UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended March 31, 2018

 

¨	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

 

For the transition period from ______________ to _____________

 

Commission file number:  333-171637

 

NOWNEWS DIGITAL MEDIA TECHNOLOGY CO. LTD.

(Exact name of Company as specified in its charter)

 

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

 

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

 

	+886 287978775 ext 500
	(Registrant’s telephone number, including area code)

 

N/A

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

 

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

 

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

 

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
Emerging growth company	¨

 

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

 

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

 

APPLICABLE ONLY TO ISSUERS 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 Sections 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 ISSUERS

 

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:

 

As of May 18, 2018, there were 23,617,000 shares of $0.001 par value common stock issued and outstanding.

 

 

 

  

FORM 10-Q

NOWNEWS DIGITAL MEDIA TECHNOLOGY CO. LTD.

INDEX

 

			Page
PART I.	Financial Information
	Item 1.  Financial Statements (Unaudited).		F-1
	Item 2.  Management’s Discussion and Analysis of Financial Condition and results of Operation.		3
	Item 3.  Quantitative and Qualitative Disclosures About Market Risk.		11
	Item 4.  Controls and Procedures.		11
PART II.	Other Information		11
	Item 1.  Legal Proceedings.		11
	Item 1A. Risk Factors.		11
	Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.		11
	Item 3.  Defaults Upon Senior Securities.		11
	Item 4.  Mine Safety Disclosures.		11
	Item 5.  Other Information.		11
	Item 6.  Exhibits.		11

  

 

 

Item 1. Financial Statements

 

NOWNEWS DIGITAL MEDIA TECHNOLOGY CO., LTD. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

  

		Page
Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017		F-2
Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2018 and 2017		F-3
Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017		F-4
Notes to Consolidated Financial Statements		F-5 - F-23

 

 

NOWNEWS DIGITAL MEDIA TECHNOLOGY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

		March 31,				December 31,
		2018				2017
			(UNAUDITED)
Assets
Current Assets
Cash and cash equivalents		$	696,676			$	186,494
Accounts receivable, net			582,350				687,362
Due from related parties			7,136				26,051
Other current assets			478,112				91,636
Current assets of discontinued operations			15				15
Total Current Assets			1,764,289				991,558
Furniture, fixture, and equipment, net			282,275				276,059
Security deposits, non-current			41,980				67,478
Intangible assets, net			20,182				21,800
Total Assets		$	2,108,726			$	1,356,895
Liabilities and Equity
Current Liabilities
Long-term obligation under capital lease, current		$	2,318			$	2,238
Accounts payable			146,066				144,849
Accrued expenses			880,690				957,956
Due to related parties			2,727,916				1,612,260
Other current liabilities			3,536				8,559
Current liabilities of discontinued operations			104,638				102,731
Total Current Liabilities			3,865,164				2,828,593
Long-term obligation under capital lease			2,912				3,442
Total Liabilities			3,868,076				2,832,035
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 23,072,000 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively			23,072				23,072
Additional paid-in capital			9,184,634				9,184,634
Subscriptions received in advance			530,000				530,000
Accumulated deficit			(12,322,143	)			(11,869,788	)
Accumulated other comprehensive income			16,506				16,234
Total Stockholders' deficit			(2,567,931	)			(2,115,848	)
Noncontrolling Interests			808,581				640,708
Total Deficit			(1,759,350	)			(1,475,140	)
Total Liabilities and Equity		$	2,108,726			$	1,356,895

 

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

 

 

NOWNEWS DIGITAL MEDIA TECHNOLOGY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED) 

 

		For The Three Months Ended
		March 31,
		2018				2017
Net revenue		$	878,312			$	637,547
Cost of revenue			(756,088	)			(573,635	)
Gross profit			122,224				63,912
Selling expenses			(332,296	)			(174,237	)
General and administrative expenses			(518,844	)			(343,591	)
Total operating expense			(851,140	)			(517,828	)
Operating loss			(728,916	)			(453,916	)
Other income (expense)
Interest income			3				179
Interest expense			(95	)			(65	)
Other (expense) income, net			(1,379	)			802
Total other (expense) income			(1,471	)			916
Loss from continuing operations before income taxes			(730,387	)			(453,000	)
Income taxes			-				-
Loss from continuing operations			(730,387	)			(453,000	)
Loss from discontinued operations, net of income taxes			-				-
Net loss			(730,387	)			(453,000	)
Net loss attributable to noncontrolling interests:
Net loss from continuing operations			278,032				180,859
Net loss from discontinued operations			-				-
Total net loss attributable to noncontrolling interest			278,032				180,859
Net loss attributable to NowNews Digital Media Technology Co. Ltd.			(452,355	)			(272,141	)
Foreign currency translation (loss) gain			(2,666	)			187,299
Comprehensive loss			(455,021	)			(84,842	)
Other comprehensive (income) loss attributable to noncontrolling interests			(7,111	)			2,724
Comprehensive loss attributable to NowNews Digital Media Technology Co. Ltd.		$	(462,132	)		$	(82,118	)
Amount attributable to common stockholders:
Net loss from continuing operations, net of income taxes		$	(452,355	)		$	(272,141	)
Net loss from discontinued operations, net of income taxes			-				-
Net loss attributable to common stockholders		$	(452,355	)		$	(272,141	)
Net loss attributable to common stockholders - basic and diluted
Loss from continuing operations		$	(0.02	)		$	(0.01	)
Loss from discontinued operations			-				-
Net loss attributable to common stockholders		$	(0.02	)		$	(0.01	)
Weighted average shares outstanding, basic and diluted			23,072,000				23,072,000

 

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

 

 

NOWNEWS DIGITAL MEDIA TECHNOLOGY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

		For the Three Months Ended
		March 31,
		2018				2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(730,387	)		$	(453,000	)
Depreciation			21,128				15,327
Amortization			5,153				656
Adjustments to reconcile net loss to net cash provided by operating activities:
Decrease in accounts receivable			117,037				198,010
Decrease in related-parties trade receivable			19,278				53,506
Increase in advance to supplier			-				(248,587	)
Decrease in security deposits			26,585				2,462
Increase in other current assets			(389,383	)			(562	)
(Decrease) increase in accounts payable			(1,461	)			47,373
Decrease in accrued expenses			(91,285	)			(7,277	)
Decrease in other current liabilities			(5,149	)			(1,388	)
Net cash used in continuing activities			(1,028,484	)			(393,480	)
Net cash used in discontinued operations			-				-
Net cash used in operating activities			(1,028,484	)			(393,480	)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to fixed assets			(22,215	)			(9,641	)
Acquisition of subsidiary equity interest			-				(30,957	)
Net cash used in continuing activities			(22,215	)			(40,598	)
Net cash used in discontinued operations			-				-
Net cash used in investing activities			(22,215	)			(40,598	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from loans from related parties			1,111,865				110,756
Payments of capital lease obligations			(552	)			(9,620	)
Capital contributions from noncontrolling interest			446,735				709,142
Net cash provided by continuing activities			1,558,048				810,278
Net cash provided by discontinued operations			-				-
Net cash provided by financing activities			1,558,048				810,278
EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH EQUIVALENTS			2,833				24,230
NET INCREASE IN CASH & CASH EQUIVALENTS			510,182				400,430
NET INCREASE IN CASH & CASH EQUIVALENTS FROM DISCONTINUED OPERATIONS			-				-
NET INCREASE IN CASH & CASH EQUIVALENTS FROM CONTINUING OPERATIONS			510,182				400,430
CASH & CASH EQUIVALENTS, BEGINNING BALANCE			186,494				244,691
CASH & CASH EQUIVALENTS, ENDING BALANCE		$	696,676			$	645,121
SUPPLEMENTAL DISCLOSURES:
Income tax paid		$	-			$	-
Interest paid		$	95			$	65

 

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

 

 

NOWNEWS DIGITAL MEDIA TECHNOLOGY CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

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.

 

On June 4, 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 and addendums, NOWnews Network issued 1,650,000, 350,000, 1,000,000, 2,200,000, 1,114,100, and 600,000 shares to non-controlling shareholders on August 14, 2015, September 8, 2015, November 30, 2016, March 16, 2017, October 2, 2017, and November 17, 2017, respectively (See Note 10). 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 $30,930). The transaction was completed on March 31, 2017. On November 17, 2017, Sky Media also made capital contribution to NOWnews Network in cash of NT$10,000,000, equivalent to $332,779. On March 30, 2018, NOWnews Network received NT$13,000,000, equivalent to $446,735 subscriptions in advance from Gamania Digital. As of the date of this report, no capital has been issued. NOWnews Network remains the Company’s majority owned subsidiary in which Company indirectly holds 50.36% of the equity interest (see Note 9) at March 31, 2018.

 

 

On August 19, 2015, the Company established Dawnrain Media Co., Ltd. (“Dawnrain”) in the Republic of Seychelles (“Seychelles”) as a wholly owned subsidiary. On August 27, 2015, Dawnrain incorporated New Taoyard Cultural Transmission Co., Ltd. (“New Taoyard”) in Seychelles. On November 15, 2016, the Company established Asia Well Ltd.(“Asia Well”) in Seychelles as a wholly owned subsidiary. Dawnrain, New Taoyard, and Asia Well are holding companies and have not carried out substantive business operations of their own.

 

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.

 

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.

 

On August 1, 2017, New Taoyard entered into a share purchase agreement (the “Lovelife Agreement) with Shanghai Lovelife Trading Co., Ltd. (the “Lovelife”), a limited liability formed in the People’s Republic of China, and its sole shareholder and director. Pursuant to the Lovelife Agreement, Lovelife shall transfer 100% of its equity interest to New Taoyard. As of the date of this report, Lovelife has a registered capital of USD 160,000 but no capital has actually been paid into the Lovelife.

 

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 $12,322,143 and $11,869,788, and stockholders’ deficits of $2,567,931 and $2,115,848 as of March 31, 2018 and December 31, 2017, respectively. The net losses attributable to common stockholders of $452,355 and $272,141 for the three months ended March 31, 2018 and 2017, respectively. In addition, current liabilities exceed current assets by $2,100,875 and $1,837,035 as of March 31, 2018 and December 31, 2017, 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:

 

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. All the assets and liabilities of Worldwide and NOWnews Network were transferred to the Company at their respective carrying amounts on the date of 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 nature of and effects on earnings per share (EPS) of nonrecurring intra-entity transactions involving long-term assets and liabilities is not required to be eliminated and EPS amounts have been recast to include the earnings (or losses) of the transferred net assets.

 

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 March 31, 2018, and December 31, 2017, the Company has uninsured deposits in banks of $454,951 and $41,540, respectively.

 

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 March 31, 2018, and December 31, 2017, the Company assessed the allowance for doubtful accounts of $10,537 and $10,345, 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 to 5 years
Computer Equipment	5 years
Office Equipment and Furniture	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 three months ended March 31, 2018 and the year ended December 31, 2017, 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.

 

Fair Value Measurements:

 

FASB ASC 820, “Fair Value Measurements” defines fair value for certain financial and nonfinancial assets and liabilities that are recorded at fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. It requires that an entity measure its financial instruments to base fair value on exit price, maximize the use of observable units and minimize the use of unobservable inputs to determine the exit price. It establishes a hierarchy which prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy increases the consistency and comparability of fair value measurements and related disclosures by maximizing the use of observable inputs and minimizing the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the assets or liabilities based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy prioritizes the inputs into three broad levels based on the reliability of the inputs as follows:

 

·

Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Valuation of these instruments does not require a high degree of judgment as the valuations are based on quoted prices in active markets that are readily and regularly available.

 

·

Level 2 – Inputs other than quoted prices in active markets that are either directly or indirectly observable as of the measurement date, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

·

Level 3 – Valuations based on inputs that are unobservable and not corroborated by market data. The fair value for such assets and liabilities is generally determined using pricing models, discounted cash flow methodologies, or similar techniques that incorporate the assumptions a market participant would use in pricing the asset or liability.

 

The carrying values of certain assets and liabilities of the Company, such as cash and cash equivalents, accounts receivable, due from related parties, other current assets, accounts payable, accrued expenses, due to shareholders, and other current liabilities approximate fair value due to their relatively short maturities.

 

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 $27,235 and $23,881 for the three months ended March 31, 2018 and 2017, respectively. Other than the above, the Company does not provide any other post-retirement or post-employment benefits.

 

 

Stock-based Compensation:

 

The Company measures expense associated with all employee stock-based compensation awards using a fair value method and recognizes such expense in the consolidated financial statements on a straight-line basis over the requisite service period in accordance with ASC Topic 718 “Compensation-Stock Compensation”. Total employee stock-based compensation expenses were $0 for the three months ended March 31, 2018 and 2017, respectively.

 

The Company accounted for stock-based compensation to non-employees in accordance with ASC Topic 505-50 “Equity-Based Payments to Non-Employees” which requires that the cost of services received from non-employees is measured at fair value at the earlier of the performance commitment date or the date service is completed and recognized over the period the service is provided. Total non-employee stock-based compensation expenses were $0 for the three months ended March 31, 2018 and 2017, respectively.

 

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 March 31, 2018 and December 31, 2017.

 

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 March 31, 2018 and December 31, 2017, 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 (Losses) per share (EPS):

 

Earnings (losses) 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 (losses) 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 three months ended March 31, 2018 and 2017, 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:

 

In February 2016, the FASB issued ASU No. 2016-02, “Leases.” The core principle of the ASU is that a lessee should recognize the assets and liabilities that arise from its leases other than those that meet the definition of a short-term lease. The ASU requires extensive qualitative and quantitative disclosures, including with respect to significant judgments made by management. Subsequently, the FASB issued ASU No. 2017-13, in September 2017 and ASU No. 2018-01, in January 2018, which amends and clarifies ASU 2016-02. The ASU will be effective for the Company beginning January 1, 2019, including interim periods in the fiscal year 2019. Early adoption is permitted. The Company is in the process of determining the method of adoption and assessing the impact of this ASU on its consolidated results of operations, cash flows, financial position and disclosures.

 

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) . In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing . In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients and ASU 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting . In December 2016, the FASB issued ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. In September 2017, the FASB issued ASU 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842). These amendments provide additional clarification and implementation guidance on the previously issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The amendments in ASU 2016-08 clarify how an entity should identify the specified good or service for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. ASU 2016-10 clarifies the following two aspects of ASU 2014-09: identifying performance obligations and licensing implementation guidance. ASU 2016-11 rescinds several SEC Staff Announcements that are codified in Topic 605, including, among other items, guidance relating to accounting for consideration given by a vendor to a customer, as well as accounting for shipping and handling fees and freight services. ASU 2016-12 provides clarification to Topic 606 on how to assess collectability, present sales tax, treat noncash consideration, and account for completed and modified contracts at the time of transition. ASU 2016-12 clarifies that an entity retrospectively applying the guidance in Topic 606 is not required to disclose the effect of the accounting change in the period of adoption. Additionally, ASU 2016-20 clarifies certain narrow aspects within Topic 606 including its scope, contract cost accounting, and disclosures. The new guidance requires enhanced disclosures, including revenue recognition policies to identify performance obligations to customers and significant judgments in measurement and recognition. The effective date and transition requirements for these amendments are the same as the effective date and transition requirements of ASU 2014-09, which is effective for fiscal years, and for interim periods within those years, beginning after December 15, 2017. The Company is currently evaluating the overall impact that ASU 2014-09 and its related amendments will have on the Company’s financial statements.

 

On December 22, 2017, the SEC issued Staff Accounting Bulletin (“SAB 118”), which provides guidance on accounting for tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Act for which the accounting under ASC 740 is complete. In March 2018, the FASB issued ASU 2018-05, Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SEC Update), Income Taxes (Topic 740). ASU 2018-05 provides guidance regarding the recording of tax impacts where uncertainty exists, in the period of adoption of the 2017 U.S. Tax Cuts and Jobs Act (the “2017 Tax Act”).To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate to be included in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provision of the tax laws that were in effect immediately before the enactment of the Tax Act. While the Company is able to make reasonable estimates of the impact of the reduction in corporate rate and the deemed repatriation transition tax, the final impact of the Tax Act may differ from these estimates, due to, among other things, changes in our interpretations and assumptions, additional guidance that may be issued by the I.R.S., and actions we may take. The Company is continuing to gather additional information to determine the final impact.

 

In February 2018, the FASB issued Accounting Standards Update No. 2018-02 (ASU 2018-02), Income Statement - Reporting Comprehensive Income (Topic 220). The guidance in ASU 2018-02 allows an entity to elect to reclassify the stranded tax effects related to the Tax Cuts and Jobs Act (the Tax Act) of 2017 from accumulated other comprehensive income into retained earnings. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect this standard will have on its Consolidated Financial Statements.

 

 

NOTE 4: ACCOUNTS RECEIVABLE

 

Accounts receivable consist of the following:

 

		March 31, 2018				December 31, 2017
Accounts receivable		$	592,887			$	697,707
Less: Allowance for doubtful accounts			(10,537	)			(10,345	)
Accounts receivable, net		$	582,350			$	687,362

 

NOTE 5: PROPERTY AND EQUIPMENT, NET

 

Property and equipment consist of the following:

 

		March 31,				December 31,
		2018				2017
Capital Lease		$	181,643			$	178,334
Leasehold improvement			153,624				149,508
Computer equipment			57,413				56,367
Office equipment and furniture			41,509				23,883
Electronic equipment			17,941				13,855
			452,130				421,947
Less: Accumulated depreciation			(169,855	)			(145,888	)
		$	282,275			$	276,059

  

 

As of March 31, 2018, assets under capital lease of $181,643 represented server equipment (see Note 11). Depreciation expense for the three months ended March 31, 2018 and 2017 was $21,128 and $15,327, respectively.

 

NOTE 6: INTANGIBLE ASSETS, NET

 

Intangible assets consist of the following:

 

		March 31,				December 31,
		2018				2017
Copyrights		$	971,990			$	954,280
Software			38,267				37,570
Trademark			7,216				7,085
Patent			173				170
Others			16,364				16,066
			1,034,010				1,015,171
Accumulated amortization			(1,013,828	)			(993,371	)
Intangible assets, net		$	20,182			$	21,800

 

Intangible assets amounted to $20,182 and $21,800 as of March 31, 2018 and December 31, 2017, 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 $971,990). 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 for the three months ended March 31, 2018 and 2017, respectively.

 

For the three months ended March 31, 2018 and 2017, total amortization expense amounted to $2,010 and $656, respectively.

 

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

 

As of March 31,		Amount
2019		$	7,804
2020			7,529
2021			4,849
		$	20,182

  

 

NOTE 7: ACCRUED EXPENSES

 

Accrued expenses consist of the following:

 

		March 31,				December 31,
		2018				2017
Accrued bonus		$	348,171			$	427,486
Accrued payroll			202,489				179,094
Accrued professional fees			170,570				164,309
Accrued employee benefits and pension expenses			75,416				108,884
Accrued sales taxes			5,643				12,677
Other			78,401				65,506
Total		$	880,690			$	957,956

 

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 three months ended March 31, 2018 and 2017. No tax benefit has been realized since a 100 % valuation allowance has offset deferred tax asset resulting from the net operating losses.

 

On December 22, 2017 H.R. 1, originally known as the Tax Cuts and Jobs Act, (the “Tax Act”) was enacted. Among the significant changes to the U.S. Internal Revenue Code, the Tax Act lowers the U.S. federal corporate income tax rate (“Federal Tax Rate”) from 35% to 21% effective January 1, 2018. The 21% Federal Tax Rate will apply to earnings reported for the full 2018 fiscal year. In addition, the Company must re-measure its net deferred tax assets and liabilities using the Federal Tax Rate that will apply when these amounts are expected to reverse. As of March 31, 2018, the Company can determine a reasonable estimate for certain effects of tax reform and is recording that estimate as a provisional amount. The provisional remeasurement of the deferred tax assets and allowance valuation of deferred tax assets at March 31, 2018 resulted in a net effect of $0 discrete tax expenses (benefit) which lowered the effective tax rate by 17% for the three months ended March 31, 2018. The provisional remeasurement amount is anticipated to change as data becomes available allowing more accurate scheduling of the deferred tax assets and liabilities primarily related to net operating loss carryover.

 

 

Anguilla

 

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

 

Seychelles

 

Dawnrain Media Co., Ltd., New Taoyard Cultural Transmission Co., Ltd., and Asia Well Ltd. are incorporated in Seychelles, which does not tax income.

 

Taiwan

 

NOWnews Network and NOWnews International are incorporated in Taiwan. According to the amendments to the “Income Tax Act”enacted by the office of the President of the R.O.C. on February 7, 2018, an increase in the statutory income tax rate from 17% to 20% and decrease in the undistributed earning tax from 10% to 5% are effective from January 1, 2018. This increase in the statutory income tax rate does not affect the amounts of the current or deferred taxes recognized as of March 31, 2018 and for the three months then ended. No income tax liabilities existed as of March 31, 2018 and December 31, 2017 due to the Company's continuing operating losses.

 

Provision for income tax expense (benefit) consists of the following:

 

		For the Three Months ended March 31,
		2018				2017
Current
USA		$	-			$	-
Taiwan			-				-
Deferred
USA
Deferred tax assets for NOL carryforwards			(35,733	)			(26,409	)
Valuation allowance			35,733				26,409
Net changes in deferred income tax expense (benefit) under non-current portion			-				-
Taiwan
Noncurrent portion
NOL carryforwards			(204,256	)			(52,836	)
Valuation allowance			204,256				52,836
Net changes in deferred income tax expense (benefit) under non-current portion			-				-
Total provision for income tax expense (benefit)		$	-			$	-

 

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

 

		For the Three Months Ended March 31,
		2018				2017
U.S. statutory income tax rate			21.0	%			35.0	%
Foreign statutory income tax rate difference			(1.0	)%			(18.0	)%
Provisional remeasurement of deferred taxes (U.S.)			(17.0	)%			-	%
Changes in valuation allowance			(3.0	)%			(17.0	)%
Effective income tax rate			0.0	%			0.0	%

 

Significant components of the Company’s deferred taxes as of March 31, 2018 and December 31, 2017 were as follows:

 

		March 31,				December 31,
		2018				2017
Deferred tax assets:
Net operating loss carryforwards		$	4,804,612			$	4,564,623
Less: Valuation allowance			(4,804,612	)			(4,564,623	)
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 March 31, 2018, and December 31, 2017, 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 March 31, 2018, 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 Corp. (“GIA”), (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.

 

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 at NT$10 per share, respectively, through new issuance. 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. On August 14, 2015, NOWnews Network has fulfilled its obligation of Phase I through issuance of 1,250,000 and 400,000 shares at NT$10 per share 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 September 8, 2015, NOWnews Network issued additional 350,000 shares at NT$10 per share 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 March 16, 2017, NOWnews Network issued additional 2,200,000 shares at NT$10 per share to Gamania Digital for approximately $711,054 (or NT $22,000,000). On March 31, 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 October 2, 2017 and November 17, 2017, NOWnews Network issued additional 1,114,100 and 600,000 shares at NT$10 per share to Gamania Digital for approximately $366,722 (or NT$11,141,000) and $199,667 (or NT$6,000,000), respectively. On November 17, 2017, Sky Media also made capital contribution to NOWnews Network in cash of NT$10,000,000, equivalent to $332,779. On March 30, 2018, NOWnews Network received NT$13,000,000, equivalent to $446,735 subscriptions in advance from Gamania Digital. As of the date of this report, no capital has been issued. NOWnews Network remains the Company’s majority owned subsidiary in which Company indirectly holds 50.36% of the equity interest at March 31, 2018.

 

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.

 

Dawnrain and New Taoyard had 30,000,000 issued and outstanding shares with a par value of $1 per share. Asia Well had 2,250,000 issued and outstanding shares with a par value of $1 per share. On May 16, 2017, the Company has completed the amendment of share registry to reduce the amount of the issued and outstanding shares to 10 shares of Dawnrain, 10 shares of New Taoyard, and 100 shares of Asia Well. Accordingly, the capital of $10, $10, and $100 has been paid to Dawnrain, New Taoyard, and Asia Well, respectively.

 

On June 22, 2017, the Company entered into a subscription agreement (the “Agreement”) with Wei Su Technology Holdings Co., Ltd. (the “Wei Su”). Wei Su was incorporated in September 2001 under the laws of Taiwan. Pursuant to the Agreement, Wei Su agreed to purchase 100,000 restricted shares of common stock, par value $.001 of the Company (“Share Purchase”) for an aggregate price of $530,000 (the “Subscription Price”). The Agreement contains a buy-back clause whereby Wei Su will have an option to have the Company buy back the shares issued to Wei Su under the Agreement at a price of $5.8 per share one year after Wei Su pays the full Subscription Price. The closing of the transactions contemplated under the Agreement 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 of March 31, 2018, the Company has not issued 100,000 shares to Wei Su.

 

On March 17, 2017, the Company entered into a consulting agreement (the “EMCC Agreement”) with EMCC International Consultancy Co., Ltd. (“EMCC”) for the maintenance of the listing in the U.S. stock exchange market. At December 31, 2017, the Company recognized non-employee stock based compensation cost of $795,000 (300, 000 shares of the Company’s common stock at $2.65 per share based on the closing price at December 31, 2017 of the Company’s common stocks traded on the U.S. OTC Markets) in connection with the terms in the EMCC Agreement. As of the date of this report, the Company is in process of issuance of common stock of the Company to EMCC.

 

On December 1, 2017, the Board of Directors and the majority beneficiary shareholders of the Company approved to award bonus to current four directors and Mr. Alan Chen, the former Chairman, in an aggregate of 545,000 shares of the Company’s common stock at $2.65 per share based on the closing price on December 29, 2017 of the Company’s common stocks traded on the U.S. OTC Markets). Accordingly, the Company recorded stock compensation costs of $1,444,250 at December 31, 2017. As of the date of this report, the Company is in process of issuance of common stock of the Company to the four directors and Mr. Alan Chen.

 

 

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).

 

On each of November 30, 2016, March 16, 2017, October 2, 2017, and November 17, 2017, NOWnews Network respectively issued additional 1,000,000, 2,200,000, 1,114,100, and 600,000 shares of common stock to non-controlling shareholders, pursuant to the Stock Purchase Agreement (see Note 9). As a result, Sky Media owned 50.36% of NOWnews Network.

 

Non-controlling interest consisted of the following:

 

		March 31,				December 31,
		2018				2017
Beginning balance		$	640,708			$	641,118
Capital contribution by non-controlling interest			446,735				835,124
Net loss attributed to non-controlling interest			(278,032	)			(842,645	)
Other comprehensive loss attributable to non-controlling interest			(830	)			7,111
Ending balance		$	808,581			$	640,708

 

 

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 $174,598 as a capital lease for the equipment and began depreciating the equipment on a straight line basis over five years.

 

On June 21, 2017, NOWnews Network entered into another capital lease agreement with High Performance Information Co., Ltd. (“HPI”), pursuant to which NOWNews Network agreed to lease the Network Attached Storage (“NAS”) servers from HPI for three years with maturity date on May 31, 2020. At the end of this 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 $7,045 as a capital lease for the equipment and began depreciating the equipment on a straight line basis over three years.

 

Depreciation expense of those equipment under capital lease was $10,170 and $9,324 for the three months ended March 31, 2018 and 2017, respectively.  Interest expense resulted from capital leases amounted to $95 and $65 for the three months ended March 31, 2018 and 2017, respectively.

 

Operating Lease

 

Operating lease commitments consist of leases for office space and copy machines under various operating lease agreements which expire in August, 2022. 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 March 31,		Capital Leases Amount				Operating Leases Amount
2019		$	2,318			$	303,844
2020			2,912				311,508
2021			-				324,412
2022			-				321,975
After 2023			-				127,790
Total minimum payments		$	5,230			$	1,389,529

 

The Company incurred rent expenses of $71,517 and $25,382 for the three months ended March 31, 2018 and 2017, respectively.

 

(2) Litigation

 

Defamation and General Matters

 

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.

 

 

(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 December 31, 2017, the sale of Phase I has been completed. As of the date of this report, NOWnews Network has issued in an aggregate of 4,914,100 common stock shares to Gamania Digital in exchange for approximately $1,621,960 (or NT$49,141,000) in the sale of Phase II, which shall terminate on September 21, 2018 pursuant to the Stock Purchase Agreement and addendums.

 

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 three months ended March 31, 2018.

 

Net assets of discontinued operations as of March 31, 2018 were as follows:

 

		As of March 31, 2018
Cash & cash equivalents		$	14
Other Current assets			1
Current assets		$	15
Accounts payable		$	180
Accrued expenses			429
Due to related parties			104,029
Current liabilities		$	104,638

 

 

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
Mega Media Investments Co., Ltd. (Taiwan Branch)		Entity controlled by Mr. Alan Chen
Gamania Digital Entertainment Co., Ltd.		Entity owned 45.61% of NOWnews Network.
GASH Co., Ltd.		Entity controlled by Gamania Digital.
Jollywiz Digital Technology Co., Ltd.		Entity controlled by Gamania Digital.
GASH Media Digital Marketing Co., Ltd		Entity controlled by GASH Co., Ltd.
Mr. Alan Chen		Director and controlling beneficiary shareholder of the Company. Current Director and former Chairman of NOWnews Network.

  

Transactions

 

		For the Three Months Ended March 31,
		2018				2017
Sales to GASH Co., Ltd.		$	8,621			$	9,670
Sales to Mega Media Investments Co., Ltd. (Taiwan Branch)			-				13,215
Sales to GASH Media Digital Marketing Co., Ltd.			-				4,451
Total		$	8,621			$	27,336

 

The primary services provided by NOWnews Network to this related party were advertisement space on NOWnews Network’s website.

 

 

Due from related parties

 

		March 31,				December 31,
		2018				2017
Trade receivable from GASH Co., Ltd.		$	7,136			$	19,698
Trade receivable from GASH Media Digital Marketing Co., Ltd.			-				6,353
Total		$	7,136			$	26,051

 

 

Due to related parties

 

		March 31,				December 31,
		2018				2017
Due to Mr. Alan Chen		$	2,700,096			$	1,573,618
Due to Mega Media Investments Co., Ltd. (Taiwan Branch)			25,655				5,302
Due to Gamania Digital Entertainment Co., Ltd.			2,165				-
Due to Jollywiz Digital Technology Co., Ltd.			-				33,340
		$	2,727,916			$	1,612,260

 

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 May 20, 2018, the date which the financial statements were available to be issued. All subsequent events requiring recognition as of March 31, 2017 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.”

 

 

Item 2. 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, the former Chairman of the Company, and Ms. Tu entered into 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 which there were two phases of stock transfers. In Phase I, NOWnews Network was committed to issue and sell to Gamania Digital and Ta Ya 1,250,000 and 400,000 shares of its outstanding shares at a price of NT$10 per share, 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 were expected, but not obligated, to purchase the same amount of shares from NOWnews Network, and Mr. Chen and Ms. Tu, as in Phase I. On August 14, 2015, NOWnews Network has fulfilled its obligation of Phase I through the issuance and sale of 1,250,000 and 400,000 shares at a price of NT$10 per share 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 September 8, 2015, NOWnews Network issued and sold additional 350,000 shares at a price of NT$10 per share to Gamania Digital for approximately $107,230 (or NT$3.5 million). On November 30, 2016, NOWnews Network issued and sold additional 1,000,000 shares at a price of NT$10 per share to Gamania Digital for approximately $313,283 (or NT$10 million). On March 16, 2017, NOWnews Network issued and sold additional 2,200,000 shares at a price of NT$10 per share to Gamania Digital for approximately $711,054 (or NT $22,000,000). On March 31, 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 October 2, 2017 and November 17, 2017, NOWnews Network issued and sold additional 1,114,100 and 600,000 shares at a price of NT$10 per share to Gamania Digital for approximately $366,722 (or NT$11,141,000) and $199,667 (or NT$6,00,000), respectively. On November 17, 2017, Sky Media also made capital contribution to NOWnews Network in cash of NT$10,000,000 (approximately $332,779).  On March 30, 2018, NOWnews Network received NT$13,000,000 (approximately $446,735) subscriptions in advance from Gamania Digital. As of the date of this report, no capital stock has been issued. NOWnews Network remains the Company’s majority owned subsidiary in which Company indirectly holds 50.36% of the equity interest at March 31, 2018.

 

 

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. Dawnrain, New Taoyard, and Asia Well are holding companies and have not carried out substantive business operations of their own.

 

On August 1, 2017, New Taoyard entered into a share purchase agreement (the “Lovelife Agreement) with Shanghai Lovelife Trading Co., Ltd. (“Lovelife”), a limited liability formed in the People’s Republic of China, and its sole shareholder and director. Pursuant to the Lovelife Agreement, Lovelife shall transfer 100% of its equity interest to New Taoyard. As of the date of this report, Lovelife has a registered capital of USD 160,000 but no capital has actually been paid to Lovelife.

 

Results of Operations for the Three Months Ended March 31, 2018 and 2017

 

		For The Three Months Ended
		March 31,								Change in
		2018				2017				$				%
Net revenue		$	878,312			$	637,547			$	240,765				38
Cost of revenue			(756,088	)			(573,635	)			(182,453	)			32
Gross profit			122,224				63,912				58,312				91
Selling expenses			(332,296	)			(174,237	)			(158,059	)			91
General and administrative expenses			(518,844	)			(343,591	)			(175,253	)			51
Total operating expense			(851,140	)			(517,828	)			(333,312	)			64
Operating loss			(728,916	)			(453,916	)			(275,000	)			61
Other income (expense)
Interest income			3				179				(176	)			(98	)
Interest expense			(95	)			(65	)			(30	)			46
Other (expense) income, net			(1,379	)			802				(2,181	)			(272	)
Total other income			(1,471	)			916				(2,387	)			(261	)
Loss from continuing operations before income taxes			(730,387	)			(453,000	)			(277,387	)			61
Income taxes			0				0				0				-
Loss from continuing operations			(730,387	)			(453,000	)			(277,387	)			61
Loss from discontinued operations, net of income taxes			0				0				0				-
Net loss			(730,387	)			(453,000	)			(277,387	)			61
Net loss attributable to noncontrolling interests:
Net loss from continuing operations			278,032				180,859				97,173				54
Net loss from discontinued operations			0				0				0				-
Total net loss attributable to noncontrolling interest			278,032				180,859				97,173				54
Net loss attributable to NowNews Digital Media Technology Co., Ltd.		$	(452,355	)		$	(272,141	)		$	(180,214	)			66

 

Net Revenue

 

Our net revenue for the three months ended March 31, 2018 was $0.88 million, an increase of $0.24 million or 38% from $0.64 million for the three months ended March 31, 2017. The increase was primarily due to the increase in advertisement revenue and licensing and services revenue.

 

Advertising

 

Our advertising avenue was $0.82 million for the three months ended March 31, 2018, an increase of $0.24 million, or 41%, from $0.58 million for the three months ended March 31, 2017. We will continue focus on the internet advertising and marketing business.

 

 

Licensing and Services

 

Our revenue from content licensing was $0.06 million for the three months ended March 31, 2018, relatively the same with the result for the three months ended March 31, 2017.

 

Cost of Revenue

 

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

 

Cost of revenue was $0.75 million for the three months ended March 31, 2018, an increase of $0.18 million, or 32%, as compared to $0.57 million for the three months ended March 31, 2017. The increase was mainly due to the increase of $0.12 million in labor costs.

 

Gross Profit

 

Gross profit increased approximately $0.06 million, or 91%, for the three months ended March 31, 2018, as compared to the same period in 2017, due to the increase in net revenue. Gross profit margin was 14% for the three months ended March 31, 2018 as compared to 10% for the same period in 2017.

 

Selling Expenses

 

Total selling expenses consist primarily of payroll, labor and health insurance, and advertisement expenses. The amount increased by $0.16 million, or 91%, from $0.17 million for the three months ended March 31, 2017 to $0.33 million for the three months ended March 31, 2018. 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 increase by approximately $0.17 million, or 51%, from $0.35 million for the three months ended March 31, 2017 to $0.52 million for the three months ended March 31, 2018. The increase in general and administration expenses was principally due to the increase in labor expenses and office rental expenses.

  

Net Loss

 

As a result of the above factors, we have net loss of approximately $0.73 million for the three months ended March 31, 2018 as compared to net loss of approximately $0.45 million for the three months ended March 31, 2017, representing an increase of loss of $0.28 million, or approximately 61%.

 

Liquidity and Capital Resources

 

Our unaudited 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 $12,322,143 and $11,869,788, and stockholders’ deficits of $2,567,931 and $2,115,848 as of March 31, 2018 and December 31, 2017, respectively. The net losses attributable to common stockholders of $452,355and $272,141 for the three months ended March 31, 2018 and 2017, respectively. In addition, current liabilities exceed current assets by $2,100,875 and $1,837,035 as of March 31, 2018 and December 31, 2017, 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 March 31, 2018, we had working capital deficit of $2,100,875 as compared to working capital deficit of $1,837,035 as of December 31, 2017. We had cash and cash equivalents of $696,676 as of March 31, 2018, an increase of $510,182, or 274% from $186,494 as of December 31, 2017. Our principal sources and uses of funds were as follows:

 

		For the Three Months Ended March 31,
		2018				2017
Net cash used in operating activities		$	(1,028,484	)		$	(393,480	)
Net cash used in investing activities			(22,215	)			(40,598	)
Net cash provided by financing activities			1,558,048				810,278
Net cash used in discontinued operations			-				-
Effect of exchange rate change on cash and cash equivalents			2,833				24,230
Net increase in cash and cash equivalents		$	510,182			$	400,430

 

Net cash used in operating activities of continuing operations was approximately $1.03 million for the three months ended March 31, 2018, compared to net cash used in operating activities of approximately $0.39 million for the three months ended March 31, 2017. The increase of $0.64 million of cash used in operating activities was primarily due to net loss of 0.73 million, the increase in other current assets of$0.39 million, and the decrease in accrued expenses of $0.09 million.

 

Net cash used in investing activities of continuing operations was $22,215 for the three months ended March 31, 2018, compared to $40,598 for the same period last year. We used $0.02 and $0.01million in the addition of electronic equipment, computer equipment and office equipment and furniture during the three months ended March 31, 2018 and 2017, respectively. We used $0.03 million in an acquisition of subsidiary equity interest during the three months ended March 31, 2017, whereas we did not purchase subsidiary equity interest during the three months ended March 31, 2018.

 

Net cash provided by financing activities of continuing operations amounted to approximately $1.56 million for the three months ended March 31, 2018, compared to approximately $0.81 million cash used during the three months ended March 31, 2017, representing an increase of approximately $0.75 million. The increase in net cash provided from financing activities was mainly due to the increase of $1.11 million of the proceeds received from related party loans  during the three months ended March 31, 2018, compared to $0.11 million for the same period in 2017. In addition, our subsidiary received additional capital contributions of $0.45 million and $0.71 million from noncontrolling interest during the three months ended March 31, 2018 and 2017, respectively.

 

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. All the assets and liabilities of Worldwide and NOWnews Network were transferred to the Company at their respective carrying amounts on the date of 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 nature of and effects on earnings per share (EPS) of nonrecurring intra-entity transactions involving long-term assets and liabilities is not required to be eliminated and EPS amounts have been recast to include the earnings (or losses) of the transferred net assets.

 

 

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 March 31, 2018, and December 31, 2017, the Company has uninsured deposits in banks of $454,951 and $41,540, respectively.

 

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 March 31, 2018 and December 31, 2017, the Company assessed the allowance for doubtful accounts of $10,537 and $10,345, 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 to 5 years
Computer Equipment	5 years
Office Equipment and Furniture	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 three months ended March 31, 2018 and the year ended December 31, 2017, 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.

 

Fair Value Measurements:

 

FASB ASC 820, “Fair Value Measurements” defines fair value for certain financial and nonfinancial assets and liabilities that are recorded at fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. It requires that an entity measure its financial instruments to base fair value on exit price, maximize the use of observable units and minimize the use of unobservable inputs to determine the exit price. It establishes a hierarchy which prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy increases the consistency and comparability of fair value measurements and related disclosures by maximizing the use of observable inputs and minimizing the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the assets or liabilities based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy prioritizes the inputs into three broad levels based on the reliability of the inputs as follows:

 

·

Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Valuation of these instruments does not require a high degree of judgment as the valuations are based on quoted prices in active markets that are readily and regularly available.

 

·

Level 2 – Inputs other than quoted prices in active markets that are either directly or indirectly observable as of the measurement date, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

·

Level 3 – Valuations based on inputs that are unobservable and not corroborated by market data. The fair value for such assets and liabilities is generally determined using pricing models, discounted cash flow methodologies, or similar techniques that incorporate the assumptions a market participant would use in pricing the asset or liability.

 

The carrying values of certain assets and liabilities of the Company, such as cash and cash equivalents, accounts receivable, due from related parties, other current assets, accounts payable, accrued expenses, due to shareholders, and other current liabilities approximate fair value due to their relatively short maturities.

 

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 $27,235 and $23,881 for the three months ended March 31, 2018 and 2017, respectively. Other than the above, the Company does not provide any other post-retirement or post-employment benefits.

 

 

Stock-based Compensation:

 

The Company measures expense associated with all employee stock-based compensation awards using a fair value method and recognizes such expense in the consolidated financial statements on a straight-line basis over the requisite service period in accordance with ASC Topic 718 “Compensation-Stock Compensation”. Total employee stock-based compensation expenses were $0 for the three months ended March 31, 2018 and 2017, respectively.

 

The Company accounted for stock-based compensation to non-employees in accordance with ASC Topic 505-50 “Equity-Based Payments to Non-Employees” which requires that the cost of services received from non-employees is measured at fair value at the earlier of the performance commitment date or the date service is completed and recognized over the period the service is provided. Total non-employee stock-based compensation expenses were $0 for the three months ended March 31, 2018 and 2017, respectively.

 

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 March 31, 2018 and December 31, 2017.

 

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 March 31, 2018 and December 31, 2017, 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 (Losses) per share (EPS):

 

Earnings (losses) 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 (losses) 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 three months ended March 31, 2018 and 2017, 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:

 

In February 2016, the FASB issued ASU No. 2016-02, “Leases.” The core principle of the ASU is that a lessee should recognize the assets and liabilities that arise from its leases other than those that meet the definition of a short-term lease. The ASU requires extensive qualitative and quantitative disclosures, including with respect to significant judgments made by management. Subsequently, the FASB issued ASU No. 2017-13, in September 2017 and ASU No. 2018-01, in January 2018, which amends and clarifies ASU 2016-02. The ASU will be effective for the Company beginning January 1, 2019, including interim periods in the fiscal year 2019. Early adoption is permitted. The Company is in the process of determining the method of adoption and assessing the impact of this ASU on its consolidated results of operations, cash flows, financial position and disclosures.

 

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) . In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing . In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients and ASU 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting . In December 2016, the FASB issued ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. In September 2017, the FASB issued ASU 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842). These amendments provide additional clarification and implementation guidance on the previously issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The amendments in ASU 2016-08 clarify how an entity should identify the specified good or service for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. ASU 2016-10 clarifies the following two aspects of ASU 2014-09: identifying performance obligations and licensing implementation guidance. ASU 2016-11 rescinds several SEC Staff Announcements that are codified in Topic 605, including, among other items, guidance relating to accounting for consideration given by a vendor to a customer, as well as accounting for shipping and handling fees and freight services. ASU 2016-12 provides clarification to Topic 606 on how to assess collectability, present sales tax, treat noncash consideration, and account for completed and modified contracts at the time of transition. ASU 2016-12 clarifies that an entity retrospectively applying the guidance in Topic 606 is not required to disclose the effect of the accounting change in the period of adoption. Additionally, ASU 2016-20 clarifies certain narrow aspects within Topic 606 including its scope, contract cost accounting, and disclosures. The new guidance requires enhanced disclosures, including revenue recognition policies to identify performance obligations to customers and significant judgments in measurement and recognition. The effective date and transition requirements for these amendments are the same as the effective date and transition requirements of ASU 2014-09, which is effective for fiscal years, and for interim periods within those years, beginning after December 15, 2017. The Company is currently evaluating the overall impact that ASU 2014-09 and its related amendments will have on the Company’s financial statements.

 

On December 22, 2017, the SEC issued Staff Accounting Bulletin (“SAB 118”), which provides guidance on accounting for tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Act for which the accounting under ASC 740 is complete. In March 2018, the FASB issued ASU 2018-05, Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SEC Update), Income Taxes (Topic 740). ASU 2018-05 provides guidance regarding the recording of tax impacts where uncertainty exists, in the period of adoption of the 2017 U.S. Tax Cuts and Jobs Act (the “2017 Tax Act”).To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate to be included in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provision of the tax laws that were in effect immediately before the enactment of the Tax Act. While the Company is able to make reasonable estimates of the impact of the reduction in corporate rate and the deemed repatriation transition tax, the final impact of the Tax Act may differ from these estimates, due to, among other things, changes in our interpretations and assumptions, additional guidance that may be issued by the I.R.S., and actions we may take. The Company is continuing to gather additional information to determine the final impact.

 

In February 2018, the FASB issued Accounting Standards Update No. 2018-02 (ASU 2018-02), Income Statement - Reporting Comprehensive Income (Topic 220). The guidance in ASU 2018-02 allows an entity to elect to reclassify the stranded tax effects related to the Tax Cuts and Jobs Act (the Tax Act) of 2017 from accumulated other comprehensive income into retained earnings. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect this standard will have on its Consolidated Financial Statements.

 

 

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

 

Not applicable. 

 

Item 4.  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 quarter ended March 31, 2018. 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.

  

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 quarter ended March 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 

 

PART II - OTHER INFORMATION

 

Item 1.  Legal Proceedings.

 

None. 

 

Item 1A. Risk Factors

 

Not applicable.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

Not applicable.

 

Item 6. Exhibits.

 

Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K.

 

 

 

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 November 14, 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)
10.10		Subscription Agreement, dated June 22, 2017, by and between the Company and an Taiwanese investor (11)
21.1		List of Subsidiaries (12)
31.1		Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1		Certification of the Principal Executive Officer and 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 13, 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
(11)	Incorporated by reference the exhibits 10.1 to the Company’s Form 8-K filed on June 27, 2017
(12)	Incorporated by reference the exhibits 21.1 to the Company’s Form 10-K filed on April 17, 2018

 

SIGNATURES

 

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

 

	NOWNEWS DIGITAL MEDIA TECHNOLOGY CO. LTD.
Date: May 21, 2018	By:	/s/ Chi-Yuan Chang
		Chi-Yuan Chang
		Interim Chief Executive Officer and Chief Financial Officer
		(Interim Principal Executive Officer and Principal Accounting and Financial Officer)