UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number: 000-51815
LOGIQ, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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46-5057897 |
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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85 Broad Street, 16-079
New York, NY
10004
(Address of principal executive offices, including Zip Code)
(808)
829-1057
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each
class |
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Trading symbol(s)
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Name of each exchange on which
registered |
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.0001
par value per share
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities
Act. ☐
Yes ☒ No
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act.
☐ Yes ☒ No
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. ☒
Yes ☐ No
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). ☒
Yes ☐ No
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
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Large accelerated filer |
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging Growth Company |
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant has filed a report on
and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Act). ☐
Yes ☒ No
The aggregate market value of the registrant’s common
stock held by non-affiliates as of March 31, 2021, based upon the
closing price of the registrant’s common stock as reported by the
OTC:QX on such date, was approximately $100,767,528. This
calculation does not reflect a determination that persons are
affiliates for any other purposes.
As of March 29, 2022 the issuer had 26,243,516 shares of common
stock issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: None.
Table of Contents
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
This annual report on Form 10-K (“Annual Report”) and other reports
that we file with the SEC contain statements that are considered
forward-looking statements. Forward-looking statements give the
Company’s current expectations, plans, objectives, assumptions or
forecasts of future events. All statements other than statements of
current or historical facts contained in this Annual Report,
including statements regarding the Company’s future financial
position, business strategy, budgets, projected costs and plans and
objectives of management for future operations, are forward-looking
statements. In some cases, you can identify forward-looking
statements by terminology such as “anticipate,” “could,” “would,”
“continue” “estimate,” “plans,” “potential,” “projects,” “ongoing,”
“expects,” “management believes,” “we believe,” “we intend,” and
similar expressions. These statements are based on the Company’s
current plans and are subject to risks and uncertainties, and as
such, the Company’s actual future activities and results of
operations may be materially different from those set forth in the
forward-looking statements.
The forward-looking statements contained or incorporated by
reference in this Annual Report are forward-looking statements
within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act and are subject to the safe
harbor created by the Private Securities Litigation Reform Act of
1995.
Any or all of the forward-looking statements in this Annual Report
may turn out to be inaccurate, and as such, you should not place
undue reliance on these forward-looking statements. The Company has
based these forward-looking statements largely on its current
expectations and projections about future events and financial
trends that it believes may affect its financial condition, results
of operations, business strategy and financial needs. The
forward-looking statements can be affected by inaccurate
assumptions or by known or unknown risks, uncertainties and
assumptions due to a number of factors, including:
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our
ability to raise capital, which in turn is related to the
performance of our stock price and liquidity; |
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dependence on key personnel; |
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continued growth of mobile app
markets; |
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the
operation of our business; and |
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general economic conditions in the ASEAN,
Asia-Pacific Region, and in the United States. |
These forward-looking statements speak only as of the date on which
they are made, and except to the extent required by federal
securities laws, we undertake no obligation to update any
forward-looking statements to reflect events or circumstances after
the date on which the statement is made or to reflect the
occurrence of unanticipated events. In addition, we cannot assess
the impact of each factor on our business or the extent to which
any factor, or combination of factors, may cause actual results to
differ materially from those contained in any forward-looking
statements. Furthermore, among the important factors that could
cause actual results to differ materially from those indicated by
forward-looking statements are the risks and uncertainties
described under “Risk Factors” in this Annual Report and elsewhere
in this document and in our other filings with the SEC.
USE OF TERMS
Except as otherwise indicated by the context, all references in
this Annual Report to:
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“Logiq,” “Company,” “we,” or “our,” unless the context otherwise
requires, are to Logiq, Inc. and all its subsidiaries that may
exist from time to time;
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“SEC”
is to the United States Securities and Exchange
Commission; |
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“Securities Act” is to the Securities Act of
1933, as amended; |
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“Exchange Act” is to the Securities Exchange Act
of 1934, as amended; and |
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“U.S.
dollar,” “USD,” “US$” and “$” are to the legal currency of the
United States. |
PART I
Item 1. Business
Corporate Information
Logiq, Inc., formerly known as Weyland Tech, Inc., is a Delaware
corporation that incorporated in 2004. Logiq is headquartered in
New York, with offices in New York City, Singapore, Minneapolis, MN
and Jakarta, Indonesia.
On September 25, 2020, the Company commenced trading under the
Company’s new name, Logiq, Inc., under its new symbol: “LGIQ”. The
Company’s common stock is quoted on the OTCQX Market.
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.
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 (https://www.createapp.com/), 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 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:
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In
May 2018, the Company expanded its portfolio to fintech
applications with the launch of its PayLogiq mobile payments
platform in Indonesia. |
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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. |
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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. |
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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. |
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On
March 3, 2021, the Company entered into an Agreement and Plan of
Merger whereby Rebel AI, Inc., a Delaware corporation (“Rebel”),
would become a wholly-owned subsidiary of the Company, thereby
acquiring Rebel’s platform of enabling brands and agencies to
securely transact media and activate first-party data. Although the
parties have entered into the merger agreement, the parties intend
to consummate the merger upon satisfaction or waiver of certain
conditions as set forth in the merger agreement. |
Products
General
Since 2017, we have been focused on enabling mobile commerce via
our enhanced platform offered on a PaaS basis, and the Company’s
e-wallet initiative. Product launches with our strategic partners
DPEX Worldwide Express (S) PTE. Ltd. (Indonesia), BGT Corp Public
Company Limited (Thailand), and Augicom Telecom SA (France) are
representative of the PaaS platform strategy and product offering.
As of the date of this Annual Report, we offer the following
products (each of which is described below): (i) APPLogiq, (ii)
PAYLogiq, (iii) GOLogiq; and (iv) the DATALogiq branded consumer
data management platform.
AppLogiq
APPLogiq, the Company’s core product and PaaS, allows SMBs to
create mobile apps for their business without the need of technical
knowledge, high investment, or background in IT.
APPLogiq has evolved over the course of 2017, 2018 and 2019 to
capitalize on the immediate opportunity for developing a larger
network of valuable users and merchants by developing services that
will enable the adoption of mobile commerce across Greater South
East Asia and the United States. The platform enhancements have
taken the Company’s technology from a standalone “do-it-yourself”
(“DIY”) app builder to an enhanced platform built to enable
mobile commerce by empowering users to create their own e-commerce
and mobile-commerce ecosystem.
In 2019, the Company focused on scaling this business model by
continuing to develop and expand strategic partnerships that would
increase the number of users, and the merchants available to users,
of the Company’s products on a PaaS basis. These efforts expanded
on the success of recent product launches representative of the
PaaS platform strategy and product offerings with our strategic
partners, and after extensive discussions with our partners,
management believes that supporting these initiatives through
deeper engagement, interaction, and co-marketing/sales
substantially benefited the Company in 2018 and 2019. As a result,
our year-over-year revenues increased by 45% in 2018 and by 52% in
2019. For 2020 over 2019, in spite of COVID-19, the Company worked
to improve gross profit margins while reducing older, white-label
partnership revenues and although year-over-year revenues decreased
by 34%, the gross profits margins improved to approximately 25.8%
due to a loss of customers as a result of adverse effects of the
on-set of Covid-19 in March 2020 and the provision of complimentary
services in an effort to retain customers.
In 2020 and 2021, we have revamped Version 4 of our CreateApp
platform with the following added functionalities: E-Store Multiple
Product Variations & Options, Food-Ordering Self Pickup &
Delivery options, Google Maps Autocomplete Address
Integration, Google Fonts
Integration, Dynamic Global Font Size, Line Integration, Lazy Load
& Shimmer Effect Implementation and a customer focused Support
Service Desk Widget dashboard.
We are planning to introduce a data warehousing project. This
project will enhance browsing speed by reconstruct &
restructure our platform to handle big data in chunks dynamically.
We plan to implement SPA (Single Page Applications) to rewrite the
pages dynamically to the current web page with new data from the
webserver instead of loading entire new pages. We also process the
data and store it as an object array in the server's memory for
faster data fetching. The overall browsing experience will feel
more like a native app.
PayLogiq
Launched in late 2017 as the Company’s e-wallet initiative,
PAYLogiq is a ‘consumer facing’ product offering that supports the
PaaS strategy developed by the enhancements to the AppLogiq
platform providing payment capabilities to users of our platform.
Moreover, PAYLogiq is designed to be a robust and universal payment
platform, and its growth is therefore not limited to the Company’s
PaaS customers alone.
Since its launch, PAYLogiq has surpassed the Company’s expectations
as it has achieved stronger than anticipated customer traction with
limited marketing expense. In 2020, PAYLogiq’s total gross mobile
transaction volume totaled $16.4 million.
GOLogiq
GOLogiq is our PaaS platform that provides mobile payment
capabilities for the local food delivery service industry. We
launched GOLogiq in the fall of 2019 in Jakarta, Indonesia, and as
of December 31, 2020, GOLogiq has reached a registered customer
base of 166,000 mobile users. The Company plans to continue to
reinvest in GOLogiq in order to increase user growth and regional
expansion with its unique pedestrian-powered approach to urban food
delivery.
DATALogiq Consumer Data
Management Platform
DATALogiq 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
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. DATALogiq
also licenses its software technology and provides managed
technology services to various other e-commerce companies.
DATALogiq is located in Minneapolis, Minnesota, USA.
Product Development
DATALogiq is developing an end-to-end marketing technology platform
utilizing big data and artificial intelligence (“AI”) for
enterprise and SMB clients that will allow clients to develop
desired target audiences, activate campaigns, insert creative
content and broadcast through a cost-effective advertising channel
for the campaign.
Development of our software is focused on expanding product lines,
designing enhancements to our core technologies, and integrating
existing and new products into our principal software architecture
and platform technologies. We intend to continue to offer regular
updates to our products and to continue to look for opportunities
to expand our existing suite of products and services.
To date, we have primarily developed products internally, sometimes
also licensing or acquiring products, or portions of products, from
third parties. These arrangements sometimes require that we pay
royalties to third parties. We intend to continue to license or
otherwise acquire technology or products from third parties when it
makes business sense to do so.
In the third quarter of 2020, we rebranded under the Logiq name.
Our offerings now extend from mobile commerce and fintech solutions
for SMBs, to AI-powered, SaaS-based digital marketing solutions for
enterprises and major brands. We believe the Logiq branding better
reflects the use of data analytics that underlies both of our
business segments.
Our customer relationships now range from hundreds of thousands of
SMBs around the world to publicly traded Fortune 1000 companies.
Among our notable customers are QuinStreet (a marketing technology
company), Purple (the creator of the renowned Purple mattress) and
Sunrun (a solar company).
These new major clients reflect our transformation, which
began with the completion of our acquisition of the assets of
Push. This has led to the streamlining during the third
quarter of 2020 of our various brands and business units into two
business segments: DataLogiq and AppLogiq.
DATALogiq’s data engine uses proprietary methodologies and
AI systems to deliver valuable consumer insights that can
dramatically enhance the effectiveness, reach, and return on
investment of online marketing spend for enterprises and major
brands. Alongside DataLogiq is our new Fixel subsidiary that
offers simplified online marketing with critical privacy
features.
Our APPLogiq mobile commerce PaaS enables SMBs worldwide to
easily create and deploy a native mobile app for their business
without technical knowledge or background. APPLogiq empowers
businesses to reach more customers, increase sales, manage
logistics, and promote their products and services in an easy and
affordable way. Our APPLogiq mobile platform now also
includes our PAYLogiq fintech and GOLogiq delivery
services that have garnered great interest from potential partners
due to the deep consumer data both have been acquiring since their
inception.
The combination of APPLogiq’s mobile platform and
DATALogiq’s data engines offers a uniquely powerful
e-commerce and m-commerce platform for many types of businesses and
brands. We have and will continue to integrate, existing and new,
cutting-edge services with the aim of providing a comprehensive and
differentiated e-commerce and m-commerce offering for our existing
and interested, new customers.
Soon after the close of the Push asset acquisition, the impact of
the COVID-19 pandemic quickly emerged, with global lockdowns and
the corresponding impact on SMBs. Fortunately, due to the
diversification of our revenue sources we have thus far been able
to weather the storm. While our APPLogiq m-commerce
business, targeted at distributors and SMB end users, has been
adversely affected by the lockdown of traditional commercial
businesses, our DATALogiq e-commerce data-driven digital
marketing business has benefited by shifting to the many solely
online businesses that have experienced an uptick in demand due to
the pandemic.
Importantly, for DATALogiq, the recent acquisition of Fixel
and its audience targeting solution has meant the introduction of a
new SaaS revenue stream. Audience targeting is the ability to take
the full audience of prospective customers and segment it into
groups based on different criteria, including online behavioral
characteristics, demographics, interests, and intent. The
acquisition reflects our ability to adapt to the substantial
industry shift that the end of the third party cookies represents.
Fixel provides a timely solution to the loss of third party data
that addresses the consumer privacy concerns that gave rise to the
coming decline in third party cookies.
Our Competitive
Strength
Logiq has an AI-driven, first party data, privacy compliant
targeting solution that does not rely on third party cookie
solutions. Our proprietary technology does not use any personally
identifiable information or third party cookie information. Rather,
it relies only on first party data collected on an advertiser’s or
publisher’s website. The AI engine has the unique ability to
determine the “most engaged visitors” to a website and then use
that information to target them on Google, Facebook, Yahoo, Bing,
LinkedIn, TradeDesk and other major platforms. At the heart of our
data solution lies the value – the AI engine that analyzes and
makes judgements about all visitors to a site.
By segmenting site visitors into Baseline, Medium and High
categories, these designations can be leveraged when creating
campaigns on any of these destinations. These segments are touted
to give our customers the best insight into who are the most
engaged audiences in the 90 to 95% of site visitors who don’t
convert.
Across advertisers, publishers, agencies and tech platforms (such
as demand side platforms that allow buyers of digital advertising
inventory to manage multiple advertising exchange and data exchange
accounts through one interface), the Logiq solution is viewed by
existing customers (through their feedback to Logiq) to be a
solution that can gain rapid adoption, as the industry trend is one
where ecosystem constituents look to move away from their current
third party cookie targeting initiatives. Our solution is not only
for advertising purposes but could also be applied to a marketer’s
analytics stack to gain deeper insights and understanding of their
visitors’ behavior.
Today, Logiq uses its proprietary advertising and marketing
technology platform to provide direct-to-consumer marketing
services to advertisers. Our technology platform has proven to find
in-market audiences and convert them to paying customers. Today,
our technology is being used by enterprise brands such as Purple
Mattress, Sunrun, and QuinStreet. A key next phase of the Company
is to go downstream to small to medium size e-commerce agencies and
brands by providing a new kind of marketing solution that delivers
enterprise level capabilities via a simplified, do-it-yourself,
automated platform.
Our Strategy
Our growth strategy is a multi-pronged approach, consisting of the
following:
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Development of an end-to-end unified SaaS
offering. We expect to unify all of our technology platforms
into one framework to provide a streamlined user experience for
customers to leverage all of our applications through a SaaS
model. |
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Expand our customer base and business
relationships. Today, we are already installed in major media
companies and technology platforms. We intend to increase the usage
of our technology and deepen technology relationships to drive
increased revenue. |
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Expand salesforce to acquire new brands and
online advertisers. We intend to increase our salesforce to
expand our existing business relationships with leading media
networks and advertising agencies and to aggressively activate new
brand advertiser relationships and business joint
ventures. |
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Focus on SMBs. We believe that there is a
significant opportunity for an end-to-end advertising and marketing
technology solution for SMBs seeking to grow their online sales
without dealing with the many challenges of integrating multiple
point solutions. We intend to heavily market our platforms to
SMBs. |
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Maintain innovation. We continue to
develop and introduce new features and improved functionality to
our platforms. Key initiatives include development of easy to use
self serve platforms for SMBs, and continued development of
AI-driven marketing technologies. |
Sales and Marketing
Our sales and marketing efforts are focused on promoting sales,
producing expert content and brand awareness. The Company believes
that our resellers agreements signed in 2015, 2016, and 2017
created a large enough addressable market opportunity to generate
sales and profits in a scalable manner, grow the Company’s business
and enhance shareholder value. Given the nature of DIY mobile apps
and the primary target market of SMBs, a typical go-to-market
strategy would have a direct sales force or resellers approach SMBs
directly to drive our revenue.
The Company has further evolved our PaaS platform with two distinct
market paths to drive recurring revenue business model:
A) Cooperation agreements in countries/regions where our partners
are responsible for targeting SMBs either through an installed base
of customers or groups of direct sellers with a sales and marketing
team focusing on end customers. The 2020 partnership with KMSB is
representative of this revised path.
B) Digital wallet or e-wallet solutions. A distinguishing
characteristic of Greater South East Asia (“GSEA”) compared
to the United States is the substantially lower percentage of the
population in GSEA with bank accounts, credit cards, or debit
cards. This creates the need for alternative payment methods,
specifically e-wallets according to the International Data
Corporation (IDC). GSEA is poised for its own payments
transformation in much the same way that China has shifted to
online payments. Online payments in GSEA is divided into four broad
payment modes: e-wallets (such as our PayLogiq platform), credit
cards, debit cards and online banking. Of these IDC experts, the
e-wallet mode is expected to grow the fastest over the next five
years. Drivers for GSEA’s e-wallet industry include the mismatch
between internet penetration and banking penetration (which creates
a structural opportunity for e-wallet), the increasing integration
of e-wallets with use cases such as online games and e-commerce,
and the opportunity to offer broader digital financial services
using e-wallets as a foundation.
With the above strategy, we believe that the Company will be able
to maintain a lower capital expenditure base due to the ‘level-two’
customer support vs. ‘level-one’ customer support, smaller sales
and marketing teams, and the need to provide hosting services.
The Company’s APPLogiq platform operates as a PaaS allowing users
to develop their own applications supplying the infrastructure 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.
We do not compensate resellers and distributors. Instead, the end
user pays the reseller/distributor directly as well as paying for
our services, for which we or our reseller/distributor in licensed
territories bill the end user separately.
Markets, Geography, and Seasonality
Our products and services are predominantly sold in North America
and the Southeast Asian markets. Based on our current and
historical balance sheets and statement of operations, it does not
appear that our business or operations experience any seasonality
with respect to our sales as any such seasonality appears to be
unpredictable. Although we believe our customers’ historical buying
patterns and budgetary cycles may be a factor that impacts our
quarterly sales results, we are not able to reliably predict our
sales based on seasonality because outside factors (timing,
introduction of new products and services, and other economic
factors impacting our industry) can also substantially impact our
revenues during the year.
Major Customers
No single customer represented significant concentration risk
during 2021 APPLogiq’s continued shift in focus away from bulk
white label distributors to direct marketing end users.
For the DATALogiq business segment in the year ended December 31,
2021, there is no significant customer concentration risk based on
our total consolidated revenues.
Research and Development
Our R&D strategy is to offer cutting edge financial, marketing,
and advertising technology to the Company’s present and future
customers. The Company continues to invest in website, e-commerce
platform and mobile app development. In addition, the Company
continues to develop its system support knowledge base and other
internal systems.
The Company’s commercial and corporate-strategy functions
collaborate closely with the R&D team on the Company’s
priorities. The R&D strategy determines what capabilities and
technologies the Company must have in place to bring the desired
solutions to market. R&D capabilities are the technical
abilities to discover, develop, or scale marketable solutions.
Capabilities are unlocked by a combination of technologies and
assets, and focus on the outcomes. The choices of operating
model and organizational design will ultimately determine how well
the R&D strategy is executed.
Competition
Our business is rapidly evolving and highly competitive. Our
current and potential competitors include: (i) advertising
companies, web design firms and, more recently, mobile app makers;
(ii) other DIY mobile app companies; (iii) a number of indirect
competitors, including media companies, web portals, comparison
shopping websites, and web search engines, either directly or in
collaboration with SMBs; (iv) companies that provide e-commerce and
e-wallet services, including website/app development; and (v)
companies that provide infrastructure web and mobile services. We
believe that the principal competitive factors in our mobile apps
business include ease of use, affordability and broad range of
functionality. Many of our current and potential competitors have
greater resources, longer histories, more customers, and greater
brand recognition. They may adopt more aggressive pricing and
devote more resources to technology, functionality and ease of use
and marketing. Other companies also may enter into business
combinations or alliances that strengthen their competitive
positions.
E-commerce
We face competition principally from regional players that operate
across several markets in the U.S., Europe, and Asia. We also face
competition from single-market players in those regions. We compete
to attract, engage and retain buyers based on the variety and value
of products and services listed on our marketplaces, overall user
experience and convenience, online communication tools, integration
with mobile and networking applications and tools, quality of
mobile applications, and availability of payment settlement and
logistics services. We also compete to attract and retain sellers
based on the number and engagement of buyers, the effectiveness and
value of the marketing services we offer, commission rates and the
usefulness of the services we provide including data and analytics
for potential buyer targeting, cloud computing services and the
availability of support services, including payment settlement and
logistics services.
E-wallet Platforms
PAYLogiq competes primarily with credit card and debit card service
providers, banks with payment processing offerings, other offline
payment options and other electronic payment system operators.
PAYLogiq competes with these companies primarily on the basis of
transaction processing speed, convenience, network size,
accessibility, reliability and price. We believe the combination of
PAYLogiq’s numerous physical merchant locations and the PAYLogiq
App is a significant competitive advantage because of the strong
demand in GSEA for convenient forms of payment processing.
Intellectual Property
The Company has, under a software purchase agreement, the eWallet
platform currently operating under the brand names AtozPay and
AtozGo in Indonesia (PAYLogiq and GOLogiq respectively), and the
global rights to market and operate in other countries
worldwide.
In addition, the Company has acquired the rights to the following
United States trademarks through its acquisition of the Push
assets:
|
1. |
United States Trademark “Astrology Nova”
(Registration Number 5631852), registered under Push Holdings,
Inc. |
|
2. |
United States Trademark “BlueDrone” (Registration
Number 5528307), registered under Comiseo, Inc. |
The Company is in the process of registering transfers of these
trademarks with the United States Patent and Trademark Office into
the name of the Company.
The Company has three trademarks pending for registration in the
United States for the word mark “Logiqx” under serial numbers
8885602, 88856050 and 88856033.
Employees
We believe that our future success will depend, in part, on
our ability to continue to attract, hire, and retain qualified
personnel.
The Company currently has thirty-seven full-time contracted
personnel in Singapore, Myanmar, Hong Kong and the United States.
None of our employees are represented by a union or covered by a
collective bargaining agreement.
Government Approval
Because our core business is to provide a PaaS platform that allows
SMBs to build their presence on mobile devices, we do not believe
that any government agency approval is required for the products
and services that we provide to our customers.
Government Regulations
We and our clients currently use pseudonymous data about Internet
and mobile app users on our platform to manage and execute digital
advertising campaigns in a variety of ways, including delivering
advertisements to end users based on their geographic locations,
the type of device they are using, their interests as inferred from
their web browsing or app usage activity, or their relationships
with our clients. Such data is passed to us from third parties,
including original equipment manufacturers, application providers,
and publishers. We do not use this data to discover the identity of
individuals, and we currently prohibit clients, data providers and
inventory suppliers from importing data that directly identifies
individuals onto our platform.
Our ability, like those of other advertising technology companies,
to collect, augment, analyze, use and share data relies upon the
ability to uniquely identify devices across websites and
applications, and to collect data about user interactions with
those devices for purposes such as serving relevant ads and
measuring the effectiveness of ads. The processes used to identify
devices and similar and associated technologies are governed by
U.S. and foreign laws and regulations and dependent upon their
implementation within the industry ecosystem. Such laws,
regulations, and industry standards may change from time to time,
including those relating to the level of consumer notice, consent
and/or choice required when a company employs cookies or other
electronic tools to collect data about interactions with users
online.
In the U.S., both federal and state legislation govern
activities such as the collection and use of data, and privacy in
the advertising technology industry has frequently been subject to
review by the Federal Trade Commission (the “FTC”), U.S. Congress,
and individual states. Much of the federal oversight on digital
advertising in the U.S. currently comes from the FTC, which has
primarily relied upon Section 5 of the Federal Trade
Commission Act, which prohibits companies from engaging in “unfair”
or “deceptive” trade practices, including alleged violations of
representations concerning privacy protections and acts that
allegedly violate individuals’ privacy interests. However, there is
increasing consumer concern over data privacy in recent years,
which has led to a myriad of proposed legislation and new
legislation both at the federal and state levels, some of which has
affected and will continue to affect our operations and those of
our industry partners. For example, the California Consumer Privacy
Act of 2018 (the “CCPA”), which went into effect January 1, 2020,
defines “personal information” broadly enough to include online
identifiers provided by individuals’ devices, applications, and
protocols (such as IP addresses, mobile application identifiers and
unique cookie identifiers) and individuals’ location data, if there
is potential that individuals can be identified by such data.
The CCPA creates individual data privacy rights for consumers in
the State of California (including rights to deletion of and access
to personal information), imposes special rules on the collection
of consumer data from minors, creates new notice obligations and
new limits on and rules regarding the “sale” of personal
information (interpreted by many observers to include common
advertising practices), and creates a new and potentially severe
statutory damages framework for violations of the CCPA and for
businesses that fail to implement reasonable security procedures
and practices to prevent data breaches. The CCPA also offers the
possibility to a consumer to recover statutory damages for certain
violations and could open the door more broadly to additional risks
of individual and class-action lawsuits even though the statute’s
private right of action is limited in scope. There have been many
class action lawsuits filed invoking the CCPA outside of the
private right of action provided for by the law. It is unclear at
this point whether any of these claims will be accepted by the
courts. In addition, the California Privacy Rights Act, or CPRA,
recently passed, which will impose additional notice and opt out
obligations on the digital advertising space, including an
obligation to provide an opt out for behavioral advertising. When
the CPRA goes into full effect in January 2023, it will impose
additional restrictions on us and on our industry partners; it is
difficult to predict with certainty the full effect of the CPRA and
its implementing regulations on the industry.
As our business is global, our activities are also subject to
foreign legislation and regulation. In the European Union
(including the European Economic Area (the “EEA”) and the countries
of Iceland, Liechtenstein and Norway), or EU, separate laws and
regulations (and member states’ implementations thereof) govern the
processing of personal data, and these laws and regulations
continue to impact us. The General Data Protection Regulation
(“GDPR”), which applies to us, came into effect on May 25, 2018.
Like the CCPA, the GDPR defines “personal data” broadly, and it
enhances data protection obligations for controllers of such data
and for service providers processing the data. It also provides
certain rights, such as access and deletion, to the individuals
about whom the personal data relates. The digital advertising
industry has collaborated to create a user-facing framework for
establishing and managing legal bases under the GDPR and other EU
privacy laws including ePrivacy (discussed below). Although the
framework is actively in use, it is under attack by the Belgian
Data Protection Authority and others and we cannot predict its
effectiveness over the long term. European regulators
have questioned the framework’s viability and activists have filed
complaints with regulators of alleged non-compliance by specific
companies that employ the framework. Continuing to maintain
compliance with the GDPR’s requirements, including monitoring and
adjusting to rulings and interpretations that affect our approach
to compliance, requires significant time, resources and expense,
and may lead to significant changes in our business operations, as
will the effort to monitor whether additional changes to our
business practices and our backend configuration are needed, all of
which may increase operating costs, or limit our ability to operate
or expand our business.
Additionally, in the EU, EU Directive 2002/58/EC (as amended by
Directive 2009/136/EC), commonly referred to as the ePrivacy or
Cookie Directive, directs EU member states to ensure that accessing
information on an Internet user’s computer, such as through a
cookie and other similar technologies, is allowed only if the
Internet user has been informed about such access, and provided
consent. A recent ruling by the Court of Justice of the European
Union clarified that such consent must be reflected by an
affirmative act of the user, and European regulators are
increasingly agitating for more robust forms of consent. These
developments may result in decreased reliance on implied consent
mechanisms that have been used to meet requirements of the Cookie
Directive in some markets. A replacement for the Cookie Directive
is currently under discussion by EU member states to complement and
bring electronic communication services in line with the GDPR and
force a harmonized approach across EU member states. Although it
remains under debate, the proposed ePrivacy Regulation may further
raise the bar for the use of cookies, and the fines and penalties
for breach may be significant. We cannot yet determine the impact
such future laws, regulations, and standards may have on our
business.
As the collection and use of data for digital advertising has
received media attention over the past several years, some
government regulators, such as the FTC, and privacy advocates have
suggested creating a “Do Not Track” standard that would allow
Internet users to express a preference, independent of cookie
settings in their browser, not to have their online browsing
activities tracked. The CPRA similarly contemplates the use of
technical opt outs for the sale and sharing of personal information
for advertising purposes as well as to opt out of the use of
sensitive information for advertising purposes, and allows for AG
rulemaking to develop these technical signals. If a “Do Not Track,”
“Do Not Sell,” or similar control is adopted by many Internet users
or if a “Do Not Track” standard is imposed by state, federal, or
foreign legislation (as it arguably is to some degree under the
CCPA regulations), or is agreed upon by standard setting groups, we
may have to change our business practices, our clients may reduce
their use of our platform, and our business, financial condition,
and results of operations could be adversely affected.
Furthermore, additional governmental regulations, including foreign
governmental regulations, may affect our business. For more
information, see the section “Risk Factors”.
Environmental Matters
No significant pollution or other types of hazardous emission
result from the Company’s operations, and it is not anticipated
that our operations will be materially affected by federal, state
or local provisions concerning environmental controls. Our costs of
complying with environmental health and safety requirements have
not been material.
Furthermore, compliance with federal, state and local requirements
regulating the discharge of materials into the environment, or
otherwise relating to the protection of the environment, have not
had, nor are they expected to have, any material effect on the
capital expenditures, earnings or competitive position of the
Company. However, we will continue to monitor emerging developments
in this area.
Corporate Information
Our principal executive offices are located at 85 Broad Street,
16-079, New York, NY 10004 and our telephone number is (808)
829-1057. We do not incorporate the information on our website into
this Annual Report and you should not consider it part of this
Annual Report.
Company Website
We maintain a corporate Internet website at: www.logiq.com
The contents of this website are not incorporated in or otherwise
to be regarded as part of this Annual Report.
We file reports with the SEC which are available on our website
free of charge. These reports include annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K,
“Section 16” filings on Form 3, Form 4, and Form 5, and other
related filings, each of which is provided on our website as soon
as reasonably practical after we electronically file such materials
with or furnish them to the SEC. In addition, the SEC maintains a
website (www.sec.gov) that contains reports, proxy and information
statements, and other information regarding issuers that file
electronically with the SEC, including the Company.
Three Year History
2019
On August 19, 2019, the Company entered into subscription
agreements with a total of 157 subscribers for an aggregate of
42,745,675 Common Shares of the Company’s for an aggregate purchase
price of $6,411,851. The Company used the net proceeds from the
offering (after deducting consulting fees and expenses related to
the offering in the aggregate amount of approximately $775,000) for
working capital and general corporate purposes.
On December 16, 2019, the Company and its wholly-owned subsidiary,
Origin8, entered into the asset purchase agreement for the Push
Transaction (as defined below).
On November 15, 2019, the Company’s shareholders approved the
proposal to grant the Board discretionary authority to amend the
Company’s Certificate of Incorporation to effectuate a reverse
stock split of the Company’s common stock, $0.0001 par value, by a
ratio of no less than 1-for-5 and no more than 1-for-20, with such
ratio to be determined by the Board in its sole discretion (the
“Reverse Split”), and with such Reverse Split to be effective at
such time and date, if at all, as determined by the Board in its
sole discretion.
2020
On January 8, 2020, the Company’ completed the acquisition of
substantially all of the assets of Push (the “Push Transaction”).
At closing, the Company issued 28,571,428 Common Shares to
ConversionPoint (Push’s parent company) and a further
7,142,857 Common Shares were issued and placed in an
independent third-party escrow where such Common Shares will be
released to ConversionPoint if the acquired Push business achieves
certain performance milestone requirements, subject to offset for
indemnification purposes. The Company obtained an independent
valuation opinion with respect to the acquired business.
On February 25, 2020, the Board filed a Certificate of Amendment to
the Certificate of Incorporation with the Secretary of State of the
State of Delaware to effectuate the Reverse Split. The Reverse
Split became effective on February 27, 2020. Immediately following
the Reverse Split, the total number of the Common Shares held by
each stockholder was converted automatically into the number of
whole Common Shares equal to the number of issued and outstanding
Common Shares held by such stockholder immediately prior to the
Reverse Split, divided by 13. The Reverse Split did not change the
authorized capital stock of the Company. The Company continues to
be authorized to issue up to 250,000,000 Common Shares.
On August 11, 2020, the Company, entered into a binding letter of
intent to acquire Fixel AI Inc. (“Fixel”). Founded in July of 2017,
Fixel has a fully automated audience segmentation software suite
that ranks audiences according to their level of engagement.
Fixel’s software helps e-commerce and digital agency marketers to
create and retarget high return on ad spend audiences using cutting
edge A.I. and big data technology. Fixel technology solutions
enables automated audience segmentation for the purpose of creating
lookalike audiences and remarketing to highly engaged visitors that
otherwise failed to convert in the sales funnel. Fixel allows
clients to run Data Driven marketing campaigns efficiently
improving Return on add spend and sales conversions while still
exceeding other corporate KPIs.
On October 30, 2020, the Company and Fixel entered into an
Agreement and Plan of Merger (the “Fixel Merger Agreement”)
pursuant to which Logiq Merger Sub, Inc., a wholly-owned subsidiary
of the Company formed solely for the purpose of this transaction,
merged with Fixel (the “Merger”). Following the Merger, the
surviving entity continued its existence as a wholly-owned
subsidiary of the Company, and the shareholders of Fixel received
564,467 Common Shares (the “Consideration Shares”) at a deemed
issue price of US$8.86 per share, for an aggregate purchase price
of approximately US$5,000,000. Pursuant to the Agreement and Plan
of Merger, 112,868 Consideration Shares were placed in escrow with
a third party escrow agent in order to establish a holdback
mechanism with respect to $1,000,000 worth of the Consideration
Shares to secure the Fixel shareholders’ obligations under the
Agreement and Plan of Merger for a period of 18 months following
the closing of the Merger. On November 2, 2020, the Merger
occurred.
2021
On March 3, 2021, the Company, 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”), entered into an
Agreement and Plan of Merger (the “Merger Agreement”), pursuant to
which, upon consummation of the transactions contemplated by the
Merger Agreement (the “Closing”), the parties intend to effect a
merger of Merger Sub with and into Rebel AI, whereby the separate
existence of Merger Sub will cease and Rebel AI will become a
wholly-owned subsidiary of the Company (the “Merger”). The Merger
closed on March 29, 2021 and Rebel AI became a wholly-owned
subsidiary of the Company. As consideration for the Merger, at the
Closing, the Company delivered to those persons set forth in the
Merger Agreement an aggregate 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 9, 2021, the Company entered into an Agency Agreement (the
“Agency Agreement”) with Research Capital Corporation (the “Agent”)
relating to a Canadian initial public 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 (“Common Stock”, 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”). The
Warrants will be governed by a warrant indenture (the “Warrant
Indenture”) between the Company and Odyssey Trust Company (the
“Warrant Agent”). No Units will be issued, however, as the Units
will be immediately separated and purchasers will receive only
shares of Common Stock and Warrants. 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. 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 units
of securities (the “Advisory Fee Units”), and 158,115
non-transferrable compensation options (the “Agent Options”) to the
Agent as compensation for certain strategic advisory and support
services rendered to the Company in connection with the Offering.
Each Advisory Fee Unit is comprised of (i) one share of Common
Stock, and (ii) one Warrant. Each Agent Option is exercisable for
one Unit at an exercise price of C$3.00 per Unit. On June 21, 2021,
the Company’s common stock began trading on the NEO Exchange under
the symbol “LGIQ”. The Company’s common stock continues to trade in
the United States on the OTCQX under the same symbol.
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.
Item 1A. Risk Factors
Investing in our common stock involves a high degree of risk.
You should carefully consider the risks described below, as well as
the other information in this Annual Report, including our
financial statements and the related notes, and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations,” before deciding whether to invest in our common stock.
In addition to other information in this Annual Report and in other
filings we make with the Securities and Exchange Commission, the
following risk factors should be carefully considered in evaluating
our business as they may have a significant impact on our business,
operating results and financial condition. If any of the following
risks actually occurs, our business, financial condition, results
of operations and future prospects could be materially and
adversely affected. In such an event, the market price of our
common stock could decline, and you may lose all or part of your
investment. Additional risks and uncertainties not presently known
to us or that we currently deem immaterial also may impair our
business operations. Because of the following factors, as well as
other variables affecting our operating results, past financial
performance should not be considered as a reliable indicator of
future performance, and investors should not use historical trends
to anticipate results or trends in future periods.
RISKS RELATED TO OUR
BUSINESS
We are subject to risks associated with changing technologies
in the mobile apps industry, which could place us at a competitive
disadvantage.
The successful implementation of our business strategy requires us
to continuously evolve our existing solutions and introduce new
solutions to meet customers’ needs. We believe that our customers
rigorously evaluate our solution and service offerings on the basis
of a number of factors, including, but not limited
to: quality; price competitiveness; technical expertise and
development capability; innovation; reliability and timeliness of
delivery; operational flexibility; customer service; and overall
management.
Our success depends on our ability to continue to meet our
customers’ changing requirements and specifications with respect to
these and other criteria. There can be no assurance that we will be
able to address technological advances or introduce new offerings
that may be necessary to remain competitive within the mobile apps
industry.
Systems failures could cause interruptions in our services or
decreases in the responsiveness of our services which could harm
our business.
If our systems fail to perform for any reason, we could experience
disruptions in operations, slower response times, or decreased
customer satisfaction. Our ability to host mobile apps successfully
and provide high quality customer service depends on the efficient
and uninterrupted operation of our hosting company’s computer and
communications hardware and software systems. Although unlikely,
our hosting company’s systems are vulnerable to damage or
interruption from human error, natural disasters, power loss,
telecommunication failures, break-ins, sabotage, computer viruses,
intentional acts of vandalism, and similar events. Any systems
failure that causes an interruption in our services or decreases
the responsiveness of our services could impair our reputation,
damage our brand name, and materially adversely affect our
business, financial condition and results of operations and cash
flows.
If our security is breached, our business could be disrupted,
our operating results could be harmed, and customers could be
deterred from using our products and services.
Our business relies on the secure electronic transmission, storage,
and hosting of sensitive information, including financial
information, and other sensitive information relating to our
customers, company, and workforce. As a result, we face some risk
of a deliberate or unintentional incident involving unauthorized
access to our computer systems (including, among other methods,
cyber- attacks or social engineering) that could result in
misappropriation or loss of assets or sensitive information, data
corruption, or other disruption of business operations. In light of
this risk, we have devoted significant resources to protecting and
maintaining the confidentiality of our information, including
implementing security and privacy programs and controls, training
our workforce, and implementing new technology. We have no
guarantee that these programs and controls will be adequate to
prevent all possible security threats. We believe that any
compromise of our electronic systems, including the unauthorized
access, use, or disclosure of sensitive information or a
significant disruption of our computing assets and networks, would
adversely affect our reputation and our ability to fulfill
contractual obligations, and would require us to devote significant
financial and other resources to mitigate such problems, and could
increase our future cyber security costs. Moreover, unauthorized
access, use, or disclosure of such sensitive information could
result in contractual or other liability. In addition, any real or
perceived compromise of our security or disclosure of sensitive
information may result in lost revenues by deterring customers from
using or purchasing our products and services in the future or
prompting them to use competing service providers.
Delays in the release of new or enhanced products or services
or undetected errors in our products or services may result in
increased cost to us, delayed market acceptance of our products,
and delayed or lost revenue.
To achieve market acceptance, new or enhanced products or services
can require long development and testing periods, which may result
in delays in scheduled introduction. Any delays in the release
schedule for new or enhanced products or services may delay market
acceptance of these products or services and may result in delays
in new or existing customers from using these new or enhanced
products or services or the loss of new or existing customers. In
addition, new or enhanced products or services may contain a number
of undetected errors or “bugs” when they are first released.
Although we extensively test each new or enhanced product or
service before it is released to the market, there can be no
assurance that significant errors will not be found in existing or
future releases. As a result, in the months following the
introduction of certain releases, we may need to devote significant
resources to correct these errors. There can be no assurance,
however, that all of these errors can be corrected.
Defects or errors in our applications could harm our
reputation, result in significant cost to us and impair our ability
to market our products and services.
Our applications may contain defects or errors, some of which may
be material. Errors may result from our own technology or from the
interface of our cloud-based solutions with legacy systems and
data, which we did not develop. The risk of errors is particularly
significant when a new product is first introduced or when new
versions or enhancements of existing products are released. The
likelihood of errors is increased when we do more frequent releases
of new products and enhancements of existing products. We have,
from time to time, found defects in our applications. Although
these past defects have not resulted in any litigation against us
to date, we have invested significant capital, technical,
managerial, and other resources to investigate and correct these
past defects and we have needed to divert these resources from
other development efforts. In addition, material performance
problems or defects in our applications may arise in the future.
Material defects in our cloud-based solutions could result in a
reduction in sales, delay in market acceptance of our applications,
or credits or refunds to our customers. In addition, such defects
may lead to the loss of existing customers and difficulty in
attracting new customers, diversion of development resources, or
harm to our reputation. Correction of defects or errors could prove
to be impossible or impractical. The costs incurred in correcting
any defects or errors or in responding to resulting claims or
liability may be substantial and could adversely affect our
operating results.
If we are not able to reliably meet our data storage and
management requirements, or if we experience any failure or
interruption in the delivery of our services over the Internet,
customer satisfaction and our reputation could be harmed and
customer contracts may be terminated.
As part of our current business model, we deliver our applications
over the Internet and store and manage hundreds of terabytes of
data for our customers, resulting in substantial information
technology infrastructure and ongoing technological challenges,
which we expect to continue to increase over time. If we do not
reliably meet these data storage and management requirements, or if
we experience any failure or interruption in the delivery of our
services over the Internet, customer satisfaction and our
reputation could be harmed, leading to reduced revenues and
increased expenses. Our hosting services are subject to
service-level agreements and, in the event that we fail to meet
guaranteed service or performance levels, we could be subject to
customer credits or termination of these customer contracts. If the
cost of meeting these data storage and management requirements
increases, our results of operations could be harmed.
Upgrading our products and services could result in
implementation issues and business disruptions.
We update our products and services on a periodic basis. In doing
so, we face the possibility that existing customers will find the
updated product and/or service unacceptable, or new customers may
not be as interested as they have been in the past versions.
Furthermore, translation errors might introduce new software and/or
technical bugs that will not be caught.
New entrants and the introduction of other platforms in our
markets may harm our competitive position.
The markets for development, distribution, and sale of offering
SMBs a platform to create mobile apps for their business are
rapidly evolving. New entrants seeking to gain market share by
introducing new technology, new products, and new platforms may
make it more difficult for us to sell our products which could
create increased pricing pressure, reduced profit margins,
increased sales and marketing expenses, or the loss of market share
or expected market share, any of which may significantly harm our
business, operating results and financial condition.
Our future success depends on our ability to develop and
successfully introduce new and enhanced products that meet the
needs of our customers.
Our sales depend on our ability to anticipate our existing and
prospective customers’ needs and develop products that address
those needs. Our future success will depend on our ability to
design new products, anticipate technological improvements and
enhancements, and to develop products that are competitive in the
rapidly changing mobile apps industry. Introduction of new products
and product enhancements will require coordination of our efforts
with our customers to develop products that offer performance
features desired by our customers and performance and functionality
superior or more cost effective than solutions offered by our
competitors. If we fail to coordinate these efforts, develop
product enhancements or introduce new products that meet the needs
of our customers as scheduled, our operating results will be
materially and adversely affected, and our business and prospects
will be harmed. We cannot assure that product introductions will
meet our anticipated release schedules or that our products will be
competitive in the market. Furthermore, given the rapidly changing
nature of the mobile apps market, there can be no assurance our
products and technology will not be rendered obsolete by
alternative or competing technologies.
Our cost structure is partially fixed. If our revenues
decline and we are unable to reduce our costs, our profitability
will be adversely affected.
Our cost structure is partially fixed, and if our revenues
decrease, these fixed costs will not be reduced. We base our cost
structure on historical and expected levels of demand for our
services, as well as our fixed operating infrastructure, such as
computer hardware, software, and staffing levels. If demand for our
services declines, and as a result, our revenues decline, we may
not be able to adjust our cost structure on a timely basis and our
profitability may be materially adversely affected.
Attrition of customers and failure to attract new customers
could have a material adverse effect on our business, financial
condition and results of operations, and cash flows.
Although we offer mobile apps designed to support and retain our
customers, our efforts to attract new customers or prevent
attrition of our existing customers may not be successful. If we
are unable to retain our existing customers or acquire new
customers in a cost-effective manner, our business, financial
condition and results of operations, and cash flows would likely be
adversely affected. Although we have spent significant resources on
business development and related expenses and plan to continue to
do so, these efforts may not be cost-effective at attracting new
customers.
Our ability to sustain or increase revenues will depend upon
our success in entering new markets, continuing to increase our
customer base, and in deriving additional revenues from our
existing customers.
One component of our overall business strategy is to derive more
revenues from our existing customers by expanding their use of our
products and services. Such strategy would have our customers
utilize our PaaS platforms and our tools and components to leverage
vast amounts of information stored in both corporate databases and
public data sources in order to make informed business decisions
during the research and development process. In addition, we seek
to expand into new markets, and new areas within our existing
markets, by potentially acquiring businesses in these markets,
attracting and retaining personnel knowledgeable in these markets,
identifying the needs of these markets, and developing marketing
programs to address these needs. If successfully implemented, these
strategies could increase the usage of our PaaS platforms from SMBs
operating within our existing customer base, as well as by new
customers in other industries. However, if our strategies are not
successfully implemented, our products and services may not achieve
market acceptance or penetration in targeted new departments within
our existing customers or in new industries. As a result, we may
incur additional costs and expend additional resources without
being able to sustain or increase revenue.
A pandemic, epidemic or outbreak of an infectious disease in
the United States or elsewhere may adversely affect our
business.
If a pandemic, epidemic or outbreak of an infectious disease occurs
in the United States or elsewhere, our business may be adversely
affected.
COVID-19 has spread worldwide and has resulted in government
authorities implementing numerous measures to try to contain it,
such as travel bans and restrictions, quarantines, shelter-in-place
orders and shutdowns. These measures have impacted, and may further
impact, our workforce and operations, the operations of our
customers and our partners, and those of our respective vendors and
suppliers. Our critical business operations, including our
headquarters, are located in regions which have been impacted
by COVID-19. Our customers worldwide have also been affected
and may continue to be affected by COVID-19 related
restrictions and closures.
The spread of COVID-19 has caused us to modify our business
practices as the Company complies with state mandated requirements
for safety in the workplace to ensure the health, safety and
well-being of our employees. These measures include personal
protective equipment, social distancing, cleanliness of the
facilities and daily monitoring of the health of employees in our
facilities, as well as modifying our policies on employee travel
and the cancellation of physical participation in meetings, events
and conferences. We may take further actions as required by
government authorities or that we determine are in the best
interests of our employees, customers, partners and suppliers.
However, we have not developed a specific and comprehensive
contingency plan designed to address the challenges and risks
presented by the COVID-19 pandemic and, even if and when we do
develop such a plan, there can be no assurance that such plan will
be effective in mitigating the potential adverse effects on our
business, financial condition and results of operations.
In addition, while the extent and duration of the COVID-19
pandemic on the global economy and our business in particular is
difficult to assess or predict, the pandemic has resulted in, and
may continue to result in, significant disruption of global
financial markets, which may reduce our ability to access capital
or our customers’ ability to pay us for past or future purchases,
which could negatively affect our liquidity. A recession or
financial market correction resulting from the lack of containment
and spread of COVID-19 could impact overall technology
spending, adversely affecting demand for our products, our business
and the value of our common stock.
The ultimate impact of the COVID-19 pandemic or a similar
health epidemic is highly uncertain and subject to change. The
extent of the impact of the COVID-19 pandemic on our
operational and financial performance, including our ability to
execute our business strategies and initiatives in the expected
time frame, will depend on future developments, including, but not
limited to, the duration and continued spread of the pandemic, its
severity, the actions to contain the disease or treat its impact,
further related restrictions on travel, and the duration, timing
and severity of the impact on customer spending, including any
recession resulting from the pandemic, all of which are uncertain
and cannot be predicted. An extended period of economic disruption
as a result of the COVID-19 pandemic could have a material
negative impact on our business, results of operations, access to
sources of liquidity and financial condition, though the full
extent and duration is uncertain.
If we are not successful in selecting and integrating the
businesses and technologies we acquire, or in managing our current
and future divestitures, our business may suffer.
Over the years, we have expanded our business through acquisitions.
We continue to search to acquire businesses and technologies and
form strategic alliances. However, businesses and technologies may
not be available on terms and conditions we find acceptable. We
risk spending time and money investigating and negotiating with
potential acquisition or alliance partners, but not completing
transactions. Even if completed, acquisitions and alliances involve
numerous risks which may include: difficulties in achieving
business and continuing financial success; difficulties and
expenses incurred in assimilating and integrating operations,
services, products, technologies, or pre-existing relationships
with our customers, distributors, and suppliers; challenges with
developing and operating new businesses, including those which are
materially different from our existing businesses and which may
require the development or acquisition of new internal capabilities
and expertise; challenges of maintaining staffing at the acquired
entities, including loss of key employees; potential losses
resulting from undiscovered liabilities of acquired companies that
are not covered by the indemnification we may obtain from the
seller(s); the presence or absence of adequate internal controls
and/or significant fraud in the financial systems of acquired
companies; diversion of management’s attention from other business
concerns; acquisitions could be dilutive to earnings, or in the
event of acquisitions made through the issuance of our common stock
to the shareholders of the acquired company, dilutive to the
percentage of ownership of our existing shareholders; new
technologies and products may be developed which cause businesses
or assets we acquire to become less valuable; and risks that
disagreements or disputes with prior owners of an acquired
business, technology, service, or product may result in litigation
expenses and distribution of our management’s attention. In the
event that an acquired business or technology or an alliance does
not meet our expectations, our results of operations may be
adversely affected.
Some of the same risks exist when we decide to sell a business,
site, product line, or division. In addition, divestitures could
involve additional risks, including the following: difficulties in
the separation of operations, services, products, and personnel;
and the need to agree to retain or assume certain current or future
liabilities in order to complete the divestiture. We evaluate the
performance and strategic fit of our businesses. These and any
divestitures may result in significant write-offs, including those
related to goodwill and other intangible assets, which could have
an adverse effect on our results of operations and financial
condition. In addition, we may encounter difficulty in finding
buyers or alternative exit strategies at acceptable prices and
terms and in a timely manner. We may not be successful in managing
these or any other significant risks that we encounter in divesting
a business, site, product line, or division, and as a result, we
may not achieve some or all of the expected benefits of the
divestitures.
If we are unable to manage our growth and expand our
operations successfully, our business and operating results will be
harmed and our reputation may be damaged.
We have expanded our operations significantly since inception and
anticipate that further significant expansion will be required to
achieve our business objectives. The growth and expansion of our
business and product offerings places a continuous and significant
strain on our management, operational, and financial resources. Any
such future growth would also add complexity to and require
effective coordination throughout our organization. To manage any
future growth effectively, we must continue to improve and expand
our information technology and financial infrastructure, our
operating and administrative systems and controls, and our ability
to manage headcount, capital and processes in an efficient manner.
We may not be able to successfully implement improvements to these
systems and processes in a timely or efficient manner, which could
result in additional operating inefficiencies and could cause our
costs to increase more than planned. If we do increase our
operating expenses in anticipation of the growth of our business
and this growth does not meet our expectations, our operating
results may be negatively impacted. If we are unable to manage
future expansion, our ability to provide high quality products and
services could be harmed, which could damage our reputation and
brand and may have a material adverse effect on our business,
operating results, and financial condition.
We may be unable to respond to customers’ demands for new
mobile app solutions and service offerings, and our business,
financial condition and results of operations, and cash flows may
be materially adversely affected.
Our customers may demand new mobile app solutions and service
offerings. If we fail to identify these demands from customers or
update our offerings accordingly, new offerings provided by our
competitors may render our existing solutions and services less
competitive. Our future success will depend, in part, on our
ability to respond to customers’ demands for new offerings on a
timely and cost-effective basis and to adapt to address the
increasingly sophisticated requirements and varied needs of our
customers and prospective customers. We may not be successful in
developing, introducing or marketing new offerings. In addition,
our new offerings may not achieve market acceptance. Any failure on
our part to anticipate or respond adequately to customer
requirements, or any significant delays in the development,
introduction or availability of new offerings or enhancements of
our current offerings could have a material adverse effect on our
business, financial condition and results of operations and cash
flows.
Increasing competition and increasing costs within our
customers’ industries may affect the demand for our products and
services, which may affect our results of operations and financial
condition.
Our customers’ demand for our products is impacted by continued
demand for their products and by our customers’ research and
development costs, budget costs, and capital expenditures. Demand
for our customers’ products could decline, and prices charged by
our customers for their products may decline, as a result of
increasing competition that our customers face in their respective
industries. In addition, our customers’ expenses could continue to
increase as a result of increasing costs of complying with
government regulations and other factors. A decrease in demand for
our customers’ products, pricing pressures associated with the
sales of these products, and additional costs associated with
product development could cause our customers to reduce their
research and development costs, budget costs, and capital
expenditures. Although we believe our products can help our
customers increase productivity, generate additional sales, and
reduce costs in many areas, because our products and services
depend on such research and development, budget, and capital
expenditures, our revenues may be significantly reduced.
We are subject to pricing pressures in some of the markets we
serve.
The market for PaaS for the SMB industry is intensely competitive.
In response to increased competition and general adverse economic
conditions in this market, we may be required to modify our pricing
practices. Changes in our pricing model could adversely affect our
revenue and earnings.
We may be unable to respond to the evolving industry
practices and technology solutions, and our business, financial
condition and results of operations and cash flows may be
materially adversely affected.
To remain competitive as a mobile app provider, we must continue to
invest in research and development of new technology solutions in
order to keep up with the ever-evolving industry practices and
enhancements to our existing solutions. The process of developing
new technologies, products and services is complex and expensive.
The introduction of new solutions by our competitors, the market
acceptance of competitive solutions based on new or alternative
technologies or the emergence of new industry practices could
render our solutions less competitive.
We derive a significant percentage of our revenues from a
concentrated group of customers and the loss of more than one of
our major customers could materially and adversely affect our
business, results of operations or financial
condition. With the new business segment of
DATALogiq, on a consolidated revenue basis, there is no significant
customer concentration in FY2021.
No single customer represented significant concentration risk
during fiscal year 2021 and 2020.Three (3) customers accounted for
13.05%, 9.23% and 7.99% of net sales for fiscal year 2019. Three
(3) customers accounted for 16.43%, 6.15% and 5.38% of net sales
for fiscal year 2018. Three (3) customers accounted for 14.78%,
7.18% and 5.34% of net sales for fiscal year 2017. The loss of any
of our major customers could have a material adverse effect on our
results of operations and financial condition. We may not be able
to maintain our customer relationships, and our customers may delay
payment under, or fail to renew, their agreements with us, which
could adversely affect our business, results of operations, or
financial condition. Any reduction in the amount of revenues that
we derive from these customers, without an offsetting increase in
new sales to other customers, could have a material adverse effect
on our operating results. A significant change in the liquidity or
financial position of our customers could also have a material
adverse effect on the collectability of our accounts receivable,
our liquidity, and our future operating results.
Our insurance coverage may not be sufficient to avoid
material impact on our financial position or results of operations
resulting from claims or liabilities against us, and we may not be
able to obtain insurance coverage in the future.
We maintain insurance coverage for protection against many risks of
liability. The extent of our insurance coverage is under continuous
review and is modified as we deem it necessary. Despite this
insurance, it is possible that claims or liabilities against us may
have a material adverse impact on our financial position or results
of operations. In addition, we may not be able to obtain any
insurance coverage, or adequate insurance coverage, when our
existing insurance coverage expires.
We depend on key personnel and may not be able to retain
these employees or recruit additional qualified personnel, which
could harm our business.
Our success depends to a significant extent on the continued
services of our senior management and other members of management.
We have contractual agreements with our CEO, CFO, and COO.
If our CEO, CFO, COO, or other members of senior management do not
continue in their present positions, our business may suffer.
Because of the nature of our business, we are highly dependent upon
attracting and retaining qualified personnel. While we have a
strong record of employee retention, there is still significant
competition for qualified personnel in our industry. Therefore, we
may not be able to attract and retain the qualified personnel
necessary for the development of our business. The loss of the
services of existing personnel, as well as the failure to recruit
additional key technical, UX, and managerial personnel in a timely
manner, could harm our business.
We are subject to risks associated with the operation of a
global business.
We derive a significant portion of our total revenue from our
operations in international markets. During the years ended
December 31, 2019, 2018, and 2017, 100%, of our total revenue was
derived from our international operations. In 2021, 38% was derived
from our international operations. In 2020, 57% was derived from
our international operations. Our global business may be affected
by local economic conditions, including inflation, recession, and
currency exchange rate fluctuations. In addition, political and
economic changes, including international conflicts, including
terrorist acts, throughout the world may interfere with our or our
customers’ activities in particular locations and result in a
material adverse effect on our business, financial condition, and
operating results. Potential trade restrictions, exchange controls,
adverse tax consequences, and legal restrictions may affect the
repatriation of funds into the U.S. Also, we could be subject to
unexpected changes in regulatory requirements, the difficulties of
compliance with a wide variety of foreign laws and regulations,
potentially negative consequences from changes in or
interpretations of U.S. and foreign tax laws, import and export
licensing requirements, and longer accounts receivable cycles in
certain foreign countries. These risks, individually or in the
aggregate, could have an adverse effect on our results of
operations and financial condition.
Potential changes in U.S. and international tax
law.
Tax proposals to reform corporate tax law are constantly being
considered. Proposals include both increasing and reducing the
corporate statutory tax rate, broadening the corporate tax base
through the elimination or reduction of deductions, exclusions, and
credits, implementing a territorial regime of taxation, limiting
the ability of U.S. corporations to deduct interest expense
associated with offshore earnings, modifying the foreign tax credit
rules, and reducing the ability to defer U.S. tax on offshore
earnings. These or other changes in the U.S. tax laws could
increase our effective tax rate, which would affect our
profitability.
Changes in government regulation or in practices relating to
mobile apps and e-wallet industries could decrease the need for the
products and services we provide.
Governmental agencies throughout the world, including but not
limited to the U.S., regulate mobile apps, e-wallets, and the
products and services we offer to our customers. Changes in
regulations, such as a relaxation in regulatory requirements, or an
increase in regulatory requirements that we have difficulty
satisfying or that make our products and services less competitive,
could eliminate or substantially reduce the demand for our products
and services.
Any negative commentaries made by any regulatory agencies or
any failure by us to comply with applicable regulations and related
guidance could harm our reputation and operating results, and
compliance with new regulations and guidance may result in
additional costs.
Any negative commentaries made by any regulatory agencies or any
failure on our part to comply with applicable regulations could
result in the termination of customers using our products and
services. This could harm our reputation, our prospects for
generating future revenue, and our operating results. If our
operations are found to violate any applicable law or other
governmental regulations, we might be subject to civil and criminal
penalties, damages, and fines. Any action against us for violation
of these laws, even if we successfully defend against it, could
cause us to incur significant legal expenses, divert our
management’s attention from the operation of our business, and
damage our reputation.
Current and future litigation against us, which may arise in
the ordinary course of our business, could be costly and time
consuming to defend.
We are subject to claims that arise in the ordinary course of
business, such as claims brought by our customers in connection
with commercial disputes and employment claims made by our current
or former employees. Third parties may in the future assert
intellectual property rights to technologies that are important to
our business and demand back royalties or demand that we license
their technology. Litigation may result in substantial costs and
may divert management’s attention and resources, which may
seriously harm our business, overall financial condition, and
operating results. Insurance may not cover such claims, may not be
sufficient for one or more such claims, and may not continue to be
available on terms acceptable to us. A claim brought against us
that is uninsured or underinsured could result in unanticipated
costs, negatively affecting our business, results of operations,
and financial condition.
We could incur substantial costs resulting from product
liability claims relating to our products or services or our
customers’ use of our products or services.
Any failure or errors caused by our products or services could
result in a claim for substantial damages against us by our
customers, regardless of our responsibility for the failure.
Although we are generally entitled to indemnification under our
customer contracts against claims brought against us by third
parties arising out of our customers’ use of our products, we might
find ourselves entangled in lawsuits against us that, even if
unsuccessful, may divert our resources and energy and adversely
affect our business. Further, in the event we seek indemnification
from a customer, a court may not enforce our indemnification right
if the customer challenges it or the customer may not be able to
fund any amounts for indemnification owed to us. In addition, our
existing insurance coverage may not continue to be available on
reasonable terms or may not be available in amounts sufficient to
cover one or more large claims, or the insurer may disclaim
coverage as to any future claim.
As a public company, we may incur significant administrative
workload and expenses in connection with new and changing
compliance requirements.
As a public company with common stock quoted on OTCQX Market, we
must comply with various laws, regulations and requirements. New
laws and regulations, as well as changes to existing laws and
regulations affecting public companies, including the provisions of
the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010, and rules adopted by the SEC,
may result in increased general and administrative expenses and a
diversion of management’s time and attention as we respond to new
requirements.
RISKS RELATED TO OUR
COMMON STOCK
Our quarterly and annual operating results fluctuate and may
continue to fluctuate in the future, and if we fail to meet the
expectations of analysts or investors, our stock price and the
value of your investment could decline
substantially.
We believe that operating results for any particular quarter are
not necessarily a meaningful indication of future results.
Nonetheless, fluctuations in our quarterly operating results could
negatively affect the market price of our common stock. Our results
of operations in any quarter or annual period have varied in the
past, and may vary from quarter to quarter or year to year and are
influenced by such factors as:
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changes in the general global
economy; |
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changes in customer budget cycles; |
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the
number and scope of ongoing customer engagements; |
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changes in the mix of our products and
services; |
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competitive pricing pressures; |
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the
extent of cost overruns; |
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buying patterns of our customers; |
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the
timing of new product releases by us or our
competitors; |
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general economic factors, including factors
relating to disruptions in the world credit and equity markets and
the related impact on our customers’ access to capital; |
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our
earnings releases, actual or anticipated changes in our earnings,
fluctuations in our operating results or our failure to meet the
expectations of financial market analysts and
investors; |
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changes in financial estimates by us or by any
securities analysts who might cover our stock; |
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speculation about our business in the press or
the investment community; |
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significant developments relating to our
relationships with our customers or suppliers; |
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stock
market price and volume fluctuations of other publicly traded
companies and, in particular, those that are in our
industry; |
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customer demand for our business
solutions; |
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investor perceptions of our industry in general
and our Company in particular; |
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the
operating and stock performance of comparable
companies; |
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announcements by us or our competitors of new
products, significant acquisitions, strategic partnerships or
divestitures; |
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the
timing and charges associated with completed acquisitions,
divestitures, and other events; |
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changes in accounting standards, policies,
guidance, interpretation or principles; |
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changes in tax laws, rules, regulations, and tax
rates in the locations in which we operate; |
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exchange rate fluctuations; |
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loss
of external funding sources; |
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sales
of our common stock, including sales by our directors, officers or
significant stockholders; and |
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addition or departure of key
personnel. |
Securities class action litigation is often instituted against
companies following periods of volatility in their stock price.
Should this type of litigation be instituted against us, it could
result in substantial costs to us and divert our management’s
attention and resources.
Moreover, securities markets may from time to time experience
significant price and volume fluctuations for reasons unrelated to
the operating performance of particular companies. These market
fluctuations may adversely affect the price of our common stock and
other interests in our Company at a time when you may want to sell
your interest in our common stock.
If securities or industry analysts issue an adverse opinion
regarding our stock or do not publish research or reports about our
company, our stock price and trading volume could
decline.
The trading market for our common stock will depend in part on the
research and reports that equity research analysts publish about us
and our business. We anticipate having limited analyst coverage and
we may continue to have inadequate analyst coverage in the future.
Even if we obtain adequate analyst coverage, we would have no
control over such analysts or the content and opinions in their
reports. Securities analysts may elect not to provide research
coverage of our company and such lack of research coverage may
adversely affect the market price of our common stock. The price of
our common stock could also decline if one or more equity research
analysts downgrade our common stock or if those analysts issue
other unfavorable commentary or cease publishing reports about us
or our business. If one or more equity research analysts cease
coverage of our company, we could lose visibility in the market,
which in turn could cause our stock price to decline.
Substantial future sales of shares of our common stock could
cause the market price of our common stock to decline.
The market price of shares of our common stock could decline as a
result of substantial sales of our common stock, particularly sales
by our directors, executive officers and significant stockholders,
a large number of shares of our common stock becoming available for
sale or the perception in the market that holders of a large number
of shares intend to sell their shares. As of March 29, 2022, we
have 26,243,516 shares of our common stock
outstanding.
Moreover, we may enter into agreements with certain holders of our
common stock which could give such holders certain rights, subject
to some conditions, to require us to file registration statements
covering their shares or to include their shares in registration
statements that we may file for ourselves or our stockholders.
Anti-takeover provisions in our charter documents and under
Delaware law could make an acquisition of us, which may be
beneficial to our stockholders, more difficult and may prevent
attempts by our stockholders to replace or remove our current
management and limit the market price of our common
stock.
Provisions in our certificate of incorporation and bylaws, as may
be amended from time to time, may have the effect of delaying or
preventing a change of control or changes in our management. Some
of these provisions:
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authorize our board of directors to issue up to
250,000,000 shares of authorized common stock; |
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specify that special meetings of our stockholders
can be called only by the Chairman of our board of directors,
President, or Vice President; and |
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provide that stockholders will not be allowed to
vote cumulatively in the election of directors; |
In addition, we are subject to the provisions of Section 203
of the Delaware General Corporation Law, which limits the ability
of stockholders owning in excess of 15% of our outstanding voting
stock to merge or combine with us, unless such transaction
satisfies certain conditions.
These anti-takeover provisions and other provisions in our
certificate of incorporation and bylaws, as may be amended from
time to time, make it more difficult for stockholders or potential
acquirers to obtain control of our board of directors or initiate
actions that are opposed by the then-current board of directors and
could also delay or impede a merger, tender offer or proxy contest
involving our company. These provisions could also discourage proxy
contests and make it more difficult for you and other stockholders
to elect directors of your choosing or cause us to take other
corporate actions you desire. Any delay or prevention of a change
of control transaction or changes in our board of directors could
cause the market price of our common stock to decline.
Our inability to raise additional capital on acceptable terms
in the future may limit our ability to develop and commercialize
new solutions and technologies and expand our
operations.
If our available cash balances and anticipated cash flow from
operations are insufficient to satisfy our liquidity requirements,
due to lower demand for our products as a result of other risks
described in this “Risk Factors” section, we may seek to raise
additional capital through equity offerings, debt financings,
collaborations or licensing arrangements. We may also consider
raising additional capital in the future to expand our business,
pursue strategic investments, take advantage of financing
opportunities, develop and exploit existing and new products,
expand into new markets, or other reasons.
Additional funding may not be available to us on acceptable terms,
or at all. If we raise funds by issuing equity securities, dilution
to our stockholders could result. Any equity securities issued also
may provide for rights, preferences or privileges senior to those
of holders of our common stock. The terms of debt securities issued
or borrowings could impose significant restrictions on our
operations. The incurrence of indebtedness or the issuance of
certain equity securities could result in increased fixed payment
obligations and could also result in restrictive covenants, such as
limitations on our ability to incur additional debt or issue
additional equity, limitations on our ability to acquire or license
intellectual property rights, and other operating restrictions that
could adversely affect our ability to conduct our business. In
addition, the issuance of additional equity securities by us, or
the possibility of such issuance, may cause the market price of our
common stock to decline. If we do not have, or are not able to
obtain, sufficient funds, we may have to delay development or
commercialization of our products or license to third parties the
rights to commercialize products or technologies that we would
otherwise seek to commercialize. If we raise additional funds
through collaboration and licensing arrangements with third
parties, it may be necessary to relinquish some rights to our
technologies or our products, or to grant licenses on terms that
are not favorable to us. If we are unable to raise adequate funds,
we may have to liquidate some or all of our assets, or delay,
reduce the scope of or eliminate some or all of our development
programs. We also may have to reduce marketing, customer support or
other resources devoted to our products or cease operations. Any of
these actions could harm our business, operating results, and
financial condition.
We do not intend to pay dividends for the foreseeable
future.
For the foreseeable future, we intend to retain any earnings to
finance the development and expansion of our business, and we do
not anticipate paying any cash dividends on our common stock.
Accordingly, investors must be prepared to rely on sales of their
common stock after price appreciation to earn an investment return,
which may never occur. Investors seeking cash dividends should not
purchase our common stock. Any determination to pay dividends in
the future will be made at the discretion of our board of directors
and will depend on our results of operations, financial condition,
contractual restrictions, restrictions imposed by applicable law
and other factors our board deems relevant.
RISKS RELATED TO
INTELLECTUAL PROPERTY
We may be unable to adequately enforce or defend our
ownership and use of our intellectual property and other
proprietary rights.
Part of our success is dependent upon our intellectual property and
other proprietary rights. We rely upon a combination of trademark,
trade secret, copyright, unpatented know-how, and unfair
competition laws, as well as license and access agreements and
other contractual provisions, to protect our intellectual property
and other proprietary rights. In addition, we attempt to protect
our intellectual property and proprietary information by requiring
certain of our employees and consultants to enter into
confidentiality, non-competition, and assignment-of-inventions
agreements. The steps we take to protect these rights may not be
adequate to prevent misappropriation of our technology by third
parties, or may not be adequate under the laws of some foreign
countries, which may not protect our intellectual property rights
to the same extent as do the laws of the United States. Our
attempts to protect our intellectual property may be challenged by
others or invalidated through administrative process or litigation,
and agreement terms that address non-competition are difficult to
enforce in many jurisdictions and may not be enforceable in any
particular case. In addition, there remains the possibility that
others will “reverse engineer” our products in order to introduce
competing products, or that others will develop competing
technology independently. If we resort to legal proceedings to
enforce our intellectual property rights or to determine the
validity and scope of the intellectual property or other
proprietary rights of others, the proceedings could be burdensome
and expensive, even if we were to prevail. The failure to
adequately protect our intellectual property and other proprietary
rights may have a material adverse effect on our business, results
of operations or financial condition.
Claims by others that we infringe their intellectual property
or trade secret rights could harm our business.
Our industry is characterized by vigorous protection and pursuit of
intellectual property rights, which has resulted in protracted and
expensive litigation for many companies. Third parties may in the
future assert claims of infringement of intellectual property
rights against us or against our customers or channel partners for
which we may be liable. As the number of products and competitors
in our market increases and overlaps occur, infringement claims may
increase.
Intellectual property or trade secret claims against us, and any
resulting lawsuits, may result in our incurring significant
expenses and could subject us to significant liability for damages
and invalidate what we currently believe are our proprietary
rights. Our involvement in any patent dispute or other intellectual
property dispute or action to protect trade secrets and know-how
could have a material adverse effect on our business. Adverse
determinations in any litigation could subject us to significant
liabilities to third parties, require us to seek licenses from
third parties and prevent us from developing and selling our
products. Any of these situations could have a material adverse
effect on our business. These claims, regardless of their merits or
outcome, would likely be time consuming and expensive to resolve
and could divert management’s time and attention.
Some of our products and services utilize open source
software, and any failure to comply with the terms of one or more
of these open source licenses could adversely affect our
business.
Some of our products utilize software covered by open source
licenses. Open source software is typically freely accessible,
usable and modifiable, and is used by our development team in an
effort to reduce development costs and speed up the development
process. Certain open source software licenses require a user who
intends to distribute the open source software as a component of
the user’s software to disclose publicly part or all of the source
code to the user’s software. In addition, certain open source
software licenses require the user of such software to make any
derivative works of the open source code available to others on
unfavorable terms or at no cost. This can subject previously
proprietary software to open source license terms. While we monitor
the use of all open source software in our products, processes and
technology and try to ensure that no open source software is used
in such a way as to require us to disclose or make available the
source code to the related product, such use could inadvertently
occur. This could harm our intellectual property position and have
a material adverse effect on our business.
RISKS RELATED TO OUR
INTERNATIONAL OPERATIONS
Our international sales and operations subject us to
additional risks that can adversely affect our operating results
and financial condition.
Our international operations subject us to a variety of risks and
challenges, including: exposure to fluctuations in foreign currency
exchange rates, increased management, travel, infrastructure and
legal compliance costs associated with having international
operations; reliance on channel partners; increased financial
accounting and reporting burdens and complexities; compliance with
foreign laws and regulations; compliance with U.S. laws and
regulations for foreign operations; and reduced protection for
intellectual property rights in some countries and practical
difficulties of enforcing rights abroad. Any of these risks could
adversely affect our international operations, reduce our
international sales or increase our operating costs, adversely
affecting our business, operating results and financial condition
and growth prospects.
We may be exposed to liabilities under the Foreign Corrupt
Practices Act, and any determination that we violated the Foreign
Corrupt Practices Act could have a material adverse effect on our
business.
We are subject to the Foreign Corrupt Practice Act, or FCPA, and
other laws that prohibit improper payments or offers of payments to
foreign governments and their officials and political parties by
U.S. persons and issuers as defined by the statute for the purpose
of obtaining or retaining business. We have operations, agreements
with third parties and make sales in Asia, which may experience
corruption. Our activities in Asia create the risk of unauthorized
payments or offers of payments by one of the employees, consultants
or agents of our company, because these parties are not always
subject to our control. It is our policy to implement safeguards to
discourage these practices by our employees. Also, our existing
safeguards and any future improvements may prove to be less than
effective, and the employees, consultants, sales agents or
distributors of our Company may engage in conduct for which we
might be held responsible. Violations of the FCPA may result in
severe criminal or civil sanctions, and we may be subject to other
liabilities, which could negatively affect our business, operating
results and financial condition. In addition, the government may
seek to hold our Company liable for successor liability FCPA
violations committed by companies in which we invest or that we
acquire.
Item 1B. Unresolved Staff Comments.
Not applicable.
Item 2. Properties
Currently, we do not own any real estate.
Our corporate headquarters are in a leased space comprising
approximately 300 square feet of office space in New York, New
York, at a rate of $923 per month.
The Company’s DataLogiq business segment 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 leased 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
related rent expense for the leases is calculated on a
straight-line basis with the difference recorded as deferred
rent.
Rent expense for the fiscal years ended December 31, 2021 and 2020,
was $366,875 and $291,440, respectively.
The Company believes that its existing facilities are sufficient to
accommodate its current and future operations.
Item 3. Legal Proceedings
We are not currently a party to any legal proceedings, litigation
or claims, which, if determined adversely to us, would have a
material adverse effect on our business, financial condition,
results of operations or cash flows. We may from time to time, be a
party to litigation and subject to claims incident to the ordinary
course of business. Regardless of the outcome, litigation can have
an adverse impact on us because of defense and settlement costs,
diversion of management resources, and other factors.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity
Securities
Market Information
Our common stock, par value $0.0001 per share, is traded on the
OTC:QX under the symbol “LGIQ”. Our common stock is also traded and
quoted on the NEO Exchange in Canada under the symbol “LGIQ”.
Trading of securities on the OTC:QX is often sporadic and investors
may have difficulty buying and selling or obtaining market
quotations. Any OTC:QX market quotations reflect inter-dealer
quotations, without adjustment for retail mark-up, mark-down or
commission and may not necessarily represent actual
transactions.
Holders
As of March 29, 2022, there were 26,243,516 shares of our
common stock outstanding held by approximately 518 holders of
record of our common stock. This number was derived from our
stockholder records and does not include beneficial holders of our
common stock whose shares are held in “street name” with various
dealers, clearing agencies, banks, brokers and other
fiduciaries.
Dividends
We have never declared or paid any cash dividends on our common
stock. We currently intend to retain all available funds and any
future earnings for use in the operation of our business, and do
not anticipate paying any cash dividends on our common stock in the
foreseeable future.
Our future dividend policy will be determined at the discretion of
our Board of Directors and will depend upon a number of factors,
including our financial condition and performance, our cash needs
and expansion plans, capital requirements, general business
conditions, income tax consequences, and other factors that our
Board of Directors may deem to be relevant. In addition, cash
dividends may generally only be issued if we have a capital
surplus.
Securities Authorized for Issuance Under Equity Compensation
Plans
See Part III, Item 12, “Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters” for
information regarding securities authorized for issuance under
equity compensation plans.
Unregistered Sales of Equity Securities.
During the year ended December 31, 2019, the Company engaged in the
following sales and issuances of unregistered securities:
In between January 16, 2019 and May 10, 2019, the Company completed
a private placement pursuant to which it sold 3,706,000 shares of
its common stock to individuals at a price of $0.10 per share
resulting in proceeds of $370,600 to the company.
On January 28, 2019, February 12, 2019, May 6, 2019, June 5, 2019,
and June 20, 2019, the Company issued 661,202 shares of its common
stock to advisor for services provided to the Company.
On February 14, 2019, the Company issued 820,000 shares of its
common stock to legal consultant in exchange for services provided
to the Company; and 605,000 shares in connection with advisory on
the Myanmar initiative.
On March 12, 2019, the Company issued 250,000 shares of its common
stock to legal consultant in exchange for services provided to the
Company.
On April 30, 2019, the Company issued 250,000 shares of its common
stock to financial advisor in exchange for services provided to the
Company.
On May 10, 2019, the Company issued 875,000 shares of its common
stock to finder and consultant in exchange for services provided to
the Company.
On June 5, 2019, the Company issued 1,086,000 shares of its common
stock to legal consultant, technology consultants and strategy
consultant in exchange for services provided to the Company.
On June 14, 2019, the Company issued 325,500 shares of its common
stock to strategy consultants and up listing consultant in exchange
for services provided to the Company.
On June 14, 2019, the Company completed a private placement
pursuant to which it sold 500,000 shares of its common stock to an
individual at a price of $0.20 per share resulting in proceeds of
$100,000 to the Company.
On June 20, 2019, the Company issued 3,329,940 shares of its common
stock with a two-year lock-up from the date of issuance, as part of
a legal settlement. On 9 July, 2019, 3,550,000 shares of the
Company’s common stock were returned to treasury as part of the
legal settlement.
On July 12, 2019, July 16, 2019 and July 26, 2019, the Company
issued 2,545,000 shares of its common stock to consultants and up
listing consultant in exchange for services provided to the
Company.
On July 12, 2019, the Company issued 250,000 shares of its common
stock to board advisor in exchange for services provided to the
Company.
On July 16, 2019, the Company issued 447,000 shares of its common
stock to legal consultants in exchange for services provided to the
Company.
On July 16, 2019, the Company completed a private placement
pursuant to which it sold 500,000 shares of its common stock to an
individual at a price of $0.20 per share resulting in proceeds of
$100,000 to the Company.
On August 22, 2019, the Company issued 1,450,000 shares of its
common stock to strategy consultant in exchange for services
provided to the Company.
On August 22, 2019, the Company issued 666,667 shares to individual
investor in advance of $100,000 investment to come in 2020.
On August 22, 2019, the Company completed a private placement
pursuant to which it sold 270,000 shares of its common stock to
individuals at a price of $0.15 per share resulting in proceeds of
$40,500 to the Company.
On October 23, 2019, the Company issued 250,000 shares of its
common stock to legal consultants in exchange for services provided
to the Company.
On November 13, 2019, the Company issued 2,150,000 shares of its
common stock to senior management and founder in exchange for
services provided to the Company.
On November 21, 2019, the Company issued 6,000,000 shares of its
common stock to senior management, directors and operational staff
in exchange for services provided to the Company.
On November 21, 2019, the Company issued 144,761 shares of its
common stock to strategy consultants in exchange for services
provided to the Company.
On December 4, 2019, the Company completed a private placement
pursuant to which it sold 40,000 shares of its common stock to an
individual at the price of $0.10 per share resulting in proceeds of
$4,000 to the Company.
On December 5, 2019, the Company issued 160,000 shares of its
common stock to consultant in exchange for services provided to the
Company.
On August 19, 2019 and November 15, 2019, the Company completed
private placements pursuant to which it sold 45,511,676 shares of
its common stock to individuals at prices of $0.15 and $0.25 per
share resulting in proceeds of $7,023,350.
On December 31, 2019, the Company partially completed a private
placement pursuant to which it sold 6,251,162.67 shares of its
common stock to individuals at prices of $$0.30 and $0.15 per share
resulting in proceeds of $1,808,350 to the Company.
During the year ended December 31, 2020, the Company engaged in the
following sales and issuances of unregistered securities:
None
During the year ended December 31, 2021, the Company engaged in the
following sales and issuances of unregistered securities:
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).
On March 29, 2021, the Company issued 1,032,056 shares of the
Company’s common stock in connection with its acquisition of
Rebel.
During the nine months ended September 30, 2021, a total of
2,292,135 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
6,418,707 shares with par value of $0.0001 per share were issued to
various stockholders and 1,976,434 shares with par value of $0.0001
per share were issued to various stockholders of the IPO on NEO
Exchange in Canada on June 21, 2021.
No underwriters were involved in the transactions described above.
All of the securities issued in the foregoing transactions were
issued by the Company in reliance upon the exemption from
registration available under Section 4(a)(2) of the Securities Act,
including Regulation D and/or Regulation S promulgated thereunder,
in that the transactions involved the issuance and sale of the
Company’s securities to financially sophisticated individuals or
entities that were aware of the Company’s activities and business
and financial condition, and took the securities for investment
purposes and understood the ramifications of their actions. The
Company did not engage in any form of general solicitation or
general advertising in connection with the transactions. The
individuals or entities represented that they were each an
“accredited investor” as defined in Regulation D at the time of
issuance of the securities, and that each of such individuals or
entities was acquiring such securities for their own account and
not for distribution. All certificates representing the securities
issued have a legend imprinted on them stating that the shares have
not been registered under the Securities Act and cannot be
transferred until properly registered under the Securities Act or
an exemption applies.
Use of Proceeds
Not applicable.
Issuer Repurchases of Equity Securities
During the year ended December 31, 2021, there were no repurchases
of the Company’s common stock by the Company.
Item 6. [Reserved]
Not applicable.
Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion and analysis of our financial condition
and operating results should be read in conjunction with our
consolidated financial statements and related notes to those
statements included elsewhere in this report. This document
contains forward-looking statements that are subject to risks and
uncertainties. All statements other than statements of historical
fact contained in this document and the materials accompanying this
document are forward-looking statements. The forward-looking
statements are based on the beliefs of our management, as well as
assumptions made by and information currently available to our
management. Frequently, but not always, forward-looking statements
are identified by the use of the future tense and by words such as
“believes,” expects,” “anticipates,” “intends,” “will,” “may,”
“could,” “would,” “projects,” “continues,” “estimates” or similar
expressions. Forward-looking statements are not guarantees of
future performance and actual results could differ materially from
those indicated by the forward-looking statements. Forward-looking
statements involve known and unknown risks, uncertainties, and
other factors that may cause our or our industry’s actual results,
levels of activity, performance, or achievements to be materially
different from any future results, levels of activity, performance,
or achievements expressed or implied by the forward-looking
statements. The forward-looking statements contained or
incorporated by reference in this document are forward-looking
statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (“Securities Act”) and Section 21E of
the Securities Exchange Act of 1934, as amended (“Exchange Act”)
and are subject to the safe harbor created by the Private
Securities Litigation Reform Act of 1995. These statements include
declarations regarding our plans, intentions, beliefs, or current
expectations. Among the important factors that could cause actual
results to differ materially from those indicated by
forward-looking statements are the risks and uncertainties
described under “Risk Factors” in our Annual Report on Form 10-K
for the year ended December 31, 2020 filed with the Securities and
Exchange Commission (“SEC”), and elsewhere in this document and in
our other filings with the SEC. Forward-looking statements are
expressly qualified in their entirety by this cautionary statement.
The forward-looking statements included in this document are made
as of the date of this document and we do not undertake any
obligation to update forward-looking statements to reflect new
information, subsequent events, or otherwise.
Use of Terms
Except as otherwise indicated by the context and for the purposes
of this report only, references in this report to:
| |
● |
“Logiq, Inc. (Delaware) (formerly known as
Weyland) the “Company,” “we,” “us,” or “our,” are to the business
of Logiq, Inc. (Delaware), a Delaware corporation and
AppLogiq; |
|
● |
DataLogiq and Logiq, Inc. (Nevada), a Nevada
corporation, business segment; |
|
● |
PAY/GOLogiq or Weyland International Perkasa, an
Indonesian associate of the Company; |
|
● |
“SEC”
are to the Securities and Exchange Commission; |
|
● |
“Securities Act” are to the Securities Act of
1933, as amended; |
|
● |
“Exchange Act” are to the Securities Exchange Act
of 1934, as amended; |
|
● |
“U.S.
dollars,” “dollars” and “$” are to the legal currency of the United
States. |
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 (https://www.createapp.com/), 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 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. |
Recent Corporate Developments
Amendment to Equity
Incentive Plan
On April 21, 2021, in connection with the Company being listed 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 (y) 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 and
the Company’s stockholders on January 25, 2022.
Amendments to Bylaws –
Adoption of Majority Voting Policy
On April 21, 2021, the Company’s Board of Directors (the “Board”),
in connection with the Company being listed 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’s Stockholders approved the
Policy and related changes to the Company’s Bylaws at a special
meeting of stockholders on January 25, 2022.
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.
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.
COVID-19 Effect
Due to the unprecedented effect and related impact of Covid-19
pandemic, the Company has experienced a push back from the
Company’s resellers and white label distributors from April 2020,
for its Platform as a Service pay-to-use subscription basis. The
Company is expecting an uncertain outlook in its service revenues,
as its operations in South East Asia are currently being disrupted
by the continuing impact of Covid-19 pandemic. In particular, our
PAY/GOLogiq associate revenues have been reduced as offices and
compulsory lock down protocols are being implemented, which are
expected to be in force until the majority of the populous have
been vaccinated through to the end of calendar year 2021.
Components of Results of Operations
Revenue (Service)
The Company’s AppLogiq business segment’s PaaS, operated as
CreateApp provides the infrastructure allowing users to develop
their own applications and IT services, which users can access
anywhere via a smart mobile phone, 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’s 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.
The Company’s DataLogiq revenues are derived through the management
of online advertising campaigns on behalf of customers, which
include per-impression, and cost per acquisition (“CPA”)
arrangements as well as the delivery of qualified leads.
Cost of Revenue (Service)
Cost of revenue primarily consists of fees from cloud-based hosting
services and personnel costs. Personnel costs consist of wages,
bonuses, benefits, and stock-based compensation expenses. Allocated
overhead costs consist of certain facilities and utility costs. We
expect cost of revenue to increase in absolute dollars, as product
revenue increases.
The Company’s DataLogiq digital marketing analytics business
segment cost of revenue is primarily generated by media cost to
power our assets.
Operating Expenses
Our operating expenses consist of general and administrative,
depreciation and amortization, and research and development
expenses. Salaries and personnel-related costs, benefits, and
stock-based compensation expense, are the most significant
components of each category of operating expenses. Operating
expenses also include allocated overhead costs for facilities and
utility costs.
General and Administrative – General and administrative
expense consists primarily of employee compensation and related
expenses for administrative functions including finance, legal,
human resources and fees for third-party professional services, as
well as allocated overhead. We expect our general and
administrative expense to increase in absolute dollars as we
continue to invest in growing the business.
Depreciation and amortization – Depreciation and
amortization expense consists primarily of amortization of
development costs and trademark for our software platforms.
Research and Development – Research and development expense
consists primarily of employee compensation and related expenses,
allocated overhead, and developments to our website, e-commerce,
and mobile app platforms. We expect our research and development
expenses to increase in absolute dollars as we continue to invest
in new and existing products and services.
Other Income (Expense), net
Other income consists of income received for activities outside of
our core business. In 2021, this includes interest from US based
financial asset money market funds.
Other (expense) consists of expense for activities outside of our
core business. In 2021, DataLogiq incurred early withdrawal fees
from an escrow account relating to Conversion Point
Technologies.
Provision for Income Taxes
Provision for income taxes consists of estimated income taxes due
to the United States, foreign countries, and the respective taxing
authorities in jurisdictions in which we conduct business.
Results of Operations
Results of Operations for the Three Months ended December 31,
2021 and 2020
The following sets forth selected items from our statements of
operations and the percentages that such items bear to net sales
for the three months ended December 31, 2021 and 2020. The
consolidated results include Logiq, Inc. (a Delaware Corporation),
and its subsidiaries, Logiq, Inc. (a Nevada Corporation), Fixel,
and Rebel (collectively also known as DataLogiq business segment).
Logiq, Inc. (Delaware) results include our business segment
AppLogiq.
| |
|
For the three months ended |
|
| |
|
December 31, 2021 |
|
|
December 31, 2020 |
|
|
Change |
|
| Revenue (service) |
|
$ |
13,136,311 |
|
|
|
100.0 |
% |
|
$ |
6,583,634 |
|
|
|
100.0 |
% |
|
$ |
6,552,677 |
|
|
|
99.5 |
% |
| Cost of
revenues (service) |
|
|
9,060,147 |
|
|
|
69.0 |
|
|
|
5,195,432 |
|
|
|
78.9 |
|
|
|
3,864,715 |
|
|
|
74.4 |
|
| Gross
profit |
|
|
4,076,164 |
|
|
|
31.0 |
|
|
|
1,388,202 |
|
|
|
21.1 |
|
|
|
2,687,962 |
|
|
|
193.6 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and amortization |
|
|
1,030,932 |
|
|
|
7.8 |
|
|
|
611,372 |
|
|
|
9.3 |
|
|
|
419,560 |
|
|
|
68.6 |
|
| General and administrative |
|
|
3,869,768 |
|
|
|
29.5 |
|
|
|
4,643,766 |
|
|
|
70.5 |
|
|
|
(773,998 |
) |
|
|
(16.7 |
) |
| Sales and marketing |
|
|
1,098,004 |
|
|
|
8.4 |
|
|
|
726,662 |
|
|
|
11.0 |
|
|
|
371,342 |
|
|
|
51.1 |
|
| Research and
development |
|
|
3,390,493 |
|
|
|
25.8 |
|
|
|
2,568,120 |
|
|
|
39.0 |
|
|
|
822,373 |
|
|
|
32.0 |
|
| Total operating
expenses |
|
|
9,389,197 |
|
|
|
71.5 |
|
|
|
8,549,920 |
|
|
|
129.9 |
|
|
|
839,277 |
|
|
|
9.8 |
|
| (Loss) from operations |
|
|
(5,313,033 |
) |
|
|
(40.4 |
) |
|
|
(7,161,718 |
) |
|
|
(108.8 |
) |
|
|
1,848,685 |
|
|
|
(25.8 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other (Expenses)/Income, net |
|
|
18,478 |
|
|
|
0.14 |
|
|
|
19,235 |
|
|
|
0.29 |
|
|
|
(757 |
) |
|
|
(3.9 |
) |
| Impairment loss
on investment in associate |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Net (Loss) before income tax |
|
|
(5,294,555 |
) |
|
|
(40.3 |
) |
|
|
(7,142,483 |
) |
|
|
(108.5 |
) |
|
|
1,847,928 |
|
|
|
(25.9 |
) |
| Income tax
(expense) |
|
|
(1,440 |
) |
|
|
(0 |
) |
|
|
- |
|
|
|
- |
|
|
|
(1,440 |
) |
|
|
(0 |
) |
| Net (Loss) |
|
|
(5,295,995 |
) |
|
|
(40.3 |
) |
|
|
(7,142,483 |
) |
|
|
(108.5 |
) |
|
|
1,846,488 |
|
|
|
(25.9 |
) |
Logiq (Delaware) including AppLogiq results of
operations
| |
|
For the three months ended |
|
| |
|
December 31, 2021 |
|
|
December 31, 2020 |
|
|
Change |
|
| Revenue (service) |
|
$ |
6,206,027 |
|
|
|
100.0 |
% |
|
$ |
2,112,988 |
|
|
|
100.0 |
% |
|
$ |
4,093,039 |
|
|
|
193.7 |
% |
| Cost of
revenues (service) |
|
|
4,192,271 |
|
|
|
67.6 |
|
|
|
1,580,897 |
|
|
|
74.8 |
|
|
|
2,611,374 |
|
|
|
165.2 |
|
| Gross
profit |
|
|
2,013,756 |
|
|
|
32.4 |
|
|
|
532,091 |
|
|
|
25.2 |
|
|
|
1,481,665 |
|
|
|
278.5 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and amortization |
|
|
31,285 |
|
|
|
0.5 |
|
|
|
31,283 |
|
|
|
1.5 |
|
|
|
2 |
|
|
|
0.0 |
|
| General and administrative |
|
|
993,220 |
|
|
|
16.0 |
|
|
|
3,351,717 |
|
|
|
158.6 |
|
|
|
(2,358,497 |
) |
|
|
(70.4 |
) |
| Sales and marketing |
|
|
- |
|
|
|
-.0 |
|
|
|
557,625 |
|
|
|
26.4 |
|
|
|
(557,625 |
) |
|
|
(100.0 |
) |
| Research and
development |
|
|
3,268,448 |
|
|
|
52.7 |
|
|
|
2,455,413 |
|
|
|
116.2 |
|
|
|
813,035 |
|
|
|
33.1 |
|
| Total operating
expenses |
|
|
4,292,953 |
|
|
|
69.2 |
|
|
|
6,396,038 |
|
|
|
302.7 |
|
|
|
(2,103,085 |
) |
|
|
(32.9 |
) |
| (Loss) from operations |
|
|
(2,279,197 |
) |
|
|
(36.7 |
) |
|
|
(5,863,947 |
) |
|
|
(277.5 |
) |
|
|
3,584,750 |
|
|
|
(61.1 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other (Expenses)/Income, net |
|
|
- |
|
|
|
- |
|
|
|
25,015 |
|
|
|
1.18 |
|
|
|
(25,015 |
) |
|
|
(100.00 |
) |
| Impairment loss
on investment in associate |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Net (Loss) before income tax |
|
|
(2,279,197 |
) |
|
|
(36.7 |
) |
|
|
(5,838,932 |
) |
|
|
(276.3 |
) |
|
|
3,559,735 |
|
|
|
(61.0 |
) |
| Income tax
(expense) |
|
|
(1,440 |
) |
|
|
(0 |
) |
|
|
- |
|
|
|
- |
|
|
|
(1,440 |
) |
|
|
(0 |
) |
| Net (Loss) |
|
|
(2,280,637 |
) |
|
|
(36.7 |
) |
|
|
(5,838,932 |
) |
|
|
(276.3 |
) |
|
|
3,558,295 |
|
|
|
(60.9 |
) |
Logiq (Nevada) including DataLogiq results of operations
| |
|
For the three months ended |
|
| |
|
December 31, 2021 |
|
|
December 31, 2020 |
|
|
Change |
|
| Revenue
(service) |
|
$ |
6,930,284 |
|
|
|
100.0 |
% |
|
$ |
4,470,646 |
|
|
|
100.0 |
% |
|
$ |
2,459,638 |
|
|
|
55.0 |
% |
| Cost of
revenues (service) |
|
|
4,867,876 |
|
|
|
70.2 |
|
|
|
3,614,535 |
|
|
|
80.9 |
|
|
|
1,253,341 |
|
|
|
34.7 |
|
| Gross
profit |
|
|
2,062,408 |
|
|
|
29.8 |
|
|
|
856,111 |
|
|
|
19.1 |
|
|
|
1,206,297 |
|
|
|
140.9 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and
amortization |
|
|
999,647 |
|
|
|
14.4 |
|
|
|
580,088 |
|
|
|
13.0 |
|
|
|
419,559 |
|
|
|
72.3 |
|
| General and
administrative |
|
|
2,876,548 |
|
|
|
41.5 |
|
|
|
1,292,050 |
|
|
|
28.9 |
|
|
|
1,584,498 |
|
|
|
122.6 |
|
| Sales and
marketing |
|
|
1,098,004 |
|
|
|
15.8 |
|
|
|
169,037 |
|
|
|
3.8 |
|
|
|
928,967 |
|
|
|
549.6 |
|
| Research
and development |
|
|
(122,045 |
) |
|
|
1.8 |
|
|
|
112,707 |
|
|
|
2.5 |
|
|
|
9,338 |
|
|
|
8.3 |
|
| Total
operating expenses |
|
|
5,096,244 |
|
|
|
73.5 |
|
|
|
2,153,882 |
|
|
|
48.2 |
|
|
|
2,942,362 |
|
|
|
136.6 |
|
| (Loss) from
operations |
|
|
(3,033,836 |
) |
|
|
(43.8 |
) |
|
|
(1,297,771 |
) |
|
|
(29.0 |
) |
|
|
(1,736,065 |
) |
|
|
133.8 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other
(Expenses)/Income, net |
|
|
18,478 |
|
|
|
0.27 |
|
|
|
(5,780 |
) |
|
|
(0.13 |
) |
|
|
24,258 |
|
|
|
(419.69 |
) |
|
Impairment loss on investment in associate |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Net (Loss) before
income tax |
|
|
(3,015,358 |
) |
|
|
(43.5 |
) |
|
|
(1,303,551 |
) |
|
|
(29.2 |
) |
|
|
(1,711,807 |
) |
|
|
131.3 |
|
| Income
tax (expense) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Net (Loss) |
|
|
(3,015,358 |
) |
|
|
(43.5 |
) |
|
|
(1,303,551 |
) |
|
|
(29.2 |
) |
|
|
(1,711,807 |
) |
|
|
131.3 |
|
Consolidated Revenue (Service)
Consolidated Revenues were $13,136,311 and $6,583,634 for the three
months ended December 31, 2021 and 2020, respectively.
The revenues from our AppLogiq segment (CreateApp platform)
increased to $6,206,027 compared to $2,112,988 for the three months
ended December 31, 2021 and 2020, respectively, as a result of our
strategic shift of targeting high margin end customer segment
compared to low margin high volume white label resellers.
Our DataLogiq platform revenues increased to $6,930,284 compared to
$4,470,646 for the three months ended December 31, 2021 and 2020,
respectively. The increase in revenues is due to a large increase
in the data monetization business and the inclusion of revenue from
Push Interactive.
Consolidated Cost of Revenue (Service)
Consolidated Cost of revenues were $9,060,147 and $5,195,432 for
the three months ended December 31, 2021 and 2020,
respectively.
The Cost of revenues of the Company’s CreateAPP platform increased
to $4,192,271 from $1,580,897 for the three months ended December
31, 2021 and 2020 respectively.
Our DataLogiq platform cost of revenue was $4,867,876 compared to
$3,614,535 for the three months ended December 31, 2021 and 2020
respectively.
Consolidated Gross Profit
Our consolidated gross margin was $4,076,164 compared to $1,388,202
for the three months ended December 31, 2021 and 2020
respectively.
Our consolidated gross margin increased to 31.0% from 21.1% for the
three months ended December 31, 2021 and 2020.
Our AppLogiq (CreateApp) platform gross margin was $2,013,756
compared to $532,091 for the three months ended December 31, 2021
and 2020 respectively. Our AppLogiq gross margin increased to 32.4%
from 25.2% as a result of our strategic shift of targeting high
margin end customer segment compared to low margin high volume
white label resellers.
Our DataLogiq platform gross margin was $2,062,408 and $856,111 for
the three months ended December 31, 2021 and 2020, respectively.
Our DataLogiq platform gross margin increased to 29.8% from 19.1%
for the three months ended December 31, 2021 and 2020,
respectively.
Consolidated
Operating Expenses
General and
Administrative (G&A)
Consolidated General and administrative expenses were $3,869,768
and $4,643,766 for the three months ended December 31, 2021 and
2020, respectively.
The Company including AppLogiq’s General and administrative
expenses were $993,220 and $3,351,717 for the three months ended
December 31, 2021 and 2020, respectively. The decrease in the three
months ended December 31, 2021 of $2,358,497 reflects stock
compensation costs including shares issued to consultants and
director . Other G&A cash expenses include legal &
professional costs decrease of $167,628 and consultants
$488,814.
Our DataLogiq platform General and administrative expenses were
$2,876,548 and $1,292,050 for the three months ended December 31,
2021 and 2020, respectively. The increase was partly as a result of
inclusion of Fixel AI and Rebel AI together with new hires in the
branding and operations management.
Stock-based compensation
Stock-based compensation expenses for the three months ended
December 31, 2021 and 2020 was $33,309 and $1,704,643,
respectively.
Sales and Marketing
(S&M)
Consolidated Sales and Marketing expenses were $1,098,004 and
$726,662 for the three months ended December 31, 2021 and 2020,
respectively. This includes Sales and Marketing expenses from our
AppLogiq platform of $0 and $557,625 from our general marketing
effort. Sales and Marketing expenses from our DataLogiq platform of
$1,098,004 and $169,037 for the three months ended December 31,
2021 and 2020 includes the increased incentive compensation for
sales teams and the inclusion of Fixel’s and Rebel’s sales and
marketing costs.
Research and Development
(R&D)
Consolidated Research and Development expenses were $3,390,493 and
$2,568,120 for the three months ended December 31, 2021 and 2020,
respectively.
Our AppLogiq (CreateAPP) platform Research and Development
(R&D) expenses were $3,268,448 and $2,455,413 for the three
months ended December 31, 2021 and 2020, respectively.
Consolidated Other Income/(Expenses)
Consolidated Other income (expenses), net was $18,478 and $19,235
for the three months ended December 31, 2021 and 2020 respectively.
Our DataLogiq platform received income of $38,616 mainly from the
PPP loan forgiveness.
Consolidated Net (Loss) Before Income Tax
The Company reports a Consolidated net loss of ($5,295,995) and
($7,142,483) for the three months ended December 31, 2021 and 2020
respectively.
The Company incorporating our AppLogiq (CreateAPP) platform
incurred a net loss of ($2,279,197) and ($5,838,932) for the three
months ended December 31, 2021 and 2020, respectively.
Our DataLogiq platform incurred a net loss of ($3,015,358) and
($1,303,551) for the three months ended December 31, 2021 and 2020
respectively.
Consolidated Income Tax (Expense)
No provision for corporate taxes is made as the Company incurred a
loss and has unutilized loss carryforwards.
Logiq, Inc.
(Delaware) 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, increased our
revenues by 193.7% to $6,206,027 from $2,112,988 in the same period
in FY2020, and the gross profit margins increased to 32.4% from
25.2%.
Cost of Revenue (Service)
AppLogiq Cost of Service revenues were $4,192,271 and $1,580,897
for the three months ended December 31, 2021 and 2020,
respectively, as a result of increased revenues.
Gross Profit
AppLogiq Gross Profit increased to $2,013,756 from $532,091 for the
three months ended December 31, 2021 and 2020, respectively. Gross
Profit % improved to 32.4% from 25.2% for the three months ended
December 31, 2021 and 2020, respectively as a result of the change
in strategic focus from bulk white label distributors to direct
marketing end users.
General and
Administrative (G&A)
AppLogiq G&A expenses was $993,220 and $3,351,717 for the three
months ended December 31, 2021 and 2020, respectively. The decrease
in the three months ended December 31, 2021 of $1,671,336 reflects
stock compensation costs including shares issued to consultants,
director, legal fee and retainers . Other G&A cash expenses
include legal & professional costs decrease of $152,353 and
consultants $503,814.
Consultancy fees including stock compensation was $0 and $1,353,320
for the three months ended December 31, 2021 and 2020,
respectively.
Legal & professional fees including stock compensation was $0
and $15,275 for the three months ended December 31, 2021 and 2020,
respectively.
Sales and Marketing
(S&M)
AppLogiq S&M expense was $0 and $557,625 for the three months
ended December 31, 2021 and 2020, respectively.
Research and Development
(R&D)
AppLogiq Research and Development expense was $3,268,448 and
$2,455,413 for three months ended December 31, 2021 and 2020,
respectively.
The increased spending reflects an increase 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 mining and
analytics dashboard for the AtoZGo delivery service and the AtoZPay
payment facility and other internal systems in the three months
ended December 31, 2021.
(Loss) from Operations
The Company including our AppLogiq segment posted a loss from
operations of $(2,279,197) and $(5,863,947) for the three months
ended December 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 decrease reflects stock compensation
costs including $33,309 and $1,704,645 for the three months ended
December 31, 2021 and 2020, respectively
Other Income/(Expenses)
AppLogiq there was $0 and $25,015 for the three months ended
December 31, 2021 and 2020, respectively.
Logiq, Inc. (Nevada)
including DataLogiq Results of Operations
Revenue (Service)
DataLogiq revenues were $4,470,646 for the three months ended
December 31, 2020 compared to $6,930,284 for the same period in
2021, an increase of $2,459,638 or 55.0%. The increase in revenues
is primarily a result of our continued focus on growing the data
monetization business.
Cost of Revenue (Service)
DataLogiq Cost of revenue was $3,614,535 for the three months ended
December 31, 2020 compared to $4,867,876 for the same period in
2021, an increase of $1,253,341 or 34.7%.
Gross Profit
DataLogiq gross profit was $856,111 for the three months ended
December 31, 2020 compared to $2,062,408 for the same period in
2021, an increase of $1,206,297 or 140.9%. Gross profit margin was
19.1% for the three months ended December 31, 2020 compared to
29.8% 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 $580,088 for
the three months ended December 31, 2020 compared to $999,647 for
the same period in 2021, an increase of $419,559 or 72.3%. The
increase is due to the acquisitions of Fixel AI in November 2020
and Rebel AI in March 2021 and the depreciation and amortization
expense associated with those subsidiaries.
General and
administrative
DataLogiq general and administrative expenses were $1,292,050 for
the three months ended December 31, 2020 compared to $2,876,548 for
the same period in 2021, an increase of $1,584,498 or 122.6%. The
increase is due to increase in payroll related costs and employee
headcount to help support the growth of the business.
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
$169,037 for the three months ended December 31, 2020 compared to
$1,098,004 for the same period in 2021, an increase of $928,967 or
549.6%. The increase is primarily due to commissions and the
marketing contract with Civet Digital for $550K.
Research and
development
DataLogiq research and development expenses were $112,707 for the
three months ended December 31, 2020 compared to $122,045 for the
same period in 2021, an increase of $9,338 or 8.3%. Research and
development costs include developers that support and enhance our
technologies. The increase in research and development is due to
the acquisition of Fixel AI and Rebel AI and the research and
development expenses from that business unit.
(Loss) from Operations
DataLogiq’s loss from operations was $(1,297,771) for the three
months ended December 31, 2020 compared to $(3,033,836) for the
same period in 2021.
Other Income/(Expenses)
For the three months ended December 31, 2021, DataLogiq other
income was $18,478 compared to $(5,780) for the same period in
2020.
Results of Operations
for the fiscal years ended December 31, 2021 and
2020
The following sets forth selected items from our statements of
operations and the percentages that such items bear to net sales
for the fiscal years ended December 31, 2021, and December 31, 2020
(Because of rounding, numbers may not foot). The Consolidated
results include Logiq, Inc. (a Delaware Corporation) and its
subsidiaries, Logiq, Inc (a Nevada Corporation), Fixel AI Inc. and
Rebel Inc. (collectively, also known as the DataLogiq segment).
Logiq, Inc. (Delaware) results include our business segment
APPLogiq.
Consolidated Results of Operations
| |
|
For the fiscal years ended |
|
| |
|
December 31, 2021 |
|
|
December 31, 2020 |
|
|
Change |
|
| Revenue
(service) |
|
$ |
37,346,859 |
|
|
|
100.0 |
% |
|
$ |
37,910,393 |
|
|
|
100.0 |
% |
|
$ |
(563,534 |
) |
|
|
(1.5 |
)% |
| Cost of
revenues (service) |
|
|
26,290,203 |
|
|
|
70.4 |
|
|
|
31,546,948 |
|
|
|
83.2 |
|
|
|
(5,256,745 |
) |
|
|
(16.7 |
) |
| Gross
profit |
|
|
11,056,656 |
|
|
|
29.6 |
|
|
|
6,363,445 |
|
|
|
16.8 |
|
|
|
4,693,211 |
|
|
|
73.8 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and
amortization |
|
|
3,782,136 |
|
|
|
10.1 |
|
|
|
1,966,045 |
|
|
|
5.2 |
|
|
|
1,816,091 |
|
|
|
92.4 |
|
| General and
administrative |
|
|
18,166,721 |
|
|
|
48.6 |
|
|
|
10,994,815 |
|
|
|
29.0 |
|
|
|
7,171,907 |
|
|
|
65.2 |
|
| Sales and
marketing |
|
|
2,296,483 |
|
|
|
6.1 |
|
|
|
1,423,909 |
|
|
|
3.8 |
|
|
|
872,574 |
|
|
|
61.3 |
|
| Research
and development |
|
|
7,400,732 |
|
|
|
19.8 |
|
|
|
6,244,704 |
|
|
|
16.5 |
|
|
|
1,156,028 |
|
|
|
18.5 |
|
| Total
operating expenses |
|
|
31,646,072 |
|
|
|
84.7 |
|
|
|
20,629,473 |
|
|
|
54.4 |
|
|
|
11,016,600 |
|
|
|
53.4 |
|
| (Loss) from
operations |
|
|
(20,589,416 |
) |
|
|
(55.1 |
) |
|
|
(14,266,028 |
) |
|
|
(37.6 |
) |
|
|
(6,323,389 |
) |
|
|
44.3 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other
(Expenses)/Income, net |
|
|
474,510 |
|
|
|
1.27 |
|
|
|
(243,641 |
) |
|
|
(0.64 |
) |
|
|
718,151 |
|
|
|
(294.8 |
) |
|
Impairment loss on investment in associate |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Net (Loss) before
income tax |
|
|
(20,114,906 |
) |
|
|
(53.9 |
) |
|
|
(14,509,669 |
) |
|
|
(38.3 |
) |
|
|
(5,605,238 |
) |
|
|
38.6 |
|
| Income
tax (expense) |
|
|
(11,881 |
) |
|
|
(0 |
) |
|
|
- |
|
|
|
- |
|
|
|
(11,881 |
) |
|
|
(0 |
) |
|
Net (Loss) |
|
|
(20,126,787 |
) |
|
|
(53.9 |
) |
|
|
(14,509,669 |
) |
|
|
(38.3 |
) |
|
|
(5,617,119 |
) |
|
|
38.7 |
|
Logiq (Delaware) including AppLogiq results of
operations
| |
|
For the fiscal years ended |
|
| |
|
December 31, 2021 |
|
|
December 31, 2020 |
|
|
Change |
|
| Revenue (service) |
|
$ |
14,340,379 |
|
|
|
100.0 |
% |
|
$ |
22,758,572 |
|
|
|
100.0 |
% |
|
$ |
(8,418,193 |
) |
|
|
(37.0 |
)% |
| Cost of
revenues (service) |
|
|
9,787,285 |
|
|
|
68.2 |
|
|
|
19,094,090 |
|
|
|
83.9 |
|
|
|
(9,306,805 |
) |
|
|
(48.7 |
) |
| Gross
profit |
|
|
4,553,094 |
|
|
|
31.8 |
|
|
|
3,664,482 |
|
|
|
16.1 |
|
|
|
888,612 |
|
|
|
24.2 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and amortization |
|
|
125,133 |
|
|
|
0.9 |
|
|
|
113,533 |
|
|
|
0.5 |
|
|
|
11,600 |
|
|
|
10.2 |
|
| General and administrative |
|
|
9,234,094 |
|
|
|
64.4 |
|
|
|
6,611,134 |
|
|
|
29.0 |
|
|
|
2,622,961 |
|
|
|
39.7 |
|
| Sales and marketing |
|
|
122,300 |
|
|
|
0.9 |
|
|
|
1,016,625 |
|
|
|
4.5 |
|
|
|
(894,325 |
) |
|
|
(88.0 |
) |
| Research and
development |
|
|
6,718,168 |
|
|
|
46.8 |
|
|
|
5,953,913 |
|
|
|
26.2 |
|
|
|
764,255 |
|
|
|
12.8 |
|
| Total operating
expenses |
|
|
16,199,695 |
|
|
|
113.0 |
|
|
|
13,695,205 |
|
|
|
60.2 |
|
|
|
2,504,490 |
|
|
|
18.3 |
|
| (Loss) from operations |
|
|
(11,646,601 |
) |
|
|
(81.2 |
) |
|
|
(10,030,723 |
) |
|
|
(44.1 |
) |
|
|
(1,615,878 |
) |
|
|
16.1 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other (Expenses)/Income, net |
|
|
(76,937 |
) |
|
|
(1 |
) |
|
|
16,748 |
|
|
|
0.07 |
|
|
|
(93,685 |
) |
|
|
(559.38 |
) |
| Impairment loss
on investment in associate |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Net (Loss) before income tax |
|
|
(11,723,538 |
) |
|
|
(81.8 |
) |
|
|
(10,013,975 |
) |
|
|
(44.0 |
) |
|
|
(1,709,563 |
) |
|
|
17.1 |
|
| Income tax
(expense) |
|
|
(11,881 |
) |
|
|
(0 |
) |
|
|
- |
|
|
|
- |
|
|
|
(11,881 |
) |
|
|
(0 |
) |
| Net (Loss) |
|
|
(11,735,419 |
) |
|
|
(81.8 |
) |
|
|
(10,013,975 |
) |
|
|
(44.0 |
) |
|
|
(1,721,444 |
) |
|
|
17.2 |
|
Logiq (Nevada) including DataLogiq results of operations
| |
|
For the fiscal years ended |
|
| |
|
December 31, 2021 |
|
|
December 31, 2020 |
|
|
Change |
|
| Revenue
(service) |
|
$ |
23,006,480 |
|
|
|
100.0 |
% |
|
$ |
15,151,821 |
|
|
|
100.0 |
% |
|
$ |
7,854,659 |
|
|
|
51.8 |
% |
| Cost of
revenues (service) |
|
|
16.502,918 |
|
|
|
71.7 |
|
|
|
12,452,858 |
|
|
|
82.2 |
|
|
|
4,050,060 |
|
|
|
32.5 |
|
| Gross
profit |
|
|
6,503,562 |
|
|
|
28.3 |
|
|
|
2,698,963 |
|
|
|
17.8 |
|
|
|
3,804,599 |
|
|
|
141.0 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and
amortization |
|
|
3,657,003 |
|
|
|
15.9 |
|
|
|
1,852,512 |
|
|
|
12.2 |
|
|
|
1,804,491 |
|
|
|
97.4 |
|
| General and
administrative |
|
|
8,932,627 |
|
|
|
38.8 |
|
|
|
4,383,681 |
|
|
|
28.9 |
|
|
|
4,584,946 |
|
|
|
103.8 |
|
| Sales and
marketing |
|
|
2,174,183 |
|
|
|
9.5 |
|
|
|
407,284 |
|
|
|
2.7 |
|
|
|
1,766,899 |
|
|
|
433.8 |
|
| Research
and development |
|
|
682,564 |
|
|
|
3.0 |
|
|
|
290,791 |
|
|
|
1.9 |
|
|
|
391,773 |
|
|
|
134.7 |
|
| Total
operating expenses |
|
|
15,446,377 |
|
|
|
67.1 |
|
|
|
6,934,268 |
|
|
|
45.8 |
|
|
|
8,512,109 |
|
|
|
122.8 |
|
| (Loss) from
operations |
|
|
(8,942,815 |
) |
|
|
(38.9 |
) |
|
|
(4,235,305 |
) |
|
|
(28.0 |
) |
|
|
(4,707,510 |
) |
|
|
111.1 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other
(Expenses)/Income, net |
|
|
551,447 |
|
|
|
2.40 |
|
|
|
(260,389 |
) |
|
|
(1.72 |
) |
|
|
811,836 |
|
|
|
(311.78 |
) |
|
Impairment loss on investment in associate |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Net (Loss) before
income tax |
|
|
(8,391,368 |
) |
|
|
(36.5 |
) |
|
|
(4,495,694 |
) |
|
|
(29.7 |
) |
|
|
(3,895,674 |
) |
|
|
86.7 |
|
| Income
tax (expense) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Net (Loss) |
|
|
(8,391,368 |
) |
|
|
(36.5 |
) |
|
|
(4,495,694 |
) |
|
|
(29.7 |
) |
|
|
(3,895,674 |
) |
|
|
86.7 |
|
Consolidated Geographical Information – Revenue
Revenue by geographical region for the years ended December 31,
2021 and 2020 were as follows:
| |
|
2021 |
|
|
% |
|
|
2020 |
|
|
% |
|
| Southeast
Asia |
|
$ |
7,170,190 |
|
|
|
19.2 |
|
|
|
12,109,193 |
|
|
|
31.9 |
|
| EU |
|
|
3,585,095 |
|
|
|
9.6 |
|
|
|
5,570,000 |
|
|
|
14.7 |
|
| South Korea |
|
|
2,151,057 |
|
|
|
5.8 |
|
|
|
3,770,000 |
|
|
|
9.9 |
|
| 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 |
|
Consolidated Revenue (Service)
Consolidated Service revenues were $37,346,859 and $37,910,393 for
the twelve months ended December 31, 2021 and 2020, respectively.
The decrease is due to the revenues of Applogiq decreased
$8,418,193 or 37.0% from FY2020 to FY2021 due to a loss of
customers as a result of adverse effects of the on-set of Covid-19
and from a strategic shift away from white label APP resellers and
towards higher margin direct marketing customers.
Consolidated Cost of Revenue (Service)
Consolidated Cost of service was $26,290,203 and $31,546,948 for
the twelve months ended December 31, 2021 and 2020, respectively.
FY2020 included the cost of revenues of DATALogiq effective January
8, 2020.
Consolidated Gross Profit
Consolidated Gross Profit was $11,056,656 and $6,363,445 for the
twelve months ended December 31, 2021 and 2020, respectively.
FY2020 included the Gross profit of DATALogiq effective January 8,
2020.
Consolidated Gross Profit margin was 29.6% and 16.8% for the
twelve months ended December 31, 2021 and 2020, respectively.
Consolidated Other Income/(Expenses)
Consolidated Other income was $474,510 and expenses $243,641 for
the twelve months ended December 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 and expense
from early withdrawal fees from an escrow account in DATALogiq.
Consolidated Operating Expenses
General and
Administrative (G&A)
Consolidated General and administrative expenses were $18,166,721
and $10,994,815 for the twelve months ended December 31, 2021 and
2020, respectively. The increase is partly due to the inclusion of
the G&A of DATALogiq business segment effective January 8, 2020
and Fixel AI effective November 1, 2020, respectively.
Significant movements are explained in the review of operations by
business segments of APPLogiq, DATALogiq and Fixel AI in the
sections below.
Sales and Marketing
(S&M)
Consolidated S&M expense was $2,296,483 and $1,423,909 for the
twelve months ended December 31, 2021 and 2020, respectively. The
increase is mainly due to the inclusion of the sales and marketing
for DATALogiq of $1,766,899 or 433.8% from FY2020 to
FY2021.
Research and Development
(R&D)
Consolidated Research and Development expense were $7,400,732 and
$6,244,704 for the twelve months ended December 31, 2021 and 2020,
respectively. The increase was due to an increase feature
development for APPLogiq of $764,255 or 12.8% from FY2020 to
FY2021.
Consolidated (Loss) from operations
The Company posted a loss from operations of $(20,589,416) and
$(14,266,028) for the twelve months ended December 31,2021 and
2020, respectively. The increase is partly due to the inclusion of
the loss from operations of DATALogiq business segment effective
January 8, 2020 of $(4,235,305).
The increase in the loss is due to increased staff costs, travel,
consultancy, professional and development fee for mobile app and
increase in research & development on our platform as further
described below.
Consolidated Net (loss)/profit before income tax
The Company posted a net loss before income tax $(20,126,787) and
$(14,509,669) for the twelve months ended December 31, 2021 and
2020, respectively.
The increase in the loss is due to increase in research &
development costs, legal and professional costs, travelling cost,
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 twelve months ended
December 31, 2021 and 2020 was $3,534,545 and $2,014,223,
respectively.
Consolidated Net (loss) income
The Company posted a consolidated net loss of $(20,126,787) for the
twelve months ended December 31, 2021 as compared to a net loss of
$(14,509,669) for the year ended December 31, 2020. The increase is
partly due to the inclusion of the net loss from DATALogiq business
segment effective January 8, 2020 of $(4,495,694).
Logiq, Inc. including APPLogiq Results of
Operations
Revenue (Service)
APPLogiq Service revenues were $14,340,379 and $22,758,572 for the
twelve months ended December 31, 2021 and 2020, respectively.
APPLogiq revenues was down by 37.0% compared to 2020 due to a loss
of customers as a result of adverse effects of the on-set of
Covid-19 and from a strategic shift away from white label APP
resellers and towards higher margin direct marketing customers.
Cost of Revenue (Service)
APPLogiq Cost of service was down 48.7% to $9,787,285 and
$19,094,090 for the twelve months ended December 31, 2021 and 2020,
respectively in line with the drop in revenues.
Gross Profit
APPLogiq Gross Profit was $4,553,094 and $3,664,482 for the twelve
months ended December 31, 2021 and 2020, respectively. Gross Profit
% was 31.8% and 16.1% for the twelve months ended December 31, 2021
and 2020, respectively as a result of the provision of
complimentary services during Covid-19 to retain customers.
Other Income/(Expenses)
APPLogiq Other expenses $76,937 and income $16,748 for the twelve
months ended December 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 $9,234,094 and $6,611,134 for the
twelve months ended December 31, 2021 and 2020, respectively.
Consultancy fees was $3,220,578 and $3,131,502 for the twelve
months ended December 31, 2021 and 2020, respectively.
Legal & professional fees was $1,605,122 and $958,571 for the
twelve months ended December 31, 2021 and 2020, respectively.
Sales and Marketing
(S&M)
APPLogiq S&M expense was $122,300 and $1,016,625 for the twelve
months ended December 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 $6,718,168 and
$5,953,913 for the twelve months ended December 31, 2021 and 2020,
respectively.
(Loss) from operations
APPLogiq and the Company posted a loss from operations of
$(11,646,601) and $(10,030,723) for the twelve months ended
December 31,2021 and 2020, respectively.
DATALogiq business segment Results of Operations
Revenue (Service)
DATALogiq revenues increased from $15.2 million for the year ended
December 31, 2020 to $23.0 million for the same period in 2021. The
$7.9 million increase is due to the Logiq acquisition of Push in
January 2020 and acquisition of Fixel in November 2020 and the
revenues derived from its business.
Cost of Revenue (Service)
DATALogiq Cost of service increased from $12.5 million for the year
ended December 31, 2020 to $16.5 million for the same period in
2021. The $4.1 million increase is due to the Logiq acquisition of
Push in January 2020 and acquisition of Fixel in November 2020 and
the cost of revenues resulting from its business.
Gross Profit
DATALogiq gross profit was $6.5 million for the year ended December
31, 2021 compared to $2.7 for the same period in 2020, an increase
of $3.8 million. This segment was new in 2020, as a result of the
acquisition of Push and Fixel.
DATALogiq gross profit margin was 28.3% for the year ended
December 31, 2021 and compare to $17.8% for the year ended December
31, 2020.
Other (Expenses)
DATALogiq other expenses was $551,447 for year ended December 31,
2021 and represents cost from early withdrawal fees of restricted
cash.
General and
Administrative (G&A)
DATALogiq general and administrative expenses were $8.9 million for
the year ended to December 31, 2021 compared to $4.4 million for
the same period in 2020, an increase of $4.5 million. The increase
is due to the Logiq acquisition of Push in January 2020 and
acquisition of Fixel in November 2020 and the hiring of additional
employees in Q4 as we scaled up the business.
Sales and Marketing
(S&M)
DATALogiq sales and marketing expenses include those expenses
required to support our sales efforts and includes sales
commissions and consultants. Sales and marketing expenses for the
years ended December 31, 2021 and 2020 were $2.2 million and $0.4,
respectively. The increase in sales and marketing costs of $1.8
million is due to the Logiq acquisition of Push in January 2020 and
acquisition of Fixel in November 2020.
Research and Development
(R&D)
DATALogiq research and development expenses were $0.7 million for
the year ended December 31, 20201 compared to $0.3 for the same
period in 2020. Research and development costs include developers
that support and enhance our technologies. The increase in research
and development is due to the Logiq acquisition of Push in January
2020 and acquisition of Fixel in November 2020.
(Loss) from operations
DATALogiq’s loss from operations was $8.9 million for the year
ended December 31, 2021 compared to $4.2 for the same period in
2020.
Liquidity and Capital Resources
During the year ended December 31, 2020, 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, and (iii)
proceeds from third-party financings.
Canadian Initial Public Offering (IPO)
On June 9, 2021, the Company entered into an Agency Agreement (the
“Agency Agreement”) with Research Capital Corporation (the “Agent”)
relating to a Canadian initial public 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 (“Common Stock”, 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”). The
Warrants will be governed by a warrant indenture (the “Warrant
Indenture”) between the Company and Odyssey Trust Company (the
“Warrant Agent”). No Units will be issued, however, as the Units
will be immediately separated and purchasers will receive only
shares of Common Stock and Warrants. 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.
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 units of securities (the “Advisory Fee
Units”), and 158,115 non-transferrable compensation options (the
“Agent Options”) to the Agent as compensation for certain strategic
advisory and support services rendered to the Company in connection
with the Offering. Each Advisory Fee Unit is comprised of (i) one
share of Common Stock, and (ii) one Warrant. Each Agent Option is
exercisable for one Unit at an exercise price of C$3.00 per Unit.
On June 21, 2021, the Company’s common stock began trading on the
NEO Exchange under the symbol “LGIQ”. The Company’s common stock
continues to trade in the United States on the OTCQX under the same
symbol.
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 December 31, 2021, we currently have material commitments for
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 as Risk Factors.
The following table summarizes our cash flows for the years ended
December 31, 2021 and 2010:
| |
|
For the Year Ended
December 31, |
|
|
Cash flows: |
|
2021 |
|
|
2020 |
|
| Net
cash (used in) operating activities |
|
$ |
(16,855,183 |
) |
|
$ |
(11,974,597 |
) |
| Net cash provided
by (used in) investment activities |
|
$ |
(933,682 |
) |
|
$ |
(3,803,967 |
) |
| Net cash provided
by financing activities |
|
$ |
15,885,352 |
|
|
$ |
8,687,759 |
|
Operating Activities
During the year ended December 31, 2021, loss from operations used
$(20,126,787), compared to $(14,509,669) for the year ended
December 31, 2020.
Investing Activities
During the year ended December 31, 2021, we did use cash $933,682
for investing activities in the Company’s financial asset
investment portfolio based and managed in the US.
Financing Activities
During the year ended December 31,
2021, we generated $15,885,352 from financing activities, compared
to $8,687,759 of cash generated for the year ended December 31,
2021.
We estimate that based on current plans and assumptions, 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, without further
financing, 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, 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.
Known Trends or Uncertainties
We have seen some consolidation in the mobile applications industry
during economic downturns. These consolidations have not had a
negative effect on our total sales; however, should consolidations
and downsizing in the industry continue to occur, those events
could adversely impact our revenues and earnings going forward.
We believe that the need for improved productivity in the research
and development activities directed toward developing new and
enhanced PaaS applications will continue to result in SMBs
utilizing our products and services. New product developments could
result in increased revenues and earnings if they are accepted by
our markets; however, there can be no assurances that new products
will result in significant improvements to revenues or earnings.
For competitive reasons, we do not disclose all of our new product
development activities.
The potential for growth in new markets is uncertain. We will
continue to explore these opportunities until such time as we
either generate sales or determine that resources would be more
efficiently used elsewhere.
Inflation
We have not been affected materially by inflation during the
periods presented, and no material effect is expected in the near
future.
Contractual Obligations and Commitments
We have no material contractual obligations as of December 31,
2021.
Critical Accounting Policies and Estimates
Our critical accounting policies and estimates are included in Note
2 – “Summary of Significant Accounting Policies” of Notes to
Consolidated Financial Statements included in this Annual
Report.
Recently Issued or Newly Adopted Accounting Standards
Our recently issued or newly adopted accounting standards are
included in Note 2 - “Summary of Significant Accounting
Policies” of the Notes to Consolidated Financial Statements
included in this Annual Report.
Off-Balance Sheet Arrangements
As of December 31, 2021, we did not have any relationships with
unconsolidated entities or financial partnerships, such as entities
often referred to as structured finance or special purpose
entities, which would have been established for the purpose of
facilitating off-balance sheet arrangements or other contractually
narrow or limited purposes. As such, we are not materially exposed
to any financing, liquidity, market, or credit risk that could
arise if we had engaged in such relationships.
We do not have relationships or transactions with persons or
entities that derive benefits from their non-independent
relationship with us or our related parties.
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk
Not applicable.
Item 8. Financial Statements and Supplementary Data
LOGIQ, INC.
INDEX TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Logiq,
Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of
Logiq, Inc. (the “Company”) as of December 31, 2021 and 2020, and
the related consolidated statements of operations and comprehensive
loss, stockholders’ equity and cash flows for each of the two years
in the period ended December 31, 2021, and the related notes
(collectively referred to as the “financial statements”). In our
opinion, the consolidated financial statements present fairly, in
all material respects, the financial position of the Company as of
December 31, 2021 and 2020, and the results of its operations and
its cash flows for each of the two years in the period ended
December 31, 2021 in conformity with accounting principles
generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting
Oversight Board (United States) (“PCAOB”) and are required to be
independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial
reporting. As part of our audit we are required to obtain an
understanding of internal control over financial reporting but not
for the purpose of expressing an opinion on the effectiveness of
the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising
from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to
the audit committee and that: (1) relates to accounts or
disclosures that are material to the consolidated financial
statements and (2) involved our especially challenging, subjective,
or complex judgments. The communication of the critical audit
matter does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing separate
opinions on the critical audit matter or on the accounts or
disclosures to which it relates.
Impairment of Goodwill and Long-Lived Assets – Refer to Notes 2, 3
and 5 to the financial statements.
As disclosed in the consolidated financial statements goodwill and
intangible assets, net were $5.6 and $14.8 million respectively as
of December 31, 2021. Impairment is reviewed whenever events or
changes in circumstances indicate that the carrying amounts of
these assets may not be fully recoverable. As shown in Notes 3 and
5 to the financial statements, the Company did not recognize any
impairment for goodwill and intangible assets during the year ended
December 31, 2021.
If an indicator of impairment exists for any software technology,
an estimate of the undiscounted future cash flows over the life of
the primary asset for each software technology is compared to that
long-lived asset’s carrying value.
The determination of whether an impairment indicator has occurred
involves the evaluation of subjective factors by management to
assess what constitutes an event or change in circumstance that
indicates a software technology should be tested for
recoverability, and therefore auditing the valuation of goodwill
and intangible assets involved especially subjective judgment.
How the Critical Audit Matter Was Addressed in the Audit:
Subjective auditor judgment was required to evaluate the
completeness of management’s assessment as to whether an event or
change in circumstance indicates a software technology’s assets
should be tested for recoverability. The primary procedures we
performed to address this critical audit matter included the
following:
We tested the effectiveness of controls over management’s goodwill
and long-lived impairment process, including controls related to
determining the completeness of management’s assessment as to which
events or changes in circumstance indicates a software technology’s
assets should be tested for recoverability.
We evaluated management’s process for determining whether all
potential indicators of impairment were appropriately identified,
including:
|
● |
comparing the consistency and
precision of the methodology used to determine the proper
impairment indicators by management to the relevant requirements of
generally accepted accounting principles (“GAAP”); |
|
● |
considering current technology,
economy or other industry changes through review of relevant
industry publications, current news publications and Board of
Directors’ meeting minutes, in order to evaluate the completeness
of events or changes in circumstances identified by management as
indicators that the software technology asset should be tested for
recoverability. |
|
/s/ Centurion ZD CPA &
Co. |
|
| Centurion
ZD CPA & Co. |
|
| Hong
Kong |
|
| |
|
| March 31,
2022 |
|
| |
|
| We have
served as the Company’s auditor since 2012 |
|
LOGIQ, INC.
Consolidated Balance Sheets
| |
|
December 31 |
|
|
December 31 |
|
| |
|
2021 |
|
|
2020 |
|
| |
|
(Audited ) |
|
|
(Audited) |
|
| ASSETS |
|
|
|
|
|
|
| Non-current
assets |
|
|
|
|
|
|
| Intangible assets,
net |
|
|
14,797,196 |
|
|
|
11,736,540 |
|
| Property and equipment, net |
|
|
153,973 |
|
|
|
178,561 |
|
| Goodwill |
|
|
5,577,926 |
|
|
|
5,078,090 |
|
| Total
non-current assets |
|
|
20,529,095 |
|
|
|
16,993,191 |
|
| |
|
|
|
|
|
|
|
|
| Current assets |
|
|
|
|
|
|
|
|
| Amount due from associate |
|
|
7,208,700 |
|
|
|
5,673,700 |
|
| Accounts receivable |
|
|
3,966,086 |
|
|
|
2,618,494 |
|
| Right to use assets - operating
lease |
|
|
91,571 |
|
|
|
364,234 |
|
| Prepayment, deposit and other
receivables |
|
|
804,011 |
|
|
|
206,443 |
|
| Financial assets held for resale |
|
|
681 |
|
|
|
594,263 |
|
| Restricted cash |
|
|
22,513 |
|
|
|
10,889 |
|
| Cash and cash
equivalents |
|
|
1,563,752 |
|
|
|
3,478,889 |
|
| Total
current assets |
|
|
13,657,314 |
|
|
|
12,946,912 |
|
| Total
assets |
|
$ |
34,186,409 |
|
|
$ |
29,940,103 |
|
| |
|
|
|
|
|
|
|
|
| LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
| Current
Liabilities |
|
|
|
|
|
|
|
|
| Accounts payable |
|
|
2,293,858 |
|
|
|
1,009,204 |
|
| Accruals and other payables |
|
|
1,804,131 |
|
|
|
1,110,732 |
|
| Deferred revenue |
|
|
10,500 |
|
|
|
46,857 |
|
| Lease liability - operating lease |
|
|
91,571 |
|
|
|
364,234 |
|
| Convertible promissory notes |
|
|
-
|
|
|
|
2,911,000 |
|
| Amount due to director |
|
|
-
|
|
|
|
77,500 |
|
| Deposits
received for share to be issued |
|
|
401,028 |
|
|
|
-
|
|
| Total current
liabilities |
|
|
4,601,088 |
|
|
|
5,519,527 |
|
| |
|
|
|
|
|
|
|
|
| Non-Current
Liabilities |
|
|
|
|
|
|
|
|
| Other loan |
|
|
10,000 |
|
|
|
10,000 |
|
| Notes
payable |
|
|
-
|
|
|
|
507,068 |
|
| Total
non-current liabilities |
|
|
10,000 |
|
|
|
517,068 |
|
| Total
liabilities |
|
$ |
4,611,088 |
|
|
$ |
6,036,595 |
|
| |
|
|
|
|
|
|
|
|
| STOCKHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
| Common
stock, $0.0001 par value, 250,000,000 shares authorized, 26,350,756
and 15,557,439 shares issued and outstanding as of December 31,
2021 and December 31, 2020, respectively* |
|
|
2,635 |
|
|
|
1,556 |
|
| Additional paid-in capital |
|
|
82,473,004 |
|
|
|
66,739,895 |
|
| Capital reserves |
|
|
29,349,795 |
|
|
|
19,285,383 |
|
| Accumulated
deficit brought forward |
|
|
(82,250,113 |
) |
|
|
(62,123,326 |
) |
| Total
stockholder’s equity |
|
|
29,575,321 |
|
|
|
23,903,508 |
|
| Total
liabilities and stockholders’ equity |
|
$ |
34,186,409 |
|
|
$ |
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 years ended
December 31, |
|
| |
|
2021 |
|
|
2020 |
|
| |
|
(Audited) |
|
|
(Audited) |
|
| |
|
|
|
|
|
|
| Service Revenue |
|
$ |
37,346,859 |
|
|
$ |
37,910,393 |
|
| Cost of Service |
|
|
26,290,203 |
|
|
|
31,546,948 |
|
| Gross
Profit |
|
|
11,056,656 |
|
|
|
6,363,445 |
|
| |
|
|
|
|
|
|
|
|
| Operating Expenses |
|
|
|
|
|
|
|
|
| Depreciation and amortization |
|
|
3,782,136 |
|
|
|
1,966,045 |
|
| General and administrative |
|
|
18,166,721 |
|
|
|
10,994,815 |
|
| Sales and marketing |
|
|
2,296,483 |
|
|
|
1,423,909 |
|
| Research and
development |
|
|
7,400,732 |
|
|
|
6,244,704 |
|
| Total
Operating Expenses |
|
|
31,646,072 |
|
|
|
20,629,473 |
|
| |
|
|
|
|
|
|
|
|
| (Loss) from
Operations |
|
|
(20,589,416 |
) |
|
|
(14,266,028 |
) |
| |
|
|
|
|
|
|
|
|
| Other
(Expenses)/Income, net |
|
|
474,510 |
|
|
|
(243,641 |
) |
| |
|
|
|
|
|
|
|
|
| Net (Loss) before
income tax |
|
|
(20,114,906 |
) |
|
|
(14,509,669 |
) |
| Income tax
(Corporate tax) |
|
|
(11,881 |
) |
|
|
-
|
|
| Net
(Loss) |
|
$ |
(20,126,787 |
) |
|
$ |
(14,509,669 |
) |
| |
|
|
|
|
|
|
|
|
| Net
(Loss) per common share - basic and fully diluted: |
|
|
(0.9499 |
) |
|
|
(1.1444 |
) |
| |
|
|
|
|
|
|
|
|
| Weighted
average number of basic and fully diluted common shares
outstanding* |
|
|
21,187,556 |
|
|
|
12,678,904 |
|
| * |
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 year ended December 31, |
|
| |
|
2021 |
|
|
2020 |
|
| |
|
(Audited) |
|
|
(Audited) |
|
| OPERATING ACTIVITIES: |
|
|
|
|
|
|
| Net
loss |
|
$ |
(20,126,787 |
) |
|
$ |
(14,509,669 |
) |
| Adjustments to
reconciled net loss to net cash used by operating activities: |
|
|
|
|
|
|
|
|
| Depreciation of
property, plant, and equipment |
|
|
52,824 |
|
|
|
46,565 |
|
| Amortization of
intangible assets |
|
|
3,729,313 |
|
|
|
1,919,480 |
|
| PPP Loan
forgiveness |
|
|
(507,068 |
) |
|
|
-
|
|
| Changes in
operating assets and liabilities: |
|
|
|
|
|
|
|
|
| Accounts
receivable |
|
|
(1,347,592 |
) |
|
|
(271,049 |
) |
| Intangible
assets |
|
|
-
|
|
|
|
(116,000 |
) |
| Prepayments,
deposit and other receivables |
|
|
(597,569 |
) |
|
|
(91,664 |
) |
| Accounts
payable |
|
|
1,284,654 |
|
|
|
642,393 |
|
| Accruals and
payables |
|
|
693,399 |
|
|
|
405,347 |
|
|
Deferred revenue |
|
|
(36,357 |
) |
|
|
-
|
|
| Net
cash (used in) operating activities |
|
|
(16,855,183 |
) |
|
|
(11,974,597 |
) |
| |
|
|
|
|
|
|
|
|
| INVESTING
ACTIVITIES: |
|
|
|
|
|
|
|
|
| Increase in
amount due from associate |
|
|
(1,535,000 |
) |
|
|
(9,101 |
) |
| Financial assets
held for resale |
|
|
593,582 |
|
|
|
2,136,100 |
|
| Net
restricted cash acquired in acquisitions |
|
|
7,736 |
|
|
|
1,676,968 |
|
| Net
cash provided by (used in) investing activities |
|
|
(933,682 |
) |
|
|
3,803,967 |
|
| |
|
|
|
|
|
|
|
|
| FINANCING
ACTIVITIES: |
|
|
|
|
|
|
|
|
| Advances to
associate |
|
|
-
|
|
|
|
(2,848,000 |
) |
| Repayment of
bank loan |
|
|
-
|
|
|
|
(500,000 |
) |
| Borrowings under
long term loan |
|
|
-
|
|
|
|
10,000 |
|
| Proceeds from
Convertible bond |
|
|
-
|
|
|
|
2,911,000 |
|
| Proceeds from
notes payable-US government CARES Act |
|
|
-
|
|
|
|
507,068 |
|
| Proceeds from
shares to be issued |
|
|
401,028 |
|
|
|
-
|
|
| Proceeds from
stock issuance, net of expenses |
|
|
11,573,540 |
|
|
|
8,607,691 |
|
|
Proceeds from stock issuance from IPO, net of expenses |
|
|
3,910,784 |
|
|
|
-
|
|
| Net
cash provided by (used in) financing activities |
|
|
15,885,352 |
|
|
|
8,687,759 |
|
| |
|
|
|
|
|
|
|
|
|
(DECREASE)/INRCREASE IN CASH AND CASH EQUIVALENTS |
|
|
(1,903,513 |
) |
|
|
517,129 |
|
| |
|
|
|
|
|
|
|
|
| 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 |
|
$ |
1,586,265 |
|
|
$ |
3,489,778 |
|
| |
|
|
|
|
|
|
|
|
| NON-CASH
TRANSACTION |
|
|
|
|
|
|
|
|
|
Issuance of shares for services received |
|
$ |
3,534,545 |
|
|
$ |
2,014,223 |
|
The accompanying notes are an integral part of these consolidated
financial statements
LOGIQ, INC.
Consolidated Statements of Stockholders’ Equity
For the Years Ended December 31, 2021 and 2020
| |
|
Common
Stock * |
|
|
Amount |
|
|
Additional
paid-in
capital |
|
|
Subscriptions
received/Capital
reserves |
|
|
Accumulated
(Deficit) |
|
|
Stockholders’
(Deficit)/Equity |
|
|
Balance December 31, 2018 |
|
|
36,915,343 |
|
|
$ |
3,692 |
|
|
$ |
46,177,521 |
|
|
$ |
-
|
|
|
$ |
(41,071,971 |
) |
|
$ |
5,109,242 |
|
| Issuance of
Shares |
|
|
58,627,601 |
|
|
|
5,748 |
|
|
|
9,614,508 |
|
|
|
-
|
|
|
|
-
|
|
|
|
9,620,256 |
|
| Cancelation of
shares |
|
|
(3,550,000 |
) |
|
|
(355 |
) |
|
|
355 |
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Shares issued for services |
|
|
19,311,309 |
|
|
|
2,045 |
|
|
|
2,265,734 |
|
|
|
-
|
|
|
|
-
|
|
|
|
2,267,779 |
|
|
Net loss for the year |
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,541,686 |
) |
|
|
(6,541,686 |
) |
|
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 |
|
|
(102,742,549 |
) |
|
|
(10,274 |
) |
|
|
10,274 |
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
| Issuance of
Shares |
|
|
2,366,016 |
|
|
|
237 |
|
|
|
6,657,412 |
|
|
|
-
|
|
|
|
-
|
|
|
|
6,657,649 |
|
| Issuance of Shares
for acquisitions |
|
|
3,311,668 |
|
|
|
331 |
|
|
|
-
|
|
|
|
19,285,383 |
|
|
|
-
|
|
|
|
19,285,714 |
|
| Cancelation of
shares |
|
|
(404,439 |
) |
|
|
(40 |
) |
|
|
(616,841 |
) |
|
|
-
|
|
|
|
-
|
|
|
|
(616,881 |
) |
|
Shares issued for services |
|
|
1,722,490 |
|
|
|
172 |
|
|
|
2,630,932 |
|
|
|
-
|
|
|
|
-
|
|
|
|
2,631,104 |
|
|
Net loss for the year |
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(14,509,669 |
) |
|
|
(14,509,669 |
) |
|
Balance December 31, 2020 |
|
|
15,557,439 |
|
|
$ |
1,556 |
|
|
$ |
66,739,895 |
|
|
$ |
19,285,383 |
|
|
$ |
(62,123,326 |
) |
|
$ |
23,903,508 |
|
| Issuance of
Shares |
|
|
5,675,343 |
|
|
|
568 |
|
|
|
9,287,284 |
|
|
|
-
|
|
|
|
-
|
|
|
|
9,287,852 |
|
| Issuance of Shares
for acquisitions |
|
|
1,032,056 |
|
|
|
103 |
|
|
|
-
|
|
|
|
10,064,412 |
|
|
|
-
|
|
|
|
10,064,515 |
|
| Cancelation of
shares |
|
|
(90,000 |
) |
|
|
(9 |
) |
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(9 |
) |
|
Shares issued for services |
|
|
2,313,941 |
|
|
|
231 |
|
|
|
3,534,825 |
|
|
|
-
|
|
|
|
-
|
|
|
|
3,535,056 |
|
|
Issuance of Shares for Convertible Note |
|
|
1,861,977 |
|
|
|
186 |
|
|
|
2,911,000 |
|
|
|
-
|
|
|
|
-
|
|
|
|
2,911,186 |
|
|
Net loss for the year |
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(20,126,787 |
) |
|
|
(20,126,787 |
) |
|
Balance December 31, 2021 |
|
|
26,350,756 |
|
|
$ |
2,635 |
|
|
$ |
82,473,004 |
|
|
$ |
29,349,795 |
|
|
$ |
(82,250,113 |
) |
|
$ |
29,575,321 |
|
| * |
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.
DECEMBER 31, 2021 AND 2020
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.
Item
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
None
Item
9A. Controls and Procedures
Evaluation
of Disclosure Controls and Procedures
We
maintain disclosure controls and procedures that are designed to
ensure that information required to be disclosed in our periodic
and current reports that we file with the SEC is recorded,
processed, summarized and reported within the time periods
specified in the SEC’s rules and forms, and that such information
is accumulated and communicated to our management, including our
principal executive officer and principal financial officer, as
appropriate, to allow timely decisions regarding required
disclosure. In designing and evaluating the disclosure controls and
procedures, management recognized that any controls and procedures,
no matter how well designed and operated, can provide only
reasonable and not absolute assurance of achieving the desired
control objectives. In reaching a reasonable level of assurance,
management necessarily was required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and
procedures. In addition, the design of any system of controls also
is based in part upon certain assumptions about the likelihood of
future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future
conditions; over time, control may become inadequate because of
changes in conditions, or the degree of compliance with policies or
procedures may deteriorate. Because of the inherent limitations in
a cost-effective control system, misstatements due to error or
fraud may occur and not be detected.
Our
management, with the participation of our principal executive
officer and principal financial officer, has evaluated the
effectiveness of our disclosure controls and procedures as defined
in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
of 1934, as amended, or the Exchange Act, as of the end of the
period covered by this Annual Report. Based on such evaluation, our
principal executive officer and principal financial officer have
concluded that as of such date, our disclosure controls and
procedures were effective at the reasonable assurance
level.
Management’s
Annual Report on Internal Control over Financial
Reporting
Our
management is responsible for establishing and maintaining adequate
internal controls over financial reporting, as such term is defined
in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Internal
control over financial reporting is a process designed under the
supervision and with the participation of our management, including
our principal executive officer and principal financial officer, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with GAAP. Our internal control over
financial reporting includes those policies and procedures
that:
(i)
pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of
our assets;
(ii)
provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in
accordance with GAAP, and that our receipts and expenditures are
being made only in accordance with authorizations of our management
and directors; and
(iii)
provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of our
assets that could have a material effect on our financial
statements.
Because of its inherent limitations, internal controls over
financial reporting may not prevent or detect all misstatements.
Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial
statement preparation and presentation. We have conducted an
evaluation of the effectiveness of our internal control over
financial reporting. Based on our evaluation, management has
concluded that our internal control over financial reporting was
effective as of December 31, 2021.
Changes
in Internal Control over Financial Reporting
There
have been no changes in our internal control over financial
reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act, that occurred during the period covered by this
Annual Report that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.
Attestation
Report of the Registered Public Accounting Firm
This
Annual Report does not include an attestation report of our
registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to
attestation by our registered public accounting firm pursuant to
Item 308(b) of Regulation S-K.
Item
9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent
Inspections
Not applicable.
PART
III
Item
10. Directors, Executive Officers, and Corporate
Governance
The
following table sets forth the names, ages, and positions of our
executive officers and directors as of March 31, 2022. There are no
arrangements, agreements or understandings between non-management
security holders and management under which non-management security
holders may directly or indirectly participate in or influence the
management of our affairs. There are no arrangements or
understandings between any director and any other person pursuant
to which any director or executive officer was or is to be selected
as a director or executive officer, as applicable.
|
Name |
|
Age |
|
Positions and Offices
Held |
| Brent
Suen |
|
55 |
|
President, Chief Executive Officer, Principal
Financial Officer and Director |
| John
MacNeil |
|
60 |
|
Chief
Operating Officer, Chief of Staff and Director |
| Lionel
Choong |
|
60 |
|
Chief
Financial Officer and Director |
| Eddie
Foong |
|
48 |
|
Vice
President, Product |
| Matthew Burlage |
|
58 |
|
Independent Director |
| Joshua
Jacobs |
|
51 |
|
Independent Director |
| Brett
Lay |
|
59 |
|
Independent Director |
| Ross
O’Brian |
|
54 |
|
Independent Director |
| Lea
Hickman |
|
54 |
|
Independent Director |
Set
forth below is a brief description of the background and business
experience of each of our executive officers, directors, and key
management personnel.
Brent Suen, age 55, President, Chief Executive Officer, Principal
Financial Officer and Director
Brent Suen previously served as the Company’s Chief
Executive Officer until September 1, 2020 and was re-appointed on
January 7, 2022, and has been President of the Company since
November 19, 2014, and a director of the Company since November 19,
2014. Mr. Suen has 27 years of experience in the investment
banking industry. He began his career in merger arbitrage at Bear
Stearns in 1988, at the age of 20, as the firms’ youngest hire. In
1993, he founded Axis Trading Corp., one of the first online
platforms for stock trading and subsequently sold it to a division
of Softbank in 1996. In 1997, he co-founded Elevation Capital which
invested in and advised Silicon Valley based companies on IPO’s,
mergers and acquisitions, strategic partnerships and fund raising.
In 2003 Brent moved to Hong Kong and China where he established
Bay2Peak S.A. Bay2Peak has invested in and advised over fifty
companies which include Internet, software, renewable energy and
life science companies. From 2006 to 2008 he also advised IRG TMT
Asia Fund on private and public investments. In 2012 Brent served
as advisor to McLarty Group and Citibank Venture Capital on a
sale/leaseback program valued at $160 million leading to the
eventual sale of the company for $630 million. For the past six
years, Brent led the start-up and management of Empirica S.A., a
security/intelligence and frontier markets focused advisory firm
operating in Asia, the Middle East, Africa and Central Asia.
Mr.
Suen holds a BA degree in Marketing from the University of Arkansas
at Little Rock.
Based
on Mr. Suen’s work experience and education, the Board believes
that he is qualified to serve as executive chairman, director and
Principal Financial Officer.
Lionel Choong, age 60, Chief Financial Officer, Principal
Accounting Officer, Director
Lionel
Choong has been Chief Financial Officer since July 17, 2015, and is
a current member of our board. Since May 11, 2018, Mr. Choong is
the audit committee chairman and independent non-executive director
of Moxian Inc (NASD: MOXC). Previously, Mr. Choong was the Vice
Chairman, audit committee chairman and an independent non-executive
director of Emerson Radio Corp. (NYSE: MSN) from November 2013 to
June 2017. Mr. Choong was acting Chief Financial Officer of Global
Regency Ltd., between April 2009 and June 2015 and remains as a
consultant thereafter. Mr. Choong is a director and consultant for
Willsing Company Ltd., a position he has held since August 2004 and
Board Advisor to Really Sports Co., Ltd., a position he has held
since June 2013. Mr. Choong has a wide range of experience in
a variety of senior financial positions with companies in China,
Hong Kong SAR, and London, UK. His experience encompasses building
businesses, restructuring insolvency, corporate finance, and
initial public offerings in a number of vertical markets, including
branded apparel, consumer and lifestyle, consumer products,
pharmaceuticals, and logistics. From June 2008 to May 2011,
Mr. Choong was acting Chief Financial Officer of Sinobiomed,
Inc. (predecessor company of Logiq, Inc.).
Mr. Choong
is a fellow member and holds a corporate finance diploma from the
Institute of Chartered Accountants in England and Wales. He is also
a CPA and practicing member of the Hong Kong Institute of Certified
Public Accountants and a member of the Hong Kong Securities
Institute. Mr. Choong holds a Bachelor of Arts in Accountancy
from London Guildhall University, UK, and a Master of Business
Administration from the Hong Kong University of Science and
Technology and the Kellogg School of Management at Northwestern
University in the US.
Based
on Mr. Choong’s work experience, previous directorships, and
education, the Board believes that he is qualified to serve as a
director and Chief Financial Officer with overall review of all
financial matters of the Company.
Eddie Foong, age 48, Vice President, Product
Eddie
Foong served as our Chief Operating Officer and a director of the
Company until September 1, 2020. Mr. Foong is now Vice President,
Product. Mr. Foong is the founder and creator of AppLogiq, and has
over 17 years of experience in IT, sales and marketing and
operations. He was involved in a RFID technology company that
developed and changed Singapore National Library Books borrowing
system island wide. He previously headed the sales and marketing
department of Info. Technology within MNCs and government
agencies.
Mr.
Foong graduated with a Class 1 Beng Honours Degree and IBM Award
holder from University of Strathclyde, U.K.
Based
on Mr. Foong’s work experience and education, the Board believes
that he is well qualified to serve in his role as Vice President,
Product.
John MacNeil, age 60, Chief Operating Officer, Chief of Staff,
Director
Mr. MacNeil has served as our Chief Operating Officer since January
7, 2022. Mr. MacNeil has more than 30 years of experience in the
financial services and technology industries. He has advised
technology, financial technology and renewable energy companies on
strategic relationships, financial forecasting, investor relations
and capital formation. He previously served as a portfolio manager
for technology funds at Schroders Investment Management. He holds a
Bachelor of Electrical Engineering from University of Connecticut
and MBA from Columbia Business School.
Joshua Jacobs, age 51, Independent Director
Mr.
Jacobs, a pioneer in the programmatic media-buying industry, has
led innovative technology companies on a global scale. Mr. Jacobs
recently served as a director of Maven, Inc. (OTC:MVEN), a media
platform for digital publishers. Built through acquisitions, Mr.
Jacobs co-led the fundraising, acquisition and integration of 4
media companies (including Sports Illustrated and Jim Cramer’s
TheStreet.com) over a 3 year period of time. Under his leadership,
Maven grew from a pre-product/pre-revenue startup, to a market
leading platform serving over 110 million readers
monthly.
Prior
to Maven, Mr. Jacobs was the Global CEO of Accuen, an Omnicom
agency, and a president of Omnicom Media Group. Mr. Jacobs grew
Accuen from a single office in Chicago, to a global powerhouse with
employees in over 65 countries.
Mr.
Jacobs has held senior global executive roles in market leading
technology companies including:
|
|
● |
President
of Services at Kik Interactive where Mr. Jacobs lead the team
creating a developer and partner ecosystem, powered by one of the
world’s leading chat and messaging platforms. |
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|
● |
SVP
of Advertising Products and Global Marketing at Glam Media (Mode
Media) where Mr. Jacobs oversaw all aspects of brand advertising,
applications and ad partners as well as the Glam Publisher Network
of 1,400 sites. He was also responsible for Glam Media’s global
marketing, including brand and agency marketing, corporate
communications and research. |
|
|
● |
VP
and General Manager of Marketing Technology at Yahoo! where he was
responsible for driving Yahoo!’s advertising technology and
publisher network display partnership strategy as well as driving
the business operations supporting the company’s advertising
platform business, as General Manager of the RightMedia
Exchange. |
Mr. Jacobs has also led multiple early stage companies through the
creation of their initial products, fundraising, and scaling of
operations including roles as President of X1, an Idealab company
and Co-founder of small business publishing platform Bigstep.com.
Mr. Jacobs continues to support the startup ecosystem as a board
member, investor and advisor to numerous technology and media
startups. In addition to Logiq, Mr. Jacobs sits on the board of
Resonant (NASD:RESN).
Matthew Burlage, age 58, Independent Director
Matthew
Burlage is an independent, non-executive director of the Company.
Mr. Burlage has spent the last three decades involved in financing
and advising Asia’s leading corporations, government enterprises
and financial institutions and has been involved in some of the
most ground-breaking transactions in Asia, particularly in the
telecom, media, technology and internet (TMTI) sectors. Recently,
Mr. Burlage has focused on developing ESG compliant relationships
and clients in the energy renewables, food/agriculture technology
and financial technology sectors.
In
2000, Mr. Burlage co-founded IRG, a boutique financial advisory and
investment firm focused on the core growth sectors in Asia. He
advises Asian and global corporates, private equity funds, hedge
funds and sovereign wealth funds on a range of transactions
including mergers, acquisitions, corporate restructurings, and debt
capital and equity capital financings. He is also responsible for
the firm’s investment strategy and management of its proprietary
capital. Before co-founding IRG, Mr. Burlage was a Managing
Director and Head of Industry Groups at Lehman Brothers in Hong
Kong where he created the first and largest dedicated TMT industry
group at an investment bank in Asia in the early 1990s.
Mr.
Burlage holds an MBA from Harvard Business School and a Bachelor of
Arts from Yale University. Mr. Burlage also attended the Japanese
Language Institute of Sophia University.
Based
on Mr. Burlage’s work experience and education, the Board believes
that he is qualified to serve as an independent director of the
Company.
Ross O’Brien, age 54, Independent Director
Ross
O’Brien is an independent, non-executive director of the Company.
Mr. O’Brien is a telecommunications analyst and market entry
consultant who focuses on Asia’s digital economies. He has been
based in Hong Kong for over two decades, and has also lived and
worked in Indonesia, Singapore, China, Vietnam, and Bangladesh.
Mr. O’Brien runs the technology practice of B2B
consultancy Intercedent Asia, where he focuses on market entry
strategies for telecoms and IT companies, in managed services and
wireless solutions. Mr. O’Brien is also a Senior
Contributing Editor at the MIT Technology Review’s Insight program.
Previously, Mr. O’Brien been an analyst and consultant
with Pyramid Research, Ovum (now Omdia) and Strategic Intelligence,
and a consultant at AT&T Solutions. For many years, he ran the
Hong Kong program of the Economist Newspaper’s senior executive
advisory program, the Economist Corporate Network.
Mr.
O’Brien holds an AB from Dartmouth College (Hanover, NH), and an
MBA from the Haas School of Business (University of California at
Berkeley). He is conversant and literate in Mandarin and
Indonesian.
Based
on Mr. O’Brien’s work experience and education, the Board believes
that he is well qualified to serve as an independent director of
the Company.
Brett Lay, age 59, Independent Director
Brett
Lay is an independent, non-executive director of the Company. Mr.
Lay is currently the CEO for Gateway Network Connections /Asia
Connectivity Elements, in addition to CEO HMB IX. Gateway Network
Connections is a partnership with GTA in Guam for a newly
constructed data center serving the Guam market, while HMB IX is a
data center in Hermosa Beach California serving independent
undersea cable owners’ termination equipment. Previously, Mr.
Lay served as Chief Financial Officer of Pacnet Limited,
AsiaNetcom, and Pacific Internet from February 2007 to April 2015.
A seasoned successful business executive with 30 years of operating
experience including 15 years as a Chief Financial Officer for both
private and public companies. He has 18 years of work experience in
Asia while residing in Singapore and Hong Kong. He was an active
member of the board of directors for joint ventures in China,
India, South Korea, and Philippines.
Brett
has his Masters of Science Finance and Masters of Science
Management, from the University of Colorado, Denver. Based on Mr.
Lay’s work experience, previous directorships, and education, the
Board believes that he is well qualified to serve as an independent
director of the Company.
Lea Hickman, age 54, Independent
Director
For
over 30 years, Lea has been leading product teams to deliver world
class products used by millions of people. Starting her career at
IBM where she was building applications for Fortune 500 companies,
she went on to lead product teams at Netscape, Macromedia, Adobe
and InVision.
Her
work in technology evangelism, partnerships, product marketing and
product management give her insights on how product can drive the
entire business. At Macromedia she worked directly for the
President of Products and the CTO on the New Business Opportunity
team responsible for new products and businesses that leveraged the
Flash Player. At Adobe, Lea led Product Management for all of the
Design, Web and Interactive tools including Dreamweaver, Flash,
Indesign and Illustrator. Lea was responsible for the product
vision and strategy of the Creative Cloud, working with hundreds of
colleagues across Adobe to transform Adobe from boxed software to
one of the most successful SaaS services in the industry. After her
work on the Creative Cloud, Lea went on to manage the consumer
business at Adobe where she had responsibility for all marketing,
product and engineering.
After
Adobe, Lea lead product at InVision, a startup focused on design
collaboration where she built and designed best practices for the
product team. In 2017 she joined Silicon Valley Product Group as a
Partner where she helps product organizations build products that
customers love.
Lea
has deep passion for product and mentoring product teams regardless
of where they are in their own transformation. She has spoken at
numerous conferences and has worked with many Fortune 500 executive
teams on this topic.
Lea
is a graduate of Lehigh University with a B.A. in Sociology (1989)
and of the Stanford University Executive Institute
(2000).
Board of Directors; Director Independence
The
Board facilitates its exercise of independent supervision over the
Company’s management through frequent meetings of the Board. The
Board is comprised of eight directors: Brent Suen, Lionel Choong,
Lea Hickman, John MacNeil, Matthew Burlage, Ross O’Brien, Brett
Lay, and Joshua Jacobs.
Lea Hickman, Matthew Burlage, Ross O’Brien, Joshua Jacobs, and
Brett Lay, are all independent directors. Brent Suen, John MacNeil
and Lionel Choong are not independent directors as they are
executive officers of the Company.
Board
Committees and Independence
Our
board of directors has established four standing committees – Audit
Committee, Compensation Committee, Nominating and Corporate
Governance Committee, and Social Media Committee – each of which
operates under a charter that has been approved by our board of
directors.
Each
of the board committees has the composition and responsibilities
described below.
Audit
Committee
The
Audit Committee’s main function is to oversee our accounting and
financial reporting processes and the audits of our financial
statements. This committee’s responsibilities include, among other
things:
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|
● |
selecting
and hiring the independent registered public accounting firm to
audit our financial statements; |
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|
● |
helping
to ensure the independence and performance of the independent
registered public accounting firm; |
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|
● |
approving
audit and non-audit services and fees; |
|
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|
|
● |
reviewing
financial statements and discussing with management and the
independent registered public accounting firm our annual audited
and quarterly financial statements, the results of the independent
audit and the quarterly reviews, and the reports and certifications
regarding internal controls over financial reporting and disclosure
controls; |
|
|
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|
|
● |
preparing
the audit committee report that the SEC requires to be included in
our annual proxy statement; |
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|
● |
reviewing
reports and communications from the independent registered public
accounting firm; |
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|
● |
reviewing
earnings press releases and earnings guidance; |
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|
● |
reviewing
the adequacy and effectiveness of our internal controls and
disclosure controls and procedures; |
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● |
reviewing
our policies on risk assessment and risk management; |
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|
● |
reviewing
related party transactions; |
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● |
establishing
and overseeing procedures for the receipt, retention and treatment
of accounting related complaints and the confidential submission by
our employees of concerns regarding questionable accounting or
auditing matters; and |
|
|
|
|
|
|
● |
reviewing
and monitoring actual and potential conflicts of
interest. |
The
members of our Audit Committee are Mr. Burlage, Mr. O’Brien, Mr.
Jacobs, and Mr. Lay. Mr. Burlage serves as the chairperson of the
committee. All members of our Audit Committee meet the requirements
for financial literacy under the applicable rules and regulations
of the SEC. Our board of directors has determined that Mr. Burlage
is an “audit committee financial expert” as defined by applicable
SEC rules and has the requisite financial sophistication. Our board
of directors has determined that Mr. Burlage, Mr. O’Brien, Mr. Lay
and Mr. Jacobs are independent under the applicable rules of the.
The Audit Committee operates under a written charter that satisfies
the applicable standards of the SEC.
Compensation
Committee
The
Compensation Committee evaluates, recommends, and approves policy
relating to compensation and benefits of the Company’s officers and
employees. The Compensation Committee is directly responsible for,
among other matters:
|
|
● |
annually
reviewing and approving corporate goals and objectives relevant to
the compensation of the Company’s Chief Executive Officer and other
executive officers; |
|
|
● |
evaluating
the performance of these officers in light of those goals and
objectives, and setting the compensation of these officers based on
such evaluations; |
|
|
● |
administering
and interpreting the Company’s cash and equity-based compensation
plans; |
|
|
● |
annually
reviewing and making recommendations to the Board with respect to
all cash and equity-based incentive compensation plans and
arrangements; and |
|
|
● |
annually
reviewing and evaluating the composition and performance of the
Compensation Committee, including the adequacy of the Compensation
Committee’s charter. |
The
members of our Compensation Committee are Mr. Burlage, Mr. O’Brien,
and Mr. Lay. Mr. O’Brien serves as the chairperson of the
committee. Our board of directors has determined that Mr. Burlage,
Mr. O’Brien, and Mr. Lay are independent and all current members
qualify as a “non-employee director” as defined in Rule 16b-3
promulgated under the Exchange Act. Our board of directors has
determined that each of the members of our Compensation Committee
is an “outside director” as that term is defined in
Section 162(m) of the U.S. Internal Revenue Code of 1986, as
amended, or Section 162(m). The compensation committee
operates under a written charter, which the Compensation Committee
will review and evaluate at least annually.
Nominating
and Corporate Governance Committee
The
Nominating and Corporate Governance Committee is responsible for
making recommendations to the Board of Directors regarding
candidates for directorship, and the structure and composition of
the Company’s Board of Directors and committees of the Board of
Directors. The Nominating and Corporate Governance Committee is
directly responsible for, among other matters:
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|
● |
identifying,
evaluating, and nominating candidates for appointment or election
as members of the Board of Directors; |
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● |
developing,
recommending, and evaluating a corporate governance guideline
applicable to all of the Company’s employees, officers, and
directors; and |
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● |
annually
reviewing and evaluating the composition and performance of the
Nominating and Corporate Governance Committee, including the
adequacy of the Nominating and Corporate Governance Committee’s
charter. |
The
members of our Nominating and Corporate Governance Committee are
Mr. Burlage, Mr. O’Brien, and Mr. Lay. Mr. Lay serves as the
chairman of the committee. Our board of directors has determined
that Mr. Burlage, Mr. O’Brien, and Mr. Lay are independent. The
Nominating and Corporate Governance Committee operates under a
written charter, which the Nominating and Corporate Governance
Committee will review and evaluate at least annually.
Social
Media Committee
The
Social Media Committee is responsible for overseeing the social
media strategy initiatives for the Company pursuant to Regulation
FD. The Social Media Committee is directly responsible for, among
other matters:
1.
Providing compliant Regulation FD strategic leadership for social
media through the alignment of social media strategies and
activities with enterprise strategic objectives and
processes.
2.
Establishing and maintaining corporate policies with respect to use
of social media for both process-driven social engagements, as well
as for use of social media by employees for participating in social
conversations (e.g. blogging and Tweeting by subject matter
experts).
3.
Prioritizing social media initiatives and deliver final approvals
and recommendations on proceeding with proposed social media
projects, including process, technology, and organizational
projects.
4.
Ensuring open communication between the social media department and
the other functional units of Logiq.
The
members of our Social Media Committee are Mr. Burlage, Mr. O’Brien,
and Mr. Lay.
Board
Diversity
Our
Nominating and Corporate Governance Committee is responsible for
reviewing with the board of directors, on an annual basis, the
appropriate characteristics, skills and experience required for the
board of directors as a whole and its individual members. In
evaluating the suitability of individual candidates (both new
candidates and current members), the Nominating and Corporate
Governance Committee, in recommending candidates for election, and
the board of directors, in approving (and, in the case of
vacancies, appointing) such candidates, will take into account many
factors, including the following:
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Personal
and professional integrity, ethics and values; |
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Experience
in corporate management, such as serving as an officer or former
officer of a publicly-held company; |
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Experience
as a board member or executive officer of another publicly-held
company; |
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Strong
finance experience; |
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Diversity
of expertise and experience in substantive matters pertaining to
our business relative to other board members; |
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Diversity
of background and perspective, including, but not limited to, with
respect to age, gender, race, place of residence and specialized
experience; |
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Experience
relevant to our business industry and with relevant social policy
concerns; and |
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Relevant
academic expertise or other proficiency in an area of our business
operations. |
Currently,
our board of directors evaluates each individual in the context of
the board of directors as a whole, with the objective of assembling
a group that can best maximize the success of the business and
represent stockholder interests through the exercise of sound
judgment using its diversity of experience in these various
areas.
Code
of Business Conduct and Ethics
We
have adopted a written code of business conduct and ethics that
applies to our directors, officers and employees, including our
principal executive officer, principal financial and accounting
officer, controller, or persons performing similar functions. Our
code of business conduct and ethics is available under the
“Investors” section of our website at www.weyland-tech.com. In
addition, we post on our website all disclosures that are required
by law concerning any amendments to, or waivers from, any provision
of the code. The reference to our website address does not
constitute incorporation by reference of the information contained
at or available through our website, and should not consider it to
be a part of this Annual Report.
Family
Relationships
There
are no family relationships between any of the Company’s directors
or executive officers.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires the Company’s
officers and directors, and persons who beneficially own more than
ten percent (10%) of a registered class of the Company’s equity
securities to file reports of ownership and changes in ownership
with the Securities and Exchange Commission (“SEC”). Officers,
directors and greater than ten percent beneficial stockholders are
required by SEC regulations to furnish the Company with copies of
all Section 16(a) forms they file.
To the best of the Company’s knowledge based solely on a review of
Forms 3, 4, and 5 (and any amendments thereof) received by us
during or with respect to the year ended December 31, 2021, the
following persons have not filed on a timely basis, the identified
reports required by Section 16(a) of the Exchange Act during fiscal
year ended December 31, 2021:
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Name and principal position |
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Number
of late
reports |
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Transactions
not timely
reported |
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Known
failures to
file a
required
form |
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Tom Furukawa, former Chief Executive Officer |
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0 |
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0 |
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0 |
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Brent Suen, President, Chairman, Principal Financial Officer &
Director |
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1 |
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1 |
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0 |
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Lionel Choong, Chief Financial Officer, Principal Accounting
Officer and Director |
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0 |
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0 |
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0 |
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Daniel Urbino, former Chief Operating Officer |
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0 |
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0 |
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0 |
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Eddie Foong, Vice President, Product |
|
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0 |
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0 |
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0 |
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John MacNeil, Chief of Staff and Director |
|
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0 |
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0 |
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0 |
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|
Matthew Burlage, Independent Director |
|
|
0 |
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0 |
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|
|
0 |
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|
Joshua Jacobs, Independent Director |
|
|
0 |
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|
|
0 |
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|
|
0 |
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|
Ross O’Brien, Independent Director |
|
|
0 |
|
|
|
0 |
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|
|
0 |
|
|
Brett Lay, Independent Director |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
Lea Hickman, Independent Director |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Legal
Proceedings
To
the best of our knowledge, none of our directors or executive
officers has, during the past ten years:
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● |
been
convicted in a criminal proceeding or been subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses); |
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● |
had
any bankruptcy petition filed by or against the business or
property of the person, or of any partnership, corporation or
business association of which he was a general partner or executive
officer, either at the time of the bankruptcy filing or within two
years prior to that time; |
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● |
been
subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction or federal or state authority, permanently or
temporarily enjoining, barring, suspending or otherwise limiting,
his involvement in any type of business, securities, futures,
commodities, investment, banking, savings and loan, or insurance
activities, or to be associated with persons engaged in any such
activity; |
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● |
been
found by a court of competent jurisdiction in a civil action or by
the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated a federal or state securities
or commodities law, and the judgment has not been reversed,
suspended, or vacated; |
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● |
been
the subject of, or a party to, any federal or state judicial or
administrative order, judgment, decree, or finding, not
subsequently reversed, suspended or vacated (not including any
settlement of a civil proceeding among private litigants), relating
to an alleged violation of any federal or state securities or
commodities law or regulation, any law or regulation respecting
financial institutions or insurance companies including, but not
limited to, a temporary or permanent injunction, order of
disgorgement or restitution, civil money penalty or temporary or
permanent cease-and-desist order, or removal or prohibition order,
or any law or regulation prohibiting mail or wire fraud or fraud in
connection with any business entity; or |
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● |
been
the subject of, or a party to, any sanction or order, not
subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act),
any registered entity (as defined in Section 1(a)(29) of the
Commodity Exchange Act), or any equivalent exchange, association,
entity or organization that has disciplinary authority over its
members or persons associated with a member. |
Except
as set forth in our discussion below in “Certain Relationships and
Related Transactions,” none of our directors or executive officers
has been involved in any transactions with us or any of our
directors, executive officers, affiliates or associates which are
required to be disclosed pursuant to the rules and regulations of
the Commission.
Item
11. Executive Compensation
Executive
Compensation
The
table below summarizes all compensation awarded to, earned by, or
paid to our former or current executive officers for the fiscal
years ended December 31, 2021 and 2020.