UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





**AMENDMENT
        No. 1**





**TO**





**FORM
        20-F/A**





**o**
            **REGISTRATION
                STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE
                ACT
                OF 1934**




**OR**





**x** ****  **ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**


**For
      the fiscal year ended December 31, 2005**




**OR**





**o** ****  **ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934**


For
      the
      transition period from ___________________________ to
      ________________________________





**o**
            **SHELL
                COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                EXCHANGE
                ACT OF 1934**




Date
      of
      event requiring this shell company report
      ___________________________




For
      the
      transition period from ___________________________ to
      ________________________________





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:
      8,200,000 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   oAccelerated
      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




-2-




**EXPLANATORY
        NOTE**





This
        amendment (“Amendment No. 1”) to our Annual Report on Form 20-F for the fiscal
        year ended December 31, 2005, filed with the US Securities and Exchange
        Commission (the “SEC”) on July 17, 2006 (the “Original Report”), is being filed
        for the purpose of making the following changes in the Original Report in
        connection with our responses to comments we received from the Staff of the
        SEC:





·
              We
                  have restated our consolidated statements of cash flows for the
                  year ended
                  December 31, 2005, as described in more detail in Note 10, which
                  has been
                  added to our Consolidated Financial Statements. The restatement
                  has had no
                  impact on our financial position as at December 31, 2005 nor on
                  the
                  results of our operations for each of the years ended December
                  31, 2005,
                  2004 and 2003. The financial statements have been restated
                  to:





(i)
        reflect the provision of doubtful accounts as an adjustment to reconcile
        net
        loss to net cash flows from operating activities; and





(ii)
        reflect the receipt of cash from a certain acquisition as a source of cash
        from
        investing activities;





·
              Expanding
                  Note 2 to our Consolidating Financial Statements regarding our
                  accounting
                  policies on non-monetary transactions and revenue recognition,
                  adding
                  Notes 11 and 12 to the Consolidated Financial Statements regarding
                  accounts receivable and comparative figures, respectively and expanding
                  the consolidated balance sheet to reflect the net of allowance
                  for
                  doubtful accounts;





·
              Clarifying
                  information under Item 4B regarding our Revenue Model for our Banner
                  Advertising, IR/PR Business and our Internet Content
                  Partners;





·
              Enhancing
                  disclosure under Item 5A regarding our revenue and expense items
                  and Item
                  5B regarding Liquidity and Capital Resources;
                  and





·
              Including
                  the Report of Independent Registered Public Accounting Firm by
                  Moore
                  Stephens Ellis Foster Ltd. for our consolidated financial statements
                  as at
                  December 31, 2004 and for the two years in the period ended December
                  31,
                  2004, and the signature to the Report by Ernst & Young LLP for our
                  consolidated financial statements as at December 31, 2005 and for
                  the year
                  ended December 31, 2005, which were inadvertently omitted in the
                  Original
                  Report. The Report by Ernst & Young LLP has been modified to respond
                  to comments from the Staff.





In
        addition, we are including in this Amendment No. 1 currently dated
        certifications by our Chief Executive Officer and our Chief Financial
        Officer.





Except
        as
        expressly set forth above, this Amendment No. 1 speaks as of the filing date
        of
        the Original Report (July 17, 2006) and does not, and does not purport to,
        amend, update or restate the information in any other item of the Original
        Report, and should not be understood to mean that any other statements contained
        therein are true and complete as of any date subsequent to July 17, 2006.
        The
        filing of this Amendment No. 1 shall not be deemed an admission that the
        Original Report, when filed, contained any untrue statement of material fact
        or
        omitted to state a material fact necessary to make a statement not
        misleading.





-3-


**TABLE
      OF CONTENTS**


**CAUTIONARY
                    NOTICE REGARDING FORWARD-LOOKING STATEMENTS**
                **3****PART
                    I**ITEM
                    1.
                IDENTITY
                    OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
                3ITEM
                    2.
                OFFER
                    STATISTICS AND EXPECTED TIMETABLE
                3ITEM
                    3.
                KEY
                    INFORMATION
                4ITEM
                    4.
                INFORMATION
                    ON THE COMPANY
                22ITEM
                    4A.
                UNRESOLVED
                    STAFF COMMENTS
                33ITEM
                    5.
                OPERATING
                    AND FINANCIAL REVIEW AND PROSPECTS
                34ITEM
                    6.
                DIRECTORS,
                    SENIOR MANAGEMENT AND EMPLOYEES
                41ITEM
                    7.
                MAJOR
                    SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
                45ITEM
                    8.
                FINANCIAL
                    INFORMATION
                47ITEM
                    9.
                THE
                    OFFER AND LISTING
                47ITEM
                    10.
                ADDITIONAL
                    INFORMATION
                48ITEM
                    11.
                QUANTITATIVE
                    AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
                51ITEM
                    12.
                DESCRIPTION
                    OF SECURITIES OTHER THAN EQUITY SECURITIES
                51**PART
                    II**
                
                **51**ITEM
                    13.
                DEFAULTS,
                    DIVIDENDS ARREARS AND DELINQUENCIES
                51ITEM
                    14.
                MATERIAL
                    MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
                    PROCEEDS
                52ITEM
                    15.
                CONTROLS
                    AND PROCEDURES
                52ITEM
                    16A.
                AUDIT
                    COMMITTEE FINANCIAL EXPERT
                53ITEM
                    16B.
                CODE
                    OF ETHICS
                53ITEM
                    16C.
                PRINCIPAL
                    ACCOUNTANT FEES AND SERVICES
                53ITEM
                    16D.
                EXEMPTIONS
                    FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
                53ITEM
                    16E.
                PURCHASES
                    OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
                    PURCHASERS
                53
   -1-
   **PART
                    III**
                
                **54**ITEM
                    17.
                FINANCIAL
                    STATEMENTS
                54ITEM
                    18.
                FINANCIAL
                    STATEMENTS
                54ITEM
                    19.
                EXHIBITS
                54Ex
                    - 4(b)9
                CONSULTING
                    AGREEMENT BETWEEN CHINESEWORLDNET.COM INC. AND GOLDPAC INVESTMENT
                    PARTNERS.
                50EX.
                    - 8.
                LIST
                    OF SUBSIDIARIES
                50EX.
                    - 12.1.
                CEO
                    CERTIFICATION
                50EX.
                    - 12.2.
                CFO
                    CERTIFICATION
                50EX.
                    - 13.1.
                CEO
                    CERTIFICATION PURSUANT TO SECTION 906
                50ITEM
                    13.2.
                CFO
                    CERTIFICATION PURSUANT TO SECTION 906
                50






-2-




**INTRODUCTION
      AND USE OF CERTAIN TERMS**




ChineseWorldNet.Com
        Inc. is a corporation incorporated under the *Company
        Law* (1998
        revision) of the Cayman Islands on January 12, 2000. Except as the context
        otherwise requires, all references in this Annual Report on Form 20-F/A 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”) and ChineseWorldNet.com (Hong Kong) Ltd., a
        company incorporated under the laws of Hong Kong (“CWNHK”). Our consolidated
        financial statements are prepared in accordance with United States generally
        accepted accounting principles (“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
      510
      - 1199 West Pender Street, Vancouver, British Columbia, Canada V6E 2R1. We
      moved
      to our current offices in August 2003.





**CAUTIONARY
      NOTICE REGARDING FORWARD-LOOKING STATEMENTS**




The
        information set forth in this Form 20-F/A is as of December 31, 2005 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 a development stage, 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/A 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/A 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.





-3-




**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, 2005, 2004, 2003, 2002 and 2001. 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 31,2005
            
            2004
            
            2003
            
            2002
            
            2001Income
                Statement:Operating
                revenues
            
            $
            533,521
            
            $
            487,710
            
            $
            247,293
            
            $
            234,716
            
            $
            338,237Operating
                loss before income taxes
            
            
            (78,030
            )
            
            (95,946
            )
            
            (163,313
            )
            
            (367,690
            )
            
            (191,140
            )Net
                loss
            
            
            (78,030
            )
            
            (95,946
            )
            
            (163,313
            )
            
            (367,690
            )
            
            (191,140
            )Loss
                per share (basic and diluted)
            
            
            (0.01
            )
            
            (0.01
            )
            
            (0.02
            )
            
            (0.05
            )
            
            (0.02
            )Common
                shares outstanding
            
            
            8,200,000
            
            
            8,004,384
            
            
            8,000,000
            
            
            8,000,000
            
            
            7,808,219Consolidated
                Balance Sheet:Total
                assets
            
            $
            312,053
            
            $
            336,623
            
            $
            329,949
            
            $
            356,864
            
            $
            708,088Equipment
            
            
            16,767
            
            
            22,421
            
            
            23,272
            
            
            24,620
            
            
            30,078Total
                liabilities
            
            
            170,469
            
            
            119,766
            
            
            239,843
            
            
            112,378
            
            
            97,293Stockholders’
                equity
            
            
            (8,416
            )
            
            66,857
            
            
            90,106
            
            
            244,486
            
            
            610,795




No
      dividends have been declared or paid in 2005.




**B.**  **Capitalization
      And Indebtedness**




This
        Report on Form 20-F/A 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/A 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-




**D.**  **Risk
      Factors**




*The
        following discussion in this Annual Report on Form 20-F/A contains
        forward-looking statements regarding our business, prospects and results
        of
        operations that involve risks and uncertainties. Our actual results could
        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.*




**Risk
      Factors Relating to Our Company and Our Business**




***Our
      limited operating history makes it difficult for investors to judge our
      prospects.***




We
      have a
      limited operating history upon which an evaluation of our current business
      and
      prospects can be based. Potential investors should consider any purchase of
      our
      common shares in light of the risks, expenses and problems frequently
      encountered by all companies in the early stages of development. We have
      received limited revenues from our operations and expect that most of our
      revenues in the foreseeable future will be dependant upon the implementation
      of
      our business plan.




In
      creating the suite of services that we propose to offer through our financial
      portals, we will need to rely upon partnerships or collaborations with other
      companies such as on-line trading facilities and there can be no guarantees
      that
      we will be able to enter into such collaborations or partnerships to provide
      these services. We may never achieve profitability.




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




We
      are
      pursuing a number of growth strategies, which will require us to expand our
      data
      and information content and service offerings through internal development
      efforts. We also seek partnerships, and potentially joint ventures and
      acquisitions with providers o financial products and services to customers
      in
      North America and Asia to implement our growth strategies. Some of these
      strategies relate to new service offerings for which there are no established
      markets in North America or the PRC, or relate to service offerings in which
      we
      lack experience and expertise. We cannot assure you that we will be able to
      deliver new service offerings on a commercially viable basis or in a timely
      manner, or at all.




In
      addition to our premium subscription based service offerings, we also intend
      to
      increase our online banner advertising revenue from our website by increasing
      the number of sponsors for some of our website content. Our current online
      advertising business has been limited and, to date, we do not have significant
      experience with selling Internet-based banner advertising. In addition, we
      intend to increase revenue through NAI’s investment seminars and conferences. In
      order to successfully implement our growth strategies, we would need to hire
      additional employees and incur costs relating to any efforts to increase our
      advertising revenues and investment seminar and conference revenues, which
      could
      adversely affect our financial condition and operating results. We cannot assure
      you that we will be able to efficiently or effectively implement our growth
      strategies by offering premium subscription services, advertising, and seminars.
      If we are unable to successfully implement our growth strategies, our revenue
      and profitability will not grow as we expect, if at all, and our competitiveness
      may be materially and adversely affected.




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




We
      have
      enhanced our design and our technological infrastructure to further improve
      our
      websites and to accommodate increased traffic, and intend to continue such
      development activities. However, unforeseen development difficulties could
      prevent us from implementing such improvements or cause the costs to implement
      such improvements, including design, technology and related costs, to be higher
      than anticipated.




-5-




In
      the
      past, we have experienced spikes in traffic on our websites when there have
      been
      important financial news events. Accordingly, our websites must accommodate
      a
      high volume of traffic, often at unexpected times. Although we have upgraded
      and
      continue to improve our systems, our websites have in the past, and may in
      the
      future, experience publishing problems, slower response times than usual or
      other problems for a variety of reasons. These occurrences could cause our
      readers to perceive our websites as not functioning properly and, therefore,
      cause them to use other methods to obtain their financial news and information.
      In such a case, our business, results of operations and financial condition
      could be materially adversely affected.




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




We
      currently offer to our premium subscribers a small number of personalized
      service packages with different features and functionalities. If we introduce
      a
      new feature or a new research tool that is not favorably received, our current
      premium subscribers may not continue to use our service as frequently as before.
      New subscribers could also choose a competitive or different service offering
      over ours. We may also experience difficulties that could delay or prevent
      us
      from introducing new research tools or features. Furthermore, these research
      tools or features may contain errors that are discovered after the services
      are
      introduced. We may need to significantly modify the design of these research
      tools or features to correct these errors. Our business could be materially
      and
      adversely affected if we experience difficulties or delays in introducing new
      features and research tools or if these new features and research tools are
      not
      accepted by user.




***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. We charge premium subscribers a monthly subscription fee of $9.95
      or
      an annual fee of $59.95. We also offer real-time streaming 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
      those from our 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 to retain our subscribers
      who pay no fee and migrate them to our premium service packages. We may not
      be
      able to continue to develop newer and more comprehensive service packages that
      our subscribers will be willing to purchase. If we are unsuccessful at
      developing new premium services packages that are attractive 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 provide 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.




-6-




***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 growing awareness about our www.chineseworldnet.com and www.na-investor.com websites
        and their associate brands is an important aspect of our efforts to continue
        to
        attract users. Our planned products and services may not have widely recognized
        brands, and we will need to increase awareness of these brands among potential
        users. Despite our continued efforts to build brand awareness, they may not
        be
        cost effective or successful in the future in reaching potential users, and
        some
        potential users may not be receptive to our advertising campaign or other
        efforts. Accordingly, our efforts may not be successful 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 new and rapidly evolving. Our business would
      be
      materially adversely affected 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




·  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 due to system failures 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 to it
      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 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 and 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.




-7-




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 defence of a law suit 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 furnish
      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 and not to disclose it to third parties
      or
      permit its security to be breached. If our users perceive that we are not
      protecting their privacy, or if the technology developed by these third parties
      that we use does not function as anticipated and our information security
      measures are breached, our users could be discouraged from registering to use
      our free services or our premium services, which could have a material adverse
      effect on our business, results of operations and financial
      condition.




***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. During the past 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, 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 overruns,
      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
      a part
      of the investor relations and public relations services that NAI offers, the
      organization of Chinese investment seminars provides for a significant portion
      of our total revenues. NAI charges a fee of $4,000 per presenting company and
      $2,000 for basic exhibition booths at these seminars. Individual investors
      however, are permitted to attend free of charge. Presenting companies and
      companies with exhibition booths typically attend for the purpose of meeting
      individual investors. If we fail to attract a sufficient number of individual
      investors to our seminars, we may experience a decline in our attendees who
      pay
      a fee to attend the seminars which would adversely affect our
      revenues.




-8-




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




Our
      two
      principal website addresses or Uniform Resource Locators (URLs), www.chineseworldnet.com and www.na-investor.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.na-investor.com domain
      names, they could become the 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
      our subscribers trained customer support through a toll free telephone number
      to
      call when they are in North America. Our trained customer support personnel
      are
      available to our subscribers to assist in English, Cantonese or Mandarin with
      their technical problems as well as personalized account problems and content
      search needs. We depend on our customer support force to explain our service
      offerings to our existing and potential subscribers and resolve our subscribers’
problems. Many of our customer support personnel have only worked for us for
      a
      short period of time, and some of them may not have received sufficient training
      or gained sufficient experience to effectively serve our customers. In addition,
      we will need to further increase the size of our customer support force as
      our
      business continues to grow. We may not be able to hire, retain, integrate or
      motivate additional customer support personnel without any short-term
      disruptions of our operations. Also, hiring multilingual staff can be difficult.
      As a result, our business could be adversely affected if we do not continue
      to
      expand and maintain an effective customer support force.




***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 effort of our senior management team. In addition, we intend
      to
      grant stock options to many of our employees in lieu of additional salary.
      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 our existing
      employees. Our inability to retain our 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 from current operations combined with our cash resources are
      adequate to fund our current marketing program in North America. However, we
      expect to need to secure additional financing to implement our planned expansion
      into Asia. We have not entered into any agreements with respect to this
      additional financing but expect to raise such funds through debt or the offering
      of stock to accredited investors. In the event that there is an opportunity
      for
      an acquisition and additional funds are needed, we may not be successful in
      raising a sufficient amount of additional capital or in internally generating
      a
      sufficient amount of capital to fund this purpose. See Item 4 “Information on
      the Company”




-9-




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




The
      online financial data and information services market for the Chinese community
      in North America is relatively new, has few substantial barriers to entry and
      is
      competitive and rapidly changing. More broadly, 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,
      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 for our breach. 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 we are found to have violated the
      intellectual property rights of others, we may be enjoined 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.




-10-




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,
      further 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
      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 favourable 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 our 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.




***Our
      strategy of expansion through acquisitions may affect our ability to receive
      favourable 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 revenue, 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 favourable debt or equity financing. As a result, we may need to accept
      a less than favourable 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.




-11-





**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
                Interactive Edition, TheStreet.com, Globeinvestor.com, The New York
                Times
                on the Web, 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! 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, 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, ChinaByte and Xinhua
                News
                Agency;




-
            online
                brokerage firms, many of which provide financial and investment news
                and
                information, such as ez128.com, Cash Online, Pt123.com;
                and




-
            online
                services or websites focused on business, finance and investing,
                such asChinesefn.com,HKNasdaq.com,www.meigu.com,Chinese.wsj.com,www.cnyes.com.




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 adversely affect our business, results
      of
      operations and financial condition.




-12-




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 into China, which competes with our
      business. If we are not able to effectively compete with these companies for
      the
      limited marketing budgets of attendees, our business may be adversely effected
      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 slower 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 an increase in the number of users of our websites,
      computer viruses, outside programmers penetrating and disrupting our software
      systems, human error, 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.




-13-




***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. Further, laws
      and
      regulations that address issues such as user privacy, pricing, online content
      regulation, 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 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 communications, 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.




-14-




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




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




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




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




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




Our
      revenue growth also depends on the increasing acceptance and use of electronic
      commerce in the region comprised of the PRC, Hong Kong and Taiwan (referred
      in
      this 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, 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.




-15-




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




-  security;




-  reliability;




-  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 or the penetration rate availability of access technology,
      hardware and software may prevent many 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 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 and 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 for the domestic
      Chinese Internet network to connect 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 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 base of Internet users 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. For example, 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.




-16-




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




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




**PRC**
            
            **OECD**Economic
                structure:
            
            Planned
                economy but in a slow process of transition to a market
                economy
            
            Market
                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.




*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.




-17-




**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
      ww.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.




-18-




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 third 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 three 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
                subjects 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.




-19-




**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 prohibit 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.




-20-




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.




**Currently,
      our Common Shares are not publicly traded on any market or exchange, and as
      a
      result a shareholder would have difficulty in selling any shares. If our Common
      Shares become****traded
      on the OTC Bulletin Board, it would be considered a “penny stock” and a
      shareholder’s ability to sell shares in the secondary trading market may be
      limited.**




Our
      common shares are currently not quoted or listed for trading on any securities
      market or exchange, whether in the U.S. or elsewhere. As a result, existing
      shareholders would have difficulty in selling their
      shares in a secondary trading market. This
      lack
      of liquidity may also make it more difficult for us to raise capital in the
      future through the sale of equity securities.




In
      October of 2005, a market maker filed a Form 15c2-11 on our behalf with the
      National Association of Securities Dealers in connection with our intention
      to
      apply for quotation of our common shares on the OTC Bulletin Board.




If
      we
      obtain quotation of our shares on the OTC Bulletin Board, 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:




-21-






·
            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.




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




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




Under
      the
      common law of the Cayman Islands, the fiduciary relationship of a director
      is to
      us and a director therefore does not usually owe a fiduciary duty to individual
      shareholders. As a result, it may be difficult for a shareholder to take action
      against the directors for breach of fiduciary duty.




The
      common law in the Cayman Islands is derived in part from comparatively limited
      judicial precedent in the Cayman Islands and from English common law, the
      decisions of whose courts are of persuasive authority but are not binding on
      a
      court in the Cayman Islands. Cayman Islands law in this area may conflict with
      jurisdictions in the United States. As a result, our public shareholders may
      face more difficulties in protecting their interests in the face of actions
      against the management, directors or our controlling shareholders than would
      shareholders of a corporation incorporated in a jurisdiction in the United
      States.




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




We
      are a
      Cayman Islands company have no assets located in the United States. A
      substantial portion of our current operations is conducted in Canada and we
      expect to expand to Hong Kong, Taiwan and PRC. In addition, all of our directors
      and officers are nationals and/or residents of countries other than the United
      States. All or a substantial portion of the assets of these persons are located
      outside the United States. As a result, it may be difficult for you to effect
      service of process within the United States upon these persons. In addition,
      there is uncertainty as to whether the courts of the Cayman Islands, Canada,
      Hong Kong, Taiwan and, PRC and other jurisdictions would recognize or enforce
      judgments of United States courts obtained against us or such persons predicated
      upon the civil liability provisions of the securities laws of the United States
      or any state thereof, or be competent to hear original actions brought in the
      Cayman Islands, Canada, Hong Kong, Taiwan, PRC or other jurisdictions against
      us
      or such persons predicated upon the securities laws of the United States or
      any
      of our state.




**ITEM
      4.**  **INFORMATION
      ON** **THE
      COMPANY**




**A.**  **History
      and Development of CWN**




ChineseWorldNet.Com
      Inc. was incorporated on January 12, 2000 under the *Company
      Law* (1998
      revision) of the Cayman Islands. 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 510- 1199 West Pender Street,
      Vancouver, British Columbia, Canada V6E 2R1, Telephone (604) 488-8878. We moved
      to this current location in August 2003.




-22-




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.




On
      November 1, 2004, we also started operations in Hong Kong through our
      subsidiary, CWNHK, at their office 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.




We
      have
      two 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.na-investor.com website)
      and investment seminars/conferences. 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. Tin 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
      plan
      was to first launch our Portal and IR/PR businesses in North America and then
      to
      expand both 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.




**B.**  **Business
      Overview**




**Internet
      Financial Portal Business**




**Introduction**




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




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




**Current
      Product / Service Offering**




**Services**




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




-23-




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; and




·
            Financial
                Statement Summary.




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.




-24-




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.




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




**2.**  **Banner
      Advertising**




CWN
        intends to derive revenue from selling banner advertising to companies on
        the www.chineseworldnet.com website.
        The fee for six-month banner advertising ranges between $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.
        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.




**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
      transaction 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.




Through
      December 31, 2005, 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.




-25-




**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), financial newspaper and investment seminars. Unlike the www.chineseworldnet.com business
      model, client companies instead of individual investors pay a fee to NAI for
      the
      IR/PR services.




**Current
      Product / Service Offering**




1.
            Internet
                website (www.na-investor.com)




NAI
      operates the www.na-investor.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 40,000 registered members for
      the www.na-investor.com website
      and it attracts over 900,000 readers each month.




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




2.
            Investment
                Seminars and Conferences




NAI
      markets and organizes Chinese investment seminars 2 to 4 times a year at which
      private and public companies pay a sponsorship fee to NAI to enable them 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. NAI charges
      $2,000 for a basic exhibition booth per company. There are also other general
      sponsorship opportunities at each conference, ranging from $4,000 to $10,000.
      The conferences have been held in Vancouver and Toronto. The investment seminar
      and conference website is www.gcff.ca .




3.
            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, email messages to NAI members and other services like on-line
      promotional events that can help increase Internet traffic to client companies’
websites.




4.
            Chinese
                Webpage Design, Hosting and
                Maintenance




NAI
      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 webpages will also be linked to the www.na-investor.com website
      in the featured company section. NAI charges a one-time set-up fee plus 12-month
      maintenance fee in total of $2,400 for this service.




-26-






5.
            Computer
                Consultation Service




NAI
      began
      provide computer consultation services at the end of 2002 as an extra service
      to
      clients who needed support. This is not a core business of NAI.




6.
            Company
                Review




NAI’s
      in-house editors write company reviews for client companies. Company reviews
      are
      sent to all NAI members by email and by mail and posted on the www.na-investor.com website.
      This is a fee-paying service for companies featured in the company review,
      and
      NAI provides a disclaimer at the end of each review that this is a paid service
      and that the information provided in the review is not the view of, or endorsed
      by, NAI. This service was discontinued in 2004.




7.
            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 service.




8.
            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 service.




9.
            Financial
                Newspaper




From
      August 2001 through May 2003, NAI published a bi-weekly Chinese financial
      newspaper in Canada to provide readers with news of North American and Greater
      China’s stock markets, analysis and commentaries on particular industry sectors
      or companies as well as articles on investing in general. None of the contents
      of the newspaper were sponsored or paid by client companies other than ordinary
      course advertisements except that, upon the request of client companies, NAI
      would prepare a client company-sponsored written report to be distributed with
      the newspaper to readers. In that case, recipients of our-sponsored written
      report have been notified that our report should not be constituted as
      investment advice but an advertisement and the fact that it is sponsored by
      a
      client company. Beginning in September 2002, the newspaper was provided on
      a
      bi-weekly basis and was sold for $2.00 per copy. However, in May 2003, NAI
      decided to discontinue the publication of the financial newspaper due to
      difficulties generating enough paying readership to justify the cost of
      producing the newspaper.




10.
            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.




**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. See “Corporate Strategy and Strategic Business Plan.”




-27-




**Revenue
      Model of the IR/PR Business**




For
        fiscal year ended December 31, 2005, we generated revenue in total of $533,521.
        Currently our company has two revenue models, they are IR/PR Business and
        portal
        business. The IR/PR business is marketed via the brand name of NAI. 
Sources of revenue for the IR/PR business are from each of the current
        product/service offerings mentioned above such as investment seminar, on-line
        marketing service, Chinese webpage design, hosting and maintenance, company
        review, translation service, miscellaneous IR/PR services and the financial
        newspaper. The portal business is derived from the flagship financial internet
        portal www.chineseworldnet.com that
        includes revenue streams from Banner Advertisements, Online Marketing Service
        and CWN Membership.  All our revenues from both businesses are recognized
        in our 100 % owned operating subsidiary NAI Interactive Ltd, which is based
        in
        Vancouver, BC in Canada.




NAI’s
      revenues for the years ended December 31, 2005, 2004 and 2003 were as follows:





Revenues
              
              Year
                  ended Dec.31, 2005
              
              Year
                  ended Dec. 31, 2004
              
              Year
                  ended Dec. 31, 2003Banner
                  Advertisement
              
              $
              18,457
              
              $
              9,377
              
              $
              7,818Company
                  Review,
                  Company Newsletter, Translation
              
              
              10,973
              
              
              21,593
              
              
              3,610Chinese
                  Webpage Design, Hosting and Maintenance
                Computer
                  Consultation Service
              
              
              89,937
                0
              
              
              47,898
                13,898
              
              
              11,849
                8,798CWN
                  Membership, Online Service
              
              
              11,475
              
              
              15,279
              
              
              14,855Online
                  Marketing Service
              
              
              13,107
              
              
              13,881
              
              
              36,460Miscellaneous
                  IR/PR Service
              
              
              169,866
              
              
              126,436
              
              
              57,052Investment
                  Seminar
              
              
              174,881
              
              
              175,442
              
              
              84,172Financial
                  Newspaper
                Investment
                  Guides
              
              
              0
                42,880
              
              
              0
                63,591
              
              
              12,939
                9,698Interest
                  and Others
              
              
              1,945
              
              
              315
              
              
              42**TOTAL
                  REVENUE**
              
              **$**
              **533,521**
              
              **$**
              **487,710**
              
              **$**
              **247,293**




**Corporate
      Strategy and Strategic Business Plan**




Our
      goal
      is to become a global leader in 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 business.
      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. We have started to plan to enter the greater China
      region with the launch of our new product, RZTO, a platform serving the
      fast-growing number of private Chinese companies seeking listing and access
      to
      capital in North American markets. This new platform is expected to be launched
      in the third quarter of 2006 and be 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. This
      would, in turn, 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 ranger 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. Details of our proposed
      expansion strategy of our services into other markets are as
      follows:




-28-







Target
                Launch Date of theGeographic
                Market
            
            Portal
                Business
            
            IR/PR
                Business
            
            Local
                PresenceCanada
                and the United States
            
            Launched
                in October 2002
            
            Launched
                in 2001
            
            The
                main operation of both businesses is from the Vancouver office. We
                also
                maintain an office in Toronto, Canada.Hong
                Kong
            
            Launched
                in 4thQuarter of 2004
            
            1stQuarter of 2006
            
            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.PRC
            
            2ndQuarter of 2005
            
            2ndQuarter of 2006
            
            We
                may establish a direct presence or seek strategic partners locally
                to
                launch the servicesTaiwan
            
            3rd
                Quarter of 2005
            
            4thQuarter 2006
            
            We
                may establish a direct presence or seek strategic partners locally
                to
                launch the services




***Internet
      Content Partners:***




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





**Company
                  Name**
              
              **Services
                  Provided**ALPHATRADE.COM
              
              ALPHATRADE.COM
                  provides our subscribers real-time streaming stock information
                  for a
                  monthly fee.PR
                  Newswire
              
              We
                  disseminate PRNewswire Chinese news releases for companies in North
                  America, China, Hong Kong, and Taiwan on ourwww.chineseworldnet.comwebsite. 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.





There
        were no significant developments with partners established in 2005. 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
        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.





-29-




**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 is increasing at an
      unprecedented rate and has reached over 300 million according to the data
      published by Nielsen/NetRatings in March 2005. This figure already surpassed
      the
      figures in the whole North America. The percentage of users in the region was
      only 8.4 percent of the population compared to 67 percent in North
      America.




By
      March
      2005, China had 94 million internet users, which would make China the nation
      with the second-largest number of Internet users, behind the United States,
      which had about 201 million users (same data), and ahead of third place Japan
      with 67 million users. The growth of internet users in China from 2000-2005
      is
      317.8% compared to 110% in United States.




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




According
      to the Internet Subscriber Survey conducted by the FIND team of the Advanced
      Institute (ACI), Institute for Information Industry (III), under the support
      of
      Department of Industrial Technology (DOIT) and Ministry of Economic Affairs
      (MOEA), it was estimated that there were 8.77 million Internet users in Taiwan
      as of September 2003. The Internet penetration rate was 39%; compared to the
      same time period in 2002, there was an increase of 420,000 users, with a growth
      rate of 5%.




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




**Internet
      Advertising Market**




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




-30-




The
      actual full year 2003 Internet advertising revenue in the United States was
      just
      under $7.3 billion, according to t he
      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
      th e
      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%. Based on
      this data, we believe that our services and offerings are well positioned in
      a
      market that is continuing to grow.




**Investor
      Relations (“IR”) Market**




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




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




**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.




-31-




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.




**C.**  **Organizational
      Structure**









ChineseWorldNet.Com
      Inc was incorporated under the *Company
      Law* (1998
      revision) of the Cayman Islands on January 12, 2000. Our principal executive
      and
      registered office is located at Appleby Spurling Hunter Group, Clifton House,
      P.O. Box 1350, Grand Cayman, Cayman Islands. Our North American office and
      principal place of business is located at Suite 510 - 1199 West Pender Street,
      Vancouver, British Columbia, Canada V6E 2R1.




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




NAI
      is a
      British Columbia company incorporated on November 13, 1998. We acquired NAI
      on
      January 15, 2000 from Ms. Tin 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 #510-1199 West Pender
      Street, Vancouver, B.C., V6E 2R1.




-32-




(“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.




At
      December 31, 2005, we had a total of 13 employees, all full-time employees,
      of
      which 12 are employees of NAI. Our President and CEO is the only employee
      directly hired by CWN. All employees are located in the Vancouver office in
      Canada.




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




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




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




**D.**  **Property,
      Plants and Equipment**





We
      do not
      own any real property. As of December 31, 2005 we owned $11,822 in computer
      equipment and computer software and $4,945 in office furniture. We have a lease
      agreement for the Vancouver office (Address: #510 - 1199 West Pender Street,
      Vancouver, British Columbia, Canada V6E 2R1). There is no lease for the Toronto
      office because we rent a mailbox facility at the Toronto Board of
      Trade.




**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.




-33-




**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, 2005, 2004 and 2003, 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, 2005, 2004 and 2003




For
      the
      year ended December 31, 2005, net loss was $72,491 on revenue of $533,521.
      Overall, revenues in 2005 increased 9% from 2004 levels, while the net loss
      was
      reduced from $95,946 in 2004 to $72,491. For the year ended December 31, 2004,
      net loss was $95,946 on revenue of $487,710. Overall, revenues in 2004 increased
      from 2003 levels, while the net loss was further narrowed from $163,313 in
      2003
      to $95,946. The overall market improved in 2004 and 2005.





**Year
        ended December 31, 2005 compared to year ended December 31,
        2004**





*Revenues*





The
        improvement in general economic conditions, coupled with the increase of
        publicly listed companies from China are the main factors for the increase
        in
        our overall revenues for our Banner
        Advertisements, Chinese Webpage Design and Hosting, Online Marketing Service,
        Miscellaneous IR/PR Service, and Investment Seminars. These areas are our
        core
        services, from which we derived most of our revenues and revenue growth in
        2005.





*Revenue
        Growth Trend*




With
        the
        improvement of overall economic markets and increase in the revenues from
        our
        core services, we engaged in fewer non-core services projects, from which
        we did
        not derive as much revenues. For instance, we discontinued projects in the
        area
        of Computer Consultation Services, a non-core service area which we placed
        emphasis on in the past and relied more heavily upon for additional revenue
        in
        2002. Another non -core
        service area that we discontinued in 2005 is our Company Review & Company
        Newsletter, which did not produce the revenues that we had originally expected.





We
        expect
        that as we place more focus on our core services and less on our non-core
        services, as described above, our overall revenues will increase. Primarily,
        we
        intend to concentrate our resources on expanding our sales force with respect
        to
        our Banner Advertisements 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 Advertisements from
        $9,377 for the year ended December 31, 2004 (“fiscal 2004”) to $18,457 for the
        year ended December 31, 2005 (“fiscal 2005”) is primarily due to the doubling of
        the number of customers from three to six. As in 2004, the CWN website has
        become more established, thus portal traffic increased substantially as
        a
        result of increased number of website sponsors and direct-link arrangements
        we
        have with companies worldwide. There
        has
        been a larger viewership of our website and more attraction has been drawn
        to
        our banner advertisement, which in turn has increased the number of customers
        who want to place advertisements on our website.





*Company
        Review, Company Newsletter, Translation*




During
        fiscal 2005, we cancelled services provided under Company Review and Company
        Newsletter for NAI client companies but maintained our Translation services.
        The
        service cancellation was due to unsuccessful results and negative feedback
        from
        clients during that time. The termination of services resulted in decreasing
        revenue from $21,593 in fiscal 2004 to $10,973 in fiscal 2005. Revenues
        generated from our Translation services have remained constant in each year.





*Chinese
        Webpage Design, Hosting and Maintenance*




-34-




The
        revenues for Chinese Webpage Design - Hosting and Maintenance increased from
        $47,898 in fiscal 2004 to $89,937 in fiscal 2005. This is
        primarily due to the growth of Chinese micro-site development with client
        companies and the increase in the number of Chinese companies seeking to
        be
        publicly listed. Our customer base increased by 45%, and we kept our prices
        constant which resulted in an almost two-fold increase in revenue.





*Computer
        Consultation Services*




Revenues
        from Computer Consultation services were $0 in fiscal 2005, as compared to
        $13,898 in fiscal 2004 as we ceased to offer these services.





*CWN
        Membership, Online Services*




CWN
        Membership & Online service revenues decreased from $15,279 from fiscal 2004
        to $11,475 in fiscal 2005. This is
        due to the management decision in 2005 to open up 80% of our paid content
        to the
        free subscribers to increase our portal traffic. As
        a
        result of this content reduction, we decreased the monthly paid subscription fee from $14.95 to $ 9.95.
        Subsequently ,
        our
        portal traffic began
        and continues to rise but our overall revenues
        from subscription fees
        dropped due to the reduced individual subscription price. There has been
        no
        significant decrease in the use of the online services we provide to
        subscribers.





*Miscellaneous
        IR/PR services*




Revenues
        from IR/PR services increased 34% from $126,436 in fiscal 2004 to $169,866
        in
        fiscal 2005. The revenue growth is due to some 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
        revenue decrease in our Investment Guides business from $63,591 in fiscal
        2004
        to $42,880 in fiscal 2005 is primarily due to the declined production of
        our
        Mining Investment Guides. In the year 2005, the mining sector shrunk
        substantially and the number of companies involved in the Mining Investment
        Guides, as well as sponsorship, decreased. This resulted in a 33% reduction
        in
        revenues. Revenue from these Mining Investment Guides fluctuates depending
        upon
        market movements. In time, CWN will attempt to stabilize revenues from the
        Mining Investment Guides by diversifying into sectors other than
        mining.





*Other
        Revenues*




Other
        revenue items, such as Online Marketing Services and Investment Seminars,
        were
        $189,933 in fiscal 2005 as compared to $189,638 in fiscal 2004. The number
        of
        customers remains approximately the same for our online marketing services
        in
        the fiscal 2005 when compared to the fiscal 2004. Revenues generated from
        the
        Investment Seminars continued to be stable due to only a marginal change
        in
        number of customers, sponsors, and exhibitors.





*Launch
        of RZTO*




At
        the
        end of 2005, we started to plan for the launch of a new product called RZTO
        to
        target the small to mid-size private companies in China that are interested
        in
        looking for information about listing and accessing North American capital
        market. This new platform is tentatively scheduled to launch in late fiscal
        2006
        based on a membership model where companies can have access to professional
        service providers in North America, information regarding finance rules and
        regulations in North America and self-testing mechanisms about their company’s
        status. Furthermore, financial service providers can also become members
        in
        order to have access to Chinese private companies and other business
        opportunities in China.





*Expenses*




Total
        expenses for fiscal 2005 were $617,886, up from $570,006 in fiscal 2004.
        Expenses related to travel and entertainment, office and miscellaneous increased
        with increasing revenue and activities. The
        increase in our operating expenses is principally from an increase in our
        accounting and legal fees and employee salaries and benefits, while our
        advertising and promotion cost decreased slightly. 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 staff for our Banner Advertising Services and our promotional efforts
        for our IP/PR Services, we expect that it will be these specific expenses
        which
        will have the largest increase.




-35-





*Advertising
        and Promotion*




Our
        advertising and promotional expenses decreased from $86,199 in fiscal 2004
        to
        $50,813 in fiscal 2005 mainly due to the increased awareness of CWN in our
        market and our reduced reliance on promotion to produce this awareness. We
        transformed from an emerging stage company in fiscal 2004 to an established
        business in fiscal 2005, and as a result we require relatively less advertising
        to be done via external media, such
        as
        advertisements in newspapers, magazines, mail-out pamphlets,
        etc.





*Accounting
        and Legal*




Our
        accounting and legal fees increased from $24,989 in fiscal 2004 to $56,504
        in
        fiscal 2005. The increase resulted from the change of our auditors in fiscal
        2005 from Moore Stephens Ellis Foster Ltd. to Ernst & Young LLP, and the
        increase in professional fees for audit and legal services work performed
        for
        us.





*Printing*




Printing
        expenses decreased to $10,086 for fiscal 2005 from $18,276 for fiscal 2004
        primarily associated with the reduction in advertisement and promotion expenses.
        Our printing expenses declined due to the lower demand for advertisements,
        thus
        lowering our printing requirements for pamphlets and magazines.





*Salaries
        and benefits*




Salaries
        and benefit expenses increased to $292,930 in fiscal 2005 from $261,491 in
        fiscal 2004 primarily due to the increase in the number of staff and
        compensation payments.





*Travel
        and entertainment*




Travel
        expenses increased to $57,043 in fiscal 2005 from $42,227 in fiscal 2004
        due to
        business development activity expansion in Asia for the purpose of increasing
        our business overseas, and management making numerous associated trips.





*Other
        Expenses*




Other
        expenses, such as consulting fees, office and miscellaneous, rent and operating
        costs, increased from $136,824 in fiscal 2004 to $150,510 in fiscal 2005.
        This
        is due to the increased levels of business development activity and greater
        expenditures on information technology.





*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 loss derived from currency exchange
        transactions. We generally deposit our excess cash in interest bearing or
        mutual
        fund accounts. For fiscal 2004, we suffered a significant loss from currency
        exchange transactions; while in fiscal 2005 our liquid investments had generated
        major growth in the mutual fund sector. These factors resulted in the other
        income line in our income statement improving to $6,335 in 2005 as compared
        to
        an other loss of $13,650 in fiscal 2004.





-36-


**Year
        ended December 31, 2004 compared to year ended December 31,
        2003**





*Revenues*




During fiscal
        2004, we increased revenues to $487,710 from $247,293 during the year ended
        December 31, 2003 (“fiscal 2003”). The significant changes are as
        follows:





*Company
        Review, Company Newsletter, Translation*




During
        fiscal 2004, we earned revenue of $21,593 compared to $3,610 in fiscal 2003.
        The
        increase in revenue was due to the adoption of company review and newsletter
        services for client companies delivered by NAI prior to fiscal 2003. The
        increase in revenue was due to a substantial increase in clients purchasing
        our
        services and an increase in our package prices.





*Chinese
        Webpage Design, Hosting and Maintenance*




Revenue
        growth from the fiscal 2003 of $11,849 to $47,898 in fiscal 2004 is due to
        our
        package model of webpage design, hosting and maintenance services to customers
        becoming more established and well-rounded to fit our clients’ needs. As the
        model became mature and as the demand for Chinese translated websites increased,
        the expansion of our client base contributed to our revenue growth and the
        increase in the number of monthly clients.





*Computer
        Consultation Services*




Revenue
        for fiscal 2004 was $13,898 as compared to $8,798 for fiscal 2003. The increase
        was a result of computer consultation services provided by CWN to a limited
        number of exclusive clients. These services were in existence prior to the
        establishment of CWN, in which we setup for our exclusive clients computer
        programs for marketing purposes. During the fiscal year of 2004, the number
        of
        our exclusive clients remained the same while the frequency they purchased
        this
        service from us increased.





*Online
        Marketing Service*




During
        fiscal 2004, online marketing service revenue decreased to $13,881 from $36,460
        in fiscal 2003 due to the phasing out of our online marketing service program.
        The overall performance of the program did not meet our expectations, and
        the
        number of clients involved in the program decreased.





*Miscellaneous
        IR/PR Services*




During
        the fiscal 2004, we generated revenue of $126,436 as compared to $57,052
        in
        fiscal 2003 from our Miscellaneous IR/PR Services. The increase was due to
        the
        change in programs and price package for client companies. We involved larger
        programs with more exclusive price packages in the beginning of fiscal 2004
        because we foresaw the trend of the growing mining sector. As a result, the
        number of customers which signed up for longer contract terms increased.





*Investment
        Seminars*




During
        fiscal 2004, we incurred revenue of $175,442 as compared to $84,172 in fiscal
        2003. The increase of $91,270 was mainly due to the success of our conference
        program transformation from a one day event to a two day event. For example,
        our
        Toronto conference was modified to have Day 1 and Day 2 events. The addition
        of
        the Day 1 event was aimed at inviting Chinese private companies to attend
        and
        learn the fundamentals of listing and accessing capital in North America.
        It is
        typically difficult for small growth companies to raise funding domestically
        in
        China, and more Chinese companies are coming to North America for listings
        on
        stock exchanges. We see this increase in small growth companies coming from
        China to North America for financing as a growing trend and we expect the
        continued growth for our Day 1 event in the next few years. The Day 2 event
        represents the existing regular exhibition and presentation type of financial
        conference that we have continued from previous years.





*Financial
        Newspaper*




For
        fiscal 2004, we did not earn any revenue as compared to $12,939 in fiscal
        2003.
        The decrease was due to the termination of our financial newspaper in May,
        2003.
        The development of the newsletter was not successful and it had been
        unprofitable since inception. Accordingly, we decided to stop production.




-37-





*Investment
        Guides*




Revenue
        from investment guides increased from $9,698 in fiscal 2003 to $63,591 in
        fiscal
        2004. Our revenue generated from our investment guides mainly focus on mining
        companies and the mining sector. In fiscal 2004, the mining sector was doing
        extremely well and our number of client companies increased substantially
        from
        fiscal 2003.





*Other
        Revenues*




Other
        revenue items, such as Banner Advertisement and CWN Membership & Online
        Services, were $24,971 in fiscal 2004 as compared to $22,715 in fiscal 2003.
        Our
        financial portal business continued to
        generate steady revenue from Banner Advertisement and CWN Membership &
Online Services.





*Expenses*





Total
        expenses for fiscal 2004 were $570,006, up from $412,670 in fiscal 2003.
        Expenses related to advertising and promotion, travel and entertainment,
        office
        and miscellaneous increased with correlated increases in sales activities
        and
        revenue. The addition of the expenditure item ‘Interest expense on long term
        debt’ was due to the private placement financing that was completed in May of
        year 2004 by issuing convertible debentures. The increase in our operating
        expenses was principally from an increase in our advertising and promotional
        costs, as well as accounting and legal fees. Our overall expenses increased
        due
        to substantial growth in our business model in fiscal 2004.





*Advertising
        and Promotion*




Advertising
        and promotional expenses increased from $41,050 in fiscal 2003 to $86,199
        in
        fiscal 2004. The increase was due to the increase in the cost of promotional
        materials printed for advertising and marketing purposes. Also, during fiscal
        2004, CWN was in the process of expansion, and accordingly, we incurred greater
        promotional advertising of our business to retail clients.





*Accounting
        and Legal*




Our
        accounting and legal fees increased from $12,112 in fiscal 2003 to $24,989
        in
        fiscal 2004. The increase was due to increased counseling costs from our
        lawyers
        and accounting consultants, and the increased level of work performed by
        them
        associated with public disclosure compliance.





*Interest
        Expense on Long-Term Debt*




Interest
        expense on long term debt increased from nil in fiscal 2003 to $4,398 in
        fiscal
        2004. The increase was from the completion of a private placement financing
        consisting of convertible debt in fiscal 2004.





*Printing*




Printing
        expenses increased from $12,682 in fiscal 2003 to $18,276 in fiscal 2004.
        The
        increase was primarily associated with the increase in our advertisement
        and
        promotion expenses. As the increase in our sales and promotional activities
        increased, the amount of print materials used increased.





*Provision
        for Bad and Doubtful Debts*




For
        fiscal 2004, we recognized a bad debt provision of $26,458 as compared to
        $4,467
        for fiscal 2003, which is in line with our corresponding revenue
        increase.





*Salaries
        and benefits*




Salaries
        and benefit expenses increased to $261,491 in fiscal 2004 from $225,880 in
        fiscal 2003 primarily due to the increase in number of our staff and increase
        in
        compensation payments to them.





*Travel
        and Entertainment*




Travel
        expenses increased to $42,227 in fiscal 2004 from $18,640 in fiscal 2003
        due to
        our business development activities in Toronto and Asia. Our largest conference
        took place in Toronto, Canada which required multiple trips for our management
        team with respect to arranging the conference and engaging in related business
        development activities.





*Other
        Expenses*




-38-




Other
        expenses, such as consulting fees, office and miscellaneous, rents and operating
        costs, increased from $97,839 in fiscal 2003 to $105,968 in fiscal 2004.
        This
        was due to the increase in expenses associated with an overall increase in
        sales
        during fiscal 2004.





*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 loss derived from currency exchange
        transactions. We generally deposit our excess cash in interest bearing or
        mutual
        fund accounts. For fiscal 2004, we incurred a $15,988 loss from currency
        exchange transactions, while in fiscal 2003, we incurred a $227 loss. We
        also
        earned $1,691 in interest and sundry income in fiscal 2003 as compared with
        $376
        in fiscal 2004. These factors resulted in other income of $2,064 in fiscal
        2003
        as compared to an other loss of $13,650 in fiscal 2004.





For
                  year ending December 31,2005
              
              2004**Revenues**Banner
                  Advertisement
              
              $
              18,457
              
              $
              9,377Company
                  Review,
                  Company Newsletter
              
              
              10,973
              
              
              21,593Chinese
                  Webpage Design, Hosting and Maintenance
                Computer
                  Consultation Service
              
              
              89,937
                0
              
              
              47,898
                13,898CWN
                  Membership, Online Service
              
              
              11,475
              
              
              15,279Online
                  Marketing Service
              
              
              13,107
              
              
              13,881Miscellaneous
                  IR/PR Service
              
              
              169,866
              
              
              126,436Investment
                  Seminar
              
              
              174,881
              
              
              175,442Financial
                  Newspaper
                Investment
                  Guides
              
              
              0
                42,880
              
              
              0
                63,591Interest
                  and others
              
              
              1,945
              
              
              315**TOTAL
                  REVENUE**
              
              **$**
              **533,521**
              
              **$**
              **487,710****Expenses**Advertising
                  and promotion
              
              $
              50,813
              
              $
              86,199Accounting
                  and legal
              
              
              56,504
              
              
              24,989Consulting
              
              
              24,000
              
              
              29,354Depreciation
              
              
              8,084
              
              
              6,784Non-cash
                  compensation changesFinancial
                  charges - related partiesInterest
                  (imputed) - related parties
              
              
              1,154
              
              
              1,107Interest
                  expense on long term debt
              
              
              7,500
              
              
              4,398Office
                  and miscellaneous
              
              
              30,959
              
              
              23,347Printing
              
              
              10,086
              
              
              18,276Provision
                  for Bad and doubtful debts
              
              
              31,447
              
              
              26,458Rent
                  and operating
              
              
              35,182
              
              
              34,383Salaries
                  and benefits
              
              
              292,930
              
              
              261,491Telephone
              
              
              12,184
              
              
              10,993Travel
                  and entertainment
              
              
              57,043
              
              
              42,227**TOTAL
                  OPERATING EXPENSES**
              
              **$**
              **617,886**
              
              **$**
              **570,006**Other
                  Income (Loss)
              
              
              6,335
              
              
              (13,650
              )**NET
                  LOSS**
              
              **$**
              **(78,030**
              **)**
              **$**
              **(95,946**
              **)**







-39-




**Currency**




We
      maintain our accounting records in U.S. dollars. The reporting and functional
      currency of NAI is the Canadian dollar 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.




We
      do not
      believe foreign currency fluctuations have a material impact on our financial
      condition. We do not engage in foreign currency hedge transactions.




***Inflation***




We
      do not
      believe that inflation will have a material adverse effect on our financial
      condition. Traditionally, the PRC and Canada have not been countries that
      experienced a substantial increase in inflation.




**B.**  **Liquidity
      and Capital Resources**




As
        of
        December 31, 2005, we had cash and cash equivalents of $231,630. As of that
        date, we did not have any outstanding debt or line of credit. In the short
        term,
        we believe that our current cash, cash equivalents, and cash flow are sufficient
        to satisfy our cash requirements for the next 12 months. 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. 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. However, in the long term, we may require additional
        cash resources to assist with our business expansion or other future
        developments. If our current operational and current shareholder sources
        are
        insufficient to satisfy our cash requirements, we anticipate that additional
        funds will need to be raised to further our expansion into Asia and for
        acquisition purposes. We intend to raise such additional funds through private
        placements of common shares. However, if we are unable to raise additional
        capital through a private placement offering, we will likely seek debt financing
        from lending institutions or private lenders. This capital raise would likely
        be
        tied to a specific transaction such as the acquisition of a target so at
        this
        time, and until we can identify such a target, we do not need to raise capital.
        There were no private placements or acquisitions completed in the year 2003
        or
        2005. In 2004, we completed a private placement financing of $150,000 by
        issuing
        three year 5% convertible debentures.




**C.**  **Research
      and Development, Patents and Licenses**




We
      are
      not engaged in research and development activities and have no
      patents.




**D.**  **Trend
      Information**




A
      few
      favourable industry and economic trends may in the future have a 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. 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.




-40-




**F.**  **Tabular
      Disclosure of Contractual Obligations**





*Payments
                due by period*Contractual
                Obligations
            
            Total
            
            Less
                than 1 year
            
            1-3
                years
            
            3-5
                years
            
            More
                than 5 yearsLong-Term
                Debt ObligationsCapital
                (Finance) Lease Obligations
            
            $
            150,000
            
            
            
            
            $
            150,000
                (private placement
            )Operating
                Lease Obligations
            
            $
            41,022
            
            $
            24,570
                (office lease
            )
            
            
            
            $
            487
                (car lease
            )Purchase
                ObligationsOther
                Long-Term LiabilitiesTotal
            
            $
            191,022
            
            $
            24,570
            
            $
            150,000
            
            $
            487
            
            $
            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, 2005, 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, 2005**





**Name**
              
              **Age**
              
              **Office
                  Held Since**
              
              **Position
                  with CWN****Joe
                  K.F. Tai**
              
              42
              
              January
                  12, 2000
              
              President,
                  Chief Executive Officer and Director**Kelvin
                  Szeto**(1)
              
              45
              
              June
                  1, 2006
              
              Chief
                  Operating Officer & Chief Financial Officer**Chi
                  Cheong Liu**(2)
              
              46
              
              January
                  12, 2000
              
              Treasurer
                  and Director**Chi
                  Kong Liu**(2)
              
              45
              
              January
                  12, 2000
              
              Director**Andy
                  S.W. Lam**(3)
              
              56
              
              March
                  8, 2004
              
              Director**Gilbert
                  Chan**
              
              30
              
              December
                  1, 2004
              
              Secretary






-41-





(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 familyrelationships
                  between our directors and
                  executives.




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




**NAI**





**-
      Directors and Officers as of December 31, 2005**





**Name**
            
            **Age**
            
            **Position
                with NAI****Kelvin
                Szeto**
            
            45
            
            President,
                Secretary and Director**Gilbert
                Chan**
            
            30
            
            Vice
                President - Marketing and Project Development**Lixin
                Yang**(1)
            
            35
            
            Vice
                President - Editing





(1)
            Mr.
                Lixin Yang was appointed as Vice-President - Editing in March
                2004.





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 for the past six years has also served as President 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 jewellery wholesaler.
      In addition, Mr. Liu is also a venture capitalist specializing in biotechnology
      and technology investments.





***Andy
      S. W. Lam***




-42-




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 seat on the board of a number
      of
      public listed companies 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.




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.






***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.





***Lixin
      Yang***




Mr.
      Yang
      was promoted to the position of VP - Editing of NAI on March 1, 2004. Mr. Yang
      has been part of the Editing Department since June 2002. He is responsible
      for
      content development and overseeing the Editing Department. Mr. Yang has over
      ten
      years working experience in commercial banking, investment banking and
      investment consulting fields in China and holds a MBA from Vrije University
      Brussels, Belgium.




**B.**  Compensation




The
      following table provides information regarding the direct or indirect
      remuneration paid during the 2005 fiscal year to the directors and officers
      of
      CWN, including our subsidiaries, in office as of December 31,
      2005:


Annual
                    CompensationName
                    and Principal Position
                
                Year
                
                Salary
                
                Bonus)
                
                Other
                    Annual CompensationJoe
                    K. F. Tai
                  *President,
                    Chief Executive Officer and Director*
                
                2005
                
                Nil(1)
                    (2)
                
                Nil
                
                NilChi
                    Cheong Liu
                  *Secretary/
                    Treasurer and Director*
                
                2005
                
                Nil(1)
                
                Nil
                
                NilChi
                    Kong Liu(2)
                  *Director*
                
                2005
                
                Nil(2)
                
                Nil
                
                NilAndy
                    S.W. Lam
                  *Director*
                
                2005
                
                Nil
                
                Nil
                
                NilKelvin
                    Szeto
                  *Chief
                    Operating Officer and Chief Financial Officer of CWN;*(3)
                  *President,
                    Secretary and Director of NAI*
                
                2005
                
                $28,400
                
                Nil
                
                NilGilbert
                    Chan
                  *VP
                    Marketing and Project Development of NAI*
                
                2005
                
                $40,200
                
                Nil
                
                NilLixin
                    Yang
                  *VP
                    Editing of NAI*
                
                2005
                
                $29,738
                
                Nil
                
                Nil







-43-






(1)
              We
                  have a consulting agreement with Goldpac Investment Partners Ltd.
                  for 2004
                  and 2005 for $24,000 per year. Goldpac Investment Partners Ltd.
                  is a
                  company owned by Chi Cheong Liu, one of our directors and shareholders
                  and
                  Ms. Tim Yee Lau who is the spouse of Joe Tai, our President and
                  Chief
                  Executive Officer)




(2)
              Joe
                  Tai and Chi Cheong Liu are shareholders and do not receive
                  salaries.




(3)
              Kelvin
                  Szeto was appointed as Chief Operating Officer and Chief Financial
                  Officer
                  of CWN on June 1, 2006.




**Pension
      Plans**




We
      do not
      provide retirement 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. We have entered
      into consulting agreements with Goldpac Investments Ltd and Goldpac Investment
      Partners Ltd., which are partially owned and wholly owned respectively by Mr.
      Chi Cheong Liu, one of our directors. Currently, we only have one consulting
      agreement with Goldpac Investment Partners Ltd. in force.




As
      of
      December 31, 2005, we did not have either an Audit Committee or a Compensation
      Committee.




**D.**  **Employees**




As
      of
      December 31, 2005, we had a total of 13 employees, all full-time, of which
      12
      are employees of NAI. This is an increase from a total of 12 employees at
      December 31, 2004. Our President and Chief Executive Officer is the only
      employee hired by CWN. All 13 employees are located in our Vancouver office.
      There had been as many as 3 employees based in Toronto; however, since the
      end
      of 2002, we no longer have employees there. There are currently no full-time
      employees in Hong Kong.




**E.**  **Share
      Ownership of Directors and Senior Management**




The
      following table sets forth certain information regarding the ownership of our
      common shares as of May 31, 2006 by each of the directors and members of senior
      management in office as of May 31, 2006. The percentage owned is based on
      8,200,000 shares outstanding as of May 31, 2006.




**As
      at May 31, 2006**




-44-




**Name
                  and Title**
              
              **Share
                  Ownership**
              
              **%
                  Share Ownership**Joe
                  Tai(1)
                *President,
                  CEO and Director*
              
              
              250,000
              
              
              3.05
              %Ken
                  Cai(2)
                *Director*
              
              
              0
              
              
              —Chi
                  Cheong Liu
                *Director*
              
              
              1,730,000
              
              
              21.10
              %Chi
                  Kong Liu
                *Director*
              
              
              570,000
              
              
              6.95
              %Lixin
                  Yang(3)
                *Vice
                  President, Editing of NAI*
              
              
              10,000
              
              
              0.12
              %Michael
                  Hui
                *Vice
                  President, Website Development of NAI*
              
              
              0
              
              
              —Kelvin
                  Szeto
                *Chief
                  Operating Officer and Chief Financial Officer of CWN;*(4)
                *President,
                  Secretary and Director of NAI*
              
              
              150,000
              
              
              1.83
              %Gilbert
                  Chan
                *Vice
                  President, Marketing and Project Development of NAI*
              
              
              50,000
              
              
              0.61
              %Andy
                  S.W. Lam(5)
                *Director*
              
              
              0
              
              
              —***All
                  Directors and Senior Management as a group***
              
              
              ***2,760,000***
              
              
              ***3.66***
              ***%***





(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.
                Cai resigned as a Director in January
                2004.


(3)
            Mr.
                Lixin Yang was appointed Vice President, Editing in March
                2004.


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


(5)
              Mr.
                  Andy S. W. Lam was appointed Director in March
                  2004.




**Stock
      Options**




We
      have
      not established a stock option plan for our directors, senior officers or
      employees, and we have not granted stock options, warrants, or other similar
      rights to any of our directors, senior management or employees. However, we
      may
      establish a stock option plan in the future.




**ITEM
      7.**  **MAJOR
      SHAREHOLDERS AND RELATED PARTY TRANSACTIONS**




**A.**  **Major
      shareholders**




The
      following table sets forth, as at June 30, 2006, 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 8,200,000 shares outstanding as
      of
      June 30, 2006.




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. We have no options or warrants outstanding.




**As
      at May 31, 2006**




-45-




**Name
                of Shareholder**
            
            **Number
                of**
              **Common
                Shares**
            
            **Percentage
                of Shares**
              **Beneficially
                Owned (%)**Chi
                Cheong Liu
            
            
            1,730,000
            
            
            21.10
            %Goldpac
                Investment Partners Ltd.
            
            
            1,000,000
            
            
            12.20
            %Datacom
                Venture Limited (1)
            
            
            600,000
            
            
            7.32
            %Chi
                Kong Liu
            
            
            580,000
            
            
            7.07
            %Wai
                Yee Lai
            
            
            580,000
            
            
            7.07
            %Fong
                Szeto
            
            
            570,000
            
            
            6.95
            %Monica
                Law
            
            
            570,000
            
            
            6.95
            %Wai
                Mun Yeung
            
            
            420,000
            
            
            5.12
            %




(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.




During
      the past three fiscal years, there has not been any significant change in
      percentage ownership by any of the above major shareholders.




As
      far as
      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.




**United
      States Shareholders**




As
      of
      December 31, 2005, we had two registered shareholders with addresses in the
      United States, holding less than 0.25% of the outstanding common shares.




**B.**  **Related
      party transactions**




In
      2005,
      we paid $24,000 in consulting fees to Goldpac Investment Partners Ltd., a
      company owned Chi Cheong Liu, one of our directors and a holder of 21.1% of
      our
      outstanding shares. Goldpac Investment Partners Ltd. is a holder of 12.2% of
      our
      outstanding shares. In 2004, we paid $24,000 in consulting fees to Goldpac
      Investment Partners Ltd.




In
      2005,
      we renewed our consulting agreement with Goldpac Investment Partners Ltd. for
      the period January 1 - December 31, 2005. Goldpac Investment Partners will
      provide consulting advice in relation to corporate development, market
      development and technical support for $2,000 per month, or $24,000 for the
      year




In
      2003,
      we accrued imputed interest of $1,039 at an interest rate of 4% per annum on
      the
      amounts due to Goldpac Investment Partners Ltd. and Mr. Douglas Liu, both
      stockholders of the company. This interest is for a shareholder loan from NAI
      Interactive Ltd when it was purchased by CWN in January 2000. **** There
      is
      no immediate obligation for the repayment of the loan. $879 was accrued at
      an
      interest rate of 4% per annum in the 2002 fiscal year.




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.




**C.**  **Interests
      of Experts and Counsel**




This
        Report on Form 20-F/A 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.




-46-




**ITEM
      8.**  **FINANCIAL
      INFORMATION**




**A.**  **Financial
      Statements**




This
        Annual Report on Form 20-F/A includes our audited consolidated financial
        statements for the years ended December 31, 2005, 2004 and 2003, including
        our
        consolidated balance sheets as of December 31, 2005 and 2004, and the
        consolidated statements of loss and deficit for the years ended December
        31,
        2005, 2004 and 2003, and the notes to those statements and the auditor’s reports
        thereon.




**B.**  **Significant
      Changes**




There
      have been no significant changes in our business in the period from December
      31,
      2005 until the date of this document.




**ITEM
      9.**  **THE
      OFFER AND LISTING**




**A.**  **Offer
      and Listing Details**




Our
      common shares are not listed for trading on any market or exchange; accordingly,
      we cannot provide historical high and low market prices for our common
      shares.




**B.**  **Plan
      of Distribution**




This
        Report on Form 20-F/A 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 not listed for trading on any market or exchange.




**D.**  **Selling
      Shareholders**




This
        Report on Form 20-F/A 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/A 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/A 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.




-47-




**ITEM
      10.**  **ADDITIONAL
      INFORMATION**




**A.**  **Share
      Capital**




This
        Report on Form 20-F/A 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/A Registration Statement (SEC file no. 000-33051) was filed
        on July
        3,
        2002. Such discussion is hereby incorporated by reference into this Annual
        Report.




**C.**  **Material
      Contracts**




On
      June
      24, 2003, we entered into a office lease agreement for our current offices
      located at Suite 510 - 1199 West Pender Street, Vancouver, British Columbia,
      Canada V6E 2R1. The term of the lease is for 3 years from August 2003. Monthly
      payments are CAD$3,683.17 plus applicable taxes.




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
      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 2005.




**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 the *Investment
      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.




-48-




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.




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.




-49-




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;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; and4.
            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
      ninety 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
      centres 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 centres 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.




-50-




**F.**  **Dividends
      and Paying Agents**




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




**G.**  **Statement
      by Experts**




This
        Report on Form 20-F/A 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/A may be inspected
        at
        our principal office located at Suite 510 - 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 Judiciary
        Plaza, Room 1024, 450 Fifth Street N.W., 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**




This
      item
      is not applicable.




**ITEM
      11.** **QUANTITATIVE
      AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK**




This
      item
      is not applicable.




**ITEM
      12.**  **DESCRIPTION
      OF SECURITIES OTHER THAN EQUITY SECURITIES**




This
        Report on Form 20-F/A 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 instalment, 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.




-51-




**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.




**ITEM
      15.**  **CONTROLS
      AND PROCEDURES**





Disclosure
        Controls and Procedures .
        In our
        initial Annual Report on Form 20-F for the year ended December 31, 2005,
        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, 2005, 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 out principal
        executive officer and principal financial officer, as appropriate to allow
        timely decisions regarding required disclosure.





On
        August
        30, 2006, we received a letter from the Staff of the SEC commenting on our
        initial Annual Report on Form 20-F for the year ended December 31, 2005.
        As a
        part of our responses to these comments, we determined that we were required
        to
        restate our Consolidated Financial Statements for the year ended December
        31,
        2005 to reflect the provision of doubtful accounts as an adjustment to reconcile
        net loss to net cash flows from operating activities and to recognize the
        receipt of cash related to an acquisition as a source of cash from investing
        activities. In connection with the restatement, our management, including
        our
        Chief Executive Officer and our Chief Financial Officer, re-evaluated and
        identified a material weakness in our internal controls over financial
        reporting, namely, that we misclassified the line items described above.
        Solely
        as a result of this material weakness, management has concluded that our
        disclosure controls and procedures were not effective as of December 31,
        2005.





We
        are
        confident that as of the date of this filing we have fully remediated the
        material weakness in our internal controls over financial reporting by (i)
        engaging an outside accountant as a consultant to supplement our technical
        resources and to provide technical support and guidance on accounting issues
        within the Company, and (ii) implementing 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.





In
        connection with this Amendment No. 1 to our Annual Report on Form 20-F for
        the
        year ended December 31, 2005, our Chief Executive Officer and Chief Financial
        Officer have evaluated our disclosure controls and procedures currently in
        effect as a result of the implementation of the remedial actions discussed
        above, and have concluded that, as of this date, our disclosure controls
        and
        procedures are effective.




Changes
      in Internal Control Over Financial Reporting




During
        the year ended December 31, 2005, other than the remedial actions discussed
        above which relate to the filing of this Amendment No. 1 of our Annual Report
        on
        Form 20-F, there have not been any significant changes in our internal control
        over financial reporting that have materially affected, or are reasonably
        likely
        to materially affect, our internal control over financial reporting.





-52-




**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.




**ITEM
      16C.**  **PRINCIPAL
      ACCOUNTANT FEES AND SERVICES**




The
      following table sets forth the aggregate fees billed by our auditors, Ernst
      & Young in 2005 and Moore Stephens Ellis Foster Ltd. In 2004, for
      professional services rendered to us during the past two fiscal years ended
      December 31, 2005 and 2004. 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, 2005
            
            Year
                Ended
              December
                31, 2004Audit
                Fees (1)
            
            $
            25,000
            
            $
            10,000Audit-Related
                Fees (2)
            
            $
            0
            
            $
            0Tax
                Fees (3)
            
            $
            0
            
            $
            0All
                Other Fees
            
            $
            0
            
            $
            0Totals
            
            $
            25,000
            
            $
            10,000





(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**




Not
      applicable.




**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 2005.




-53-




**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 Accountants
              F-1Auditor’s
                  Report from Moore Stephens Ellis Foster Ltd.
              F-2Year-end
                  Consolidated Balance Sheet as of December 31, 2005 and
                  2004
              F-3Year-end
                  Consolidated Statements of Stockholders’ Equity for the years ended
                  December 31, 2005 and 2004
              F-4
                  to F-5Year-end
                  Consolidated Statements of Operations for the years ended December
                  31,
                  2005 and 2004
              F-6Year-end
                  Consolidated Statements of Cash Flows for the years ended December
                  31,
                  2005 and 2004
              F-7Notes
                  to Consolidated Financial Statements
              F-8
                  to F-20




**ITEM
      18.**  **FINANCIAL
      STATEMENTS**




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




**ITEM
      19.**  **EXHIBITS**





**Exhibit
                No.**
            
            **Document
                Description**1
            (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, 2004






-54-






**Exhibit
                  No.**
              
              **Document
                  Description**4(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, 20058
              **
              List
                  of Subsidiaries11.1
              **
              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 193413.1
              **
              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/A (file no. 000-33051) filed on July 3,
                  2002.





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








-55-


SIGNATURES





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





Date:  December
        22, 2006


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











Consolidated
      Financial Statements





**Chineseworldnet.com
      Inc. & Subsidiaries**


(Expressed
      in U.S. Dollars)


December
      31, 2005 and 2004










**REPORT
      OF INDEPENDENT REGISTERED**


**PUBLIC
      ACCOUNTING FIRM**





To
        The
        Board of Directors and Stockholders of


**Chineseworldnet.com
      Inc. & Subsidiaries**





We
        have
        audited the accompanying consolidated balance sheet of **Chineseworldnet.com
        Inc. & Subsidiaries** (“the
        Company”) as at December 31, 2005, and the related consolidated statements of
        stockholders’ (deficiency) equity, operations and cash flows for the year ended.
        These financial statements are the responsibility of the Company’s management.
        Our responsibility is to express an opinion on these consolidated financial
        statements based on our audits. The consolidated financial statements as
        of
        December 31, 2004 were audited by other auditors and whose report dated March
        28, 2005 expressed an unqualified opinion on those
        statements.





We
      conducted our audit in accordance with 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 circumstances, 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 disclosures in the financial statements, assessing
      the accounting principles used and significant estimates made by management,
      and
      evaluating the overall financial statement presentation. We believe that our
      audit provide 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, 2005 and the results of its operations and its cash flows for
      the
      year then ended in conformity with U.S. generally accepted accounting
      principles.





As
        described in Note 10, the accompanying consolidated financial statements
        of the
        Company as at December 31, 2005 and for the year then ended have been restated.
        We therefore withdraw our previous report dated June 9, 2006.





Vancouver
      Canada,


June
        9,
        2006 (except as to Notes 10 and 11 which are as of November 30,
        2006)





Ernst & Young LLP/s/*Ernst
                  & Young LLP*Chartered
                  Accountants


F-1




MOORE
        STEPHENS ELLIS FOSTER LTD.


CHARTERED
        ACCOUNTANTS





1650
        West
        1 st Avenue


Vancouver,
        BC Canada V6J 1G1


Telephone:
        (604) 734-1112 Facsimile: (604) 714-5916


Website:
        www.ellisfoster.com







**REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**





**TO
        THE BOARD OF DIRECTORS AND STOCKHOLDERS OF**





CHINESEWORLDNET.COM
        INC & SUBSIDIARIES









We
        have
        audited the consolidated balance sheet of **Chineseworldnet.com
        Inc. & Subsidiaries** (“the
        Company”) as at December 31, 2004 and the related consolidated statements of
        stockholders’ equity, operations and cash flows for each of the two years in the
        period ended December 31, 2004. These financial statements are the
        responsibility of the Company’s management. Our responsibility is to express an
        opinion on these consolidated financial statements based on our
        audits.





We
        conducted our audits in accordance with 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. An audit includes examining,
        on a
        test basis, evidence supporting the amounts and disclosures in the financial
        statements. An audit also includes assessing the accounting principles used
        and
        significant estimates made by management, as well as evaluating the overall
        financial statement presentation. We believe that our audits provide a
        reasonable basis for our opinion.





In
        our
        opinion, these consolidated financial statements present fairly, in all material
        respects, the financial position of the Company as at December 31, 2004 and
        the
        results of its operations and its cash flows for each of the two years in
        the
        period ended December 31, 2004 in conformity with generally accepted accounting
        principles in the United States of America.


Vancouver,
                    Canada
                *“MOORE
                    STEPHENS ELLIS FOSTER LTD”*March
                    28, 2005
                Chartered
                    Accountants





**1.**  **M** **S** *An
          independently owned and operated member of Moore Stephens North America,
          Inc.
          Members in principal cities throughout North America. Moore Stephens North
          America, Inc. is a member of Moore Stephens International Limited, members
          in
          principal cities throughout the world.*




F-2




**Chineseworldnet.com
      Inc. & Subsidiaries**




**CONSOLIDATED
      BALANCE SHEETS**




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




**2005**
              
              **2004**$
              
              $**ASSETS****Current
                  assets**Cash
                  and cash equivalents
              
              
              **226,219**
              
              
              209,770Available
                  for sales securities*[note
                  3]*
              
              
              **1**
              
              
              1,559Accounts
                  receivable,net
                  of allowance for doubtful accounts of $30,204 (2004- $52,368)*[note
                  11]*
              
              
              **58,748**
              
              
              34,844Share
                  subscription receivable
              
              
              **—**
              
              
              63,907Prepaid
                  expenses and deposits
              
              
              **10,318**
              
              
              4,122**Total
                  current assets**
              
              
              **295,286**
              
              
              314,202Equipment*[note
                  5]*
              
              
              **16,767**
              
              
              22,421**Total
                  assets**
              
              
              **312,053**
              
              
              336,623**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY****Current
                  liabilities**Accounts
                  payable and accrued liabilities
              
              
              **80,624**
              
              
              55,761Due
                  to related parties, non-interest bearing*[note
                  8]*
              
              
              **77,005**
              
              
              51,835Deferred
                  revenue
              
              
              **12,840**
              
              
              12,170**Total
                  current liabilities**
              
              
              **170,469**
              
              
              119,766Convertible
                  debentures*[note
                  6]*
              
              
              **150,000**
              
              
              150,000**Total
                  liabilities**
              
              
              **320,469**
              
              
              269,766Commitments*[note
                  9]***Stockholders’
                  equity**Common
                  stockAuthorized100,000,000,000
                  common shares with a par valueof
                  $0.001 per shareIssued
                  and outstanding8,200,000
                  common shares
              
              
              **8,200**
              
              
              8,200Additional
                  paid-in capital
              
              
              **1,195,168**
              
              
              1,194,166Accumulated
                  other comprehensive income
              
              
              **21,202**
              
              
              19,447Deficit
              
              
              **(1,232,986**
              **)**
              
              (1,154,956
              )**Total
                  stockholders’ (deficiency) equity**
              
              
              **(8,416**
              **)**
              
              66,857**Total
                  liabilities and stockholders’ equity**
              
              
              **312,053**
              
              
              336,623





*See
      accompanying notes*




F-3


**Chineseworldnet.com
      Inc. & Subsidiaries**




**CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ (DEFICIENCY) EQUITY**





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




**Accumulated****Additional**
            
            **Comprehensive**
            
            
            
            **other**
            
            **Total****Common
                stock**
            
            **paid-in**
            
            **income**
            
            
            
            **comprehensive**
            
            **stockholders’****Shares**
            
            **Amount**
            
            **capital**
            
            **(loss)**
            
            **(Deficit)**
            
            **income
                (loss)**
            
            **equity**#
            
            $
            
            $
            
            $
            
            $
            
            $
            
            $Balance,
                December 31, 2002
            
            
            8,000,000
            
            
            8,000
            
            
            1,125,826
            
            
            —
            
            
            (895,697
            )
            
            6,357
            
            
            244,486Imputed
                interest on amounts due to related parties
            
            
            —
            
            
            —
            
            
            1,039
            
            
            —
            
            
            —
            
            
            —
            
            
            1,039Components
                of comprehensive income (loss):Net
                loss for the year
            
            
            —
            
            
            —
            
            
            —
            
            
            (163,313
            )
            
            (163,313
            )
            
            —
            
            
            (163,313
            )Foreign
                currency translation adjustment
            
            
            —
            
            
            —
            
            
            —
            
            
            8,216
            
            
            —
            
            
            8,216
            
            
            8,216Change
                in net unrealized loss on available for sale securities
            
            
            —
            
            
            —
            
            
            —
            
            
            (322
            )
            
            —
            
            
            (322
            )
            
            (322
            )Comprehensive
                income (loss)
            
            
            
            
            
            
            
            
            
            
            
            (155,419
            )Balance,
                December 31, 2003
            
            
            8,000,000
            
            
            8,000
            
            
            1,126,865
            
            
            
            
            
            (1,059,010
            )
            
            14,251
            
            
            90,106




F-4


**Chineseworldnet.com
      Inc. & Subsidiaries**




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





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





**Accumulated****Additional**
            
            **Comprehensive**
            
            
            
            **other**
            
            **Total****Common
                stock**
            
            **paid-in**
            
            **income**
            
            
            
            **comprehensive**
            
            **stockholders’****Shares**
            
            **Amount**
            
            **capital**
            
            **(loss)**
            
            **(Deficit)**
            
            **income
                (loss)**
            
            **equity**#
            
            $
            
            $
            
            $
            
            $
            
            $
            
            $Balance,
                December 31, 2003
            
            
            8,000,000
            
            
            8,000
            
            
            1,126,865
            
            
            
            
            
            (1,059,010
            )
            
            14,251
            
            
            90,106Issue
                200,000 shares to Technology City for cash*[note
                4]*
            
            
            200,000
            
            
            200
            
            
            66,194
            
            
            —
            
            
            —
            
            
            —
            
            
            66,394Imputed
                interest on amounts due to related parties
            
            
            —
            
            
            —
            
            
            1,107
            
            
            —
            
            
            —
            
            
            —
            
            
            1,107Components
                of comprehensive income (loss):Net
                loss for the year
            
            
            —
            
            
            —
            
            
            —
            
            
            (95,946
            )
            
            (95,946
            )
            
            —
            
            
            (95,946
            )Foreign
                currency translation adjustment
            
            
            —
            
            
            —
            
            
            —
            
            
            5,266
            
            
            —
            
            
            5,266
            
            
            5,266Change
                in net unrealized loss on available for sale securities
            
            
            —
            
            
            —
            
            
            —
            
            
            (70
            )
            
            —
            
            
            (70
            )
            
            (70
            )Comprehensive
                income (loss)
            
            
            
            
            
            
            
            
            
            
            
            (90,750
            )Balance,
                December 31, 2004
            
            
            8,200,000
            
            
            8,200
            
            
            1,194,166
            
            
            
            
            
            (1,154,956
            )
            
            19,447
            
            
            66,857Imputed
                interest on amounts due to related parties
            
            
            —
            
            
            —
            
            
            1,002
            
            
            —
            
            
            —
            
            
            —
            
            
            1,002Components
                of comprehensive income (loss):Net
                loss for the year
            
            
            —
            
            
            —
            
            
            —
            
            
            (78,030
            )
            
            (78,030
            )
            
            —
            
            
            (78,030
            )Foreign
                currency translation adjustment
            
            
            —
            
            
            —
            
            
            —
            
            
            1,804
            
            
            —
            
            
            1,804
            
            
            1,804Change
                in net unrealized loss on available for sale securities
            
            
            —
            
            
            —
            
            
            —
            
            
            (49
            )
            
            —
            
            
            (49
            )
            
            (49
            )Comprehensive
                income (loss)
            
            
            
            
            
            
            
            
            
            
            
            (76,275
            )Balance,
                December 31, 2005
            
            
            8,200,000
            
            
            8,200
            
            
            1,195,168
            
            
            
            
            
            (1,232,986
            )
            
            21,202
            
            
            (8,416
            )





*See
      accompanying notes*




F-5


**Chineseworldnet.com
      Inc. & Subsidiaries**




**CONSOLIDATED
      STATEMENTS OF OPERATIONS**




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




**2005**
            
            **2004**
            
            **2003**$
            
            $
            
            $**Revenue**
            
            
            **533,521**
            
            
            487,710
            
            
            247,293**Expenses**Advertising
                and promotion
            
            
            **50,813**
            
            
            86,199
            
            
            41,050Audit
                and legal
            
            
            **56,504**
            
            
            24,989
            
            
            12,112Consulting
                fees
            
            
            **24,000**
            
            
            29,354
            
            
            24,000Depreciation
            
            
            **8,084**
            
            
            6,784
            
            
            7,640Interest
                (non-cash imputed interest -related
                parties)
            
            
            **1,154**
            
            
            1,107
            
            
            1,039Interest
                expense on long-term debt
            
            
            **7,500**
            
            
            4,398
            
            
            —Office
                and miscellaneous
            
            
            **30,959**
            
            
            23,347
            
            
            30,321Printing
            
            
            **10,086**
            
            
            18,276
            
            
            12,682Provision
                for bad and doubtful debts
            
            
            **31,447**
            
            
            26,458
            
            
            4,467Rent
                and operating
            
            
            **35,182**
            
            
            34,383
            
            
            28,696Salaries
                and benefits
            
            
            **292,930**
            
            
            261,491
            
            
            225,880Telephone
            
            
            **12,184**
            
            
            10,993
            
            
            6,143Travel
                and entertainment
            
            
            **57,043**
            
            
            42,227
            
            
            18,640**617,886**
            
            
            570,006
            
            
            412,670**Other
                income (loss)**Interest
                and sundry income
            
            
            **5,763**
            
            
            376
            
            
            1,691Foreign
                exchange (loss) gain and other losses
            
            
            **31**
            
            
            (15,988
            )
            
            (227
            )Gain
                (loss) on sale of available for sale securities
            
            
            **541**
            
            
            (252
            )
            
            600Recovery
                (writedown) of investment
            
            
            **—**
            
            
            2,214
            
            
            —Other
                income (loss), net
            
            
            **6,335**
            
            
            (13,650
            )
            
            2,064**Net
                loss for the year**
            
            
            **(78,030**
            **)**
            
            (95,946
            )
            
            (163,313
            )**Loss
                per share - basic and diluted**
            
            
            **(0.01**
            **)**
            
            (0.01
            )
            
            (0.02
            )**Weighted
                average number of common shares****outstanding
                - basic and diluted**
            
            
            **8,200,000**
            
            
            8,004,384
            
            
            8,000,000





*See
      accompanying notes*


F-6


**Chineseworldnet.com
      Inc. & Subsidiaries**




**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**




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




**2005**
              
              **2004**
              
              **2003**$
              
              $
              
              $(Restated
                  -Note
                  10)**OPERATING
                  ACTIVITIES**Net
                  loss for the year
              
              
              **(78,030**
              **)**
              
              (95,946
              )
              
              (163,313
              )Adjustment
                  to reconcile net loss to net cashused
                  in operating activities:Provision
                  for bad and doubtful debts
              
              
              **31,447**
              
              
              26,458
              
              
              4,467Depreciation
              
              
              **8,084**
              
              
              6,784
              
              
              7,640Interest
                  (imputed) - related parties
              
              
              **1,154**
              
              
              1,107
              
              
              1,039Interest
                  accrued on loan from non-related party
              
              
              **—**
              
              
              1,466
              
              
              —Loss
                  (gain) on sale of available for sale securities
              
              
              **(488**
              **)**
              
              252
              
              
              (536
              )Writedown
                  (recovery) of investment
              
              
              **—**
              
              
              (2,214
              )
              
              —Changes
                  in non-cash working capital items:Accounts
                  receivable
              
              
              **(45,199**
              **)**
              
              (25,910
              )
              
              2,052Prepaid
                  expenses and deposits
              
              
              **(5,952**
              **)**
              
              719
              
              
              4,488Accounts
                  payable and accrued liabilities
              
              
              **22,482**
              
              
              16,918
              
              
              (10,606
              )Deferred
                  revenue
              
              
              **223**
              
              
              (17,054
              )
              
              672**Net
                  cash provided by (used in) operating activities**
              
              
              **(66,279**
              **)**
              
              (87,420
              )
              
              (154,097
              )**FINANCING
                  ACTIVITIES**Advances
                  from related parties
              
              
              **24,347**
              
              
              (27,068
              )
              
              124,000Advances
                  from non-related parties
              
              
              **—**
              
              
              55,659
              
              
              —**Net
                  cash provided by financing activities**
              
              
              **24,347**
              
              
              28,591
              
              
              124,000**INVESTING
                  ACTIVITIES**Cash
                  acquired from Technology City HoldingsLimited
                  (Note 4)
              
              
              **69,282**
              
              
              —
              
              
              —Purchase
                  of equipment
              
              
              **(1,884**
              **)**
              
              (4,356
              )
              
              (1,467
              )Proceeds
                  on disposal of available for sale securities
              
              
              **1,536**
              
              
              —
              
              
              1,509**Net
                  cash provided by (used in) investing activities**
              
              
              **68,934**
              
              
              (4,356
              )
              
              42Foreign
                  exchange loss (gain) oncash
                  held in foreign currency
              
              
              **(10,553**
              **)**
              
              7,606
              
              
              8,465**Increase
                  (decrease) in cash and cash equivalents**
              
              
              **16,449**
              
              
              (55,579
              )
              
              (21,590
              )Cash
                  and cash equivalents, beginning of year
              
              
              **209,770**
              
              
              265,349
              
              
              286,939**Cash
                  and cash equivalents, end of year**
              
              
              **226,219**
              
              
              209,770
              
              
              265,349**Supplemental
                  disclosure of cash flow information**Cash
                  paid for interest, net of interest capitalized
              
              
              **—**
              
              
              —
              
              
              —Cash
                  paid for income taxes
              
              
              **—**
              
              
              —
              
              
              —





*See
      accompanying notes*




F-7




**Chineseworldnet.com
      Inc. & Subsidiaries**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




December
                31, 2005 and 2004
            (Expressed
                in U.S. Dollars)




**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.





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, financial newspapers, 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.





**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. 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,
      allowance for doubtful accounts and asset impairment. 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 differ from those estimates.


F-8


**Chineseworldnet.com
      Inc. & Subsidiaries**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




December
                31, 2005 and 2004
            (Expressed
                in U.S. Dollars)




**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
            %





**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, 2005, the company held $167,639 [2004 - $187,743] in cash
      equivalents.





**Foreign
      currency translations**





The
      Company, NAI and CWN HK maintain their accounting records in their functional
      currencies of U.S. dollars, Canadian dollars and HK dollars, 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 for the period end for assets and liabilities, and
      revenues and expenses are translated using the exchange rate in effect at that
      date. At the period end, monetary assets and liabilities are re-evaluated into
      the functional currency by using the exchange rate in effect at that date.
      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.




F-9


**Chineseworldnet.com
      Inc. & Subsidiaries**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




December
                31, 2005 and 2004
            (Expressed
                in U.S. Dollars)




**2.
      SIGNIFICANT ACCOUNTING POLICIES (cont’d.)**





**Advertising
      expenses**





The
      Company expensed advertising costs as incurred. Advertising expenses for the
      years ended December 31, 2005, 2004 and 2003 were $50,813, $86,199 and $41,050
      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 judgement, they cannot be determined with precision. Changes
      in
      assumptions can significantly affect estimated fair values.




F-10


**Chineseworldnet.com
      Inc. & Subsidiaries**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




December
                31, 2005 and 2004
            (Expressed
                in U.S. Dollars)




**2.
      SIGNIFICANT ACCOUNTING POLICIES (cont’d.)**





The
      carrying value of cash and cash equivalents, 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
      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.





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
      fluctuation between the Canadian dollar and the U.S. dollar.





**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.




F-11


**Chineseworldnet.com
      Inc. & Subsidiaries**





**NOTE
      TO CONSOLIDATED FINANCIAL STATEMENTS**




December
                31, 2005 and 2004
            (Expressed
                in U.S. Dollars)




**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 financial newspaper, 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. The Company charges each presenting company a flat fee
                  in advance
                  of the respective seminar or conference, and the revenue generated
                  is
                  deferred upon receipt and recognized at the end of the month that
                  the
                  seminars and conference take
                  place.





2.
              Fees
                  from membership subscriptions. Membership subscription fees that
                  have been
                  paid are accounted for as deferred revenue upon receipt. These
                  revenues
                  are recognized on a straight-line basis over the term of each respective
                  subscription.





Fees
        described above that are received in advance and require continuing performance
        obligations are deferred and recognized on a straight-line basis as services
        are
        provided.





**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 did not grant any stock options during the fiscal years 2005, 2004
      and
      2003. The adoption of SFAS 123 does not have an impact on the Company’s
      consolidated financial statements.


F-12


**Chineseworldnet.com
      Inc. & Subsidiaries**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




December
                31, 2005 and 2004
            (Expressed
                in U.S. Dollars)




**2.
      SIGNIFICANT ACCOUNTING POLICIES (cont’d.)**





**Loss
      per share**





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
      loss per share is equal to basic loss per share because there is no potential
      dilutive securities, other than the convertible debentures.





**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.





**New
      accounting pronouncements**





In
      May 2005, the FASB issued SFAS 154, “Accounting Changes and Error
      Corrections” (“SFAS 154”) which replaces Accounting Principles Board
      Opinions 20 “Accounting Changes” and SFAS 3, “Reporting Accounting Changes in
      Interim Financial Statements—An Amendment of APB Opinion No. 28.” SFAS 154
      provides guidance on the accounting for and reporting of accounting changes
      and
      error corrections. It requires retrospective application for changes in
      accounting principle and the correction of errors unless it is impractical
      to
      determine either the period-specific effects or the cumulative effect of the
      change. SFAS 154 is effective for fiscal years beginning after December 15,
      2005. The adoption of this standard will not have a material impact on the
      Company’s consolidated financial statements.




F-13


**Chineseworldnet.com
      Inc. & Subsidiaries**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




December
                31, 2005 and 2004
            (Expressed
                in U.S. Dollars)




**2.
      SIGNIFICANT ACCOUNTING POLICIES (cont’d.)**





In
      December 2004, the FASB issued SFAS No. 123(R), “Accounting for Stock-Based
      Compensation”. SFAS 123(R) establishes standards for the accounting for
      transactions in which an entity exchanges its equity instruments for goods
      or
      services. This Statement focuses primarily on accounting for transactions in
      which an entity obtains employee services in share-based payment transactions.
      SFAS 123(R) requires that the fair value of such equity instruments be
      recognized as expense in the historical financial statements as services are
      performed. SFAS 123(R) requires all share-based payments to be recognized in
      the
      financial statements based on their fair values using either a
      modified-prospective or modified-retrospective transition method. Prior to
      SFAS
      123(R), only certain proforma disclosures of fair value were required. SFAS
      123(R) shall be effective for the Company as of the beginning of the first
      interim or annual reporting period that begins on or after December 15, 2005.
      The adoption of FASB No. 123(R) will not have a material impact on the Company’s
      consolidated financial statements.





**Comparative
      figures**





Certain
      of the comparative figures have been reclassified to conform with the
      presentation adopted in the current period.




**3.
      AVAILABLE FOR SALE SECURITIES**





Available
      for sale securities consists of marketable securities and are summarized as
      follows:





**Gross**
            
            **Gross**
            
            **Accumulated****unrealized**
            
            **unrealized**
            
            **unrealized**
            
            **Market****Cost**
            
            **gains**
            
            **losses**
            
            **losses**
            
            **value**$
            
            $
            
            $
            
            $
            
            $December
                31, 2003
            
            
            4,756
            
            
            698
            
            
            (1,619
            )
            
            (921
            )
            
            3,835Change
                during the year
            
            
            (2,422
            )
            
            24
            
            
            (94
            )
            
            (70
            )
            
            (2,276
            )December
                31, 2004
            
            
            2,334
            
            
            722
            
            
            (1,713
            )
            
            (991
            )
            
            1,559Change
                during the year
            
            
            (1,509
            )
            
            —
            
            
            (49
            )
            
            (49
            )
            
            (1,558
            )December
                31, 2005
            
            
            825
            
            
            722
            
            
            (1,762
            )
            
            (1,040
            )
            
            1




F-14


**Chineseworldnet.com
      Inc. & Subsidiaries**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




December
                31, 2005 and 2004
            (Expressed
                in U.S. Dollars)




**4.
      INVESTMENT IN TECHNOLOGY CITY HOLDINGS LIMITED**





In
      a
      prior fiscal year, the Company had subscribed to 100,000 shares with a par
      value
      of $1 per share for $100,000 in Technology City Holdings Limited (“TCHL”), a
      private company which was incorporated in the British Virgin Islands operating
      a
      business in providing financial information on listed securities in Hong Kong
      through internet and other peripheral media such as paging and television.
      The
      100,000 shares subscribed by the Company represent 4.167% of the total issued
      share capital of the private company. In fiscal year 2002, the Company assessed
      that the recovery of the investment in relations to the future projected cash
      flows from the investment was doubtful and there was no market available to
      liquidate the above noted subscribed shares. Therefore, pursuant to guidance
      established in Statement of Financial Accounting Standards ** (“SFAS”)
      No. 144, *Accounting
      for the Impairment or Disposal of Long-lived Assets* ,
      the
      investment was written down to a nominal value of $1, in 2002.





In
      fiscal
      year 2004, the Company purchased the remaining asset in TCHL in exchange for
      200,000 common shares of the Company for US$69,282 (HK$540,000). A recovery
      of
      $2,887 was recognized for the Company’s portion of ownership in the investment
      and the balance of $66,194 was recorded in the paid in capital.





Investment
      in TCHL was 100% written off in fiscal 2004 and as a result no balances are
      shown on the balance sheet.





**5.
      EQUIPMENT**




**Accumulated**
            
            **Net
                book****Cost**
            
            **amortization**
            
            **value**$
            
            $
            
            $**2005**Furniture
                and fixtures
            
            
            **17,380**
            
            
            **12,435**
            
            
            **4,945**Computer
                equipment
            
            
            **60,003**
            
            
            **48,181**
            
            
            **11,822****77,383**
            
            
            **60,616**
            
            
            **16,767****2004**Furniture
                and fixtures
            
            
            16,900
            
            
            9,669
            
            
            7,231Computer
                equipment
            
            
            56,122
            
            
            40,932
            
            
            15,19073,022
            
            
            50,601
            
            
            22,421




F-15


**Chineseworldnet.com
      Inc. & Subsidiaries**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




December
                31, 2005 and 2004
            (Expressed
                in U.S. Dollars)




**6.
      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.




F-16


**Chineseworldnet.com
      Inc. & Subsidiaries**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




December
                31, 2005 and 2004
            (Expressed
                in U.S. Dollars)




**7.
      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:





**2005**
            
            **2004**
            
            **2003**$
            
            $
            
            $Net
                loss for the year
            
            
            **(78,030**
            **)**
            
            (95,946
            )
            
            (163,313
            )Statutory
                Canadian corporate tax rate
            
            
            **0**
            **%**
            
            0
            %
            
            0
            %Anticipated
                tax recovery
            
            
            **—**
            
            
            —
            
            
            —Change
                in tax rates resulting from:Impact
                of foreign exchange movement
            
            
            **(8,644**
            **)**
            
            (34,925
            )
            
            (15,548
            )Impact
                of BC rate change
            
            
            **10,127**
            
            
            —
            
            
            —Foreign
                tax rate differential
            
            
            **(3,931**
            **)**
            
            (7,525
            )
            
            (42,459
            )Others
            
            
            **417**
            
            
            37,432
            
            
            66,062Benefit
                of losses not recognized
            
            
            **2,031**
            
            
            5,018
            
            
            (8,055
            )**—**
            
            
            —
            
            
            —




The
                significant components of the Company’s future tax assets are as
                follows:




**2005**
            
            
            **2004**
            
            
            **2003**$
            
            
            $
            
            
            $Non-capital
                loss carryforwards
            
            
            **228,282**
            
            
            229,105
            
            
            192,807Equipment
                and furniture
            
            
            **14,243**
            
            
            11,389
            
            
            10,264**242,525**
            
            
            240,494
            
            
            203,071Valuation
                allowance
            
            
            **(242,525**
            **)**
            
            (240,494
            )
            
            (203,071
            )**—**
            
            
            —
            
            
            —




F-17


**Chineseworldnet.com
      Inc. & Subsidiaries**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




December
                31, 2005 and 2004
            (Expressed
                in U.S. Dollars)




**7.
      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 $169,947 expire as
      follows:





$2007
            
            
            16,4962008
            
            
            203,5152009
            
            
            296,8932010
            
            
            135,1092014
            
            
            14,2942015
            
            
            3,140669,447




**8.
      RELATED PARTY TRANSACTIONS**





[a]
            In
                2005, the Company paid $24,000 [2004 - $24,000, 2003 - $24,000] in
                consulting fees to a company related to a director of the Company.





[b]
            As
                at December 31, 2005, the Company has non interest bearing advances
                from a
                stockholder and director of $77,005 [2004 - $51,835]. In 2005, the
                Company
                recorded imputed interest of $1,154 [2004 - $1,107, 2003 - $1,039]
                at an
                interest rate of 4% per annum on these
                advances.





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.





**9.
      COMMITMENTS**





The
      Company has entered into operating leases for automobile and office space.
      Minimum future rental payments under these leases are as follows:





$2006
            
            
            32,4392007
            
            
            6,2242008
            
            
            6,2242009
            
            
            4,149110,349


F-18


**Chineseworldnet.com
        Inc. & Subsidiaries**




**NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**




December
                  31, 2005 and 2004
              (Expressed
                  in U.S. Dollars)




**10.
        RESTATEMENT**




The
        Company has restated its consolidated statements of cash flows for the year
        ended December 31, 2005. The financial statements have been restated for
        the
        following:




·
              To
                  reflect the provision for doubtful accounts as an adjustment to
                  reconcile
                  net loss to net cash flows from operating activities.




·
              To
                  reclassify the receipt of cash from the acquisition of Technology
                  City
                  Holdings Limited as a source of cash from investing activities.




The
        net
        impact of the restatements for the year ended December 31, 2005 are a decrease
        in the cash flows from operating activities of $69,282 and an increase in
        the
        cash flows from investing activities of $69,282. There was no impact to the
        cash
        flows from operating activities or cash flows from investing activities for
        the
        years ended December 31, 2004 and 2003.




The
        restatement had no impact on the financial position of the Company as at
        December 31, 2005 nor on the results of its operation for each of the years
        ended December 31, 2005, 2004, and 2003.




*Statement
        of Cash Flows for the Year Ended December 31, 2005*




For
                  the Year Ended December 31, 2005As
                  Reported
              
              Adjustment
              
              As
                  Restated$
              
              $
              
              $**Operating
                  Activities**Provision
                  for bad and doubtful debts
              
              
              —
              
              
              31,447
              
              
              31,447Changes
                  in operating assets and liabilities:Accounts
                  receivable
              
              
              55,530
              
              
              (100,729
              )
              
              (45,199
              )**Investing
                  Activities**Cash
                  acquired from Technology City Holdings Limited
              
              
              —
              
              
              69,282
              
              
              69,282




F-19


**11.
        ACCOUNTS RECEIVABLE**




During
        the year the Company incurred an expense for bad and doubtful accounts
        receivable in the amount of $31,447 (2004 - $26,458; 2003 - $4,467) and recorded
        uncollectible accounts receivable written off and foreign exchange differences
        of $53,611 (2004 - $2,230; 2003 - $9,567).





**12.
        COMPARATIVE FIGURES**





Certain
        of the 2004 and 2003 comparative figures have been reclassified to conform
        with
        the financial statement presentation adopted for 2005.


F-20