ITEM
1. Financial Statements
LOGIQ
INC.
Consolidated
Balance Sheets
|
|
March 31
|
|
|
December 31
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
Assets
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
Intangible assets, net
|
|
|
17,848,804
|
|
|
|
11,736,540
|
|
Property and equipment, net
|
|
|
195,156
|
|
|
|
178,561
|
|
Goodwill
|
|
|
5,577,926
|
|
|
|
5,078,090
|
|
Total non-current assets
|
|
|
23,621,886
|
|
|
|
16,993,191
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Amount due from associate
|
|
|
6,173,700
|
|
|
|
5,673,700
|
|
Accounts receivable
|
|
|
3,327,714
|
|
|
|
2,618,494
|
|
Right to use assets – operating lease
|
|
|
273,687
|
|
|
|
364,234
|
|
Prepayment, deposit and other receivables
|
|
|
251,405
|
|
|
|
206,443
|
|
Financial assets held for resale
|
|
|
547,201
|
|
|
|
594,263
|
|
Restricted cash
|
|
|
21,344
|
|
|
|
10,889
|
|
Cash and cash equivalents
|
|
|
2,845,295
|
|
|
|
3,478,889
|
|
Total current assets
|
|
|
13,440,346
|
|
|
|
12,946,912
|
|
Total assets
|
|
$
|
37,062,232
|
|
|
$
|
29,940,103
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
1,582,575
|
|
|
|
1,009,204
|
|
Accruals and other payables
|
|
|
2,705,213
|
|
|
|
1,110,732
|
|
Deferred revenue
|
|
|
33,043
|
|
|
|
46,857
|
|
Lease liability – operating lease
|
|
|
273,687
|
|
|
|
364,234
|
|
Convertible promissory
|
|
|
2,911,000
|
|
|
|
2,911,000
|
|
Amount due to director
|
|
|
77,500
|
|
|
|
77,500
|
|
Total current liabilities
|
|
|
7,583,018
|
|
|
|
5,519,527
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
Other loan
|
|
|
10,000
|
|
|
|
10,000
|
|
Notes payable
|
|
|
508,599
|
|
|
|
507,068
|
|
Total non-current liabilities
|
|
|
518,599
|
|
|
|
517,068
|
|
Total liabilities
|
|
$
|
8,101,617
|
|
|
$
|
6,036,595
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
Common stock, $0.0001 par value, 250,000,000 shares authorized, 17,826,644 and 15,557,439 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively*
|
|
|
1,783
|
|
|
|
1,556
|
|
Additional paid-in capital
|
|
|
69,686,188
|
|
|
|
66,739,895
|
|
Capital reserves
|
|
|
25,477,719
|
|
|
|
19,285,383
|
|
Accumulated (deficit)
|
|
|
(66,205,075
|
)
|
|
|
(62,123,326
|
)
|
Total stockholder’s equity
|
|
|
28,960,615
|
|
|
|
23,903,508
|
|
Total liabilities and stockholders’ equity
|
|
$
|
37,062,232
|
|
|
$
|
29,940,103
|
|
|
*
|
The
number of shares of common stock has been retroactively restated to reflect the 1 for 13 reverse stock-split on February 25, 2020.
|
The
accompanying notes are an integral part of these financial statements
LOGIQ
INC.
Consolidated
Statements of Operations
|
|
For the three months ended March 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Service revenue
|
|
$
|
8,080,312
|
|
|
|
14,981,394
|
|
Cost of service
|
|
|
5,854,056
|
|
|
|
12,336,262
|
|
Gross profit
|
|
|
2,226,256
|
|
|
|
2,645,132
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
689,345
|
|
|
|
449,624
|
|
General and administrative
|
|
|
4,144,365
|
|
|
|
3,202,042
|
|
Sales and marketing
|
|
|
369,261
|
|
|
|
53,015
|
|
Research and development
|
|
|
1,103,137
|
|
|
|
1,757,351
|
|
Total operating expenses
|
|
|
6,306,108
|
|
|
|
5,462,032
|
|
|
|
|
|
|
|
|
|
|
(Loss) from operations
|
|
|
(4,079,852
|
)
|
|
|
(2,816,900
|
)
|
|
|
|
|
|
|
|
|
|
Other (expenses)/income, net
|
|
|
(1,897
|
)
|
|
|
3,808
|
|
|
|
|
|
|
|
|
|
|
Net (loss) before income tax
|
|
|
(4,081,749
|
)
|
|
|
(2,813,092
|
)
|
Income tax (Corporate tax)
|
|
|
-
|
|
|
|
-
|
|
Net (loss)
|
|
$
|
(4,081,749
|
)
|
|
|
(2,813,092
|
)
|
|
|
|
|
|
|
|
|
|
Net (loss) profit per common share – basic and fully diluted:
|
|
|
(0.2497
|
)
|
|
|
(0.2430
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of basic and fully diluted common shares outstanding*
|
|
|
16,345,439
|
|
|
|
11,577,069
|
|
|
*
|
The
weighted average number of shares of common stock has been retroactively restated to reflect the 1 for 13 reverse stock-split on February
25, 2020.
|
The
accompanying notes are an integral part of these financial statements.
LOGIQ
INC.
Consolidated
Statements of Cash Flows
|
|
For the three months ended
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net (loss)
|
|
$
|
(4,081,749
|
)
|
|
$
|
(2,813,092
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation of property and equipment
|
|
|
11,641
|
|
|
|
11,641
|
|
Amortization of intangible assets
|
|
|
677,705
|
|
|
|
437,983
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
(Increase) decrease in accounts receivable
|
|
|
(699,169
|
)
|
|
|
(551,083
|
)
|
(Increase) decrease in prepayment, deposit and other receivables
|
|
|
(30,345
|
)
|
|
|
(35,622
|
)
|
Increase (decrease) in accounts payable
|
|
|
573,371
|
|
|
|
27,356
|
|
Increase (decrease) in accruals and other payables
|
|
|
1,594,481
|
|
|
|
(178,268
|
)
|
Increase (decrease) in deferred revenue
|
|
|
(45,924
|
)
|
|
|
-
|
|
Net cash (used in) operating activities
|
|
|
(1,999,989
|
)
|
|
|
(3,101,085
|
)
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Advances to an associate
|
|
|
(500,000
|
)
|
|
|
(925,000
|
)
|
Financial assets held for resale
|
|
|
47,062
|
|
|
|
(90,262
|
)
|
Net restricted cash acquired in acquisition
|
|
|
7,736
|
|
|
|
1,599,572
|
|
Net cash (used in) provided by investing activities
|
|
|
(445,202
|
)
|
|
|
584,310
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Borrowings under bank loan
|
|
|
-
|
|
|
|
1,490,000
|
|
Proceeds from notes payable-US government CARES Act
|
|
|
1,531
|
|
|
|
-
|
|
Proceeds from shares to be issued
|
|
|
1,820,521
|
|
|
|
1,407,506
|
|
Proceeds from stock issuance, net of expenses
|
|
|
-
|
|
|
|
668,287
|
|
Net cash provided by financing activities
|
|
|
1,822,052
|
|
|
|
3,565,793
|
|
|
|
|
|
|
|
|
|
|
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
|
|
(623,139
|
)
|
|
|
1,049,018
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD
|
|
|
3,489,778
|
|
|
|
2,972,649
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD
|
|
$
|
2,866,639
|
|
|
$
|
4,021,667
|
|
|
|
|
|
|
|
|
|
|
NON-CASH TRANSCATION
|
|
|
|
|
|
|
|
|
Issuance of shares for service received
|
|
$
|
1,525,904
|
|
|
$
|
668,286
|
|
The
accompanying notes are an integral part of these financial statements
LOGIQ
INC.
Consolidated
Statements of Stockholders’ Equity
|
|
Common
Stock *
|
|
|
Amount
|
|
|
Additional
paid-in
capital
|
|
|
Capital
reserves
|
|
|
Accumulated
(deficit)
|
|
|
Stockholders’
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
December 31, 2020
|
|
|
15,557,439
|
|
|
$
|
1,556
|
|
|
$
|
66,739,895
|
|
|
$
|
19,285,383
|
|
|
$
|
(62,123,326
|
)
|
|
$
|
23,903,508
|
|
Issuance
of shares for proceeds
|
|
|
238,194
|
|
|
|
24
|
|
|
|
1,420,389
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,420,413
|
|
Issuance
of shares for acquisitions
|
|
|
1,032,056
|
|
|
|
103
|
|
|
|
-
|
|
|
|
6,192,336
|
|
|
|
-
|
|
|
|
6,192,439
|
|
Issuance
of shares for services
|
|
|
998,955
|
|
|
|
100
|
|
|
|
1,525,904
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,526,004
|
|
Net (loss)
for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,081,749
|
)
|
|
|
(4,081,749
|
)
|
Balance
March 31, 2021 (unaudited)
|
|
|
17,826,644
|
|
|
|
1,783
|
|
|
|
69,686,188
|
|
|
|
25,477,719
|
|
|
|
(66,205,075
|
)
|
|
|
28,960,615
|
|
|
*
|
The
number of shares of common stock has been retroactively restated to reflect the 1 for 1,000 reverse stock-split on September 1, 2015.
|
|
|
Common Stock *
|
|
|
Amount
|
|
|
Additional paid-in capital
|
|
|
Capital reserves
|
|
|
Accumulated (deficit)
|
|
|
Stockholders’
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2019
|
|
|
111,304,253
|
|
|
$
|
11,130
|
|
|
$
|
58,058,118
|
|
|
$
|
-
|
|
|
$
|
(47,613,657
|
)
|
|
$
|
10,455,591
|
|
Effect of reverse split from 13 shares to 1 share
|
|
|
8,561,704
|
|
|
$
|
11,130
|
|
|
$
|
58,058,118
|
|
|
$
|
-
|
|
|
$
|
(47,613,657
|
)
|
|
$
|
10,455,591
|
|
Issuance of shares
|
|
|
3,355,012
|
|
|
|
4,362
|
|
|
|
(790
|
)
|
|
|
14,282,143
|
|
|
|
-
|
|
|
|
14,285,714
|
|
Cancelation of shares
|
|
|
(589
|
)
|
|
|
(1
|
)
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Shares issued for services
|
|
|
437,503
|
|
|
|
569
|
|
|
|
667,717
|
|
|
|
-
|
|
|
|
-
|
|
|
|
668,286
|
|
Net (loss) for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,813,092
|
)
|
|
|
(2,813,092
|
)
|
Balance March 31, 2020
(unaudited)
|
|
|
12,353,630
|
|
|
|
16,060
|
|
|
|
58,725,046
|
|
|
|
14,282,143
|
|
|
|
(50,426,750
|
)
|
|
|
22,596,499
|
|
|
*
|
The
number of shares of common stock has been retroactively restated to reflect the 1 for 1,000 reverse stock-split on September 1, 2015.
|
The
accompanying notes are an integral part of these financial statements
NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND BUSINESS DESCRIPTION
The Company offers solutions
that help small-to-medium-sized businesses (“SMBs”) to provide access to and reduce transaction friction of e-commerce for
their clients globally. The Company’s solutions are provided through (i) its core platform, “AppLogiq” business segment
(operated as CreateApp (https://www.createapp.com/), allows SMBs to establish their point-of-presence on the web, and (ii) “DataLogiq”
business segment, a digital marketing analytics business unit that offers proprietary data management, audience targeting and other digital
marketing services that improve an SMB’s discovery and branding within the vast e-commerce landscape.
The Company enables SMBs
to create a mobile app for their business without the need of technical knowledge, high investment, or background in IT by utilizing “AppLogiq’s
CreateApp platform that is offered as a Platform as a Service (“PaaS”) to the Company’s customers. The Company’s
DataLogiq business segment offers online marketing solutions on a performance marketing and self-serve, Software as a Service (“SaaS”)
basis.
We provide our PaaS and
digital marketing to SMBs in a wide variety of industry sectors. We believe that SMBs can increase their sales, reach more customers,
and promote their products and services using our affordable and cost-effective solutions. We recognize revenue on a pay to use subscription
basis when our customers use our PaaS platform to create mobile apps for their business and on our SaaS platform when provisioning services
for their marketing campaigns. We also recognize revenue on CPL and other metrics for engagements undertaken on a performance marketing
basis.
The Company continues
to expand its portfolio of offerings and the industries they serve:
|
●
|
In May 2018, the Company expanded its portfolio to fintech applications with the launch of its PayLogiq mobile payments platform in Indonesia.
|
|
●
|
In the fall of 2019, the Company expanded its portfolio to short-distance food delivery service with the launch of GoLogiq, a PaaS platform that provides mobile payment capabilities for the local food delivery service industry in Indonesia.
|
|
●
|
In January 2020, the Company completed the acquisition of substantially all of the assets of Push Holdings,
Inc. This acquired business, which the Company has rebranded as its DataLogiq division, operates a consumer data management platform
powered by lead generation, online marketing, and multichannel reengagement strategies through its owned and operated brands.
DataLogiq has developed a proprietary data management platform and integrated with several third-party service providers to optimize
the return on its marketing efforts. DataLogiq focuses on consumer engagement and enrichment to maximize its return on acquisition
through repeat monetization of each consumer. DataLogiq also licenses its software technology and provides managed technology
services to various other e-commerce companies. DataLogiq is located in Minneapolis, Minnesota, USA.
|
|
●
|
On November 2, 2020, the Company completed the acquisition of Fixel
AI Inc. (“Fixel”), thereby acquiring its self-serve MarTech Audience Targeting platform as a further expansion of its DataLogiq
product suite.
|
|
●
|
On March 29, 2021, the Company completed the acquisition of Rebel AI, Inc., a Delaware corporation (“Rebel”). By acquiring Rebel and its platform, the Company enables brands and agencies to securely transact media and activate first-party data.
|
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
BASIS OF PRESENTATION
The financial statements have been prepared on
a historical cost basis to reflect the financial position and results of operations of the Company in accordance with the accounting principles
generally accepted in the United States of America (“US GAAP”).
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include
the accounts of Logiq, Inc (Delaware) and its wholly owned material operating subsidiaries, Logiq, Inc (Nevada), Fixel AI Inc., and Rebel
AI Inc. Material intercompany balances and transactions have been eliminated on consolidation.
USE OF ESTIMATES
The preparation of the Company’s financial
statements in conformity with generally accepted accounting principles of the United States of America 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 revenues and expenses during the reporting period. Management makes its best
estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements
are prepared. Actual results could differ from those estimates.
BUSINESS COMBINATIONS
The Company accounts for acquisitions of entities
that include inputs and processes and have the ability to create outputs as business combinations. The Company allocates the purchase
price of the acquisition to the tangible assets, liabilities and identifiable intangible assets acquired based on their estimated fair
values. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition related expenses and integration
costs are expensed as incurred.
CERTAIN RISKS AND UNCERTAINTIES
The Company relies on cloud-based hosting through
a global accredited hosting provider. Management believes that alternate sources are available; however, disruption or termination of
this relationship could adversely affect our operating results in the near-term.
SEGMENT REPORTING
Operating segments are defined as components of
an enterprise about which separate financial information is available that is evaluated regularly by our chief operating decision maker,
or decision- making group, in deciding how to allocate resources and in assessing performance.
The Company has 2 operating business segments:
AppLogiq marketed as CreateApp platform acquired in
2015 and subsequently enhanced in 2016 and 2017, offered on a Platform-as-a-Service (“PaaS”) basis providing digital marketing
to SMBs in a wide variety of industry sectors, to increase their sales, reach more customers, and promote their products and services
using our affordable and cost-effective solutions. We recognize revenue on a pay to use subscription basis when our customers use our
PaaS platform to create mobile apps for their business; and
DataLogiq is a business segment created in January
2020 from our acquisition of the assets of Push Holdings Inc, comprising a consumer data management platform powered by lead generation,
online marketing, and multichannel reengagement strategies through its owned and operated brands by Fixel AI Inc and Rebel AI Inc. DataLogiq
has developed a proprietary data management platform and integrates with several third-party service providers to optimize the return
on its marketing efforts. DataLogiq focuses on consumer engagement and data enrichment to maximize its return on acquisition through repeat
monetization of each consumer.
We identify our reportable segments as those customer
groups that represent more than 10% of our combined revenue or gross profit or loss of all reported operating segments. We manage our
business on the basis of the two reportable segment e-commerce solutions and service provider. The accounting policies for segment reporting
are the same as for the Company as a whole. We do not segregate assets by segments since our chief operating decision maker, or decision-making
group, does not use assets as a basis to evaluate a segment’s performance.
GOOGWILL AND INTANGIBLE ASSETS, NET
Goodwill is recorded as the difference between
the aggregate consideration in a business combination and the fair value of the acquired net tangible and intangible assets acquired.
The Company evaluates goodwill for impairment on an annual basis in the fourth quarter or more frequently if indicators of impairment
exist that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company first assesses
qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying
value. Based on that qualitative assessment, if it is more likely than not that the fair value of a reporting unit is less than its carrying
value, the Company conducts a quantitative goodwill impairment test, which involves comparing the estimated fair value of the reporting
unit with its carrying value, including goodwill. The Company estimates the fair value of a reporting unit using a combination of the
income and market approach. If the carrying value of the reporting unit exceeds its estimated fair value, an impairment loss is recorded
for the difference. The Company performed its qualitative assessment and determined that no impairment indicators were present during
the three months ended March 31, 2021 and 2020.
The Company’s intangible assets consist of software technology,
which is amortized using the straight-line method over five years. Amortization expense for the three months ended March 31, 2021 and
2020 amounted to $677,705 and $437,983, respectively, which was included in the amortization of intangible assets expense of the accompanying
consolidated statements of operations.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company classifies its long-life assets into:
(i) computer and office equipment; (ii) furniture and fixtures, (iii) leasehold improvements, and (iv) finite – life intangible
assets.
Long-life assets held and used by the Company
are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be fully
recoverable. It is possible that these assets could become impaired as a result of technology, economy or other industry changes. If circumstances
require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected
to be generated by that asset or asset group to its carrying value. If the carrying value of the long-life asset or asset group is not
recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value.
Fair value is determined through various valuation techniques, including discounted cash flow models, relief from royalty income approach,
quoted market values and third-party independent appraisals, as considered necessary.
The Company makes various assumptions and estimates
regarding estimated future cash flows and other factors in determining the fair values of the respective assets. The assumptions and estimates
used to determine future values and remaining useful lives of long-lived assets are complex and subjective. They can be affected by various
factors, including external factors such as industry and economic trends, and internal factors such as the Company’s business strategy
and its forecasts for specific market expansion.
GROUP ACCOUNTING
Subsidiaries are entities (including special purpose
entities) over which the Group has power to govern the financial and operating policies, generally accompanying a shareholding of more
than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible
are considered when assessing whether the Group controls another entity. The purchase method of accounting is used to account for the
acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued or
liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values on the date of
acquisition, irrespective of the extent of any minority interest. Subsidiaries are consolidated from the date on which control is transferred
to the Group to the date on which that control ceases. In preparing the consolidated financial statements, intercompany transactions,
balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the asset transferred. Where necessary, adjustments are made to the financial statements
of subsidiaries to ensure consistency of accounting policies with those of the Group. Minority interest is that part of the net results
of operations and of net assets of a subsidiary attributable to interests which are not owned directly or indirectly by the Group. It
is measured at the minorities’ share of the fair value of the subsidiaries’ identifiable assets and liabilities at the date
of acquisition by the Group and the minorities’ share of changes in equity since the date of acquisition, except when the losses
applicable to the minority in a subsidiary exceed the minority interest in the equity of that subsidiary. In such cases, the excess and
further losses applicable to the minority are attributed to the equity holders of the Company, unless the minority has a binding obligation
to, and is able to, make good the losses. When that subsidiary subsequently reports profits, the profits applicable to the minority are
attributed to the equity holders of the Company until the minority’s share of losses previously absorbed by the equity holders of
the Company has been recovered.
SUBSIDIARIES
When subsidiaries are excluded from consolidation on
the basis that their inclusion involving expense and delay out of proportion to the value to members of the Company, investments
in subsidiaries are stated at cost less accumulated impairment losses in the Company’s balance sheet. On disposal of investments
in subsidiaries, the difference between net disposal proceeds and the carrying amount of the investment is taken to the income statement.
ASSOCIATES
Associates are all entities over which the group
has significant influence but not control or joint control, generally accompanying a shareholding interest of between 20% and 50% of the
voting rights. Investments in associates are accounted for using the equity method of accounting, after initially being recognized at
cost. The group’s investment in associates includes goodwill identified on acquisition. The group’s share of its associates’
post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition other comprehensive income is recognized
in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Dividends
receivable from associates are recognized as a reduction in the carrying amount of the investment. Where the group’s share of losses
in an associate equals or exceeds its interest in the associate, including any other unsecured long-term receivables, the group does not
recognize further losses, unless it has incurred obligations or made payments on behalf of the associate. Unrealized gains on transactions
between the group and its associates are eliminated to the extent of the group’s interest in the associates. Unrealized losses are
also eliminated, unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates
have been changed, where necessary, to ensure consistency with the policies adopted by the group.
FINANCIAL ASSETS
Financial assets at fair value through profit
or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit
or loss incorporates any dividend or interest earned on the financial asset and is included in ‘other gains and losses’ line
in the statement of profit or loss and other comprehensive income.
The Company measures certain financial assets
at fair value on a recurring basis, including the available-for-sale debt securities. Fair value is the price the Company would receive
to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date. The Company
uses a three-level hierarchy established by the Financial Accounting Standards Board (FASB) that prioritizes fair value measurements based
on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach).
The levels of the fair value hierarchy are described
below:
|
●
|
Level 1: Quoted prices in active markets for identical assets or liabilities.
|
|
●
|
Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
|
|
●
|
Level 3: Unobservable inputs with little or no market data available, which require the reporting entity to develop its own assumptions.
|
The Company’s assessment of the significance
of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Financial
assets and liabilities are classified in their entirety based on the most conservative level of input that is significant to the fair
value measurement.
LEASE
The Company adopted ASU 2016-02, Leases (Topic
842), on January 8, 2020, using a modified retrospective approach reflecting the application of the standard to leases existing at, or
entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements.
The Company leases its offices which are classified
as operating leases in accordance with Topic 842. Under Topic 842, lessees are required to recognize the following for all leases (with
the exception of short-term leases) on the commencement date: (i) lease liability, which is a lessee’s obligation to make lease
payments arising from a lease, measured on a discounted basis; and (ii) right-of-use asset, which is an asset that represents the lessee’s
right to use, or control the use of, a specified asset for the lease term.
At the commencement date, the Company recognizes the lease liability
at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that rate cannot
be readily determined, the Company’s incremental borrowing rate for the same term as the underlying lease. The right-of-use asset
is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred,
consisting mainly of brokerage commissions, less any lease incentives received. All right-of-use assets are reviewed for impairment. No
impairment for right-of-use lease assets as of March 31, 2021.
AVAILABLE-FOR-SALES INVESTMENTS
Certain shares and debt securities held by the
group are classified as being available for sale and are stated at fair value. Gains and losses arising from changes in fair value, impairment
losses, interest calculated using the effective interest method and foreign exchange gains and losses on monetary assets are recognized
directly in profit or loss. Dividends on available-for-sale equity instruments are recognized in profit or loss when the Company’s
right to receive payments is established. The fair value of available-for-sale monetary assets denominated in a foreign currency is determined
in that foreign currency and translated at the spot rate at end of the reporting period. The change in fair value attributable to translation
differences that result from a change in amortized cost of the available-for-sale monetary asset is recognized in profit or loss, and
other changes are recognized in other comprehensive income.
ACCOUNTS RECEIVABLE AND CONCENTRATION OF
RISK
Accounts receivable consists of trade receivables
from customers. The Company records accounts receivable at its net realizable value, recognizing an allowance for doubtful accounts based
on our best estimate of probable credit losses on our existing accounts receivable. Balances are written off against the allowance after
all means of collection have been exhausted and the possibility of recovery is considered remote.
As of March 31, 2021 and 2020, the allowance for
bad debt was approximately $54,619 and $54,619, respectively.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents represent cash on hand,
demand deposits, and other short-term highly liquid investments placed with banks, which have original maturities of twelve months or
less and are readily convertible to known amounts of cash.
EARNINGS PER SHARE
Basic (loss) earnings per share is based on the
weighted average number of common shares outstanding during the period while the effects of potential common shares outstanding during
the period are included in diluted earnings per share.
FASB Accounting Standard Codification Topic 260
(“ASC 260”), “Earnings Per Share,” requires that employee equity share options, non-vested shares and similar
equity instruments granted to employees be treated as potential common shares in computing diluted earnings per share. Diluted earnings
per share should be based on the actual number of options or shares granted and not yet forfeited, unless doing so would be anti-dilutive.
The Company uses the “treasury stock” method for equity instruments granted in share-based payment transactions provided in
ASC 260 to determine diluted earnings per share. Antidilutive securities represent potentially dilutive securities which are excluded
from the computation of diluted earnings or loss per share as their impact was antidilutive.
REVENUE RECOGNITION
The Company’s Platform as a Service (“PaaS”)
provides the infrastructure allowing users to develop their own applications and IT services, which users can access anywhere via a web
or desktop browser. The Company recognizes revenue on a pay-to-use subscription basis when our customers use our platform. For the territories
licensed to our distributors and on a white label basis, we derive royalty income from the end user use of our platform on a white label
basis.
The Company maintains the PaaS software platform
at its own cost. Any enhancements and minor customization for our resellers/distributors are not separately billed. Major new
proprietary features are billed to the customer separately as development income while re-usable features are added to the features available
to all customers on subsequent releases of our platform.
COST OF REVENUE
The Company cost of revenue comprises fees from
third party cloud-based hosting services and media costs.
INCOME TAXES
The Company uses the asset and liability method
of accounting for income taxes in accordance with Accounting Standards Codification (“ASC”) 740, “Income Taxes”
(“ASC 740”). Under this method, income tax expense is recognized as the amount of: (i) taxes payable or refundable for the
current year and (ii) future tax consequences attributable to differences between financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A
valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of available evidence it is more likely
than not that some portion or all of the deferred tax assets will not be realized.
STOCK BASED COMPENSATION
We value stock compensation based on the fair
value recognition provisions ASC 718, Compensation – Stock Compensation, which establishes accounting
for stock-based awards exchanged for employee services and requires companies to expense the estimated grant date fair value of stock
awards over the requisite employee service period.
We do not ascertain the fair value of restricted
stock awards using the Black-Scholes-Merton option pricing model.
See Note 15, Stockholders’ Equity, for
further details on our stock awards.
RECENT ACCOUNTING PRONOUNCEMENTS
On October 2, 2017, the FASB has issued Accounting
Standards Update (ASU) No. 2017-13, “Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases
(Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting
and Rescission of Prior SEC Staff Announcements and Observer Comments.” The ASU adds SEC paragraphs to the new revenue and leases
sections of the Codification on the announcement the SEC Observer made at the 20 July 2017 Emerging Issues Task Force (EITF) meeting.
The SEC Observer said that the SEC staff would not object if entities that are considered public business entities only because their
financial statements or financial information is required to be included in another entity’s SEC filing use the effective dates
for private companies when they adopt ASC 606, Revenue from Contracts with Customers, and ASC 842, Leases. This would include entities
whose financial statements are included in another entity’s SEC filing because they are significant acquirees under Rule 3-05 of
Regulation S-X, significant equity method investees under Rule 3-09 of Regulation S-X and equity method investees whose summarized financial
information is included in a registrant’s financial statement notes under Rule 4-08(g) of Regulation S-X. The ASU also supersedes
certain SEC paragraphs in the Codification related to previous SEC staff announcements and moves other paragraphs, upon adoption of ASC
606 or ASC 842. The Company does not expect that the adoption of this guidance will have a material impact on its condensed consolidated
financial statements.
On November 22, 2017, the FASB ASU No. 2017-14,
“Income Statement-Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers
(Topic 606): Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 116 and SEC Release 33-10403.” The ASU amends
various paragraphs in ASC 220, Income Statement - Reporting Comprehensive Income; ASC 605, Revenue Recognition; and ASC 606, Revenue From
Contracts With Customers, that contain SEC guidance. The amendments include superseding ASC 605-10-S25-1 (SAB Topic 13) as a result of
SEC Staff Accounting Bulletin No. 116 and adding ASC 606-10-S25-1 as a result of SEC Release No. 33-10403. The Company does not expect
that the adoption of this guidance will have a material impact on its condensed consolidated financial statements.
In February 2018, the FASB issued ASU No. 2018-02,
“Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income.” The ASU amends ASC 220, Income Statement
- Reporting Comprehensive Income, to “allow a reclassification from accumulated other comprehensive income to retained earnings
for stranded tax effects resulting from the Tax Cuts and Jobs Act.” In addition, under the ASU, an entity will be required to provide
certain disclosures regarding stranded tax effects. The ASU is effective for all entities for fiscal years beginning after December 15,
2018, and interim periods within those fiscal years. The Company does not expect that the adoption of this guidance will have a material
impact on its condensed consolidated financial statements.
In March 2018, the FASB issued ASU 2018-05 - Income
Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (“ASU 2018-05”), which amends
the FASB Accounting Standards Codification and XBRL Taxonomy based on the Tax Cuts and Jobs Act (the “Act”) that was signed
into law on December 22, 2017 and Staff Accounting Bulletin No. 118 (“SAB 118”) that was released by the Securities and Exchange
Commission. The Act changes numerous provisions that impact U.S. corporate tax rates, business-related exclusions, and deductions and
credits and may additionally have international tax consequences for many companies that operate internationally. The Company does not
believe this guidance will have a material impact on its condensed consolidated financial statements.
In July 2018, the FASB issued ASU 2018-10, “Codification
Improvements to Topic 842, Leases.” The ASU addresses 16 separate issues which include, for example, a correction to a cross reference
regarding residual value guarantees, a clarification regarding rates implicit in lease contracts, and a consolidation of the requirements
about lease classification reassessments. The guidance also addresses lessor reassessments of lease terms and purchase options, variable
lease payments that depend on an index or a rate, investment tax credits, lease terms and purchase options, transition guidance for amounts
previously recognized in business combinations, and certain transition adjustments, among others. For entities that early adopted Topic
842, the amendments are effective upon issuance of this Update, and the transition requirements are the same as those in Topic 842. For
entities that have not adopted Topic 842, the effective date and transition requirements will be the same as the effective date and transition
requirements in Topic 842. The Company does not believe this guidance will have a material impact on its condensed consolidated financial
statements.
In July 2018, the FASB issued ASU 2018-11 - Leases
(Topic 842): Targeted Improvements. The ASU simplifies transition requirements and, for lessors, provides a practical expedient for the
separation of non-lease components from lease components. Specifically, the ASU provides: (1) an optional transition method that entities
can use when adopting ASC 842 and (2) a practical expedient that permits lessors to not separate non-lease components from the associated
lease component if certain conditions are met. For entities that have not adopted Topic 842 before the issuance of this Update, the effective
date and transition requirements for the amendments in this Update are the same as the effective date and transition requirements in Update
2016-02. For entities that have adopted Topic 842 before the issuance of this Update, the transition and effective date of the amendments
in this Update are as follows: 1) The practical expedient may be elected either in the first reporting period following the issuance of
this Update or at the original effective date of Topic 842 for that entity. 2) The practical expedient may be applied either retrospectively
or prospectively. All entities, including early adopters, that elect the practical expedient related to separating components of a contract
in this Update must apply the expedient, by class of underlying asset, to all existing lease transactions that qualify for the expedient
at the date elected. The Company does not believe this guidance will have a material impact on its condensed consolidated financial statements.
The Company has considered all new accounting
pronouncements and has concluded that there are no new pronouncements that may have a material impact on results of operations, financial
condition, or cash flows, based on current information.
NOTE 3 – INTANGIBLE ASSETS, NET
As of March 31, 2021, and 2020, the Company has
the following amounts related to intangible assets:
|
|
Logiq
|
|
|
DataLogiq
|
|
|
Total
|
|
Cost as of January 1, 2021
|
|
$
|
1,885,330
|
|
|
$
|
12,928,422
|
|
|
$
|
14,813,752
|
|
Additions
|
|
$
|
-
|
|
|
$
|
6,789,969
|
|
|
$
|
6,789,969
|
|
Cost as of March 31, 2021
|
|
$
|
1,885,330
|
|
|
$
|
19,718,391
|
|
|
$
|
21,603,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
Brought forward as of January 1, 2021
|
|
$
|
1,271,265
|
|
|
$
|
1,805,947
|
|
|
$
|
3,077,212
|
|
Charge for the period
|
|
$
|
31,283
|
|
|
$
|
646,422
|
|
|
$
|
677,705
|
|
Accumulated depreciation as of March 31, 2021
|
|
$
|
1,302,548
|
|
|
$
|
2,452,369
|
|
|
$
|
3,754,917
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net intangible assets as of March 31, 2021
|
|
$
|
582,782
|
|
|
$
|
17,266,022
|
|
|
$
|
17,848,804
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net intangible assets as of December 31, 2020
|
|
$
|
614,065
|
|
|
$
|
11,122,475
|
|
|
$
|
11,736,540
|
|
Amortization expense related to intangible assets
for the quarter ended March 31, 2021 and 2020 amounted to $677,705 and $437,983, respectively.
No significant residual value is estimated for
these intangible assets.
The estimated future amortization expense of intangible
costs as of March 31, 2021 in the next five fiscal years and thereafter is as follows:
Remaining of 2021
|
|
$
|
3,051,608
|
|
2022
|
|
|
4,068,811
|
|
2023
|
|
|
4,068,811
|
|
2024
|
|
|
4,068,811
|
|
2025 and thereafter
|
|
|
2,590,763
|
|
|
|
|
|
|
Total
|
|
$
|
17,848,804
|
|
NOTE 4 – PROPERTY AND EQUIPMENT, NET
As of March 31, 2021, and 2020, the Company has
the following amounts related to property and equipment:
|
|
Leasehold
Improvements
|
|
|
Computer and Equipment
|
|
|
Total
|
|
Cost as of January 1, 2021
|
|
|
165,957
|
|
|
|
59,169
|
|
|
|
225,126
|
|
Additions
|
|
$
|
-
|
|
|
$
|
28,236
|
|
|
$
|
28,236
|
|
Cost as of March 31, 2021
|
|
$
|
165,957
|
|
|
$
|
87,405
|
|
|
$
|
253,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
Brought forward as of January 1, 2021
|
|
|
33,635
|
|
|
|
12,930
|
|
|
|
46,565
|
|
Charge for the period
|
|
$
|
8,409
|
|
|
$
|
3,232
|
|
|
$
|
11,641
|
|
Accumulated depreciation as of March 31, 2021
|
|
$
|
42,044
|
|
|
$
|
16,162
|
|
|
$
|
58,206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net property and equipment assets as of March 31, 2021
|
|
$
|
123,913
|
|
|
$
|
71,243
|
|
|
$
|
195,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net property and equipment assets as of December 31, 2020
|
|
|
132,322
|
|
|
|
46,239
|
|
|
|
178,561
|
|
Depreciation expense for the quarter ended March 31, 2021 and 2020
amounted to $11,641 and $11,641, respectively.
NOTE 5 – GOODWILL
|
|
As of
March 31,
2021
|
|
|
As of
December 31,
2020
|
|
Goodwill at cost - Push
|
|
$
|
4,781,208
|
|
|
$
|
4,781,208
|
|
Goodwill at cost - Fixel
|
|
|
296,882
|
|
|
|
296,882
|
|
Goodwill at cost - Rebel
|
|
|
499,836
|
|
|
|
-
|
|
Total
|
|
|
5,577,926
|
|
|
|
5,078,090
|
|
Accumulated impairment losses
|
|
|
-
|
|
|
|
-
|
|
Balance at end of period
|
|
$
|
5,577,926
|
|
|
$
|
5,078,090
|
|
Goodwill has been allocated for impairment testing
purposes to the acquisition of the assets of Push Holdings Inc.
The recoverable amount of this unit is determined
based on external valuation performed by a third-party valuation firm on March 20, 2020 as updated to December 31, 2020.
The assets were valued using a Fair Market Value
basis as defined by The Financial Accounting Standards Board (FASB ASC 820-10-20). Liabilities were taken from Push Holdings Inc Consolidated
Balance Sheet as of January 8, 2020, Fixel AI Inc Consolidated Balance Sheet as of November 2, 2020 and Rebel AI Inc Consolidated
Balance Sheet as of March 29, 2021.
NOTE 6 – ACCOUNTS RECEIVABLE
|
|
As of
March 31,
2021
|
|
|
As of
December 31,
2020
|
|
Accounts receivable - gross
|
|
$
|
3,382,333
|
|
|
$
|
2,673,113
|
|
Allowance for doubtful debts
|
|
|
(54,619
|
)
|
|
|
(54,619
|
)
|
Accounts receivable - net
|
|
|
3,327,714
|
|
|
|
2,618,494
|
|
|
|
|
|
|
|
|
|
|
Movement all in allowance for doubtful debts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at beginning of period
|
|
$
|
54,619
|
|
|
$
|
54,619
|
|
Provision for bad debts
|
|
|
-
|
|
|
|
60,324
|
|
Reversal of the provision
|
|
|
-
|
|
|
|
(60,324
|
)
|
Balance at end of period
|
|
|
54,619
|
|
|
|
54,619
|
|
Age of Impaired trade receivables
|
|
|
|
|
|
|
|
|
Current
|
|
$
|
1,981,535
|
|
|
|
59.5
|
%
|
1 - 30 days
|
|
|
1,316,808
|
|
|
|
39.6
|
%
|
31 - 60 days
|
|
|
9,232
|
|
|
|
0.3
|
%
|
61-90 days
|
|
|
961
|
|
|
|
0.0
|
%
|
91 and over
|
|
|
19,178
|
|
|
|
0.6
|
%
|
Total
|
|
|
3,327,714
|
|
|
|
100.0
|
%
|
NOTE 7 – FINANCIAL ASSETS
|
|
Fair value
|
|
|
|
As of
March 31, 2021
|
|
|
As of
December 31, 20
|
|
|
|
Assets
|
|
|
Liabilities
|
|
|
Assets
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-for-trading investments
|
|
$
|
547,201
|
|
|
|
-
|
|
|
$
|
594,263
|
|
|
|
-
|
|
The investments above include investments in quoted
fixed income securities that offer the Company the opportunity for return through interest income and fair value gains. They have various
fixed maturity and coupon rate. The fair values of these securities are based on closing quoted market prices on the last market day of
the financial year.
Fair value of the Company’s financial assets
and financial liabilities are measured at fair value on recurring quoted bid prices on an active market basis. All the available for sale
financial assets are classified as Level 1 as described in the Company’s accounting policies.
NOTE 8 – INVESTMENT IN ASSOCIATE
On April 23, 2018, the Company participated in
the incorporation of a company in Indonesia, PT Weyland Indonesia Perkasa (“WIP’), an Indonesian limited liability company
of which the Company held a 49% equity interest with the option to purchase an additional 31% equity interest at a later date. In April
2019, the Company completed the distribution as a dividend in specie, to the Company’s shareholders of record at October 12, 2018
of 49% equity interest in WIP to Weyland AtoZPay Inc. and now holds an equitable interest of 31% in WIP.
The results of operations under brand name PAY/GOLogiq
of WIP from April 23, 2018 to September 30, 2020 has not been included as the amount had been fully impaired.
The Company held an 31% unexercised option in
WIP as of December 31, 2018. Due to the continuing legal restructuring in Indonesia, all the conditions precedent had not been satisfied
and the 31% option had not been exercised as of March 31, 2021.
The Company is in the process of increasing its
equity interest in WIP to 51% in order to consolidate the financial results of WIP on a going-forward basis.
NOTE 9 – AMOUNT DUE FROM ASSOCIATE
The amount due from Associate is interest free,
unsecured with no fixed repayment terms.
NOTE 10 – PREPAYMENTS, DEPOSIT AND OTHER RECEIVABLES
Prepayments, deposits and other receivables consist of the following:
|
|
As of
March 31,
2021
|
|
|
As of
December 31,
2020
|
|
Deposit
|
|
$
|
140,000
|
|
|
$
|
60,000
|
|
Other receivables
|
|
|
1,876
|
|
|
|
1,876
|
|
Prepayments
|
|
|
109,529
|
|
|
|
144,567
|
|
|
|
|
251,405
|
|
|
|
206,443
|
|
NOTE 11 – ACCRUALS AND OTHER PAYABLE
Accruals and other payable consist of the following:
|
|
As of
March 31,
2021
|
|
|
As of
December 31,
2020
|
|
Accruals
|
|
$
|
2,109,183
|
|
|
$
|
910,325
|
|
Other payables
|
|
|
596,030
|
|
|
|
200,407
|
|
|
|
$
|
2,705,213
|
|
|
|
1,110,732
|
|
NOTE 12 – INCOME TAX
The United States of America
Logiq, Inc. is incorporated in the State of Delaware
in the U.S., and is subject to a gradual U.S. federal corporate income tax of 21%. The Company generated no taxable income for the year
ended December 31, 2020 and 2019, and which is subject to U.S. federal corporate income tax rate of 21% and 34%, respectively.
|
|
As of
March 31,
2021
|
|
|
As of
December 31,
2020
|
|
U.S. statutory tax rate
|
|
|
21.00
|
%
|
|
|
21.00
|
%
|
Effective tax rate
|
|
|
21.00
|
%
|
|
|
21.00
|
%
|
DataLogiq business segment (Logiq, Inc. (Nevada)
formerly known as Origin8, Inc.)
As of March 31, 2021, this company does not have
any deferred tax asset.
NOTE 13 – NOTES PAYABLE
On April 24, 2020, the Company’s subsidiary
Logiq Inc (Nevada) formerly known as Origin8, Inc., received loan proceeds in the amount of $503,700 (the “PPP Loan”) under
the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief and Economic Security Act and applicable regulations
(the “CARES Act”).
Under the terms of the CARES Act, as amended by
the Paycheck Protection Program Flexibility Act of 2020, Logiq Inc (Nevada) is eligible to apply for and receive forgiveness for all or
a portion of its PPP Loan. Such forgiveness will be determined, subject to limitations, based on the use of the loan proceeds for certain
permissible purposes as set forth in the PPP, including, but not limited to, payroll costs (as defined under the PPP) and mortgage interest,
rent or utility costs (collectively, “Qualifying Expenses”) incurred during the 24 weeks subsequent to funding, and on the
maintenance of employee and compensation levels, as defined, following the funding of the PPP Loan. Logiq Inc (Nevada) intends to use
the proceeds of its PPP Loan for Qualifying Expenses. However, no assurance is provided that Logiq Inc (Nevada) will be able to obtain
forgiveness of the PPP Loan in whole or in part. Any amounts that are not forgiven incur interest at 1.0% per annum and monthly repayments
of principal and interest are deferred until the Small Business Administration makes a determination on forgiveness. While Logiq Inc.’s
(Nevada) PPP Loan currently has a two-year maturity, the amended law will permit Logiq Inc (Nevada) to request a five-year maturity.
NOTE 14 – CONVERTIBLE PROMISSORY NOTES
From April to August 20, 2020, the Company entered
into convertible promissory notes issued to various investors (the “2020 Notes”), whereby the Company borrowed $2,911,000.
Proceeds received by the Company are in consideration for convertible promissory notes issued to the investors. The maturity date is July
20, 2021 and interest accrues at 10% per annum throughout the term of the 2020 Notes.
The 2020 Notes contained a contingent conversion
feature as follows:
Qualifying Event shall be any of the following
events: (i) a sale of any subsidiary. (ii) repayment to the Company in cash in full of amounts advanced to Weyland Indonesia Perkasa (“WIP”),
an Indonesian limited liability company, an “Associate” of the Company, or (iii) upon the closing of a financing (or aggregated
financings) of five million dollars ($5,000,000) or more, in gross proceeds to the Company.
The derivative liability is recorded at fair value
with changes in fair value recognized in interest income (expense), net.
Contingent Conversion Upon a Qualifying Event
–Effective upon closing a qualifying event, as defined above, the 2020 Notes will automatically be converted into common stock at
a conversion price of $2.50. In the event there is no Qualifying event prior to Maturity Date, the Note holders would have the right either
to be paid back principal with interest or to convert the outstanding principal and accrued interest at a conversion price of $1.20.
NOTE 15 – STOCKHOLDERS’ EQUITY
Common Stock
On February 25, 2020, the Company filed a certificate
of amendment (the “Certificate of Amendment”) to the Company’s Certificate of Incorporation, as amended, with the Secretary
of State of the State of Delaware, to effect a reverse stock split of the Company’s common stock, $0.0001 par value per share (“Common
Stock”), at a rate of approximately 1-for-13 (the “Reverse Stock Split”).
Upon the filing of the Certificate of Amendment,
and the resulting effectiveness of the Reverse Stock Split, every 13 outstanding shares of the Company’s Common Stock were, without
any further action by the Company, or any holder thereof, combined into and automatically became 1 share of the Company’s Common
Stock. No fractional shares were issued as a result of the Reverse Stock Split. In lieu thereof, fractional shares were cancelled, and
stockholders received a cash payment in an amount equal to the fair market value of such fractional shares on the effective date. All
shares of Common Stock eliminated as a result of the Reverse Stock Split have been returned to the Company’s authorized and unissued
capital stock, and the Company’s capital was reduced by an amount equal to the par value of the shares of Common Stock so retired.
The Reverse Stock Split did not change the Company’s
current authorized number of shares of Common Stock or its par value. As such, the Company is authorized to issue up to 250,000,000 shares
of Common Stock, par value $0.0001.
Issuance of Common Stock
Sale
of Common Stock – January 2021
On January 12, 2021, Logiq entered into a Stock
Purchase Agreement (the “Purchase Agreement”) with certain investors (the “Purchasers”), pursuant to which the
Company agreed to issue and sell, in a registered direct offering (the “Registered Offering”), 101,694 shares (the “Shares”)
of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), to the Purchasers at
an offering price of $8.50 per share.
The Registered Offering resulted in gross proceeds
of approximately $864,000 before deducting offering expenses. The Shares were offered by the Company pursuant to a prospectus supplement
to the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-248069), which was initially filed with
the Securities and Exchange Commission (the “Commission”) on August 17, 2020, and was declared effective on August 26, 2020.
Agreement and Plan of Merger – Rebel AI, Inc.
On March 29, 2021, Logiq, RAI Acquisition Sub,
Inc., a Delaware corporation and a wholly-owned subsidiary of the Company (“Merger Sub”), Rebel AI, Inc., a Delaware corporation
(“Rebel AI”), and Emmanuel Puentes, on behalf of the stockholders of Rebel AI (in such capacity, the “Stockholders’
Agent”), consummated a transaction pursuant to the terms of that certain Agreement and Plan of Merger (the “Merger Agreement”)
whereby the parties effectuated a merger of Merger Sub with and into Rebel AI, and as a result, Rebel AI became a wholly-owned subsidiary
of the Company (the “Merger”).
As consideration for the Merger, the Company delivered
to those persons set forth in the Merger Agreement an aggregate total cash payment of $1,126,000 (the “Cash Consideration”),
and an aggregate number of restricted shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”),
equal to (i) (x) $7,000,000, divided by (ii) the volume weighted average closing price of the Company’s Common Stock for the twenty
consecutive trading days prior to Closing (the “Stock Consideration,” and together with the Cash Consideration, the “Merger
Consideration”), subject in each case to adjustment as provided in the Merger Agreement. Notwithstanding the foregoing, pursuant
to the terms of the Merger Agreement, (i) a portion of the Cash Consideration, in an amount equal to the outstanding balance of that PPP
Loan made to Rebel AI in January 2021, shall be withheld at Closing and placed into an escrow account, pending forgiveness or repayment
of the PPP Loan, as applicable, and (ii) $2,000,000 of Common Stock shall be withheld from the Stock Consideration and deposited into
an escrow account, pending release in accordance with the terms of the Merger Agreement.
Sale
of Common Stock – March 2021
On March 8, 2021, Logiq entered into a Stock Purchase
Agreement (the “Purchase Agreement”) with an accredited investor (the “Purchaser”), pursuant to which the Company
agreed to issue and sell, in a registered direct offering (the “Registered Offering”), 100,000 shares (the “Shares”)
of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), to the Purchaser at an offering
price of $5.00 per share.
The Registered Offering resulted in gross proceeds
of approximately $500,000 before deducting offering expenses. The Shares were offered by the Company pursuant to a prospectus supplement
to the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-248069), which was initially filed with
the Securities and Exchange Commission (the “Commission”) on August 17, 2020, and was declared effective on August 26, 2020.
General Summary
During the period from January 1, 2021 to March
31, 2021, a total of 2,269,205 shares (post reverse split of approximately 13: 1) with par value of $0.0001 per share were issued to various
stockholders.
Capital Reserve
On March 29, 2021, the Company acquired Rebel
in exchange for 1,032,056 shares of the Company’s common stock.
On November 2, 2020, the Company acquired Fixel
in exchange for 564,467 shares of the Company’s common stock in the amount of $5,000,000 and represents the excess of consideration
over the par value of common stock of $0.0001 issued.
On January 9, 2020, the Company issued 35,714,285
shares to Conversion Point Technologies Inc. as consideration for the acquisition of all the assets of Push Holdings Inc in the amount
of $14,284,714 and represents the excess of consideration over the par value of common stock of $0.0001 issued.
During the year ended December 31, 2020, a total
of 1,318,640 shares with par value of $0.0001 per share were issued for consultancy services received including shares issued to Senior
Management, Directors, Operational Staff, Legal Consultants, Strategy Advisors and Technology Consultants received and 5,677,684 shares
with par value of $0.0001 per share were issued to various stockholders.
During the three months ended March 31, 2021,
a total of 998,955 shares with par value of $0.0001 per share were issued for consultancy services received including shares issued to
Senior Management, Directors, Operational Staff, Legal Consultants, Strategy Advisors and Technology Consultants received and 1,270,250
shares with par value of $0.0001 per share were issued to various stockholders.
Cancellation of Common Stock
During the year ended December 31, 2020, 404,439
shares with par value of $0.0001 per share were cancelled by various stockholders.
During the quarter ended March 31, 2021,
0 shares with par value of $0.0001 per share were cancelled.
Stock-Based Compensation
For the three months ended March 31, 2021, a total
of 998,955 shares of common stock was issued as stock-based compensation to directors, consultants and other professional parties.
NOTE 16 – (LOSS) PER SHARE
The following table sets forth the computation
of basic and diluted earnings per common share for the three months ended March 31, 2021 and 2020, respectively:
|
|
For the three months ended March 31,
|
|
|
|
2021
|
|
|
2020
|
|
Numerator - basic and diluted
|
|
|
|
|
|
|
Net (Loss)
|
|
$
|
(4,081,749
|
)
|
|
$
|
(2,813,092
|
)
|
Denominator
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding —basic and diluted
|
|
|
16,345,439
|
|
|
|
11,577,069
|
|
(Loss) per common share — basic and diluted
|
|
$
|
(0.2497
|
)
|
|
$
|
(0.2430
|
)
|
NOTE 17 – COMMITMENTS AND CONTINGENCIES
Leases
The Company’s current executive offices
are currently leased for $820 per month.
Logiq Inc (Nevada) leases approximately 30,348
square feet comprising 12,313 square feet of office space and 18,217 square feet of warehouse space in Minneapolis, Minnesota, at a rate
of $367,200 per annum under an operating lease. The leased office space from a related party under common ownership is under a 7.5-year
lease expiring December 31, 2021. The lease on the primary offices has a renewal option providing for additional lease periods.
The operating lease is listed as separate
line item on Logiq Inc (Nevada)’s March 31, 2021 and December 31, 2020 consolidated balance sheets and represent the Group’s
right to use the underlying asset for the lease term. The Group’s obligations to make lease payments are also listed as a separate
line items on the Group’s March 31, 2021 and December 31, 2020 consolidated balance sheets. Based on the present value of the
lease payments for the remaining lease term of the Group’s existing leases, the Group recognized right-of-use assets and lease liabilities
for operating leases of approximately $693,000, on January 8, 2020. Operating lease right-of-use assets and liabilities commencing after
January 8, 2020 are recognized at commencement date based on the present value of lease payments over the lease term. As of March 31,
2021 and December 31, 2020, total operating right-of-use assets were $273,687 and $364,234, respectively. All operating lease expense
is recognized on a straight-line basis over the lease term.
Because the rate implicit in the lease is not
readily determinable, the Group uses its incremental borrowing rate to determine the present value of the lease payments.
Information related to the Group’s operating
lease liabilities are as follows:
|
|
As of
March 31,
2021
|
|
|
As of
December 31,
2020
|
|
Cash paid for operating lease liabilities
|
|
$
|
91,900
|
|
|
|
367,200
|
|
Remaining lease term
|
|
|
9 months
|
|
|
|
1 years
|
|
Discount rate
|
|
|
1.5
|
%
|
|
|
1.5
|
%
|
Future minimum lease payments under the non-cancellable
operating lease agreements are as follows:
|
|
|
|
2021
|
|
$
|
275,400
|
|
|
|
|
|
|
Less imputed interest
|
|
|
(1,713
|
)
|
Total lease liability
|
|
$
|
273,687
|
|
Legal proceedings
None.
NOTE 18 – SEGMENT INFORMATION
The Group has determined that it operates in two
operating and reportable business segments: AppLogiq and DataLogiq. The Company determined its reportable segments based on operating
and financial reports regularly reviewed by the Company’s Chief Operating Decision Maker (“CODM”), which is the Company’s
Chief Executive Officer (“CEO”).
The AppLogiq reportable segment is comprised of
the accounts of CreateApp and Corporate activities.
The DataLogiq reportable segment is comprised
of the subsidiaries’ accounts of Logiq, Inc. (a Nevada Corporation), Fixel AI, Inc. and Rebel AI Inc.
The following table presents the segment information
for the three months ended March 31, 2021 and 2020:
|
|
For the three months ended
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
Logiq
|
|
|
|
|
|
|
Segment operating income
|
|
$
|
2,441,128
|
|
|
|
11,785,743
|
|
Other corporate expenses, net
|
|
|
5,270,305
|
|
|
|
13,551,449
|
|
Total operating (loss)
|
|
|
(2,829,177
|
)
|
|
|
(1,765,706
|
)
|
|
|
|
|
|
|
|
|
|
DataLogiq
|
|
|
|
|
|
|
|
|
Segment operating income
|
|
|
5,639,184
|
|
|
|
3,195,651
|
|
Other corporate expenses, net
|
|
|
6,891,756
|
|
|
|
4,243,037
|
|
Total operating (loss)
|
|
|
(1,252,572
|
)
|
|
|
(1,047,386
|
)
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
Segment operating income
|
|
|
8,080,312
|
|
|
|
14,981,394
|
|
Other corporate expenses, net
|
|
|
12,162,061
|
|
|
|
17,794,486
|
|
Total operating (loss)
|
|
|
(4,081,749
|
)
|
|
|
(2,813,092
|
)
|
Significant Customers
No revenues from any single customer exceeded 10% of total net revenues
for the three months ended March 31, 2021 and 2020.
NOTE 19 – GEOGRAPHICAL INFORMATION
Revenue by geographical region for the three months
ended March 31, 2021 and 2020 were as follows:
|
|
For the three months ended
March 31,
|
|
|
For the three months ended
March 31,
|
|
|
|
2021
|
|
|
%
|
|
|
2020
|
|
|
%
|
|
Southeast Asia
|
|
$
|
1,220,564
|
|
|
|
15.1
|
%
|
|
|
8,839,307
|
|
|
|
59.0
|
%
|
EU
|
|
|
610,282
|
|
|
|
7.6
|
|
|
|
1,767,861
|
|
|
|
11.8
|
|
South Korea
|
|
|
366,169
|
|
|
|
4.5
|
|
|
|
1,178,575
|
|
|
|
7.9
|
|
Africa
|
|
|
244,113
|
|
|
|
3.0
|
|
|
|
-
|
|
|
|
-
|
|
North America
|
|
|
5,639,184
|
|
|
|
69.8
|
|
|
|
3,195,651
|
|
|
|
21.3
|
|
Total revenue
|
|
$
|
8,080,312
|
|
|
|
100.0
|
|
|
$
|
14,981,394
|
|
|
|
100.0
|
|
NOTE 20 – BUSINESS COMBINATION
Push Holdings Inc.
On January 8, 2020, the Company acquired substantially
all the assets of Push Holdings Inc in exchange for 35,714,285 shares of the Company’s common stock. The fair value of the shares
of common stock at the close of the transaction was $14,285,714.
The acquisition of substantially all the assets
of Pushing Holding was accounted for as a business combination in accordance with Accounting Standards Codification Topic 805, Business
Combinations (“ASC 805”), with the results of Logiq Inc (Nevada)’s operations included in the Company’s consolidated
financial statements from January 9, 2020. Goodwill has been measured as the excess of the total consideration over the amounts assigned
to identifiable assets acquired and liabilities assumed.
During the period ended December 31, 2020, the
Company, through its wholly-owned subsidiary, Logiq Inc (Nevada) acquired substantially all of the assets of Push Holdings, Inc. The fair
values of assets acquired and liabilities assumed were as follows:
|
|
|
|
Cash and cash equivalents
|
|
$
|
574,572
|
|
Restricted cash
|
|
|
1,025,000
|
|
Accounts receivable, net
|
|
|
709,053
|
|
Prepaid expenses and other current assets
|
|
|
11,940
|
|
Property, plant and equipment
|
|
|
225,126
|
|
Intangible assets
|
|
|
8,250,000
|
|
Accounts payable
|
|
|
(367,091
|
)
|
Accrued expenses and other current liabilities
|
|
|
(424,094
|
)
|
Due to parent company
|
|
|
(500,000
|
)
|
Goodwill
|
|
|
4,781,208
|
|
Net assets acquired
|
|
$
|
14,285,714
|
|
Fair valuation methods used for the identifiable
net assets acquired in the acquisition make use of quoted prices in active markets, discounted cash flows and risk adjusted weighted cost
of capital. The methods used in determining fair value of the intangible assets included consideration of the three traditional approaches
to value: market, income, and cost. Accordingly, after due consideration of other appropriate and generally accepted valuation methodologies,
the value of intangible assets acquired from Push has been developed primarily on the basis of the income approach. Under the income approach,
the Company evaluated revenue projections derived from the software technology and the appropriate royalty rate that Push Holdings would
have paid if Push Holdings did not own the software technology.
On the acquisition date, goodwill of $4,781,208
and other intangible assets of $8,250,000 were recorded. The other intangible asset identified during the acquisition is software technology,
which has a weighted average useful life of five years, which is management’s best estimate at the time of the acquisition.
The Company incurred some accounting and legal
fees related to the acquisition of the assets of Push Holdings. The amount attributable to the Company has been included in general and
administrative expenses in the accompanying consolidated statement of operations for the three months ended March 31, 2021.
In the consolidated statements of operations,
revenues and expenses include the operations of Logiq Inc (Nevada) since January 9, 2020, which is the day after the acquisition date.
Fixel AI Inc.
On November 2, 2020, the Company acquired Fixel
AI Inc., a Delaware corporation (“Fixel”) in exchange for 564,467 shares of the Company’s common stock. The fair value
of the shares of common stock at the close of the transaction was $8.86.
On the Closing Date, the Company issued 564,467
restricted shares of its common stock to Fixel Stockholders, of which the shares allocated to the Fixel stockholders that are residents
of Israel (“Israel Stockholders”) will be delivered to an independent third-party escrow (the “Escrow Shares”),
where (i) such shares will be released to Israel Stockholders upon each Israel Stockholder’s compliance with the 104H tax ruling
issued by certain tax authorities of Israel in connection with the Merger and (ii) shares held by Founders making up approximately 20%
of the shares issued will be held subject to offset for indemnification purposes. The Shares were issued at a trailing twenty (20) day
VWAP of $8.86 per share.
The fair values of assets acquired and liabilities
assumed were as follows:
Cash and cash equivalents
|
|
$
|
67,167
|
|
Restricted cash
|
|
|
10,229
|
|
Accounts receivable, net
|
|
|
29,036
|
|
Prepaid expenses and other current assets
|
|
|
20,963
|
|
Intangible assets
|
|
|
4,678,422
|
|
Accounts payable
|
|
|
280
|
|
Accrued expenses and other current liabilities
|
|
|
(47,021
|
)
|
Deferred revenue
|
|
|
(55,958
|
)
|
Goodwill
|
|
|
296,882
|
|
Net assets acquired
|
|
$
|
5,000,000
|
|
Fair valuation methods used for the identifiable
net assets acquired in the acquisition make use of quoted prices in active markets, discounted cash flows and risk adjusted weighted cost
of capital. The methods used in determining fair value of the intangible assets included consideration of the three traditional approaches
to value: market, income, and cost. Accordingly, after due consideration of other appropriate and generally accepted valuation methodologies,
the value of intangible assets acquired from Fixel has been developed primarily on the basis of the income approach. Under the income
approach, the Company evaluated revenue projections derived from the software technology and the appropriate royalty rate that Fixel would
have paid if Fixel did not own the software technology.
On the acquisition date, goodwill of $296,882
and other intangible assets of $4,678,422 were recorded. The other intangible asset identified during the acquisition is software technology,
which has a weighted average useful life of five years, which is management’s best estimate at the time of the acquisition.
The Company incurred some accounting and legal
fees related to the acquisition of the assets of Fixel. The amount attributable to the Company has been included in general and administrative
expenses in the accompanying consolidated statement of operations for the three months ended March 31, 2021.
In the consolidated statements of operations,
revenues and expenses include the operations of Fixel AI, Inc. since November 3, 2020, which is the day after the acquisition date.
Rebel AI Inc.
On March 29, 2021, the Company acquired Rebel
for a total cash consideration of $1,126,000 and in exchange for 1,032,056 shares of the Company’s common stock. The fair value
of the shares of common stock at the close of the transaction was $6.00.
On the Closing Date, the Company issued 1,032,056
restricted shares of its common stock to Rebel Stockholders, and at a trailing twenty (20) day VWAP of $6.00 per share.
Cash and cash equivalents
|
|
$
|
7,736
|
|
Accounts receivable, net
|
|
|
10,052
|
|
Prepaid expenses and other current assets
|
|
|
14,617
|
|
Property, plant and equipment
|
|
|
28,236
|
|
Intangible assets
|
|
|
6,789,969
|
|
Accrued expenses and other current liabilities
|
|
|
(32,110
|
)
|
Goodwill
|
|
|
499,836
|
|
Net assets acquired
|
|
$
|
7,318,336
|
|
Fair valuation methods used for the identifiable
net assets acquired in the acquisition make use of quoted prices in active markets, discounted cash flows and risk adjusted weighted cost
of capital. The methods used in determining fair value of the intangible assets included consideration of the three traditional approaches
to value: market, income, and cost. Accordingly, after due consideration of other appropriate and generally accepted valuation methodologies,
the value of intangible assets acquired from Rebel has been developed primarily on the basis of the income approach. Under the income
approach, the Company evaluated revenue projections derived from the software technology and the appropriate royalty rate that Rebel would
have paid if Rebel did not own the software technology.
On the acquisition date, goodwill of $499,836
and other intangible assets of $6,789,969 were recorded. The other intangible asset identified during the acquisition is software
technology, which has a weighted average useful life of five years, which is management’s best estimate at the time of the acquisition.
The Company incurred some accounting and legal
fees related to the acquisition of the assets of Rebel. The amount attributable to the Company has been included in general and administrative
expenses in the accompanying consolidated statement of operations for the period ended March 31, 2021.
In the consolidated statements of operations,
revenues and expenses include the operations of Rebel AI, Inc. since March 29, 2021, which is the day after the acquisition date.
NOTE 21 – SUBSEQUENT EVENTS
Sale
of Common Stock – April 2021
On April 15, 2021, Logiq entered into a Stock
Purchase Agreement (the “Purchase Agreement”) with certain investors (the “Purchasers”), pursuant to which the
Company agreed to issue and sell, in a registered direct offering (the “Registered Offering”), 304,000 shares (the “Shares”)
of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), to the Purchasers at
an offering price of $5.00 per share.
The Registered Offering resulted in gross proceeds
of approximately $1,520,000 before deducting offering expenses. The Shares were offered by the Company pursuant to a prospectus supplement
to the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-248069), which was initially filed with
the Securities and Exchange Commission (the “Commission”) on August 17, 2020, and was declared effective on August 26, 2020.
Actions
Taken in Connection With Potential NEO Uplisting through an initial public offering
Amended and Restated 2020
Equity Incentive Plan
On April 21, 2021, Logiq, in connection with the
Company’s potential listing on the NEO Exchange in Canada and in order to comply with the corporate governance requirements of the
NEO Exchange, amended and restated its 2020 Equity Incentive Plan to provide that stock options issued under the plan (i) may not be transferred
and (ii) may not have an exercise price less than the fair market value (“FMV”) of such stock options as of the grant date.
Pursuant to the A&R Plan (as defined below), FMV shall be determined as follows: (i) if the Company’s common stock is then listed
or admitted to trading on a national stock exchange, the FMV shall be either (x) the five-day volume weighted average trading price, calculated
by dividing the total value by the total volume of securities traded on a national stock exchange for the relevant period, or (y) the
closing price of the Company’s common stock on a national stock exchange on the previous trading day prior to the date of grant
of the award; or (ii) if the Company’s common stock is not then listed or admitted to trading on a national stock exchange, the
FMV shall be a price determined by the administrator of the A&R Plan in good faith using any reasonable method of valuation. In addition,
the Company amended and restated the form agreements for awards made pursuant to the Company’s Amended and Restated 2020 Equity
Incentive Plan (the “A&R Plan”) to reflect the foregoing changes.
The Company’s A&R Plan and amended form
award agreements were approved by the Company’s Board of Directors on April 21, 2021. The A&R Plan remains subject to shareholder
approval, which the Company shall undertake to obtain as soon as reasonably practicable, but in no even later than one year from the amendment
date. In the event that the Company does not obtain the requisite shareholder approval of the A&R Plan within one year, the A&R
Plan shall not be effective and the form agreements for awards made thereunder shall revert to their original form.
Majority Voting Policy;
Bylaws
On April 21, 2021, the Company’s Board of
Directors (the “Board”), in connection with the Company’s potential listing on the NEO Exchange in Canada and in order
to comply with the corporate governance requirements of the NEO Exchange, approved and adopted a Majority Voting Policy for the election
of directors (the “Policy”), which policy effectively alters the manner in which directors are elected under the Company’s
Bylaws, and is therefore, subject to shareholder approval. The Company intends to submit a proposal to shareholders to approve the Policy
and related changes to the Company’s Bylaws as soon as reasonably practicable.
Under the Policy, in an uncontested election,
any director nominee who receives a greater number of votes “withheld” than votes “for” his or her election at
a meeting of shareholders of the Company must promptly tender his or her resignation to the chairman of the Board. Following receipt of
such resignation, the Governance Committee of the Board (the “Committee”) will consider the resignation and recommend to the
Board whether to accept such tendered resignation. Except in special circumstances, the Committee will be expected to accept and recommend
acceptance of the resignation by the Board. A press release disclosing the Board’s determination (and the reasons for rejecting
the resignation, if applicable) will be issued within 90 days following the date of the relevant meeting of shareholders and a copy of
the press release will be sent concurrently to the NEO Exchange, provided that the Company’s common stock is then listed for trading
on the NEO Exchange. The director’s resignation, if accepted, will become effective immediately upon acceptance thereof by the Board.
Any director who tenders his or her resignation
pursuant to the Policy will not participate in the recommendation of the Committee or the decision of the Board with respect to such resignation.
Subject to any restrictions imposed by applicable
law, where the Board accepts a resignation in accordance with the Policy, the Board may (i) leave the director vacancy unfilled until
the next annual meeting of shareholders, (ii) fill the vacancy through the appointment of a new director, or (iii) call a special meeting
of shareholders at which a new candidate will be presented to fill the vacant position.
The Policy applies only in circumstances involving
an uncontested election of directors. For purposes of the Policy, an “uncontested election” of directors of the Company means
an election held at any meeting of shareholders called for, either alone or with other matters, the election of directors, with respect
to which the number of nominees for election is equal to the number of positions on the Board to be filled through the election to be
conducted at such meeting.
Consolidated Results of Operations
|
|
For the three months ended
|
|
|
|
March 31, 2021
|
|
|
March 31, 2020
|
|
|
Change
|
|
Revenue (service)
|
|
$
|
8,080,312
|
|
|
|
100.0
|
%
|
|
$
|
14,981,394
|
|
|
|
100.0
|
%
|
|
$
|
(6,901,082
|
)
|
|
|
(46.1
|
)%
|
Cost of revenues (service)
|
|
|
5,854,056
|
|
|
|
72.4
|
|
|
|
12,336,262
|
|
|
|
82.3
|
|
|
|
(6,482,206
|
)
|
|
|
(52.5
|
)
|
Gross profit
|
|
|
2,226,256
|
|
|
|
27.6
|
|
|
|
2,645,132
|
|
|
|
17.7
|
|
|
|
(418,876
|
)
|
|
|
(15.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
689,345
|
|
|
|
8.5
|
|
|
|
449,624
|
|
|
|
3.0
|
|
|
|
239,721
|
|
|
|
53.3
|
|
General and administrative
|
|
|
4,144,365
|
|
|
|
51.3
|
|
|
|
3,202,042
|
|
|
|
21.4
|
|
|
|
942,323
|
|
|
|
29.4
|
|
Sales and marketing
|
|
|
369,261
|
|
|
|
4.6
|
|
|
|
53,015
|
|
|
|
0.4
|
|
|
|
316,246
|
|
|
|
596.5
|
|
Research and development
|
|
|
1,103,137
|
|
|
|
13.7
|
|
|
|
1,757,351
|
|
|
|
11.7
|
|
|
|
(654,214
|
)
|
|
|
(37.2
|
)
|
Total operating expenses
|
|
|
6,306,108
|
|
|
|
78.1
|
|
|
|
5,462,032
|
|
|
|
36.5
|
|
|
|
844,076
|
|
|
|
15.5
|
|
(Loss) from operations
|
|
|
(4,079,852
|
)
|
|
|
(50.5
|
)
|
|
|
(2,816,900
|
)
|
|
|
(18.8
|
)
|
|
|
(1,262,952
|
)
|
|
|
44.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (Expenses)/Income, net
|
|
|
(1,897
|
)
|
|
|
(0.02
|
)
|
|
|
3,808
|
|
|
|
0.03
|
|
|
|
(5,705
|
)
|
|
|
(149.8
|
)
|
Net (loss) before income tax
|
|
|
(4,081,749
|
)
|
|
|
(50.5
|
)
|
|
|
(2,813,092
|
)
|
|
|
(18.8
|
)
|
|
|
(1,268,657
|
)
|
|
|
45.1
|
|
Income tax (expense)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net (loss)
|
|
|
(4,081,749
|
)
|
|
|
(50.5
|
)
|
|
|
(2,813,092
|
)
|
|
|
(18.8
|
)
|
|
|
(1,268,657
|
)
|
|
|
45.1
|
|
AppLogiq Results of Operations
|
|
For the three months ended
|
|
|
|
March 31, 2021
|
|
|
March 31, 2020
|
|
|
Change
|
|
Revenue (service)
|
|
$
|
2,441,128
|
|
|
|
100.0
|
%
|
|
$
|
11,785,743
|
|
|
|
100.0
|
%
|
|
$
|
(9,344,615
|
)
|
|
|
(79.3
|
)%
|
Cost of revenues (service)
|
|
|
1,706,165
|
|
|
|
69.9
|
|
|
|
9,693,783
|
|
|
|
82.3
|
|
|
|
(7,987,618
|
)
|
|
|
(82.4
|
)
|
Gross profit
|
|
|
734,963
|
|
|
|
30.1
|
|
|
|
2,091,960
|
|
|
|
17.7
|
|
|
|
(1,356,997
|
)
|
|
|
(64.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
31,283
|
|
|
|
1.3
|
|
|
|
25,483
|
|
|
|
0.2
|
|
|
|
5,800
|
|
|
|
22.8
|
|
General and administrative
|
|
|
2,538,107
|
|
|
|
104.0
|
|
|
|
2,153,835
|
|
|
|
18.3
|
|
|
|
384,272
|
|
|
|
17.8
|
|
Sales and marketing
|
|
|
69,750
|
|
|
|
2.9
|
|
|
|
-
|
|
|
|
-.0
|
|
|
|
69,750
|
|
|
|
100.0
|
|
Research and development
|
|
|
925,000
|
|
|
|
37.9
|
|
|
|
1,681,500
|
|
|
|
14.3
|
|
|
|
(756,500
|
)
|
|
|
(45.0
|
)
|
Total operating expenses
|
|
|
3,564,140
|
|
|
|
146.0
|
|
|
|
3,860,818
|
|
|
|
32.8
|
|
|
|
(296,678
|
)
|
|
|
(7.7
|
)
|
(Loss) from operations
|
|
|
(2,829,177
|
)
|
|
|
(115.9
|
)
|
|
|
(1,768,858
|
)
|
|
|
(15.0
|
)
|
|
|
(1,060,319
|
)
|
|
|
59.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (Expenses)/Income, net
|
|
|
-
|
|
|
|
-
|
|
|
|
3,152
|
|
|
|
0.03
|
|
|
|
(3,152
|
)
|
|
|
(100.0
|
)
|
Net (loss) before income tax
|
|
|
(2,829,177
|
)
|
|
|
(115.9
|
)
|
|
|
(1,765,706
|
)
|
|
|
(15.0
|
)
|
|
|
(1,063,471
|
)
|
|
|
60.2
|
|
Income tax (expense)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net (loss)
|
|
|
(2,829,177
|
)
|
|
|
(115.9
|
)
|
|
|
(1,765,706
|
)
|
|
|
(15.0
|
)
|
|
|
(1,063,471
|
)
|
|
|
60.2
|
|
DataLogiq Results of Operations
|
|
For the three months ended
|
|
|
|
March 31, 2021
|
|
|
March 31, 2020
|
|
|
Change
|
|
Revenue (service)
|
|
$
|
5,639,184
|
|
|
|
100.0
|
%
|
|
$
|
3,195,651
|
|
|
|
100.0
|
%
|
|
$
|
2,443,533
|
|
|
|
76.5
|
%
|
Cost of revenues (service)
|
|
|
4,147,891
|
|
|
|
73.6
|
|
|
|
2,642,479
|
|
|
|
82.7
|
|
|
|
1,505,412
|
|
|
|
57.0
|
|
Gross profit
|
|
|
1,491,293
|
|
|
|
26.4
|
|
|
|
553,172
|
|
|
|
17.3
|
|
|
|
938,121
|
|
|
|
169.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
658,062
|
|
|
|
11.7
|
|
|
|
424,141
|
|
|
|
13.3
|
|
|
|
233,921
|
|
|
|
55.2
|
|
General and administrative
|
|
|
1,606,258
|
|
|
|
28.5
|
|
|
|
1,048,207
|
|
|
|
32.8
|
|
|
|
558,052
|
|
|
|
53.2
|
|
Sales and marketing
|
|
|
299,511
|
|
|
|
5.3
|
|
|
|
53,015
|
|
|
|
1.7
|
|
|
|
246,496
|
|
|
|
465.0
|
|
Research and development
|
|
|
178,137
|
|
|
|
3.2
|
|
|
|
75,851
|
|
|
|
2.4
|
|
|
|
102,286
|
|
|
|
134.9
|
|
Total operating expenses
|
|
|
2,741,968
|
|
|
|
48.6
|
|
|
|
1,601,214
|
|
|
|
50.2
|
|
|
|
1,140,755
|
|
|
|
71.2
|
|
(Loss) from operations
|
|
|
(1,250,675
|
)
|
|
|
(22.2
|
)
|
|
|
(1,048,042
|
)
|
|
|
(32.8
|
)
|
|
|
(202,634
|
)
|
|
|
19.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (Expenses)/Income, net
|
|
|
(1,897
|
)
|
|
|
(0.03
|
)
|
|
|
656
|
|
|
|
0.02
|
|
|
|
(2,553
|
)
|
|
|
(389.2
|
)
|
Net (loss) before income tax
|
|
|
(1,252,572
|
)
|
|
|
(22.2
|
)
|
|
|
(1,047,386
|
)
|
|
|
(32.8
|
)
|
|
|
(205,187
|
)
|
|
|
19.6
|
|
Income tax (expense)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net (loss)
|
|
|
(1,252,572
|
)
|
|
|
(22.2
|
)
|
|
|
(1,047,386
|
)
|
|
|
(32.8
|
)
|
|
|
(205,187
|
)
|
|
|
19.6
|
|
Consolidated Revenue (Service)
Consolidated revenues were
$8,080,312 and $14,981,394 for the three months ended March 31, 2021 and 2020, respectively. The results for the three months ended March
31, 2021 include DataLogiq segment (FY2020: DataLogiq segment effective January 8, 2020).
Our AppLogiq segment, with
the change in focus away from bulk white label distributors to direct marketing end users, reduced our revenues by 79.3% to $2,441,128
from $11,785,743 in the same period in FY2020. Although the reduction was significant, it represents a significant increase in gross profit
margins of 30.1% up from 17.7%.
Consolidated Cost of Revenue (Service)
Consolidated Cost of service
was $5,854,056 and $12,336,262 for the three months ended March 31, 2021 and 2020, respectively.
Consolidated Gross Profit
Consolidated Gross Profit
was $2,226,256 and $2,645,132 for the three months ended March 31, 2021 and 2020, respectively.
With the change in strategic
focus from bulk white label distributors to direct marketing end users, our AppLogiq gross profit reduced by 64.9% in three months ended
March 31, 2021 to $734,963 compared to $2,091,960 in the same period in FY2020.
Consolidated Gross Profit
margin was 27.6% and 17.7% for the three months ended March 31, 2021 and 2020, respectively.
In AppLogiq, with the change
in strategic focus from bulk white label distributors to direct marketing end users, our AppLogiq gross profit margin increased to 30.1%
in three months ended March 31, 2021 compared to 17.7% in the same period in FY2020.
Consolidated Other Income/(Expenses)
Consolidated Other expenses
was ($1,897) and income $3,808 for the three months ended March 31, 2021 and 2020, respectively. The Consolidated income represents interest
and gain on change in fair value from a US based money market bond portfolio.
Consolidated Operating Expenses
General and Administrative (G&A)
Consolidated General and administrative
expenses were $4,144,365 and $3,202,042 for the three months ended March 31, 2021 and 2020, respectively.
The increase is mainly due
to stock compensation of $1,525,904 and $668,286 for the three months ended March 31, 2021 and 2020, respectively and DataLogiq business
segment G&A expenses of $1,606,258 and $1,048,206 for the three months ended March 31, 2021 and 2020, respectively.
As part of our uplisting through an initial public offering exercise and S-3 shelf registration, we incurred $587,884 and $1,187,474 in the three months ended
March 31, 2021 and 2020, respectively comprising legal and professional fees, investor and public relations and consultancy fees.
Significant movements are explained in the review of operations by
our business segments of AppLogiq and DataLogiq in the sections below.
Sales and Marketing (S&M)
Consolidated S&M expense
was $369,261 and $53,015 for the three months ended March 31, 2021 and 2020, respectively. The increase is a combination of AppLogiq's investment
in market awareness campaigns and DataLogiq’s increased incentive compensation for sales teams and the inclusion of Fixel’s
sales and marketing costs.
Research and Development (R&D)
Consolidated Research and
Development expense were $1,103,137 and $1,757,351 for the three months ended March 31, 2021 and 2020, respectively. The lower expense
reflects a decrease in spending on features for lower margin accounts serviced through bulk white-label distributors, the contracts of
which have subsequently been terminated from a change in our strategic focus in our AppLogiq segment.
Consolidated (Loss) from Operations
The Company posted a loss
from operations of $(4,079,852) and $(2,816,900) for the three months ended March 31, 2021 and 2020, respectively.
The increase in the loss is
due to cost incurred for our uplisting through an initial public offering exercise and S-3 shelf registration, increased staff costs,
consultancy, legal & professional and increase in research & development on our digital platform as further described below.
Consolidated Net (Loss) Before Income Tax
The Company posted a net loss
before income tax $(4,081,749) and $(2,813,092) for the three months ended March 31, 2021 and 2020, respectively.
The increase in the loss is
due to increase in research & development costs, legal and professional costs in connection with our uplisting through an initial
public offering, consultancy fee, stock-based compensation and increase in research & development on our platform as further described
below.
Consolidated Income Tax (Expense)
No provision for corporate
taxes is made as the Company incurred a loss and has unutilized loss carryforwards. The tax paid during the fiscal year is for Delaware
franchise taxes for the current and prior years.
Stock-based compensation
Stock-based compensation expenses
for the three months ended March 31, 2021 and 2020 was $1,525,904 and $668,286, respectively reflecting the Company’s efforts in our uplisting through an initial public offering exercise and S-3 shelf registration.
Consolidated Net (Loss)
The Company posted a consolidated
net loss of $(4,081,749) for the three months ended March 31, 2021 as compared to a net loss of $(2,813,092) for the three months ended
March 31, 2020.
Logiq Inc. including AppLogiq Results of
Operations
Revenue (Service)
Our AppLogiq segment,
with the change in focus away from bulk white label distributors to direct marketing end users, reduced our revenues by 79.3% to
$2,441,128 from $11,785,743 in the same period in FY2020. Although the reduction was significant, it represents a significant
increase in gross profit margins of 30.1% up from 17.7%.
Cost of Revenue (Service)
AppLogiq Cost of Service revenues
were $1,706,165 and $9,693,783 for the three months ended March 31, 2021 and 2020, respectively as a result of reduced revenues.
Gross Profit
AppLogiq Gross Profit was
$734,963 and $2,091,960 for the three months ended March 31, 2021 and 2020, respectively. Gross Profit % improved to 30.1% from 17.7%
for the three months ended March 31, 2021 and 2020, respectively as a result of the change in strategic focus from bulk white label distributors
to direct marketing end users.
Other Income/(Expenses)
AppLogiq Other income $nil
and $3,152 for the three months ended March 31, 2021 and 2020, respectively. The other income represents interest and gain on change in
fair value from a US based managed Financial asset money market bond portfolio.
General and Administrative (G&A)
AppLogiq G&A expenses
was $2,538,107 and $2,153,835 for three months ended March 31, 2021 and 2020, respectively.
Consultancy fees was $949,224
and $949,443 for the three months ended March 31, 2021 and 2020, respectively.
Legal & professional fees
was $231,588 and $182,117 for the three months ended March 31, 2021 and 2020, respectively.
An increase in both Consultancy
fees and Legal & professional fees due to uplisting applications on both NEO and NASD exchanges in 2021 and 2020 respectively.
Sales and Marketing (S&M)
AppLogiq S&M expense was
$69,750 and $0 for the three months ended March 31, 2021 and 2020, respectively as a result of engaging in market awareness campaigns.
Research and Development (R&D)
AppLogiq Research and Development
expense was $925,000 and $1,681,500 for three months ended March 31, 2021 and 2020, respectively.
The lower expense reflects
a decrease in spending on features for lower margin accounts serviced through bulk white-label distributors the contracts of which have
subsequently been terminated from a change in our strategic focus. The Company continued development of the company’s system support
knowledge base, integrated various functionality and data of the AtoZGo delivery service and the AtoZPay payment facility and other internal
systems in the three months ended March 31, 2021.
(Loss) from Operations
AppLogiq and the Company posted
a loss from operations of $(2,829,177) and $(1,768,858) for the three months ended March 31, 2021 and 2020, respectively. Our loss arose
as a result of change in strategic focus from bulk white label distributors to direct marketing end users. In addition, our General and
Administrative increased due to legal and compliance costs relating to our uplisting application through an initial public offering on
NEO exchange and the addition of head office team members.
DataLogiq Results of Operations
Revenue (Service)
DataLogiq revenues were $3.2
million for the three months ended March 31, 2020 compared to $5.6 million for the same period in 2021, an increase of $2.4 million or
76.5%. The increase in revenues is primarily a result of increasing our focus on the data monetization business. The data monetization
business increased from $2.2 million for the three months ended March 31, 2020 to $4.6 million in same period in 2021, an increase of
$2.4 million or 109.4%. Other revenue, which includes our performance marketing network and technology services, contributed $1.0 million
of revenues for the three months ended March 31, 2021, which was flat from the same period a year ago.
Cost of Revenue (Service)
DataLogiq Cost of revenue
was $2.6 million for the three months ended March 31, 2020 compared to $4.1 million for the same period in 2021, an increase of $1.5 million
or 57.0%. Cost of revenues as a percentage of revenues was 73.6% and 82.7% for the three months ended March 31, 2021 and 2020, respectively.
The lower Cost of revenue as a percentage of revenues is due to lower customer acquisition costs.
Gross Profit
DataLogiq gross profit was
$0.5 million for the three months ended March 31, 2020 compared to $1.5 million for the same period in 2021, an increase of $1.0 million
or 169.6%. Gross profit margin was 17.3% for the three months ended March 31, 2020 compared to 26.4% for the same period in 2021. The
increase is due to an increase in our data monetization revenues and a decrease in our overall customer acquisition costs.
Depreciation and amortization
DataLogiq depreciation and
amortization expenses were $424,141 for the three months ended March 31, 2020 compared to $658,062 for the same period in 2021, an increase
of $233,921 or 55.2%. The increase is due to the acquisition of Fixel and the inclusion of their respective depreciation and amortization
of $233,921 in the three months ended March 31, 2021 compared to $0 in the same period a year ago.
General and administrative
DataLogiq general and administrative
expenses were $1.0 million for the three months ended March 31, 2020 compared to $1.6 million for the same period in 2021, an increase
of $0.6 million or 53.2%. The increase is due to increase in payroll related costs and employee headcount to help support the growth of
the business. In addition, the increase is also due to the acquisition of Fixel and the inclusion of the respective G&A of $0.1 million
in the three months ended March 31, 2021 compared to $0 in the same period a year ago.
Sales and marketing
DataLogiq sales and marketing
expenses include those expenses required to support our sales efforts and includes sales commissions and consultants. Sales and marketing
expenses were $53,015 for the three months ended March 31, 2020 compared to $299,511 for the same period in 2021, an increase of $246,496
or 465.0%. The increase is primarily due to the increased incentive compensation for our sales teams and the inclusion of Fixel’s
sales and marketing costs.
Research and development
DataLogiq research and development
expenses were $75,851 for the three months ended March 31, 2020 compared to $178,137 for the same period in 2021, an increase of $102,286.
Research and development costs include developers that support and enhance our technologies. The increase in research and development
is due to the acquisition Fixel AI and the research and development expenses from that business unit.
(Loss) from Operations
DataLogiq’s loss from
operations was $(1,250,675) for the three months ended March 31, 2021 compared to $(1,048,042) for the same period in 2020. Part of the
increase is due to the acquisition of Fixel AI and Rebel AI and the inclusion of their respective loss from operations $(448,833) in the
three months ended March 31, 2021. Logiq’s (Nevada) loss from operations reduced to $(803,739) compared to $(1,047,386) for the
same period in 2020 as a result of the increased gross profit contribution arising from increased service revenue.
Liquidity and Capital Resources
During the three months period
ended March 31, 2021, our primary sources of capital came from (i) cash flows from our operations, predominantly from providing services
under our AppLogiq platform and DataLogiq platform, (ii) existing cash, (iii) government loans, (iii) the January 2021 sale of 101,694
shares of the Company’s common stock for gross proceeds of approximately $864,000 before deducting offering expenses, and (iv) the
March 2021 sale of 100,000 shares of the Company’s common stock for gross proceeds of approximately $500,000 before deducting offering
expenses.
Our sources of liquidity and
cash flows are used to fund ongoing operations, research and development projects for new products and technologies, and provide ongoing
support services for our customers. Over the next two fiscal years, we anticipate that we will use our liquidity and cash flows from our
operations to fund our growth, particularly to grow our data sales. In addition, as part of our business strategy, we occasionally evaluate
potential acquisitions of businesses, products and technologies, and minority equity investments. Accordingly, a portion of our available
cash may be used at any time for the acquisition of complementary products or businesses or minority equity investments. Such potential
transactions may require substantial capital resources, which may require us to seek additional debt or equity financing. We cannot assure
you that we will be able to successfully identify suitable acquisition or investment candidates, complete acquisitions or investments,
integrate acquired businesses into our current operations, or expand into new markets. Furthermore, we cannot provide assurances that
additional financing will be available to us in any required time frame and on commercially reasonable terms, if at all.
As of March 31, 2021, we currently
have budgeted capital expenditures. Our capex & R&D plans are dependent on the availability of working capital and is able to
be scaled back as required.
We know of no material trends
in our capital trends aside from the funds to be raised in future offerings. We have focused our resources behind a plan to grow our data
sales, where we have a technology advantage and higher margins. If we are successful in implementing our plan, we expect to return to
a positive cash flow from operations. However, there is no assurance that we will be able to achieve this objective.
We know of no trends or demands
reasonably likely to affect liquidity other than those listed under the section titled, “Risk Factors” in this quarterly report.
The following table summarizes
our cash flows for the three months ended March 31, 2021 and 2020:
|
|
For the three months
March 31,
|
|
Cash flows:
|
|
2021
|
|
|
2020
|
|
Net cash (used in) operating activities
|
|
$
|
(1,999,989
|
)
|
|
$
|
(3,101,085
|
)
|
Net cash (used in) provided by investment activities
|
|
$
|
(445,202
|
)
|
|
$
|
584,310
|
|
Net cash provided by financing activities
|
|
$
|
1,822,052
|
|
|
$
|
3,565,793
|
|
Operating Activities
During the three months ended
March 31, 2021, (loss) from operations used $(1,999,989), compared to $(3,101,085) for the three months ended March 31, 2020. Our net
(loss) for the three months ended March 31, 2021 increased to $(4,081,749) and $(2,813,092) respectively compared to the same period last
year. Depreciation and amortization increased to $677,705 and $437,983 respectively compared to the same period last year as a result
of acquisitions of Fixel and Rebel. Movement in changes in operating assets and liabilities was $(1,999,989) and $(3,101,085) as a result
of increase in accounts receivable, accounts payable and accrued liabilities in our DataLogiq segment. Accrued liabilities in our AppLogiq
segment increased in the three months ended March 31, 2021 as a result of an increase in audit and review fees as compared to the same
period last year due to the acquisition of the DataLogiq segment and its subsidiaries. In addition, total cash consideration payable of
$1,126,000 for the Rebel AI Inc. acquisition is included in the three months ended March 31, 2021.
Investing Activities
During the three months
ended March 31, 2021, we did use cash $(445,202) for investing activities in the Company’s financial asset investment
portfolio based and managed in the US, compared to $584,310 during the three months ended March 31, 2020. The investment is reduced
as a result of the funding requirements of the Company in three months ended March 31, 2021 compared to same period in 2020.
Financing Activities
During the three months
ended March 31, 2021, we generated $1,822,052 from financing activities, compared to $3,565,793 for the three months ended March 31,
2020, primarily from the proceeds from the sale of common stock.
We estimate that based on
current plans, assumptions and fund raising, that our available cash and the cash we generate from our core operations will generally
be sufficient to satisfy our capital expenditures under our present operating expectations, for up to 12 months. We have sufficient working
capital to fund the expansion of our operations and to provide working capital necessary for our ongoing operations and obligations. However,
we shall continue to evaluate our capital expenditure needs based upon factors including our growth rate, the timing and extent of spending
to support development efforts, the expansion of our sales and marketing, the timing of new product introductions, and the continuing
market acceptance of our products and services. If cash generated from operations is insufficient to satisfy our capital requirements,
we may open a revolving line of credit with a bank, or we may have to sell additional equity or debt securities or obtain expanded credit
facilities to fund our operating expenses, or delay our expansion plans or pay our obligations, diversify our geographical reach, and
grow our Company. In the event such financing is needed in the future, there can be no assurance that such financing will be available
to us, or, if available, that it will be in amounts and on terms acceptable to us. If we cannot raise additional funds when we need or
want them, our operations and prospects could be negatively affected. However, if cash flows from operations become insufficient to continue
operations at the current level, and if no additional financing were obtained, then management would restructure the Company in a way
to preserve its business while maintaining expenses within operating cash flows.
Critical Accounting
Policies
For a description of our critical accounting policies,
see Note 2 – Summary of Significant Accounting Policies in Part 1, Item 1 of this Quarterly Report on Form 10-Q.
Recently Issued or
Newly Adopted Accounting Standards
For a description of our recently issued accounting
pronouncements, see Note 2 – Summary of Significant Accounting Policies in Part 1, Item 1 of this Quarterly Report on Form 10-Q.
Off-Balance Sheet
Arrangements
The Company has no off-balance sheet arrangements.