UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant To Section 14(a) of the Securities
Exchange Act of 1934
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[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
CITY NETWORK, INC.
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(Name of Registrant as Specified In Its Charter)
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On April 26, 2006, City Network, Inc. filed the following Form 8-K, which it is
delivering to you to supplement its Proxy Statement for its Special Meeting of
Stockholders to be held on May 12, 2006.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act 1934
Date of Report (Date of earliest event reported): April 20, 2006
City Network, Inc.
(Exact name of registrant as specified in charter)
Nevada
(State or other jurisdiction of incorporation)
001-31954 98-0467944
(Commission File Number) (IRS Employer Identification No.)
2F-1, No. 16, Jian Ba Road, Jhonghe City
Taipei County, 235, Taiwan, ROC N/A
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 011-886-2-8226-5566
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On April 24, 2006, City Network, Inc. (the "Company") issued a press
release announcing financial results for the fiscal year ended December 31,
2005, a going concern qualification, and the resignation of Mr. Tiao-Tsan Lai, a
copy of which is attached hereto as Exhibit 99.1 and is incorporated by
reference herein in its entirety.
ITEM 5.02. DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS,
APPOINTMENT OF PRINCIPAL OFFICERS.
On April 20, 2006, Mr. Tiao-Tsan Lai notified the Company of his resigned
as the Chief Executive Officer, Chairman of the Board of Directors, and
President of the Company.
There were no disagreements between Mr. Lai and the Company on any matter
relating to the Company's operations, policies or practices, which resulted in
his resignation.
On April 23, 2006, the Board of Directors of the Company appointed Ms.
Alice Chen to serve as the Chief Executive Officer, Chairman of the Board of
Directors, and President of the Company.
Ms. Chen has been Vice President and a director of the Company since
October 2002. Ms. Chen has been Vice General Manager of Sales and Marketing and
a director of City Network - Taiwan, a wholly-owned subsidiary of the Company,
since January 1999. During this time, Ms. Chen implemented and developed the
Company's worldwide sales and marketing plan. Before joining the Company and
City Network - Taiwan, Ms. Chen had ten years of experience working for the
Taiwanese National Security Agency as a national policy analyst. Additionally,
Ms. Chen spent three years working as head of sales and marketing for a
Taiwanese public company.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
99.1 Press release dated April 24, 2006.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CITY NETWORK, INC.
By: /s/ Alice Chen
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Name: Alice Chen
Title: Chairman, President and Chief
Executive Officer
Dated: April 25, 2004
INDEX TO EXHIBITS
No. Description
--- -----------
99.1 Press release dated April 24, 2006.
EXHIBIT 99.1
CITY NETWORK, INC. ANNOUNCES FINANCIAL RESULTS FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2005, GOING CONCERN QUALIFICATION, AND RESIGNATION OF MR. TIAO-TSAN
LAI
TAIPEI, Taiwan, April 24, 2006 /PRNewswire-FirstCall/ -- City Network, Inc.
(Amex: CSN), a company that designs, manufactures, and markets a comprehensive
line of broadband and wireless Internet access solutions and consumer electronic
products, announced financial results for the year end December 31, 2005. Net
sales for the year ended December 31, 2005 totaled $14,320,409, compared to
$15,674,613 for ten months ended December 31, 2004. The decrease in revenues for
the year ended December 31, 2005 was due to a decline in the amount of sales of
certain merchandise.
Net loss after tax was $1,057,476 or $0.038 per share for the year ended
December 31, 2005, compared to net loss after tax of $964,660 or $0.035 per
share for the ten months ended December 31, 2004.
Furthermore, cost of revenue for the year ended December 31, 2005 totaled
$12,881,717, compared to $14,924,938 for the ten months ended December 31, 2004.
The decrease in cost of revenues was due to a decrease in sales.
The Company also announced that gross profit increased due to the higher
margin of certain merchandise and their decline in cost but not their sales
price for the year ended December 31, 2005.
The Company reported that its independent registered public accounting firm
included an explanatory paragraph in their opinion in connection with the 2005
audit, relating to the Company's ability to continue as a going concern.
In addition, Mr. Tiao-Tsan "Andy" Lai announced that he will resign from
his positions as the Company's Chairman, President and Chief Executive Officer
and will be replaced by Ms. Alice Chen, who currently serves as a member of the
board of directors of the Company and who will assume the responsibilities of
Mr. Lai's positions immediately.
ABOUT CITY NETWORK INC.
For more information about City Network, Inc., please visit
http://www.citynetwork.com.tw.
SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995:
The statements which are not historical facts contained in this press
release are forward-looking statements that involve certain risks and
uncertainties including but not limited to risks associated with the uncertainty
of future financial results, regulatory approval processes, the impact of
competitive products or pricing, technological changes, the effect of economic
conditions and other uncertainties as may be detailed in City Network's filings
with the Securities and Exchange Commission. Nothing in this press release shall
be construed as an offer to buy or sell any securities herein.
- FINANCIAL TABLE FOLLOWS -
CITY NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FISCAL YEAR ENDED DECEMBER 31, 2005 AND TEN MONTHS ENDED DECEMBER 31, 2004
December 31, 2005 December 31, 2004
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Sales, net $ 14,320,409 $ 15,674,613
Cost of sales 12,881,717 14,924,938
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Gross Profit 1,438,692 749,675
General and administrative expenses 1,535,808 1,395,388
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Income (loss) from operations (97,116) (645,713)
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Other (Income) Expense
Interest income (8,985) (3,785)
Rental income (187,020) (17,858)
Commission income (3,846) (281)
(Gain) loss on currency exchange 9,721 (10,720)
Other income (expense) 24,518 (32,120)
Reserve for bad debt 848,517 185,858
Equity in earnings of investee 38,167 (58,330)
Miscellaneous 12,791 1,303
Loss on sale of fixed assets 78,247 32,068
Interest expense 147,914 112,922
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Total Other (Income) Expense 960,024 209,057
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Income (loss) before income taxes (1,057,140) (854,770)
Provision for income taxes 336 109,890
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Net income (loss) $ (1,057,476) $ (964,660)
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Net income (loss) per share (basic and diluted)
Basic $ (0.038) $ (0.035)
Diluted $ (0.038) $ (0.035)
Weighted average number of shares
Basic 27,925,720 27,500,000
Diluted 27,925,720 27,500,000