NPFC NewPoint Financial Corporation (CE)

Notes to Financial Statements

June 30, 2022 and June 30, 2021

(Unaudited)

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

Newpoint Financial Corp. (“Newpoint”) was incorporated in the State of Delaware on November 16, 2005 under the name Blue Ribbon Pyrocool, Inc. (“Blue Ribbon”). Blue Ribbon changed its name to Classic Rules Judo Championships, Inc. on July 15, 2008 then to Judo Capital Corp on February 15, 2017. The entity is referred to as “the Company”. The Company formed a subsidiary in the State of Connecticut on August 13, 2008 named Classic Rules World Judo Championships, Inc. to develop an annual judo championship tournament, this subsidiary is no longer active and has ceased to exist.

On June 2, 2014, the Company ceased its principal activities of hosting and sponsoring judo tournaments and dissolved Classic Rules World Judo Championships, Inc. The Company had planned to operate in real estate investment market focused in the New York City metropolitan area. On February 28, 2018, the Company ceased its plans to operate in the real estate investment market. On January 19, 2021, the Company had a 500-1 reverse stock split with FINRA and Change of Control. On February 9, 2021, new officers and directors were elected and the name of the Company was changed to Newpoint Financial Corp. (Delaware) on February 12, 2021.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim financial statements as of the six months ended June 30, 2022 and June 30, 2021 have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP) for interim financial statement presentation and in accordance with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statement presentation. They should be read in conjunction with the Company’s annual report on Form 10- K for the year ended December 31, 2021. In the opinion of management, the financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to fairly present the financial position as of June 30, 2022 and the results of operations for the six months ended June 30, 2022 and 2021 and cash flows for the six months ended June 30, 2022 and 2021. The results of operations for the six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the full year.

Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses during the reporting period. On an on-going basis, the Company evaluates its estimates. Actual results and outcomes may differ materially from the estimates as additional information becomes known.

Cash and Cash Equivalents

Cash and cash equivalents includes highly liquid instruments with original maturities of three months or less.

Investments

Short-term investments, Fixed maturities and equity securities

Short-term investments comprise investments with a maturity greater than three months up to one year from the date of purchase. Short-term investments are carried at fair value, with realized and unrealized gains and losses included in net earnings are reported as net realized and unrealized gains and losses, respectively.

Investments in debt securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities. Trading securities are recorded at fair value on the balance sheet in current assets, with the change in fair value during the period included in earnings. Debt securities held as investments that the Company classifies as held-to-maturity securities are recorded at amortized cost, net of a valuation allowance for credit losses. Investments in debt securities not classified as either held-to-maturity or trading securities are classified as available-for-sale securities. Available-for-sale securities are recorded at fair value, with the change in fair value during the period excluded from earnings and recorded net of tax as a component of other comprehensive income.

Investments in Equity securities are reported at fair value with realized and unrealized gains and losses included in net earnings are reported as net realized and unrealized gains and losses, respectively. If there are no readily determinable fair values, investments in equity securities are measured at cost less impairment.

Valuation allowance for fixed income securities

Management evaluates impairment losses for all HTM securities each quarter. The HTM securities are evaluated for potential credit loss on investments not measured at fair value through net earnings. Our allowance for credit losses is derived based on various data sources, multiple key inputs and forecast scenarios. These include default rates specific to the individual security, vintage of the security, geography of the issuer of the security, industry analyst reports, credit ratings and consensus economic forecasts. Securities that meet any one of the criteria included above will be subject to a discounted cash flow analysis by comparing the present value of expected future cash flows with the amortized cost basis. Projected cash flows are driven primarily by assumptions regarding probability of default and the timing and amount of recoveries associated with defaults.

Newpoint Financial Corp.

Notes to Financial Statements

June 30, 2022

(Unaudited)

Fair Value of Financial Instruments

The Company measures certain financial assets and liabilities at fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The carrying value of cash and cash equivalents and accounts payable approximate their fair value because of the short-term nature of these instruments and their liquidity. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.

Income Taxes

Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carryforwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company records an estimated valuation allowance on its deferred income tax assets if it is not more likely than not that these deferred income tax assets will be realized.

The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As of June 30, 2022 and December 31, 2021 the Company has not recorded any unrecognized tax benefits.

Segment Reporting

The Company’s business currently operates in one segment.

Net Loss per Share

The computation of basic net loss per common share is based on the weighted average number of shares that were outstanding during the year. The computation of diluted net loss per common share is based on the weighted average number of shares used in the basic net loss per share calculation plus the number of common shares that would be issued assuming the exercise of all potentially dilutive common shares outstanding using the treasury stock method.

Recently Issued Accounting Pronouncements

The Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal year may be applicable to the Company, it has not identified any standards that it believes merit further discussion. The Company does not expect the adoption of any recently issued accounting pronouncements to have a significant impact on its financial position, results of operations, or cash flows.

Related Parties

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.

Newpoint Financial Corp.

Notes to Financial Statements

June 30, 2022

(Unaudited)

Related Parties (Continued)

Pursuant to Section 850-10-20 the related parties include (a) affiliates of the registrant; (b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

The financial statements include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of financial statements is not required in those statements. The disclosures shall include: (a) the nature of the relationship(s) involved; (b) description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; (c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and (d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

NOTE 3 – GOING CONCERN

The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has no revenues, has incurred net losses of $429,028 and $59,546 during the six months ended June 30, 2022 and June 30, 2021. The Company has an accumulated deficit of $961,118 and $532,090 as of June 30, 2022 and December 31, 2021, respectively, and has not received any significant cash flows from operations. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company to date has been financially supported by related party entities which are also owned by the majority shareholders of the Company. The Company will continue to be financially supported by related party entities until such time as the Company generates sufficient cashflow to support its expense requirements or completes an external capital raising.

Newpoint Financial Corp.

Notes to Financial Statements

June 30, 2022

(Unaudited)

NOTE 4 – INVESTMENTS

On December 10, 2021, the Company entered into a stock purchase agreement with Novea Inc., a Wyoming corporation (“Novea”), whereby we acquired five hundred thousand (500,000) units (“Units”), each Unit having a stated value of $100 and consisting of (i) one share of Series B Convertible Redeemable Preferred Stock (“Novea Preferred Stock”) and (ii) 2.503474 shares of common stock of Novea (“Novea Common Stock”). We also acquired a warrant exercisable for ten years for additional shares of common stock of up to $50,000,000, subject to adjustment as set forth therein. In aggregate, we acquired (i) 500,000 shares of Novea Preferred Stock, (ii) 1,251,737 shares of Novea Common Stock, representing ten percent (10%) of Novea’s common stock, and (iii) one warrant to purchase up to $50,000,000 of Novea Common Stock. Novea is a financial and insurance services software Company.

As consideration for such purchase, Newpoint Financial Corp (a Wyoming corporation), now known as NPFC SPV 1, Inc., an entity that was owned by the current controlling shareholders, issued to Novea ten (10) secured $5,000,000 notes (each a “Collateral Note”), totalling $50,000,000. The Collateral Notes are due on demand and we have the right to prepay the Collateral Notes at any time on NPFC SPV 1, Inc’s behalf.

As of June 30, 2022 and December 31, 2021, investments in debt securities include mandatorily redeemable preferred stock which is classified as held to maturity, with a term ending in December 2031. The amortized cost was $50,000,000 as of June 30, 2022 and December 31, 2021. The Novea Common Stock and warrants purchased as part of the transaction are considered to have a de minimis value as of December 31, 2021. Novea issued 1,251,737 shares of Novea Common Stock to the Company, representing ten percent (10%) of Novea’s common stock outstanding. The shares issued had no par value. Novea is a private Company and does not have a readily determinable fair value.

NOTE 5 - DEPOSITS

In August, 2021, the Company entered into an agreement with Citadel Risk Holdings, Inc., (“CRHI”) which owns all the shares of American Millennium Insurance Co., (“AMIC”) a New Jersey based insurance Company. We agreed to purchase 3.75% of AMIC’s outstanding shares per year over the course of 10 years for an aggregate total 37.5% of outstanding shares at the end of the term. Closing is expected to occur in 2022 subject to receipt of regulatory approval and other customary closing conditions. As of March 31, 2022, NPFC SPV1, Inc. had made a deposit of $1,000,000 to AMIC, on behalf of the Company, as part of an agreement that remains subject to approval.

NOTE 6 – CREDIT COMMITMENT

The Company entered into a five (5) year revolving credit facility agreement with Novea dated as of December 10, 2021 (“Credit Facility”). The Credit Facility provides for a revolving credit with a commitment equal to the lesser of: (i) $5,000,000; or (ii) on any amount greater than $500,000, the lender shall only disburse any such excess up to the amount of 50% of the qualified receivables outstanding of the borrower, bearing interest at LIBOR plus 5.25%. As of June 30, 2022, and December 31, 2021 there was $4,669,200 and $4,836,500 respectively of additional borrowings available to Novea subject to the borrowing criteria.

NOTE 8 – STOCKHOLDERS’ DEFICIT

Preferred Stock

The Company is authorized to issue 50,000,000 shares of preferred stock with a par value of $0.001 per share. There were no shares of preferred stock issued or outstanding as of June 30, 2022 or December 31, 2021.

Common Stock

The Company is authorized to issue up to 100,000,000 shares of common stock with a par value of $0.001 per share. As of June 30, 2022 and December 31, 2021 there were 19,153,923 shares of common stock issued and outstanding. During the six months ended June 30, 2021, the Company issued 18,937,738 shares to settle related party liabilities.