                      
                                                      465,494
                                                      
                                                      
                                                      
                                                      347,990Seminar
      operating expense
                                                      
                                                      
                                                      152,843
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -Stock
      Based Compensation
                                                      
                                                      
                                                      222,745
                                                      
                                                      
                                                      
                                                      22,222
                                                      
                                                      
                                                      
                                                      —Telephone
                                                      
                                                      
                                                      21,569
                                                      
                                                      
                                                      
                                                      19,073
                                                      
                                                      
                                                      
                                                      15,261Travel
      and entertainment
                                                      
                                                      
                                                      183,369
                                                      
                                                      
                                                      
                                                      136,344
                                                      
                                                      
                                                      
                                                      86,4421,791,091
                                                      
                                                      
                                                      
                                                      1,269,431
                                                      
                                                      
                                                      
                                                      861,894Other
      income (loss)Interest
      and sundry income
                                                      
                                                      
                                                      60,584
                                                      
                                                      
                                                      
                                                      34,761
                                                      
                                                      
                                                      
                                                      8,388Foreign
      exchange (loss) gain and other losses
                                                      
                                                      
                                                      (231,038
                                                      )
                                                      
                                                      
                                                      (35,522
                                                      )
                                                      
                                                      
                                                      760Gain
      (loss) on sale of available for sale securities
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      (1,669
                                                      )
                                                      
                                                      
                                                      —Write
      off of equipment
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      (507
                                                      )Other
      income (loss), net
                                                      
                                                      
                                                      (170,454
                                                      )
                                                      
                                                      
                                                      (2,430
                                                      )
                                                      
                                                      
                                                      8,641Loss
      (income) before income taxes and non controlling interest
                                                      
                                                      
                                                      (950,223
                                                      )
                                                      
                                                      
                                                      54,133
                                                      
                                                      
                                                      
                                                      (209,883
                                                      )Deferred
      income tax recovery (expense)
                                                      
                                                      
                                                      (54,612
                                                      )
                                                      
                                                      
                                                      54,221
                                                      
                                                      
                                                      
                                                      —Non
      controlling interest
                                                      
                                                      
                                                      54,712
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —Net
      income (loss) for the year
                                                      
                                                      
                                                      (950,123
                                                      )
                                                      
                                                      
                                                      108,354
                                                      
                                                      
                                                      
                                                      (209,883
                                                      )Earning
      (loss) per share - basic
                                                      
                                                      
                                                      (0.09
                                                      )
                                                      
                                                      
                                                      0.01
                                                      
                                                      
                                                      
                                                      (0.03
                                                      )-
      diluted
                                                      
                                                      
                                                      (0.09
                                                      )
                                                      
                                                      
                                                      0.01
                                                      
                                                      
                                                      
                                                      (0.03
                                                      )Weighted
      average number of common shares outstanding - basic
                                                      
                                                      
                                                      10,700,000
                                                      
                                                      
                                                      
                                                      9,012,328
                                                      
                                                      
                                                      
                                                      8,200,000Weighted
      average number of common shares Outstanding – diluted
                                                      
                                                      
                                                      10,700,000
                                                      
                                                      
                                                      
                                                      9,103,713
                                                      
                                                      
                                                      
                                                      8,200,000


See
accompanying notes


F6


Chineseworldnet.Com
Inc. & Subsidiaries





CONSOLIDATED
STATEMENTS OF CASH FLOWS





Year
      ended December 31
              (Expressed
      in U.S. Dollars)





2008
                                            
                                            
                                            2007
                                            
                                            
                                            2006$
                                            
                                            
                                            $
                                            
                                            
                                            $OPERATING
      ACTIVITIESNet
      income (loss) for the year
                                            
                                            
                                            (950,123
                                            )
                                            
                                            
                                            108,354
                                            
                                            
                                            
                                            (209,883
                                            )Adjustment
      to reconcile net loss to net cash used in operating
      activities:Provision
      for bad debt / doubtful debt
                                            
                                            
                                            13,410
                                            
                                            
                                            
                                            24,459
                                            
                                            
                                            
                                            87,427Depreciation
                                            
                                            
                                            14,229
                                            
                                            
                                            
                                            6,923
                                            
                                            
                                            
                                            6,271Accretion
      on convertible debenture
                                            
                                            
                                            31,265
                                            
                                            
                                            
                                            13,755
                                            
                                            
                                            
                                            -Interest
      (imputed) - related parties
                                            
                                            
                                            -
                                            
                                            
                                            
                                            63
                                            
                                            
                                            
                                            1,178Deferred
      income tax recovery
                                            
                                            
                                            54,612
                                            
                                            
                                            
                                            (54,221
                                            )
                                            
                                            
                                            -Non
      controlling interest
                                            
                                            
                                            (54,712
                                            )
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -Stock
      based compensation
                                            
                                            
                                            222,745
                                            
                                            
                                            
                                            22,222
                                            
                                            
                                            
                                            -Write
      off of equipment
                                            
                                            
                                            —
                                            
                                            
                                            
                                            —
                                            
                                            
                                            
                                            507Foreign
      exchange gain and loss
                                            
                                            
                                            —
                                            
                                            
                                            
                                            22,014
                                            
                                            
                                            
                                            —Changes
      in non-cash working capital items:Accounts
      receivable
                                            
                                            
                                            (20,068
                                            )
                                            
                                            
                                            (19,139
                                            )
                                            
                                            
                                            (63,497
                                            )Prepaid
      expenses and deposits
                                            
                                            
                                            (27,717
                                            )
                                            
                                            
                                            (10,013
                                            )
                                            
                                            
                                            (1,784
                                            )Accounts
      payable and accrued liabilities
                                            
                                            
                                            47,601
                                            
                                            
                                            
                                            (29,839
                                            )
                                            
                                            
                                            26,523Deferred
      revenue
                                            
                                            
                                            (116,264
                                            )
                                            
                                            
                                            69,867
                                            
                                            
                                            
                                            96,030Due
      to shareholders/directors
                                            
                                            
                                            (27,318
                                            )
                                            
                                            
                                            (3,787
                                            )
                                            
                                            
                                            —Net
      cash provided by (used in) operating activities
                                            
                                            
                                            (812,340
                                            )
                                            
                                            
                                            150,658
                                            
                                            
                                            
                                            (57,228
                                            )FINANCING
      ACTIVITIESConvertible
      debenture issuance
                                            
                                            
                                            —
                                            
                                            
                                            
                                            250,000
                                            
                                            
                                            
                                            —Non
      controlling interest
                                            
                                            
                                            215,446
                                            
                                            
                                            
                                            —
                                            
                                            
                                            
                                            —Proceed
      of private placement
                                            
                                            
                                            —
                                            
                                            
                                            
                                            2,070,000
                                            
                                            
                                            
                                            —Net
      cash provided by financing activities
                                            
                                            
                                            215,446
                                            
                                            
                                            
                                            2,320,000
                                            
                                            
                                            
                                            —INVESTING
      ACTIVITIESPurchase
      of equipment
                                            
                                            
                                            (42,451
                                            )
                                            
                                            
                                            (2,413
                                            )
                                            
                                            
                                            (12,903
                                            )Short
      term investments
                                            
                                            
                                            (1,291,726
                                            )
                                            
                                            
                                            —
                                            
                                            
                                            
                                            —Net
      cash provided by (used in) investing activities
                                            
                                            
                                            (1,334,177
                                            )
                                            
                                            
                                            (2,413
                                            )
                                            
                                            
                                            (12,903
                                            )Effect
      of exchange rate changes on cash and cash equivalents
                                            
                                            
                                            (23,311
                                            )
                                            
                                            
                                            13,451
                                            
                                            
                                            
                                            830Increase
      (decrease) in cash and cash equivalents
                                            
                                            
                                            (1,954,382
                                            )
                                            
                                            
                                            2,481,696
                                            
                                            
                                            
                                            (69,301
                                            )Cash
      and cash equivalents, beginning of year
                                            
                                            
                                            2,638,614
                                            
                                            
                                            
                                            156,918
                                            
                                            
                                            
                                            226,219Cash
      and cash equivalents, end of year
                                            
                                            
                                            684,232
                                            
                                            
                                            
                                            2,638,614
                                            
                                            
                                            
                                            156,918Supplemental
      disclosure of cash flow informationCash
      paid for interest, net of interest capitalized
                                            
                                            
                                            15,000
                                            
                                            
                                            
                                            12,500
                                            
                                            
                                            
                                            7,500Cash
      paid for income taxes
                                            
                                            
                                            —
                                            
                                            
                                            
                                            —
                                            
                                            
                                            
                                            —


See
accompanying notes


F7


Chineseworldnet.Com
Inc. & Subsidiaries





1.
NATURE OF OPERATIONS





The
Company was incorporated under the laws of Cayman Islands on January 12, 2000.
On January 15, 2000 the Company acquired 100% of the issued and outstanding
shares of NAI Interactive Ltd. (“NAI”), a company incorporated under the laws of
British Columbia, Canada. The Company also has a dormant wholly-owned subsidiary
ChineseWorldNet.com HK Limited (“CWN HK”) incorporated under the laws of Hong
Kong.  During the fiscal year 2008, the Company invested and owned 70%
interest in ChineseWorldNet.com (Shanghai) Ltd. (“CWN China”)





The
Company’s business is to provide online internet services through its Chinese
world-wide website. The online internet services comprise banner advertisements,
web page hosting and maintenance, on line promotion for customers, translation
services, investment seminars, investment handbooks, website contest events, and
subscription fees. These services are considered as one segment based upon the
Company’s organizational structure, the way in which these operations are
managed and evaluated by management, the availability of separate financial
results and materiality considerations.





These
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles in the United States of America
applicable to a going concern, which contemplates the realization of assets and
the satisfaction of liabilities and commitments in the normal course of
business. The Company has recurring losses since its inception and requires
additional funds to maintain and expand its intended business
operations.  Management’s plans in this regard are to raise debt or
equity financing as required which the Company has been able to finance the
operations through a series of equity and debt financings.  From August to
October 2007, the Company received net proceeds of $2,070,000 in connection with
the private placement. In March 2007, the Company issued a convertible debt in
the amount of $250,000 at an interest rate of 6%. However, additional fund is
still required to fund the Company’s anticipated business
expansion.





These
conditions raise substantial doubt about the Company’s ability to continue as a
going concern.  These consolidated financial statements do not include
any adjustments that might result from this uncertainty.





2.
SIGNIFICANT ACCOUNTING POLICIES





Basis
of consolidation





These
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America and
include the accounts of the Company and its wholly owned subsidiaries and a
subsidiary which the Company owns 70% interest. All material inter-company
accounts and transactions have been eliminated upon consolidation.





Use
of estimates





The
preparation of financial statements in conformity with generally accepted
accounting principles in the United States of America requires management to
make estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amount of revenues and expenses during
the reporting period. Significant areas requiring the use of management
estimates relate to the determination of the net recoverable value of assets,
fair value of financial instruments, allowance for doubtful accounts, asset
impairment, deferred income tax assets and liabilities and stock based
compensation. Management makes its best estimate of the ultimate outcome of
these items based on historical trends and other information available when the
financial statements are prepared. Actual amounts may ultimately differ from
those estimates.


F8


Chineseworldnet.Com
Inc. & Subsidiaries





2.
SIGNIFICANT ACCOUNTING POLICIES (cont’d.)





Equipment





Equipment
is recorded at cost, net of accumulated amortization.





Depreciation
on equipment is provided on a declining-balance basis over its expected useful
lives at the following annual rates:





Furniture
      and fixtures
                  
                  
                  20
                  %Computer
      equipment
                  
                  
                  30
                  %Leasehold
      improvement
                  
                  
                  30
                  %





Cash
equivalents





Cash
equivalents usually consist of highly liquid investments which are readily
convertible into cash with maturity of three months or less when purchased. As
at December 31, 2008, the Company held $221,070 [2007 - $2,574,291] in cash
equivalents.





Short
tem investments





The
Company’s short term investments include various term deposits deposited in
various financial institution, which earn interest at rate of 1.7% to 3.25% per
annum and mature for September 1, 2009 to October 20, 2009.





Foreign
currency translations





The
Company, NAI, CWN HK and CWN SH maintain their accounting records in their
functional currencies of U.S. dollars, Canadian dollars, HK dollars and Chinese
Renminbi, respectively. However, the Company reports in U.S. dollars. Foreign
currency transactions in the foreign subsidiaries are translated into their
functional currency using the exchange rate in effect at that date for assets,
liabilities, revenues and expenses. At the period end, monetary assets and
liabilities denominated in the foreign currency are re-evaluated into the
functional currency by using the exchange rate in effect for the period end. The
resulting foreign exchange gains and losses are included in
operations.





Assets
and liabilities of the foreign subsidiaries are translated into the reporting
U.S. dollars at exchange rates in effect at the balance sheet date. Revenues and
expenses are translated at the average exchange rates. Gain and losses from such
translations are included in stockholders’ equity, as a component of other
comprehensive income.


F9


Chineseworldnet.Com
Inc. & Subsidiaries





2.
SIGNIFICANT ACCOUNTING POLICIES (cont’d.)





Advertising
expenses





The
Company expensed advertising costs as incurred. Advertising expenses for the
years ended December 31, 2008, 2007 and 2006 were $144,906, $286,439 and $49,836
respectively.




Income
taxes





The
Company accounts for income taxes under the provisions of Statement of Financial
Accounting Standards (“SFAS”) No. 109, Accounting for Income Taxes,
which requires the Company to recognize deferred tax liabilities and assets for
the expected future tax consequences of events that have been recognized in the
Company’s financial statements or tax returns using the liability method. Under
this method, deferred tax liabilities and assets are determined based on the
temporary differences between the financial statement and tax bases of assets
and liabilities using enacted tax rates in effect in the years in which the
differences are expected to reverse. The effect on deferred income tax assets
and liabilities of a change in income tax rates is included in the period that
includes the enactment date. Valuation allowances are established when necessary
to reduce deferred income tax assets to the amount expected to be
realized.





Comprehensive
income





The
Company accounts for comprehensive income under the provisions of Statement of
Financial Accounting Standards No. 130 (SFAS 130), Reporting Comprehensive
Income, which establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. The Company is
disclosing this information on its Statement of Stockholders’ Equity. The
Company’s comprehensive income (loss) consists of net earnings (loss) for the
year, foreign currency translation adjustments and unrealized gain (loss) on
available-for-sale securities.





Financial
instruments and concentration of risks





Fair
value of financial instruments is made at a specific point in time, based on
relevant information about financial markets and specific financial instruments.
As these estimates are subjective in nature, involving uncertainties and matters
of significant judgment, they cannot be determined with precision. Changes in
assumptions can significantly affect estimated fair values.


F10


Chineseworldnet.Com
Inc. & Subsidiaries





2.
SIGNIFICANT ACCOUNTING POLICIES (cont’d.)





The
carrying value of cash and cash equivalents, short term investments, available
for sale securities, accounts receivable, accounts payable and accrued
liabilities and due to related parties approximates the fair value because of
the short-term nature of these instruments. Management is of the opinion that
the Company is not exposed to significant interest, risk arising from these
financial instruments.





The
Company has cash and cash equivalents with various financial institutions, which
may exceed insured limits throughout the year. The Company is exposed to credit
loss for amounts in excess of insured limits in the event of non-performance by
the institution. However, the Company does not anticipate
non-performance.  As at December 31, 2008, the Company had $nil (2007
- $2,237,142) in a bank beyond insured limits.





Concentration
of credit risk with respect to trade receivables are limited due to the
Company’s large number of diverse customers. The Company does not require
collateral or other security to support financial instruments subject to credit
risk.





The
Company operates and incurs significant expenditures outside of the United
States of America and is exposed to foreign currency risks due to the currency
exchange fluctuation between the subsidiaries’ functional currency and the
Company’s reporting currency.





Available
for sale securities





Marketable
securities are classified as available for sale securities and are recorded at
market value. Unrealized holding gains and losses on available for sale
securities are excluded from income and charged to Accumulated other comprehensive
income as a separate component of stockholders’ equity until
realized.





Non-monetary
transactions





The
Company entered into agreements for the supply of content for the Company’s
websites in exchange for advertising, consisting primarily of links to the
supplier’s websites.  The Company accounted for these transactions in
accordance with Accounting Principles Board No. 29 “Accounting for Nonmonetary
Transactions” (“APB 29”) and with Emerging Issues Task Force No. 99-17
“Accounting for Advertising
Barter Transactions” (“EITF 99-17).  No cash was exchanged
between the parties in any of these transactions.  These transactions
have been recorded at a zero value, being the carrying amount of the content
supplied.


F11


Chineseworldnet.Com
Inc. & Subsidiaries





2.
SIGNIFICANT ACCOUNTING POLICIES (cont’d.)





Revenue
recognition





Revenue
consists of two main sources:





1.
            fees
      from banner advertisement, web page hosting and maintenance, on-line
      promotion and translation services, advertising and promotion fees for
      customers in the Company’s Chinese Investment Guides, sponsorship fees
      from investment seminars and forums, all of which sales prices are fixed
      and determinable at the time the contracts are signed and there are no
      provisions for refunds contained in the contracts. These revenues are
      recognized when all significant contractual obligations have been
      satisfied and collection of the resulting receivable is reasonably
      assured.


2.
            fees
      from membership subscriptions. These revenues are recognized over the term
      of the subscription.





Fees
received in advance and require continuing performance obligation are deferred
and recognized as revenue systematically over the period of services provided to
customers.





Long-lived
assets impairment





Long-term
assets of the Company are reviewed for impairment whenever events or changes in
circumstances indicate that their carrying value has become impaired, in
accordance with the guidance established in Statement of Financial Accounting
Standards No. 144 (SFAS 144), Accounting for the Impairment or
Disposal of Long-Lived Assets. An impairment loss would be recognized
when the carrying amount of an asset exceeds the estimated undiscounted future
cash flows expected to result from the use of the asset and its eventual
disposition. The amount of the impairment loss to be recorded is calculated by
the excess of the asset’s carrying value over its fair value. Fair value is
generally determined using a discounted cash flow analysis.





Stock-based
compensation





The
Company has adopted the fair value method of accounting for stock-based
compensation as recommended by the Statement of Financial Accounting Standards
No. 123 (SFAS 123), Accounting
for Stock-based Compensation.


The
Company has granted stock options to directors and certain employees for
services provided to the Company  under this method. The Company
recognizes compensation expense for stock options awarded based on the fair
value of the options at the grant date using the Black-Scholes option pricing
model. The fair value of the options is amortized over the vesting
period.





Fair
value of financial instruments





On
January 1, 2008, the Company adopted the provisions of Financial Accounting
Standards Board (FASB) Statement of Financial Accounting Standards
(SFAS) No. 157 “Fair Value Measurements” (SFAS 157) for all financial
assets and financial liabilities recognized or disclosed at fair value in the
financial statements on a recurring basis (at least annually). The Company has
deferred its implementation of the provisions of SFAS No. 157 for all
non-financial assets and liabilities in accordance with FASB Staff Position
(FSP) FAS 157-2, “Effective Date of FASB Statement No. 157” (FSP
157-2), SFAS No. 157 defines fair value, establishes a framework for
measuring fair value, and enhances fair value measurement disclosure. The
adoption of SFAS No. 157 did not have a significant impact on our
consolidated financial statements, and the resulting fair values calculated
under SFAS No. 157 after adoption were not significantly different than the
fair values that would have been calculated under previous
guidance.


F12


Chineseworldnet.Com
Inc. & Subsidiaries





2.
SIGNIFICANT ACCOUNTING POLICIES (cont’d.)





Earning
(Loss) per share





Earning
(loss) per share is computed using the weighted average number of common shares
outstanding during the period. The Company has adopted Statement of Financial
Accounting Standards No. 128 (SFAS 128), Earnings Per Share. Diluted
earning (loss) per share is equal to basic loss per share because there is no
potential dilutive securities.





Accounts
receivable





Accounts
receivable are recorded at face value, less an allowance for doubtful accounts.
The allowance for doubtful accounts is an estimate calculated based on an
analysis of current business and economic risks, customer credit-worthiness,
specific identifiable risks such as bankruptcies, terminations or discontinued
customers, or other factors that may indicate a potential loss. The allowance is
reviewed on a regular basis, at least annually, to ensure that it adequately
provides for all reasonably expected losses in the receivable balances. An
account may be determined to be uncollectible if all collection efforts have
been exhausted, the customer has filed for bankruptcy and all recourse against
the account is exhausted, or disputes are unresolved and negotiations to settle
are exhausted. This uncollectible amount is written off against the
allowance.  For the fiscal year 2008, the Company incurred an expense
for bad and doubtful accounts receivable in the amount of $13,410 (2007 –
($17,425); 2006 - $87,427) and recorded uncollectible accounts receivable
written off and foreign exchange difference of $1,l712 (2007 - $nil; 2006 -
$2,471).





Newly
adopted accounting pronouncements and new accounting
pronouncements




On
January 1, 2008, the Company adopted SFAS No. 159, “Fair Value of
Option for Financial Assets and Financial Liabilities – including an amendment
of FASB Statement No.115” (“SFAS 159”). SFAS 159 permits companies to choose to
measure certain financial instruments and other items at fair value using an
instrument-by-instrument election. The Company does not elect to use the fair
value option and therefore, the adoption of SFAS 159 did not have a material
impact on the Company’s consolidated financial position or result of
operations




In
December 2007, the FASB issued SFAS No. 141 (Revised) "Business Combinations".
SFAS 141 (Revised) replaces SFAS 141 "Business Combination" and establishes
principles and requirements for how the acquirer of a business recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed, and any noncontrolling interest in the acquiree. The
statement also provides guidance for recognizing and measuring the goodwill
acquired in the business combination and determines what information to disclose
to enable users of the financial statements to evaluate the nature and financial
effects of the business combination. The guidance will become effective for the
fiscal year beginning after December 15, 2008. We do not expect that SFAS 141
(Revised) will have any impact on our historical financial statements upon
adoption.




In
December 2007, the FASB issued SFAS 160, "Noncontrolling Interests in
Consolidated Financial Statements". SFAS 160 amends Accounting Research Bulletin
51, Consolidated Financial Statements, to establish accounting and reporting
standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. It also clarifies that a noncontrolling
interest in a subsidiary is an ownership interest in the consolidated entity
that should be reported as equity in the consolidated financial statements. SFAS
160 also changes the way the consolidated income statement is presented by
requiring consolidated net income to be reported at amounts that include the
amounts attributable to both the parent and the noncontrolling interest. It also
requires disclosure, on the face of the consolidated statement of income, of the
amounts of consolidated net income attributable to the parent and to the
noncontrolling interest. SFAS 160 requires that a parent recognize a gain or
loss in net income when a subsidiary is deconsolidated and requires expanded
disclosures in the consolidated financial statements that clearly identify and
distinguish between the interests of the parent owners and the interests of the
noncontrolling owners of a subsidiary. SFAS 160 is effective for fiscal periods,
and interim periods within those fiscal years, beginning on or after December
15, 2008. We do not expect that SFAS 160 will have any impact on our historical
financial statements upon adoption.




In March
2008, the FASB issued FASB Statement No. 161 ("SFAS 161"),
"Disclosures about Derivative Instruments and Hedging Activities". SFAS 161
requires companies with derivative instruments to disclose information that
should enable financial-statement users to understand how and why a company uses
derivative instruments, how derivative instruments and related hedged items are
accounted for under FASB Statement No. 133 "Accounting for Derivative
Instruments and Hedging Activities" and how derivative instruments and related
hedged items affect a company's financial position, financial performance and
cash flows. SFAS 161 is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008. The
adoption of this statement is not expected to have a material effect on the
Company's future financial position or results of operations.


F13


Chineseworldnet.Com
Inc. & Subsidiaries





In April,
2008, the FASB issued FSP. FAS 142-3, “Determination of the Useful Life of
Intangible Assets” (“FSP 142- 3”). In determining the useful life of acquired
intangible assets, FSP 142-3 removes the requirement to consider whether an
intangible asset can be renewed without substantial cost of material
modifications to the existing terms and conditions and, instead, requires an
entity to consider its own historical experience in renewing similar
arrangements. FSP 142-3 also requires expanded disclosure related to the
determination of intangible asset useful lives. FSP 142-3 is effective for
fiscal years beginning after December 15, 2008. The guidance for
determining the useful life of a recognized intangible asset must be applied
prospectively to intangible assets acquired after the effective date. Early
adoption is prohibited. The adoption of FSP 142-3 will not have a material
impact on the Company’s consolidated financial position or result of
operations.





In May
2008, the FASB issued FASB Staff Position (“FSP”) No. APB 14-1 “Accounting for
Convertible Debt Instruments That May Be Settled in Cash Upon Conversion
(Including Partial Cash Settlements)” (previously FSP APB 14-a), which will
change the accounting treatment for convertible securities which the issuer may
settle fully or partially in cash. Under the final FSP, cash settled convertible
securities will be separated into their debt and equity components. The value
assigned to the debt component will be the estimated fair value, as of the
issuance date, of a similar debt instrument without the conversion feature, and
the difference between the proceeds for the convertible debt and the amount
reflected as a debt liability will be recorded as additional paid-in capital. As
a result, the debt will be recorded at a discount reflecting its below market
coupon interest rate. The debt will subsequently be accreted to its par value
over its expected life, with the rate of interest that reflects the market rate
at issuance being reflected on the income statement. This change in methodology
will affect the calculations of net income and earnings per share for many
issuers of cash settled convertible securities. The FSP is effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and interim periods within those fiscal years. The adoption will not have a
material effect on the Company’s consolidated financial statements.





In May
2008, the FASB issued SFAs statement No. 162, “The Hierarchy of Generally
Accepted Accounting Principles” (“SFAS 162”). SFAS 162 identifies the sources of
accounting principles and the framework for selecting the principles used in the
preparation of financial statements of non-governmental entities that are
presented in conformity with GAAP in the United States. Any effect of applying
the provisions of this Statement shall be reported as a change in accounting
principle in accordance with FASB statement No. 154, “Accounting Changes
and Error Corrections.” The adoption of FSAS No. 162 will not have an
impact on its results of operations, financial position and cash
flows.





In June
2008, the Financial Accounting Standards Board (FASB) issued FSP EITF 03-6-1,
“Determining Whether Instruments Granted in Share-Based Payment Transactions are
Participating Securities”.  FSP EITF 03-6-1 addresses whether
instruments granted in share-based payment transactions are participating
securities prior to vesting and affects entities that accrue cash dividends on
share-based payment awards during the awards’ service period when the dividends
do not need to be returned if the employees forfeit the awards.  FSP
EITF 03-6-1 states that all outstanding unvested share-based payment awards that
contain rights to nonforfeitable dividends participate in undistributed earnings
with common shareholders and, therefore, need to be included in the earnings
allocation in computing earnings per share under the two-class
method.  FSP EITF 03-6-1 is effective for fiscal years beginning after
December 15, 2008, and interim periods within those fiscal years.  The
Company does not expect the adoption of FSP EITF 03-6-1 to have a material
impact on its consolidated financial statements.





In
October 2008, the FASB issued FSP FAS 157-3, Determining the Fair Value of a
Financial Asset When the Market for That Asset Is Not Active,which
addresses the application of Statement of Financial Accounting Standards
(“SFAS”) No.157 for illiquid financial instruments.  FSP FAS 157-3
clarifies that approaches to determining fair value other than the market
approach may be appropriate when the market for a financial asset is not
active.  The Company does not expect the adoption of FSP FAS 157-3 to
have a material effect on the Company’s consolidated financial
statements.





In
November 2008, the Emerging Issues Task Force issued EITF No. 08-6,
“Equity Method Investment Accounting Considerations” (“EITF 08-6”) that
addresses how the initial carrying value of an equity method investment should
be determined, how an impairment assessment of an underlying indefinite-lived
intangible asset of an equity method investment should be performed, how an
equity method investee’s issuance of shares should be accounted for, and how to
account for a change in an investment from the equity method to the cost method.
EITF 08-6 shall be effective in fiscal years beginning on or after
December 15, 2008, and interim periods within those fiscal years. EITF 08-6
shall be applied prospectively with early application prohibited. The impact of
adopting EITF 08-6 will not have a material impact on our consolidated financial
condition or results of operations.


F14


Chineseworldnet.Com
Inc. & Subsidiaries





In April
2009, the FASB issued FASB Staff Position No. FAS 107-1 and APB 28-1 ("FSP FAS
107-1 and APB 28-1"), "Interim Disclosures about Fair Value of Financial
Instruments". The FSP amends SFAS 107, "Disclosure about Fair Value of Financial
Instruments," and Accounting Principles Board Opinion No. 28, "Interim Financial
Reporting", to require disclosures about fair value of financial
instruments for interim reporting periods of publicly traded companies as well
as in annual financial statements. The Company does not currently believe that
adopting this FSP will have a material impact on the Company’s consolidated
financial statements.




In April
2009, the FASB issued FASB Staff Position No. FSP FAS 115-2 and FAS 124-2 ("FSP
FAS 115-2 and FAS 124-2"), "Recognition and Presentation of Other-Than-Temporary
Impairments". The FSP amends the other-than-temporary impairment guidance in
U.S. GAAP for debt securities to make the guidance more operational and to
improve the presentation and disclosure of other-than-temporary impairments on
debt and equity securities in the financial statements. This FSP does not amend
existing recognition and measurement guidance related to other-than-temporary
impairments of equity securities. The Company is required to adopt FSP FAS 115-2
and FAS 124-2 in the fiscal year 2009.  The Company does not currently
believe that adopting this FSP will have a material impact on the Company’s
consolidated financial statements.





In April
2009, the FASB issued FASB Staff Position No. FAS 157-4 ("FSP FAS 157-4"),
"Determining Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not
Orderly". The FSP provides additional guidance for estimating fair value in
accordance with FASB Statement No. 157, "Fair Value Measurements", when the
volume and level of activity for the asset or liability have significantly
decreased. This FSP also includes guidance on identifying circumstances that
indicate a transaction is not orderly. The Company is required to adopt FSP FAS
157-4 in the fiscal year 2009.  The Company does not currently believe that
adopting this FSP will have a material impact on the Company’s financial
statements.


F15


Chineseworldnet.Com
Inc. & Subsidiaries
 
 3.
AVAILABLE FOR SALE SECURITIES
 
 Available
for sale securities consist of marketable securities and are summarized as
follows:
 
 Gross
                                        
                                        
                                        Gross
                                        
                                        
                                        Accumulatedunrealized
                                        
                                        
                                        unrealized
                                        
                                        
                                        unrealized
                                        
                                        
                                        MarketCost
                                          $
                                        
                                        
                                        gains
                                          $
                                        
                                        
                                        losses
                                          $
                                        
                                        
                                        losses
                                          $
                                        
                                        
                                        value
                                          $December
      31, 2006
                                        
                                        
                                        1,009
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (1,005
                                        )
                                        
                                        
                                        (1,005
                                        )
                                        
                                        
                                        4Change
      during the year
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -December
      31, 2007
                                        
                                        
                                        1,009
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (1,005
                                        )
                                        
                                        
                                        (1,005
                                        )
                                        
                                        
                                        4Change
      during the year
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (1
                                        )
                                        
                                        
                                        (1
                                        )
                                        
                                        
                                        (1
                                        )December
      31, 2008
                                        
                                        
                                        1,009
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (1,006
                                        )
                                        
                                        
                                        (1,006
                                        )
                                        
                                        
                                        3
 
 4.
EQUIPMENT
  Accumulated
                                    
                                    
                                    Net
      bookCost
                                      $
                                    
                                    
                                    amortization
                                      $
                                    
                                    
                                    value
                                      $2008Furniture
      and fixtures
                                    
                                    
                                    26,054
                                    
                                    
                                    
                                    15,825
                                    
                                    
                                    
                                    10,229Computer
      equipment
                                    
                                    
                                    78,205
                                    
                                    
                                    
                                    59,672
                                    
                                    
                                    
                                    18,533Leasehold
      improvement
                                    
                                    
                                    24,691
                                    
                                    
                                    
                                    6,927
                                    
                                    
                                    
                                    17,764128,950
                                    
                                    
                                    
                                    82,424
                                    
                                    
                                    
                                    46,5262007Furniture
      and fixtures
                                    
                                    
                                    25,358
                                    
                                    
                                    
                                    17,592
                                    
                                    
                                    
                                    7,766Computer
      equipment
                                    
                                    
                                    82,367
                                    
                                    
                                    
                                    68,132
                                    
                                    
                                    
                                    14,235Leasehold
      improvement
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -107,725
                                    
                                    
                                    
                                    85,724
                                    
                                    
                                    
                                    22,001
  F16
  Chineseworldnet.Com
Inc. & Subsidiaries
 
 5.
CONVERTIBLE DEBENTURES
 
 In fiscal
year 2004, the convertible debentures were issued to an investor and a related
company owned by a director as a working capital credit facility of $50,000 and
$100,000 respectively with advances secured by two unregistered three-year
convertible debentures, which are due on May 31, 2007. Simple interest accrues
at 5% per annum on the amount of principal outstanding. The debentures are
convertible into common shares of the Company upon the Company completing its
registration statement with the relevant securities commission. The amount of
the debenture remaining outstanding is convertible into one fully paid and
non-assessable common share of the Company at a price per share that is equal to
the higher of: 1) the 30-day closing average price of its common shares on its
principal market which shall initially be the OTC Bulletin Board discounted at
20% calculated from the date the conversion notice is received by the Company,
or 2) US$0.60 per share, prior to maturity.
 
 At any
time during the term of the debenture, should the common shares of the Company
trade for a period of 30 consecutive trading days at an average closing price
exceeding $0.80 per common share, the Company shall have the option, exercisable
by providing the subscriber with written notice, of shortening the subscriber’s
right to convert the outstanding amount to a period of thirty (30) days from the
date of such notice. If the subscriber does not exercise his right of
conversion, the debenture will no longer be convertible to common shares. The
entire $150,000 of convertible debenture has been classified as a
liability.
 
 In
accordance with EITF No. 00-27, Application of Issue No. 98-5 to
Certain Convertible Instruments, no beneficial conversion feature was
calculated on the issuance of the convertible debenture.
 
 In
January 2007, the Company issued 250,000 common stocks of the Company for the
settlements of the above convertible debentures at $0.60 per share.
 
 On March
1, 2007, convertible debentures were issued to an investor as a working capital
of $250,000 with advances secured by an unregistered three-year convertible
debenture, which are due on February 28, 2010. Simple interest accrues at 6% per
annum on the amount of principal outstanding. The debentures are convertible
into common shares of the Company upon the Company completing its registration
statement with the relevant securities commission. The principal amount of this
note may be converted at a conversion price to US$1.00 per share, in whole or in
part, by the Holder at any time until the note is repaid in full by the Company.
In connection with the issuance of the convertible debenture, the investor also
received 75,000 warrants which are exercisable at any time between March 1, 2007
and February 28, 2010 at a price of $1.30 per share.  Each warrant
converts into one common stock of the Company.
 
 In
accordance with EITF No. 00-27, Application of Issue No. 98-5 to
Certain Convertible Instruments, the Company recorded $29,046, $29,047
and $191,907 to the share purchase warrants, beneficial conversion feature and
convertible debt, respectively.
 
 During
the fiscal year 2008, $31,265 (2007 - $13,755) was accreted to the convertible
debenture.  A summary of convertible debenture as
follows:
 
 December 31,
                                  
                                  
                                  December 31,2008
                                  
                                  
                                  2007Convertible
      debentures - face valueDue
      February 28, 2010 - unsecured and interest bearing at 6%
                                  
                                  
                                  250,000
                                  
                                  
                                  
                                  250,000250,000
                                  
                                  
                                  
                                  250,000Less
      interest (effective interest rate: 16.4%)
                                  
                                  
                                  (58,093
                                  )
                                  
                                  
                                  (58,093
                                  )Accretion
                                  
                                  
                                  45,020
                                  
                                  
                                  
                                  13,755Total
                                  
                                  
                                  236,927
                                  
                                  
                                  
                                  205,662Less
      current portion
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -$
                                  236,927
                                  
                                  
                                  $
                                  205,662
  F17
  Chineseworldnet.Com
Inc. & Subsidiaries
 
 6.
INCOME TAXES
 
 The
parent company is not subject to income taxes.
 
 Income
tax expense varies from the amount that would be computed from applying the
combined federal and provincial income tax rate to loss before taxes as
follows:
 
 2008
                                  $
                                
                                
                                2007
                                  $
                                
                                
                                2006
                                  $Net
      loss for the year
                                
                                
                                (950,223
                                )
                                
                                
                                51,133
                                
                                
                                
                                (209,883
                                )Statutory
      Cayman Islands corporate tax rate
                                
                                
                                0
                                %
                                
                                
                                0
                                %
                                
                                
                                0
                                %Anticipated
      tax recovery
                                
                                
                                —
                                
                                
                                
                                —
                                
                                
                                
                                —Change
      in tax rates resulting from:Impact
      of foreign exchange movement
                                
                                
                                (896
                                )
                                
                                
                                12,238
                                
                                
                                
                                1,273Impact
      of BC rate change
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (6,074
                                )Foreign
      tax rate differential
                                
                                
                                (118,032
                                )
                                
                                
                                64,176
                                
                                
                                
                                (46,700
                                )Others
                                
                                
                                4,495
                                
                                
                                
                                4,583
                                
                                
                                
                                3,647Recognition
      of  non- capital loss carryforwards
                                
                                
                                -
                                
                                
                                
                                (82,686
                                )Change
      in valuation allowance
                                
                                
                                169,045
                                
                                
                                
                                (52,532
                                )
                                
                                
                                47,854Income
      tax expense (recovery)
                                
                                
                                54,612
                                
                                
                                
                                (54,221
                                )
                                
                                
                                —
 
 The
significant components of the Company’s deferred tax assets are as
follows:
 
 2008
                                    $
                                  
                                  
                                  2007
                                    $
                                  
                                  
                                  2006
                                    $Non-capital
      loss carryforwards
                                  
                                  
                                  291,000
                                  
                                  
                                  
                                  191,601
                                  
                                  
                                  
                                  275,570Equipment
      and furniture
                                  
                                  
                                  2,000
                                  
                                  
                                  
                                  17,223
                                  
                                  
                                  
                                  15,476Others
                                  
                                  
                                  5,000
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -298,000
                                  
                                  
                                  
                                  208,824
                                  
                                  
                                  
                                  291,046Valuation
      allowance
                                  
                                  
                                  (298,000
                                  )
                                  
                                  
                                  (149,501
                                  )
                                  
                                  
                                  (291,046
                                  )Net
      deferred income tax assets
                                  
                                  
                                  —
                                  
                                  
                                  
                                  59,323
                                  
                                  
                                  
                                  —
  F18
  Chineseworldnet.Com
Inc. & Subsidiaries
 
 6.
INCOME TAXES (cont’d.)
 
 The
Company has available non-capital losses for Canadian income tax purposes which
may be carried forward to reduce taxable income in future years. If not
utilized, the non-capital losses in the amount of $759,341 expire as
follows:
 
 $2009
                      
                      
                      282,3742010
                      
                      
                      128,5022014
                      
                      
                      13,5952015
                      
                      
                      2,5552026
                      
                      
                      130,0162029
                      
                      
                      202,299759,341
 
 The
Company also has available non-capital losses for Chinese income tax purposes
which may be carried forward to reduce taxable income in future years. If not
utilized, the non-capital losses in the amount of $182,106 expire at
2012.
 
 7.
STOCKHOLDERS EQUITY
 
 Common
Stocks
 
 On
January 28, 2007, the Company issued 250,000 common stocks for the settlement of
convertible debentures of $150,000.
 
 On
October 26, 2007, 2,250,000 common stocks were issued in connection of a private
placement at a price of $1.08 for a total of $2,070,000.
 
 Stock
Options
 
 On
October 11, 2007, the Company granted key officers and directors 550,000 stock
options, which expire on October 11, 2012 with each stock option entitling its
holder to purchase one common share at $1.08.
 
 As at
December 31, 2008, the Company has 495,000 stock options
outstanding:
 
 Number of Options
                            
                            
                            Weighted
                              Average Exercise
                              PriceBalance,
      December 31, 2006
                            
                            
                            -
                            
                            
                            $
                            -Granted
                            
                            
                            550,000
                            
                            
                            
                            1.08Forfeited
                            
                            
                            (10,000
                            )
                            
                            
                            1.08Balance,
      December 31, 2007
                            
                            
                            540,000
                            
                            
                            $
                            1.08Forfeited
                            
                            
                            (45,000
                            )
                            
                            
                            1.08Balance,
      December 31, 2008
                            
                            
                            495,000
                            
                            
                            $
                            1.08
 
 Exercise price
                                    
                                    Outstanding
                                    
                                    
                                    ExercisableNumber of
                                      Options
                                    
                                    
                                    Weighted
                                      Average
                                      Exercise
                                      Price
                                    
                                    
                                    Weighted
                                      Average
                                      Remaining
                                      Contractual
                                      Life (years)
                                    
                                    
                                    Number of
                                      Options
                                    
                                    
                                    Weighted
                                      Average
                                      Exercise
                                      Price$
                                    1.08
                                    
                                    
                                    495,000
                                    
                                    
                                    $
                                    1.08
                                    
                                    
                                    
                                    3.78
                                    
                                    
                                    
                                    99,000
                                    
                                    
                                    $
                                    1.08495,000
                                    
                                    
                                    $
                                    1.08
                                    
                                    
                                    
                                    3.78
                                    
                                    
                                    
                                    99,000
                                    
                                    
                                    $
                                    1.08
  F19
  Chineseworldnet.Com
Inc. & Subsidiaries
 
 7.
STOCKHOLDERS EQUITY (cont’d.)
 
 Stock
options (cont’d.)
 
 During
the fiscal year 2007, the weighted average fair value of stock options granted
in the year was $0.93 and compensation expense of $22,222 was recognized for
options granted during the year and vesting over time using the Black-Scholes
option pricing model. The fair value of each option granted is estimated on the
date of grant using the Black-Scholes option pricing model with weighted average
assumptions for grants as follows:
 
 2007Risk-free
      interest rate
                              
                              
                              4.36
                              %Expected
      life of options
                              
                              5
      yearsAnnualized
      volatility
                              
                              
                              90.6
                              %Dividend
      rate
                              
                              
                              0
                              %
 
 Share
purchase warrants
 
 A summary
of share purchase warrants is as follows:
 
 Expiry
                          
                          Exercise
      Price
                          
                          
                          NumberFebruary
      28, 2010
                          
                          $
                          1.30
                          
                          
                          
                          75,000
 
 8.
RELATED PARTY TRANSACTIONS
 
 [a]
                  In2008,
      the Company incurred $84,000 [2007 - $84,000, 2006 - $24,000] in
      consulting fees to two companies related to a director of the Company, of
      which there were no outstanding balance as at December 31,
      2007.
 
 [b]
                In
      2008, the Company paid $80,360 [2007 - $86,400, 2006 - $68,600] salary to
      senior officers of the
Company.
 
 [c]
                As
      at December 31, 2008, the Company has non-interest bearing advances from a
      stockholder and director of $128 [2007 - $29,802, 2006 - $76,910]. In
      2008, the Company recorded imputed interest of $nil [2007 - $63, 2006 -
      $1,178] at an interest rate of 4% per annum on these
    advances.
 
 [d]
                Included
      in accounts payable, $36,136 [2007 - $30,233, 2006 – $14,187] was payable
      to directors and senior officers of the
Company.
 
 [e]
                During
      the fiscal year 2008, the Company accrued $8,000 director fees payable to
      the directors of the Company.  The amount also has been included
      in 8 [d]
 
 [f]
              As
      at December 31, 2008, the Company provided an advance of $2,580 (2007 -
      $2,562; 2006 – $nil) to a director as a prepaid
  expenses.
 
 All
related party transactions were entered into in the normal course of business
and are recorded at the exchange amount established and agreed to between the
related parties.
  F20
  Chineseworldnet.Com
Inc. & Subsidiaries
 
 9.
COMMITMENTS
 
 The
Company has entered into operating leases for automobile and office space.
Minimum future rental payments under these leases are as follows:
 
 $2009
                            
                            
                            70,7842010
                            
                            
                            67,4352011
                            
                            
                            39,337Total
                            
                            
                            177,556
 
 During
the fiscal year 2008, the Company entered into a license agreement which the
Company was granted a license to use and distribute the licensor’s products and
service described in the agreement for a term of 3 years for a total
consideration of $54,624 and payable $17,139, $18,285 and $19,200 at the
beginning of year one, two and three, respectively.
 
 10.  SUBSEQUENT
EVENTS
  [a]
                Subsequent
      to the year end, the Company entered a new consulting agreement with
      Silver Lake Investment Partners, Limited controlled by a director of the
      Company.  The Company will be charged $2,000 per month for the
      consulting fee from January 1 to December 31,
  2009.
  [b]
                Subsequent
      to the year end, the Company entered a new consulting agreement with
      Goldpac Investments Ltd. controlled by a director of the
      Company.  The Company will be charged $6,000 per month for the
      consulting fee from January 1, 2009 to December 31,
  2009.
 
 11.  COMPARATIVE
FIGURES
 
 Certain
of comparative figures have been reclassified to conform with the presentation
adopted in the current period.
 
 12.  GEOGRAPHIC
INFORMATION
 
 The
Company’s head office is located in Vancouver, British Columbia, Canada. The
operations of the Company are primarily in two geographic areas: Canada and
China. A summary of geographical information for the Company’s assets and net
loss for the years is as follows:
 
 Year ended December 31, 2008
                      
                      Canada
                      
                      
                      China
                      
                      
                      TotalRevenue
      from external customers
                      
                      $
                      881,633
                      
                      
                      $
                      129,689
                      
                      
                      $
                      1,011,322Net
      income (loss)
                      
                      
                      (819,324
                      )
                      
                      
                      (130,799
                      )
                      
                      
                      (950,123
                      )Total assets
                      
                      
                      1,523,879
                      
                      
                      
                      580,504
                      
                      
                      
                      2,104,383
 
 
 Year ended December 31, 2007
                      
                      Canada
                      
                      
                      China
                      
                      
                      TotalRevenue
      from external customers
                      
                      $
                      609
                      
                      
                      $
                      1,358,477
                      
                      
                      $
                      1,359,086Net
      income (loss)
                      
                      
                      118,006
                      
                      
                      
                      (9,652
                      )
                      
                      
                      108,354Total assets
                      
                      
                      2,763,539
                      
                      
                      
                      16,687
                      
                      
                      
                      2,780,226
  F21