UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended
Commission
File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| |
||
| (Address of principal executive offices) | (Zip Code) |
Phone
number:
Indicate
by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the 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
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting 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 ☐ 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 ☐
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: shares of common stock as of November 14,2023.
NEWPOINT FINANCIAL CORP.
FORM 10-Q
TABLE OF CONTENTS
| Page No. | ||
| PART I - FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements | 4 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 14 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 19 |
| Item 4 | Controls and Procedures | 19 |
| PART II - OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 20 |
| Item 1A. | Risk Factors | 20 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 20 |
| Item 3. | Defaults Upon Senior Securities | 20 |
| Item 4. | Mine Safety Disclosures | 20 |
| Item 5. | Other Information | 20 |
| Item 6. | Exhibits | 20 |
| 2 |
INFORMATION REGARDING FORWARD-LOOKING DISCLOSURE
This quarterly report on Form 10-Q contains forward-looking statements. Statements in this report that are not historical facts, including statements about management’s beliefs and expectations, constitute forward-looking statements. These statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined under Item 1A, Risk Factors, in our most recent annual report on Form 10-K, and any updated risk factors we include in our quarterly reports on Form 10-Q and other filings with the SEC. Forward- looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.
+
Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, the following:
| ● | risks arising from material weaknesses in our internal control over financial reporting, including material weaknesses in our control environment; |
| ● | our ability to attract new clients and retain existing clients; |
| ● | our ability to retain and attract key employees; |
| ● | risks associated with assumptions we make in connection with our critical accounting estimates; |
| ● | potential adverse effects if we are required to recognize impairment charges or other adverse accounting-related developments; |
| ● | potential downgrades in the credit ratings of our securities; |
| ● | risks associated with the effects of global, national and regional economic and political conditions, including fluctuations in economic growth rates, interest rates and currency exchange rates; and |
| ● | developments from changes in the regulatory and legal environment for advertising and marketing and communications services companies around the world. |
Investors should carefully consider these factors and the additional risk factors outlined in more detail under Item 1A, Risk Factors, in our 2022 Annual Report on Form 10-K and other filings with the SEC.
| 3 |
PART I
NEWPOINT FINANCIAL CORP.
CONDENSED BALANCE SHEETS
| September 30, | December 31, | |||||||||||
| Note | 2023 | 2022 | ||||||||||
| (Unaudited) | ||||||||||||
| ASSETS | ||||||||||||
| Current Assets: | ||||||||||||
| Cash | ||||||||||||
| Interest Receivable | ||||||||||||
| Loan Receivable - Due from Related Party | 6 | $ | $ | |||||||||
| Total Current Assets | ||||||||||||
| Other Assets | ||||||||||||
| Credit Facility Receivable | 5 | |||||||||||
| Allowance for Credit Facility Receivable | 5 | ( | ) | ( | ) | |||||||
| Total Other Assets | ||||||||||||
| TOTAL ASSETS | $ | $ | ||||||||||
| LIABILITIES & STOCKHOLDERS’ DEFICIT | ||||||||||||
| Current Liabilities: | ||||||||||||
| Accounts Payable and accrued expenses | 6 | $ | $ | |||||||||
| Loans Payable - Due to Related Parties | 6 | |||||||||||
| Total Current Liabilities | ||||||||||||
| Total Liabilities | ||||||||||||
| Stockholders’ Deficit | ||||||||||||
| Preferred Stock, par value $, shares Authorized, Issued or Outstanding at September 30, 2023 and December 31, 2022 | ||||||||||||
| Common Stock, par value $, shares Authorized, shares Issued and Outstanding at September 30, 2023 and December 31,2022 | ||||||||||||
| Additional Paid-In Capital | ||||||||||||
| Accumulated Deficit | 7 | ( | ) | ( | ) | |||||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | $ | ||||||||||
The accompanying notes are an integral part of these unaudited financial statements
| 4 |
NEWPOINT FINANCIAL CORP.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
| For the three months ended | For the nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenues: | $ | $ | $ | $ | ||||||||||||
| Expenses: | ||||||||||||||||
| Professional fees | ||||||||||||||||
| General and administrative expense | $ | |||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Operating Loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Income (Expense) | ||||||||||||||||
| Interest Income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ||||||||||||
| Other Gain on Investment | ||||||||||||||||
| Total Other Income (Expense) | ( | ) | ||||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic & Diluted Loss per Common Share | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted Average Common Shares Outstanding | ||||||||||||||||
The accompanying notes are an integral part of these unaudited financial statements
| 5 |
NEWPOINT FINANCIAL CORP.
UNAUDITED CONDENSED STATEMENT OF STOCKHOLDERS’ DEFICIT
For The Nine Months Ended September 30, 2023 and 2022
| For the Nine Months Ended September 30, 2023 | ||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional | Total | |||||||||||||||||||||||||
| Shares | Par Value | Shares | Par Value | Paid-In Capital | Accumulated Deficit | Stockholders’ Deficiency | ||||||||||||||||||||||
| Balance as of December 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Net Loss for the Quarter Ended March 31, 2023 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of March 31, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Net Loss for the Quarter Ended June 30, 2023 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of June 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Net Loss for the Quarter Ended September 30, 2023 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Additional Paid-in Capital | - | - | ||||||||||||||||||||||||||
| Balance as of September 30, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| For the Nine Months Ended September 30, 2022 | ||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional | Total | |||||||||||||||||||||||||
| Shares | Par Value | Shares | Par Value | Paid-In Capital | Accumulated Deficit | Stockholders’ Deficiency | ||||||||||||||||||||||
| Balance as of December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Net Loss for the Quarter Ended March 31, 2022 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of March 31, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Net Loss for the Quarter Ended June 30, 2022 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of June 30, 2022 | ( | )) | ( | ) | ||||||||||||||||||||||||
| Net Loss for the Quarter Ended September 30, 2022 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying notes are an integral part of these unaudited financial statements
| 6 |
NEWPOINT FINANCIAL CORP.
UNAUDITED CONDENSED STATEMENT OF CASH FLOWS
| For the nine months ended | ||||||||
| September 30, | ||||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Changes In: | ||||||||
| Accounts Payable and Accrued expenses | ( | ) | ( | ) | ||||
| Accounts Payable - Related Party | ||||||||
| Net Gains on investment | ( | ) | ||||||
| Other Current Liabilities | ||||||||
| Interest Receivable | ( | ) | ( | ) | ||||
| Net Cash (used in) provided by Operating Activities | ( | ) | ||||||
| CASH FLOWS FROM INVESTING | ||||||||
| Proceeds from Repayment of Related Party Loan | ||||||||
| Loan Advanced to Related Party | ( | ) | ||||||
| Net Cash Used in Investing Activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING | ||||||||
| Proceeds from Related Party Loans | ||||||||
| Net Cash provided by Financing Activities | ||||||||
| Net (Decrease) Increase in Cash | ( | ) | ||||||
| Cash at Beginning of Period | ||||||||
| Cash at End of Period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid during the year for: | ||||||||
| Interest | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Deposit paid to AMIC ,Inc. financed with related party debt | $ | $ | ||||||
| Credit Commitment funded with related party debt | $ | $ | ||||||
| Related party loan converted to additional paid-in capital | $ | |||||||
The accompanying notes are an integral part of these unaudited financial statements
| 7 |
Newpoint Financial Corp.
Notes to Financial Statements
September 30, 2023 and September 30, 2022
(Unaudited)
NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
Newpoint
Financial Corp. (“Newpoint”) was incorporated in the State of Delaware on
On
June 2, 2014, the Company ceased its principal activities of hosting and sponsoring judo tournaments and dissolved Classic Rules World
Judo Championships, Inc. The Company had planned to operate in real estate investment market 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
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 revenue and has generated net losses
of $
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.
| 8 |
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.
Deposits
held at financial institutions insured by the Federal Deposit Insurance Corporation (FDIC) are insured up to $
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.
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 credit loss on investments not measured at fair value through net earnings. Our allowance for credit losses 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.
| 9 |
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 carry forwards 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
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.
| 10 |
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
As at December 31, 2022, management impaired the Company’s equity investment in Novea Inc., a Wyoming corporation (“Novea”) to . This is based on management’s best estimates of the current risk factors involved. These risk factors remain elevated given the lack of clarity regarding the future projections for Novea. As at September 30, 2023, management’s assessment of the valuation of Novea remains unchanged.
The Company follows U.S GAAP guidance on Fair Value Measurements, which defines fair value and establishes a fair value hierarchy organized into three levels based upon the input assumptions used in pricing assets.
Level 1 – Inputs have the highest reliability and are related to assets with unadjusted quoted prices in active markets
Level 2 – Inputs related to assets with quoted prices in markets that are not considered active or other than quoted prices in active markets which may include quoted prices for similar assets or liabilities or other inputs which can be
corroborated by observable market data.
Level 3 – Inputs are unobservable and are used to the extent that observable inputs do not exist.
The Company’s investment in the common stock of Novea is considered a level 3 investment.
NOTE 5 – CREDIT COMMITMENT
The
Company entered into a five (
The
Company has recognized a full allowance against the $
| 11 |
NOTE 6 – RELATED PARTY TRANSACTIONS AND NOTE PAYABLE
| September 30, 2023 | December 31, 2022 | |||||||
| Due to Related Parties | ||||||||
| Newpoint Financial Corp (Wyoming) (1) | $ | $ | ||||||
| Newpoint Reinsurance Limited (2) | $ | $ | ||||||
| Newpoint Capital Limited (3) | $ | $ | ||||||
| Total | $ | $ | ||||||
September 30, 2023 | December 31, 2022 | |||||||
| Due from Related Party | ||||||||
| Mutual Holdings (4) | $ | $ | ||||||
| Total | $ | $ | ||||||
| (1) | ||
| (2) | ||
| (3) |
| 12 |
| (4) |
The
Company entered into consulting agreements with members of management. The Company incurred $
NOTE 7 – STOCKHOLDERS’ DEFICIT
Preferred Stock
The Company is authorized to issue shares of preferred stock with a par value of $ per share. There were shares of preferred stock issued or outstanding as of September 30, 2023 or December 31, 2022.
Common Stock
The Company is authorized to issue up to shares of common stock with a par value of $ per share. As of September 30, 2023 and December 31, 2022 there were shares of common stock issued and outstanding.
Additional Paid in Capital
During
the quarter ended September 30, 2023, the Company agreed to convert two related party liabilities to additional paid in capital. The
Company had an amount outstanding of $
NOTE 8 – COMMITMENTS AND CONTINGENCIES
On November 29, 2022, the Company filed a complaint with the United States District Court Central District of California. This action arises from Defendants Bermuda Monetary Authority (“BMA”) and its officials’ Gerald Gakundi and Susan Davis Crockwell (collectively “Defendants”) blatant, intentional bad faith malfeasance in denying Plaintiff’s Newpoint Financial Corp. application to obtain a controlling interest in a Bermudian insurance company without any, much less good, cause. The Company lodged a complaint for:
1. Tortious interference with existing and prospective economic advantage;
2. Negligent interference with existing and prospective economic advantage;
3. Trade libel;
4. Violation of business and professions code section 17200 and request for injunctive relief.
The Company has sought judgement against the Defendants for punitive and exemplary damages, fees, and an injunction, enjoining the Defendants from making defamatory statements regarding the Company.
The complaint filed with regard to the BMA, is likely to incur ongoing costs in relation to its legal proceedings. The company does not have a firm estimate of the expected costs as the matter is in an early stage and further disclosure of anticipated amounts may prejudice proceedings.
NOTE 9 – SUBSEQUENT EVENTS
The Company evaluated subsequent events through the date of this filing and concluded there were no material subsequent events requiring adjustment to or disclosure in these interim condensed financial statements.
| 13 |
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 aims to 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. The agreement was modified on September 30, 2022. We also entered into an agreement for the acquisition of an interest in American Millennium Insurance Co., a New Jersey based insurance company through the purchase of shares of its parent company, Citadel Risk Holdings Inc (“CRHI”). During 2021, the Company agreed a subscription agreement with Citadel Reinsurance Company, which together with its affiliates owns all of the issued and outstanding shares of common stock of CRHI. Pursuant to the agreement, we agreed to purchase Class A ordinary shares representing 100% of Citadel Reinsurance Company Limited to be subscribed to in equal instalments of $2,500,000 paid annually for a 10-year period. The proposed deal with American Millennium Insurance Co., Citadel Risk Holdings Inc. and Citadel Reinsurance Company Limited was rescinded on November 21, 2022.
| 14 |
History
The Company was initially 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 and subsequently to Judo Capital Corp on February 15, 2017.
On June 2, 2014, the Company ceased its principal activities of hosting and sponsoring judo tournaments and dissolved Classic Rules World Judo Championships, Inc. The Company had planned to operate in real estate investment market 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. In February 2021 new officers and directors were elected and the name of the Company was changed to Newpoint Financial Corp.
Human Capital
As of the date of this report, we have no full-time/W-2 employees. Management of the Company expects to use consultants, attorneys, and accountants as necessary, and does not anticipate a need to hire any full-time employees until necessary for the operation of the Company. The need for employees and their availability will be addressed in connection with the scope and requirements of the operations of the Company.
Item 1A. Risk Factors.
As a smaller reporting company, the Company is not required to provide the information under this item.
Item 1B. Unresolved Staff Comments.
As a smaller reporting company, the Company is not required to include the disclosure under this item.
Item 2. Properties.
Our principal place of business is located at 433 North Camden Drive, Suite 725, Beverly Hills, CA 90210. The space is leased by NMS Consulting, Inc., our contracted management consulting firm whereby they provide us with general office support. At this time, we do not pay any rent and we believe that our existing facilities and equipment are adequate.
Item 3. Legal Proceedings
On November 29, 2022, the Company filed a complaint with the United States District Court Central District of California. This action arises from Defendants Bermuda Monetary Authority (“BMA”) and its officials’ Gerald Gakundi and Susan Davis Crockwell (collectively “Defendants”) blatant, intentional bad faith malfeasance in denying Plaintiff’s Newpoint Financial Corp. application to obtain a controlling interest in a Bermudian insurance company without any, much less good, cause. The Company lodged a complaint for:
1. Tortious interference with existing and prospective economic advantage;
2. Negligent interference with existing and prospective economic advantage;
3. Trade libel;
4. Violation of business and professions code section 17200 and request for injunctive relief.
The Company has sought judgement against the Defendants for punitive and exemplary damages, fees, and an injunction, enjoining the Defendants from making defamatory statements regarding the Company.
Except as set forth above, we are not party to, and our property is not the subject of, any material legal proceedings.
Item 4. Mine Safety Disclosures.
Not applicable.
| 15 |
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
The Company’s common stock is eligible for quotation on the Pink tier of the OTC Markets Group under the symbol “NPFC.” However, there is no reported trading in the Company’s common stock. As of September 30, 2023, there were approximately 860 holders of record of our common stock.
Equity Compensation Plan Information
We did not have any equity compensation plans as of September 30, 2023.
Dividend Policy
We have not paid any cash dividends since our incorporation and do not anticipate paying any dividends in the foreseeable future.
Recent Sales of Unregistered Securities
None.
Purchases of Equity Securities
None.
Item 6. [Reserved.]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described. This discussion should be read in conjunction with our financial statements and the related notes included in this report. This discussion contains forward-looking statements. Please see “Cautionary Note Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements.
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.
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.
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We consider the following accounting policies to be both those most important to the portrayal of our financial condition and those that require the most subjective judgment:
Valuation of investments and credit facility allowances: Management relies on estimates of projected cashflows as support for the amounts disclosed in the Company’s financial statements as investments and valuation allowances taken against respective investments. The projections are based on the best estimates available, however these estimates are subject to potential changes in market conditions, interest rates and market liquidity considerations.
Going Concern: Management relies on estimates of projections to support the going concern assumption and relies on the basis that 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.
Results of Operations for the three and nine months ended September 30, 2023 and September 30, 2022
Revenues . The Company had no revenue during the nine months ended September 30, 2023 and the nine months ended September 30, 2022. The Company had no revenue during the 3 months ended September 30, 2023 and September 30, 2022.
Cost of Revenues . The Company had no cost of revenues for the nine months ended September 30, 2023 and the nine months ended September 30, 2022. The Company had no cost revenue during the 3 months ended September 30, 2023 and September 30, 2022.
General and Administrative expenses. The Company incurred $119,085 of general and administrative expenses during the nine months ended September 30, 2023 compared to $122,287 during the same period in 2022. The Company incurred $17,296 of general and administrative expenses during the three months ended September 30, 2023 compared to $38,277 during the same period in 2022. The costs decrease related to travel, subscriptions and IT services.
Professional fees. The Company incurred $414,133 of professional fees during the nine months ended September 30, 2023 compared to $297,428 during the same period in 2022. The Company incurred $231,090 of professional fees during the three months ended September 30, 2023 compared to $190,978 during the same period in 2022. The increase in professional fees is the result of the Company incurring costs associated with consultants and legal fee during the period.
Loss From Operations. The Company incurred an operating loss of $533,218 during the nine months ended September 30, 2023 compared to $419,715 during the same period in 2022. The Company incurred an operating loss of $248,386 during the three months ended September 30, 2023 compared to $229,255 during the same period in 2022. The increase in net loss is a result of increased professional fees.
Other Income (Expense). The Company earned interest income of $54,500 during the nine months ended September 30, 2023 compared to $19,763 during the nine months ended September 30, 2022. The Company earned interest income of $20,527 during the three months ended September 30, 2023 compared to $7,778 during the three months ended September 30, 2022.The Company incurred interest expense of $0 during the nine months ended September 30, 2023 compared to $376,909 during the nine months ended September 30, 2022. The Company incurred interest expense of $0 during the three months ended September 30, 2023 compared to $126,376 during the three months ended September 30, 2022.The Company had gain on its equity investments in Novea of $0 during the three and nine months ended September 30, 2023 compared to $300,000 for the three and nine months ended September 30, 2022.
Net Loss. The Company incurred a net loss of $478,718 during the nine months ended September 30, 2023 compared to a net loss of $476,861 during the same period in 2022. The Company incurred a net loss of $227,859 during the three months ended September 30, 2023 compared to a net loss of $47,833 during the same period in 2022. The increase in net loss was a result of increased professional fees.
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Liquidity and Capital Resources
As of September 30, 2023, the Company had cash of $35,734 with current assets totalling $462,308 and current liabilities totalling $1,828,903 with an additional Paid-In Capital 965,007 creating a working capital deficit of $2,350,756. Current liabilities consisted of accounts payable and accrued liabilities totalling $105,073, related party payable of $1,723,830
As of December 31, 2022, the Company had cash of $934,300, with current assets totalling $941,359 and current liabilities totalling $2,375,215 with an additional Paid-In Capital 419,028 creating a working capital deficit of $1,433,856. Current liabilities consisted of accounts payable and accrued liabilities totalling $113,139, related party payable of $2,262,076
Cash Flows
Net cash (used in) provided by operating activities was ($506,299) and $1,892 during the nine months ended September 30, 2023 and 2022, respectively.
Net cash used in investing activities was $400,000 and $0 during the nine months ended September 30, 2023 and 2022, respectively.
Net cash provided by financing activities was $7,733 and $0 during the nine months ended September 30, 2023 and 2022, respectively. During the quarter ended September 30, 2023, the Company agreed to convert $545,979 of the related party liability to additional paid in capital.
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 credit facility further stipulates that should a technical breach occur, that interest rate charged will be increased to LIBOR plus 7.25%.
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 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 30, 2022 Newpoint Capital Limited had made a payment of $167,300 on behalf of the Company as per the credit agreement with Novea.
Subsequent Events
No subsequent events occurred after the balance sheet date.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
Smaller reporting companies are not required to provide the information required by this item.
Item 4. Controls and Procedures
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 has 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, 2022.
Changes in Internal Controls Over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with our evaluation of these controls as of the end of our last fiscal quarter as covered by this report on September 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
The Company’s management does not expect that its disclosure controls or its internal control over financial reporting will prevent or detect all error or all fraud and is not effective. 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. 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. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company 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. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or management override of the controls. The design of any system of controls is based in part on 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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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On November 29, 2022, the Company filed a complaint with the United States District Court Central District of California. This action arises from Defendants Bermuda Monetary Authority (“BMA”) and its officials’ Gerald Gakundi and Susan Davis Crockwell (collectively “Defendants”) blatant, intentional bad faith malfeasance in denying Plaintiff’s Newpoint Financial Corp. application to obtain a controlling interest in a Bermudian insurance company without any, much less good, cause. The Company lodged a complaint for:
1. Tortious interference with existing and prospective economic advantage;
2. Negligent interference with existing and prospective economic advantage;
3. Trade libel;
4. Violation of business and professions code section 17200 and request for injunctive relief.
The Company has sought judgement against the Defendants for punitive and exemplary damages, fees, and an injunction, enjoining the Defendants from making defamatory statements regarding the Company.
Except as set forth above, 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.
| 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.* |
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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.
| Dated: November 14, 2023 | ||
| 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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