UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2022
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 000-54953
Newpoint Financial Corp.
(Exact name of registrant as specified in its charter)
Delaware |
47-2653358 | |
| (State or other jurisdiction of incorporation) | (IRS Employer Identification No.) |
433 North Camden Drive, Suite 725
Beverly Hills, CA 90210
(Address of principal executive offices)
(860) 574-9190
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| 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 ☒
As of May 20, 2022, there were shares outstanding of the registrant’s common stock, par value $0.001.
TABLE OF CONTENTS
| Page No. | ||
| PART I - FINANCIAL INFORMATION | 3 | |
| Item 1. | Financial Statements | 3 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 12 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 14 |
| Item 4 | Controls and Procedures | 14 |
| PART II - OTHER INFORMATION | 15 | |
| Item 1. | Legal Proceedings | 15 |
| Item 1A. | Risk Factors | 15 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 15 |
| Item 3. | Defaults Upon Senior Securities | 15 |
| Item 4. | Mine Safety Disclosures | 15 |
| Item 5. | Other Information | 15 |
| Item 6. | Exhibits | 15 |
| 2 |
PART I
Item 1. Financial Statements.
NEWPOINT FINANCIAL CORP.
UNAUDITED CONDENSED BALANCE SHEETS
| 2022 | 2021 | |||||||||
| March 31, | December 31, | |||||||||
| Note | 2022 | 2021 | ||||||||
| ASSETS: | ||||||||||
| Current Assets: | ||||||||||
| Cash | $ | - | $ | 5,843 | ||||||
| Interest Receivable | 4,860 | - | ||||||||
| TOTAL CURRENT ASSETS | $ | 4,860 | $ | 5,843 | ||||||
| Other Assets: | ||||||||||
| Investments | 4 | 50,000,000 | 50,000,000 | |||||||
| Deposits | 5 | 1,000,000 | ||||||||
| Credit facilities | 6 | 330,800 | 163,500 | |||||||
| Total Other Assets | 51,330,800 | 50,163,500 | ||||||||
| TOTAL ASSETS | $ | 51,335,660 | $ | 50,169,343 | ||||||
| LIABILITIES & STOCKHOLDERS’ DEFICIT: | ||||||||||
| Current Liabilities: | ||||||||||
| Accounts Payable | $ | 35,631 | $ | 31,730 | ||||||
| Accounts Payable - Related Parties | 7 | 235,821 | 68,021 | |||||||
| Total Current Liabilities | $ | 271,452 | $ | 99,751 | ||||||
| Non-Current Liabilities: | ||||||||||
| Loan payable-Related Parties | 7 | 51,330,800 | 50,163,500 | |||||||
| Total Liabilities | $ | 51,602,252 | $ | 50,263,251 | ||||||
| Stockholders’ Deficit: | ||||||||||
| Preferred Stock, par value $, shares Authorized, Issued or Outstanding at March 31, 2022 and December 31, 2021 | - | |||||||||
| Common Stock, par value $, shares Authorized, shares Issued and Outstanding at March 31, 2022 and shares Issued at December 31, 2021 | 19,154 | 19,154 | ||||||||
| Additional Paid-In Capital | 419,028 | 419,028 | ||||||||
| Accumulated Deficit | 8 | (704,774 | ) | (532,090 | ) | |||||
| Total Stockholders’ Deficit | (266,592 | ) | (93,908 | ) | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 51,335,660 | $ | 50,169,343 | ||||||
The accompanying notes are an integral part of these condensed financial statements
| 3 |
NEWPOINT FINANCIAL CORP.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2022 AND 2021
E | 2022 | 2021 | ||||||
| March 31, | March 31, | |||||||
| 2022 | 2021 | |||||||
| Revenues | $ | - | $ | - | ||||
Expenses: | ||||||||
| Professional fees | 14,457 | |||||||
| General and administrative expense | 20,621 | 20,924 | ||||||
| Total Operating Expenses | 35,078 | 20,924 | ||||||
| Operating Loss | $ | (35,078 | ) | $ | (20,924 | ) | ||
| Other Income (Expense) | ||||||||
| Interest Income | 4,860 | - | ||||||
| Interest expense | (142,466 | ) | - | |||||
| Total Other Income (Expense) | (137,606 | ) | - | |||||
| Net Loss | $ | (172,684 | ) | $ | (20,924 | ) | ||
| Basic & Diluted Loss per Common Share | $ | (0.01 | ) | $ | (0.00 | ) | ||
| Weighted Average Common Shares Outstanding | 19,153,923 | 15,111,035 | ||||||
The accompanying notes are an integral part of these condensed financial statements
| 4 |
NEWPOINT FINANCIAL CORP.
UNAUDITED CONDENSED STATEMENTS OF STOCKHOLDERS’ DEFICIT
THREE MONTHS ENDED MARCH 31, 2022 AND 2021
| Preferred Stock | Common Stock | Additional | Total | |||||||||||||||||||||||||
| Shares | Par Value | Shares | Par Value | Paid-In Capital | Accumulated Deficit | Stockholders’ Deficit | ||||||||||||||||||||||
| Balance as of December 31, 2021 | - | $ | - | 19,153,923 | $ | 19,154 | $ | 419,028 | $ | (532,090 | ) | $ | (93,908 | ) | ||||||||||||||
| Net Loss for the Three Months Ended March 31, 2022 | - | - | - | - | - | (172,684 | ) | (172,684 | ) | |||||||||||||||||||
| Balance as of March 31, 2022 | - | $ | - | 19,153,923 | $ | 19,154 | $ | 419,028 | $ | (704,774 | ) | $ | (266,592 | ) | ||||||||||||||
Preferred Stock | Common Stock | Additional | Total | |||||||||||||||||||||||||
| Shares | Par Value | Shares | Par Value | Paid-In Capital | Accumulated Deficit | Stockholders’ Deficit | ||||||||||||||||||||||
| Balance as of December 31, 2020 | - | $ | - | 216,185 | $ | 216 | $ | 350,931 | $ | (444,912 | ) | $ | (93,765 | ) | ||||||||||||||
| Beginning balance | - | $ | - | 216,185 | $ | 216 | $ | 350,931 | $ | (444,912 | ) | $ | (93,765 | ) | ||||||||||||||
| Issue of Common Shares | - | - | 18,937,738 | 18,938 | 68,097 | - | 87,035 | |||||||||||||||||||||
| Net Loss for the Three Months Ended March 31, 2021 | - | - | - | - | - | (20,924 | ) | (20,924 | ) | |||||||||||||||||||
| Balance as of March 31, 2021 | - | $ | - | 19,153,923 | $ | 19,154 | $ | 419,028 | $ | (465,836 | ) | $ | (27,654 | ) | ||||||||||||||
| Ending balance | - | $ | - | 19,153,923 | $ | 19,154 | $ | 419,028 | $ | (465,836 | ) | $ | (27,654 | ) | ||||||||||||||
The accompanying notes are an integral part of these condensed financial statements
| 5 |
NEWPOINT FINANCIAL CORP.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2022 AND 2021
| N | 2022 | $ | 2021 | |||||
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2022 | 2021 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net Loss | $ | (172,684 | ) | $ | (20,924 | ) | ||
| Expenses paid by Related Party | 167,800 | 20,924 | ||||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Changes In: | ||||||||
| Accounts Payable | 3,901 | - | ||||||
| Interest Receivable | (4,860 | ) | - | |||||
| Net Cash Provided by (Used in) Operating Activities | (5,843 | ) | - | |||||
| Net Increase (decrease) in Cash | (5,843 | ) | - | |||||
| Cash at Beginning of Period | 5,843 | - | ||||||
| Cash at End of Period | $ | - | $ | - | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid during the Period for: | ||||||||
| Interest | $ | - | $ | - | ||||
| Income Taxes | $ | - | $ | - | ||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Deposit paid to AMIC, Inc. financed with related party debt | $ | 1,000,000 | $ | - | ||||
| Credit Commitment funded with related party debt | $ | 167,300 | $ | - | ||||
The accompanying notes are an integral part of these condensed financial statements
| 6 |
Newpoint Financial Corp.
Notes to Financial Statements
March 31, 2022 and March 31, 2021
NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
Newpoint Financial Corp. (“Newpoint”) was incorporated in the State of Delaware on November 16, 2005 under the name Blue Ribbon Pyrocool, Inc. (“Blue Ribbon”). Blue Ribbon changed its name to Classic Rules Judo Championships, Inc. on July 15, 2008 then to Judo Capital Corp on February 15, 2017. The Company formed a subsidiary in the State of Connecticut on August 13, 2008 named Classic Rules World Judo Championships, Inc. to develop an annual judo championship tournament. Collectively the entities are referred to as “the Company”. On June 2, 2014, the Company ceased its principal activities of hosting and sponsoring judo tournaments. The Company had planned to operate in real estate investment activities focused in the New York City metropolitan area. On February 28, 2018, the Company ceased its plans to operate in the real estate investment market. On January 19, 2021, the Company had a 500-1 reverse stock split with FINRA and Change of Control. All share and per share information has been retroactively adjusted to reflect the reverse stock split. On February 9, 2021, new officers and directors were elected and the name of the Company was changed to Newpoint Financial Corp. (Delaware).
NOTE 2 – GOING CONCERN
The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has generated interest on the credit facility provided of $4,860 for the quarter ended 31 March 2022 and has incurred net losses of $172,684 and $20,924 during the Quarter ended March 31, 2022 and March 31, 2021. The Company has an accumulated deficit of $704,774 and $532,090 as of March 31, 2022 and December 31, 2021, and has experienced negative cash flows from operations. These circumstances raise some doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The Company to date has been financially supported by related party entities which are also owned by the majority shareholders of the Company. The Company will continue to be financially supported by related party entities until such time as the company generates sufficient cashflow to support its expense requirements or completes an external capital raising.
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses during the reporting period. On an on-going basis, the Company evaluates its estimates. Actual results and outcomes may differ materially from the estimates as additional information becomes known.
Cash and Cash Equivalents
Cash and cash equivalents includes highly liquid instruments with original maturities of three months or less.
Investments
Short-term investments, Fixed maturities and equity securities
Short-term investments comprise investments with a maturity greater than three months up to one year from the date of purchase. Short-term investments are carried at fair value, with realized and unrealized gains and losses included in net earnings are reported as net realized and unrealized gains and losses, respectively.
| 7 |
Newpoint Financial Corp.
Notes to Financial Statements
March 31, 2022 and 2021
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Investments in debt securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities. Trading securities are recorded at fair value on the balance sheet in current assets, with the change in fair value during the period included in earnings. Debt securities held as investments that the Company classifies as held-to-maturity securities are recorded at amortized cost, net of a valuation allowance for credit losses. Investments in debt securities not classified as either held-to-maturity or trading securities are classified as available-for-sale securities. Available-for-sale securities are recorded at fair value, with the change in fair value during the period excluded from earnings and recorded net of tax as a component of other comprehensive income.
Investments in equity securities are reported at fair value with realized and unrealized gains and losses included in net earnings are reported as net realized and unrealized gains and losses, respectively. If there are no readily determinable fair values, investments in equity securities are measured at cost less impairment.
Valuation allowance for fixed income securities
Management evaluates impairment losses for all HTM securities each quarter. The HTM securities are evaluated for potential impairment on investments not measured at fair value through net earnings. An allowance for impairment is derived based on various data sources, multiple key inputs and forecast scenarios. These include default rates specific to the individual security, vintage of the security, geography of the issuer of the security, industry analyst reports, credit ratings and consensus economic forecasts. Securities that meet any one of the criteria included above will be subject to a discounted cash flow analysis by comparing the present value of expected future cash flows with the amortized cost basis. Projected cash flows are driven primarily by assumptions regarding probability of default and the timing and amount of recoveries associated with defaults.
Fair Value of Financial Instruments
The Company measures certain financial assets and liabilities at fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The carrying value of cash and cash equivalents and accounts payable approximate their fair value because of the short-term nature of these instruments and their liquidity. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.
Income Taxes
Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carryforwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company records an estimated valuation allowance on its deferred income tax assets if it is not more likely than not that these deferred income tax assets will be realized.
The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As of March 31, 2022 and December 31, 2021, the Company has determined it does not have any uncertain tax positions.
Segment Reporting
The Company’s business currently operates in one segment.
| 8 |
Newpoint Financial Corp.
Notes to Financial Statements
March 31, 2022 and March 31, 2021
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The computation of basic net loss per common share is based on the weighted average number of shares that were outstanding during the year. The computation of diluted net loss per common share is based on the weighted average number of shares used in the basic net loss per share calculation plus the number of common shares that would be issued assuming the exercise of all potentially dilutive common shares outstanding using the treasury stock method.
Recently Issued Accounting Pronouncements
The Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal year may be applicable to the Company, it has not identified any standards that it believes merit further discussion. The Company does not expect the adoption of any recently issued accounting pronouncements to have a significant impact on its financial position, results of operations, or cash flows.
Related Parties
The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.
Pursuant to Section 850-10-20 the related parties include (a) affiliates of the registrant; (b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial statements include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of financial statements is not required in those statements. The disclosures shall include: (a) the nature of the relationship(s) involved; (b) description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; (c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and (d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
NOTE 4 – INVESTMENTS
On December 10, 2021, the Company entered into a stock purchase agreement with Novea Inc., a Wyoming corporation (“Novea”), whereby we acquired five hundred thousand () units (“Units”), each Unit having a stated value of $ and consisting of (i) one share of Series B Convertible Redeemable Preferred Stock (“Novea Preferred Stock”) and (ii) shares of common stock of Novea (“Novea Common Stock”). We also acquired a warrant exercisable for ten years for additional shares of common stock of up to $50,000,000, subject to adjustment as set forth therein. In aggregate, we acquired (i) shares of Novea Preferred Stock, (ii) shares of Novea Common Stock, representing ten percent (%) of Novea’s common stock, and (iii) one warrant to purchase up to $50,000,000 of Novea Common Stock. Novea is a financial and insurance services software company.
As consideration for such purchase, Newpoint Financial Corp (a Wyoming corporation), now known as NPFC SPV 1, Inc., an entity that was owned by the current controlling shareholders, issued to Novea ten (10) secured $5,000,000 notes (each a “Collateral Note”), totaling $50,000,000. The Collateral Notes are due on demand and we have the right to prepay the Collateral Notes at any time on NPFC SPV 1, Inc’s behalf.
As of March 31, 2022 and December 31, 2021, investments in debt securities include mandatorily redeemable preferred stock which is classified as held to maturity, with a term ending in December 2031. The amortized cost was $50,000,000 as of March 31, 2022 and December 31, 2021. The Novea Common Stock and warrants purchased as part of the transaction are considered to have a de minimis value as of December 31, 2021. Novea issued shares of Novea Common Stock to the Company, representing ten percent (%) of Novea’s common stock outstanding. The shares issued had no par value. Novea is a private company and does not have a readily determinable fair value.
| 9 |
Newpoint Financial Corp.
Notes to Financial Statements
March 31, 2022 and March 31, 2021
NOTE 5 - DEPOSITS
In August 2021, the Company entered into an agreement with Citadel Risk Holdings, Inc., (“CRHI”) which owns all the shares of American Millennium Insurance Co., (“AMIC”) a New Jersey based insurance company. We agreed to purchase 3.75% of AMIC’s outstanding shares per year over the course of 10 years for an aggregate total 37.5% of outstanding shares at the end of the term. Closing is expected to occur in 2022 subject to receipt of regulatory approval and other customary closing conditions. As at March 31, 2022, NPFC SPV1, Inc. had made a deposit of $1,000,000 to AMIC, on behalf of the Company, as part of an agreement that remains subject to approval.
NOTE 6 – CREDIT COMMITMENT
The Company entered into a five (5) year revolving credit facility agreement with Novea dated as of December 10, 2021 (“Credit Facility”). The Credit Facility provides for a revolving credit with a commitment equal to the lesser of: (i) $5,000,000; or (ii) on any amount greater than $500,000, the lender shall only disburse any such excess up to the amount of 50% of the qualified receivables outstanding of the borrower, bearing interest at LIBOR plus 5.25%. As of March 31, 2022 and December 31, 2021 there was $4,669,200 and $4,836,500 respectively of additional borrowings were available to Novea subject to the borrowing criteria.
NOTE 7 – RELATED PARTY TRANSACTIONS AND NOTE PAYABLE
SCHEDULE OF RELATED PARTY TRANSACTION
| March 31, 2022 | December 31, 2021 | |||||||
| Due to Related Parties | ||||||||
| Newpoint Financial Corp (Wyoming) (1) | $ | 51,142,466 | $ | 50,000,000 | ||||
| Newpoint Reinsurance Limited (2) | $ | 163,500 | $ | 163,500 | ||||
| Newpoint Capital Limited (3) | $ | 260,655 | $ | 68,021 | ||||
| Total | $ | 51,566,621 | $ | 50,231,521 | ||||
| (1) | Newpoint Financial Corp (a Wyoming corporation), now known as NPFC SPV 1, Inc. entered into an agreement dated December 13, 2021 with the Company as part of the transaction to provide the collateral notes to Novea. In December 2021 the Company entered into a Loan Facility Agreement (the “LFA”) with NPFC SPV I, an entity owned by the Company’s principal stockholders, in connection with the Stock Purchase Agreement between the Company and Novea (see Note 4). The LFA provides total principal of $50,000,000 and is due in December 2031. If the Company is in default, as defined, at any time during the term of the LFA, then the lender can demand repayment within 30 days. The LFA calls for interest at a fixed rate of 1% per annum. Interest can be deferred for up to two years upon the Company’s request. As of March 31, 2022, NPFC SPV1, Inc. had made a deposit of $1,000,000 to AMIC, on behalf of the Company, as part of an agreement that remains subject to approval. The remaining portion of $142,466 relates to interest incurred on amounts outstanding. | |
| (2) | Newpoint Reinsurance Limited registered under the provisions of the Nevis business Corporation 1984 Ordinance, as amended. In December 2021 the Company entered into a Revolving Credit Facility Agreement (the “RCFA”) with Newpoint Reinsurance Company Limited, an entity owned by the Company’s majority shareholder. The RCFA provides for available borrowings up to $1,000,000 for a term of three years and an option to roll the facility. As of March 31, 2022 and December 31, 2021 the Company has additional available borrowings of $836,500 after it was provided $163,500 as a related party transaction for the credit commitment agreement with Novea. As of March 31, 2022 0 further payments have been made from Newpoint Reinsurance Limited. | |
| (3) | Newpoint Capital Limited, a company registered in the United Kingdom has provided $260,655 of related party transactions to the Company as of March 31, 2022 for the payment of amounts requested per the credit agreement with Novea totaling $167,300 and the remaining portion for accounting, auditor fees and fees associated with filings with the SEC for annual and quarterly reports. |
| 10 |
Newpoint Financial Corp.
Notes to Financial Statements
March 31, 2022 and March 31, 2021
NOTE 8 – STOCKHOLDERS’ DEFICIT
Preferred Stock
The Company is authorized to issue shares of preferred stock with a par value of $ per share. There were preferred shares issued or outstanding as of March 31, 2022 or December 31, 2021.
Common Stock
The Company is authorized to issue up to shares of common stock with a par value of $ per share. As at March 31, 2022 there were shares of common stock issued and outstanding and at December 31, 2021 there were shares of common stock issued and outstanding. During the three months ended March 31, 2021, the Company issued shares to settle related party liabilities.
NOTE 9 – SUBSEQUENT EVENTS
We are in the process of seeking regulatory approval for the Company’s acquisitions of AMIC and CRHI shares. Upon approval, we expect the transactions to be completed sometime in 2022.
| 11 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
This report contains forward-looking statements. The statements regarding Newpoint Financial Corp. contained in this report that are not historical in nature, particularly those that utilize terminology such as “may,” “will,” “should,” “likely,” “expects,” “anticipates,” “estimates,” “believes” or “plans,” or comparable terminology, are forward-looking statements based on current expectations and assumptions, and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements.
Important factors known to us that could cause such material differences include: uncertainties associated with the following:
| ● | Inadequate capital and barriers to raising the additional capital or to obtaining the financing needed to implement our business plans; | |
| ● | Our failure to earn revenues or profits; | |
| ● | Risks associated with potential acquisitions, including increased operating expenses and cash requirements; assimilation of operations, intellectual property and products of an acquired company, and | |
| ● | Lack of an active trading market for our common stock; |
We undertake no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable law. You are advised, however, to consult any future disclosures we make on related subjects in future reports to the SEC.
Overview
Newpoint Financial Corp., a Delaware corporation (the “Company,” “we,” “us,” or “our”) is a holding company that strategically invests primarily in regulated entities such as banks and insurance companies. These investments may result in us acquiring a controlling or non-controlling interests of these entities. To date, we have entered into three such transactions (one of which has closed): in December 2021 we acquired a 10% interest in Novea, Inc., a financial and insurance services software company; we have also entered into an agreement for the acquisition of an interest in American Millennium Insurance Co., a New Jersey based insurance company through purchase of shares of its parent holding companies. Closing is subject to receipt of regulatory approvals and other customary closing conditions.
Since our current investments (one of which has closed) constitute (or will constitute) a minority interest in these companies, we anticipate that our income will be dependent on the ability of these companies to generate revenue and payment of dividends.
Critical Accounting Policies
Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
| 12 |
Certain of the Company’s accounting policies that we believe are the most important to the portrayal of the Company’s financial condition and results of operations and that require management’s subjective judgments are described below to facilitate a better understanding of our business activities. Management bases its judgments on its experience and assumptions which it believes are reasonable and applicable under the circumstances.
We expect that uncertainty and volatility in financial markets relating to the COVID-19 pandemic will continue to impact the company. The scope, duration and magnitude of the direct and indirect effects of the COVID-19 pandemic are changing rapidly and are difficult to anticipate.
We are subject to economic factors such as interest rates, inflation, foreign exchange rates, adverse reserve developments, regulation, tax policy changes, political risks and other market risks that can impact our strategy, operations, and results.
Results of Operations for the three months ended March 31, 2022 and March 31, 2021
Revenues. The Company had $4,860 of interest income during the three months ended March 31, 2022 and $0 for the three months ended March 31, 2021.
Cost of Revenues. The Company had no cost of revenues for the three months ended March 31, 2022 or 2021.
General and Administrative expenses. The Company incurred $20,621 of general and administrative expenses during the three months ended March 31, 2022, compared to $20,924 during the same period in 2021. The decline in general and administrative expenses was a result of higher costs related to personnel costs being offset by lower costs related to filing and banking fees.
Professional fees. The Company incurred $14,457 of professional fees during the three months ended March 31, 2022 compared to $0 during the same period in 2021. The increase in professional fees is the result of costs relating the financial and audit costs during the period.
Loss From Operations. The Company incurred an operating loss of $35,078 during the three months ended March 31, 2022 compared to $20,924 during the same period in 2021. The decrease in net loss is a result of lower general and administration fees incurred in the quarter.
Net Loss. The Company incurred a net loss of $172,684 during the three months ended March 31, 2022 compared to $20,924 during the same period in 2021. The increase in net loss is a result of higher interest costs incurred during the period.
Liquidity and Capital Resources
As of March 31, 2022, we had cash and cash equivalents of $0 with current assets totaling $4,860 and current liabilities totaling $271,452 creating a working capital deficit of $ 266,592. Current liabilities consisted of accounts payable and accrued liabilities totaling $35,631 and related party payable of $235,821.
As of December 31, 2021, we had cash and cash equivalents of $5,843 with current assets totaling $5,843 and current liabilities totaling $99,751 creating a working capital deficit of $93,908. Current liabilities consisted of accounts payable and accrued liabilities totaling $31,730 and related party payable of $68,021.
Any liquidity needs will be met by the related entities.
Cash Flows
Net cash used in operating activities was $5,843 and $0 during the three months ended March 31, 2022 and 2021, respectively. The decrease of $5,843 was a result of a decline in cash costs during the quarter.
Net cash provided by financing activities was $0 and $0 during the three months ended March 31, 2022 and 2021, respectively.
Net cash provided by investing activities were $0 and $0 during the years ended March 31, 2022 and 2021, respectively.
The Company to date has been financially supported by related party entities which are also owned by the principal shareholders of the Company. The Company will continue to be financially supported by related party entities until such time as the company generates sufficient cash flow to support its expense requirements or completes an external capital raising.
Off-Balance Sheet Arrangements
During 2021, the Company entered into a revolving credit commitment with Novea, Inc. The initial borrowing of the revolving credit loans under the revolving credit commitments may be an amount up to $500,000. Subject to agreed terms, the total obligation of the Company to make revolving credit loan in an aggregate principal amount shall not exceed $5,000,000. The loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate equal to LIBOR plus 5.25%.
The Company entered into a Revolving Credit Facility Agreement (the “RCFA”) with Newpoint Reinsurance Company Limited, an entity owned by the Company’s principal shareholders. The RCFA provides for available borrowings up to $1,000,000 for a term of three years and an option to roll the facility. As of March 31, 2022, the Company has additional available borrowings of $836,500 after it was provided $163,500 as a related party transaction for the credit commitment agreement with Novea.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required for smaller reporting companies.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
The Securities and Exchange Commission, or the SEC defines the term “disclosure controls and procedures” to mean a company’s controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its chief executive and chief financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified under the SEC’s rules and forms and that information required to be disclosed is accumulated and communicated to its chief executive officer to allow timely decisions regarding disclosure.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were not effective as of such date due to the material weaknesses identified in the Company’s annual report on Form 10-K for the year ending December 31, 2021.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
We are not party to, and our property is not the subject of, any material legal proceedings.
Item 1A. Risk Factors.
Not required for smaller reporting companies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
No disclosure required.
Item 5. Other Information.
None.
Item 6. Exhibits.
| Exhibit No. | Description | |
| 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* | |
| 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* | |
| 32.1 | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** | |
| 101 | Inline XBRL Document Set for the financial statements and accompanying notes in Part I, Item 1, of this Quarterly Report on Form 10-Q.* | |
| 104 | Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set.* |
| * | Filed herewith. |
| ** | Furnished herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| NEWPOINT FINANCIAL CORP. | |||
| Dated: | May 20, 2022 | By: | /s/ Keith Beekmeyer |
| Keith Beekmeyer | |||
| Chief Executive Officer | |||
| (principal executive officer) | |||
| By: | /s/ Julian Jammine | ||
| Julian Jammine | |||
| Chief Financial Officer | |||
| (principal financial and accounting officer) | |||
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