# EDGAR Filing Document

**Accession Number:** 0000934796
**File Stem:** 0001214659-23-000089
**Filing Date:** 2023-1
**Character Count:** 110434
**Document Hash:** 423910e952afa9a5dfb2a64deb5fcc61
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001214659-23-000089.hdr.sgml**: 20230104

**ACCESSION NUMBER**: 0001214659-23-000089

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 70

**CONFORMED PERIOD OF REPORT**: 20220930

**FILED AS OF DATE**: 20230104

**DATE AS OF CHANGE**: 20230104

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** NETWORK CN INC
- **CENTRAL INDEX KEY:** 0000934796
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-ADVERTISING [7310]
- **IRS NUMBER:** 113177042
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-30264
- **FILM NUMBER:** 23505071

**BUSINESS ADDRESS:**
- **STREET 1:** UNIT 705B, 7TH FL, NEW EAST OCEAN CENTRE
- **STREET 2:** 9 SCIENCE MUSEUM ROAD, TST
- **CITY:** KOWLOON
- **STATE:** K3
- **ZIP:** 00000
- **BUSINESS PHONE:** 852 9625 0097

**MAIL ADDRESS:**
- **STREET 1:** UNIT 705B, 7TH FL, NEW EAST OCEAN CENTRE
- **STREET 2:** 9 SCIENCE MUSEUM ROAD, TST
- **CITY:** KOWLOON
- **STATE:** K3
- **ZIP:** 00000

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** TEDA TRAVEL GROUP INC
- **DATE OF NAME CHANGE:** 20040420

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** ACOLA CORP
- **DATE OF NAME CHANGE:** 20011026

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** MEGACHAIN COM LTD
- **DATE OF NAME CHANGE:** 19990827

?xml version="1.0" encoding="utf-8"?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-Q**

(Mark One)

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

For the quarterly period ended: September 30, 2022

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

For the transition period from <u>____________</u> to <u>_____________</u>

Commission File Number: 000-30264

**<u>NETWORK CN INC.</u>**

(Exact Name of Registrant as Specified in Its Charter)

---

| | |
|:---|:---|
| **<u>Delaware</u>** | **<u>90-0370486</u>** |
| (State or other jurisdiction of incorporation<br> or organization) | (I.R.S. Employer Identification No.) |

---

Unit 705B, 7th Floor, New East Ocean Centre, 9 Science Museum Road, TST, KLN, Hong Kong

(Address of principal executive offices, Zip Code)

**<u>(852) 9625-0097</u>**

(Registrant's telephone number, including area code)

<u>___________________________________________________</u>

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| Title of each class | Trading Symbol(s) | Name of each exchange on which <br> registered |
| Common Stock, $0.001 par value | NWCN | OTC market |

---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes □ No ⌧

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No □

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer □ Accelerated filer □ <br> Non-accelerated filer □ Smaller reporting company ⌧ <br> Emerging growth company □

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. □

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes □ No ⌧

The number of shares outstanding of each of the issuer's classes of common stock, as of December 30, 2022 is as follows:

---

| | |
|:---|:---|
| Class of Securities | Shares Outstanding |
| Common Stock, $0.001 par value | 20749018 |

---

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
| **PART I** | **PART I** | **PART I** |
| **FINANCIAL INFORMATION** | **FINANCIAL INFORMATION** | **FINANCIAL INFORMATION** |
| Item 1. | [Consolidated Financial Statements (Unaudited)](#p1i1) | 3 |
| Item 2. | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#p1i2) | 21 |
| Item 3. | [Quantitative and Qualitative Disclosures About Market Risk](#p1i3) | 26 |
| Item 4. | [Controls and Procedures](#p1i4) | 26 |
| **PART II** | **PART II** | **PART II** |
| **OTHER INFORMATION** | **OTHER INFORMATION** | **OTHER INFORMATION** |
| Item 1. | [Legal Proceedings](#p2i1) | 27 |
| Item 1A. | [Risk Factors](#p2i1a) | 27 |
| Item 2. | [Unregistered Sales of Equity Securities and Use of Proceeds](#p2i2) | 27 |
| Item 3. | [Defaults Upon Senior Securities](#p2i3) | 27 |
| Item 4. | [Mine Safety Disclosures](#p2i4) | 27 |
| Item 5. | [Other Information](#p2i5) | 28 |
| Item 6. | [Exhibits](#p2i6) | 28 |

---

[**Table of Contents**](#toc)

**PART I**

**FINANCIAL INFORMATION**

---

| | |
|:---|:---|
| **ITEM 1.** | **CONSOLIDATED FINANCIAL STATEMENTS** |

---

**NETWORK CN INC.** 

**CONSOLIDATED FINANCIAL STATEMENTS**

---

| | |
|:---|:---|
|  | **Page** |
| [Consolidated Balance Sheets as of September 30, 2022 (Unaudited) and as of December 31, 2021](#bs) | 4 |
| [Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended <br> September 30, 2022 and 2021 (Unaudited)](#sop) | 5 |
| [Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 <br> (Unaudited)](#cf) | 7 |
| [Notes to Unaudited Consolidated Financial Statements](#notes) | 8 |

---

[**Table of Contents**](#toc)

**NETWORK CN INC.** 

**CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **As of**<br> **September 30, 2022** | **As of** <br> **December 31, 2021** |
| **<u>ASSETS</u>** | **(Unaudited)** | |
| **Current Assets** | | |
| Cash | $2657 | $21677 |
| Accounts receivables | 22966 |  |
| Prepaid expenses and other current assets, net | 15385 | 19828 |
| &nbsp;&nbsp;&nbsp;Total Current Assets | 41008 | 41505 |
| **Equipment, Net** | 2770 | 2631 |
| **Right-of-use assets** | 66069 | 75522 |
| **TOTAL ASSETS** | $109847 | $119658 |
| &nbsp;&nbsp;&nbsp;&nbsp;**<u>LIABILITIES AND STOCKHOLDERS' DEFICIT</u>** |  |  |
| **Current Liabilities** |  |  |
| Accounts payable, accrued expenses and other payables | $2498835 | $2597181 |
| Lease liabilities | 55852 | 44960 |
| Short term loan | 1137616 | 2973211 |
| &nbsp;&nbsp;&nbsp;Total Current Liabilities | 3692303 | 5615352 |
| **Non-Current Liabilities** |  |  |
| Noncurrent portion of lease liabilities | 2216 | 30561 |
| 1% convertible promissory note due 2025, net | 645000 | 645000 |
| 1% convertible promissory note due 2027, net | 2154398 | - |
| &nbsp;&nbsp;&nbsp;Total Non- Current Liabilities | 2801614 | 675561 |
| **TOTAL LIABILITIES** | 6493917 | 6290913 |
| **COMMITMENTS AND CONTINGENCIES** |  |  |
| **STOCKHOLDERS' DEFICIT** |  |  |
| Preferred stock, $0.001 par value, 5,000,000 shares authorized <br>None issued and outstanding |  |  |
| Common stock, $0.001 par value, 100,000,000,000 shares <br> authorize Shares issued and outstanding: 20,749,018 and <br> 20,749,018 as of September 30, 2022 and December 31, 2021, <br> respectively | 20749 | 20749 |
| Additional paid-in capital | 130983370 | 130559370 |
| Accumulated deficit | (139092392) | (138455814) |
| Accumulated other comprehensive income | 1704203 | 1704440 |
| **TOTAL STOCKHOLDERS' DEFICIT** | (6384070) | (6171255) |
| **TOTAL LIABILITIES AND STOCKHOLDERS' <br> DEFICIT** | $109847 | $119658 |

---

The accompanying notes are an integral part of the consolidated financial statements.

[**Table of Contents**](#toc)

**NETWORK CN INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **For the Three Months Ended** | **For the Three Months Ended** | **For the Nine Months Ended** | **For the Nine Months Ended** |
|  |  | **September 30, <br> 2022** | **September 30, <br> 2021** | **September 30, <br> 2022** | **September 30, <br> 2021** |
| **REVENUES** |  | | | | |
| Advertising services |  | $22534 | $- | $22534 | $- |
| &nbsp;&nbsp;&nbsp;&nbsp;Revenue, Net |  | 22534 | - | 22534 | - |
| **COST OF REVENUES** |  |  |  |  |  |
| Cost of advertising services |  | (17237) | - | (17237) | - |
|  |  | (17237) | - | (17237) | - |
| **GROSS PROFIT** |  | 5297 |  | 5297 |  |
| **OPERATING EXPENSES** |  |  |  |  |  |
| General and administrative |  | (111755) | (72702) | (397146) | (209859) |
| Stock based compensation for services |  | - | - | (24000) | - |
| &nbsp;&nbsp;&nbsp;Total Operating Expenses |  | (111755) | (72702) | (421146) | (209859) |
| **LOSS FROM OPERATIONS** |  | (106458) | (72702) | (415849) | (209859) |
| **OTHER INCOME** |  |  |  |  |  |
| Interest income |  |  |  | 2 |  |
| Government Grant |  | 718 | - | 2769 | - |
| &nbsp;&nbsp;&nbsp;Total Other Income |  | 718 | - | 2771 | - |
| **INTEREST AND OTHER DEBT-RELATED <br> EXPENSES** |  |  |  |  |  |
| Amortization of convertible promissory note |  | (17862) |  | (54398) |  |
| Interest expense |  | (53214) | (129971) | (169102) | (389878) |
| &nbsp;&nbsp;&nbsp;Total Interest and Other Debt–Related Expenses |  | (71076) | (129971) | (223500) | (389878) |
| **NET LOSS BEFORE INCOME TAXES** |  | (176816) | (202673) | (636578) | (599737) |
| Income taxes |  | - | - | - | - |
| **NET LOSS** |  | $(176816) | $(202673) | $(636578) | $(599737) |
| **OTHER COMPREHENSIVE INCOME/(LOSS)** |  |  |  |  |  |
| Foreign currency translation gain/(loss) |  | (237) | 60 | (237) | 248 |
| &nbsp;&nbsp;&nbsp;Total other comprehensive loss |  | (237) | 60 | (237) | 248 |
| **COMPREHENSIVE LOSS** |  | $(177053) | $(202613) | $(636815) | $(599489) |
| **NET LOSS PER COMMON SHARE – BASIC <br> AND DILUTED** | 12.0 | $(0.01) | $(0.02) | $(0.03) | $(0.07) |
| **WEIGHTED AVERAGE SHARES <br> OUTSTANDING – BASIC AND DILUTED** | 12.0 | 21018190 | 8774263 | 21018190 | 8774263 |

---

The accompanying notes are an integral part of the consolidated financial statements.

[**Table of Contents**](#toc)

**NETWORK CN INC.**

**CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)**

**FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | | | | |
|  | **Share** | **Amount** | **Additional Paid-<br> In**<br>**Capital** | **Accumulated**<br>**Deficit** | **Accumulated <br> Other**<br> **Comprehensive**<br>**Income** |<br>**Total** |
| Balance as of January 1, 2021 | 8774263 | $8773 | $124209441 | $(133695748) | $1704239 | $(7773295) |
| Translation adjustment |  |  |  |  | (17) | (17) |
| Net loss for the period | - | - | - | (195633) | - | (195633) |
| Balance as of March 31, 2021 | 8774263 | $8773 | $124209441 | $(133891381) | $1704222 | $(7968945) |
| Translation adjustment |  |  |  |  | 205 | 205 |
| Net loss for the period | - | - | - | (201431) | - | (201431) |
| Balance as of June 30, 2021 | 8774263 | $8773 | $124209441 | $(134092812) | $1704427 | $(8170171) |
| Translation adjustment |  |  |  |  | 60 | 60 |
| Net loss for the period | - | - | - | (202673) | - | (202673) |
| Balance as of September 30, 2021 | 8774263 | 8773 | 124209441 | (134295485) | 1704487 | (8372784) |

---

**NETWORK CN INC.**

**CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)**

**FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Stock**<br>**Share** | <br>**Amount** | **Additional Paid-In**<br>**Capital** | **Accumulated**<br>**Deficit** | **Accumulated Other<br> Comprehensive**<br>**Income** | <br>**Total** |
| Balance as of January 1, 2022 | 20749018 | 20749 | 130559370 | (138455814) | 1704440 | (6171255) |
| Stock-based <br> compensation for stock <br> granted to directors for <br> services |  |  | 24000 |  |  | 24000 |
| Beneficial conversion <br> feature associated with <br> convertible notes |  |  | 400000 |  |  | 400000 |
| Translation adjustment  |  |  |  |  |  |  |
| Net loss for the period  | - | - | - | (272841) | - | (272841) |
| Balance as of March 31, 2022 | 20749018 | 20749 | 130983370 | (138728655) | 1704440 | (6020096) |
| Translation adjustment  |  |  |  |  |  |  |
| Net loss for the period  | - | - | - | (186921) | - | (186921) |
| Balance as of June 30, 2022 | 20749018 | 20749 | 130983370 | (138915576) | 1704440 | (6207017) |
| Translation adjustment  |  |  |  |  | (237) | (237) |
| Net loss for the period  | - | - | - | (176816) | - | (176816) |
| Balance as of September 30, 2022 | 20749018 | 20749 | 130983370 | (139092392) | 1704203 | (6384070) |

---

The accompanying notes are an integral part of the consolidated financial statements.

[**Table of Contents**](#toc)

**NETWORK CN INC.** 

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(UNAUDITED)**

---

| | | |
|:---|:---|:---|
|  | **For the Nine Months Ended** | **For the Nine Months Ended** |
|  | **September 30, 2022** | **September 30, 2021** |
| **CASH FLOWS FROM OPERATING ACTIVITIES:** |  |  |
| Net loss | $(636578) | $(599737) |
| Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 10392 | 154 |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of convertible notes discount | 54398 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock issued for services | 24000 |  |
| Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivables | (22966) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 4443 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities | (17453) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable, accrued expenses and other payables | 396654 | 279248 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities | (187110) | (320335) |
| **CASH FLOWS FROM INVESTING ACTIVITIES:** |  |  |
| Purchase of equipment | (1078) | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities | (1078) | - |
| **CASH FLOWS FROM FINANCING ACTIVITIES:** |  |  |
| Proceeds from private placement |  | 320513 |
| Proceeds from short-term loan | 169405 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities | 169405 | 320513 |
| **EFFECT OF EXCHANGE RATE CHANGES ON CASH** | (237) | 248 |
| **NET (DECREASE) INCREASE IN CASH** | (19020) | 426 |
| **CASH, BEGINNING OF PERIOD** | 21677 | 5967 |
| **CASH, END OF PERIOD** | $2657 | $6393 |
| **SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:** |  |  |
| Cash paid during the period for: |  |  |
| &nbsp;&nbsp;Income taxes | $- | $- |
| &nbsp;&nbsp;Interest paid | $- | $- |
| **SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING <br> ACTIVITIES:** |  |  |
| Settlement of short term loan by conversion to convertible note | 2005000 |  |
| Settlement of short term loan interest payable by conversion to convertible note | $495000 | $— |

---

The accompanying notes are an integral part of the consolidated financial statements.

[**Table of Contents**](#toc)

**NETWORK CN INC.** 

**NOTES TO UNAUDITED CONSOLIDATED**

**FINANCIAL STATEMENTS**

---

| | |
|:---|:---|
| **NOTE 1.** | **ORGANIZATION AND PRINCIPAL ACTIVITIES** |

---

Network CN Inc. was originally incorporated on September 10, 1993 in Delaware with headquarters in the Hong Kong Special Administrative Region of the People's Republic of China ("PRC" or "China"). Since August 2006, the Company has been principally engaged in the provision of out-of-home advertising in China through the operation of a network of roadside LED digital video panels, mega-size LED digital video billboards and light boxes in major cities.

Details of the Company's principal subsidiaries and variable interest entities as of September 30, 2022, are described in Note 3 – Subsidiaries and Variable Interest Entities.

**COVID-19 Pandemic**

In December 2019, an outbreak of COVID-19 was identified in China and was subsequently recognized as a global pandemic by the World Health Organization ("WHO") on March 11, 2020. Since that time, COVID-19 has spread around the world and throughout the United States, including in the regions and countries in which we operate. Federal, state and local governments in the U.S and around the world have imposed restrictions on travel and business operations and are advising or requiring individuals to limit or eliminate time outside of their homes. Temporary closures of businesses have also been ordered in certain jurisdictions, and other businesses have temporarily closed voluntarily. These actions expanded significantly in March and April of 2020 throughout the U.S. Consequently, the COVID-19 outbreak has severely restricted the level of economic activity in the U.S. and around the world.

The outbreak has resulted in authorities implementing numerous measures to try to contain the virus, such as quarantines and shelter in place orders. These measures may remain in place for a significant period of time and adversely affect our business, operations and financial condition as well as the business, operations and financial conditions of our business partners. The spread of the virus has also caused us to modify our business practices (including employee work locations and cancellation of physical participation in meetings) in ways that may be detrimental to our business (including working remotely and its attendant cybersecurity risks). We may take further actions as may be required by government authorities or that we determine are in the best interests of our employees. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus or otherwise be satisfactory to government authorities.

There has been no material adverse impact on the Company's 2021 and 2022 results of operations to date. The effect of COVID-19 and related events, those not yet known or knowable, could have a negative effect on the stock price, business prospects, financial condition, and results of operations of the Company, including as a result of quarantines, market volatility, market downturns and business closures.

For the reasons discussed above, the Company cannot reasonably estimate with any degree of certainty the future impact COVID-19 may have on the Company's results of operations, financial position, and liquidity. Notwithstanding any actions by national, state, and local governments to mitigate the impact of COVID-19 or by the Company to address the adverse impacts of COVID-19, there can be no assurance that any of the foregoing activities will be successful in mitigating or preventing significant adverse effects on the Company.

**Recent development**

**Our Business in Ningbo**

The Company explored new media project in Ningbo, China and decided to restart its business and expects that will improve the Company's future financial performance. In April 2022, the Company has established a newly subsidiary, NCN (Ningbo) Culture Media Co., Ltd ("NCN Ningbo"), a wholly foreign-owned enterprise in Ningbo, China. The Company owns 100% of the established subsidiary company, NCN Ningbo. In August 2022, NCN Ningbo started its operation and acquired rights to operate advertising panels in Ningbo, China and sell advertising airtime to our customers directly.

**Issuance of Convertible Promissory Note**

On January 18, 2022, the Company entered into a Subscription Agreement under which the Subscriber agreed to purchase the 1% Senior Unsecured Convertible Note Agreement from the Company for an agreement purchase price of two million five hundred thousand US Dollars ($2,500,000). On the same date, the Company signed the with 1% Senior Unsecured Convertible Note Agreement under which the Company may sell and issue to the Subscriber up to an aggregate maximum amount of $2,500,000 in principal amount of Convertible Notes prior to January 19, 2027. The Convertible Promissory Notes issued to the Investor are convertible at the holder's option into shares of Company common stock at $1.25 per share.

[**Table of Contents**](#toc)

**Exercise of conversion option**

On October 28, 2021, Keywin Holdings Limited ("Keywin") exercised its option to purchase an aggregate of 11,764,756 shares of the Company' common stock for an aggregate purchase price of $2,000,000 which for setting off against the Company's obligation to repay part of the short-term loan interest payable, there was no cash proceeds from the exercise of Keywin option.

**Private Placement**

On May 3, 2021, the Company entered into Common Stock Agreement with the foreign investor (the "New investor") that the Company will sell an aggregate of 200,000 shares of the Company's common stock to the New investor. Pursuant to the terms of a Common Stock Agreement between the Company and the New investor, the purchase price paid by the New investor for the shares were $3 per share for an aggregate sum of six hundred thousand U.S. dollars. The Company received $459,077 cash proceeds from the investor and $140,923 was settled for the interest payable of short-term loans.

**Increase of authorized capital**

On April 28, 2020, the Board of Directors and Majority of stockholders of the Company approved to increase the total number of authorized shares of Common Stock from 26,666,667 to 100,000,000,000. On October 11, 2021, we filed a Certificate of Amendment to our Certificate of Incorporation with the Delaware Secretary of State to increase our authorized shares of common stock from 26,666,667 to 100,000,000,000 and the increase had approved by Delaware secretary of state on April 5, 2022

**Identification of New projects**

On January 14, 2020, the Company entered into a Letter of Intent with Earthasia Worldwide Holdings Limited ("EWHL") that the Company will acquire 100% of the EWHL's issued and outstanding stock owned by the shareholders of the EWHL and the EWHL will become a wholly owned subsidiary of the Company.

On July 23, 2020, the Company entered into Share Exchange Agreement with Ease Global Limited ("Ease Global"), the shareholder of Trade More Global Limited ('Trade More") that the Company will purchase, One Thousand and One Hundred (1,100) currently issued shares of common stock of Trade More from Ease Global and in exchange for Forty-nine Million (49,000,000) shares of newly-issued shares of common stock of the Company. The closing of the Exchange shall occur on other date as agreed by the parties of the Share Exchange Agreement. Upon completion of the Exchange, 78% of issued shares of common stock of the Company shall be held by the Ease Global while all of the shares of capital stock of Trade More shall be held by the Company. EWHL is a wholly owned subsidiary of Trade More.

The closing of Exchange was not completed on September 2, 2020 which was due to the progress of audit. Since Ease Global cannot fulfill the revenue target and complete the audit, the Company considered the Share Exchange Agreement was lapsed.

**Going Concern**

The Company has experienced recurring net losses $176,816 and $202,673 for the three months ended September 30, 2022 and 2021 respectively, and $636,578 and $599,737 for the nine months ended September 30, 2022 and 2021 respectively. As of September 30, 2022, and December 31, 2021, the Company has stockholders' deficit of $6,384,070 and $6,171,255, respectively. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company's plans regarding those concerns are addressed in the following paragraph. The unaudited consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

In response to current financial conditions, the Company has actively explored new prominent media projects in order to provide a wider range of media and advertising services and improve our financial performance. If the project can start to operate, the Company expects that the project will improve the Company's future financial performance. The Company expects that the new project can generate positive cashflow.

[**Table of Contents**](#toc)

The existing cash and cash equivalents together with highly liquid current assets are insufficient to fund the Company's operations for the next twelve months. The Company will need to rely upon some combination of cash generated from the Company's operations, or proceeds from the issuance of the Company's equity and debt securities as well as the exercise of the conversion option by the Company's note holders to convert the notes to the Company's common stock, in order to maintain the Company's operations. Based on the Company's best estimates, the Company believes that there are sufficient financial resources to meet the cash requirements for the coming twelve months and the consolidated financial statements have been prepared on a going concern basis. However, there can be no assurance the Company will be able to continue as a going concern. These uncertainties may result in adverse effects on continuation of the Company as a going concern. The accompany consolidated financial statements do not reflect any adjustments that might result from the outcome of these uncertainties.

---

| | |
|:---|:---|
| **NOTE 2** | **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** |

---

***(A)***  ***Basis of Presentation and Preparation*** 

The accompanying unaudited consolidated financial statements of Network CN Inc., its subsidiaries and variable interest entities (collectively "NCN" or the "Company" "we", "our" or "us") have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of our financial position and results of operations.

The unaudited consolidated financial statements for the three months and nine months ended September 30, 2022 and 2021 were not audited. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments or a description of the nature and amount of any adjustments other than normal recurring adjustments) have been made which are necessary for a fair presentation of financial statements. The results for the interim period are not necessarily indicative of the results to be expected for the full fiscal year. The year-end consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.

The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021, previously filed with the Securities and Exchange Commission on December 23, 2022. The disclosures made in the unaudited interim consolidated financial statements generally do not repeat those in the annual statements.

***(B) Principles of Consolidation***

The unaudited consolidated financial statements include the financial statements of Network CN Inc., its subsidiaries and its variable interest entities for which it is the primary beneficiary. A variable interest entity is an entity in which the Company, through contractual arrangements, bears the risks and enjoys the rewards normally associated with ownership of the entity. Upon making this determination, the Company is deemed to be the primary beneficiary of the entity, which is then required to be consolidated for financial reporting purposes. All significant intercompany transactions and balances have been eliminated upon consolidation.

***(C) Use of Estimates***

In preparing unaudited consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Differences from those estimates are reported in the period they become known and are disclosed to the extent they are material to the unaudited consolidated financial statements taken as a whole.

***(D) Convertible Promissory Notes***

***New 1% Convertible Promissory Notes, due in 2025***

On January 14, 2020, the Company issued 1% unsecured senior convertible promissory notes to an individual with the principal amount of $645,000. The 1% convertible promissory notes bore interest at 1% per annum, payable semi-annually in arrears, matured on January 13, 2025, and were convertible at any time into shares of the Company's common stock at a fixed conversion price of $1.00 per share, subject to customary anti-dilution adjustments.

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The Company determined the 1% convertible promissory notes to be conventional convertible instruments under ASC Topic 815, Derivatives and Hedging. Its embedded conversion option qualified for equity classification. The 1% convertible promissory notes did not have any embedded conversion option which shall be bifurcated and separately accounted for as a derivative under ASC 815, nor did they contain a cash conversion feature. The Company accounted for the Notes in accordance with ASC 470, as a single debt instrument. No beneficial conversion feature (the "BCF") was recognized as the set conversion price for the Notes was greater than the fair value of the Company's share price at date of issuance.

 

***New 1% Convertible Promissory Notes, due in 2027***

On January 18, 2022, the Company entered into a Subscription Agreement under which the Subscriber agreed to purchase the 1% Senior Unsecured Convertible Note Agreement from the Company for an agreement purchase price of two million five hundred thousand US Dollars ($2,500,000). On the same date, the Company signed the with 1% Senior Unsecured Convertible Note Agreement under which the Company may sell and issue to the Subscriber up to an aggregate maximum amount of $2,500,000 in principal amount of Convertible Notes prior to January 19, 2027. The Convertible Promissory Notes issued to the Investor are convertible at the holder's option into shares of Company common stock at $1.25 per share.

The Company evaluates the conversion feature to determine whether it was beneficial as described in ASC 470-20. The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible notes payable and may not be settled in cash upon conversion, is treated as a discount to the convertible notes payable. This discount is amortized over the period from the date of issuance to the date the notes is due using the effective interest method. If the notes payable are retired prior to the end of their contractual term, the unamortized discount is expensed in the period of retirement to interest expense. In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the shares of common stock at the commitment date to be received upon conversion.

***(E) Revenue Recognition***

In accordance with ASC 606, *Revenue From Contracts with Customers*, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that are within the scope of the standard, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The standard also includes criteria for the capitalization and amortization of certain contract acquisition and fulfillment costs.

The Company recognize revenue when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration we expect to be entitled to receive in exchange for such services. To achieve this core principle, we apply the following five steps:

1) Identify the contract(s) with a customer - A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party's rights regarding the goods or services to be transferred and identifies the payment terms related to those goods or services, (ii) the contract has commercial substance and, (iii) we determine that collection of substantially all consideration for goods or services that are transferred is probable based on the customer's intent and ability to pay the promised consideration. We apply judgment in determining the customer's ability and intention to pay, which is based on a variety of factors including the customer's historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. The contract term for contracts that provide a right to terminate a contract for convenience without significant penalty will reflect the term that each party has enforceable rights under the contract (the period through the earliest termination date). If the termination right is only provided to the customer, the unsatisfied performance obligations will be evaluated as customer options as discussed below.

2) Identify the performance obligations in the contract - Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both (i) capable of being distinct, whereby the customer can benefit from the good or service either on its own or together with other resources that are readily available from third parties or from us, and (ii) are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. If these criteria are not met the promised goods or services are accounted for as a combined performance obligation. Certain of our contracts (under which we deliver multiple promised services) require us to perform integration activities where we bear risk with respect to integration activities. Therefore, we must apply judgment to determine whether as a result of those integration activities and risks, the promised services are distinct on the context of the contract.

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We typically do not include options that would result in a material right. If options to purchase additional services or options to renew are included in customer contracts, we evaluate the option in order to determine if our arrangement include promises that may represent a material right and needs to be accounted for as a performance obligation in the contract with the customer.

3) Determine the transaction price - The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring goods or services to the customer. Our contract prices may include fixed amounts, variable amounts or a combination of both fixed and variable amounts. To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. When determining if variable consideration should be constrained, management considers whether there are factors outside our control that could result in a significant reversal of revenue. In making these assessments, we consider the likelihood and magnitude of a potential reversal of revenue. These estimates are re-assessed each reporting period as required.

4) Allocate the transaction price to the performance obligations in the contract - If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price (SSP) basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct good or service that forms part of a single performance obligation. For most performance obligations, we determine standalone selling price based on the price at which the performance obligation is sold separately. Although uncommon, if the standalone selling price is not observable through past transactions, we estimate the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.

5) Recognize revenue when (or as) we satisfy a performance obligation: we satisfy performance obligations either over time or at a point-in-time as discussed in further detail below. Revenue is recognized when the related performance obligation is satisfied by transferring control of a promised good or service to a customer.

***(F) Recent Accounting Pronouncements***

In December 2019, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions and enhances and simplifies various aspects of the income tax accounting guidance in ASC 740. ASU 2019-12 was effective January 1, 2021. The adoption of ASU 2019-12 did not have any impact on the Company's consolidated financial statement presentation or disclosures.

In January 2020, the FASB issued ASU 2020-01, "Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)," an amendment clarifying the interaction between accounting standards related to equity securities, equity method investments, and certain derivative instruments. The guidance is effective for fiscal years beginning after December 15, 2020. The Company adopted ASU 2020-01 effective January 1, 2021. The adoption of ASU 2020-01 did not have any impact on its consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06"). ASU 2020-06 simplifies the accounting for convertible debt by eliminating the beneficial conversion and cash conversion accounting models. Upon adoption of ASU 2020-06, convertible debt proceeds, unless issued with a substantial premium or an embedded conversion feature that is not clearly and closely related to the host contract, will no longer be allocated between debt and equity components. This modification will reduce the issue discount and result in less non-cash interest expense in financial statements. ASU 2020-06 also updates the earnings per share calculation and requires entities to assume share settlement when the convertible debt can be settled in cash or shares. For contracts in an entity's own equity, the type of contracts primarily affected by ASU 2020-06 are freestanding and embedded features that are accounted for as derivatives under the current guidance due to a failure to meet the settlement assessment by removing the requirements to (i) consider whether the contract would be settled in registered shares, (ii) consider whether collateral is required to be posted, and (iii) assess shareholder rights. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, and only if adopted as of the beginning of such fiscal year. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

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In October 2020, the FASB issued ASU 2020-10, "Codification Improvements," this ASU affects a wide variety of Topics in the Codification. They apply to all reporting entities within the scope of the affected accounting guidance. More specifically, this ASU, among other things, contains amendments that improve the consistency of the Codification by including all disclosure guidance in the appropriate Disclosure Section (Section 50). Many of the amendments arose because the FASB provided an option to give certain information either on the face of the financial statements or in the notes to financial statements and that option only was included in the Other Presentation Matters Section (Section 45) of the Codification. The option to disclose information in the notes to financial statements should have been codified in the Disclosure Section as well as the Other Presentation Matters Section (or other Section of the Codification in which the option to disclose in the notes to financial statements appears). Those amendments are not expected to change current practice. The amendments are effective for annual periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. Early application of the amendments is permitted for and varies based on the entity. The amendments should be applied retrospectively and at the beginning of the period that includes the adoption date. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity's Own Equity (Subtopic 815-40): Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options ("ASU 2021-04"). ASU 2021-04 provides guidance as to how an issuer should account for a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option (i.e., a warrant) that remains classified after modification or exchange as an exchange of the original instrument for a new instrument. An issuer should measure the effect of a modification or exchange as the difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange and then apply a recognition model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification). ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the effective date. Early adoption is permitted for all entities, including adoption in an interim period. If an entity elects to early adopt ASU 2021- 04 in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The adoption of ASU 2021-04 is not expected to have any impact on the Company's consolidated financial statement presentation or disclosures.

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| **NOTE 3.** | **SUBSIDIARIES AND VARIABLE INTEREST ENTITIES** |

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Details of the Company's principal subsidiaries and variable interest entities as of September 30, 2022 was as follows:

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| | | | |
|:---|:---|:---|:---|
| **Name** | **Place of**<br> **Incorporation** | **Ownership/Control**<br> **interest**<br> **attributable to**<br> **the Company** | **Principal activities** |
| NCN Group Limited | BVI | 100% | Investment holding |
| NCN Media Services Limited | BVI | 100% | Investment holding |
| Cityhorizon Limited | Hong Kong | 100% | Investment holding |
| NCN Group Management Limited | Hong Kong | 100% | Provision of administrative and management services |
| Crown Eagle Investment Limited | Hong Kong | 100% | Investment holding |
| Crown Winner International Limited | Hong Kong | 100% | Investment holding |
| NCN Group (Global) Limited | Hong Kong | 100% | Investment holding |
| ChenXing (Beijing) Advertising Co., Ltd | PRC | 100% | Investment holding |
| Ruibo (Shenzhen) Advertising Co., Ltd | PRC | 100% | Investment holding |
| NCN (Ningbo) Culture Media Co., Ltd | PRC | 100% | Provision of advertising services |
| NCN (Nanjing) Culture Co., Ltd | PRC | 100% | Provision of advertising services |
| NCN (Beijing) Advertising Co., Ltd. | PRC | 100% | Provision of advertising services |
| NCN Huamin Management Consultancy <br> (Beijing) Company Limited (2) | PRC | 100% | Dormant |
| Huizhong Lianhe Media Technology Co., Ltd. (2) | PRC | 100% | Dormant |
| Beijing Huizhong Bona Media Advertising Co., Ltd.(2) | PRC | 100% (1) | Dormant |
| Xingpin Shanghai Advertising Limited (3) | PRC | 100% (1) | Dormant |
| Chuanghua Shanghai Advertising Limited (3) | PRC | 100% | Dormant |
| Jiahe Shanghai Advertising Limited (2) | PRC | 100% | Dormant |

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*Remarks:* 

*1)* *Variable interest entity which the Company exerted 100% control through a set of commercial arrangements.*

*Note:* 

*2)* *The subsidiary/variable interest entity 's business license has been revoked.*

*3)* *The subsidiary/variable interest entity was classified as abnormal operation business.*

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| **NOTE 4.** | **ACCOUNTS RECEIVABLE, NET** |

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Accounts receivables, net as of September 30, 2022 and December 31, 2021 were as follows:

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| | | |
|:---|:---|:---|
|  | **As of<br> September 30, 2022** | **As of<br> December 31, 2021** |
| Accounts receivable | $22966 | $- |
| Less: allowance for doubtful debts | - | - |
| &nbsp;&nbsp;Total | $22966 | $- |

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The Company recorded no allowance for doubtful debts for accounts receivable for the three and nine months ended September 30, 2022 and December 31, 2021.

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|:---|:---|
| **NOTE 5.** | **PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET** |

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Prepaid expenses and other current assets, net as of September 30, 2022 and December 31, 2021 were as follows:

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| | | |
|:---|:---|:---|
|  | **As of<br> September 30, 2022** | **As of<br> December 31, 2021** |
| Prepaid expenses | $15385 | $19828 |
| Less: allowance for doubtful debts | - | - |
| &nbsp;&nbsp;Total | $15385 | $19828 |

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The Company recorded no allowance for doubtful debts for prepaid expenses and other current assets as of September 30, 2022 and December 31, 2021.

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|:---|:---|
| **NOTE 6.** | **ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER PAYABLES** |

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Accounts payable, accrued expenses and other payables as of September 30, 2022 and December 31, 2021 were as follows:

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| | | |
|:---|:---|:---|
|  | **As of<br> September 30, 2022** | **As of<br> December 31, 2021** |
| Accounts payable | $25454 | $- |
| Accrued staff benefit and related fees | 2081696 | 1943544 |
| Accrued professional fees | 78442 | 61057 |
| Accrued interest expenses | 159451 | 485479 |
| Other accrued expenses | 53301 | 6610 |
| Other payables | 100491 | 100491 |
| Total | $2498835 | $2597181 |

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| **NOTE 7.** | **SHORT-TERM LOANS** |

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As of September 30, 2022 and December 31, 2021, the Company recorded an aggregated amount of $1,137,616 and $2,973,211 of short-term loans, respectively. Those loans were borrowed from a shareholder and an unrelated individual. Except for loan of $128,205 from an unrelated individual that are unsecured, bearing yearly interest of 1% and are repayable on demand, the remaining loans are unsecured, bear a monthly interest of 1.5% and are repayable on demand. However, according to the agreement, the Company shall have the option to shorten or extend the life of those short-term loans if the need arises and the Company has agreed with the lender to extend the short-term loans on the due date. On January 18, 2022, the Company issued convertible notes of US$2,500,000 which is for setting off against the short-term loans and interest payable. As of the date of this report, the balance of $1,137,616 have not yet been repaid.

The interest expenses of the short-term loans were $45,287 and $146,812 for the three and nine months ended September 30, 2022, respectively, while interest expenses amounted $128,345 and $385,036 for the three and nine months ended September 30, 2021, respectively.

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| **NOTE 8.** | **CONVERTIBLE PROMISSORY NOTES AND WARRANTS** |

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*Issuance of New 1% Convertible Promissory Notes, due 2025 in 2020*

On January 14, 2020, the Company entered into a Subscription Agreement with Tsang Wai Yee Terri ("the Subscriber") under which the Subscriber agreed to purchase the 1% Senior Unsecured Convertible Note Agreement from the Company for an agreement purchase price of six hundred and forty-five thousand US Dollars ($645,000). On the same date, the Company signed the 1% Senior Unsecured Convertible Note Agreement under which the Company may sell and issue to the Subscriber up to an aggregate maximum amount of $645,000 in principal amount of Convertible Notes prior to January 13, 2025. The Convertible Promissory Notes issued to the Investor are convertible at the holder's option into shares of Company common stock at $1.00 per share.

*Issuance of New 1% Convertible Promissory Notes, due 2027 in 2022*

 

On January 18, 2022, the Company entered into a Subscription Agreement under which the Subscriber agreed to purchase the 1% Senior Unsecured Convertible Note Agreement from the Company for an agreement purchase price of two million five hundred thousand US Dollars ($2,500,000). On the same date, the Company signed the with 1% Senior Unsecured Convertible Note Agreement under which the Company may sell and issue to the Subscriber up to an aggregate maximum amount of $2,500,000 in principal amount of Convertible Notes prior to January 19, 2027. The Convertible Promissory Notes issued to the Investor are convertible at the holder's option into shares of Company common stock at $1.25 per share.

 

The following table details the accounting treatment of the convertible promissory notes:

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| | | | |
|:---|:---|:---|:---|
|  | **New 1%<br> Convertible<br> Promissory<br> Notes, due in 2025** | **New 1%<br> Convertible<br> Promissory<br> Notes, due in 2027** | **Total** |
| Net carrying value of convertible promissory notes as of <br> December 31, 2021 | $645000 | $- | $645000 |
| Proceeds of new 1% convertible promissory note |  | 2500000 | 2500000 |
| Less: Allocated intrinsic value of beneficial conversion <br> feature (Note a) |  | (400000) | (400000) |
| Add: Accumulated amortization of debt discount | - | 54398 | 54398 |
| Net carrying value of convertible promissory notes as of <br> September 30, 2022 | $645000 | $2154398 | $2799398 |

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Note:

&nbsp;&nbsp;&nbsp;&nbsp;(a) At the time of issuance, the Company evaluated the intrinsic value of the beneficial conversion feature
("BCF") associated with the conversion feature of the convertible promissory note. The BCF was recorded into additional paid-in
capital. Additionally, the convertible promissory note was considered to have an embedded BCF because the effective conversion price was
less than the fair value of the Company's common stock on notes issuance date. The value of the BCF was recorded as a discount on
the convertible promissory note. Hence, in connection with the issuance of the convertible promissory note, the Company recorded a total
debt discount of $400,000 that will be amortized over the term of the Note using effective interest rate method.

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***Amortization of debt discount***

The following table details the amortization of debt discount:

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|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended** | **For the Three Months Ended** | **For the Nine Months Ended** | **For the Nine Months Ended** |
|  | **September 30, <br> 2022** | **September 30, <br> 2021** | **September 30, <br> 2022** | **September 30, <br> 2021** |
| New 1% convertible promissory <br> notes, due in 2025 | $- | $- | $- | $- |
| New 1% convertible promissory <br> notes, due in 2027 | 17862 | - | 54398 | - |
| Total | $17862 | $- | $54398 | $- |

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***Interest Expense***

The following table details the interest expenses:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended** | **For the Three Months Ended** | **For the Nine Months Ended** | **For the Nine Months Ended** |
|  | **September 30, <br> 2022** | **September 30, <br> 2021** | **September 30, <br> 2022** | **September 30, <br> 2021** |
| New 1% convertible promissory notes, due in 2025 | $1626 | $1608 | $4824 | $4860 |
| New 1% convertible promissory notes, due in 2027 | 6301 | - | 17466 | - |
| Total | $7927 | $1608 | $22290 | $4860 |

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|:---|:---|
| **NOTE 9.** | **LEASE LIABILITIES** |

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On September 27, 2021, the Company entered into a lease agreement for office in Hong Kong with a two-year term, commencing on September 27, 2021 and expiring on September 26, 2023. In August 2022, the Company entered into rights agreement to acquire rights to operate the advertising panels.

The operating lease expense as of September 30, 2022 and December 31, 2021 were as follows:

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|:---|:---|:---|
|  | &nbsp;&nbsp;**As of**<br> **September 30, 2022** | **As of**<br> **December 31, 2021** |
| Operating lease cost – straight line | $45009 | $15385 |

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As of September 30, 2022, future minimum commitments under the Company's non-cancellable operating lease, in accordance with ASC 842, are as follows:

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|:---|:---|
| Fiscal years ending September 30, | Operating leases |
| 2022 | $11538 |
| 2023 | 45224 |
| 2024 | 2305 |
| 2025 |  |
| Thereafter | - |
| Total undiscounted cash flows | 59067 |
| Less: imputed interest | (999) |
| Present value of lease liabilities | $58068 |

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As of September 30, 2022 and December 31, 2021, the remaining weighted-average lease term was 1.16 years and 1.74 years, respectively and the weighted-average incremental borrowing rate used to determine the operating lease liabilities was 2.33%.

Supplementary cash flow information related to lease where the Company was the lessee for the nine months September 30, 2022 and 2021 was as follows:

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| | | |
|:---|:---|:---|
|  | **For the Nine Months Ended** | **For the Nine Months Ended** |
|  | **September 30, 2022** | **September 30, 2021** |
| Operating cash outflows from operating lease | $(17453) | $- |

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|:---|:---|
| **NOTE 10.** | **COMMITMENTS AND CONTINGENCIES** |

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***Contingencies***

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The Company accounts for loss contingencies in accordance with ASC Topic 450 and other related guidelines. As of September 30, 2022 and December 31, 2021, the Company's management is of the opinion that there are no commitments and contingencies to account for.

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| **NOTE 11.** | **STOCKHOLDERS' DEFICIT** |

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***Stock, Options and Warrants Issued for Services***

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On December 30, 2021, the Board of Director granted an aggregate of 132,172 shares of common stock to the directors of the Company for their services rendered during the year 2021 and 2022. Each director was granted shares of the Company's common stock and vested in 2021: Earnest Leung, 52,172 shares; Wong Wing Kong, 15,000 shares; and Shirley Cheng, 50,000 shares and Frederick Wong granted 15,000 shares and vested in 2022. In connection with these stock grants and in accordance with ASC Topic 718, the Company recognized $nil of non-cash stock-based compensation included in general and administrative expenses on the consolidated statements of operations for the three months ended September 30, 2022 and 2021 and recognized $24,000 and $nil of non-cash stock-based compensation included in general and administrative expenses on the consolidated statements of operations for the nine months ended September 30, 2022 and 2021, respectively.

***Restriction on payment of dividends***

The Company has not declared any dividends since incorporation. For instance, the terms of the outstanding promissory notes issued January 14, 2020 contain restrictions on the payment of dividends. The dividend restrictions provide that the Company or any of its subsidiaries shall not declare or pay dividends or other distributions in respect of the equity securities of such entity other than dividends or distributions of cash which amounts during any 12-month period that exceed ten percent (10%) of the consolidated net income of the Company based on the Company's most recent audited consolidated financial statements disclosed in the Company's annual report on Form 10-K (or equivalent form) filed with the U.S. Securities and Exchange Commission.

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|:---|:---|
| **NOTE 12.** | **RELATED PARTY TRANSACTIONS** |

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Except as set forth below, during the three months and nine months ended September 30, 2022 and 2021, the Company did not enter into any material transactions or series of transactions that would be considered material in which any officer, director or beneficial owner of 5% or more of any class of the Company's capital stock, or any immediate family member of any of the preceding persons, had a direct or indirect material interest.

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As of September 30, 2022 and December 2021, the Company recorded an aggregated amount of $1,009,411 and $2,845,005 of short-term loans from a shareholder that the loans are unsecured, bear a monthly interest of 1.5% and repayable on demand. However, according to the agreements, the Company shall have the option to shorten or extend the life of those short-term loans if the need arises and the Company has agreed with the shareholder to extend the short-term loans on the due date. As of September 30, 2022 and December 2021, the Company recorded an interest payable recorded in accounts payable, accrued expenses and other payables of $121,073 and $470,315, respectively. The interest expenses of the short-term loans for the three months September 30, 2022 and 2021 amounted to $44,967 and $128,025, respectively. The interest expenses of the short-term loans for the nine months September 30, 2022 and 2021 amounted to $145,852 and $384,076, respectively .On January 18, 2022, the shareholder agreed to purchase the 1% Senior Unsecured Convertible Note Agreement from the Company and converted the short-term loan and interest payable to convertible note. As of the date of this report, except the loan and interest payable balance of $2,500,000 converted to convertible note, the remaining loans have not yet been repaid.

On July 1, 2009, the Company and Keywin, of which the Company's chief executive officer and director is the director and his spouse is the sole shareholder, entered into an Amendment, pursuant to which the Company agreed to extend the exercise period for the Keywin Option under the Note Exchange and Option Agreement between the Company and Keywin, to purchase an aggregate of 1,637,522 shares of our common stock for an aggregate purchase price of $2,000,000, from a three-month period ended on July 1, 2009, to a six-month period ended October 1, 2009. The exercise period for the Keywin option was subsequently further extended to a nine-month period ended January 1, 2010, pursuant to the Second Amendment. On January 1, 2010, the Company and Keywin entered into the third Amendment, pursuant to which the Company agreed to further extend the exercise period to an eighteen-month period ended on October 1, 2010, and provide the Company with the right to unilaterally terminate the exercise period upon 30 days' written notice. On September 30, 2010, the exercise price was extended at various times from September 1, 2010 to December 31, 2017 and the Keywin Option was further extended to a hundred and twenty-nine-month period ending on January 1, 2020 and the exercise price changed to $0.99. On December 31, 2019, the latest exercise period for the Keywin Option was further extended to a hundred and fifty-three-month period ending on January 1, 2022. On June 1, 2021, the Company and Keywin, of which the Company's chief executive officer and director is the director and his spouse is the sole shareholder, entered into an Amendment, pursuant to which the Company agreed Keywin to purchase an aggregate of 11,764,756 shares of the Company's common stock for an aggregate purchase price of $2,000,000. On October 28, 2021, Keywin exercised its option to purchase an aggregate of 11,764,756 shares of the Company's common stock for an aggregate purchase price of $2,000,000 which for setting off against the Company's obligation to repay part of the short term loan interest payable, there was no cash proceeds from the exercise of Keywin option.

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|:---|:---|
| **NOTE 13.** | **NET LOSS PER COMMON SHARE** |

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Net loss per common share information for the three and six months ended September 30, 2022 and 2021 was as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended** | **For the Three Months Ended** | **For the Nine Months Ended** | **For the Nine Months Ended** |
|  | **September 30, <br> 2022** | **September 30, <br> 2021** | **September 30, <br> 2022** | **September 30, <br> 2021** |
| **Numerator:** | | | | |
| Net loss attributable to NCN <br> common stockholders | $(176816) | $(202673) | $(636578) | $(599737) |
| **Denominator:** |  |  |  |  |
| Weighted average number of <br> shares outstanding, basic | 21018190 | 8774263 | 21018190 | 8774263 |
| Effect of dilutive securities |  |  |  |  |
| Options and warrants | - | - | - | - |
| Weighted average number of <br> shares outstanding, diluted | 21018190 | 8774263 | 21018190 | 8774263 |
| **Net loss per common share – <br> basic and diluted** | $(0.01) | $(0.02) | $(0.03) | $(0.07) |

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The diluted net loss per common share is the same as the basic net loss per common share for the three and nine months ended September 30, 2022 and 2021 as all potential common shares including stock options and warrants are anti-dilutive and are therefore excluded from the computation of diluted net loss per common share. There were no securities that could potentially dilute basic net loss per common share in the future that were not included in the computation of diluted net loss per common share because of anti-dilutive effect for the three and nine months ended September 30, 2022 and 2021.

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| **NOTE 14.** | **INCOME TAXES** |

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Income is subject to taxation in various countries in which the Company and its subsidiaries operate or are incorporated. The loss before income taxes by geographical locations for the three and nine months ended September 30, 2022 and 2021 were summarized as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended** | **For the Three Months Ended** | **For the Nine Months Ended** | **For the Nine Months Ended** |
|  | **September 30, <br> 2022** | **September 30, <br> 2021** | **September 30, <br> 2022** | **September 30, <br> 2021** |
| United States | $(60258) | $(30058) | $(219082) | $(78894) |
| Foreign | (116558) | (172615) | (417496) | (520753) |
|  | $(176816) | $(202673) | $(636578) | $(599737) |

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Other than the United States, the Company is subject to taxation in Hong Kong and PRC. Under Hong Kong tax laws, deferred tax assets are recognized for tax loss carried forward to the extent that the realization of the related tax benefit through future taxable profits is probable. These tax losses do not expire under current Hong Kong tax legislation. Under PRC tax laws, tax losses may be carried forward for 5 years and no carry-back is allowed. At September 30, 2022, the Company does not have available tax losses in the Hong Kong and PRC to utilize for future taxable profits.

The Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") was enacted on March 27, 2020. There are several different provisions with the CARES Act that impact income taxes for corporations. The Company has evaluated the tax implications and believes these provisions did not have a material impact to the financial statements.

At September 30, 2022, the Company had an unused net operating loss carryforward of approximately $16,447,000 for income tax purposes. This net operating loss carryforward may result in future income tax benefits of approximately $3,537,450, which will expire on various from 2024 through 2037 as follows:

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| | |
|:---|:---|
| 2024 to 2028 | $2279147 |
| 2029 to 2033 | 892375 |
| 2034 to 2037 | 217937 |
| Indefinitely | 147990 |
| Effect of net operating loss carried forward | $3537450 |

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The realization of net operating loss carryforward is uncertain at this time, a valuation allowance in the same amount has been established. Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the Company's deferred tax liabilities and assets of September 30, 2022 and December 31, 2021 are as follows:

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| | | |
|:---|:---|:---|
|  | **As of** <br> **September 30, 2022** | **As of** <br> **December 31, 2021** |
| Deferred tax liabilities | $- | $- |
| Deferred tax assets: |  |  |
| Effect of net operating loss carried forward | 3537450 | 3496482 |
| Less: valuation allowance | (3537450) | (3496482) |
| Net deferred tax assets | $- | $- |

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Movement of valuation allowance:

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| | | |
|:---|:---|:---|
|  | **As of** <br> **September 30, 2022** | **As of** <br> **December 31, 2021** |
| At the beginning of the period/year | $3496482 | $3443596 |
| Additions/(Deductions) | 40967 | 52886 |
| At the end of the period/year | $3537450 | $3496482 |

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| **ITEM 2.** | **MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.** |

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**Special Note Regarding Forward Looking Statements**

This Quarterly Report on Form 10-Q, including the following "Management's Discussion and Analysis of Financial Condition and Results of Operations", contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include, among others, those concerning our expected financial performance and strategic and operational plans, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and that a number of risks and uncertainties could cause actual results of the Company to differ materially from those anticipated, expressed or implied in the forward-looking statements. The words "believe", "expect", "anticipate", "project", "targets", "optimistic", "intend", "aim", "will" or similar expressions are intended to identify forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Risks and uncertainties that could cause actual results to differ materially from those anticipated include risks related to our potential inability to raise additional capital; changes in domestic and foreign laws, regulations and taxes; uncertainties related to China's legal system and economic, political and social events in China; Securities and Exchange Commission regulations which affect trading in the securities of "penny stocks"; changes in economic conditions, including a general economic downturn or a downturn in the securities markets; and any of the factors and risks mentioned in the "Risk Factors" sections of our Annual Report on Form 10-K for fiscal year ended December 31, 2021 and in Part 2, Item 1A of this Form 10-Q. The Company assumes no obligation and does not intend to update any forward-looking statements, except as required by law.

**COVID-19 Pandemic**

In December 2019, an outbreak of COVID-19 was identified in China and was subsequently recognized as a global pandemic by the World Health Organization ("WHO") on March 11, 2020. Since that time, COVID-19 has spread around the world and throughout the United States, including in the regions and countries in which we operate. Federal, state and local governments in the U.S and around the world have imposed restrictions on travel and business operations and are advising or requiring individuals to limit or eliminate time outside of their homes. Temporary closures of businesses have also been ordered in certain jurisdictions, and other businesses have temporarily closed voluntarily. These actions expanded significantly in March and April of 2020 throughout the U.S. Consequently, the COVID-19 outbreak has severely restricted the level of economic activity in the U.S. and around the world.

The outbreak has resulted in authorities implementing numerous measures to try to contain the virus, such as quarantines and shelter in place orders. These measures may remain in place for a significant period of time and adversely affect our business, operations and financial condition as well as the business, operations and financial conditions of our business partners. The spread of the virus has also caused us to modify our business practices (including employee work locations and cancellation of physical participation in meetings) in ways that may be detrimental to our business (including working remotely and its attendant cybersecurity risks). We may take further actions as may be required by government authorities or that we determine are in the best interests of our employees. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus or otherwise be satisfactory to government authorities.

There has been no material adverse impact on the Company's 2021 and 2022 results of operations to date. The effect of COVID-19 and related events, those not yet known or knowable, could have a negative effect on the stock price, business prospects, financial condition, and results of operations of the Company, including as a result of quarantines, market volatility, market downturns and business closures.

For the reasons discussed above, the Company cannot reasonably estimate with any degree of certainty the future impact COVID-19 may have on the Company's results of operations, financial position, and liquidity. Notwithstanding any actions by national, state, and local governments to mitigate the impact of COVID-19 or by the Company to address the adverse impacts of COVID-19, there can be no assurance that any of the foregoing activities will be successful in mitigating or preventing significant adverse effects on the Company.

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**Use of Terms**

Except as otherwise indicated by the context, references in this report to:

● " BVI" are references to the British Virgin Islands;

● " China" and "PRC" are to the People's Republic of China;

● the "Company", "NCN", "we", "us", or "our", are references to Network CN Inc., a Delaware corporation and its direct and indirect subsidiaries: NCN Group Limited, or NCN Group, a BVI limited company; NCN Media Services Limited, a BVI limited company; NCN Group Management Limited, or NCN Group Management, a Hong Kong limited company; Crown Winner International Limited, or Crown Winner, a Hong Kong Limited company, and its subsidiary, and its variable interest entity, Xingpin Shanghai Advertising Limited; Crown Eagle Investments Limited, or Crown Eagle, a Hong Kong limited company, and its subsidiary, Chenxing (Beijing) Advertising Limited, or Chenxing, a PRC limited company; NCN (Ningbo) Culture Media Co., Ltd, a PRC limited company; NCN (Nanjing) Culture Co., Ltd, a PRC limited; NCN (Beijing) Advertising Co., Ltd, a PRC limited; NCN Group (Global) Limited, or NCN (Global), a Hong Kong limited company, and its subsidiary, Ruibo (Shenzhen) Advertising Limited or Ruibo, a PRC limited company; Cityhorizon Limited, or Cityhorizon Hong Kong, a Hong Kong limited company, and its subsidiary, Huizhong Lianhe Media Technology Co., Ltd., or Lianhe, a PRC limited company; Chuanghua Shanghai advertising Limited, a PRC limited company; NCN Huamin Management Consultancy (Beijing) Company Limited, or NCN Huamin, a PRC limited company; and the Company's variable interest entity, Beijing Huizhong Bona Media Advertising Co., Ltd., or Bona, a PRC limited company;

● " NCN Management Services" are references to NCN Management Services Limited, a BVI limited company;

● " RMB" are to the Renminbi, the legal currency of China;

● the "Securities Act" are to the Securities Act of 1933, as amended; and the "Exchange Act" are to the Securities Exchange Act of 1934, as amended; and

● " U.S. dollar", "$" and "US$" are to the legal currency of the United States.

 ****

**Overview of Our Business**

Our mission is to become a nationwide leader in providing out-of-home advertising in China, primarily serving the needs of branded corporate customers. Our business direction to not just selling air-time for its media panels but also started working closely with property developers in media planning for the property at the very early stage. As a media planner we share the advertising profits with the property developers without paying significant rights fees, so we expect to achieve a positive return from these projects.

To address these unfavorable market conditions, we continue to implement cost-cutting measures, including reductions in our workforce, office rentals, selling and marketing related expenses and other general and administrative expenses.

For more information relating to our business, please refer to Part I, *"Item 1 - Business"* of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

**Recent development**

**Our Business in Ningbo**

The Company explored new media project in Ningbo, China and decided to restart its business and expects that will improve the Company's future financial performance. In April 2022, the Company has established a newly subsidiary, NCN (Ningbo) Culture Media Co., Ltd ("NCN Ningbo"), a wholly foreign-owned enterprise in Ningbo, China. The Company owns 100% of the established subsidiary company, NCN Ningbo. In August 2022, NCN Ningbo started its operation and acquired rights to operate advertising panels in Ningbo, China and sell advertising airtime to our customers directly.

**Issuance of Convertible Promissory Note**

On January 18, 2022, the Company entered into a Subscription Agreement under which the Subscriber agreed to purchase the 1% Senior Unsecured Convertible Note Agreement from the Company for an agreement purchase price of two million five hundred thousand US Dollars ($2,500,000). On the same date, the Company signed the with 1% Senior Unsecured Convertible Note Agreement under which the Company may sell and issue to the Subscriber up to an aggregate maximum amount of $2,500,000 in principal amount of Convertible Notes prior to January 19, 2027. The Convertible Promissory Notes issued to the Investor are convertible at the holder's option into shares of Company common stock at $1.25 per share.

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**Exercise of conversion option**

On October 28, 2021, Keywin Holdings Limited ("Keywin") exercised its option to purchase an aggregate of 11,764,756 shares of the Company' common stock for an aggregate purchase price of $2,000,000 which for setting off against the Company's obligation to repay part of the short-term loan interest payable, there was no cash proceeds from the exercise of Keywin option.

**Private Placement**

On May 3, 2021, the Company entered into Common Stock Agreement with the foreign investor (the "New investor") that the Company will sell an aggregate of 200,000 shares of the Company's common stock to the New investor. Pursuant to the terms of a Common Stock Agreement between the Company and the New investor, the purchase price paid by the New investor for the shares were $3 per share for an aggregate sum of six hundred thousand U.S. dollars. The Company received $459,077 cash proceeds from the investor and $140,923 was settled for the interest payable of short-term loans.

**Increase of authorized capital**

On April 28, 2020, the Board of Directors and Majority of stockholders of the Company approved to increase the total number of authorized shares of Common Stock from 26,666,667 to 100,000,000,000. On October 11, 2021, we filed a Certificate of Amendment to our Certificate of Incorporation with the Delaware Secretary of State to increase our authorized shares of common stock from 26,666,667 to 100,000,000,000 and the increase had approved by Delaware secretary of state on April 5, 2022

**Identification of New projects**

On January 14, 2020, the Company entered into a Letter of Intent with Earthasia Worldwide Holdings Limited ("EWHL") that the Company will acquire 100% of the EWHL's issued and outstanding stock owned by the shareholders of the EWHL and the EWHL will become a wholly owned subsidiary of the Company.

On July 23, 2020, the Company entered into Share Exchange Agreement with Ease Global Limited ("Ease Global"), the shareholder of Trade More Global Limited ('Trade More") that the Company will purchase, One Thousand and One Hundred (1,100) currently issued shares of common stock of Trade More from Ease Global and in exchange for Forty-nine Million (49,000,000) shares of newly-issued shares of common stock of the Company. The closing of the Exchange shall occur on other date as agreed by the parties of the Share Exchange Agreement. Upon completion of the Exchange, 78% of issued shares of common stock of the Company shall be held by the Ease Global while all of the shares of capital stock of Trade More shall be held by the Company. EWHL is a wholly owned subsidiary of Trade More.

The closing of Exchange was not completed on September 2, 2020 which was due to the progress of audit. Since Ease Global cannot fulfill the revenue target and complete the audit, the Company considered the Share Exchange Agreement was lapsed.

**Results of Operations** 

*The following results of operations is based upon and should be read in conjunction with the Company's unaudited consolidated financial statements and the notes thereto included in Part I – Financial Information, "Item 1. Financial Statement." All amounts are expressed in U.S. dollars.*

***Comparison of Three Months Ended September 30, 2022 and September 30, 2021***

*Revenues*. Our revenues consist primarily of income from out-of-home advertising panels. We recognize revenue in the period when advertisements are either aired or published. Revenues for the three months ended September 30, 2022 was $22,534, as compared to $nil for the prior year, The increase was attributed to the start of business in Ningbo, China in August 2022.

*Cost of Revenues*. Cost of revenues primarily consists of fees to obtain rights to operate advertising panels. Cost of revenues for the three months ended September 30, 2022 was $17,237 as compared to $nil for the prior year, The increase was attributed to the start of business in Ningbo, China in August 2022.

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*General and Administrative Expenses **–*** General and administrative expenses primarily consist of compensation related expenses (including salaries paid to executive and employees, employee bonuses and other staff welfare and benefits, rental expenses, depreciation expenses, fees for professional services, travel expenses and miscellaneous office expenses). General and administrative expenses for the three months ended September 30, 2022 increased by 54% to $111,755, as compared to $72,702 for the corresponding prior year period. The increase in general and administrative expenses was mainly due to the increase in salary, audit fee and office expenses such as rent.

*Other income **–*** Other income for the three months ended September 30, 2022 was $718 was due from government grant received.

*Interest and Other Debt-Related Expenses **–*** Interest expense and other debt-related expenses for the three months ended September 30, 2022 was decreased by 83% to $71,076, as compared to $129,971 for the corresponding prior year period. The decrease was due from the conversion of short term loan to convertible note.

*Income Taxes **–*** The Company derives all of its income in the PRC and is subject to income tax in the PRC. No income tax was recorded during the three months ended September 30, 2022 and 2021, because the Company and all of its subsidiaries and variable interest entities operated at a taxable loss during the respective periods.

*Net Loss –* The Company incurred a net loss of $176,816 for the three months ended September 30, 2022, a decrease of 13%, as compared to a net loss of $202,673 for the corresponding prior year period.

***Comparison of Nine Months Ended September 30, 2022 and September 30, 2021***

*Revenues*. Our revenues consist primarily of income from out-of-home advertising panels. We recognize revenue in the period when advertisements are either aired or published. Revenues for the nine months ended September 30, 2022 was $22,534, as compared to $nil for the prior year, The increase was attributed to the start of business in Ningbo, China in August 2022.

*Cost of Revenues*. Cost of revenues primarily consists of fees to obtain rights to operate advertising panels. Cost of revenues for the nine months ended September 30, 2022 was $17,237 as compared to $nil for the prior year, The increase was attributed to the start of business in Ningbo, China in August 2022.

 

*General and Administrative Expenses* – General and administrative expenses for the nine months ended September 30, 2022 increased by 89% to $397,146, compared to $209,859 for the corresponding prior year period. The increase in general and administrative expenses was mainly due to increase of salaries, shares granted to director and office expenses.

*Other income **–*** Other income for the nine months ended September 30, 2022 was $2,771 was due from government grant received.

 

*Interest and Other Debt-Related Expenses* – Interest expense and other debt-related expenses for the nine months ended September 30, 2022 decreased to $223,500, or by 43%, compared to $389,878 for the corresponding prior year period. . The decrease was mainly due from the conversion of short term loan to convertible promissory note in early 2022.

*Income Taxes* – The Company derives all of its income in the PRC and is subject to income tax in the PRC. No income tax was recorded during the nine months ended September 30, 2022 and 2021 as the Company and all of its subsidiaries and its variable interest entities operated at a taxable loss during the respective periods.

*Net Loss* – The Company incurred a net loss of $636,578 for the nine months ended September 30, 2022, compared to of $599,737 for the corresponding prior year period. The result was mainly driven by the increase in general and administrative expenses

**Liquidity and Capital Resources**

As of September 30, 2022, we had cash of $2,657, as compared to $21,677 as of December 31, 2021, an insignificant increase of $19,020. The decrease was due to payment of expenses.

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The following table sets forth a summary of our cash flows for the periods indicated:

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|:---|:---|:---|
|  | **For the Nine Months Ended** | **For the Nine Months Ended** |
|  | **September 30, 2022** | **September 30, 2021** |
| Net cash used in operating activities | $(187110) | $(320335) |
| Net cash used in investing activities | (1078) |  |
| Net cash provided by financing activities | 169405 | 320513 |
| Effect of exchange rate changes on cash | (237) | 248 |
| Net increase in cash | (19020) | 426 |
| Cash, beginning of period | 21677 | 5967 |
| Cash, end of period | $2657 | $6393 |

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***Operating Activities***

Net cash used in operating activities for the nine months ended September 30, 2022 was $187,110, as compared to net cash provided by operating activities amounting to $320,335 for the corresponding prior year period. This was mainly attributable to increase in payments for expenses during the nine months ended September 30, 2022.

Our cash flow projections indicate that our current assets and projected revenues from our existing project will not be sufficient to fund operations over the next twelve months. This raises substantial doubt about our ability to continue as a going concern. We intend to rely on the issuance of additional equity and debt securities as well as on our note holders' exercise of their conversion option to convert our notes to our common stock, in order to fund our operations. However, it may be difficult for us to raise funds in the current economic environment. We cannot give assurance that we will be able to generate sufficient revenue or raise new funds, and our note holders will exercise their conversion option before the note is due. In any such case, we may not be able to continue as a going concern.

***Investing Activities***

Net cash used in investing activities for the nine months ended September 30, 2022 and 2021 was $1,078 and $nil.

***Financing Activities***

Net cash provided by financing activities was $169,405 for the nine months ended September 30, 2022, as compared to $320,513 for the corresponding prior year period. The decrease was mainly due to proceeds from short term loan during the nine months ended September 30, 2022 as compared to 2021.

***Short-term Loan***

As of September 30, 2022, the Company recorded an aggregated amount of $1,137,616 short-term loans. Those loans were borrowed from unrelated individuals. Those loans with an aggregate amount of $1,009,411 are unsecured, bear a monthly interest of 1.5% and shall be repayable in one month and loan with an aggregate amount of $128,205 is unsecured, bear a yearly interest of 1% and shall be repayable in one month. However, according to the agreement, the Company shall have the option to shorten or extend the life of those short-term loans if the need arises and the Company has agreed with the lender to extend the short-term loans on the due date. Up to the date of this report, those loans have not yet been repaid.

***Capital Expenditures***

Net cash used in investing activities for the nine months ended September 30, 2022 was $1,078 from the purchase of office equipment.

**Contractual Obligations and Commercial Commitments**

The following table presents certain payments due under contractual obligations with minimum firm commitments as of September 30, 2022:

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|:---|:---|:---|:---|:---|:---|
|  | **Payments due by period** | **Payments due by period** | **Payments due by period** | **Payments due by period** | **Payments due by period** |
|  | **Total** | **Due in**<br> **2022** | &nbsp;&nbsp;&nbsp;**Due in**<br> **2023–2024** | **Due in**<br> **2025-2026** | **Thereafter** |
| Debt Obligations (a) | $645000 | $- | $- | $645000 | $- |
| Debt Obligations (a) | 2500000 |  |  |  | 2500000 |
| Short Term Loan (b) | 1137616 | 1137616 |  |  |  |

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***(a) Debt Obligations***. We issued an aggregate of $645,000 in 1% Convertible Promissory Notes in January 2020 and such 1% Convertible Promissory Notes matured in January 2025 and we issued an aggregate of $2,500,000 in 1% Convertible Promissory Notes in January 2022 and such 1% Convertible Promissory Notes matured in January 2027. For details, please refer to the Note 8 of the consolidated financial statements.

***(b) Short Term Loan.*** We have entered into short-term loan agreements with unrelated individuals. Those loans with an aggregate amount of $1,009,411 are unsecured, bear a monthly interest of 1.5% and shall be repayable in one month and loan with an aggregate amount of $128,205 is unsecured, bear a yearly interest of 1% and shall be repayable in one month. However, according to the agreement, the Company shall have the option to shorten or extend the life of those short-term loans if the need arises and the Company has agreed with the lender to extend the short-term loans on the due date. Up to the date of this report, those loans have not yet been repaid.

**Recent Accounting Pronouncements**

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and we do not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position or results of operations.

**Off Balance Sheet Arrangements**

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our investors.

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| **ITEM 3.** | **QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.** |

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Not applicable.

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|:---|:---|
| **ITEM 4.** | **CONTROLS AND PROCEDURES.** |

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**Evaluation of Disclosure Controls and Procedures**

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure that information that would be required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time period specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including to our Chief Executive Officer and Interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15 under the Exchange Act, our management evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2022. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of September 30, 2022, and as of the date that the evaluation of the effectiveness of our disclosure controls and procedures was completed, our disclosure controls and procedures were effective to satisfy the objectives for which they are intended.

**Changes in Internal Control Over Financial Reporting** 

We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.

There has been no change to our internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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**PART II**

**OTHER INFORMATION**

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|:---|:---|
| **ITEM 1.** | **LEGAL PROCEEDINGS.** |

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From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these, or other matters, may arise from time to time that may harm our business.

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|:---|:---|
| **ITEM 1A.** | **RISK FACTORS.** |

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There have been no material changes to the risk factors disclosed in Item 1A of our Form 10-K for the fiscal year ended December 31, 2021, other than as disclosed below. Additional risks and uncertainties, including risks and uncertainties not presently known to us, or that we currently deem immaterial, could also have an adverse effect on our business, financial condition and/or results of operations.

***The ongoing COVID-19 pandemic could adversely affect our business, results of operations and financial condition.***

The outbreak of COVID-19 was declared a pandemic by the World Health Organization on March 11, 2020. Since that time, COVID-19 has spread around the world and throughout the United States, including in the regions and communities in which we operate. Federal, state and local governments in the U.S and around the world have imposed restrictions on travel and business operations and are advising or requiring individuals to limit or eliminate time outside of their homes. Temporary closures of businesses have also been ordered in certain jurisdictions, and other businesses have temporarily closed voluntarily. These actions expanded significantly in March and April of 2020 throughout the U.S. Consequently, the COVID-19 outbreak has severely restricted the level of economic activity in the U.S. and around the world.

The outbreak has resulted in authorities implementing numerous measures to try to contain the virus, such as quarantines and shelter in place orders. The spread of the virus has caused us to modify our business practices (including employee work locations and cancellation of physical participation in meetings) in ways that may be detrimental to our business (including working remotely and its attendant cybersecurity risks). We may take further actions as may be required by government authorities or that we determine are in the best interests of our employees. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus or otherwise be satisfactory to government authorities.

Our existing cash together with highly liquid current assets are insufficient to fund the Company's operations for the next twelve months. The Company will need to rely upon some combination of cash generated from the Company's operations, the proceeds from the potential exercise of the outstanding option held by Keywin Holdings Limited ("Keywin") to purchase $2 million in shares of the Company's common stock, or proceeds from the issuance of the Company's equity and debt securities as well as the exercise of the conversion option by the Company's note holders to convert the notes to the Company's common stock, in order to maintain the Company's operations. However, it may be difficult for us to raise funds in the current economic environment. If adequate capital is not available to us, our operations and financial condition could be adversely impacted.

The effect of COVID-19 and related events, including those described above and those not yet known or knowable, could have a negative effect on our stock price, business prospects, financial condition, and results of operations.

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| | |
|:---|:---|
| **ITEM 2.** | **UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.** |

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We have not sold any equity securities during the quarter ended September 30, 2022 which sale was not previously disclosed in a current report on Form 8-K filed during that period.

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| | |
|:---|:---|
| **ITEM 3.** | **DEFAULTS UPON SENIOR SECURITIES.** |

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None.

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| | |
|:---|:---|
| **ITEM 4.** | **MINE SAFETY DISCLOSURES**. |

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Not applicable.

[**Table of Contents**](#toc)

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| | |
|:---|:---|
| **ITEM 5.** | **OTHER INFORMATION.** |

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Not applicable.

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| | |
|:---|:---|
| **ITEM 6.** | **EXHIBITS.** |

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The following exhibits are filed as part of this report or incorporated by reference:

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| | |
|:---|:---|
| **Exhibit No.** | &nbsp;&nbsp;&nbsp;**Description** |
| 31.1 | &nbsp;&nbsp;&nbsp;[Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.](ex31_1.htm) |
| 31.2 | &nbsp;&nbsp;&nbsp;[Certifications of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.](ex31_2.htm) |
| 32.1 | &nbsp;&nbsp;[Certifications of Principal Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.](ex32_1.htm) |
| 32.2 | &nbsp;&nbsp;[Certifications of Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.](ex32_2.htm) |
| 101 \* | &nbsp;&nbsp;Financial statements and footnotes of Network CN Inc. for the fiscal quarter ended September 30, 2022, formatted in XBRL (eXtensible Business Reporting Language) pursuant to Rule 405 of Regulation S-T (furnished herewith) |
| 104 | &nbsp;&nbsp; Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |

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\* Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Act of 1934, as amended, and otherwise are not subject to liability under those sections.

[**Table of Contents**](#toc)

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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| | | |
|:---|:---|:---|
| Date: January 4, 2023 | **NETWORK CN INC.** | **NETWORK CN INC.** |
|  | By: | /s/ Earnest Leung |
|  |  | Earnest Leung, Chief Executive Officer |
|  |  | (*Principal Executive Officer*) |
|  | By: | /s/ Shirley Cheng |
|  |  | Shirley Cheng, Chief Financial Officer |
|  |  | (*Principal Financial Officer and Principal*<br> *Accounting Officer*) |

---

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATIONS**

I, Earnest Leung, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Network CN Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: January 4, 2023

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| |
|:---|
| /s/ Earnest Leung |
| Earnest Leung |
| *Chief Executive Officer*<br> *(Principal Executive Officer)* |

---

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATIONS**

I, Shirley Cheng, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Network CN Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: January 4, 2023

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| |
|:---|
| /s/Shirley Cheng |
| Shirley Cheng |
| *Chief Financial Officer*<br> *(Principal Financial Officer and Principal*<br> *Accounting Officer)* |

---

## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906<br> OF THE SARBANES-OXLEY ACT OF 2002** 

The undersigned, Earnest Leung, the Chief Executive Officer of NETWORK CN INC. (the "Company"), DOES HEREBY CERTIFY that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 (the "Report"), fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

IN WITNESS WHEREOF, each of the undersigned has executed this statement this 4th day of January 2023.

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| |
|:---|
| <u>/s/ Earnest Leung</u> |
| Earnest Leung |
| Chief Executive Officer |
| (Principal Executive Officer) |

---

A signed original of this written statement required by Section 906 has been provided to Network CN Inc. and will be retained by Network CN Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

The forgoing certification is being furnished to the Securities and Exchange Commission pursuant to § 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

## Exhibit 32.2

**Exhibit 32.2**

**CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906<br> OF THE SARBANES-OXLEY ACT OF 2002** 

The undersigned, Shirley Cheng, the Interim Chief Financial Officer of NETWORK CN INC. (the "Company"), DOES HEREBY CERTIFY that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 (the "Report"), fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

IN WITNESS WHEREOF, each of the undersigned has executed this statement this 4th day of January 2023.

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| |
|:---|
| <u>/s/Shirley Cheng</u> |
| Shirley Cheng |
| Chief Financial Officer |
| (*Principal Financial Officer and Principal Accounting Officer*) |

---

A signed original of this written statement required by Section 906 has been provided to Network CN Inc. and will be retained by Network CN Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

The forgoing certification is being furnished to the Securities and Exchange Commission pursuant to § 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.