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United States securities and exchange commission logo
June 12, 2023
Shirley Cheng
Chief Financial Officer
Network CN Inc.
Unit 705B, 7th Floor
New East Ocean Centre
9 Science Museum Road
TST, KLN, Hong Kong
Re:Network CN Inc.
Form 10-K for Fiscal Year Ended December 31, 2022
Filed April 13, 2023
File No. 000-30264
Dear Shirley Cheng:
            We have reviewed your filing and have the following comments.  In some of our
comments, we may ask you to provide us with information so we may better understand your
disclosure.
            Please respond to these comments within ten business days by providing the requested
information or advise us as soon as possible when you will respond.  If you do not believe our
comments apply to your facts and circumstances, please tell us why in your response.
            After reviewing your response to these comments, we may have additional comments.
Form 10-K for Fiscal Year Ended December 31, 2022
Use of Terms, page i
1.Please refrain from using terms such as “we” or “our” when describing activities or
functions of a VIE.  For example, disclose, if true, that your subsidiaries and/or the VIEs
conduct operations in China, that the VIEs are consolidated for accounting purposes but
are not entities in which you own equity, and that the holding company does not conduct
operations.  Disclose clearly the entity (including the domicile) in which investors own an
interest.
2.We note that your definition of China and the PRC excludes Hong Kong and Macau.  We
also note that you appear to have operations and directors/officers located in Hong Kong.
Please revise to clarify that the legal and operational risks associated with operating in

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China also apply to operations in Hong Kong and Macau.  Please also discuss the laws
and regulations in Hong Kong and/or Macau, as applicable, as well as the related risks and
consequences.  The requested disclosure may appear in the definition itself or in another
appropriate discussion of legal and operational risks applicable to the company.
Item 1. Business, page 1
3.Please disclose prominently in Item 1 that you are not a Chinese operating company but a
Delaware holding company with operations conducted by your subsidiaries and through
contractual arrangements with a variable interest entity (VIE) based in China and that this
structure involves unique risks to investors.  If true, disclose that these contracts have not
been tested in court.  Explain whether the VIE structure is used to provide investors with
exposure to foreign investment in China-based companies where Chinese law prohibits
direct foreign investment in the operating companies, and disclose that investors may
never hold equity interests in the Chinese operating company.  Your disclosure should
acknowledge that Chinese regulatory authorities could disallow this structure, which
would likely result in a material change in your operations and/or a material change in the
value of your securities, including that it could cause the value of such securities to
significantly decline or become worthless.  Please also provide a cross-reference to your
detailed discussion of risks facing the company as a result of this structure.
4.Please disclose prominently the legal and operational risks associated with being based in
or having the majority of the company’s operations in China.  Your disclosure should
make clear whether these risks could result in a material change in your operations and/or
the value of your securities or could significantly limit or completely hinder your ability to
offer or continue to offer securities to investors and cause the value of such securities to
significantly decline or be worthless.  Your disclosure should address how recent
statements and regulatory actions by China’s government, such as those related to the use
of variable interest entities and data security or anti-monopoly concerns, have or may
impact the company’s ability to conduct its business, accept foreign investments, or list on
a U.S. or other foreign exchange.  Please disclose the location of your auditor's
headquarters and whether and how the Holding Foreign Companies Accountable Act, as
amended by the Consolidated Appropriations Act, 2023, and related regulations will affect
your company.  Provide a cross-reference to your detailed discussion of such legal and
operational risks.

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5.We note your disclosure on page F-14 that the company "exerted 100% control" of the
variable interest entity through a set of commercial arrangements. However, neither the
investors in the holding company nor the holding company itself have an equity
ownership in, direct foreign investment in, or control of, through such ownership or
investment, the VIEs. Accordingly, please refrain from implying that the contractual
agreements are equivalent to equity ownership in the business of the VIEs.  Any
references to control or benefits that accrue to you because of the VIEs should be limited
to a clear description of the conditions you have satisfied for consolidation of the VIEs
under U.S. GAAP.  Additionally, please disclose that the Delaware holding company is
the primary beneficiary of the VIEs for accounting purposes.
6.Please describe how cash is transferred through your organization and disclose your
intentions to distribute earnings or settle amounts owed under the VIE agreements.  State
whether any transfers, dividends, or distributions have been made to date between the
holding company, its subsidiaries, and the consolidated VIEs, or to investors, and quantify
the amounts where applicable.  Please provide cross-references to the condensed
consolidating schedule and the consolidated financial statements.  Additionally, please
also include this disclosure in Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
7.Please disclose that to the extent cash or assets in the business are in the PRC/Hong Kong
or a PRC/Hong Kong entity, the funds or assets may not be available to fund operations or
for other use outside of the PRC/Hong Kong due to interventions in or the imposition of
restrictions and limitations on the ability of you, your subsidiaries, or the consolidated
VIEs by the PRC government to transfer cash or assets.  Additionally, please also include
this disclosure in Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
8.Please discuss whether there are limitations on your ability to transfer cash between you,
your subsidiaries, the consolidated VIEs or investors.  Additionally, please also include
this disclosure in Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
9.To the extent you have cash management policies that dictate how funds are transferred
between you, your subsidiaries, the consolidated VIEs or investors, please summarize the
policies here and disclose the source of such policies (e.g., whether they are contractual in
nature, pursuant to regulations, etc.); alternatively, state here that you have no such cash
management policies that dictate how funds are transferred.  Additionally, please also
include this disclosure in Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
10.Please refer to the section captioned "Corporate Structure."  Please revise your diagram
to use dashed lines without arrows with respect to the relationship with the VIEs.
Additionally, please describe all contracts and arrangements through which you claim to
have economic rights and exercise control that results in consolidation of the VIEs'

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operations and financial results into your financial statements.  Identify clearly the entity
in which investors own their interest and the entity(ies) in which the company’s operations
are conducted.  Describe the relevant contractual agreements between the entities and how
this type of corporate structure may affect investors and the value of their investment,
including how and why the contractual arrangements may be less effective than direct
ownership and that the company may incur substantial costs to enforce the terms of the
arrangements.  Disclose the uncertainties regarding the status of the rights of the
Delaware holding company with respect to its contractual arrangements with the VIE, its
founders and owners, and the challenges the company may face enforcing these
contractual agreements due to legal uncertainties and jurisdictional limits.
11.Please disclose each permission or approval that you, your subsidiaries, or the VIEs are
required to obtain from Chinese authorities to operate your business and to offer securities
to foreign investors.  State whether you, your subsidiaries, or VIEs are covered by
permissions requirements from the China Securities Regulatory Commission (CSRC),
Cyberspace Administration of China (CAC) or any other governmental agency that is
required to approve the VIE’s operations, and state affirmatively whether you have
received all requisite permissions or approvals and whether any permissions or approvals
have been denied.  Please also describe the consequences to you and your investors if you,
your subsidiaries, or the VIEs: (i) do not receive or maintain such permissions or
approvals, (ii) inadvertently conclude that such permissions or approvals are not required,
or (iii) applicable laws, regulations, or interpretations change and you are required to
obtain such permissions or approvals in the future.  If you conclude that you do not need
any additional permissions and approvals to operate your business and to offer securities
to investors, and you did not rely upon an opinion of counsel in coming to
that conclusion, state as much and explain why such an opinion was not obtained.  Lastly,
we note that the CSRC has recently announced regulations that outline the terms under
which China-based companies can conduct offerings and/or list overseas.  Please also
include disclosure to reflect these recent events and explain how the regulations apply to
you and your ability to operate and offer securities.

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Network CN Inc.
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12.We note that the consolidated VIEs constitute a material part of your consolidated
financial statements.  Please provide here, in tabular form, a condensed consolidating
schedule that disaggregates the operations and depicts the financial position, cash flows,
and results of operations as of the same dates and for the same periods for which audited
consolidated financial statements are required.  The schedule should present major line
items, such as revenue and cost of goods/services, and subtotals and disaggregated
intercompany amounts, such as separate line items for intercompany receivables and
investment in subsidiary.  The schedule should also disaggregate the parent company, the
VIEs and its consolidated subsidiaries, the WFOEs that are the primary beneficiary of the
VIEs, and an aggregation of other entities that are consolidated.  The objective of this
disclosure is to allow an investor to evaluate the nature of assets held by, and the
operations of, entities apart from the VIE, as well as the nature and amounts associated
with intercompany transactions.  Any intercompany amounts should be presented on a
gross basis and when necessary, additional disclosure about such amounts should be
included in order to make the information presented not misleading.
13.Include a summary of risk factors and disclose the risks that your corporate structure and
being based in or having the majority of the company’s operations in China poses to
investors.  In particular, describe the significant regulatory, liquidity, and enforcement
risks with cross-references to the more detailed discussion of these risks in the annual
report.  For example, specifically discuss risks arising from the legal system in China,
including risks and uncertainties regarding the enforcement of laws and that rules and
regulations in China can change quickly with little advance notice; and the risk that the
Chinese government may intervene or influence your operations at any time, or may exert
more control over offerings conducted overseas and/or foreign investment in China-based
issuers, which could result in a material change in your operations and/or the value of
your securities.  Acknowledge any risks that any actions by the Chinese government to
exert more oversight and control over offerings that are conducted overseas and/or foreign
investment in China-based issuers could significantly limit or completely hinder your
ability to offer or continue to offer securities to investors and cause the value of such
securities to significantly decline or be worthless.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations, page 9
14.Please refer to the section captioned "Overview of Our Business."  Please acknowledge
here that if the PRC government determines that the contractual arrangements constituting
part of the VIE structure do not comply with PRC regulations, or if these regulations
change or are interpreted differently in the future, your securities may decline in value or
become worthless if the determinations, changes, or interpretations result in your inability
to assert contractual control over the assets of your PRC subsidiaries or the VIEs that
conduct all or substantially all of your operations.

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15.Please refer to the section captioned "Recent Developments."  Given the Chinese
government’s significant oversight and discretion over the conduct of your business,
please highlight the risk that the Chinese government may intervene or influence your
operations at any time, which could result in a material change in your operations and/or
the value of your securities.  Also, given recent statements by the Chinese government
indicating an intent to exert more oversight and control over offerings that are conducted
overseas and/or foreign investment in China-based issuers, acknowledge the risk that any
such action could significantly limit or completely hinder your ability to offer or continue
to offer securities to investors and cause the value of such securities to significantly
decline or be worthless.
16.Please refer to the section captioned "Recent Developments."   In light of recent events
indicating greater oversight by the Cyberspace Administration of China (CAC) over data
security, particularly for companies seeking to list on a foreign exchange, please revise
your disclosure to explain how this oversight impacts your business and to what extent
you believe that you are compliant with the regulations or policies that have been issued
by the CAC to date.
Item 9A. Controls and Procedures, page 18
17.You disclose that your disclosure controls and procedures were not effective as a result of
the material weaknesses in your internal control over financial reporting that existed as of
such date as discussed below.  Please revise to discuss the material weaknesses in your
internal control over financial reporting and also state that your internal control over
financial reporting is not effective.  Refer to Item 308(a)(3) of Regulation S-K.
            We remind you that the company and