The accompanying notes are an integral part of
these financial statements.
The accompanying notes are an integral part of
these financial statements.
The accompanying notes are an integral part of
these consolidated financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND BUSINESS DESCRIPTION
Corporate Information
Logiq, Inc., formerly known as Weyland Tech, Inc.,
is a Delaware corporation that was incorporated in 2004. Logiq is headquartered in New York, with offices in New York City, Singapore,
Minneapolis, MN, Denver, CO, and Jakarta, Indonesia. The Company’s common stock is quoted on the OTCQX under the symbol, “LGIQ”,
and NEO Exchange in Canada under the same symbol.
Business Overview
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” (operated as CreateApp), which allows SMBs to establish their
point-of-presence on the web, and (ii) “DataLogiq”, 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”,
which is a platform that is offered as a Platform as a Service (“PaaS”) to the Company’s customers. The Company’s
DataLogiq business unit 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 a Cost per lead (“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., headquartered in Minneapolis, Minnesota. 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., 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., thereby acquiring its “The Rebel AI” advertising platform as a further expansion
of its DataLogiq product suite. |
| ● | On June 21, 2021, the Company completed the Canadian IPO offering of 1,976,434 units of its securities, consisting of shares common stock and warrants to purchase shares of common stock, on the NEO exchange in Canada. |
AppLogiq Spin-Off
On
December 15, 2021, we entered into various agreements with Lovarra, a Nevada corporation (“Lovarra”) and public reporting
subsidiary of the Company, pursuant to which the Company agreed to transfer its AppLogiq business to Lovarra, subject to customary conditions
and approvals and completion of requisite financial statement audits (the “Separation”). Lovarra is a fully reporting U.S.
public company, which is approximately 78.5% owned by the Company’s wholly owned subsidiary GoLogiq LLC (“GoLogiq”).
In connection with the Separation, the Company intends to distribute, on a pro rata basis, 100% of the Company’s ownership interests
in Lovarra to the Company’s shareholders of record as of December 30, 2021 (the “Record Date”) (the “Distribution,”
and collectively with the “Separation,” the “Spin Off”), which Distribution of said shares is expected to occur
six months from completion of the Separation (the “Distribution Date”).
On
January 27, 2022, we completed the transfer of our AppLogiq business to Lovarra. In connection with the completion of the transfer of
AppLogiq to Lovarra, Lovarra issued 26,350,756 shares of its common stock to the Company (the “Lovarra Shares”). The Company
will hold the Lovarra Shares until it distributes 100% of the Lovarra Shares to the Company’s stockholders of record as of December
30, 2021 on a 1-for-1 basis (i.e. for every 1 share of Logiq held on December 30, 2021, the holder thereof will receive 1 share of Lovarra),
which the Company intends to complete approximately 6 months from now, subject to customary conditions and approvals.
Until
such time as the Distribution is complete, we will consolidate and report the financials of the AppLogiq business as a consolidated subsidiary
of Logiq.
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), Push Holdings Inc and
Fixel 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 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 Push Holdings Inc. and Fixel 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.
GOODWILL 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 years ended December 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 years ended December 31, 2021 and 2020
amounted to $3,729,313 and $1,919,480, 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. Please refer to Note 5 for the Company’s accounting policy on investments in subsidiaries.
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 recognized in profit or loss. The net gain or loss recognized 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. Fair value is determined in the manner described in Note 7.
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 December 31, 2020.
Available-for-sale investments
Certain shares and debt securities held by the
group are classified as being available for sale and are stated at fair value. Fair value is determined in the manner described in Note
4. 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 amortised cost of the
available-for-sale monetary asset is recognized in profit or loss, and other changes are recognised 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.
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, Stock-Based Compensation, 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 December 31, 2021 and 2020, the Company
has the following amounts related to intangible assets:
| |
Logiq (Delaware) | | |
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 December 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 | |
$ | 125,133 | | |
$ | 3,604,180 | | |
$ | 3,729,313 | |
Accumulated depreciation as of December 31, 2021 | |
$ | 1,396,398 | | |
$ | 5,410,127 | | |
$ | 6,806,525 | |
| |
| | | |
| | | |
| | |
Net intangible assets as of December 31, 2021 | |
$ | 488,932 | | |
$ | 14,308,264 | | |
$ | 14,797,196 | |
| |
| | | |
| | | |
| | |
Net intangible assets as of December 31, 2020 | |
$ | 614,065 | | |
$ | 11,122,475 | | |
$ | 11,736,540 | |
Amortization expenses related to intangible assets for the three months
ended December 31, 2021 and 2010 amounted to $1,017,202 and $599,730, respectively. Amortization expenses related to intangible assets
for the twelve months ended December 31, 2021 and 2020 amounted to $3,729,313 and $1,919,480, respectively.
No significant residual value is estimated for
these intangible assets.
The estimated future amortization expense of intangible
costs as of December 31, 2021 in the following fiscal years is as follows:
2022 | |
$ | 4,068,811 | |
2023 | |
| 4,068,811 | |
2024 | |
| 4,068,811 | |
2025 | |
| 2,251,265 | |
2026 and thereafter | |
| 339,498 | |
| |
$ | 14,797,196 | |
NOTE 4 – PROPERTY AND EQUIPMENT, NET
As of December 31, 2021, and December 31, 2020,
the Company’s DataLogiq business segment 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 December 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 | |
$ | 33,636 | | |
$ | 19,188 | | |
$ | 52,824 | |
Accumulated depreciation as of December 31, 2021 | |
$ | 67,271 | | |
$ | 32,118 | | |
$ | 99,389 | |
| |
| | | |
| | | |
| | |
Net property and equipment as of December 31, 2021 | |
$ | 98,686 | | |
$ | 55,287 | | |
$ | 153,973 | |
| |
| | | |
| | | |
| | |
Net property and equipment as of December 31, 2020 | |
$ | 132,322 | | |
$ | 46,239 | | |
$ | 178,561 | |
Depreciation expenses for the years ended December
31, 2021 and 2020 amounted to $52,824 and $46,565, respectively.
NOTE 5 – GOODWILL
| |
As of December 31, | | |
As of December 31, | |
| |
2021 | | |
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 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, 2021.
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.
NOTE 6 – ACCOUNTS RECEIVABLE
| |
December 31, | | |
December 31, | |
| |
2021 | | |
2020 | |
| |
| | |
| |
Accounts receivable - gross | |
$ | 4,121,678 | | |
$ | 2,673,113 | |
Allowance for doubtful debts | |
| (155,592 | ) | |
| (54,619 | ) |
Accounts receivable - net | |
| 3,966,086 | | |
| 2,618,494 | |
| |
| | | |
| | |
Movement in allowance for doubtful debts | |
| | | |
| | |
| |
| | | |
| | |
Balance as at beginning of period | |
$ | 54,619 | | |
$ | 54,619 | |
Provision for bad debts | |
| 100,973 | | |
| 60,324 | |
Reversal of the provision | |
| - | | |
| (60,324 | ) |
Balance at end of period | |
| 155,592 | | |
| 54,619 | |
Age of Impaired trade receivables
Current | |
$ | 2,305,065 | | |
| 58.1 | % |
1 - 30 days | |
| 1,333,789 | | |
| 33.6 | % |
31 - 60 days | |
| 97,110 | | |
| 2.4 | % |
61-90 days | |
| 125,456 | | |
| 3.2 | % |
91 and over | |
| 104,666 | | |
| 2.7 | % |
Total | |
| 3,966,086 | | |
| 100.0 | % |
NOTE 7 – FINANCIAL ASSETS
| |
Fair value | |
| |
As at December 31, 2021 | | |
As at December 31, 2020 | |
| |
Assets | | |
Liabilities | | |
Assets | | |
Liabilities | |
Held-for-trading investments | |
$ | 681 | | |
$ | - | | |
$ | 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.
During the quarter ended June 30, 2020, certain
investments were disposed and the proceeds utilized to repay the Company’s loan in note 12 below
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 at 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 December 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
The following amounts are outstanding at December
31, 2021 and December 31, 2020:
| |
As of December 31, | | |
As of December 31, | |
| |
2021 | | |
2020 | |
| |
| | |
| |
Deposit | |
$ | 400,801 | | |
$ | 60,000 | |
Other receivables | |
| - | | |
| 1,876 | |
Prepayments | |
| 403,210 | | |
| 144,567 | |
| |
$ | 804,011 | | |
$ | 206,443 | |
NOTE 11 – ACCRUALS AND OTHER PAYABLES
Accruals and other payable consist of the following:
| |
As of December 31, | | |
As of December 31, | |
| |
2021 | | |
2020 | |
| |
| | |
| |
Accruals | |
$ | 1,804,131 | | |
$ | 910,325 | |
Other payables | |
| - | | |
| 200,407 | |
| |
$ | 1,804,131 | | |
$ | 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, 2021 and 2020, and which is subject to U.S. federal corporate income tax rate of 21% and 21%, respectively.
| |
As of December 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 December 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”).
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.
As disclosed in the Company’s
Quarterly Report on Form 10-Q filed with the SEC on August 16, 2021, with the exception of 2 convertible promissory notes issued amounting
to principal of $30,000, the 2020 Notes were converted into shares of our common stock at $2.50 following the qualifying conversion date
of July 17, 2021. On September 1, 2021, 1,169,652 shares of our common stock underlying the 2020 Notes were issued pursuant to this conversion.
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
In July 2019, the Company issued a total of 51,762,839
Reg S shares to high net worth individuals and family offices in South East Asia.
During the year ended December 31, 2019, a total
of 19,311,309 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 58,627,601 shares
with par value of $0.0001 per share were issued to various stockholders.
During the year ended December 31, 2020, a total
of 6,995,735 shares (post reverse split of approximately 13:1) with par value of $0.0001 per share were issued to various stockholders.
In the year 2021 we have below common stock issuance:
Sale of Common Stock – January 2021
On January 12, 2021, Logiq entered into a Stock
Purchase Agreement with certain investors, pursuant to which the Company agreed to issue and sell, in a registered direct offering, 101,694
shares of the Company’s common stock to the purchasers at an offering price of $8.50 per share.
The offering resulted in gross proceeds of approximately
$864,000 before deducting offering expenses. The shares of common stock 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 on August 17, 2020, and was declared effective on August 26, 2020 (the “Registration Statement”).
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.
On June 30, 2021, the parties entered into an
Amendment No. 1 to Agreement and Plan of Merger (the “Amendment”), pursuant to which the parties amended the Merger Agreement
to eliminate any potential reductions to the total cash purchase price payable pursuant to the Merger Agreement in the event that the
PPP Loan made to Rebel AI in January 2021 is not forgiven in full. As a result, Schedule A to the Merger Agreement was deleted and eliminated
in its entirety.
Sale of Common Stock – March 2021
On March 8, 2021, Logiq entered into a Stock Purchase
Agreement with an accredited investor, pursuant to which the Company agreed to issue and sell, in a registered direct offering, 100,000
shares of the Company’s common stock, to the purchaser at an offering price of $5.00 per share.
The 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
Registration Statement.
Sale of Common Stock – April 2021
On April 15, 2021, Logiq entered into a Stock
Purchase Agreement with certain investors, pursuant to which the Company agreed to issue and sell, in a registered direct offering, 304,000
shares of the Company’s common stock, to the purchasers at an offering price of $5.00 per share.
The 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
Registration Statement.
Sale of Units in Connection With Canadian
IPO - June 2021
On June 9, 2021, Logiq entered into an Agency
Agreement (the “Agency Agreement”) with Research Capital Corporation (the “Agent”) relating to the offering (the
“Offering”) by the Company of a minimum of 1,666,667 units of securities (each, a “Unit”), and a maximum of 3,333,333
Units, at a price of C$3.00 per Unit (the “Offering Price”), for minimum gross proceeds of C$5,000,000, and maximum gross
proceeds of C$10,000,000. Each Unit consists of (i) one share of common stock of the Company, par value $0.0001 per share (and the Common
Stock included in a Unit being a “Unit Share”), and (ii) one Common Stock purchase warrant (each, a “Warrant”),
where each Warrant entitles the holder thereof to acquire one share of Common Stock (each, a “Warrant Share”) at an exercise
price of C$3.50 per Warrant Share, subject to adjustment, at any time before the third anniversary (the “Warrant Expiry Date”)
of June 17, 2021 (the “Closing Date”).
In consideration for
the Agent’s services to the Company in connection with the Offering, the Company agreed to pay the Agent a cash fee (the “Agent’s
Commission”) equal to 8.0% of the aggregate gross proceeds of the Offering. As additional compensation, the Company also agreed
to issue to the Agent such number of non-transferrable compensation options (the “Agent Options”) equal to 8.0% of the number
of Units sold pursuant to the Offering. Each Agent Option is exercisable for one Unit (an “Agent Unit”) at an exercise price
of C$3.00 until the third anniversary of the Closing Date. Each Agent Unit consists of (i) one share of Common Stock, and (ii) one Common
Stock purchase warrant (each, an “Agent Unit Warrant”). The Agent Unit Warrants will be issued under a Warrant Indenture,
and have the same attributes as the Warrants to be comprised in the Units.
Furthermore, the Company
agreed to issue 83,333 units of securities (the “Advisory Fee Units”) to the Agent as compensation for certain strategic advisory
and support services rendered. This number was determined by dividing C$250,000 by the Offering Price. Each Advisory Fee Unit is comprised
of (i) one share of Common Stock, and (ii) one warrant exercisable to purchase one share of Common Stock at an exercise price of C$3.50
for a period of 36 months from the Closing Date.
Pursuant to the terms of the Agency Agreement,
the Company also agreed to grant the Agent an option (the “Over-Allotment Option”), exercisable in whole or in part, at the
sole discretion of the Agent, at any time up to 30 days following the Closing Date, to purchase from the Company: (i) up to such additional
number of Units (the “Over-Allotment Units”) equal to 15% of the number of Units sold under the Offering (the “Over-Allotment
Number”) at the Offering Price; (ii) up to such number of additional Warrants (the “Over-Allotment Warrants”) equal
to 15% of the number of Warrants comprising the Units sold under the Offering at C$0.4898 per Over-Allotment Warrant; (iii) up to such
number of additional shares of Common Stock (the “Over-Allotment Unit Shares”) equal to 15% of the number of shares of Common
Stock comprising the Units sold under the Offering at C$2.5102 per Over-Allotment Unit Share; or (iv) any combination of Over-Allotment
Units, Over-Allotment Warrants, and Over-Allotment Unit Shares, so long as the aggregate number of Over-Allotment Units, Over-Allotment
Warrants, and Over-Allotment Unit Shares does not comprise together more than what is included in the Over-Allotment Number of Over-Allotment
Units. The Over-Allotment Option was granted to the Agent solely to cover over-allotments, if any, and for market stabilization purposes.
On June 21, 2021, the Offering closed whereby
the Company sold 1,976,434 Units for aggregate gross proceeds of C$5,929,302 before deducting offering expenses. The Company also issued
83,333 Advisory Fee Units and 158,115 Agent Options to the Agent at the closing of the Offering. In connection with the closing of the
Offering, the Company entered into a Warrant Indenture (the “Warrant Indenture”) with Odyssey Trust Company (the “Warrant
Agent”), pursuant to which the Company issued Warrants to purchase up to a maximum of 4,223,333 shares of Common Stock. Each Warrant
is exercisable at any time after June 21, 2021, and prior to June 21, 2024.
On June 21, 2021, the Company filed a prospectus
supplement (the “Resale Prospectus Supplement”) to the Registration Statement. The Resale Prospectus Supplement covered the
resale of the shares of Common Stock, Warrants (and the Warrant Shares underlying the Warrants), and Agent Options sold in the Offering,
and may be used by the selling stockholders or certain of their respective assigns identified therein to resell such securities.
Overallotment-Allotment Offering –
July 2021
On July 27, 2021, the Company closed the partial
exercise of the over-allotment option granted to the Agent in connection with the Offering in Canada (the “Over-Allotment Offering”),
whereby the Company sold an additional 201,700 Units for aggregate gross proceeds of C$605,100 before deducting offering expenses. The
Company also issued an additional 16,136 non-transferrable Agent Options to the Agent as compensation for certain strategic advisory and
support services rendered to the Company in connection with the Offering.
In connection with the Over-Allotment Offering,
on July 27, 2021, the Company filed a prospectus supplement to its shelf registration statement on Form S-3 (Registration No. 333-248069),
which was initially filed with the Commission on August 17, 2020, and was declared effective on August 26, 2020. The prospectus supplement
covers the resale of the shares of Common Stock, Warrants (and the Warrant Shares underlying the Warrants), and Agent Options sold in
the Over-Allotment Offering, and may be used by the selling stockholders or certain of their respective assigns identified therein to
resell such securities.
Conversion of promissory notes-July 2021
On July 21, 2021, the total outstanding convertible
promissory notes of $2,911,000, with the exception of two convertible promissory notes issued amounting to principal amount of $30,000,
converted their notes into shares issued as additional paid in capital.
Sale of Common stock & Warrants - August
2021
On August 6, 2021, Logiq entered into a Stock
Purchase Agreement with certain investors, pursuant to which the Company agreed to issue and sell, in a registered direct offering, 1,668,042
shares of the Company’s common stock to the purchasers at an offering price of $2.40 per share.
The offering resulted in gross proceeds of approximately
$4,003,301 before deducting offering expenses. The Shares were offered by the Company pursuant to a prospectus supplement to the Company’s
Registration Statement.
On August 6, 2021, the Company issued warrants
(each, a “Warrant”) to purchase up to 1,668,042 shares of common stock. Each Warrant is a cash warrant and is exercisable
at any time after August 6, 2021, and prior to August 6, 2024, with an exercise price of $2.85 per share (subject to a contractual 8%
discount for one holder).
The Warrants were issued in reliance on the exemption
from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, to a limited number of persons who are “accredited
investors” or “sophisticated persons” as those terms are defined in Rule 501 of Regulation D promulgated by the SEC
or Regulation S thereunder, without the use of any general solicitation or advertising to market or otherwise offer the Warrants for sale.
None of the Warrants or the Common Stock underlying such Warrants have been registered under the Securities Act of 1933, as amended, or
applicable state securities laws, and none may be offered or sold in the United States absent registration under the Securities Act of
1933, as amended, or an exemption from such registration requirements.
During the period from October 1, 2021 to December 31, 2021, a total
of 106,041 shares with par value of $0.0001 per share were issued to various stockholders.
Capital reserve
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 Logiq, Inc. Nevada formerly known as Origin8, Inc. incorporating
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.
On November 2, 2020, the Company acquired substantially
all the assets of Fixel AI Inc., a Delaware corporation (“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.
In July 2019, the Company issued a total of 51,762,839
Reg S shares to high net worth individuals and family offices in South East Asia.
During the year ended December 31, 2019, a total
of 19,311,309 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 58,627,601 shares
with par value of $0.0001 per share were issued to various stockholders.
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.
Cancellation of Common Stock
During the year ended December 31, 2019, 3,550,000
shares with par value of $0.0001 per share were cancelled by various stockholders.
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 year ended December 31, 2021, 2,788,972
shares with par value of $0.0001 per share were cancelled by various stockholders.
Employee Stock Option Plan
The Company has a stock option and incentive plan,
the “Stock Option Plan”. The exercise price for all equity awards issued under the Stock Option Plan is based on the fair
market value of the common share price which is the closing price quoted on the Pink Sheets on the last trading day before the date of
grant. The stock options generally vest on a monthly basis over a two-year to three-year period, and have a five-year life.
A summary of the Company’s stock option
activity during the year ended December 31, 2019 is presented below:
| |
Number of options | | |
Weighted Average Exercise Price | | |
Weighted Average Grant-date Fair Value | | |
Weighted Average Remaining Contractual Life (Years) | | |
Aggregate Intrinsic Value | |
Options Outstanding, December 31, 2014 | |
| 250,000 | | |
| 0.6 | | |
| 2.8 | | |
| 0.67 | | |
$ | - | |
Less: Option expired | |
| (250,000 | ) | |
| 0.6 | | |
| 2.8 | | |
| - | | |
| - | |
Options Outstanding, December 31, 2015 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Options Outstanding, December 31, 2016 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Options Outstanding, December 31, 2017 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Options Outstanding, December 31, 2018 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Options Outstanding, December 31, 2019 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Options Outstanding, December 31, 2020 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Options Outstanding, December 31, 2021 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
All options outstanding are fully expired as of
December 31, 2020. No new options were granted in the fiscal year 2020 or 2019.
Stock-Based Compensation
For the fiscal year ended December 31, 2021, a
total of 2,313,941 shares of common stock was issued as stock-based compensation to directors, consultants, advisors 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 twelve months ended December 31, 2021 and 2020, respectively:
| |
For the three months ended December 31, | | |
For the twelve months ended December 31, | |
| |
2021 | | |
2020 | | |
2021 | | |
2020 | |
Numerator - basic and diluted | |
| | |
| | |
| | |
| |
Net (Loss) | |
$ | (5,295,993 | ) | |
$ | (7,142,483 | ) | |
$ | (20,126,787 | ) | |
$ | (14,509,669 | ) |
| |
| | | |
| | | |
| | | |
| | |
Denominator | |
| | | |
| | | |
| | | |
| | |
Weighted average number of common shares outstanding - basic and diluted | |
| 26,307,321 | | |
| 14,093,979 | | |
| 21,187,556 | | |
| 12,678,904 | |
(Loss) per common share - basic and diluted | |
$ | (0.2013 | ) | |
$ | (0.5068 | ) | |
$ | (0.9499 | ) | |
$ | (1.1444 | ) |
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.
NOTE 17 – COMMITMENTS AND CONTINGENCIES
Operating lease
The Company’s current executive offices
are currently leased for $923 per month.
Logiq Inc (Nevada) leases approximately 12,422 square feet comprising
8,737 square feet of office space and 3,685 square feet of warehouse space in Minneapolis, Minnesota, at a rate of $210,000 per annum.
The original lease of office space from a related party under common ownership was a 7.5-year lease expiring December 31, 2021. The
company extended its lease on the primary offices with a renewal option providing for additional lease period of twelve (12) months expiring
December 31, 2022.
The operating lease is listed as separate line item on Logiq,
Inc. (Nevada)’s December 31, 2020 and 2019 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
December 31, 2021 and 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 December 31, 2021 and 2020, total operating right-of-use
assets were $91,571 and $364,234, respectively. All operating lease expense is recognized on a straight-line basis over the lease term.
For the years-ended December 31, 2021 and 2020, the Group recorded
approximately nil and $8,400 in amortization expense related to finance leases.
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 December 31, 2021 | | |
As of December 31, 2020 | |
Cash paid for operating lease liabilities | |
$ | 367,200 | | |
| 367,200 | |
Remaining lease term | |
| 1 year | | |
| 1 year | |
Discount rate | |
| 1.5 | % | |
| 1.5 | % |
Future minimum lease payments under the non-cancellable
operating lease agreements are as follows:
2021 | |
$ | 91,800 | |
| |
| | |
Less imputed interest | |
| (229 | ) |
Total lease liability | |
$ | 91,571 | |
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 of
Logiq, Inc. (a Nevada corporation), Fixel AI, Inc. and Rebel AI Inc.
The following table presents the segment information
for the years ended December 31, 2021 and 2020:
| |
For the three months ended December 31, | | |
For the twelve months ended December 31, | |
| |
2021 | | |
2020 | | |
2021 | | |
2020 | |
Logiq (Delaware) incl APPLogiq | |
| | |
| | |
| | |
| |
Segment operating income | |
$ | 6,206,027 | | |
$ | 2,112,988 | | |
$ | 14,340,379 | | |
$ | 22,758,572 | |
Other corporate expenses, net | |
| 8,486,664 | | |
| 7,951,920 | | |
| 26,075,798 | | |
| 32,772,548 | |
Total operating income | |
| (2,280,637 | ) | |
| (5,838,932 | ) | |
| (11,735,419 | ) | |
| (10,013,976 | ) |
| |
| | | |
| | | |
| | | |
| | |
Logiq (Nevada) incl DATALogiq | |
| | | |
| | | |
| | | |
| | |
Segment operating income | |
$ | 6,930,284 | | |
$ | 4,470,646 | | |
$ | 23,006,480 | | |
$ | 15,151,821 | |
Other corporate expenses, net | |
| 9,945,640 | | |
| 5,774,197 | | |
| 31,397,848 | | |
| 19,647,514 | |
Total operating income | |
| (3,015,356 | ) | |
| (1,303,551 | ) | |
| (8,391,368 | ) | |
| (4,495,693 | ) |
| |
| | | |
| | | |
| | | |
| | |
Consolidated | |
| | | |
| | | |
| | | |
| | |
Segment operating income | |
$ | 13,136,311 | | |
$ | 6,583,634 | | |
$ | 37,346,859 | | |
$ | 37,910,393 | |
Other corporate expenses, net | |
| 18,432,304 | | |
| 13,726,117 | | |
| 57,473,646 | | |
| 52,420,062 | |
Total operating income | |
| (5,295,993 | ) | |
| (7,142,483 | ) | |
| (20,126,787 | ) | |
| (14,509,669 | ) |
Significant Customers
No revenues from any single customer exceeded 10% of total net revenues
in 2021 and 2020.
NOTE 19 – GEOGRAPHICAL INFORMATION
| |
2021 | | |
% | | |
2020 | | |
% | | |
2019 | | |
% | |
Southeast Asia | |
$ | 7,170,190 | | |
| 19.2 | | |
| 12,109,193 | | |
| 31.9 | | |
| 25,988,621 | | |
| 75.0 | |
EU | |
| 3,585,095 | | |
| 9.6 | | |
| 5,570,000 | | |
| 14.7 | | |
| 5,888,800 | | |
| 17.0 | |
South Korea | |
| 2,151,056 | | |
| 5.8 | | |
| 3,770,000 | | |
| 9.9 | | |
| 2,771,200 | | |
| 8.0 | |
Africa | |
| 1,434,038 | | |
| 3.8 | | |
| 961,200 | | |
| 2.5 | | |
| - | | |
| - | |
North America | |
| 23,006,480 | | |
| 61.6 | | |
| 15,500,000 | | |
| 40.9 | | |
| - | | |
| - | |
Total revenue | |
$ | 37,346,859 | | |
| 100.0 | | |
$ | 37,910,393 | | |
| 100.0 | | |
$ | 34,648,621 | | |
| 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 year ended December 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 substantially
all the assets of 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 | |
Property, plant and equipment | |
| - | |
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 year ended December 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 December 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
AppLogiq Spin-Off
On December 15, 2021,
we entered into various agreements with Lovarra, a Nevada corporation (“Lovarra”) and public reporting subsidiary of the Company,
pursuant to which the Company agreed to transfer its AppLogiq business to Lovarra, subject to customary conditions and approvals and completion
of requisite financial statement audits (the “Separation”). Lovarra is a fully reporting U.S. public company, which is approximately
78.5% owned by the Company’s wholly owned subsidiary GoLogiq LLC (“GoLogiq”). In connection with the Separation, the
Company intends to distribute, on a pro rata basis, 100% of the Company’s ownership interests in Lovarra to the Company’s
shareholders of record as of December 30, 2021 (the “Record Date”) (the “Distribution,” and collectively with
the “Separation,” the “Spin Off”), which Distribution of said shares is expected to occur six months from completion
of the Separation (the “Distribution Date”).
On January 27, 2022,
we completed the transfer of our AppLogiq business to Lovarra. In connection with the completion of the transfer of AppLogiq to Lovarra,
Lovarra issued 26,350,756 shares of its common stock to the Company (the “Lovarra Shares”). The Company will hold the Lovarra
Shares until it distributes 100% of the Lovarra Shares to the Company’s stockholders of record as of December 30, 2021 on a 1-for-1
basis (i.e. for every 1 share of Logiq held on December 30, 2021, the holder thereof will receive 1 share of Lovarra), which the Company
intends to complete approximately 6 months from now, subject to customary conditions and approvals.
Until such time as the
Distribution is complete, we will consolidate and report the financials of the AppLogiq business as a consolidated subsidiary of Logiq.