Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements. Such
forward-looking statements are based on current expectations, estimates, and
projections about our industry, management beliefs, and certain assumptions made
by our management. Words such as "anticipates," "expects," "intends," "plans,"
"believes," "seeks," "estimates," variations of such words, and similar
expressions are intended to identify such forward-looking statements. These
statements are not guarantees of future performance and are subject to certain
risks, uncertainties, and assumptions that are difficult to predict; therefore,
actual results may differ materially from those expressed or forecasted in any
such forward-looking statements. Unless required by law, we undertake no
obligation to update publicly any forward-looking statements, whether as a
result of new information, future events, or otherwise. However, readers should
carefully review the risk factors set forth in other reports and documents that
we file from time to time with the United States Securities and Exchange
Commission (the "SEC"), particularly the Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q and any Current Reports on Form 8-K, as the same may be
amended from time to time.
The following discussion of our financial condition and results of operations
should be read in conjunction with, and is qualified in its entirety by, the
unaudited consolidated financial statements and notes thereto included in Item 1
of this Quarterly Report on Form 10-Q.
Overview
Since December 24, 2014, New Asia Holdings, Inc. (the "Company") has been
developing and deploying its proprietary, neural trading models for the
financial community. We offer trading software solutions to clients on the basis
of a software-as-a-service ("SaaS") licensing and delivery models with licensed
users availing themselves of service-based contractual arrangements.
The Company's products capitalize the large volume of the 24-hour Forex markets
to achieve capital appreciation over a medium- to long-term basis, combined with
the usage of a good wealth vehicle designed to control risk, profit from both
bull or bear markets, and maximize liquidity and economic resilience.
Our proprietary trading models were developed by a team of professional
engineers in communications, electronic circuitry design and financial
engineering. This diverse team is the key factor in our successful development
of non-traditional and innovative trading models. Our systems were designed to
take intelligent positions as the market moves/changes and, upon development,
our systems were to bring a rigorously tested track-record.
The Company's systems were designed to adapt themselves and to take intelligent
positions as the market moves/changes. The models were subjected to rigorous
testing akin to the volatile trading environment of major financial
events/crises that have happened in recent history. These models were also
programmed to have the ability to learn and adapt new manners of trading,
effectively translating the human behavioral of trading into a predictive
science. The Company's quantitative strategies and proprietary algorithmic
trading system were developed to generate risk adjustable returns for its
licensees and their clients.
Since 2016, the Company's focus has been to license its algorithm to licensees,
regulated funds and banks to capitalize on the large volume of the 24-hour Forex
markets to achieve capital appreciation over a medium- to long- term basis,
combined with the usage of a good wealth vehicle designed to control risk,
profit from both bull or bear markets, and maximize liquidity and economic
resilience.
On August 25, 2015, the Company entered into a Sale and Purchase Agreement (the
"Purchase Agreement") with Anthony Ng Zi Qin, pursuant to which the Company
acquired Magdallen Quant Pte Ltd ("MQL"). The MQL acquisition was accomplished
through a share exchange with Anthony Ng Zi Qin of 7,422,000 restricted shares
of common stock of the Company ("Consideration Shares"), with a value of $0.41
per share, and an aggregate fair value of $3,043,020, in exchange for the entire
issued and outstanding capital of MQL held by Mr. Anthony Ng Zi Qin, consisting
of 8,000,100 shares of stock issued at par value of SGD 1.00 per share, or
$0.714 on the acquisition date.
On August 19, 2016, the Company and Anthony Ng Zi Qin entered into an Addendum
(the "First MQL Addendum") to the Purchase Agreement to extend the August 25,
2016, anniversary date for the adjustment of issued shares for an additional
period of 12 months. On November 10, 2017, the Company and Anthony Ng Zi Qin
signed an Addendum (the "Second MQL Addendum") to the Purchase Agreement, as
amended, pursuant to which the Company agreed to issue an aggregate of 3,339,900
shares of common stock, in satisfaction of the shortfall in the value of the
shares issued. These shares were issued on December 12, 2017 in full
satisfaction of the aforementioned contingent liability. The Purchase Agreement,
as amended, is referred to herein as the "MQL Acquisition Agreement."
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The algorithms were placed into commercial operation in November 2015 upon the
execution of a Software Licensing Agreement (the "MQL License Agreement")
between and New Asia Momentum Limited ("NAML"), a company owned and controlled
by Dr. Lin Kok Peng, the Company's Chief Executive Officer, Chief Financial
Officer and Chairman of the Board. Under the terms of the MQL License Agreement,
MQL agreed to license its proprietary trainable, trading algorithms to NAML in
exchange for payment of a license fee and certain other fixed and time and
materials fees. Pursuant to the terms of the MQL License Agreement, MQL licensed
its proprietary trainable, trading algorithms. NAML, in turn, offered these
proprietary, trainable, algorithm trading software solutions to broker-dealers,
banks, funds and other clients based on a SaaS licensing and delivery model,
with sub-licensed users availing themselves of service-based contractual
arrangements. NAML was required to pay MQL royalty fees equal to 20% of the
trading profits achieved by the SaaS contract agreements that NAML executed with
its clients. The targeted geographic market was Asia, with an initial emphasis
on Singapore, Hong Kong, Indonesia, and Australia. From 2015 to 2017, NAML grew
its retail assets under management ("AUM") from zero to approximately $2.5
million.
In conjunction with the expansion into the regulated fund and bank model, NAML
decided to ask its clients to redeem the AUM and as of September 30, 2017,
trading on the AUM was terminated.
The Company initiated its focus on the regulated bank and fund model in 2017
with the launch of the Feuris Fund A with AUM of approximately $6.67 million.
Because the risk profiles required by these regulated funds and banks reflect a
lower level of risk, there was a significantly reduced frequency of trading
activities. As of September 30, 2019, due to market conditions that impacted
trading frequencies and volumes, NAML liquidated the Feuris Fund A and returned
the AUM to the investors.
The MQL License Agreement currently remains in place.
While the Company continues to improve its algorithm products, there are no
guarantees that such product improvements will translate to improved financial
performance. The Company, in its efforts to expand its business, is currently
considering several new business opportunities, including the following:
·The Company may integrate a business solution to not rely on using an
application that relies on our algorithms for actual trading, but instead to
provide a platform where users can use the algorithms as a tool to obtain
information that can assist users in making potential investment decisions.
·The Company is currently evaluating a possible acquisition.
As of March 31, 2022, the Company has not yet determined which, if any, of the
above business opportunities it will implement and is also considering other
additional opportunities. There can be no assurance that any of these business
opportunities will come to fruition and, if initiated, will be successful. The
Company continues to improve its products and has been working to create new
products. The Company is doing its best to provide the basis for improved
performance in the coming quarters, however, there is no guarantee that such new
products and product improvements will translate to improved financial
performance.
The Company did not generate any revenue during the three months ended March 31,
2022 and 2021.
As described above, the commercial business associated with the licensing of the
algorithm products has not materialized and the Company is pursuing new
applications of the products that would not involve trading and other new
business activities.
COVID-19
In December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan,
Hubei Province, China. While initially the outbreak was largely concentrated in
China and caused significant disruptions to its economy, it has now spread to
most countries around the world and infections have been reported globally. The
spread of COVID-19 has had a material adverse effect on segments of the global
economy.
Because COVID-19 infections continue to be reported worldwide, certain national,
state and local governmental authorities have issued stay-at-home orders,
proclamations and/or directives aimed at minimizing the spread of COVID-19.
Additional, more restrictive proclamations and/or directives may be issued in
the future. As a result, certain Company internal operations communications and
accounting operations have been disrupted by these "stay at home" orders, which
have affected the timing of certain new business development activities (the
Company had previously liquidated the Feuris Fund A AUM during the third quarter
of 2019).
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The ultimate impact of the COVID-19 pandemic on the Company's operations is
unknown and will depend on future developments, which are highly uncertain and
cannot be predicted with confidence, including the duration of the COVID-19
outbreak, new information which may emerge concerning the severity of the
COVID-19 pandemic, and any additional preventative and protective actions that
governments, or the Company, may direct, which may result in an extended period
of continued business disruption and reduced operations. Any resulting financial
impact cannot be reasonably estimated at this time but could be anticipated to
have a material adverse impact on our business, financial condition and results
of operations.
The measures taken to date will impact the Company's business for the fiscal
first and second quarters and potentially beyond. Management expects that all of
its business segments, across all of its geographies, will be impacted to some
degree, but the significance of the impact of the COVID-19 outbreak on the
Company's business and the duration for which it may have an impact cannot be
determined at this time.
Results of Operations
Three Months Ended March 31, 2022 Compared to the Three Months Ended March 31,
2021
Revenues
We had no revenue during the three months ended March 31, 2022 and 2021,
respectively. The MQL License Agreement between MQL and NAML still remains in
place and the Company is focusing on the development of expanded new business
solutions as described above.
Operating Expenses
Operating expenses were $46,606 for the three months ended March 31, 2022,
consisting of $18,341 of general and administrative expenses, $8,401 of outside
service expenses, and $19,864 of professional fees. This compares to operating
expenses for the three months ended March 31, 2021, of $48,764, consisting of
$20,387 of general and administrative expenses, $9,744 of outside service
expenses, and $18,633 of professional fees. The operating expenses for the
three-month period ended March 31, 2022 were slightly lower than the operating
expenses for the corresponding period in 2021 because general and administrative
expenses were lower.
Net Loss
As a result of the foregoing, we had a net loss of $46,606 for the three months
ended March 31, 2022, compared to a net loss of $48,764 for the three months
ended March 31, 2021.
We expect to incur net losses through 2022 because we expect to continue to
incur expenses, but do not expect to generate significant, or any, revenues. We
cannot guarantee that we will be successful in generating sufficient revenues or
other funds in the future to cover our expenses. We expect to cover such
shortfall in operating margins through advances from our principal shareholder
and other fundraising measures, some of which have been conducted, as the
Company deems appropriate. There is no assurance that our principal shareholder
will continue to advance funds to us or that we will be successful in any other
fundraising measures.
Liquidity and Capital Resources
We had cash in the amount of $39,588 and $57,888 at March 31, 2022 and December
31, 2021, respectively. To date, we have funded our operations from private
placements concluded in the third and fourth quarter of 2020 and from advances
from our principal shareholder, Lin Kok Peng. Dr. Lin Kok Peng, our Chief
Executive Officer, Chief Financial Officer and Chairman of the Board, also has
voting and dispositive control over the shares of the Company's common stock,
and we just recently completed two Private Placements as described in herein.
We do not have sufficient capital to sustain our operations for the next 12
months. We expect to continue to rely on advances from our principal
shareholder, as well as from other sources of financing, including additional
private placements of our common shares in order to continue to fund our
business operations. Issuances of additional shares will result in dilution to
existing stockholders. There is no assurance that we will achieve any additional
sales of equity securities or that we will be able to arrange for debt or other
financing to fund our operations and other activities. We do not have any oral
or written agreements with NAHL which would require NAHL to fund our operations.
During the three-month period ended March 31, 2022, Lin Kok Peng did not make
any advances to the Company. The total advances due to Lin Kok Peng are $916,452
and $916,452 as of March 31, 2022 and December 31, 2021, respectively. As of
March 31, 2022, the advances constitute unsecured interest-free loans to the
Company.
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On August 14, 2020, the Company signed an Agreement with NAHL. Pursuant to the
terms of the Agreement, all funds advanced to the Company by NAHL up to August
14, 2020 (the "Prior Advances") will continue to constitute an interest-free
loan to the Company, which was due and payable by the Company to NAHL on or
before September 15, 2020 (the "Prior Advance Repayment Date", which may be
extended as set forth below). If the Company does not repay the Prior Advances
by the Prior Advance Repayment Date, NAHL, at its sole discretion, will have the
option to extend the Prior Advance Repayment Date or convert all or a portion of
the Prior Advances into Common Stock at a conversion price of $0.003 per share
(the "Prior Advance Conversion Price"), subject to adjustment as set forth in
the Agreement. NAHL's election to extend the Prior Advance Repayment Date or to
convert the Prior Advances into Common Stock shall be made on the first business
day following the Prior Advance Repayment Date. The Parties acknowledge and
agree that the Prior Advances shall not be convertible into Common Stock prior
to the Prior Advance Repayment Date.
Following the Effective Date, NAHL was to endeavor, on a best efforts' basis, to
continue to advance operating funds to the Company as may be required and
requested by the Company for its operations, for a period of at least through
December 31, 2020 (such additional advances, as funded, the "Additional
Advances" and, together with the Prior Advances, the "Advances"). Any such
Additional Advances were to be due and payable by the Company to NAHL on or
before January 31, 2021 (as the same may be extended as set forth below, the
"Additional Advance Repayment Date"). In the event that any Additional Advances
were made and were not repaid by the Additional Advance Repayment Date, NAHL, at
its sole discretion, would have the option to extend the Additional Advance
Repayment Date or convert all or a portion of the Additional Advances into
Common Stock at a conversion price of $0.003 per share (the "Additional Advance
Conversion Price"), subject to adjustment as set forth in the Agreement. NAHL's
election to extend the Additional Advance Repayment Date or to convert the
Additional Advances into Common Stock shall be made on the first business day
following the Additional Advance Repayment Date. The Parties acknowledge and
agree that any Additional Advances shall not be convertible into Common Stock
prior to the Additional Advance Repayment Date.
On January 5, 2021, the shares of the Company's stock under the name of NAHL
were changed to Lin Kok Peng, as an individual, at the request of the owner of
NAHD, Lin Kok Peng and NAHL was closed.
As of March 31, 2022, Dr. Lin Kok Peng had not exercised its option to convert
the advances into shares of common stock. Accordingly, the total of $916,452 in
advances remained as an unsecured interest-free loan to the Company as of March
31, 2022.
Through March 31, 2022, Lin Kok Peng has continued to advance operating funds to
the Company totaling $916,452 and is expected to continue to advance such
operating funds in the future. In August 2020, NAHL informed the Company that
the previous terms of the prior agreement had not reflected the level of risk
that NAHL has taken in effecting these advances over the years. Therefore, on
August 14, 2020, the Company and NAHL entered into an Agreement on Advances (the
"Agreement") wherein the Company and NAHL agreed as follows. On January 5, 2021,
Lin Kok Peng decided to change his ownership of the Company from NAHL to his own
Name (Lin Kok Peng) and thus all prior agreements executed between the Company
and NAHL remain fully in effect:
·All funds that have been advanced to the Company by NAHL up to August 14, 2020
(the "Prior Advances") will continue to constitute an interest-free loan to the
Company, which will be due and payable by the Company to NAHL on or before
September 15, 2020. If the Company does not repay the Prior Advances by that
date NAHL will have the right to extend that date for repayment or to convert
all or a portion of the Prior Advances into Common Stock at a conversion price
of $0.003 per share.
·Following August 14, 2020, NAHL will endeavor, on a best efforts' basis, to
continue to advance operating funds to the Company as may be required and
requested by the Company for its operations, for a period of at least through
December 31, 2020 (such additional advances, as funded, the "Additional
Advances"). Any such Additional Advances were due and payable by the Company to
NAHL on or before January 31, 2021. In the event that any Additional Advances
are made and are not repaid by such date, NAHL will have the right to extend
that date for repayment or convert all or a portion of the Additional Advances
into Common Stock at a conversion price of $0.003 per share.
·In the event that NAHL determines not to fund any Additional Advances, then
conversion price for any Prior Advances made prior to January 1, 2020, will
remain $0.003 per share but the conversion price with respect to any Prior
Advances made after January 1, 2020 will be $0.01 per share.
·The conversion prices as set forth above are subject to customary adjustments
for stock splits, stock dividends, recapitalizations and other customary events
which occur following August 14, 2020.
·On January 5, 2021, the shares of the Company's stock under the name of NAHL
were changed to Lin Kok Peng, as an individual, at the request of the owner of
NAHD, Lin Kok Peng and NAHL was closed.
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We expect to incur losses and negative operating cash flows for the foreseeable
future, and we may never become profitable. We also expect to continue to incur
significant operating and capital expenditures for the next several years and
anticipate that our expenses will increase substantially in the foreseeable
future. We also expect to experience negative cash flow for the foreseeable
future as we fund our operating losses and capital expenditures.
As a result, we will need to generate significant revenues to achieve and
maintain profitability. We may not be able to generate these revenues or achieve
profitability in the future. Our failure to achieve or maintain profitability
could negatively impact the value of our common stock.
We have no agreements to obtain funds through bank loans, lines of credit or any
other traditional sources. Since we have no financing committed, our inability
to realize financing to maintain operations and grow our business would
materially restrict our business operations. Future financing may not be
available upon acceptable terms, or at all. Should we be successful in securing
future financing, new issuances of equity or convertible debt (i) would dilute
our current shareholders, possibly significantly, (ii) might require a
significant increase to our authorized stock, and (iii) might have rights,
preferences, or privileges senior to our common or preferred stock. If financing
is not available to us on favorable terms, such severe limitation might cause us
to consider another consolidation of existing common equity at any time to
attract financing and maintain our business.
Due to the uncertainty of our ability to meet our current operating and capital
expenses and the fact that we have suffered recurring losses from operations and
have a net capital deficiency, in their report on our audited annual financial
statements as of and for the years ended December 31, 2021 and 2020, our
independent auditors included an explanatory paragraph regarding concerns about
our ability to continue as a going concern. Recurring losses from operations
raise substantial doubt about our ability to continue as a going concern. The
presence of the going concern explanatory paragraph may have an adverse impact
on the relationships we are developing and plan to develop with third parties as
we continue the commercialization of our products and could make it challenging
and difficult for us to raise additional financing, all of which could have a
material adverse impact on our business and prospects and result in a
significant or complete loss of your investment.
Cash and Cash Equivalents
The following table summarizes the sources and uses of cash for the periods
stated. The Company held no cash equivalents for any of the periods presented.
For the Three Months Ended
March 31, 2022 March 31, 2021
Cash, beginning of period $57,888 $200,378
Net cash used in operating activities (18,289) (32,910)
Net cash provided by investing activities -
-
Net cash used in financing activities - (38,697)
Effect of exchange rate on cash (11) 3
Cash, end of period $39,588 $128,774
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that are material to stockholders.
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Critical Accounting Policies
Our financial statements and related public financial information are based on
the application of accounting principles generally accepted in the United States
("U.S. GAAP"). U.S. GAAP requires the use of estimates, assumptions, judgments
and subjective interpretations of accounting principles that have an impact on
the assets, liabilities, revenue and expense amounts reported. These estimates
can also affect supplemental information contained in our external disclosures
including information regarding contingencies, risks and financial condition. We
believe our use of estimates and underlying accounting assumptions adhere to
U.S. GAAP and are consistently and conservatively applied. We base our estimates
on historical experience and on various other assumptions that we believe to be
reasonable under the circumstances. Actual results may differ materially from
these estimates under different assumptions or conditions. We continue to
monitor significant estimates made during the preparation of our financial
statements.
Our significant accounting policies are summarized in Note 1 in the Annual
Report on Form 10-K for the most recent fiscal year, as filed with the SEC.
While all these significant accounting policies impact our financial condition
and results of operations, we view certain of these policies as critical.
Policies determined to be critical are those policies that have the most
significant impact on our financial statements and require management to use a
greater degree of judgment and estimates. Actual results may differ from those
estimates. Our management believes that given current facts and circumstances,
it is unlikely that applying any other reasonable judgments or estimate
methodologies would cause effect on our results of operations, financial
position or liquidity for the periods presented in this report.
Related Parties
The Company follows the Financial Accounting Standards Board's ("FASB")
Accounting Standards Codification ("ASC") 850, "Related Party Disclosures," for
the identification of related parties and disclosure of related party
transactions. See Note 4.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
The extent to which the COVID-19 pandemic may directly or indirectly impact our
business, financial condition, and results of operations is highly uncertain and
subject to change. We considered the potential impact of the COVID-19 pandemic
on our estimates and assumptions and there was not a material impact to our
consolidated financial statements as of and for the three months ended March 31,
2022; however, actual results could differ from those estimates and there may be
changes to our estimates in future periods.
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