NEW ASIA HOLDINGS, INC. Forward-Looking Statements
This Management's Discussion and Analysis contains forward-looking statements that involve future events, our future performance and our expected future operations and actions. In some cases, you can identify forward-looking statements by the use of words such as "may", "will", "should", "anticipate", "believe", "expect", "plan", "future", "intend", "could", "estimate", "predict", "hope", "potential", "continue", or the negative of these terms or other similar expressions. These forward-looking statements are only our predictions and involve numerous assumptions, risks and uncertainties. Our actual results or actions may differ materially from these forward-looking statements for many reasons, including, but not limited to, the matters discussed in this report under the caption "Risk Factors". We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included in this annual report on Form 10-K.
Overview SinceDecember 24, 2014 ,New Asia Holdings, Inc. , aNevada corporation (the "Company" or "NAHD"), 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 NAHD 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 NAHD 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. OnAugust 25, 2015 , the Company entered into a Sale and Purchase Agreement (the "Purchase Agreement") withAnthony Ng Zi Qin , pursuant to which the Company acquiredMagdallen Quant Pte Ltd ("MQL"). The MQL acquisition was accomplished through a share exchange withAnthony 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 ofSGD 1.00 per share, or$0.714 on the acquisition date. -------------------------------------------------------------------------------- 28 -------------------------------------------------------------------------------- OnAugust 19, 2016 , the Company andAnthony Ng Zi Qin entered into an Addendum (the "First MQL Addendum") to the Purchase Agreement to extend theAugust 25, 2016 anniversary date for the adjustment of issued shares for an additional period of 12 months. OnNovember 10, 2017 , the Company andAnthony 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 onDecember 12, 2017 in full satisfaction of the aforementioned contingent liability. The Purchase Agreement, as amended, is referred to herein as the "MQL Acquisition Agreement." The algorithms were placed into commercial operation inNovember 2015 upon the execution of a Software License Agreement (the "MQL License Agreement") between andNew Asia Momentum Limited ("NAML"), a company owned and controlled by NAHD's Chairman and CEO, Dr.Lin Kok Peng . 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 on the basis of 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 wasAsia , with an initial emphasis onSingapore ,Hong Kong ,Indonesia , andAustralia . 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
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 ofSeptember 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 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 involved in the development of new business opportunities, including the following: ?Point of Sales (POS) and mobile Point of Sales (mPOS) solutions and technologies. The Company expects to develop its own mobile readers which would allow small- and medium-sized businesses to accept payments anytime and anywhere by swiping a debit or credit card. The Company aims to be a strong market leader in mPOS solutions. ?A global digital payment system that would allow users to gain access to the existing global merchant base in multiple countries and regions and earn attractive rewards and cashback benefits. We expect that access to the existing global merchant base would be established through proven payment merchant networks, such as UnionPay, and convertible to both mainstream currencies and other digital assets to ensure a steady stream of liquidity. We anticipate that users would be able to convert cryptocurrencies for spending at merchant outlets worldwide. InDecember 2019 , a novel strain of coronavirus (COVID-19) emerged inWuhan ,Hubei Province ,China . While initially the outbreak was largely concentrated inChina and caused significant disruptions to its economy, it has now spread to several other countries and infections have been reported globally. Because COVID-19 infections have been 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). 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 -------------------------------------------------------------------------------- 29
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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. The following table provides selected financial data about us for the fiscal years endedDecember 31, 2019 andDecember 31, 2018 . For detailed financial information, see the audited Financial Statements included in this annual report on Form 10-K. -------------------------------------------------------------------------------- 30 --------------------------------------------------------------------------------
December 31, 2019 December 31, 2018
ASSETS
Current Assets
Cash $ 23,874 $ 28,617
Prepaid Expense 11,000 13,225
Total Current Assets 34,874 41,842
Other Assets
Deposit 195 195
Total Other Assets 195 195
TOTAL ASSETS 35,069 42,037
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts Payable and Accrued Liabilities 91,858 43,699
Advance From Shareholder 836,452 711,539
Total Current Liabilities 928,310 755,238
Total Liabilities 928,310 755,238
Stockholders' Deficit
Preferred Stock, $0.001 par value, 30,000,000 shares
authorized, 0 shares issued and outstanding - -
Common Stock, $0.001 par value, 400,000,000 shares
authorized, shares issued 72,288,667 and outstanding
72,288,667 at December 31, 2019 and December 31, 2018,
respectively 72,289 72,289
-
Additional Paid In Capital 11,182,713 11,182,713
Accumulated Deficit (12,148,029) (11,968,027)
Accumulated Other Comprehensive Loss (214) (176)
Total Stockholders' Deficit (893,241) (713,201)
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT $ 35,069 $ 42,037
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During fiscal 2019, we generated no revenues compared to fiscal 2018 when we
generated $76 in revenues. In addition, we have a history of losses. The
reduction in fiscal 2019 revenues resulted from significantly reduced trading
volumes of the Feuris Fund A activities since the risk profiles required by
these regulated funds and banks reflects a lower level of risk, which resulted
in significantly reduced frequency of trading activities over the last several
quarters which then led to the closure of the Feuris Fund A by Momentum as of
September 30, 2019 and the return of the $ 6.67 million AUM to clients. The
Company continues to improve its products and, coupled the self-learning
capabilities of the Algorithms the Company is doing its best to provide the
basis for improved performance in the coming quarters, however, there is no
guarantees that such product improvements will translate to improved financial
performance and the Company has begun to focus on the development of new
business and technology solutions that are expected to be announced during the
second half of 2020.
As of December 31, 2019 and December 31, 2018 , our accountants have expressed
substantial doubt about our ability to continue as a going concern as a result
of our history of net losses. Our ability to achieve and maintain profitability
and positive cash flow is dependent upon our ability to successfully develop and
market our software and our ability to generate revenues.
Operating expenses were $180,002 for the year ended December 31, 2019 and
$145,824 for the year ended December 31, 2018 and consisted primarily of general
and administrative expenses and professional fees. This compares with operating
expenses for the year ended December 31, 2018 of $145,824 , which primarily
consisted of general and administrative expenses and professional fees. The
nominal increase in such expenses in the year ended December 31, 2019 was
related to increased professional fees and general and administrative expenses.
As a result of the foregoing, we had net loss of $ 180,002 for the year ended
December 31, 2019 . This compares with a net loss for the year ended December 31,
2018 of $145,748 .
After the change in control in December 24, 2014 , and the acquisition of our
proprietary trainable trading algorithm assets in August 2015 , the Company had
been implementing its business model, as described above. We expect that we will
need to raise additional funds to support the continued implementation and
expansion of our business model (focused on the implementation of new business
solutions as described above) including, working capital and for the acquisition
of new businesses and technologies, or if we must respond to unanticipated
events that require us to make additional investments. We cannot assure that
additional financing will be available when needed on favorable terms, or at
all.
We had begun to generate nominal revenues since the second quarter of 2016,
however, due to the change in strategy to focus on the regulated bank and fund
model, the Company's licensee decided to terminate all activities with retail
clients and the retail AUM was returned to retail clients. The focus on the
regulated bank and fund model was initiated in 2017 with the launch of the
Feuris Fund A with AUM of approximately $6.67 million . However, since the
adoption of the regulated fund and bank models, the risk profiles required by
these regulated funds and banks reflects a lower level of risk, which has
resulted in significantly reduced frequency of trading activities over the last
several quarters and the Company's licensee, Momentum decided, as of September
30, 2019 , to liquidate the Feuris Fund A and return the AUM to the investors.
The License Agreement between MQL and Momentum still remains in place. The
Company continues to improve its products and, coupled the self-learning
capabilities of the Algorithms the Company is doing its best to provide the
basis for improved performance in the coming quarters, however, there is no
guarantees that such product improvements will translate to improved financial
performance. The Company is currently pursuing the development of new business
opportunities, as described above, which are expected to begin to be implemented
after the second half of 2020. We expect to incur operating losses through the
balance of 2020 because we will be incurring expenses and not generating
sufficient revenues. We cannot guarantee that we will be successful in
generating sufficient revenues or other funds in the future to cover these
operating costs. We expect to cover such shortfall in operating margins through
advances from our principal shareholder and other fund-raising measures that the
Company deems appropriate.
Liquidity and Capital Resources
As of
We had net cash used in operating activities of$(129,618) for the year endedDecember 31, 2019 and$(107,822) of net cash used by operating activities for the year endedDecember 31, 2018 .
We had net cash flows from financing activities of
We had no cash flows from investing activities during the year endedDecember 31, 2019 , compared to no cash flows from investing activities for the year endedDecember 31, 2018 . -------------------------------------------------------------------------------- 32 --------------------------------------------------------------------------------
The Company's ultimate continued existence is dependent upon its ability to generate sufficient cash flows from operations to support its daily operations as well as provide sufficient resources to retire existing liabilities and obligations on a timely basis.
The Company's need for capital may change dramatically as a result of any business acquisition or combination transaction. There can be no assurance that the Company will identify any such business, product, technology or company suitable for acquisition in the future. Further, there can be no assurance that the Company would be successful in consummating any acquisition on favorable terms or that it will be able to profitably manage the business, product, technology or company it acquires. The Company has no current plans, proposals, arrangements or understandings with respect to the sale or issuance of additional securities prior to the location of a merger or acquisition candidate. Accordingly, there can be no assurance that enough funds will be available to the Company to allow it to cover the expenses related to such activities. The Company's Articles of Incorporation authorize the issuance of up to 30,000,000 shares of preferred stock and 400,000,000 shares of common stock. The Company's ability to issue preferred stock may limit the Company's ability to obtain debt or equity financing as well as impede potential takeover of the Company, which takeover may be in the best interest of stockholders. The Company's ability to issue these authorized but unissued securities may also negatively impact our ability to raise additional capital through the sale of our debt or equity securities. The Company anticipates future sales of equity securities to facilitate either the consummation of a business combination transaction or to raise working capital to support and preserve the integrity of the corporate entity. However, there is no assurance that the Company will be able to obtain additional funding through the sales of additional equity securities or, that such funding, if available, will be obtained on terms favorable to or affordable by the Company. It is the belief of management and significant stockholders that they will provide sufficient working capital necessary to support and preserve the integrity of the corporate entity. However, there is no legal obligation for either management or significant stockholders to provide additional future funding. Further, the Company is at the mercy of future economic trends and business operations for the Company's majority stockholder to have the resources available to support the Company. Should this pledge fail to provide financing, the Company has not identified any alternative sources. If no additional operating capital is received during the next twelve months, the Company will be forced to rely on existing cash in the bank and upon additional funds loaned by management and/or significant stockholders to preserve the integrity of the corporate entity at this time. In the event, the Company is unable to acquire advances from management and/or significant stockholders, the Company's ongoing operations would be negatively impacted. While the Company is of the opinion that good faith estimates of the Company's ability to secure additional capital in the future to reach our goals have been made, there is no guarantee that the Company will receive sufficient funding to sustain operations or implement any future business plan steps.
Further, the Company is at the mercy of future economic trends and business operations for the Company's majority stockholder to have the resources available to support the Company.
In such a restricted cash flow scenario, the Company would be unable to complete its business plan steps, and would, instead, delay all cash intensive activities. Without necessary cash flow, the Company may become dormant during the next twelve months, or until such time as necessary funds could be raised in the equity securities market. Regardless of whether the Company's cash assets prove to be inadequate to meet the Company's operational needs, the Company might seek to compensate providers of services by issuances of stock in lieu of cash.
Off-Balance Sheet Arrangements
We have no significant 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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--------------------------------------------------------------------------------Future Financings We will continue to rely on advances from our principal shareholder as well as from other sources of financing, including 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 the equity securities or arrange for debt or other financing to fund our operations and other activities. Critical Accounting Policies Our financial statements and related public financial information are based on the application of accounting principles generally accepted inthe United States (GAAP). 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, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to 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 of our financial statements. 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.
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