New Asia Holdings, Inc. - Quarter Report: 2018 June (Form 10-Q)

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS:

NEW ASIA HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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NEW ASIA HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME

 (Unaudited) 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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NEW ASIA HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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NEW ASIA HOLDINGS, INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2018

Note 1: Organization and Summary of Significant Accounting Policies

Organization

New Asia Holdings, Inc. (formerly known as DM Products, Inc., previously known as Midwest E.S.W.T. Corp, and previously known as Effective Sport Nutrition Corporation) (the "Company" or "NAHD") was incorporated on March 1, 2001. Prior to December 2014, we were in the business of locating inventive products and introducing these products (such as the Banjo Minnow Fishing Lure System) through a Direct Response Model, a form of marketing that allows potential consumers direct access to the seller without the necessity of traditional retail. In December 2014, the Company underwent a change in control as a result of approximately 90% of the issued and outstanding shares of common stock of the Company being acquired by New Asia Holdings, Ltd. (wholly owned by Lin Kok Peng, Ph.D.) (“NAHL”) and other accredited investors and management adopting a new business plan based on developing highly advanced, 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. In addition, and consistent with the requirements of the US Securities laws, we may utilize our in-house proprietary neural trading models to trade our own funds, thus providing added value to our shareholders.

The Company's focus is to capitalize the large volume of the 24 hours Forex markets to achieve capital appreciation over a medium to long term combined with the usage of a good wealth vehicle in order to control risk, profit from both bull or bear markets, maximize liquidity and economic resilience.

On August 19, 2016, the Company entered into an Addendum (the “First MQL Addendum”) to the Magdallen Quant Pte Ltd (“MQL”) Share and Purchase Agreement (“MQL Agreement”) with Mr. Anthony Ng Zi Qin to extend the August 25, 2016 anniversary date for the adjustment of issued shares for an additional period of twelve (12) months. On November 10, 2017, the Company and Anthony Ng Zi Qin entered into the Second MQL Addendum to the MQL Agreement (the “Second MQL Addendum”), pursuant to which the parties agreed that the Company would issue an aggregate of 3,339,900 shares in satisfaction of the shortfall in the value of the shares issued pursuant to the MQL Agreement, as amended. On December 11, 2017, the common stocks restricted shares were issued at a fair value of $615,111 which created a cancellation of contingency of $5,158,387 which was recorded as a capital transaction for the year ended December 31, 2017.

Basis of Presentation

The unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim consolidated financial information and with the instructions to Securities and Exchange Commission ("SEC") Form 10-Q and Article 8 of SEC Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  In the opinion of management, all adjustments of a normal recurring nature and considered necessary for a fair presentation of its financial condition and results of operations for the interim periods presented in this Quarterly Report on Form 10-Q have been included.  Operating results for the interim periods are not necessarily indicative of financial results for the full year.  These unaudited interim consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017.  In preparing these financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting periods.  Actual results could differ from those estimates.

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 reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Related Parties

The Company follows Accounting Standards Codification (“ASC”) 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions. See Note 4.

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Revenue Recognition

The Company recognizes revenue from the services in accordance with ASC 606, “Revenue Recognition.” The Company recognizes revenue only when all of the following criteria have been met:

i.The contract with customers exists;   

ii.Performance obligations in the contract has been provided;   

iii.The fees are fixed or determinable;    

iv.The fees are allocated based on the performance obligations in the contract; 

v.Recognized when the performance obligation has been satisfied and the collection is reasonably   

assured.

Revenue is realized from Performance Fees received by MQL, the Company’s wholly-owned subsidiary, as described in Part I, Item 1 and Note 5 below. Specifically, in November 2015, MQL, entered into a Software License Agreement with New Asia Momentum Limited (“NAML”), a Company owned and controlled by NAHD's Chairman and CEO, Dr. Lin Kok Peng. In consideration of MQL's performance, NAML agreed to pay MQL in accordance with the following provisions:

i.License and Other Fixed Price Fees as set forth below:  

• License fees shall be based on profits from the End Users' accounts. The license fee shall be calculated as follows: -

oWhere the asset under management from all End Users is less than US$ 10 million, fifteen percent (15%) only of the profits from the End Users' accounts;  

oIf the asset under management from all End Users exceed US$10 million, MQL's fees shall be separately agreed on between MQL and NAML, and if MQL and NAML are unable to agree on such apportionment, MQL shall still be entitled to fifteen percent (15%) only of the profits from the End Users' accounts;  

oOn every anniversary date of the MQL Agreement, parties will review the performance of the Licensed Software and may by mutual agreement between MQL and NAML vary the license fee.   

ii.Time & Material Fees: The charges for performance of any T&M tasks due to Work Orders will be billed monthly for charges incurred in the previous monthly period and are due and payable within thirty (30) days of the date of the invoice. Expenses may include, but are not limited to, reasonable charges for materials, office and travel expenses, graphics, documentation, research materials, computer laboratory and data processing, and out-of-pocket expenses reasonably required for performance. Expenses for travel and travel-related expenses and individual expenses in excess of US$500 require NAML’s prior approval. 

Recent Accounting Pronouncements

In April 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016–10 Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments in this Update do not change the core principle of the guidance in Topic 606.   Rather, the amendments in this ASU clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. Topic 606 includes implementation guidance on (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entity's promise to grant a license provides a customer with either a right to use the entity's intellectual property (which is satisfied at a point in time) or a right to access the entity's intellectual property (which is satisfied over time). The amendments in this ASU are intended render more detailed implementation guidance with the expectation to reduce the degree of judgement necessary to comply with Topic 606.

We have adopted the provisions of ASU No. 2014-09 on January 1, 2018, using the modified retrospective method. We do not have an adjustment to our operating balance of accumulated deficit for the adoption of this update. There is no impact to the statement of operations for any periods being presented.

Note 2: Going Concern

The accompanying unaudited interim consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has sustained substantial losses of $11,905,176 since inception, has a working capital deficit of $651,420, and is in need of additional capital to grow its operations so that it can become profitable. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

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In view of these matters, the ability of the Company to continue as a going concern is dependent upon growth of revenues and the ability of the Company to raise additional capital. Management believes that the deployment of its proprietary trainable trading algorithms in 2016, coupled with continued improvements and modifications to the algorithms, the change in focus in 2016 to the regulated fund and bank and model, which has resulted in several successfully completed transactions by NAML (NAML is a company owned and controlled by Dr. Lin Kok Peng, the Company’s Chairman and CEO), the Company’s licensee, to increase the assets under management (“AUM”) and the development of new productswill result in increased revenues.. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Note 3: Common Stock

The Company has authorized 430,000,000 shares of capital stock, consisting of 400,000,000 shares of $0.001 par value common stock, and 30,000,000 shares of $0.001 par value preferred stock. The Company had 72,288,667 shares of common stock and no shares of preferred stock issued and outstanding as of June 30, 2018 and December 31, 2017.

As of June 30, 2018, NAHL, the Company’s principal shareholder, had not yet acted to exercise its option to convert advances from NAHL, the Company’s principal shareholder, to shares of common stock. Accordingly, as of June 30, 2018, the advances remain as an interest-free loan to the Company. See Note 4.

Note 4: Convertible Advances from Shareholder and Other Related Party Transactions

There were advances of $70,000 from NAHL, the Company’s principal shareholder, during the six-month period ended June 30, 2018. The total advances due are $702,550 and $632,550 from our principal shareholder as of June 30, 2018 and December 31, 2017, respectively. As of June 30, 2018, $465,594 of the advances constitute unsecured interest-free loans to the Company.  The advances were supposed to have been repaid by the close of business on October 31, 2016. In 2016, however, the Company and NAHL agreed that if the Company was unable to repay these advances by such date, NAHL, at its sole discretion, would have the option to extend the repayment deadline or convert all or a portion of the above advances into common stock of the Company at a conversion price of $0.02 per share. As of June 30, 2018, NAHL, the Company’s principal shareholder, had not yet acted to exercise its option to convert the advances to shares of common stock, thus the total of $702,550 in advances presently remain as an unsecured interest-free loan to the Company. The $70,000 borrowed during the six-month period ended June 30, 2018 is non-interest bearing unsecured, and due on demand.

The Company has paid Jose Capote consulting fees for acting as the Company’s Secretary and Vice President in the amount of $9,000 and $9,000 for the six months ended June 30, 2018 and June 30, 2017, respectively.

The Company pays New Asia Momentum Pte Ltd, a Singapore private company owned and controlled by Dr. Lin Kok Peng, Chairman and CEO of the Company, fees for the rental of office space and for administrative services in its Singapore Headquarters. The Company has paid New Asia Momentum Pte Ltd $23,867 and $22,800 for the six months June 30, 2018 and June 30, 2017, respectively.

In November 2015, MQL, the Company's wholly-owned subsidiary entered into a Software License Agreement with NAML, a Company owned and controlled by NAHD's Chairman and CEO, Dr. Lin Kok Peng. In consideration of MQL's performance, NAML agreed to pay MQL in accordance with the following provisions:

(i) License and Other Fixed Price Fees as set forth below:

• License fees shall be based on profits from the End Users' accounts. The license fee shall be calculated as follows: -

o Where the asset under management from all End Users is less than US$ 10 million, fifteen percent (15%) only of the profits from the End Users' accounts;  

oIf the asset under management from all End Users exceed US$10 million, MQL's fees shall be separately agreed on between MQL and NAML, and if MQL and NAML are unable to agree on such apportionment, MQL shall still be entitled to fifteen percent (15%) only of the profits from the End Users' accounts;  

oOn every anniversary date of theMQL Agreement, parties will review the performance of the Licensed Software and may by mutual agreement between MQL and NAML vary the license fee.   

(ii) Time & Material Fees: The charges for performance of any T&M tasks due to Work Orders will be billed monthly for charges incurred in the previous monthly period and are due and payable within thirty (30) days of the date of the invoice. Expenses may include, but are not limited to, reasonable charges for materials, office and travel expenses, graphics, documentation, research materials, computer laboratory and data processing, and out-of-pocket expenses reasonably required for performance. Expenses for travel and travel-related expenses and individual expenses in excess of US$500 require NAML’s prior approval.

NAML paid MQL a total of $76 and $1,848, in related party service revenue for the six months June 30, 2018 and June 30, 2017, respectively

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Note 5: Commitments and Contingencies  

The Company entered into an Office Service Agreement on May 4, 2016, with Real Office Centers 23 Corporate Center Plaza Suite 100/150 (doing business as ROC). Under the terms of the agreement, ROC granted the Company a license to use the facilities and services of the Center at 15615 Alton Parkway Suite 450, Irvine, CA 92618. The lease was for 12 months commencing July 1, 2016 and ending June 30, 2017, with monthly fixed fees of $1,115. The lease term was extended on a month to month basis at least through 2018, with monthly fixed fees of $960.

The Company entered into an Office Service Agreement on September 12, 2017 with Premier Business Centers (“PBC”). Under the terms of the agreement, PBC granted the Company a license to use the facilities and services of PBC at 15615 Alton Parkway Suite 450, Irvine, CA 92618. The basic term of this agreement is month to month commencing August 1, 2017 with monthly fixed fees of $950.

The Company pays New Asia Momentum Pte Ltd, a Singapore private company owned and controlled by Dr. Lin Kok Peng, Chairman and CEO of the Company, fees for the rental of office space and for administrative services in its Singapore Headquarters. The Company has paid New Asia Momentum Pte Ltd $23,867 and $22,800 for the six months June 30, 2018 and June 30, 2017, respectively.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 consolidated financial statements and notes thereto included in Item 1 of this Quarterly Report on Form 10-Q. This item contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those indicated in such forward-looking statements.

Forward-Looking Statements

This Quarterly Report on Form 10-Q and the documents incorporated herein by reference contain forward-looking. 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 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.

Executive Overview

New Asia Holdings, Inc. (the "Company" or "NAHD") was incorporated on March 1, 2001. Since December 2014, we have been in the business of developing highly advanced, proprietary, neural trading models for the financial community. 

It is our belief that our state-of-the-art, trainable, algorithms in our models will emulate aspects of the human brain, providing our algorithms with a self-training ability to formalize unclassified information and thus develop an enhanced ability to make forecasts based on the historical information and other data available at their disposal. Our neural networks will not make forecasts, instead, they will analyze price data and uncover opportunities. Using our proprietary neural network, trade decisions will be made based on thoroughly analyzed data (which is not generally possible when using traditional technical analysis methods). We offer a series of "next-generation" tools that can detect subtle non-linear interdependencies and patterns that other methods of technical analysis are unable to uncover.

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. In addition, we will utilize our in-house proprietary neural trading models to trade our own funds, thus providing added value to our shareholders.

Our proprietary trading models are developed by a team of professional engineers in communications, electronic circuitry design and financial engineering. This diverse team will be the key factor of our successful development of non-traditional and innovative trading models. Our systems are designed to take intelligent positions as the market moves/changes and, upon development, our systems will bring a proven, rigorously tested, track-record. We anticipate that our proprietary algorithmic trading systems will generate superior, risk adjustable, returns for our clients.

The Company's focus is to license its algorithm to licensees, regulated funds, banks and to ultimately trade its own funds to capitalize on the large volume of the 24 hours Forex markets to achieve capital appreciation over a medium- to long- term basis, combined with the usage of a good wealth vehicle in order to control risk, profit from both bull or bear markets, maximize liquidity and economic resilience.

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The NAHD systems have been designed to constantly adapt themselves and to take intelligent positions as the market moves/changes. The models are subjected to rigorous testing akin to the volatile trading environment of major financial events/crisis that happened in recent history. These models are 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 cutting edge quantitative strategies and proprietary algorithmic trading system are developed to generate superior risk adjustable returns for its licensees and their clients. 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. 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.

On August 25, 2015, the Company completed the acquisition of Magdallen Quant Pte Ltd. (“MQL”). The acquisition was accomplished through a share exchange with Mr. Anthony Ng Zi Qin of 7,422,000 new restricted shares ("Consideration Shares") of common stock of the Company, 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 Share and Purchase Agreement (the “MQL 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 entered into the Second MQL Addendum to the MQL Agreement (the “Second MQL Addendum”), pursuant to which the parties agreed that the Company would issue an aggregate of 3,339,900 shares in satisfaction of the shortfall in the value of the shares issued pursuant to the MQL Agreement, as amended. On December 11, 2017, the common stocks restricted shares were issued at a fair value of $615,111 which created a cancellation of contingency of $5,158,387 which was recorded as a capital transaction for the year ended December 31, 2017.

The algorithms were placed into commercial operation in November 2015 upon the execution of a Software Licensing Agreement for the deployment of MQL’s proprietary trainable, trading algorithms with New Asia Momentum Limited (“NAML”), a company owned and controlled by NAHD’s Chairman and CEO, Dr. Lin Kok Peng. Under the terms of the Software License Agreement, NAML agreed to pay MQL a license fee and certain other fixed and time and materials fees. Throughout 2016, NAML grew its assets under management (“AUM”) from zero to approximately $2.5 million and had average monthly returns of approximately 10.5% for the twelve months ended December 31, 2016 for its clients. During this period, MQL has continued to make improvements to its original algorithm product-lines:

•  Series X Pound/Dollar    

•  Series Y Pound/Dollar     

•  Series Z Multi-Asset Currency and Gold   

During the second quarter of 2016, NAML, the Company’s licensee, decided to expand into the regulated fund and bank model. In conjunction with this new focus, as previously reported, as previously reported, NAML decided to ask its clients to redeem the AUM and during the year 2017, trading on the aforementioned AUM was terminated. Specifically, and to support NAML’s decision to expand into the regulated fund and bank model, the Series Z (Multi-Asset Currency and Gold) have been improved and redeveloped into the following products:

•  7.42.31   

•  7.43.315   

•  7.43.325   

In January 2017, the Company’s licensee, NAML, entered into an agreement with Ferrell Asset Management Pte Ltd, (“FAMPL”), a wholly-owned subsidiary of Ferrell Financial Group, which started as an exempt fund manager in 2004, and holds a Capital Markets Services License issued by the Monetary Authority of Singapore (the “MAS”) for the provision of fund management services to individuals who are accredited investors (“Accredited Investors”) as defined in Section 4A(1)(a)(i) of the Securities and Futures Act (Chapter 289) of Singapore. The Ferrell Financial Group is an Asia-focused financial services group dedicated to serving the investment and wealth management needs of family offices and private individuals globally. As an independent, privately held group, Ferrell forms strategic partnerships with financial institutions and other relevant organizations to provide customized portfolio solutions for its clients. In January 2017, FAMPL launched “Fueris Fund” to exclusively utilize the Company’s algorithm products. Currently, the AUM for Fueris Fund is at $6.67 million.

The Company had also established a partnership with a Singapore-based fund management firm (the “Singapore Fund”) that is regulated by the MAS.  The partnership completed a six-month testing phase during the second quarter of 2017. Subsequent to the completion of the aforementioned testing phase, the Singapore Fund, in its sole discretion, decided to not to move forward with the partnership. The Company continues to actively market its proprietary algorithm products to other regulated funds and banks. The Company has also entered into a partnership with a Hong Kong-based regulated fund management firm, which has commenced a six-month testing phase. If the partnership proceeds, it is expected that aggregate AUM in the partnership will be approximately $5 million to $10 million. The fund has not yet determined whether it will proceed with the partnership.

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. Since the adoption of the regulated fund and bank models, the risk profiles required by these regulated funds and banks reflects

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a lower level of risk, which has resulted in significantly reduced frequency of trading activities over the last several quarters. 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 and its licensee are pursuing additional partnerships agreements with regulated funds for the use of our proprietary trainable trading algorithms, however, as of June 30, 2018, no new partnerships had yet been established.  However, notwithstanding these developments we expect to incur operating losses through the balance of this year 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.  

Results of Operations

Three Months Ended June 30, 2018 and June 30, 2017

We had related party revenue of $0 and $1,426 for the three months ended June 30, 2018 and June 30, 2017, respectively. These revenues resulted from fees received from the Company's licensee, NAML, a company owned and controlled by NAHD’s Chairman and CEO. As discussed above, the Company has begun to focus on expansion into the regulated fund and bank model. As of June 30, 2018, due to market conditions that impact trading frequencies and volumes, the Company has yet to receive any significant license fees from the Fueris Fund based on the performance of the algorithms. Furthermore, future revenues are also not expected to be uniform and will demonstrate significant variation from month to month as they reflect variations related to trading volumes and trading performance, accrual of management fees, etc.

Operating expenses were $39,965 for the three-month period ended June 30, 2018, and consisted primarily of general and administrative expenses, outside service expenses and professional fees. This compares with operating expenses for the three-month period ended June 30, 2017 of $49,033, which consisted primarily of general and administrative expenses, and professional fees. The operating expenses at June 30, 2018 were lower than the corresponding operating expenses at June 30, 2017 because general and administrative expenses and professional fees were lower. As a result of the foregoing, we had a net loss from operations of $39,965 and a net loss of $39,965 for the three-month period ended June 30, 2018.  We had a net loss from operations of $47,607and net income of $2,015,709 for the three-month period ended June 30, 2017, which includes a change in the contingent liability associated with the change in fair value of the securities acquired of $2,063,316 for the three months ended June 30, 2017.

We expect to incur operating losses through the balance of this year because we will be incurring expenses and may not generate 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 fundraising measures that the Company deems appropriate. 

Six Months Ended June 30, 2018 and June 30, 2017

We had related party revenue of $76 and $1,848 for the Six-months ended June 30, 2018 and June 30, 2017, respectively. These revenues resulted from fees received from the Company's licensee, NAML, a company owned and controlled by NAHD Chairman and CEO. As discussed above, the Company has begun tofocus on expansion into the regulated fund and bank model. As of June 30, 2018, due to market conditions that impact trading frequencies and volumes, the Company has yet to receive any significant license fees from the Fueris Fund based on the performance of the algorithms. Furthermore, future revenues are also not expected to be uniform and will demonstrate significant variation from month to month as they reflect variations related to trading volumes and trading performance, accrual of management fees, etc.

Operating expenses were $82,973 for the six-month period ended June 30, 2018, and consisted primarily of general and administrative expenses, outside service expenses and professional fees. This compares with operating expenses for the six-month period ended June 30, 2017 of $106,739, which consisted primarily of general and administrative expenses, and professional fees. The operating expenses at June 30, 2018 were lower than the corresponding operating expenses at June 30, 2017 because general and administrative expenses and professional fees were lower. As a result of the foregoing, we had a net loss from operations of $82,897 and a net loss of $82,897 for the six-month period ended June 30, 2018.  We had a net loss from operations of $104,891 and net income of $2,626,405 for the six-month period ended June 30, 2017, which includes a change in the contingent liability associated with the change in fair value of the securities acquired of $2,731,296 for the six months ended June 30, 2017.

We expect to incur operating losses through the balance of this year because we will be incurring expenses and may not generate 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 fundraising measures that the Company deems appropriate. 

Liquidity and Capital Resources

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We had cash in the amount of $68,437 and $69,535 as of June 30, 2018 and June 30, 2017, respectively.  We had net cash used in operating activities of $59,058 for the six-month period ended June 30, 2018 and $99,332 of net cash used in operating activities for the six-month period ended June 30, 2017. We had cash flows of $70,000 from financing activities (from advances from our principal shareholder) during the six-month period ended June 30, 2018 and $96,596 cash flows from financing activities during the six-month period ended June 30, 2017.

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.

Future Financings

We expect that 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 in the 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.

Revenue Recognition

The Company recognizes revenue from the services in accordance with ASC 606,” Revenue Recognition.” The Company recognizes revenue only when all of the following criteria have been met:

i.The contract with customers exists;   

ii.Performance obligations in the contract has been provided;   

iii.The fees are fixed or determinable;    

iv.The fees are allocated based on the performance obligations in the contract; 

v.Recognized when the performance obligation has been satisfied and the collection is reasonably   

assured.

Revenue is realized from Performance Fees received by MQL, the Company’s wholly-owned subsidiary, as described in Part I, Item 1 and Note 5 below. Specifically, in November 2015, MQL, entered into a Software License Agreement with New Asia Momentum Limited (“NAML”), a Company owned and controlled by NAHD's Chairman and CEO, Dr. Lin Kok Peng. In consideration of MQL's performance, NAML agreed to pay MQL in accordance with the following provisions:

i.License and Other Fixed Price Fees as set forth below:  

oLicense fees shall be based on profits from the End Users' accounts. The license fee shall be calculated as follows:  

oWhere the asset under management from all End Users is less than US$ 10 million, fifteen percent (15%) only of the profits from the End Users' accounts;  

oIf the asset under management from all End Users exceed US$10 million, MQL's fees shall be separately agreed on between MQL and NAML, and if MQL and NAML are unable to agree on such apportionment, MQL shall still be entitled to fifteen percent (15%) only of the profits from the End Users' accounts;  

oOn every anniversary date of the MQL Agreement, parties will review the performance of the Licensed Software and may by mutual agreement between MQL and NAML vary the license fee.   

ii.Time & Material Fees: The charges for performance of any T&M tasks due to Work Orders will be billed monthly for charges incurred in the previous monthly period and are due and payable within thirty (30) days of the date of the invoice. Expenses may include, but are not limited to, reasonable charges for materials, office and travel expenses, graphics, documentation, research materials, computer laboratory and data processing, and out-of-pocket expenses reasonably required for performance. Expenses for travel and travel-related expenses and individual expenses in excess of US$500 require NAML’s prior approval. 

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Recent Accounting Pronouncements

In April 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2016–10 Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments in this Update do not change the core principle of the guidance in Topic 606.   Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. Topic 606 includes implementation guidance on (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entity's promise to grant a license provides a customer with either a right to use the entity's intellectual property (which is satisfied at a point in time) or a right to access the entity's intellectual property (which is satisfied over time). The amendments in this Update are intended render more detailed implementation guidance with the expectation to reduce the degree of judgement necessary to comply with Topic 606.

We have adopted the provisions of ASU No. 2014-09 on January 1, 2018, using the modified retrospective method. We do not have an adjustment to our operating balance of accumulated deficit for the adoption of this ASU. There was no impact to the statement of operations for any periods presented.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 (the “Exchange Act”) and are not required to provide the information under this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under 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 our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our management conducted an evaluation as of June 30, 2018, with the participation of Mr. Lin Kok Peng, who is our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2018, our disclosure controls and procedures were not effective due to the size and nature of the existing business operations. Given the size of our current operations and existing personnel, the opportunity to implement internal control procedures that segregate accounting duties and responsibilities is limited. Until the organization can increase in size to warrant an increase in personnel, formal internal control procedures will not be implemented until they can be effectively executed and monitored. As a result of the size of the current organization, there will not be significant levels of supervision, review, independent directors nor a formal audit committee.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the three months ended June 30, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder of more than 5% of our outstanding common stock, is an adverse party or has a material interest averse to our interest.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION

There have been no material changes to the procedures by which security holders may recommend nominees to our Board of Directors since the filing of our quarterly report on Form 10-Q for the quarter ended March 31, 2018. 

ITEM 6. EXHIBITS

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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.

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