NowNews Digital Media Technology Co. Ltd. - FORM 10-K

Attached files

file	filename
EX-32.2 - EXHIBIT 32.2 - NowNews Digital Media Technology Co. Ltd.	v462676_ex32-2.htm
EX-32.1 - EXHIBIT 32.1 - NowNews Digital Media Technology Co. Ltd.	v462676_ex32-1.htm
EX-31.2 - EXHIBIT 31.2 - NowNews Digital Media Technology Co. Ltd.	v462676_ex31-2.htm
EX-31.1 - EXHIBIT 31.1 - NowNews Digital Media Technology Co. Ltd.	v462676_ex31-1.htm
EX-21.1 - EXHIBIT 21.1 - NowNews Digital Media Technology Co. Ltd.	v462676_ex21-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

FORM 10-K

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

For the fiscal year ended December 31, 2016

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

For the transition period from __________________ to ___________________

Commission file number: 333-171637

NOWNEWS DIGITAL MEDIA TECHNOLOGY CO. LTD.

(Exact name of registrant as specified in its charter)

Nevada		36-4794119
State or other jurisdiction of		(I.R.S. Employer
Incorporation or organization		Identification No.)

4F, No. 32, Ln. 407, Sec. 2, Tiding Road, Neihu District, Taipei City, Taiwan		114
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: +86-451-8233-5794

Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered pursuant to section 12(g) of the Act:

Common Stock, Par Value $0.001

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ¨ Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ¨ Yes x No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). x Yes ¨ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

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

Large accelerated filer ¨

Accelerated filer ¨

Non-accelerated filer ¨ (Do not check if a smaller reporting

company)

Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

¨ Yes x No

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the bid and asked price of such common equity, as of the last business day of the registrant’s 2016 second fiscal quarter was approximately $79.02 million based on the closing price of $4.90 on June 30, 2016.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ¨ Yes ¨ No

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

The number of shares of common stock, par value $0.001 (the “Common Stock”), outstanding as of May 2, 2017 is 23,072,000.

DOCUMENTS INCORPORATED BY REFERENCE

None.

Table of Contents

		Page

	PART I	3

Item 1.	Business.	3

Item 1A.	Risk Factors.	14

Item 1B.	Unresolved Staff Comments.	14

Item 2.	Properties.	14

Item 3.	Legal Proceedings.	14

Item 4.	Mine Safety Disclosures.	15

	PART II	15

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	15

Item 6.	Selected Financial Data.	16

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	16

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	26

Item 8.	Financial Statements and Supplementary Data.	F-1

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	27

Item 9A.	Controls and Procedures.	27

Item 9B.	Other Information.	28

	PART III	28

Item 10.	Directors, Executive Officers, and Corporate Governance.	28

Item 11.	Executive Compensation.	30

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	32

Item 13.	Certain Relationships and Related Transactions, and Director Independence.	33

Item 14.	Principal Accountant Fees and Services.	34

Item 15.	Exhibits, Financial Statement Schedules.	35

Cautionary Statement Regarding Forward Looking Statements

The discussion contained in this Annual Report on Form 10-K (“Annual Report”) contains “forward-looking statements” within the meaning of Section 27A of the United States Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the United States Securities Exchange Act of 1934, as amended, or the Exchange Act. Any statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases like “anticipate,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “target,” “expects,” “management believes,” “we believe,” “we intend,” “we may,” “we will,” “we should,” “we seek,” “we plan,” the negative of those terms, and similar words or phrases. We base these forward-looking statements on our expectations, assumptions, estimates and projections about our business and the industry in which we operate as of the date of this Annual Report. These forward-looking statements are subject to a number of risks and uncertainties that cannot be predicted, quantified or controlled and that could cause actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Statements in this Annual Report describe factors, among others, that could contribute to or cause these differences. Actual results may vary materially from those anticipated, estimated, projected or expected should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect. Because the factors discussed in this Annual Report could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement made by us or on our behalf, you should not place undue reliance on any such forward-looking statement. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement. Except as required by law, we undertake no obligation to publicly revise our forward-looking statements to reflect events or circumstances that arise after the date of this Annual Report or the date of documents incorporated by reference herein that include forward-looking statements.

PART I

Item 1. Business.

Corporate History

We were incorporated as Forever Zen Ltd. on March 20, 2010 under the laws of the State of Nevada. On December 13, 2013, we changed our name to NowNews Digital Media Technology Co., Ltd. and planned to enter into the business of internet media and news content. Prior to the Share Exchange described below, we were a development stage company and had not yet realized any revenues from our planned operations.

On November 14, 2014, we entered into and closed a share exchange agreement (the “Share Exchange Agreement”), with Worldwide Media Investments Corp., an Anguilla corporation (“Worldwide”), the shareholders of Worldwide, and NOWnews Network Co., Ltd., a Taiwan corporation (“NOWnews Network”). Pursuant to the Share Exchange Agreement, (i) the Company issued an aggregate of 20,000,000 shares of common stock to the shareholders of Worldwide in exchange for all the issued and outstanding capital stock of Worldwide. Worldwide, through its wholly owned subsidiary, Sky Media Investments Co., Ltd. (“Sky Media”), owns 66% of all the issued and outstanding capital stock of NOWnews Network(the “Share Exchange”). As a result of the Share Exchange, Worldwide and Sky Media become our wholly owned subsidiary and NOWnews Network is now our majority owned subsidiary in which we indirectly holds 66% of the equity interest. Upon consummation of the Share Exchange, we ceased to be a shell company.

On August 5, 2015, NOWnews Network, Sky Media, Mr. Alan Chen and his spouse, Ms. Chiu-Li Tu, entered a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Gamania Digital Entertainment Co. Ltd. (“Gamania Digital”) and Ta Ya Venture Capital Co. Ltd. (“Ta Ya”). Pursuant to the Stock Purchase Agreement, NOWnews Network issued 1,650,000 and 350,000 shares to non-controlling shareholders on August 14, 2015 and September 8, 2015, respectively. On November 30, 2016, NOWnews Network issued 1,000,000 shares to non-controlling shareholders. As a result, we then indirectly held 53.09% of NOWnews Network’s equity interest.

On August 19, 2015, we incorporated Dawnrain Media Co., Ltd. (“Dawnrain”) in the Republic of Seychelles (“Seychelles”). Dawnrain is our wholly owned subsidiary. On August 27, 2015, Dawnrain incorporated New Taoyard Cultural Transmission Co., Ltd. (“New Taoyard”) in Seychelles. On November 15, 2016, we incorporated Asia Well Ltd. in Seychelles.

On February 22, 2017, Sky Media entered into a stock purchase agreement with Jin Hao Kang Marketing Co., Ltd (“Jin Hao Kang”), pursuant to which Sky Media purchased 1,065,000 shares of NOWnews Network held by Jin Hao Kang for a purchase price of NT $937,200 (approximately US$30,930).

On February 22, 2017, NOWnews Network entered into a new stock purchase agreement with Gamania Digital, pursuant which NOWnews Network issued 2,200,000 shares to non-controlling shareholders for a purchase price of NT$ 22,000,000 (approximately US$725,534) on April 13, 2017. As a result of this purchase of stock, we now indirectly hold 52.49% of NOWnews Network’s equity interest.

Corporate Structure

The diagram below illustrates our corporate structure as of the date of this report:

Worldwide was incorporated in Anguilla on June 4, 2013 under the Anguilla International Business Companies Act, 2000. Worldwide is a holding company and has not carried out substantive business operations of its own. Mr. Alan Chen is the sole director and controlling beneficiary shareholder of Worldwide.

Sky Media was incorporated under the laws of Anguilla on June 4, 2013.

NOWnews Network Co. Ltd. (“NOWnews Network”) was incorporated in Taipei City, Taiwan on June 8, 2006. NOWnews Network is a media company with operations in Taiwan and is our primary operating subsidiary as of December 31, 2016.

NOWnews Network owns 55% of the equity interest of Nownews International Marketing Co., Ltd, a Taiwan corporation (“Nownews International”), primarily engaged in sales of advertising spaces in newspapers. The operation of Nownews International was terminated in December 2013. On January 17, 2017, Nownews International started the liquidation process and registered as a dissolved company in process.

Dawnrain was incorporated in Seychelles on August 19, 2015. Dawnrain is a holding company and has not carried out substantive business operations of its own.

On August 27, 2015, Dawnrain incorporated New Taoyard Cultural Transmission Co., Ltd. in Seychelles. New Taoyard is a holding company and has not carried out substantive business operations of its own.

On November 15, 2016, Asia Well Ltd. was incorporated in Seychelles. Asia Well Ltd. is a holding company and has not carried out substantive business operations of its own.

As of the date of this report, each of Dawnrain and New Taoyard has 30,000,000 issued and outstanding shares with a par value of $1 per share. Asian Well Ltd. has 2,250,000 issued and outstanding shares with a par value of $1 per share. As of the date of this report, no capital has been paid into any of these three Seychelles companies. Each of Dawnrain, New Taoyard and Asian Well Ltd. has been in the process of amending its share registry to reduce the amount of the issued and outstanding shares to 100 shares and expects to complete such amendments by the end of May, 2017.

Recent Development

In an effort to expand the Company’s business, we entered into several agreements with companies in various industries. On April 13, 2016, the Company entered into a share exchange agreement with Beijing Xintongying Culture and Communications Co. Ltd. (“Xintongying”). Xintongying is a leading radio advertising agency providing services including radio media planning, regular advertisement media planning, product placement planning, audio production, media buying service and advertising monitoring. Upon consummation of the share exchange, Beijing Xintongying will become a wholly owned subsidiary of the Company.

On October 4, 2016, the Company entered into a share exchange agreement with MySong Industrial Co., Ltd. (“MySong”). MySong was first established in 1979 and is the industry leader of Taiwan karaoke tape industry and the first to introduce Japanese karaoke products into Taiwan. Owning copyrights to more than 3000 hit pop songs, MySong can make the copyrighted songs into different formats for various software. Upon consummation of the share exchange, MySong will become a wholly owned subsidiary of the Company. The Company’s management anticipates that, after becoming our wholly-owned subsidiary, MySong will enhance the cooperation with China Audio-Video Copyright Association to generate more income from copyright fees and assist the agency marketing business of various types of audio and video works.

On November 19, the Company entered into another share exchange agreement with Lao Development Holding Limited and its shareholders. Lao Development holds 19% of Lao Construction Bank's stocks. Upon the closing of the share exchange, the Company will own 19% of Lao Construction Bank's stocks. Lao Construction Bank is a fully licensed bank established in 2012, providing foreign currency deposit, currency exchange and other local financial services. The Company’s management expects that Lao Construction Bank will act as a window of investment for the Company by assisting the Company in screening and evaluating potential investment targets in the future.

On January 14, 2017, the Company entered into a cooperation agreement with Earl International Development Sdn. Bhd. (“Earl”), pursuant to which Earl appointed the Company as its general cooperative partner to solicit international construction companies for the "Prefer 1 Malaysia" ("PR1MA") project, which was established by the Malaysian government and aims to build one million PR1MA homes in the next ten years.

The above developments were disclosed in the Company’s current reports on Form-8K filed with the SEC on April 15, 2016, October 7, 2016, November 23, 2016 and January 18, 2017, respectively.

Principal Services

We generate our revenues primarily from online advertising and marketing services and news content licensing.

Advertising and Marketing

Our advertising product offerings consist of banner, button, text-link and video advertisements that appear on pages within our website, and advertising campaign design and management services. Our primary advertising and sponsorship client base for advertising and sponsorships includes international and local companies. We offer brand advertising services in display formats on our website as well as performance-based online marketing solutions, such as promoted feeds on mobile or tablet. Display advertising comprises the text, images and other interactive ads that run across the web on computers and mobile devices, including content specially formatted to be displayed on smartphones, tablets and other mobile personal digital devices.

We also provide advertising campaign design and management services for a fee. Our services include design and implementation of marketing and advertising projects consisting of content advertising through publishing topic news and experience articles, pop-up or embedded advertisements on our website or applications, creation of visual/mobile/audio advertisement, etc. Through these services, we help our clients establish their corporate image and brand and market their products.

News Content Licensing

We have our own team comprising journalists and editors who produce approximately 350 - 500 news articles/reports on a daily basis, covering real-time diversified news including politics, finance, life, technology, sport, entertainment, travel and others. Besides, NOWnews Network also licenses its self-created news content to major portals and corporate partners with more extensive news network, such as Yahoo Hong Kong, Yahoo Taiwan, MSN Taiwan, Yam, Sina Taiwan, Taiwan Mobile, Chunghwa Telecom, Far EasTone Telecommunications Co. Ltd., Vibo Telecom, etc.

Historically, we provided editing services to customers including selecting, sorting, editing news for other website operators such as Yahoo Taiwan. We ceased this service in December 2013 because this service was not profitable. In addition, we used to provide film/video editing services and licensed copyrights to a related party, Chunghwa Wideband Best Network Co., Ltd., and stopped in later 2013.

Seasonality

We have experienced seasonality in our online advertising business. Historically, the periods from May through August and from November to January have seen increase of more than 20% in advertising revenues due to the summer break and the winter holiday season. February has historically been the worst month for our advertising business as it is after the Lunar New Year holidays when advertising revenues are generally down nationwide. Past performance may not be indicative of future trends, as the mix of advertising industry sectors, which may have different seasonality factors, may shift from quarter to quarter. There is no seasonality in its licensing business.

Major Customers

For the fiscal year ended December 31, 2016, our top three customers and their respective sale amount are as follows:

			Percentage of Total
Name	Sales ($)		Revenue
Kose Corporation		344,935		11.05	%
Zenithoptimedia Co., Ltd.		177,649		5.69	%
GuoShi Partners Co.		162,945		5.22	%

For the fiscal year ended December 31, 2015, our top three customers and their respective sale amount are as follows:

			Percentage of Total
Name	Sales ($)		Revenue
Google		221,062		9.00	%
Zenithoptimedia Co., Ltd.		178,662		7.27	%
GuoShi Partners Co.		172,501		7.02	%

Employees

As of the date of this report, we have 88 employees, all of whom are full-time and are based in Taiwan. The breakdown of our employees based on departments is set forth below:

Department		Number of Employees
News		52
Sales and Marketing		17
Innovation and Development		12
Finance		2
Administration		5

There are no collective bargaining contracts covering any of our employees. We believe our relationship with our employees is satisfactory.

Regulation

Regulatory Authorities

We are subject to the supervision of the National Communications Commission of Republic of China (the “NCC”). The NCC was established in February 2006.

Permits, Licenses and Approvals

Pursuant to the Provisions on Broadcasting and Television Program Supply, to obtain the permit to engage in broadcasting and TV program supply business, we are required to meet two criteria: (i) minimum registered capital of NT$1,200,000 and (ii) minimum office area of approximately 377square feet. The operating permit should be obtained from Ministry of Culture before we apply for the business license for regular companies. As of the date of this report, NOWnews Network has obtained the approval for (i) production and distribution of radio and TV programs and (ii) radio and TV advertisement.

We believe we have all requisite permits, approvals and licenses to conduct our businesses.

Rating of Internet Content

The Regulations for the Rating of Internet Content was abolished by the NCC in 2012. At present, the rating of internet content is governed by Article 46 of the Protection of Children and Youths Welfare and Rights Act (last amended on August 8, 2012), which requires that all internet platform providers adopt their own rules implementing “clear and practicable” protection measures in accordance with the internet content supervisory institutions engaged by the NCC and other relevant authorities to prevent youth and children from having access to harmful internet contents. An internet platform provider is required to restrict children and youths from having access to internet content upon the relevant authority’s notification that such internet contents may be harmful or that such internet platform provider failed to implement “clear and practicable” protection measures.

Personal Data Protection Act

On May 26, 2010, the President of the Republic of China announced the amendment of the Personal Information Protection Act, or PIPA, which replaced the former Computer-Processed Personal Data Protection Act, or CPPDPA, and became fully effective on October 1, 2012, except for its Articles 6 and 54 that await further determination by the Executive Yuan. Under the PIPA, every individuals or governmental or non-governmental agencies, including us, should be subject to certain requirements and restrictions for collecting, processing or using personal data. The definition of “personal data” is extended to cover a broad scope, including name, birthday, ID, special features, fingerprints, marriage status, family, education, occupation, medical records, medical history, generic information, sex life, health examination report, criminal records, contact information, financial status, social activities, and any other data which is sufficient to directly or indirectly identify a specific person. If we fail to comply with the PIPA, we may be subject to serious punishment for civil claims, criminal offenses and administrative liabilities: the ceiling of the aggregate compensation amount for damages payable in a single case will be up to NT$200 million or the actual value of loss arising from our violation provided the amount of actual value of such loss is higher than NT$200 million; the defendant may be subject to an imprisonment of up to five years; and the penalty for administrative liabilities will be up to NT$500,000 for each violation, and may be imposed consecutively if such violation continues.

Foreign Investment

Pursuant to the provisions of the Statute for Investment by Foreign Nationals, there are only a few industries where foreign investments are restricted. None of the businesses of NOWnews Network fall under the restricted industries. Therefore, there is no restriction on foreign ownership in NOWnews. However, Taiwan restricts investments by the PRC nationals. In accordance with the Rules on Investment Permit by Nationals from the People’s Republic of China, only certain industries are open to the PRC nationals. The following businesses of NOWnews Network are open to the PRC nationals: Online and catalog shopping, non-store retail, portal website operation, data processing, website management and related services.

News Regulation

As a news generator, we are subject to regulations on contents of news. We are prohibited from creating or distributing certain news including but not limited to the following:

News that damages people’s reputation

News that invades people’s privacy

News that involves information on national defense

News that might influence judicial proceedings

Depending on the circumstances, in the event of violation of any of the foregoing restrictions, we may be subject to fines or criminal liabilities. In addition, we need to comply with requirements on news regarding election, public polls, and pharmaceuticals, etc.

Regulation on Advertisement

Companies are prohibited from using false or misleading advertising language and advertising agencies cannot help its clients design or create untrue or misleading advertisements. Otherwise, the agencies may be subject to the same liabilities as their clients.

Foreign Exchange

Foreign exchange regulation in Taiwan is primarily governed by the Ordinance of Foreign Exchange Administration, latest amended on April 29, 2009 (the “Foreign Exchange Ordinance”). Under the Foreign Exchange Ordinance, foreign exchange refers to foreign currency, bills and marketable securities. The authority managing the administration of foreign exchange is Ministry of Finance of Republic of China, while the authority managing the practical operation of foreign exchange business is Central Bank of Republic of China. The Foreign Exchange Ordinance also specifies the allocated power of Ministry of Finance and Central Bank, respectively. To the extent that any foreign exchange receipts, payments or transactions reach the threshold of NT$500,000 ($15,432) or equivalent in foreign currency, it must be reported to the Central Bank or its designated authorities. Upon incurrence of any of the following events, the State Council of Republic of China may determine and announce that for a period of time, to close the foreign exchange market, suspend or restrict all or partial foreign exchange payment, order a mandatory sale or deposit of all or partial foreign exchange into a designed bank, or dispose in any other manner as it deems necessary:

the disorder in domestic or international economy to the detriment of the stability of Taiwan’s economy; or Taiwan suffers serious trade deficit.

Tax

The current principal regulations governing tax in Taiwan include the following:

Income Tax Law, latest amended on July 27, 2016;

The Implementation Rules of Income Tax Law, latest amended on September 30, 2014;

Value-Added and Non-Value-Added Business Tax Law, latest amended on December 28, 2016; and

The Implementation Rules of Value-Added and Non-Value-Added Business Tax Law, latest amended on December 23, 2015.

Under the Income Tax Law, there are two kinds of income tax, comprehensive income tax for individuals and income tax for enterprises operating for profit, respectively.

Individuals who have income with a source within Taiwan must pay comprehensive income tax on their income sourced within Taiwan; while non-resident individuals having income with a source within Taiwan, except otherwise provided in the Income Tax Law, shall pay tax based on the amount attributable to the sources of their income.

The enterprise with head office located in Taiwan shall pay profit-seeking income tax on its global income both within and outside Taiwan; while the enterprises with head office outside Taiwan shall only pay profit-seeking income tax on its business income sourced from within Taiwan.

Rate of Income Tax

The individual comprehensive income tax exemption threshold is NT$60,000 ($1,852) per person per year. Any income beyond such exemption threshold is subject to a progressive tax rate ranging from 5% to 45%.

With respect to enterprises operating for profit, the exemption threshold is NT$120,000 ($3,704). Any income beyond such exemption threshold is subject to 17% tax rate on its taxable income.

Sale of goods or service, import of goods in Taiwan are subject to a Value-Added or Non-Value-Added Business Tax. The Rate of business tax, except as otherwise stipulated in the relevant tax law, ranges from 5% to 10% as determined by the State Council of Taiwan.

Enforceability of Judgments in Taiwan

All of our directors and executive officers named in this report are residents of Taiwan and substantially all of our assets and the assets of those persons are located in Taiwan. As a result, it may not be possible for investors to effect service of process upon us or those persons outside of Taiwan, or to enforce against them judgments obtained in courts outside of Taiwan. Any final judgment obtained against us in any court other than the courts of the Republic of China in connection with any legal suit or proceeding arising out of or relating to our securities will be enforced by the courts of the Republic of China without further review of the merits only if the court of the Republic of China in which enforcement is sought is satisfied that:

the court rendering the judgment has jurisdiction over the subject matter according to the laws of the Republic of China;

the judgment and the court procedure resulting in the judgment are not contrary to the public order or good morals of the Republic of China;

if the judgment was rendered by default by the court rendering the judgment, we, or our officers and directors, were duly served within a reasonable period of time in accordance with the laws and regulations of the jurisdiction of the court or process was served on us with judicial assistance of the Republic of China; and

judgments at the courts of the Republic of China are recognized and enforceable in the court rendering the judgment on a reciprocal basis.

A party seeking to enforce a foreign judgment in the Republic of China would be required to obtain foreign exchange approval from the Central Bank of the Republic of China (Taiwan) for the payment out of Taiwan of any amounts recovered in connection with the judgment denominated in a currency other than NT dollars if a conversion from NT dollars to a foreign currency is involved.

Market Opportunities

Our current primary focus is on the Taiwan market. The success of our business is tied to the size and vitality of Taiwan’s economy. According to the International Monetary Fund, Taiwan’s gross domestic product in 2016 grew 0.97% year over year to $519.15 billion.

Taiwan has one of the most advanced telecommunications networks in Asia. With excellent telecommunications infrastructure in place and the innovative use of breakthrough information technologies, Taiwan continues to be well placed to drive both mobile and data communications services.

Competition

The market for Web sites offering online content and services targeting the global Chinese community is competitive and we expect competition to increase in the future. Many of the companies attempting to address this market offer portal, content and e-commerce services. The following table lists the Chinese-language Web sites that we believe are currently our primary competitors in Taiwan:

udn.com

appledaily.com.tw

Chinatimes.com

ltn.com.tw

ettoday.net

As internet usage in Mainland China, Hong Kong, Macau and Taiwan (collectively, the “Greater China”) increases and the Greater China market becomes more attractive to advertisers and for conducting fee-based services, large global competitors, such as Facebook, LinkedIn, Google, Twitter, Line, Kakao and WhatsApp, may increasingly focus their resources on the Greater China market. We cannot assure you that we will succeed in competing against the established and emerging competitors in the market. The increased competition could result in reduced traffic, loss of market share and revenues, and lower profit margins.

Our ability to compete successfully depends on many factors, including the quality of our content, the breadth, depth and ease of use of our services, our sales and marketing efforts and the performance of our technology.

Competitive Strength

We provide online content and services for the global Chinese community with a focus on Taiwan, including but not limited to informational features, social media and social networking services as well as other fee-based services. This industry can be characterized as highly competitive and rapidly changing due to the fast growing market demand. Barriers to entry are relatively low, and current and new competitors can launch new websites or services at a relatively low cost. Many companies offer various content and services targeting this community that compete with us. Many of our competitors have greater financial resources, a longer history of providing online services, a larger and more active user base, more established brand names and currently offer a greater breadth of products that may be more popular than our online offerings. However, we believe that we possess the following competitive strengths that enable us to compete effectively:

We have an outstanding editorial team which produces hundreds of news on a daily basis, covering real-time diversified news including politics, finance, life, technology, sport, entertainment, travel and others. Besides, we license our self-created news content to major portals and corporate partners with a stable and extensive news network. We believe this is very critical to attract readers and increase traffic volume of our website.

We have been focusing on new media operations and interaction with its members and fans. We believe we are the first news media which opened official accounts on LINE and WeChat, two very popular mobile messengers in Asia and created NOWnews Network fan group on Facebook.

With the growing popularity of mobile devices, we are the first to develop applications on mobile devices offering users real-time news anywhere at any time. The current daily traffic on our website exceeds 14 million and is mobile website has a daily traffic volume of approximately 4 million.

We have won many awards and is highly recognized and rated among our peers. Recognition and awards include:

10th among the top 100 websites in Taiwan in the survey conducted by comScore

18th on the “Top 100 Hottest Websites in Taiwan” and first among the original news websites by Digital Times in 2014

22th on the “Top 100 Most Popular Fan Clubs in Taiwan” by Digital Times in 2013

The Seventh and Eighth Quality Journalism Awards by the Ministry of the Interior of Taiwan

The 13th Cross-Strait News Reporting Award – Citizen News

The 2011 Excellent Alliance Partners by Yahoo Shopping Center

We have a very large member base, which includes approximately 350,000 Facebook fans and 820,000 LINE subscribers and 100,000 Wechat subscribers. We believe this member base will keep increasing and we will leverage this membership base to expand our business. PRC implements strict control over the media. However, we are the only Taiwan internet media to which the PRC residents have full access – this, we believe, provides us with access to a very large potential reader base and tremendous business opportunities. Currently, approximately 8% of our traffic is from the PRC. Through our platform, we can build a cross-strait service system where we can promote Taiwan’s services or products to readers in the PRC. However, PRC regulatory authorities may find the contents on our website/mobile applications objectionable and block users in China from accessing our website and/or mobile applications.

Technology Infrastructure

Our operating infrastructure is designed to serve and deliver hundreds of millions of page views a day to our users. This scalable infrastructure allows our users to access our products and services quickly and efficiently, regardless of their geographical location. Our infrastructure is also designed to provide high-speed access by forwarding queries to our Web hosting sites with greater resources or lower loads. Our Web pages are generated, served and cached by servers hosted at various co-location Web hosting sites in Taiwan and the United States.

Our servers run on our own web-based platforms. These servers are maintained at Amazon in the United States and our offices in Taiwan. We believe that our hosting partners provide significant operating advantages, including an enhanced ability to protect our systems from power loss, break-ins and other potential external causes of service interruption. They provide continuous customer service, multiple connections to the Internet and a continuous power supply to our systems. In addition, we conduct online monitoring of all our systems for accessibility, load, system resources, network- server intrusion and timeliness of content.

Sales and Marketing

We enhance our brand images and visibility through participating in various public events, exchanging resources with other companies, and establishing partnership with other media companies. In addition, we focus on keyword marketing and search engine optimizing to increase the search ranking of our news content.

Research and Development

Currently, we focus on (i) developing the Drupal platform to host our website and (ii) using Drupal to build daily news from personal blogs and company applications. Drupal is an open source content management platform powering millions of websites and applications. It’s built, used, and supported by an active and diverse community of people around the world and has thousands of add-on modules and designs available for us to build and improve our website.

Intellectual Property

We rely on a combination of copyright, trademark, patent and trade secret laws and restrictions on disclosure to protect our intellectual property rights. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our technology. Monitoring unauthorized use of our products is difficult and costly, and we cannot be certain that the steps we have taken will prevent misappropriation of our technology, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States. From time to time, we may have to resort to litigation to enforce our intellectual property rights, which could result in substantial costs and diversion of our resources.

In addition, third parties may initiate litigation against us alleging infringement of their proprietary rights. In the event of a successful claim of infringement and our failure or inability to develop non-infringing technology or license the infringed or similar technology on a timely basis, our business could be harmed. In addition, even if we are able to license the infringed or similar technology, license fees could be substantial and may adversely affect our results of operations.

Patents

We have the following patents as of the date of this report:

Patent Name	Type	Jurisdiction	Valid Period	Certificate No.
Portable multimedia sharing device	Utility Model	Taiwan	May 11, 2011 – September 15, 2020	M403695
Multimedia device with embedded multimedia information	Utility Model	Taiwan	May 21, 2012 – September 26, 2021	M429933
Information browsing system	Utility Model	Taiwan	April 11, 2012 – September 29, 2021	M426832
Multimedia file with embedded information	Utility Model	The PRC	May 11, 2011 – September 15, 2020	2495374

Trademarks

As of the date of this report, we have registered an aggregate of 17 trademarks in various categories and are in the process of applying for an additional four trademarks in Taiwan and the PRC. Set forth below is a list of our trademarks:

		Valid Period
Trademarks	Jurisdiction	From	To	Categories

	Taiwan	2/16/2007	1/31/2018	35, 41
		2/16/2007	11/30/2017	38, 42
		2/16/2008	2/15/2018	16, 35,42

		Valid Period
Trademarks	Jurisdiction	From	To	Categories

	Taiwan	5/7/2007	2/15/2018	16, 35, 42
	Taiwan	5/7/2007	8/31/2018	9, 38, 41

	Taiwan	4/3/2008	12/15/2018	9, 16, 35, 38, 41

	Taiwan	5/6/2009	4/15/2020	35
		5/6/2009	2/15/2020	38
		5/6/2009	2/15/2025	9

	Taiwan	6/30/2010	9/15/2021	9, 16, 35, 38, 41

	PRC	8/2/2010	12/23/2023	9
		8/2/2010	4/13/2022	16
		8/2/2010	5/6/2024	35
		8/2/2010	6/2/2024	41

	Taiwan	5/19/2010	1/31/2021	9, 16, 35, 38, 41

	Taiwan	5/6/2009	4/15/2020	35
	Taiwan	5/6/2009	2/15/2020	9, 38, 41

	Taiwan	2/1/2013	1/31/2023	35

		Valid Period
Trademarks	Jurisdiction	From	To	Categories

	Taiwan	8/18/2013	7/31/2023	16
	Taiwan	11/16/2013	11/15/2023	35, 41

	Taiwan	11/2/2012	8/15/2023	35

	PRC	4/7/2008	2/6/2022	16

Item 1A. Risk Factors.

Not applicable.

Item 1B. Unresolved Staff Comments.

Not applicable.

Item 2. Properties.

Our corporate headquarters are located at 4F, No. 32, Ln. 407, Sec. 2, Tiding Road, Neihu District, Taipei City 114, Taiwan, where we lease approximately 7,117.35 square feet of office space under a lease that expires April 14, 2017. Our monthly lease payment for this office space is approximately $7,130 (NT$231,000).

Our servers are primarily maintained in Taiwan. We believe the leased premise is sufficient to meet the immediate needs of our business.

Item 3. Legal Proceedings.

From time to time, the Company is subject to legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of copyrights and other intellectual property rights and other claims alleging defamation, invasion of privacy, or similar claims arising in connection with the news articles, pictures, and other contents published on the Company’s website.

Lai Matter

On July 11, 2014, Ms. Xiu-qing Lai filed a claim against NOWnews Network and five other companies (the “Five Companies”) who are unrelated to the Company, in the Taiwan Tainan District Court (the “Tainan District Court”) in connection to a news article edited by NOWnews Network and published on July 19, 2012 on the website of NOWnews Network and five other websites owned by the Five Companies, respectively. Ms. Lai claims that the news article contained a false statement that harms the reputation of Ms. Lai. Ms. Lai seeks approximately $16,975 (NT$550,000) in compensatory damages from NOWnews Network, $54,012 (NT$1,750,000) in aggregate from the Five Companies, and newspaper apologies from NOWnews Network and the Five Companies. Based on the agreements entered by NOWnews Network and the Five Companies, if any news content provided by NOWnews Network violates any regulations or infringes on any copyrights, NOWnews Network shall be responsible for any losses that may occur.

On January 6, 2015, the plaintiff agreed to settle this legal matter with NOWnews Network outside of court. NOWnews Network agreed to pay the plaintiff $12,346 (NT$400,000) in compensatory damages, and the plaintiff agreed to revoke the claim against NOWnews Network and the Five Companies. NOWnews Network has accrued $12,346 (NT$400,000) of contingent loss in connection to this lawsuit settlement during the year ended December 31, 2014. As of December 31, 2016, NOWnews Network has made payment of approximately $12,346 (NT$400,000) and this action is closed.

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market for Common Equity and Related Stockholder Matters

Our common stock is currently quoted on the OTCQB under the symbol “NDMT.” There has not been any significant trading to date in the Company’s common stock. The table below presents the high and low bid for our common stock for each quarter for the years ended December 31, 2016 and 2015. These prices reflect inter-dealer prices, without retail markup, markdown, or commission, and may not represent actual transactions.

	High		Low
First Quarter of 2017 (for the period end March 31, 2017)	$	4.80	$	2.50

Year ended December 31, 2016
1st Quarter	$	6.80	$	5.99
2nd Quarter	$	6.10	$	2.90
3rd Quarter	$	5.00	$	1.81
4th Quarter	$	5.00	$	3.00

Year ended December 31, 2015
1st Quarter	$	5.00	$	5.00
2nd Quarter	$	5.00	$	5.00
3rd Quarter	$	5.00	$	5.00
4th Quarter	$	7.80	$	6.50

As of May 2, 2017, we had 23,072,000 shares of common stock outstanding and held of record by 538 stockholders.

Securities Authorized for Issuance under Equity Compensation Plans.

None.

Stock Transfer Agent

Our stock transfer agent is Empire Stock Transfer, 1859 Whitney Mesa Dr., Henderson, NV 89014.

Dividends

The Company has never declared or paid any cash dividends on its common stock. The Company currently intends to retain future earnings, if any, to finance the expansion of its business. As a result, the Company does not anticipate paying any cash dividends in the foreseeable future.

Repurchase of Equity Securities

None.

Recent Sales of Unregistered Securities

None.

Item 6. Selected Financial Data.

Not applicable.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations .

This Management Discussion and Analysis (“MD&A”) contains “forward-looking statements”, which represent our projections, estimates, expectations or beliefs concerning among other things, financial items that relate to management’s future plans or objectives or to our future economic and financial performance. In some cases, you can identify these statements by terminology such as “may”, “should”, “plans”, “believe”, “will”, “anticipate”, “estimate”, “expect” “project”, or “intend”, including their opposites or similar phrases or expressions. You should be aware that these statements are projections or estimates as to future events and are subject to a number of factors that may tend to influence the accuracy of the statements. These forward-looking statements should not be regarded as a representation by the Company or any other person that the events or plans of the Company will be achieved. You should not unduly rely on these forward-looking statements, which speak only as of the date of this MD&A. Except as may be required under applicable securities laws, we undertake no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this MD&A or to reflect the occurrence of unanticipated events. You should, however, review the factors and risks we describe under “Risk Factors” in our reports filed with the Securities and Exchange Commission. Actual results may differ materially from any forward looking statement.

Overview

We were incorporated as Forever Zen Ltd. on March 20, 2010 under the laws of the State of Nevada. On December 13, 2013, we changed our name to NowNews Digital Media Technology Co Ltd. with the plan to enter into the business of internet media and news content. Prior to the Share Exchange as defined below, we were a development stage company and had not yet realized any revenues from our planned operations.

On November 14, 2014, we entered into and closed a share exchange agreement (the “Share Exchange Agreement”), with Worldwide Media Investments Corp., an Anguilla corporation (“Worldwide”), the shareholders of Worldwide, and NOWnews Network Co., Ltd., a Taiwan corporation (“NOWnews Network”). Pursuant to the Share Exchange Agreement, the Company issued an aggregate of 20,000,000 shares of common stock to the shareholders of Worldwide in exchange for all the issued and outstanding capital stock of Worldwide (the “Share Exchange”). Worldwide, through its wholly owned subsidiary, Sky Media Investments Co., Ltd. (“Sky Media”), owned 66% of all the issued and outstanding capital stock of NOWnews Network immediately following the Share Exchange.

As a result of the consummation of the Share Exchange on November 14, 2014, NOWnews Network became, indirectly through Worldwide and Sky Media, a majority-owned subsidiary of the Company. We are now, through NOWnews Network, engaged in creating, collecting and distributing news and information through our website http://www.nownews.com/ and our applications on mobile phones or tablets.

We currently generate revenue primarily from online advertising and marketing services and news content licensing. We historically had revenues from online product sales in the E-commerce business and editing services for customers. Since our editing service was not profitable, we ceased this service in December 2013. In addition, we also suspended our E-commerce business in April 2014 and eventually terminated the E-commerce business at the end of 2015 due to the continuous loss from this business.

On August 5, 2015, NOWnews Network, Sky Media, Mr. Alan Chen and his spouse, Ms. Chiu-Li Tu, entered a Stock Purchase Agreement (the “Stock Purchase Agreement") with Gamania Digital Entertainment Co. Ltd. (“Gamania Digital”) and Ta Ya Venture Capital Co. Ltd. (“Ta Ya”). Pursuant to the Stock Purchase Agreement, NOWnews Network issued 1,650,000 and 350,000 shares to non-controlling shareholders on August 14, 2015 and September 8, 2015, respectively. On November 30, 2016, NOWnews Network issued 1,000,000 shares to non-controlling shareholders. As a result, we then indirectly held 53.09% of NOWnews Network’s equity interest.

Results of Operations for the Years Ended December 31, 2016 and 2015

	For The Years Ended
	December 31,						Change in
	2016			2015			$			%

Net revenue	$	3,121,143		$	2,458,785		$	662,358			27
Cost of revenue		(2,172,313	)		(1,474,886	)		(697,427	)		47
Gross profit		948,830			983,899			(35,069	)		(4	)

Selling expenses		(608,924	)		(508,480	)		(100,444	)		20
General and administrative expenses		(1,072,645	)		(1,002,819	)		(69,826	)		7
Financial advisory service fee – related party		(2,970,000	)		-			(2,970,000	)		-
Total operating expense		(4,651,569	)		(1,511,299	)		(3,140,270	)		208

Operating loss		(3,702,739	)		(527,400	)		(3,175,339	)		602

Other income (expense)
Interest income		106			412			(306	)		(74	)
Interest expense		(870	)		(4,377	)		3,507			(80	)
Other income, net		6,868			4,088			2,780			68
Total other income (expense)		6,104			123			5,981			4,863

Loss from continuing operations before income taxes		(3,696,635	)		(527,277	)		(3,169,358	)		601
Income taxes		-			-			-			-
Loss from continuing operations		(3,696,635	)		(527,277	)		(3,169,358	)		601
Income (Loss) from discontinued operations, net of income taxes		2			(64,794	)		64,796			(100	)

Net loss		(3, 696,633	)		(592,071	)		(3,104,562	)		524

Net loss attributable to noncontrolling interests:
Net loss from continuing operations		164,529			72,987			91,542			125
Net loss from discontinued operations		(2	)		41,274			(41,276	)		(100	)
Total net loss attributable to noncontrolling interest		164,527			114,261			50,266			44

Net loss attributable to NowNews Digital Media Technology Co., Ltd.	$	(3,532,106	)	$	(477,810	)	$	(3,054,296	)		639

Net Revenue

Our net revenue for the year ended December 31, 2016 was $3.12 million, an increase of $0.66 million or 27% from $2.46 million for the year ended December 31, 2015. The increase was primarily due to the increase in licensing and services revenue and advertisement revenue.

Advertising

Our advertising avenue was $2.86 million for the year ended December 31, 2016, an increase of $0.59 million, or 26%, from $2.27 million for the year ended December 31, 2015. We will continue focus on the internet advertising and marketing business.

Licensing and Services

Our revenue from content licensing was $0.26 million for the year ended December 31, 2016, an increase of $0.07 million, or 34% , from $0.19 million for the year ended December 31, 2015. The increase was primarily due to increase the authorize news to new customers.

Cost of Revenue

Cost of revenue mainly consists of advertisement costs, content licensing costs, copyright costs, website maintenance costs, and labor costs.

Cost of revenue was $2.17 million for the year ended December 31, 2016, an increase of $0.70 million, or 47%, as compared to $1.47 million for the year ended December 31, 2015. The increase was mainly due to the increase of $0.53 million in advertisement cost and $0.17 million in labor cost.

Gross Profit

Gross profit decreased approximately $0.04 million, or 4%, for the year ended December 31, 2016, as compared to the same period in 2015, due to the substantial increase in cost of revenue. Gross profit margin was 30% for the year ended December 31, 2016 as compared to 40% for the same period in 2015.

Selling Expenses

Total selling expenses consist primarily of payroll, labor and health insurance, and advertisement expenses. The amount increased by $0.1 million, or 20%, from $0.51 million for the year ended December 31, 2015, to $0.61 million for the year ended December 31, 2016. The increase in selling expenses was primarily due to the increase in labor costs resulting from the increase in the number of salespersons.

General and Administrative Expenses

General and administrative expenses primarily consist of payroll, welfare, labor and health insurance, post-retirement benefits, office rent and management fees, depreciation & amortization expenses, professional services, litigation settlement payments, and expenses for other general corporate activities. General and administrative expenses increased by approximately $0.07 million, or 7%, from $1 million for the year ended December 31, 2015 to $1.07 million for the year ended December 31, 2016. The increase in general and administration expenses was principally due to the increase in the number of employees.

Financial advisory service fee – related party

Financial advisory service fee increased by $2.97 million was due to the services provided by GIA Consultants Limited In resolution of the Company’s outstanding obligations pertaining to the services that have been rendered to the Company as of August 12, 2016, the Company and GIA Consultants Limited (“GIA”) entered into a Financial Advisory Service Recognition Agreement (the “Agreement”) on September 20, 2016, pursuant to which the Company agrees to issue 660,000 shares of common stock, par value $0.001 per share, to GIA in recognition of services that have been previously rendered to the Company as of August 12, 2016. The common stock price was $4.50 per share as of closing on August 12, 2016, the closing price as of the last business day prior to August 15, 2016, totaling an aggregate sum of $2,970,000. On October 4, 2016, the Company issued 660,000 shares of common stock to GIA Consultants Limited to fulfill the Agreement signed on September 20, 2016.

Net Loss

As a result of the above factors, we have net loss of approximately $3.70 million for the year ended December 31, 2016 as compared to net loss of approximately $0.59 million for the year ended December 31, 2015, representing an increase of loss of approximately $3.10 million, or approximately 524%.

Liquidity and Capital Resources

Our consolidated financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We have incurred significant losses and have not demonstrated the ability to generate sufficient cash flows from operations to satisfy its liabilities and sustain operations. We had accumulated deficits of $7,932,295 and $4,400,189, and stockholders’ deficits of $1,380,173 and $819,522 as of December 31, 2016 and 2015, respectively. The net losses attributable to common stockholders of $3,532,106 and $477,810 for the years ended December 31, 2016 and 2015, respectively. In addition, current liabilities exceed current assets by $858,428 and $497,578 as of December 31, 2016 and 2015, respectively, representing significant working capital deficits. These matters raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on us obtaining adequate capital to fund operating losses until it becomes profitable. If we are unable to obtain adequate capital, it could be forced to cease operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

Management’s Plan to Continue as a Going Concern

In order to continue as a going concern, we will need, among other things, additional capital resources. Management’s plans to obtain such resources for us include (1) obtaining capital from the sale of its equity securities, (2) sales of our services, (3) short-term and long-term borrowings from banks, and (4) short-term borrowings from stockholders or other related party(ies) when needed. However, management cannot provide any assurance that we will be successful in accomplishing any of its plans.

Our ability to continue as a going concern is dependent upon our ability to successfully accomplish the plans described in the preceding paragraph and eventually to secure other sources of financing and attain profitable operations.

We believe that our current levels of cash, cash flows from operations, and bank/related party borrowings, will be sufficient to meet our anticipated cash needs for at least the next 12 months. However, we may need additional cash resources in the future if we experience changed business conditions or other developments. We may also need additional cash resources in the future if we find and wish to pursue opportunities for investment, acquisition, strategic cooperation or other similar actions. If we ever determine that our cash requirements exceed our amounts of cash and cash equivalents on hand, we may seek to issue debt or equity securities or obtain a credit facility. Any future issuance of equity securities could cause dilution for our shareholders. Any incurrence of indebtedness could increase our debt service obligations and cause us to be subject to restrictive operating and financial covenants. It is possible that, when we need additional cash resources, financing will only be available to us in amounts or on terms that would not be acceptable to us, if at all.

As of December 31, 2016, we had working capital deficit of $858,428 as compared to working capital deficit of $497,578 as of December 31, 2015. We had cash and cash equivalents of $244,691 as of December 31, 2016, a decrease of $56,514, or 19% from $301,205 as of December 31, 2015. Our principal sources and uses of funds were as follows:

	For the Years Ended December 31,
	2016			2015
Net cash used in operating activities	$	(648,129	)	$	(272,891	)
Net cash used in investing activities		(5,334	)		(33,154	)
Net cash provided by financing activities		592,999			547,414
Net cash provided by discontinued operations		-			-
Effect of exchange rate change on cash and cash equivalents		3,950			(10,240	)
Net (decrease) increase in cash and cash equivalents	$	(56,514	)	$	231,129

Net cash used in operating activities of continuing operations was approximately $0.65 million for the year ended December 31, 2016, compared to net cash used in operating activities of approximately $0.27 million for the year ended December 31, 2015. The increase of $0.38 million of cash used in operating activities was primarily due to the increase in net loss of $3.10 million which included the $2.97 million service fee paid to related party through issuance of 660,000 shares of common stock at $4.5 per share. The net increase in net loss without including non cash service fee payments was $0.13 million. The increase in net cash used in operating activities also included the increase of cash provided from changes in accounts receivable and related-party trade receivable of approximately $0.28 million.

Net cash used in investing activities of continuing operations was $5,334 for the year ended December 31, 2016, compared to $33,154 for the same period last year. We used $5,334 in the addition of electronic equipment, computer equipment and office equipment and furniture during the year ended December 31, 2016.

Net cash provided by financing activities of continuing operations amounted to approximately $0.59 million for the year ended December 31, 2016, resulting an increase in net cash provided by financial activities of $0.04 million compared to approximately $0.55 million cash provided for the year ended December 31, 2015. The increase was mainly due to the increase in net proceeds provided by related party loan of $0.39 million offset by decrease of capital contribution from non-controlling interest of $0.32 million.

Critical Accounting Policies

Basis of presentation:

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. Since the Company, Worldwide, and NOWnews Network were entities under common control prior to the restructuring transaction, the Company and Worldwide have recast prior period financial statements to reflect the conveyance of NOWnews Network to Sky Media as if the restructuring transaction had occurred as of January 1, 2014. All significant intercompany transactions and account balances have been eliminated.

The functional currency of NOWnews Network and NOWnews International is the New Taiwan dollars, however the accompanying consolidated financial statements have been translated and presented in United States Dollars ($). In the accompanying consolidated financial statements and notes, “$”, “US$” and “U.S. dollars” mean United States dollars, and “NT$” and “NT dollars” mean New Taiwan dollars.

Use of estimates and assumptions:

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the amount of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those results. The most significant estimates reflected in the consolidated financial statements include depreciation, useful lives of property and equipment, deferred income taxes, useful life of intangible assets and contingencies. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.

Cash and cash equivalents:

The Company considers all cash on hand and in banks, certificates of deposit and other highly-liquid investments with original maturities of three months or less, when purchased, to be cash and cash equivalents. As of December 31, 2016 and 2015, the Company has uninsured deposits in banks of $122,508 and $100,536.

Accounts receivable:

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. As of December 31, 2016 and 2015, the Company assessed the allowance for doubtful accounts of $9,464 and $14,121, respectively.

Property and equipment:

Property and equipment are recorded at cost less accumulated depreciation. Gains or losses on disposals are reflected as gain or loss in the year of disposal. The cost of improvements that extends the life of property, and equipment are capitalized. These capitalized costs may include structural improvements, equipment, and fixtures. All ordinary repair and maintenance costs are expensed as incurred.

Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets or lease term as follows:

Electronic Equipment	3 years
Computer Equipment	3 to 5 years
Office Equipment and Furniture	3 to 5 years
Leasehold Improvement	Lesser of term of the lease or the estimated useful lives of the assets

Long-lived assets:

The Company applies the provisions of FASB ASC Topic 360 (ASC 360), “Property, Plant, and Equipment” which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with ASC 360, at least on an annual basis. ASC 360 requires the impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.

Intangible assets:

Intangible assets consist of software, trademark, and copyrights (see Note 6). At least annually, the Company evaluates intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. Estimating future cash flows related to an intangible asset involves significant estimates and assumptions. If the Company’s assumptions are not correct, there could be an impairment loss or, in the case of a change in the estimated useful life of the asset, a change in amortization expense. There was no impairment of intangible assets as of and for the years ended December 31, 2016 and 2015, respectively.

Leases:

Lease agreements are evaluated to determine if they are capital leases meeting any of the following criteria at inception: (a) Transfer of ownership; (b) Bargain purchase option; (c) The lease term is equal to 75 percent or more of the estimated economic life of the leased property; (d) The present value at the beginning of the lease term of the minimum lease payments, excluding that portion of the payments representing executory costs such as insurance, maintenance, and taxes to be paid by the lessor, including any profit thereon, equals or exceeds 90 percent of the excess of the fair value of the leased property to the lessor at lease inception over any related investment tax credit retained by the lessor and expected to be realized by the lessor.

If at its inception a lease meets any of the four lease criteria above, the lease is classified by the lessee as a capital lease; and if none of the four criteria are met, the lease is classified by the lessee as an operating lease.

Revenue recognition:

Product and service revenue is recognized when the following fundamental criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or the service has been performed, (iii) the Company’s price to the customer is fixed or determinable and (iv) collection of the resulting accounts receivable is reasonably assured. Payments received before satisfaction of all of the relevant criteria for revenue recognition are recorded as unearned revenue. The Company recognizes revenue for product sales upon transfer of title to the customer. The Company recognizes revenue for services upon performance of the service. Customer purchase orders and/or contracts will generally be used to determine the existence of an arrangement. Shipping documents and the completion of any customer acceptance requirements, when applicable, will be used to verify product delivery or that services have been rendered. The Company will assess whether a price is fixed or determinable based upon the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. The Company will record reductions to revenue for estimated product returns and pricing adjustments in the same period that the related revenue is recorded. These estimates will be based on industry-based historical data, historical sales returns, if any, analysis of credit memo data, and other factors known at the time.

Post-retirement and post-employment benefits:

NOWnews Network adopted the government mandated defined contribution plan pursuant to the Labor Pension Act (the “Act”) in Taiwan. Such labor regulations require that the rate of contribution made by an employer to the Labor Pension Fund per month shall not be less than 6% of the worker's monthly salaries. Pursuant to the Act, NOWnews Network makes monthly contribution equal to 6% of employees’ salaries to the employees’ pension fund. NOWnews Network has no legal obligation for the benefits beyond the contributions made. The total amounts for such employee benefits, which were expensed as incurred, were $78,327 and $56,506 for the years ended December 31, 2016 and 2015, respectively. Other than the above, the Company does not provide any other post-retirement or post-employment benefits.

Foreign currency translation:

The Company uses the United States dollar ("U.S. dollars") for financial reporting purposes. The Company maintains the books and records in its functional currency, being the primary currency of the economic environment in which its operations are conducted. For reporting purpose, the Company translates the assets and liabilities to U.S. dollars using the applicable exchange rates prevailing at the balance sheet dates, and the statements of income are translated at average exchange rates during the reporting periods. Gain or loss on foreign currency transactions are reflected on the income statement. Gain or loss on financial statement translation from foreign currency are recorded as a separate component in the equity section of the balance sheet and is included as part of accumulated other comprehensive income. The functional currency of the Company and its subsidiaries in Taiwan is New Taiwan Dollars.

Statement of cash flows:

In accordance with FASB ASC Topic 230, “Statement of Cash Flows,” cash flows from the Company’s operations are calculated based upon the local currencies, and translated to the reporting currency using an average foreign exchange rate for the reporting period. As a result, amounts related to changes in assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets.

Income taxes:

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. The deferred income tax assets were $0 as of both December 31, 2016 and 2015.

The Company applied the provisions of ASC 740-10-50, “Accounting For Uncertainty In Income Taxes”, which provides clarification related to the process associated with accounting for uncertain tax positions recognized in our financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. At December 31, 2016 and 2015, management considered that the Company had no uncertain tax positions, and will continue to evaluate for uncertain positions in the future.

The Company is subject to the tax authority in Taiwan for years since incorporated.

Earnings per share (EPS):

Earnings per share is calculated in accordance with ASC 260. Basic earnings per share is based upon the weighted average number of common shares outstanding. Diluted earnings per share is based on the assumption that all dilutive convertible shares and stock instruments were converted or exercised. Options and warrants are assumed to be exercised at the beginning of the period if the average stock price for the period is greater than the exercise price of the warrants and options. For the years ended December 31, 2016 and 2015, no options or warrants were issued or outstanding.

Discontinued operations

Results of the Company’s discontinued entity have been presented in discontinued operations in the financial statements. See Note 1 and Note 12 for additional information.

Reclassifications:

Certain classifications have been made to the prior year financial statements to conform to the current year presentation. The reclassification had no impact on previously reported net loss or accumulated deficit.

Recent accounting pronouncements:

On November 17, 2016, the FASB issued Accounting Standard Update 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, to address the diversity in the classification and presentation of changes in restricted cash on the statement of cash flows under Topic 230. The amendments in this Update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this Update apply to all entities that have restricted cash or restricted cash equivalents and are required to present a statement of cash flows under Topic 230. The Company is still in progress of evaluating future impact of adopting this standard.

On October 26, 2016, the FASB issued Accounting Standards Update No. 2016-17—Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control to amend the consolidation guidance on how a reporting entity that is the single decision maker of a variable interest entity (VIE) should treat indirect interests in the entity held through related parties that are under common control with the reporting entity when determining whether it is the primary beneficiary of that VIE. Under the amendments, a single decision maker is not required to consider indirect interests held through related parties that are under common control with the single decision maker to be the equivalent of direct interests in their entirety. Instead, a single decision maker is required to include those interests on a proportionate basis consistent with indirect interests held through other related parties. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of operations.

On October 24, 2016, Accounting Standards Update No. 2016-16—Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory to prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. In addition, interpretations of this guidance have developed in practice for transfers of certain intangible and tangible assets. This prohibition on recognition is an exception to the principle of comprehensive recognition of current and deferred income taxes in GAAP. To more faithfully represent the economics of intra-entity asset transfers, the amendments in this Update require that entities recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments in this Update do not change GAAP for the pre-tax effects of an intra-entity asset transfer under Topic 810, Consolidation, or for an intra-entity transfer of inventory. The Company is still in progress of evaluating future impact of adopting this standard.

On August 26, 2016, the FASB issued Accounting Standard Update 2016-15, Statement of Cash Flows (Topic 230), a consensus of the FASB’s Emerging Issues Task Force. The Update is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The amendments in this Update provide guidance on the following eight specific cash flow issues: Issue 1 - Debt prepayment or debt extinguishment costs. Issue 2 - Settlement of zero-coupon debt instruments. . Issue 3 - Contingent consideration payments made after a business combination. Issue 4 - Proceeds from the settlement of insurance claims. Issue 5 - Proceeds from the settlement of corporate-owned life insurance (COLI) policies, including bank-owned life insurance (BOLI) policies. Issue 6 - Distributions received from equity method investments. 7 - Beneficial interests in securitization transactions. . Issue 8 - Separately identifiable cash flows and application of the predominance principle. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The amendments in this Update should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Company is still in progress of evaluating future impact of adopting this standard.

In February 25, 2016, FASB issued ASU-2016-02-Leases.The amendments in this Update create Topic 842, Leases, and supersede the leases requirements in Topic 840, Leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. The FASB is issuing this Update to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Topic 842 affects any entity that enters into a lease (as that term is defined in this Update), with some specified scope exemptions. The guidance in this Update supersedes Topic 840, Leases. The main difference between previous GAAP and Topic 842 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. All leases create an asset and a liability for the lessee in accordance with FASB Concepts Statement No. 6, Elements of Financial Statements, and, therefore, recognition of those lease assets and lease liabilities represents an improvement over previous GAAP, which did not require lease assets and lease liabilities to be recognized for most leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. When measuring assets and liabilities arising from a lease, a lessee (and a lessor) should include payments to be made in optional periods only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. Similarly, optional payments to purchase the underlying asset should be included in the measurement of lease assets and lease liabilities only if the lessee is reasonably certain to exercise that purchase option. Reasonably certain is a high threshold that is consistent with and intended to be applied in the same way as the reasonably assured threshold in the previous leases guidance. In addition, also consistent with the previous leases guidance, a lessee (and a lessor) should exclude most variable lease payments in measuring lease assets and lease liabilities, other than those that depend on an index or a rate or are in substance fixed payments. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. The amendments in this Update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is still in progress of evaluating future impact of adopting this standard.

In November 20, 2015, FASB issued ASU-2015-17- Income Taxes. The Board is issuing this Update as part of its initiative to reduce complexity in accounting standards (the Simplification Initiative). The objective of the Simplification Initiative is to identify, evaluate, and improve areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. Current GAAP requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. To simplify the presentation of deferred income taxes, the amendments in this Update require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in this Update apply to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this Update. For public business entities, the amendments in this Update are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The Company is still in progress of evaluating future impact of adopting this standard.

In August 2014, FASB issued ASU 2014-15 – Presentation of Financial Statements – Going Concern (Subtopic 205-40). The amendments in this Update states the disclosure of uncertainties about an entity’s ability to continue as a going concern. An entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued). When management identifies conditions or events that raise substantial doubt, management should consider whether its plans will alleviate the substantial doubt. When substantial doubt is raised but is alleviated by management’s plans, the entity should disclose following information: (a) Principal conditions or events that raised substantial doubt (before consideration of management’s plans); (b) Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations; (c) Management’s plans that alleviated the substantial doubt.

When substantial doubt is raised but is not alleviated by management’s plans,, an entity should include a statement in the footnotes indicating that there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued), and disclose the following information: (a) Principal conditions or events that raise substantial doubt; (b) Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations; (c) Management’s plans that are intended to mitigate the conditions or events that raise the substantial doubt.

The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is still in progress of evaluating future impact of adopting this standard.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 8. Financial Statements and Supplementary Data.

NOWNEWS DIGITAL MEDIA TECHNOLOGY CO., LTD. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page

Report of Independent Registered Public Accounting Firm		F-2

Consolidated Balance Sheets as of December 31, 2016 and December 31, 2015		F-3

Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2016 and 2015		F-4

Consolidated Statements of Cash Flows for the years ended December 31, 2016 and 2015		F-6

Notes to Consolidated Financial Statements		F-7

F-1

Audit • Tax • Consulting • Financial Advisory

Registered with Public Company Accounting Oversight Board (PCAOB)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

NowNews Digital Media Technology Co. Ltd.

We have audited the accompanying consolidated balance sheets of NowNews Digital Media Technology Co. Ltd. and Subsidiaries (the “Company”) as of December 31, 2016 and 2015, and the related consolidated statements of income and comprehensive income, equity and cash flows for the years then ended. The Company’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of NowNews Digital Media Technology Co. Ltd. and Subsidiaries as of December 31, 2016 and 2015, and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 2 of the consolidated financial statements, the Company has incurred significant negative cash flows from operative activities, and continuing net losses and working capital deficits. The Company’s viability is dependent upon its ability to obtain future financing and the success of its future operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plan in regard to these matters is also described in Note 2 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

KCCW Accountancy Corp.

Alhambra, California

May 3, 2017

KCCW Accountancy Corp.

430 S. Garfield Ave., Suite 489, Alhambra, CA 91801, USA

Tel: +1 626 282 3700 • Fax: +1 626 529 1580 • info@kccwcpa.com

F-2

PART I –FINANCIAL INFORMATION

Item 1. Financial Statements

NOWNEWS DIGITAL MEDIA TECHNOLOGY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31,			December 31,
	2016			2015

Assets

Current Assets
Cash and cash equivalents	$	244,691		$	301,205
Accounts receivable, net		585,968			447,169
Due from related parties		59,898			66,894
Security deposits, current		16,617			-
Other current assets		6,779			22,311
Current assets of discontinued operations		4,025			3,976
Total Current Assets		917,978			841,555

Furniture, fixture, and equipment, net		111,207			158,463
Security deposits, non-current		-			14,090
Intangible assets, net		8,166			14,066

Total Assets	$	1,037,351		$	1,028,174

Liabilities and Equity

Current Liabilities
Long-term obligation under capital lease, current	$	15,030		$	79,751
Accounts payable		221,210			119,082
Advance from customers		-			9,650
Accrued expenses		528,310			484,371
Due to related parties		909,958			545,397
Other current liabilities		3,906			4,055
Current liabilities of discontinued operations		97,992			96,827
Total Current Liabilities		1,776,406			1,339,133

Long-term obligation under capital lease		-			15,712
Total Liabilities		1,776,406			1,354,845

Commitments and contingencies (Note 11)

Equity
Capital stock - $.001 par value
Common Stock, $.001 par value, 50,000,000 shares authorized, 23,072,000 and 22,412,000 shares issued and outstanding as of December 31, 2016 and December 31, 2015, respectively		23,072			22,412
Additional paid-in capital		6,503,039			3,533,699
Accumulated deficit		(7,932,295	)		(4,400,189	)
Accumulated other comprehensive income		26,011			24,556
Total Stockholders' deficit		(1,380,173	)		(819,522	)
Noncontrolling Interests		641,118			492,851
Total Deficit		(739,055	)		(326,671	)

Total Liabilities and Equity	$	1,037,351		$	1,028,174

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

F-3

NOWNEWS DIGITAL MEDIA TECHNOLOGY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

	For The Years Ended December 31,
	2016			2015

Net revenue	$	3,121,143		$	2,458,785
Cost of revenue		(2,172,313	)		(1,474,886	)
Gross profit		948,830			983,899

Selling expenses		(608,924	)		(508,480	)
General and administrative expenses		(1,072,645	)		(1,002,819	)
Financial advisory service fee – related party		(2,970,000	)		-
Total operating expense		(4,651,569	)		(1,511,299	)

Operating loss		(3,702,739	)		(527,400	)

Other income (expense)
Interest income		106			412
Interest expense		(870	)		(4,377	)
Other income, net		6,868			4,088
Total other income (expense)		6,104			123

Loss from continuing operations before income taxes		(3,696,635	)		(527,277	)
Income taxes		-			-
Loss from continuing operations		(3,696,635	)		(527,277	)
Income (loss) from discontinued operations, net of income taxes		2			(64,794	)

Net loss		(3,696,633	)		(592,071	)

Net loss attributable to noncontrolling interests:
Net loss from continuing operations		164,529			72,987
Net (income) loss from discontinued operations		(2	)		41,274
Total net loss attributable to noncontrolling interest		164,527			114,261

Net loss attributable to NowNews Digital Media Technology Co. Ltd.		(3,532,106	)		(477,810	)

Foreign currency translation gain		1,217			(178	)
Comprehensive loss		(3,530,889	)		(477,988	)
Other comprehensive loss attributable to noncontrolling interests		238			80,914
Comprehensive loss attributable to NowNews Digital Media Technology Co. Ltd.	$	(3,530,651	)	$	(397,074	)

Amount attributable to common stockholders:
Net loss from continuing operations, net of income taxes	$	(3,532,106	)	$	(454,290	)
Net loss from discontinued operations, net of income taxes		-			(23,520	)
Net loss attributable to common stockholders	$	(3,532,106	)	$	(477,810	)

Net loss attributable to common stockholders - basic and diluted
Loss from continuing operations	$	(0.16	)	$	(0.02	)
Loss from discontinued operations		-			-
Net loss attributable to common stockholders	$	(0.16	)	$	(0.02	)

Weighted average shares outstanding, basic and diluted		22,572,932			22,412,000

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

F-4

NOWNEWS DIGITAL MEDIA TECHNOLOGY CO. LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF EQUITY

												Accumulated
					Additional		Subscriptions					Other						Total
	Common Stock				Paid-in		Received		Accumulated			Comprehensive			Non-controlling			Stockholders'
	Shares		Amount		Capital		In Advance		Deficit			Loss			interest			Equity
Balance at December 31, 2014		22,412,000	$	22,412	$	2,793,855	$	-	$	(3,922,379	)	$	(56,180	)	$	(493,747	)	$	(1,656,039	)
Capital contribution by shareholders through debt conversion		-		-		739,844		-		-			-			561,323			1,301,167
Capital contribution by non-controlling interest		-		-		-		-		-			-			620,450			620,450
Foreign currency translation		-		-		-		-		-			80,736			(80,914	)		(178	)
Net loss for the period ended December 31, 2015		-		-		-		-		(477,810	)		-			(114,261	)		(592,071	)
Balance at December 31, 2015		22,412,000		22,412		3,533,699		-		(4,400,189	)		24,556			492,851			(326,671	)
Issuance of shares on Oct 4, 2016 at $4.5 per share for service provided by related party		660,000		660		2,969,340		-		-			-			-			2,970,000
Capital contribution by non-controlling interest		-		-		-		-		-			-			313,032			313,032
Foreign currency translation		-		-		-		-		-			1,455			(238	)		1,217
Net loss for the period ended December 31, 2016		-		-		-		-		(3,532,106	)		-			(164,527	)		(3,696,633	)
Balance at December 31, 2016		23,072,000	$	23,072	$	6,503,039	$	-	$	(7,932,295	)	$	26,011		$	641,118		$	(739,055	)

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

F-5

NOWNEWS DIGITAL MEDIA TECHNOLOGY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Years Ended
	December 31,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(3,696,633	)	$	(592,071	)
(Income) loss from discontinued operations		(2	)		64,794
Depreciation		54,762			72,627
Amortization		6,103			23,884
Loss from disposal of equipment		-			3,040
Bad debt expense		-			27,143
Financial advisory service fee paid to related party and contributed as capital		2,970,000			-
Adjustments to reconcile net loss to net cash provided by operating activities:
(Increase) decrease in accounts receivable		(134,136	)		47,020
Decrease in related-parties trade receivable		7,843			102,022
(Increase) decrease in security deposits		(2,370	)		18,385
Decrease (increase) in other current assets		15,622			(13,312	)
Increase in accounts payable		101,237			27,089
(Decrease) increase in advance from customers		(9,819	)		8,557
Increase (decrease) in other accrued expenses		39,463			(53,412	)
Decrease in other current liabilities		(199	)		(8,657	)
Net cash used in continuing activities		(648,129	)		(272,891	)
Net cash provided by discontinued operations		-			-
Net cash used in operating activities		(648,129	)		(272,891	)

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to fixed assets		(5,334	)		(23,649	)
Purchase of intangible assets		-			(9,505	)
Net cash used in continuing activities		(5,334	)		(33,154	)
Net cash used in discontinued operations		-			-
Net cash used in investing activities		(5,334	)		(33,154	)

CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from (repayment of) loans from related parties		364,716			(20,471	)
Payments of capital lease obligations		(82,022	)		(62,149	)
Capital contributions from noncontrolling interest		310,305			630,034
Net cash provided by continuing activities		592,999			547,414
Net cash provided by discontinued operations		-			-
Net cash provided by financing activities		592,999			547,414

EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH EQUIVALENTS		3,950			(10,240	)

NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS		(56,514	)		231,129
NET INCREASE IN CASH & CASH EQUIVALENTS FROM DISCONTINUED OPERATIONS		-			-
NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS FROM CONTINUING OPERATIONS		(56,514	)		231,129

CASH & CASH EQUIVALENTS, BEGINNING BALANCE		301,205			70,076
CASH & CASH EQUIVALENTS, ENDING BALANCE	$	244,691		$	301,205

SUPPLEMENTAL DISCLOSURES:
Income tax paid	$	-		$	-
Interest paid	$	870		$	4,377
NONCASH INVESTING AND FINANCING ACTIVITIES:
Equipment acquired through capital lease	$	-		$	160,757
Debt conversion to additional paid-in capital	$	-		$	1,301,167

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

F-6

NOWNEWS DIGITAL MEDIA TECHNOLOGY CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: NATURE OF OPERATIONS

NowNews Digital Media Technology Co., Ltd. (Formerly Forever Zen Ltd.) (“NowNews” or “the Company”) was incorporated in Nevada on March 30, 2010. On November 11, 2013, Pioneer Media Investments Co., Ltd. purchased 1,500,000 shares of the Company’s common stock for $135,000 in cash from two of the Company’s shareholders. Those 1,500,000 shares of common stock represented 62% of the Company’s issued and outstanding common stock immediately following the sale. As a result of the transaction, a change in control of the Company occurred and in connection therewith. Mr. Alan Chen was elected as the Company’s president and sole director. Pioneer Media Investments Co., Ltd. is beneficially owned and controlled by Alan Chen.

Worldwide Media Investments Corp. (“Worldwide”) was incorporated in Anguilla on June 4, 2013 under the Anguilla International Business Companies Act, 2000. Worldwide is a holding company and has not carried out substantive business operations of its own. Mr. Alan Chen is the sole director and controlling beneficiary shareholder of Worldwide.

NOWnews Network Co., Ltd, (“NOWnews Network”) was incorporated in Taipei City, Taiwan on June 8, 2006. NOWnews Network is a media company with operations in Taiwan. NOWnews Network operates a news website and generates revenue from fees paid by advertisers in connection with the display of graphical and non-graphical advertisements. In addition, NOWnews Network provides editing services of news articles, pictures, and videos, and sells the broadcasting rights of its news articles, pictures, and videos. Mr. Alan Chen is a director and former Chairman of NOWnews Network.

In August 2013, NOWnews Network established NOWnews International Marketing Co., Ltd (“NOWnews International”) as a 55% owned subsidiary. Mr. Shu-sen Chang, the former Chairman and current director of NOWnews Network, and one other shareholder, own 10% and 35% of NOWnews International, respectively. The primary business of NOWnews International is to sell advertisement spaces in its own newspapers.

On December 27, 2013, the Board of Directors of NOWnews Network approved the termination of operations of NOWnews International. The results of NOWnews International have been presented as discontinued operations in the consolidated statements of income and comprehensive income. NOWnews Network has reclassified the assets and liabilities of the discontinued entity in the accompanied consolidated financial statements.

During September through December 2013, Sky Media Investments, Co., Ltd. (“Sky Media”), a company incorporated in Anguilla and a wholly-owned subsidiary of the Company, acquired 7,999,945 common shares (or 66.3%) of NOWnews Network from Mr. Alan Chen for $1,522,388 (or NT$45 million). Mr. Alan Chen owned 10,169,945 shares (or 84.3%) of common stock of NOWnews Network prior to the above transaction (the “Restructuring Transaction”).

On November 14, 2014, the Company entered into and closed a share exchange agreement (the “Share Exchange Agreement”) with Worldwide, the shareholders of Worldwide, and NOWnews Network. Pursuant to the Share Exchange Agreement, the Company issued an aggregate of 20,000,000 shares of common stock to the shareholders of Worldwide in exchange for all the issued and outstanding capital stock of Worldwide. Immediately following the closing of the Share Exchange, the Company had a total of 22,412,000 issued and outstanding shares of common stock, of which 6,262,400 shares were beneficially held by Alan Chen. As a result of the Share Exchange, Worldwide and Sky Media become the Company’s wholly owned subsidiaries and NOWnews Network became the Company’s majority owned subsidiary in which Company indirectly held 66% of the equity interest. Upon consummation of the Share Exchange, Company’s assumed the business of NOWnews Network and ceased to be a shell company.

On August 5, 2015, NOWnews Network, Sky Media, Mr. Alan Chen and Ms. Tu entered a Stock Purchase Agreement (the “Stock Purchase Agreement") with Gamania Digital Entertainment Co. Ltd. (“Gamania Digital”) and Ta Ya Venture Capital Co. Ltd. (“Ta Ya”). Pursuant to the Stock Purchase Agreement, NOWnews Network issued 1,650,000 and 350,000 shares to non-controlling shareholders on August 14, 2015 and September 8, 2015, respectively. On November 30, 2016, NOWnews Network issued 1,000,000 shares of stock at NT$10 per share to non-controlling shareholders for approximately $313,283 (or NT$10 million).

On February 22, 2017, NOWnews Network entered into a new stock purchase agreement with Gamania Digital, pursuant which NOWnews Network issued 2,200,000 shares to non-controlling shareholders for a purchase price of NT$ 22,000,000 (approximately US$725,534) on April 13, 2017. As a result of this purchase of stock, NOWnews Network remained the Company’s majority owned subsidiary in which Company indirectly holds 52.49% of the equity interest (see Note 9).

On April 13, 2016, the Company entered in a share exchange agreement (“NTY Ageement”) with the Company’s wholly owned subsidiary, Dawnrain Media Co., Ltd., a Seychelles limited liability company (“Dawnrain”), New Taoyard Advertising Co., Ltd., a Seychelles limited liability company and Dawnrain’s wholly owned subsidiary (“NTY”), Beijing New Tong Ying Culture Media Co., Ltd., a limited liability formed in the People’s Republic of China (“BJNTY”), and BJNTY’s shareholders (the “BJNTY Shareholders”). Pursuant to the NTY Agreement, the BJNTY Shareholders will acquire from the Company an aggregate of 1,600,000 shares of the Company’s common stock, par value $0.001 per share (Common Stock), in exchange of 80% of the capital interest of BJNTY. In the event the Company fails to cause the Company’s common stock to be listed on NYSE by February 28, 2017, the BJNTY Shareholders shall have the option to unwind the transaction contemplated in the NTY Agreement. As the date of this report, the NTY Agreement has not been fulfilled by both parties and the BJNTY Shareholders has not informed the Company of their intention to unwind the transaction contemplated in the NTY Agreement.

F-7

On October 4, 2016, the Company entered into a share exchange agreement (the “MySongAgreement”) with MySong Industrial Co., Ltd. (“MySong”), a limited liability company formed under the laws of Taiwan and both shareholders of MySong to acquire all the issued and outstanding 5,000 shares of common stock of MySong in exchange for 200,000 restricted shares of common stock (“Share Exchange”). The closing of the transactions contemplated under the MySong Share Exchange is subject to the fulfillment of certain conditions, or on such other date and time as all parties may mutually determine (the “Closing Date”). As the date of this report, the Agreement has not been fulfilled by both parties.

On November 19, 2016, the Company entered into a share exchange agreement (the “Lao Agreement”) with Lao Development Holding Limited (“Lao Development”), a Seychelles company and each of the shareholders of Lao Development (the “Lao Shareholders”) to acquire all the issued and outstanding shares of common stock of Lao Development in exchange for 2,137,500 restricted shares of Common Stock (“Lao Share Exchange”). The closing of the transactions contemplated under the Lao Agreement is subject to the fulfillment of certain conditions. The Lao Share Exchange is expected to close on November 19, 2017 or such other date and time as all parties may mutually determine. As the date of this report, the Lao Agreement has not been fulfilled by both parties.

The Company’s fiscal year ends on December 31st.

NOTE 2: GOING CONCERN

The Company’s consolidated financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred significant losses and has not demonstrated the ability to generate sufficient cash flows from operations to satisfy its liabilities and sustain operations. The Company had accumulated deficits of $7,932,295 and $4,400,189, and stockholders’ deficits of $1,380,173 and $819,522 as of December 31, 2016 and 2015, respectively. The net losses attributable to common stockholders of $3,532,106 and $477,810 for the years ended December 31, 2016 and 2015, respectively. In addition, current liabilities exceed current assets by $858,428 and $497,578 as of December 31, 2016 and 2015, respectively, representing significant working capital deficits. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Management’s Plan to Continue as a Going Concern

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plans to obtain such resources for the Company include (1) obtaining capital from the sale of its equity securities, (2) sales of the Company’s services, (3) short-term and long-term borrowings from banks, and (4) short-term borrowings from stockholders or other related party(ies) when needed. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually to secure other sources of financing and attain profitable operations.

NOTE 3: BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation:

F-8

Use of estimates and assumptions:

Cash and cash equivalents:

Accounts receivable:

Property and equipment:

Property and equipment are recorded at cost less accumulated depreciation. Gains or losses on disposals are reflected as gain or loss in the year of disposal. The cost of improvements that extends the life of property and equipment are capitalized. These capitalized costs may include structural improvements, equipment, and fixtures. All ordinary repair and maintenance costs are expensed as incurred.

Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets or lease term as follows:

Electronic Equipment	3 years
Computer Equipment	3 to 5 years
Office Equipment and Furniture	3 to 5 years
Leasehold Improvement	Lesser of term of the lease or the estimated useful lives of the assets

Long-lived assets:

F-9

Intangible assets:

Leases:

Revenue recognition:

Post-retirement and post-employment benefits:

F-10

Foreign currency translation:

Statement of cash flows:

Income taxes:

The Company is subject to the tax authority in Taiwan for years since incorporated.

Earnings per share (EPS):

Discontinued operations

Results of the Company’s discontinued entity have been presented in discontinued operations in the financial statements. See Note 1 and Note 12 for additional information.

F-11

Reclassifications:

Recent accounting pronouncements:

F-12

In February 25, 2016, FASB issued ASU-2016-02-Leases. The amendments in this Update create Topic 842, Leases, and supersede the leases requirements in Topic 840, Leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. The FASB is issuing this Update to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Topic 842 affects any entity that enters into a lease (as that term is defined in this Update), with some specified scope exemptions. The guidance in this Update supersedes Topic 840, Leases. The main difference between previous GAAP and Topic 842 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. All leases create an asset and a liability for the lessee in accordance with FASB Concepts Statement No. 6, Elements of Financial Statements, and, therefore, recognition of those lease assets and lease liabilities represents an improvement over previous GAAP, which did not require lease assets and lease liabilities to be recognized for most leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. When measuring assets and liabilities arising from a lease, a lessee (and a lessor) should include payments to be made in optional periods only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. Similarly, optional payments to purchase the underlying asset should be included in the measurement of lease assets and lease liabilities only if the lessee is reasonably certain to exercise that purchase option. Reasonably certain is a high threshold that is consistent with and intended to be applied in the same way as the reasonably assured threshold in the previous leases guidance. In addition, also consistent with the previous leases guidance, a lessee (and a lessor) should exclude most variable lease payments in measuring lease assets and lease liabilities, other than those that depend on an index or a rate or are in substance fixed payments. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. The amendments in this Update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is still in progress of evaluating future impact of adopting this standard.

F-13

NOTE 4: ACCOUNTS RECEIVABLE

Accounts receivable consist of the following:

	December 31, 2016			December 31, 2015
Accounts receivable	$	595,432		$	461,290
Less: Allowance for doubtful accounts		(9,464	)		(14,121	)
Accounts receivable, net	$	585,968		$	447,169

NOTE 5: PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following:

	December 31,			December 31,
	2016			2015
Capital Lease	$	156,814		$	155,631
Leasehold improvement		20,441			20,198
Electronic equipment		18,214			16,043
Computer equipment		13,123			45,514
Office equipment and furniture		6,143			4,788
		214,735			242,174
Less: Accumulated depreciation		(103,528	)		(83,711	)
	$	111,207		$	158,463

As of December 31, 2016, assets under capital lease of $156,814 represented server equipment (see Note 11). Depreciation expense for the years ended December 31, 2016 and 2015 was $54,762 and $72,627, respectively.

F-14

NOTE 6: INTANGIBLE ASSETS, NET

Intangible assets consist of the following:

	December 31,			December 31,
	2016			2015
Copyrights	$	872,991		$	862,608
Software		34,369			33,961
Trademark		6,482			6,404
Patent		156			154
		913,998			903,127
Accumulated amortization		(905,832	)		(889,061	)
Intangible assets, net	$	8,166		$	14,066

Intangible assets amounted to $8,166 and $14,066 as of December 31, 2016 and 2015, respectively, mainly consisted of copyrights and software acquired, and trademark.

Copyrights

Copyrights mainly include the copyrights of multiple films and pictures acquired from June 2007 to October 2009, and during the year ended December 31, 2013, with the total purchase amount of NT$28,284,903 (approximately $872,991). Copyrights are amortized based on their determined useful life, and tested annually for impairment. The amortization period ranges from 5 to 10 years. Amortization expense related to copyrights was $0 and $15,111 for the years ended December 31, 2016 and 2015, respectively.

For the years ended December 31, 2016 and 2015, total amortization expense amounted to $6,103 and $23,884, respectively.

Estimated amortization for the next five years and thereafter is as follows:

As of December 31,	Amount
2017	$	2,512
2018		2,236
2019		1,863
2020		1,555
	$	8,166

NOTE 7: ACCRUED EXPENSES

Accrued expenses consist of the following:

	December 31,		December 31,
	2016		2015
Accrued bonus	$	156,269	$	123,771
Accrued payroll		142,037		96,383
Accrued professional fees		108,923		111,253
Accrued employee benefits and pension expenses		62,736		75,795
Accrued sales taxes		40,811		43,078
Accrued legal settlement		-		2,745
Other		17,534		31,346
Total	$	528,310	$	484,371

F-15

NOTE 8: INCOME TAX

United States

The Company is incorporated in the United States of America and is subject to United States federal taxation. No provisions for income taxes have been made as the Company has no taxable income for the period. The applicable income tax rate for the Company was 35% for the years ended December 31, 2016 and 2015. No tax benefit has been realized since a 100 % valuation allowance has offset deferred tax asset resulting from the net operating losses.

Anguilla

Worldwide Media Investments Corp. and Sky Media are incorporated in Anguilla, which does not tax income.

Taiwan

NOWnews Network and NOWnews International are incorporated in Taiwan. The Taiwan Income Tax Law imposes a unified enterprise income tax rate of 17% on all enterprises with taxable income greater than approximately $3,704 (NT$120,000). No income tax liabilities existed as of December 31, 2016 and 2015 due to the Company’s continuing operating losses.

Provision for income tax consists of the following:

	For the Years Ended
	December 31,
	2016			2015
Current
USA	$	-		$	-
Taiwan		-			-

Deferred
USA
Deferred tax assets for NOL carryforwards		(1,684,235	)		(104,129	)
Valuation allowance		1,684,235			104,129
Net changes in deferred income tax under non-current portion		-			-

Taiwan
Noncurrent portion
NOL carryforwards		(54,171	)		(160,562	)
Valuation allowance		54,171			160,562
Net changes in deferred income tax under non-current portion		-			-

Total provision for income tax	$	-		$	-

The following is a reconciliation of the statutory tax rate to the effective tax rate:

	For the Years Ended December 31,
	2016			2015

U.S. statutory income tax rate		35.0	%		35.0	%
Foreign statutory income tax rate difference		(18.0	)%		(18.0	)%
Changes in valuation allowance		(17.0	)%		(17.0	)%
Effective income tax rate		0.0	%		0.0	%

F-16

Significant components of the Company’s deferred taxes as of December 31, 2016 and 2015 were as follows:

	December 31,			December 31,
	2016			2015
Deferred tax assets:
Net operating loss carryforwards	$	3,170,956		$	1,924,332
Less: Valuation allowance		(3,170,956	)		(1,924,332	)
Deferred tax assets, net	$	-		$	-

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the net operating losses and temporary differences become deductible. Management considered projected future taxable income and tax planning strategies in making this assessment. As of December 31, 2016 and 2015, the Company accrued 100% valuation allowance against its deferred tax assets based on the assessment of the probability of future realization.

NOTE 9: STOCKHOLDERS’ EQUITY

As of December 31, 2016, the Company was authorized to issue a total of 50,000,000 shares of common stock, par value $0.001 per share.

On June 4, 2013, Worldwide issued 17,000,000 common shares to Mr. Alan Chen as founder’s shares for no consideration exchanged. As a result, a discount on capital of $17,000,000 was recorded. On the same date, Mr. Chen conveyed 1,000,000 shares, 8,548,000 shares, 3,816,000 shares, and 3,636,000 shares to Legend Media Investments Co., Ltd., Pioneer Media Investments Co., Ltd., Intelligent Media Investments Co., Ltd., and Core Winner Investment Limited, respectively (collectively, the “Recipients”). All of the recipients are entities under Mr. Chen’s common control. During the year 2014, Mr. Chen transferred 2,847,725, 410,000, and 11,687,600 shares to Ms. Chiu-li Tu, the Company’s employees, and other non-related parties, respectively. Mr. Chen and Ms. Tu are husband and wife. Prior to November 14, 2014, Mr. Chen holds 2,054,675 shares of Worldwide.

On September 16, 2013, Worldwide entered into a written Definitive Agreement with GIA Investments Gorp. (“GIA”), an unrelated party (the “Definitive Agreement”). Pursuant to the provisions of the Definitive Agreement, Worldwide would acquire NOWnews Network pursuant to a stock purchase agreement, and Worldwide will fund the operations of NOWnews Network for a period of approximately 8 months. Additionally, Worldwide desires to be acquired by an unidentified company (defined in the Definitive Agreement as “Company A”), pursuant to a stock exchange agreement, and Company A will be a participant in the OTCQB. As specified in the Definitive Agreement, GIA intends to acquire 15% of the issued and outstanding shares of Company A’s common stock for $3,000,000, and Worldwide intends that its existing shareholders will acquire 84% of the issued and outstanding shares of Company A’s common stock.

Pursuant to the Definitive Agreement, during September through December 2013, GIA funded an aggregate of $1,522,388 to Worldwide, which was recorded as “Subscriptions received in advance” on Worldwide’s consolidated balance sheet as of December 31, 2013. On May 23, 2014, Worldwide issued 3,000,000 common shares to GIA for the proceeds received.

During September through December 2013, Sky Media, the wholly-owned subsidiary of Worldwide, acquired 7,999,945 common shares (or 66.3%) of NOWnews Network from Mr. Alan Chen for $1,522,388 (or NT$45 million). Mr. Alan Chen owned 10,169,945 shares (or 84.3%) of common stock of NOWnews Network prior to the above transaction. Since Worldwide and NOWnews Network were both entities under Mr. Chen’s common control prior to the transaction, it was deemed a restructuring transaction (the “Restructuring Transaction”) and the $1,522,388 disbursed from Sky Media to Mr. Chen was recorded as a return of capital.

F-17

Pursuant to the Share Exchange Agreement entered on November 14, 2014 (see Note 1), the Company issued an aggregate of 20,000,000 shares of common stock to the shareholders of Worldwide in exchange for all the issued and outstanding capital stock of Worldwide. Immediately following the closing of the Share Exchange, the Company had a total of 22,412,000 issued and outstanding shares of common stock.

In February, 2015, Ms. Chiu-li Tu paid off the bank loans obtained by NOWnews Network, amounted to approximately $809,343 as of December 31, 2014, on behalf of NOWnews Network. Immediately after the repayment, Ms. Tu and NOWnews Network entered an agreement that such repayment will be a shareholder contribution to NOWnews Network. This transaction was treated as a related party transaction. The Company has recorded additional paid-in capital of approximately $817,104 as of December 31, 2015 for this shareholder contribution.

On July 31, 2015, NOWnews Network entered an agreement with Alan Chen and Ms. Chiu-li Tu, pursuant to which, Alan Chen and Ms. Tu agreed to forgive to their debt due from NOWnews Network in the amount of approximately $116,255 (or NT$3.7 million) and $367,808 (or NT$11.6 million), respectively, as shareholder contribution to NOWnews Network. This transaction was treated as a related party transaction, and such shareholder contribution has been recorded as additional paid-in capital.

On August 5, 2015, NOWnews Network, Sky Media, Mr. Alan Chen and Ms. Tu entered a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Gamania Digital Entertainment Co. Ltd. (“Gamania Digital”) and Ta Ya Venture Capital Co. Ltd. (“Ta Ya”), in which there are two phases of stock transfers. In Phase I, NOWnews Network is committed to sell to Gamania Digital and Ta Ya 1,250,000 and 400,000 shares of outstanding shares of NOWnews Network, respectively, through new issuance. In addition, Mr. Chen and Ms. Tu are committed to sell to Gamania Digital and Ta Ya 1,250,000 and 400,000 shares of NOWnews Network owned by them, respectively. The share transfer of Phase I shall be completed sixty (60) days upon signing the agreement. In Phase II, Gamania Digital and Ta Ya are expected, but not obligated, to purchase the same amount of shares from NOWnews Network, and Mr. Chen and Ms. Tu, as Phase I. As of the date of this report, NOWnews Network has fulfilled its obligation of Phase I through issuance of 1,250,000 and 400,000 shares to Gamania Digital and Ta Ya for approximately $388,803 (or NT$12.5 million) and $124,417 (or NT$4.0 million), respectively, on August 14, 2015. On September 8, 2015, NOWnews Network issued additional 350,000 shares to Gamania Digital for approximately $107,230 (or NT$3.5 million). On November 30, 2016, NOWnews Network issued additional 1,000,000 shares at NT$10 per share to Gamania Digital for approximately $313,283 (or NT$10 million). On February 22, 2017, Sky Media purchased 1,065,000 shares of NOWnews Network held by Jin Hao Kang Marketing Co., Ltd for a purchase price of approximately US$30,930 (or NT $937,200). On April 13, 2017, NOWnews Network issued additional 2,200,000 shares at NT$10 per share to Gamania Digital for approximately $725,534 (or NT $22,000,000). As a result, NOWnews Network remained the Company’s majority owned subsidiary in which Company indirectly holds 52.49% of the equity interest

On October 4, 2016, the Company issued 660,000 shares of common stock to GIA Consultants Limited to fulfill the Financial Advisory Service Recognition Agreement (the “Agreement”) signed on September 20, 2016.In resolution of the Company’s outstanding obligations pertaining to the financial advisory services that have been rendered to the Company as of August 12, 2016, the Company and GIA Consultants Limited (“GIA”) entered into a Financial Advisory Service Recognition Agreement (the “Agreement”) on September 20, 2016, pursuant to which the Company agrees to issue 660,000 shares of common stock, par value $0.001 per share, to GIA in recognition of services that have been previously rendered to the Company as of August 12, 2016. The common stock price was $4.50 per share as of closing on August 12, 2016, totaling a sum of $2,970,000.

NOTE 10: NON-CONTROLLING INTEREST

In August 2013, NOWnews Network established NOWnews International as a 55% owned subsidiary. Mr. Shu-sen Chang, the former Chairman and current director of NOWnews Network, and one other shareholder, owns 10% and 35% of NOWnews International, respectively.

During September through December 2013, Sky Media acquired 66% of NOWnews Network from Mr. Alan Chen. Mr. Chen owned 84.3% of common stock of NOWnews Network prior to the Restructuring Transaction.

On August 14 and September 8, 2015, NOWnews Network issued additional 1,650,000 and 350,000 shares of common stock to non-controlling shareholders, respectively, pursuant to the Stock Purchase Agreement (see Note 9). As a result, Sky Media owned 57% of NOWnews Network.

On each of November 30, 2016 and April 13, 2017, NOWnews Network respectively issued additional 1,000,000 and 2,200,000 shares of common stock to non-controlling shareholders, pursuant to the Stock Purchase Agreement (see Note 9). As a result, Sky Media owned 52.49% of NOWnews Network.

Non-controlling interest consisted of the following:

	December 31,			December 31,
	2016			2015
Beginning balance	$	492,851		$	(493,747	)
Capital contribution by shareholders through debt conversion		-			561,323
Capital contribution by non-controlling interest		313,032			620,450
Net loss attributed to non-controlling interest		(164,527	)		(114,261	)
Other comprehensive loss attributable to non-controlling interest		(238	)		(80,914	)
Ending balance	$	641,118		$	492,851

F-18

NOTE 11: COMMITMENTS AND CONTINGENCIES

(1) Lease commitments

Capital Lease

From April, 2015, NOWnews Network entered into various capital lease agreements with Nextlink Technology Co., Ltd. (“Nextlink”), pursuant to which NOWNews Network agreed to lease multiple servers from Nextlink for the period ranges from sixteen months to two years. At the end of each contract and upon fulfillment of the lease obligations, the title of these servers and ownership shall be transferred to NOWnews Network. Because NOWnews Network takes ownership of the equipment at the completion of the lease contract, NOWnews Network determined that the arrangement represents a capital lease for the equipment. The Company recorded $156,814 as a capital lease for the equipment and began depreciating the equipment on a straight line basis over five years. Depreciation expense of those equipment under capital lease for the years ended December 31, 2016 was $35,833. Interest expense resulted from capital leases for the years ended December 31, 2016 amounted to $870.

Operating Lease

Operating lease commitments consist of leases for office space and copy machines under various operating lease agreements which expire in June, 2021. Operating lease agreements generally contain renewal options that may be exercised at the Company’s discretion after the completion of the terms.

The Company's obligations under capital and operating leases are as follows:

As of December 31,	Capital Leases Amount		Operating Leases Amount
2017	$	15,030	$	23,389
2018		-		2,000
2019		-		2,000
2020		-		2,000
2021		-		1,000
Total minimum payments	$	15,030	$	30,389

The Company incurred rent expenses of $84,932 and $123,345 for the years ended December 31, 2016 and 2015, respectively.

(2) Litigation

Defamation and General Matters

Lai Matter

F-19

(3) Shares to be issued

On August 5, 2015, NOWnews Network, Sky Media, Mr. Alan Chen and Ms. Tu entered a Stock Purchase Agreement with Gamania Digital, and Ta Ya, in which NOWnews Network is committed to sell to Gamania Digital, and Ta Ya of its outstanding shares through two Phases (see Note 9). As of the date of this report, the sale of Phase I has been completed. As of the date of this report, NOWnews Network has issued an aggregate of 3,200,000 shares to Gamania Digital in exchange for approximately $1,055,567 (or NT$ 32,000,000) in the sale of Phase II, which shall terminate by the end of August, 2017 accordingly to the Stock Purchase Agreement.

NOTE 12: DISCONTINUED OPERATIONS

On December 27, 2013, NOWnews Network’s Board of Directors approved the termination of operations of NOWnews Network’s 55% owned subsidiary, NOWnews International (see Note 1). The results of the subsidiary have been presented as a discontinued operation in the statements of income and comprehensive income. There was no revenue, cost of sales, operating expenses, or any income taxes incurred from the discontinued entity during the years ended December 31, 2016.

Net income of discontinued operations during the years ended December 31, 2016 was as follows:

	For The Years Ended
	December 31, 2016
Net revenue	$	-
Cost of goods sold	-
Selling, general, and administrative expenses	-
Other income		2
Income before income taxes		2
Income taxes		-
Net income	$	2

Net assets of discontinued operations as of December 31, 2016 were as follows:

Net assets:

	As of December 31, 2016
Cash & cash equivalents	$	4,025
Current assets	$	4,025
Accounts payable	$	162
Accrued expenses		385
Due to related parties		97,445
Current liabilities	$	97,992

F-20

NOTE 13: RELATED PARTY TRANSACTIONS

The related parties of the company with whom transactions are reported in these financial statements are as follows:

Name of entity or Individual		Relationship with the Company and its subsidiaries
GIA Consultants Limited		Entity holds 2.86% of the Company
Jin Hao Kang Marketing Co., Ltd.		Mr. Alan Chen is the Director of this entity.
Mega Media Investments Co., Ltd. (Taiwan Branch)		Entity controlled by Mr. Alan Chen
Gamania Digital Entertainment Co., Ltd.		Entity owned 34.51% of NOWnews Network.
GASH Co., Ltd.		Entity controlled by Gamania Digital.
Gash point (HK) Co., Ltd.		Entity controlled by Gamania Digital.
Jollywiz Digital Technology Co., Ltd.		Entity controlled by Gamania Digital.
Digicentre Co., Ltd.		Entity controlled by Gamania Digital.
WeBackers Co., Ltd.		Entity controlled by Gamania Digital.
GASH Media Digital Marketing Co., Ltd		Entity controlled by GASH Co., Ltd.
Chunghwa Wideband Best Network Co., Ltd.		Mr. Alan Chen is the Chairman and legal representative of this entity.
Mr. Alan Chen		Director and controlling beneficiary shareholder of the Company. Current Director and former Chairman of NOWnews Network.

Transactions

	For the Years Ended December 31,
	2016		2015
Sales to Mega Media Investments Co., Ltd. (Taiwan Branch)	$	131,507	$	50,403
Sales to GASH Media Digital Marketing Co., Ltd.		35,466		-
Sales to Jin Hao Kang Marketing Co., Ltd.		29,553		81,004
Sales to WeBackers Co., Ltd.		4,897		-
Sales to GASH Co., Ltd.		3,724		7,403
Sales to Digicentre Co., Ltd.		3,103		-
Sales to Jollywiz Digital Technology Co., Ltd.		1,552		14
Sales to Gamania Digital Entertainment Co., Ltd.		-		4,725
Sales to Gash point (HK) Co., Ltd.		-		316
Total	$	209,802	$	143,865

The primary services provided by NOWnews Network to these related parties was advertisement space on NOWnews Network’s website.

F-21

Due from related parties

	December 31,		December 31,
	2016		2015
Trade receivable from Mega Media Investments Co., Ltd. (Taiwan Branch)	$	57,230	$	-
Trade receivable from WeBackers Co., Ltd.		1,873		-
Trade receivable from Jin Hao Kang Marketing Co., Ltd		795		55,680
Trade receivable from GASH Co., Ltd.		-		6,092
Trade receivable from Gamania Digital Entertainment Co., Ltd.		-		4,803
Trade receivable from Gash point(HK) Co., Ltd.		-		306
Trade receivable from Jollywiz Digital Technology Co., Ltd.		-		13
Total	$	59,898	$	66,894

Due to related parties

	December 31,		December 31,
	2016		2015
Due to Mr. Alan Chen	$	881,203	$	545,397
Due to GASH Media Digital Marketing Co., Ltd.		16,410		-
Due to Digicentre Co., Ltd.		9,259		-
Due to Chunghwa Wideband Best Network Co., Ltd.		3,086		-
	$	909,958	$	545,397

Due to related parties were unsecured, had no written agreement, due on demand with no maturity date, and bearing no interest.

NOTE 14: SUBSEQUENT EVENT

Management has evaluated subsequent events through April 19, 2017, the date which the financial statements were available to be issued. All subsequent events requiring recognition as of December 31, 2016 have been incorporated into these consolidated financial statements and there are no subsequent events that require disclosure in accordance with FASB ASC Topic 855, “Subsequent Events.”, except as follows:

On February 22, 2017, NOWnews Network Co. Ltd. (NOWnews Network) entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Gamania Digital Entertainment Co. Ltd. (“Gamania Digital”). Pursuant to the Stock Purchase Agreement, NOWnews Network issued 2,200,000 shares to non-controlling shareholders for a purchase price of NT$22,000,000 (approximately US$725,534) on April 13, 2017.

F-22

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in the reports filed under the Securities Exchange Act, is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms. Disclosure controls are also designed with the objective of ensuring that this information is accumulated and communicated to the Company's management, including the Company's chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Pursuant to Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation with the participation of the Company’s management, the Company’s chief executive officer and chief financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the fiscal year ended December 31, 2016. Based upon that evaluation, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective.

Management’s Annual Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over our financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act. The Company’s management is also required to assess and report on the effectiveness of the Company’s internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”). Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of the Company’s financial reporting for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes policies and procedures that: (i) pertain to maintaining records that in reasonable detail accurately and fairly reflect the Company’s transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of the Company’s financial statements and that receipts and expenditures of company assets are made in accordance with management authorization; and (iii) provide reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

The Company’s management assessed the effectiveness of our internal control over financial reporting as of December 31, 2016. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. This evaluation was conducted by Shuo-Wei Shih, the Company’s chief executive officer, and Tsung-Chien Chiang, the Company’s chief financial officer. Based on our evaluation, we determined that, as of December 31, 2016, our internal control over financial reporting was effective.

This Annual Report does not include an attestation report of the Company’s registered accounting firm regarding internal control over financial reporting. The management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission.

Changes in Internal Controls 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 have been no changes in our internal control over financial reporting during the last fiscal quarter of 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Controls

Management does not expect that the Company's disclosure controls and procedures or the Company's internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. The Company's disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and the Company's chief executive officer and chief financial officer have concluded that the Company's disclosure controls and procedures are effective at that reasonable assurance level.

Item 9B. Other Information.

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Below are the names and certain information regarding the Company’s executive officers and directors as of the date of this Annual Report.

Name	Age	Position
Alan Chen	63	Chairman
Shuo-Wei Shih	48	Chief Executive Officer and Director
Tsung-Chien Chiang	57	Chief Financial Officer
En Ming Tseng	61	Director
Shang-Hong Lin	43	Director
Yuhao AixinjueLuo	48	Director

Alan Chen. For the past decade, Mr. Chen has been the chairman of the Chunghwa United Holdings Group, a consortium of multimedia companies actively involved in cable television, “5TV”, “NowNews”, “Airnet” and other global media ventures. We believe his experience qualifies him to serve as our officer and director.

Tsung-Chien Chiang. Mr. Chiang was appointed our Chief Financial Officer on November 14, 2014. Since November 2011, Mr. Chiang has been working as the chief financial officer for Chunghwa United Group, a consortium of multimedia companies actively involved in internet and cable television and other global media ventures. He was the chief financial officer of Kimlan Food Co., Ltd., a food production company, from January 2010 through October 2010. Prior to that, Mr. Chiang served as senior financial manager at Airproduct & Chemical Co., Ltd., a company manufacturing specialty air products, for about eight years. Mr. Chiang received his bachelor’s degree in business from China Culture University in Taiwan in 1983.

Shuo-Wei Shih Mr. Shih was appointed Chief Executive Officer of the Company on March 25, 2016 and a director on June 24. Before joining the Company, Mr. Shih has been a director of GIA Investment, a consulting firm in finance, operation and marketing in Taiwan since October 2014. From 2007 to 2012, Mr. Shih was the founder of Sunrise Global Solar Energy Ltd, which engages in the design, manufacture, and marketing of photovoltaic solar energy products for residential, commercial and utility-scale power plant clients worldwide. Mr. Shih was responsible for business development, financing as well as cooperation with Australian scientists. In 2012, under Mr. Shih’s supervision, Sunrise Global Solar Energy Ltd was acquired by Sino-American Silicon Products Inc.(TSEC:5483), a manufacturer of solar wafer listed in Taiwan. In 2012, he was selected by Council for Industrial and Commercial Development of Taiwan as a director responsible for resource integration and providing of financial advice. Mr. Shih started his professional career as an associate researcher with the Industrial Technology Research Institute in Taiwan. He was certified as an Industrial Technologist by National Association of Industrial Technology (USA) in 1997. Mr. Shih graduated from Southern Illinois University with a BS degree focusing on industrial technology in 1994 and received his MS degree from Indiana State University in 1996.

En Ming Tseng. Mr. Tseng was appointed a director on November 14, 2014. He has been serving as Chairman of St John’s University since December 2009 and Chairman of Digivast Co, Ltd., a mobile application company, since January 2012. Prior to that, he served on the board of directors of Heima Vista Co. Ltd., an internet application solutions company from August 2004 through July 2014. He also served on the board of directors of St John’s University from September 2010 through May 2013. From July 2011 to December 2013, Mr. Tseng was a managing consultant at Jucheng Group, a training and consulting company. Mr. Tseng holds a bachelor’s degree in shipping and transportation management from National Taiwan Ocean University, an MBA from Bloomsburg University of Pennsylvania and a PhD in industrial training from University of Northern Iowa. We believe Mr. Tseng bring to the Board extensive industry experience and in-depth knowledge of internet and mobile application business.

Shang-Hong Lin. Mr. Lin was appointed a director on November 14, 2014 and has been serving as the chief science officer of Chunghwa United Group since May 2014. Mr. Lin was an adviser of Chunghwa Wideband Best Network Co., Ltd. from May 2013 to April 2014. Prior to that, he served as sales director at Zinwell Homepage Co., Ltd. from October 2008 to April 2014 and Interactive Video Technology Co., Ltd. from October 2005 to October 2013. Mr. Lin graduated from Chinese Culture University with a master’s degree in Sociolinguistics.

Dr. Yuhao Aixinjueluo, Dr. Aixinjueluo is a banking veteran with solid expertise and extensive experience in the banking industry. In addition to holding numerous professional certifications such as Financial Risk Manager, Certified International Investment Analyst, Chartered Financial Analyst, and Certified Financial Planner, he retains important positions at many major international financial institutions. He was once the UN Messenger of Peace of the United Nations International Week of Science and Peace in 2007, the president of the Lao Economic Development Committee, the chairman of the supervisory at Lao Construction Bank, the chairman of the supervisory at Lao World Trade Center, and the chairman of the board of directors of Laos Loto Group.

Our directors will serve until the annual meeting of stockholders and until his respective successors have been elected and have qualified, or until his earlier resignation, removal or death.

We are not required to have any independent members of the Board of Directors. Our Board of Directors has determined that En Ming Tseng is independent under applicable SEC rules. As we do not have any board committees, the Board as a whole carries out the functions of audit, nominating and compensation committees.

Compensation Committee Interlocks and Insider Participation

None of our executive officers serves as a member of the Board of Directors or compensation committee of any other entity that has one or more of its executive officers serving as a member of our Board of Directors.

Material Changes to the Procedures by which Security Holders May Recommend Nominees to the Board of Directors

There have been no material changes to the procedures by which security holders may recommend nominees to the Board of Directors.

Code of Ethics

As of the date of this report, we had not adopted a Code of Ethics for Financial Executives, which would include our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We plan to adopt a code of ethics as we develop our business.

Board Leadership Structure and Role in Risk Oversight

Since November 14, 2014, we have separated the roles of Chairman of the Board and Chief Executive Officer. Although the separation of roles has been appropriate for us during that time period, in the view of the board of directors, the advisability of the separation of these roles depends upon the specific circumstances and dynamics of our leadership.

As Chairman of the Board, Mr. Chen serves as the primary liaison between the CEO and the Board and provides strategic input and counseling to the CEO. With input from other members of the board of directors and management, he presides over meetings of the board of directors. Mr. Chen has developed an extensive knowledge of our company, its challenges and opportunities and has a productive working relationship with our senior management team.

The board of directors, as a unified body and through committee participation, organizes the execution of its monitoring and oversight roles and does not expect its Chairman to organize those functions. Our primary rationale for separating the positions of Board Chairman and the CEO is the recognition of the time commitments and activities required to function effectively as Chairman and as the CEO of a company with a relatively flat management structure. The separation of roles has also permitted the board of directors to recruit senior executives into the CEO position with skills and experience that meet the board of director’s planning for the position who may not have extensive public company board experience.

Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. Management is responsible for the day-to-day management of risks the company faces, while the board of directors, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed.

The board of directors believes that establishing the right “tone at the top” and that full and open communication between executive management and the board of directors are essential for effective risk management and oversight. Our CEO communicates frequently with members of the board to discuss strategy and challenges facing the company.

Section 16(a) Beneficial Ownership Reporting Compliance

As of the date of this report, to our knowledge, the officers, directors and greater than ten percent shareholders plan to file their Form 3s as soon as possible.

Item 11. Executive Compensation.

The following table sets forth all compensation paid to our principal executive officers for the fiscal years ended December 31, 2016 and 2015. No other executive officer or former executive officer received more than $100,000 in compensation in the periods indicated except reported below.

SUMMARY COMPENSATION TABLE

						Stock		Option		All other
Name and		Salary		Bonus		awards		awards		compensation		Total
principal position	Year	($)		($)		($)		($)		($)		($)
Yih-Jong Shy	Year Ended		1,355		-		-		-		-		1,355
Chief Executive Officer	December 31, 2016
and director (1)	Year Ended		6,000		-		-		-		-		6,000
	December 31, 2015
Shuo-Wei Shih	Year Ended		4,645		-		-		-		-		4,645
Chief Executive Officer	December 31, 2016
and director (2)	Year Ended
	December 31, 2015		-		-		-		-		-		-
Tsung-Chien Chiang	Year Ended		6,000		-		-		-		-		6,000
Chief Financial Officer	December 31, 2016
	Year Ended
	December 31, 2015		6,000		-		-		-		-		6,000

(1) On March 25, 2016, Mr. Yih-Jong Shy resigned as the Chief Executive Officer. On June 24, 2016, Mr. Shy resigned as a director of the Company.

(2) On March 25, 2016, Mr. Shuo-Wei Shih was appointed as the Chief Executive Officer and on June 24, 2016, he was appointed as a director of the Company.

Employment Agreement

Yih-Jong Shy

Pursuant to the employment agreement that the Company and Mr. Shy entered into on November 14, 2014, Mr. Shy will be entitled to an annual salary of $6,000 for his services as Chief Executive Officer of the Company. The employment agreement has an initial term (the “Initial Term”) commencing as of November 14, 2014 and expiring on December 31, 2015, and continuing on a year-to-year basis thereafter unless terminated by either party on not less than thirty days’ notice prior to the expiration of the Initial Term or any one-year extension. In addition, Mr. Shy will be entitled to receive a stock option to purchase up to 15,000 shares of common stock of the Company if the Company reports a net income of $500,000 for the year ending December 31, 2015. All the shares underlying the options will vest immediately upon the Board of Director’s confirmation of the attaining of the Performance Target. On March 25, 2016, Mr. Yih-Jong Shy resigned as the Chief Executive Officer.

Shuo-Wei Shih

Pursuant to the employment agreement that the Company and Mr. Shih entered into on March 25, 2016, Mr. Shih will be entitled to an annual salary of $6,000 for his services as Chief Executive Officer of the Company. The employment agreement has an initial term (the “Initial Term”) commencing as of March 25, 2016 and expiring on December 31, 2016, and continuing on a year-to-year basis thereafter unless terminated by either party on not less than thirty days’ notice prior to the expiration of the Initial Term or any one-year extension. In addition, Mr. Shih will be entitled to receive a stock option to purchase up to 15,000 shares of common stock of the Company if the Company reports a net income of $500,000 for the year ending December 31, 2016 (the “Performance Target”). All the shares underlying the options will vest immediately upon the Board of Director’s confirmation of the attaining of the Performance Target.

Tsung-Chien Chiang

Pursuant to the employment agreement that the Company and Mr. Chiang entered into on November 14, 2014, Mr. Chiang will be entitled to an annual salary of $6,000 for his services as Chief Financial Officer of the Company. The employment agreement has an initial term (the “Initial Term”) commencing as of November 14, 2014 and expiring on December 31, 2015, and continuing on a year-to-year basis thereafter unless terminated by either party on not less than thirty days’ notice prior to the expiration of the Initial Term or any one-year extension. In addition, Mr. Chiang will be entitled to receive a stock option to purchase up to 15,000 shares of common stock of the Company if the Performance Target is met. All the shares underlying the options will vest immediately upon the Board of Director’s confirmation of the attaining of the Performance Target.

Outstanding Equity Awards at Fiscal Year-End

None.

Director Compensation

No director of the Company received any compensation for services as director during its last fiscal year.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth certain information, as of the date of filing of this report, with respect to the beneficial ownership of the outstanding common stock by (i) any holder of more than five (5%) percent; (ii) each of the Company’s executive officers and directors; and (iii) the Company’s directors and executive officers as a group. Except as otherwise indicated, each of the stockholders listed below has sole voting and investment power over the shares beneficially owned.

	Amount of shares of common stock
	Beneficially Owned			Percent Of
Name of Beneficial Owner	(1)			Class (2)
Alan Chen (4)		3,379,700	(4)		14.65	%
Tsung-Chien Chiang		50,000			*
En Ming Tseng		6,000	(5)		*
Shang-Hong Lin		10,000			*
Shuo-Wei Shih		-			-
Yuhao Aixinjue Luo		500,000			2.17	%
All Executive Officers and Directors as a Group
(six persons)		3,945,700			17.10	%
Greater than 5% Shareholders
GIA Investments Corp. (3)		3,000,000			13.00	%

Represents less than one percent.

(1)

Under Rule 13d-3 of the Exchange Act of 1934, as amended (the “Exchange Act”), a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares: (i) voting power, which includes the power to vote or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights.

(2)

Calculated based on 23,072,000 shares of Common Stock outstanding as of April 13, 2017.

(3)

Heer Hsiao holds the voting and dispositive power over the securities held by GIA Investments Corp.

(4)

This number includes (i) 1,130,000 shares of Common Stock held by Pioneer; (ii) 395,100 shares of Common Stock held by Social Cloud Co., Ltd. (“Social”); (iii) 350,000 shares of Common Stock held by Legend Media Investments (“Legend”); (iv) 419,575 shares of Common Stock held by Trophy Access Limited (“Trophy”); (v) 445,000 shares of Common Stock held by Core Winner Investment Limited (“Core”); (vi) 445,000 shares of Common Stock held by Intelligent Media Investments (“Intelligent”); and (vii) 195,025 shares of Common Stock held by his spouse. As such, Mr. Chen is deemed to have the voting and dispositive power over shares of Common Stock held by these entities and his spouse.

(5)

Includes (i) 6,000 shares of Common Stock held directly by Mr. Tseng and (ii)100,000 shares of Common Stock held by Prime Chance Limited of which his wife, Tsung-Mei Luo, is the sole director and member.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Related Party Transactions

The table below sets forth our sales to the related parties during the years ended December 31, 2016 and 2015:

	For the Years Ended
	December 31,
	2016		2015
Sales to Mega Media Investments Co., Ltd. (Taiwan Branch)	$	131,507	$	50,403
Sales to GASH Media Digital Marketing Co., Ltd.		35,466		-
Sales to Jin Hao Kang Marketing Co., Ltd.		29,553		81,004
Sales to WeBackers Co., Ltd.		4,897		-
Sales to GASH Co., Ltd.		3,724		7,403
Sales to Digicentre Co., Ltd.		3,103		-
Sales to Jollywiz Digital Technology Co., Ltd.		1,552		14
Sales to Gamania Digital Entertainment Co., Ltd.		-		4,725
Sales to Gash point (HK) Co., Ltd.		-		316
Total	$	209,802	$	143,865

The primary services provided by NOWnews Network to these related parties was advertisement space on NOWnews Network’s website.

Due from Related Parties

The table below sets forth due from related parties for the fiscal years ended December 31, 2016 and 2015:

	December 31,		December 31,
	2016		2015
Trade receivable from Mega Media Investments Co., Ltd. (Taiwan Branch)	$	57,230	$	-
Trade receivable from WeBackers Co., Ltd.		1,873		-
Trade receivable from Jin Hao Kang Marketing Co., Ltd		795		55,680
Trade receivable from GASH Co., Ltd.		-		6,092
Trade receivable from Gamania Digital Entertainment Co., Ltd.		-		4,803
Trade receivable from Gash point(HK) Co., Ltd.		-		306
Trade receivable from Jollywiz Digital Technology Co., Ltd.		-		13
Total	$	59,898	$	66,894

Due to Related Parties

The table below sets forth due to related parties for the fiscal years ended December 31, 2016 and 2015:

	December 31,		December 31,
	2016		2015
Due to Mr. Alan Chen	$	881,203	$	545,397
Due to GASH Media Digital Marketing Co., Ltd.		16,410		-
Due to Digicentre Co., Ltd.		9,259		-
Due to Chunghwa Wideband Best Network Co., Ltd.		3,086		-
	$	909,958	$	545,397

Due to related parties were unsecured, had no written agreement, due on demand with no maturity date, and bearing no interest.

The table below explains how the aforementioned parties are related to the Company.

Name of Entity or Individual		Relationship with the Company and its subsidiaries
GIA Consultants Limited		Entity holds 2.86% of the Company
Jin Hao Kang Marketing Co., Ltd.		Mr. Alan Chen is the Director of this entity.
Mega Media Investments Co., Ltd. (Taiwan Branch)		Entity controlled by Mr. Alan Chen
Gamania Digital Entertainment Co., Ltd.		Entity owned 34.51% of NOWnews Network.
GASH Co., Ltd.		Entity controlled by Gamania Digital.
Gash point (HK) Co., Ltd.		Entity controlled by Gamania Digital.
Jollywiz Digital Technology Co., Ltd.		Entity controlled by Gamania Digital.
Digicentre Co., Ltd.		Entity controlled by Gamania Digital.
WeBackers Co., Ltd.		Entity controlled by Gamania Digital.
GASH Media Digital Marketing Co., Ltd		Entity controlled by GASH Co., Ltd.
Chunghwa Wideband Best Network Co., Ltd.		Mr. Alan Chen is the Chairman and legal representative of this entity.
Mr. Alan Chen		Director and controlling beneficiary shareholder of the Company. Current Director and former Chairman of NOWnews Network.

We have not adopted written policies and procedures specifically for related person transactions. Our Board of Directors is responsible to approve all related party transactions.

Item 14. Principal Accounting Fees and Services.

The following is a summary of fees for professional services rendered by our registered independent public accounting firm for the years ended December 31, 2016 and 2015:

	Year Ended December 31, 2016		Year Ended December 31, 2015
Audit Fees	$	105,000	$	60,000
Audit Related Fees		-		-
Tax Fees		3,000		-
All Other Fees		-		-
Total Fees	$	108,000	$	60,000

Pre-Approval Policies and Procedures

The Board of Directors pre-approves all audit and non-audit services performed by the Company’s auditor and the fees to be paid in connection with such services in order to assure that the provision of such services does not impair the auditor’s independence.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

Exhibit
No.		Description

3.1		Articles of Incorporation of the Company (1)

3.2		Certificate of Amendment of the Company (2)

3.3		Bylaws of the Company (1)

10. 1		Share Exchange Agreement, dated November14, 2014, by and among the Company, Worldwide Media Investments Corp, NOWnews Network Co., Ltd., and the shareholders of Worldwide Media Investments Corp (4)

10.2		Personal Guarantee, dated November 14, 2014, by Alan Chen and Chiu-Li Tu (3)

10.3		NOWnews Office Lease Agreement dated March 3, 2015, by and between the Company and Yiqiu International Department Store Co., Ltd. (5)

10.4		Lease Termination Agreement, dated March 15, 2015, by and between the Company and Shin Kong Life Insurance Co., Ltd. (5)

10.5		Share Exchange Agreement, dated April 13, 2016, by and among the Company, Dawnrain Media Co., Ltd., New Taoyard Advertising Co., Ltd., Beijing New Tong Ying Culture Media Co., Ltd. and its shareholders (6)

10.6		Financial Advisory Service Recognition Agreement, dated September 20, 2016, by and between the Company, and GIA Investments Corp. (7)

10.7		Share Exchange Agreement, dated October 4, 2016, by and among the Company, MySong Industrial Co., Ltd. and its shareholders. (8)

10.8		Share Exchange Agreement, dated November 19, 2016, by and among the Company, Lao Development Holding Limited and its shareholders (9)

10.9		Cooperation Agreement, dated January 14, 2017, by and between the Company and Earl International Development Sdn. Bhd. (10)

21.1		List of Subsidiaries*

31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32.1		Certification of the Principal Executive Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

32.2		Certification of the Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

101.INS		XBRL Instance Document*

101.SCH		XBRL Taxonomy Extension Schema Document*

101.CAL		XBRL Taxonomy Calculation Linkbase Document*

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document*

101.LAB		XBRL Taxonomy Label Linkbase Document*

101.PRE		XBRL Taxonomy Presentation Linkbase Document*

*Filed herewith. **Furnished herewith.

(1)

Incorporated by reference herein the exhibits to the Company’s Form S-1 filed on January 11, 2011.

(2)

Incorporated by reference the exhibit to the Company’s Form 10-K filed on November 12, 2014.

(3)

Incorporated by reference the exhibit to the Company’s Form 8-K filed on November 14, 2014.

(4)

Incorporated by reference the exhibit to the Company’s Form 8-K/A filed on January 9, 2015.

(5)

Incorporated by reference the exhibits 10.6 and 10.7 to the Company’s Form 10-K filed on March 31, 2015.

(6)

Incorporated by reference the exhibits 10.1 to the Company’s Form 8-K filed on April 15, 2016

(7)

Incorporated by reference the exhibits 10.1 to the Company’s Form 8-K filed on September 21, 2016

(8)

Incorporated by reference the exhibits 10.1 to the Company’s Form 8-K filed on October 7, 2016

(9)

Incorporated by reference the exhibits 10.1 to the Company’s Form 8-K filed on November 23, 2016

(10)

Incorporated by reference the exhibits 10.1 to the Company’s Form 8-K filed on January 18, 2017

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

	NOWNEWS DIGITAL MEDIA TECHNOLOGY CO. LTD.

Date: May 3, 2017	By:	/s/ Shuo-Wei Shih
		Shuo-Wei Shih
		Chief Executive Officer
		(Principal Executive Officer)

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date

/s/ Shuo-Wei Shih	Chief Executive Officer	May 3, 2017
Shuo-Wei Shih	(Principal Executive Officer)

/s/ Tsung-Chien Chiang	Chief Financial Officer	May 3, 2017
Tsung-Chien Chiang	(Principal Financial and Accounting Officer)

/s/ Alan Chen	Chairman of the Board of Directors	May 3, 2017
Alan Chen

/s/ Shang-Hong Lin	Director	May 3, 2017
Shang-Hong Lin

/s/ En Ming Tseng	Director	May 3, 2017
En Ming Tseng

/s/ Yuhao Aixinjueluo	Director	May 3, 2017
Yuhao Aixinjueluo

Attached files

NowNews Digital Media Technology Co. Ltd. Reports

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