UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the quarterly period ended March 31, 2023 |
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: 000-54171
| LNPR GROUP, INC. |
| (Exact name of Registrant as specified in its charter) |
| Colorado | 26-1381565 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
| 175 S. Main St., Suite 1220, Salt Lake City, UT | 84111 | |
| (Address of principal executive offices) | (Zip Code) |
Issuer’s telephone number, including area code: (801) 699-2928
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| N/A | N/A | N/A |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. (1) Yes ☒ No ☐ (2) 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, 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. (Check one)
| 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 Act). Yes ☐ No ☒
The number of shares outstanding of the registrant’s common stock on May 18, 2023, was .
TABLE OF CONTENTS
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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
LNPR GROUP INC.
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2023 AND DECEMBER 31, 2022
| March 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 554,537 | $ | 1,086 | ||||
| Deposit and prepayment | 266,000 | – | ||||||
| TOTAL ASSETS | $ | 820,537 | $ | 1,086 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY / (DEFICIT) | ||||||||
| LIABILITIES | ||||||||
| Current liabilities | ||||||||
| Accruals and other payables | $ | 238,197 | $ | 234,112 | ||||
| Amount due to a director | 24,910 | 35,850 | ||||||
| TOTAL LIABILITIES | 263,107 | 269,962 | ||||||
| SHAREHOLDERS' EQUITY (DEFICIT) | ||||||||
| Preferred Stock, par value $ per share; Authorized shares; issued and outstanding -- shares | – | – | ||||||
| Common Stock, par value $ per share; Authorized shares; Issued and outstanding and as of March 31, 2023 and December 31, 2022, respectively | 623,631 | 613,881 | ||||||
| Capital paid in excess of par value | 1,429,012 | 258,762 | ||||||
| Accumulated deficit | (1,495,213 | ) | (1,141,519 | ) | ||||
| TOTAL SHAREHOLDERS' EQUITY / (DEFICIT) | 557,430 | (268,876 | ) | |||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 820,537 | $ | 1,086 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
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LNPR GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021
Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | |||||||
| (Unaudited) | ||||||||
| Operating Expenses: | ||||||||
| General and Administrative | $ | (353,694 | ) | $ | (1,800 | ) | ||
| Total Operating Expenses | (353,694 | ) | (1,800 | ) | ||||
| Net Operating Loss | (353,694 | ) | (1,800 | ) | ||||
| Share-based compensation | – | (23,700 | ) | |||||
| Provision for Income Tax | – | – | ||||||
| Net Loss | $ | (353,694 | ) | $ | (25,500 | ) | ||
| Foreign Currency Translation Adjustment | – | – | ||||||
| Comprehensive Loss | $ | (353,694 | ) | $ | (25,500 | ) | ||
| Net Loss Per Common Share - Basic | $ | (0.01 | ) | $ | – | |||
| Net Loss Per Common Share - Diluted | $ | (0.01 | ) | $ | – | |||
| Weighted Average Common Shares Outstanding - Basic | 53,546,493 | 43,531,726 | ||||||
| Weighted Average Common Shares Outstanding - Diluted | 53,546,493 | 43,531,726 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
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LNPR GROUP INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)
FOR THE THREE MONTHS ENDED MARCH 31, 2023
| Number of Common Shares Issued | Common Stock | Capital Paid in Excess of Par Value | Accumulated Deficit | Total | ||||||||||||||||
| Balance at December 31, 2022 | 47,985,382 | $ | 613,881 | $ | 258,762 | $ | (1,141,519 | ) | $ | (268,876 | ) | |||||||||
| Issuance of common stock upon debt conversion | 4,000,000 | 4,000 | 26,000 | – | 30,000 | |||||||||||||||
| Issuance of common stock | 5,750,000 | 5,750 | 1,144,250 | – | 1,150,000 | |||||||||||||||
| Net loss | – | – | – | (353,694 | ) | (353,694 | ) | |||||||||||||
| Balance at March 31, 2023 | 57,735,382 | $ | 623,631 | $ | 1,429,012 | $ | (1,495,213 | ) | $ | 557,430 | ||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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LNPR GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
Three Months Ended 2023 | Three Months Ended 2022 | |||||||
| (Unaudited) | ||||||||
| Net Loss | $ | (353,694 | ) | $ | (25,500 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Share Based Compensation | – | 23,700 | ||||||
| Accrued expense and other payable | 34,085 | 1,800 | ||||||
| Deposit and prepayment | (266,000 | ) | – | |||||
| Cash used in operating activities | (585,609 | ) | – | |||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of common stock | 1,150,000 | – | ||||||
| Repayment to a director | (10,940 | ) | – | |||||
| Net cash from financing activities | 1,139,060 | – | ||||||
| Net increase in cash | 553,451 | – | ||||||
| Effects on changes in foreign exchange rate | – | – | ||||||
| Cash at beginning of the year | 1,086 | 1,085 | ||||||
| Cash at end of the year | $ | 554,537 | $ | 1,085 | ||||
| Supplemental disclosure information: | ||||||||
| Income taxes paid | $ | – | $ | – | ||||
| Interest paid | $ | – | $ | – | ||||
The accompanying notes are an integral part of these financial statements.
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LNPR GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 2022 AND 2021
Note 1 – Organization
ORGANIZATION
New Asia Energy, Inc. (formerly known as High Desert Assets, Inc. and previously known as Univest Tech, Inc., (“New Asia Energy”), was incorporated in the State of Colorado on November 6, 2007. New Asia Energy was originally formed to develop and market music based on technology solutions.
On December 1, 2017, the Board of Directors of New Asia Energy adopted two Amendments to its Articles, changing the name of the Corporation to LNPR Group Inc., and effectuating a 40:1 reverse split of the stock of New Asia Energy; the State of Colorado effectuated said changes on December 4, 2017; and on January 17, 2018, FINRA granted effectiveness for said changes and the ticker Symbol “LNPR”.
On December 24, 2018 Veng Kun Lun informed LNPR Group Inc., (the “Company”) that they are resigning from their positions as directors and/or officers of the Company. Veng Kun Lun decision to leave did not involve any disagreement with the Company on any matter relating to its operations, policies or practices.
On January 14, 2019 the Company, by written direction of the sole Director, appointed as a Director of the Company Joe Grimes which was accepted by Mr. Grimes. Mr. Grimes was also elected as Chief Executive Officer. The change of the officers and directors became effective as of December 24, 2018.
On April 21, 2021, Joseph Grimes resigned as the Chairman of the Board, President and CEO, and appointed Paul Falconer as Director and CEO.
On August 13, 2021, the Board appointed Eng Wah Kung as CFO and Nicola Yip as the COO.
Effective July 21, 2022, Paul Falconer resigned as the CEO and director of the Company and Mark Emerson was appointed as the CEO and director.
Effective September 10, 2022, Nicola Yip resigned as the COO and director of the Company.
Note 2 – Summary of Significant Accounting Policies
This summary of significant accounting policies is presented to assist the reader in understanding the Company's consolidated financial statements. The consolidated financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the consolidated financial statements.
Critical Accounting Policies and Estimates
BASIS OF CONSOLIDATION
The Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiary, NYCEdutec, LLC (“NYCEdutec”). All significant intercompany transactions and balances have been eliminated.
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NYCEdutec is a limited liability company formed in the State of Utah under the Utah state law on October 3, 2022 by the sole member, Mark Emerson who is also the Chief Executive Officer and director of the Company. On November 22, 2022, NYCEdutec issued all of its membership interests to the Company. As a result, NYCEdutec became a wholly-owned subsidiary of the Company.
USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant accounting estimates include certain assumptions related to, among others, the allowance for doubtful accounts receivable, impairment analysis of real estate assets and other long-term assets including goodwill, valuation allowance on deferred income taxes, and the accrual of potential liabilities. Actual results may differ from these estimates.
BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared in accordance with the Financial Accounting Standards Board (“FASB”) “FASB Accounting Standard Codification™” (the “Codification”) which is the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of consolidated financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States.
The Company has adopted the Financial Accounting Standards Board (FASB) ASC Topic 260 regarding earnings / loss per share, which provides for calculation of “basic” and “diluted” earnings / loss per share. Basic earnings / loss per share includes no dilution and is computed by dividing net income / loss available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings / loss per share reflect the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings / loss per share.
There were potentially dilutive instruments outstanding during the years ended March 31, 2023 and December 31, 2022.
INCOME TAXES
In accordance with ASC 740 - Income Taxes, the provision for income taxes is computed using the asset and liability method. The liability method measures deferred income taxes by applying enacted statutory rates in effect at the balance sheet date to the differences between the tax basis of assets and liabilities and their reported amounts on the consolidated financial statements. The resulting deferred tax assets or liabilities have been adjusted to reflect changes in tax laws as they occur. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized.
The Company expects to recognize the consolidated financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a “more-likely-than-not” threshold, the amount to be recognized in the consolidated financial statements will be the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no consolidated financial statement benefit is recognized. As of March 31, 2023 and December 31, 2022, the Company had no uncertain tax positions. The Company recognizes interest and penalties, if any, related to uncertain tax positions as general and administrative expenses. The Company currently has no federal or state tax examinations nor has it had any federal or state examinations since its inception. To date, the Company has not incurred any interest or tax penalties.
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RELATED PARTIES
A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and 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. A party which can significantly influence the management or operating policies of the transacting parties or if it has 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 is also a related party.
RECENT ACCOUNTING PRONOUNCEMENTS
There are no recent accounting pronouncements that impact the Company’s operations.
GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business for the 12 months following the date of these consolidated financial statements. The Company has suffered recurring losses and has working capital deficiency and negative operating cash flows.
These matters, among others, raise substantial doubt about our ability to continue as a going concern. While the Company's cash position may not be significant enough to support the Company's daily operations, management intends to raise additional funds by way of equity and/or debt financing to fund operations. The consolidated financial statements do not include any adjustments that may result should the Company be unable to continue as a going concern.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid temporary cash investment with an original maturity of three months or less to be cash/equivalents.
SHARE-BASED COMPENSATION
The Company accounts for equity instruments issued in exchange for the receipt of goods or services from consultants in accordance with the accounting standards regarding accounting for stock-based compensation and accounting for equity instruments that are issued to other than employees for acquiring or in conjunction with selling goods or services. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably determinable. The value of equity instruments issued for consideration other than employee services is determined on the earlier of a performance commitment or completion of performance by the provider of goods or services as defined by these accounting standards. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement if there is a term.
The Company accounts for equity instruments issued in exchange for the receipt of services from employees in the consolidated financial statements based on their fair values at the date of grant. The fair value of awards is amortized over the requisite service period.
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COMMON STOCK
At formation, the Company was authorized to issue 50,000,000 shares of $0.001 par value common stock.
As of January 1, 2022, the Company had a total of 43,612,837 common stocks issued and paid-up.
As of January 25, 2022, the Company cancelled common stocks for a total consideration of $23,350 and issued common shares at par value for a total of $23,700 which consisted of shares of common stock to Paul Falconer (the Company’s ex-CEO and the owner of Falconer Family Office (“FFO”) and shares to FFO for services.
On February 23, 2022, the Company entered into a Mutual General Release and Settlement Agreement with Peter Grimes pursuant to which Mr. Grimes agreed to cancel shares previously issued to him.
On February 23, 2022, we entered into a Mutual General Release and Settlement Agreement with Kirkland Family Trust pursuant to which the trust agreed to cancel shares previously issued to it.
On July 20, 2022, the Company issued common stocks at par value for a total of $650 to Falconer Family Office (HK) Limited, a subsidiary under FFO, for services.
On July 20, 2022, a total of shares were issued to the directors of the Company for their services under the 2022 Stock Incentive Plan which was adopted on June 7, 2022.
On July 21, 2022, Mark Emerson purchased 24,472,545 (51%) shares from Paul Falconer in a private sale and gained majority control of the Company. Mr. Falconer has resigned as a director and officer of the Company.
On January 16, 2023, the Company issued and common stocks to Christina Yim and Kao Liang Chi respectively upon a conversion of a debt the Company owed to a related party amounting to $30,000.
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On January 24, 2023, the Company issued common stocks at par value for a total consideration of $150,000 to an individual shareholder David Park.
On February 28, 2023, the Company issued common stocks at par value for a total consideration of $5,000,000 to an individual shareholder Jason Kizer.
SHARE-BASED COMPENSATION
The following table summarizes the Company's total share-based compensation expense recognized in operating overhead expense, as applicable:
| Schedule of stock based compensation expense | ||||||||
| March 31, 2023 | March 31, 2022 | |||||||
| Restricted Common Stocks – shares awards to directors for service | $ | – | $ | 23,700 | ||||
| Total Share-based compensation expense | $ | – | $ | 23,700 | ||||
As of January 25, 2022, the Company cancelled 23,350,000 common stocks for a total consideration of $23,350 and issued 23,700,000 common stocks at par value for a total of $23,700 which consisted of 22,000,000 shares of common stocks to Paul Falconer (the Company’s ex-CEO and the owner of Falconer Family Office (“FFO”) and 1,700,000 common stocks to FFO for services.
2022 Stock Incentive Plan
The LNPR Group, Inc. 2022 Stock Incentive Plan (the “Stock Incentive Plan”) provides for the issuance of up to Common Stock subject to adjustment as to the number and kind of shares. The Stock Incentive Plan authorizes the Company to grant incentive and non-qualified options and to grant restricted stock awards and units of the Company’s Common Stock. The Board of Directors will be the initial administrator of the Stock Incentive Plan and will have the powers and authority set forth in the Stock Incentive Plan to grant options and restricted stock awards.
The following table sets forth the computation of basic and diluted net loss per share:
| Schedule of computation of loss per share | ||||||||
| For the Years Ending March 31, | ||||||||
| 2023 | 2022 | |||||||
| Net loss attributable to common stockholders | $ | (353,694 | ) | $ | (25,500 | ) | ||
| Basic weighted average outstanding shares of common stock | 53,546,493 | 43,531,726 | ||||||
| Dilutive effects of common stock equivalents | – | – | ||||||
| Dilutive weighted average outstanding shares of common stock | 53,546,493 | 43,531,726 | ||||||
| Net loss per share of common stock - basic and diluted | $ | ( | ) | $ | ||||
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Note 5 – Income Taxes
Deferred income taxes arise from the temporary differences between financial statement and income tax recognition of net operating losses. These loss carryovers are limited under the Internal Revenue Code should a significant change in ownership occur. The Company accounts for income taxes pursuant to ASC 740.
The types of temporary differences between the tax basis of assets and their financial reporting amounts that give rise to a significant portion of the deferred assets and liabilities are as follows:
| Schedule of deferred tax assets | ||||||||
| March 31, 2023 | March 31, 2022 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss | $ | (353,694 | ) | $ | (25,500 | ) | ||
| Valuation allowance | 353,694 | 25,500 | ||||||
| Total deferred tax asset | $ | – | $ | – | ||||
Note 6 – Related Party Transactions
In addition to the information disclosed elsewhere in the consolidated financial statements, the following transactions took place between the Company and related party at terms agreed between the parties.
NYCEdutec entered into a Software License Agreement (the “SL Agreement”) with NYC English, LLC (“NYC English”), a Utah limited liability company which is controlled by the Company’s CEO, Mark Emerson. Pursuant to the Agreement, NYCEdutec is required to make (or arrange for) minimum purchases of the Specified Products as set out in SL Agreement.
On January 24, 2023, NYCEdutec entered an Addendum to SL Agreement with NYC English, pursuant to which, NYCEdutec in addition to the purchases of the Specified Products shall pay to NYC English for leasing of the digital asset of the Specified Products and consultancy service on product development to align with the latest business needs. Both parties agreed that the payment of leasing of the digital asset and product consultancy service can be used to fulfill the minimum purchases as set out in the SL Agreement. During the three months ended March 31, 2023, NYCEdutec incurred a leasing expenses of $24,500 and a product consultancy fee of $120,000 (0 nil for both in the three month period March 31, 2022). As of March 31, 2023, NYCEdutec made a lease prepayment of $116,000 to and had an outstanding consultancy fee of $4,000 payable to NYC English (0 nil for both as of December 31, 2022).
Paul Falconer advanced $11,800 to the Company as of March 31, 2023 and December 31, 2022 for the routine operating expenditure. The advance was unsecured, interest free and payable on demand. Paul Falconer was the former Chief Executive Officer and director of the Company.
Mark Emerson advanced $24,910 to the Company as of March 31, 2023 ($35,850 as of December 31, 2022) for the routine operating expenditure. The advance was unsecured, interest free and payable on demand. Mark Emerson is currently the Chief Executive Officer and director of the Company.
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Note 7 – Contractual Obligations and Commitments
NYCEdutec, the wholly-owned subsidiary of the Company, entered into a Software License Agreement with NYC English Pursuant to the Agreement, NYCEdutec is appointed by NYC English as the non-exclusive licensee of all three levels of NYC English software (the “Products”) throughout the world. The initial term of the Agreement is until December 31, 2024. During the initial term, NYCEdutec is required to make (or arrange for) minimum purchases of the Products of $1,000,000 in year one (i.e. for the financial year ending December, 2023) and $1,500,000 in year two (i.e. for the financial year ending December, 2024). The suggested retail price for the Products and the purchase price of the Products by NYCEdutec will be decided between the parties at a later date.
On January 24, 2023, NYCEdutec entered an Addendum to SL Agreement with NYC English, pursuant to which, NYCEdutec in addition to the purchases of the Specified Products shall pay to NYC English for leasing of the digital asset of the Specified Products and consultancy service on product development to align with the latest business needs. Both parties agreed that the payment of leasing of the digital asset and product consultancy service can be used to fulfill the minimum purchases as set out in SL Agreement.
Note 8: Subsequent Events
In accordance with ASC 855-16, management has performed an evaluation of subsequent events through the date that the financial statements were available to be issued.
On December 30, 2022, the Company’s subsidiary, NYCEdutec entered into an independent contractor agreement with CTJ Inc. which is an entity owned by Thomas Irle. On April 21, 2023 the Company resolved to issued 2,327,455 common stocks under the provision of the Company’s 2022 Stock Incentive Plan to Thomas Irle as an additional compensation for his service.
Save for the above, it does not have any material subsequent events to disclose.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contain certain forward-looking statements. Historical results may not indicate future performance. Our forward-looking statements reflect our current views about future events; are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements. Factors that may cause differences between actual results and those contemplated by forward-looking statements include, but are not limited to, those discussed in the “Risk Factors” section of our Registration Statement on Form 10. We undertake no obligation to publicly update or revise any forward-looking statements, including any changes that might result from any facts, events, or circumstances after the date hereof that may bear upon forward-looking statements. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements
Critical Accounting Policies
Our significant accounting policies are described in the notes to our financial statements for the three months ended March 31, 2023 and 2022, and are included elsewhere in this Form 10-Q.
Business Overview
LNPR Group Inc. was incorporated in the State of Colorado on November 6, 2007. On October 3, 2022, an entity named “NYCEdutec LLC” (“NYCEdutec”) was formed in the State of Utah. On November 22, 2022, the manager of NYCEdutec, Mark Emerson (who also serves as our Chief Executive Officer and director), approved the issuance to the Company of all of the equity interests of NYCEdutec. As a result, NYCEdutec is now a wholly-owned subsidiary of the Company. Prior to the equity issuance to the Company, NYCEdutec had no operations.
On December 12, 2022, NYCEdutec entered into a Software License Agreement with NYC English, LLC (“NYC English”), a Utah limited liability company which is controlled by the Company’s CEO, Mark Emerson. The initial term of the agreement is until December 31, 2024. Unless terminated pursuant to the agreement, the agreement may be renewed by mutual written agreement of the parties. Each of NYCEdutec and NYC English may immediately terminate and/or temporarily suspend the agreement at any time in the event of several defaults detailed in the agreement.
Pursuant to the agreement, NYCEdutec is appointed by NYC English as the non-exclusive licensee of all three levels of NYC English software (the “Products”) throughout the world. During the initial term, NYCEdutec is required to make (or arrange for) minimum purchases of the Products as set out in SL Agreement. The suggested retail price for the Products and the purchase price of the Products by NYCEdutec will be decided between the parties at a later date.
Due to the agreement, as well as other factors, as of December 12, 2022, we ceased being a “shell company.”
Through our wholly-owned subsidiary, NYCEdutec, we are now building artificial intelligence with 20 unique engines to capture and analyze behavioral data from millions of users enabling high-quality, individualized teaching on a huge scale. Our AI-powered ‘Super Teachers’ will solve the problem that human teachers are in short supply and bring more effective, affordable, and personalized teaching to all. We are currently building 'AI English’ to address the growing demand for fluency in English.
Going Concern Uncertainty
As shown in the accompanying financial statements, the Company generated a net loss of $353,694 during the three months ended March 31, 2023. As of March 31, 2023, the Company’s current assets exceeded its current liabilities by $557,430. As of March 31, 2023, the Company had $554,537 of cash.
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We will require additional funding to finance the growth of our operations and achieve our strategic objectives. These factors, as relative to capital raising activities, create doubt as to our ability to continue as a going concern. We are seeking to raise additional capital and are targeting strategic partners in an effort to accelerate the sales and marketing of our products and begin generating revenues. Our ability to continue as a going concern is dependent upon the success of future capital offerings or alternative financing arrangements, expansion of our operations and generating sales. The accompanying financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. Management is actively pursuing additional sources of financing sufficient to generate enough cash flow to fund its operations; however, management cannot make any assurances that such financing will be secured.
Results of Operations during the three-months ended March 31, 2023 as compared to the three-months ended March 31, 2022.
We have not generated any revenues during the three months ended March 31, 2023 and 2022. We had total operating expenses of $353,694 related to general and administrative expenses during the three months ended March 31, 2023, compared to total operating expenses of $1,800 during the three months ended March 31, 2022. We incurred zero interest expense during three months ended March 31, 2023 and 2022. During the three months ended March 31, 2023 and 2022, we had a net loss of $353,694 and $25,500 respectively, mainly due to our general and administrative expenses which includes research and development expenses, contract for service fee, officers fees, leasing expenses on digital assets, meal and travelling expenses, general administration fees, and professional fees.
Liquidity and Capital Resources
At March 31, 2023, we had a cash balance of $554,537, which represents a $553,451 increase from the $1,086 cash balance at December 31, 2022. This increase was primarily as a result of proceeds from issuance of common stocks and funds advanced from a director. Our working capital surplus at March 31, 2023 was $557,430, as compared to a working capital deficit of $268,876 at December 31, 2022, respectively.
For the three months ended March 31, 2023, we incurred a net loss of $353,694 (for the three months ended March 31, 2022: $25,500). Net cash flows used in operating activities was $585,609 for the three months ended March 31, 2023 (for the three months ended March 31, 2022: Nil).
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has incurred losses from operations of $353,694 for the three months ended March 31, 2023, and has an accumulated deficit of $1,495,213 at March 31, 2023. These events and conditions indicate the existence of a material uncertainty which may cast significant doubt about the Company’s ability to continue as a going concern.
Nevertheless, the Company prepared the financial statements based on the assumption that the Company can be operated as a going concern and is of the view that the Company will have sufficient working capital to finance its operations in the next twelve months from the end of the reporting period, after taking into consideration of the followings,
| (i) | the Company has cash and cash equivalents of $554,537 and net assets of $557,430 as of March 31, 2023. The Company anticipates it is able to support working capital requirement and maintain current operations for at least six months at the Company’s current rate of expenditure; | |
| (ii) | management is proposing to raise any necessary additional funds not provided by operations through loans or through additional sales of equity securities to support the operations and the growth of the business as well as the product development. In January through February of 2023, the Company successfully raised $1,150,000 in funding. The Company would also raise additional capital to launch its AI product into the market; | |
| (iii) | management expects the Company will generate positive cash flows from operating activities upon the launch of its AI-powered product, which is expected to be in Q4 of 2023; | |
| (iv) | management will implement necessary measures to improve its liquidity condition, including but not limited to, tightening cost controls over various expenses and demanding a longer settlement period for the director’s fee and payments to related parties. |
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Barring any unforeseen circumstance, the management of the Company believes that given the above business/ financing plans and operational measures, the Company will have sufficient cash resources to satisfy its future working capital and other financing requirements in next twelve months. Accordingly, management considers its appropriate that the accompanying financial statements do not include any adjustments that would be required should the Company fail to continue as a going concern.
Notwithstanding the above, there is no assurance that the Company will be successful in raising this additional capital or financing with acceptable terms, in implementing its business plan to improve the Company’s operating results or in achieving profitable operations. The Company’s continuation as a going concern is dependent upon its ability to ultimately attain profitable operations, generate sufficient cash flow to meet its obligations, and obtain additional financing as may be required. Our auditors have included a going concern qualification in their auditors’ report dated December 31, 2022. The outcome of this uncertainty cannot be assured. The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainty.
Recent Accounting Pronouncements
We have provided a discussion of recent accounting pronouncements in Note 2 to the Consolidated Financial Statements.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our consolidated financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity capital expenditures or capital resources.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, the Company has elected not to provide the disclosure required by this item.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
We have established disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and, as such, is accumulated and communicated to our Chief Executive Officer, Mark Emerson who serves as our principal executive officer, and our Chief Financial Officer, Eng Wah Kung who serves as our principal accounting and financial officer, as appropriate, to allow timely decisions regarding required disclosure. Messrs. Emerson and Kung evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act, as of March 31, 2023.
Our management does not expect that our disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
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With respect to the three months ended March 31, 2023, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act. Based upon our evaluation regarding the three months ended March 31, 2023, our management, including our principal executive officer and principal financial officer, has concluded that our disclosure controls and procedures were ineffective.
Changes in Internal Control Over Financial Reporting
There has been no change in the Company’s internal control over financial reporting, as defined in Rules 13a-15(f) of the Exchange Act, during the Company’s three months ended March 31, 2023, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 6. Exhibits
| SEC Ref. No. | Title of Document | |
| 31.1* | Rule 13a-14(a) Certification by Principal Executive Officer | |
| 31.2* | Rule 13a-14(a) Certification by Principal Financial and Accounting Officer | |
| 32.1** | Section 1350 Certification of Principal Executive Officer | |
| 32.2** | Section 1350 Certification of Principal Financial and Accounting Officer | |
| 101.INS* | Inline XBRL Instance Document | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104* | Cover Page Interactive Data File (formatted in iXBRL, and included in exhibit 101) |
*Filed with this Report.
**Furnished with this Report.
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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.
| LNPR GROUP, INC. | ||
| Date: May 18, 2023 | By: | /s/ Mark Emerson |
| Mark Emerson, Chief Executive Officer (Principal Executive Officer) | ||
| Date: May 18, 2023 | By: | /s/ Eng Wah Kung |
| Eng Wah Kung, Chief Financial Officer (Principal Financial and Accounting Officer) | ||
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