UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
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)
Delaware |
|
46-5057897 |
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
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:
Title of each
class |
|
Trading symbol(s) |
|
Name of each exchange on which
registered |
N/A |
|
|
|
|
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.
|
Large accelerated filer |
☐ |
Accelerated filer |
☐ |
|
Non-accelerated filer |
☒ |
Smaller reporting company |
☒ |
|
|
Emerging growth Company |
☐ |
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 is a shell company
(as defined in Rule 12b-2 of the Exchange Act). ☐
Yes ☒ No
As of May 9, 2022, the issuer had 33,401,334 shares of common stock
issued and outstanding.
LOGIQ INC.
QUARTERLY REPORT ON FORM 10-Q
March 31, 2022
PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements
LOGIQ INC.
Consolidated Balance Sheets
|
|
March 31, |
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
(Unaudited) |
|
|
(Audited) |
|
ASSETS |
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
Intangible assets, net |
|
|
13,779,993 |
|
|
|
14,797,196 |
|
Property and equipment, net |
|
|
140,246 |
|
|
|
153,973 |
|
Goodwill |
|
|
5,577,926 |
|
|
|
5,577,926 |
|
Total non-current assets |
|
|
19,498,165 |
|
|
|
20,529,095 |
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Amount due from associate |
|
|
- |
|
|
|
7,208,700 |
|
Accounts receivable |
|
|
2,857,200 |
|
|
|
3,966,086 |
|
Right to use assets - operating lease |
|
|
173,803 |
|
|
|
91,571 |
|
Prepayment, deposit and other
receivables |
|
|
606,627 |
|
|
|
804,011 |
|
Financial assets held for resale |
|
|
- |
|
|
|
681 |
|
Restricted cash |
|
|
22,045 |
|
|
|
22,513 |
|
Cash and cash equivalents |
|
|
3,749,303 |
|
|
|
1,563,752 |
|
Total current
assets |
|
|
7,408,978 |
|
|
|
13,657,314 |
|
Total assets |
|
$ |
26,907,143 |
|
|
$ |
34,186,409 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
|
2,159,995 |
|
|
|
2,293,858 |
|
Accruals and other payables |
|
|
1,732,925 |
|
|
|
1,804,131 |
|
Deferred revenue |
|
|
3,154 |
|
|
|
10,500 |
|
Lease liability - operating lease |
|
|
173,803 |
|
|
|
91,571 |
|
Deposits received for share to be
issued |
|
|
17,100 |
|
|
|
401,028 |
|
Total current liabilities |
|
|
4,086,977 |
|
|
|
4,601,088 |
|
|
|
|
|
|
|
|
|
|
Non-Current Liabilities |
|
|
|
|
|
|
|
|
Other loan |
|
|
10,000 |
|
|
|
10,000 |
|
Total non-current
liabilities |
|
|
10,000 |
|
|
|
10,000 |
|
Total liabilities |
|
$ |
4,096,977 |
|
|
$ |
4,611,088 |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Common stock, $0.0001 par value, 250,000,000
shares authorized, 29,169,516 and 26,350,756 shares issued and
outstanding as of March 31, 2022 and December 31, 2020,
respectively |
|
|
2,917 |
|
|
|
2,635 |
|
Additional paid-in capital |
|
|
84,068,490 |
|
|
|
82,473,004 |
|
Capital reserves |
|
|
24,969,396 |
|
|
|
29,349,795 |
|
Accumulated deficit brought
forward |
|
|
(86,230,637 |
) |
|
|
(82,250,113 |
) |
Total stockholder’s
equity |
|
|
22,810,166 |
|
|
|
29,575,321 |
|
Total liabilities and
stockholders’ equity |
|
$ |
26,907,143 |
|
|
$ |
34,186,409 |
|
The accompanying notes are an integral part of these financial
statements
LOGIQ INC.
Consolidated Statements of Operations
|
|
For the three months ended
March 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
Service Revenue |
|
$ |
8,105,384 |
|
|
$ |
8,080,312 |
|
Cost of Service |
|
|
5,900,723 |
|
|
|
5,854,056 |
|
Gross Profit |
|
|
2,204,661 |
|
|
|
2,226,256 |
|
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
1,030,930 |
|
|
|
689,345 |
|
General and administrative |
|
|
3,600,997 |
|
|
|
4,144,365 |
|
Sales and marketing |
|
|
299,316 |
|
|
|
369,261 |
|
Research and development |
|
|
1,257,084 |
|
|
|
1,103,137 |
|
Total Operating Expenses |
|
|
6,188,327 |
|
|
|
6,306,108 |
|
|
|
|
|
|
|
|
|
|
(Loss) from Operations |
|
|
(3,983,666 |
) |
|
|
(4,079,852 |
) |
|
|
|
|
|
|
|
|
|
Other (Expenses)/Income, net |
|
|
3,142 |
|
|
|
(1,897 |
) |
|
|
|
|
|
|
|
|
|
Net (Loss) before income tax |
|
|
(3,980,524 |
) |
|
|
(4,081,749 |
) |
Income tax (Corporate tax) |
|
|
-
|
|
|
|
-
|
|
Net (Loss) |
|
$ |
(3,980,524 |
) |
|
$ |
(4,081,749 |
) |
|
|
|
|
|
|
|
|
|
Net (Loss) profit per common share - basic and fully diluted: |
|
|
(0.1510 |
) |
|
|
(0.2497 |
) |
|
|
|
|
|
|
|
|
|
Weighted average number of basic and fully diluted common shares
outstanding |
|
|
26,367,804 |
|
|
|
16,345,439 |
|
The accompanying notes are an integral part of these financial
statements.
LOGIQ INC.
Consolidated Statements of Cash Flows
|
|
For the three months ended
March 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
OPERATING ACTIVITIES: |
|
|
|
|
|
|
Net loss |
|
$ |
(3,980,524 |
) |
|
$ |
(4,081,749 |
) |
Adjustments to reconciled net loss to net cash
used by operating activities: |
|
|
|
|
|
|
|
|
Depreciation of property, plant, and
equipment |
|
|
13,727 |
|
|
|
11,641 |
|
Amortization of intangible assets |
|
|
1,017,203 |
|
|
|
677,705 |
|
Changes in operating assets and
liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
1,108,886 |
|
|
|
(699,169 |
) |
Prepayments, deposit and other
receivables |
|
|
197,383 |
|
|
|
(30,345 |
) |
Accounts payable |
|
|
(133,863 |
) |
|
|
573,371 |
|
Accruals and other payables |
|
|
(71,206 |
) |
|
|
1,594,481 |
|
Deferred revenue |
|
|
(7,346 |
) |
|
|
(45,924 |
) |
Net cash (used in) operating
activities |
|
|
(1,855,740 |
) |
|
|
(1,999,989 |
) |
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Increase in amount due from associate |
|
|
7,208,700 |
|
|
|
(500,000 |
) |
Financial assets held for resale |
|
|
681 |
|
|
|
47,062 |
|
Net restricted cash acquired in
acquisitions |
|
|
-
|
|
|
|
7,736 |
|
Net cash provided by (used in)
investing activities |
|
|
7,209,381 |
|
|
|
(445,202 |
) |
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Repayment of bank loan |
|
|
-
|
|
|
|
1,531 |
|
Proceeds from notes payable-US government CARES
Act |
|
|
-
|
|
|
|
1,820,521 |
|
Proceeds from shares to be issued |
|
|
(383,928 |
) |
|
|
-
|
|
Proceeds from stock issuance, net of
expenses |
|
|
(2,784,631 |
) |
|
|
-
|
|
Net cash provided by (used in)
financing activities |
|
|
(3,168,559 |
) |
|
|
1,822,052 |
|
|
|
|
|
|
|
|
|
|
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS |
|
|
2,185,082 |
|
|
|
(623,139 |
) |
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AND
RESTRICTED CASH, BEGINNING OF PERIOD |
|
|
1,586,265 |
|
|
|
3,489,778 |
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AND
RESTRICTED CASH, END OF PERIOD |
|
$ |
3,771,348 |
|
|
$ |
2,866,639 |
|
|
|
|
|
|
|
|
|
|
NON-CASH TRANSACTION |
|
|
|
|
|
|
|
|
Issuance of shares for services
received |
|
$ |
616,191 |
|
|
$ |
1,525,904 |
|
The accompanying notes are an integral part of these financial
statements
LOGIQ INC.
Consolidated Statements of Stockholders’ Equity
|
|
Common
stock |
|
|
Amount |
|
|
Additional
paid-in
capital |
|
|
Capital
reserves |
|
|
Accumulated
(deficit) |
|
|
Stockholders’
(equity) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2021 |
|
|
26,350,756 |
|
|
$ |
2,635 |
|
|
$ |
82,473,004 |
|
|
$ |
29,349,795 |
|
|
$ |
(82,250,113 |
) |
|
$ |
29,575,321 |
|
Issuance of Shares |
|
|
2,951,080 |
|
|
|
295 |
|
|
|
1,595,486 |
|
|
|
(4,380,399 |
) |
|
|
- |
|
|
|
(2,784,618 |
) |
Cancelation of shares |
|
|
(132,320 |
) |
|
|
(13 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(13 |
) |
Net loss for
period |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3,980,524 |
) |
|
|
(3,980,524 |
) |
Balance March 31, 2022 |
|
|
29,169,516 |
|
|
$ |
2,917 |
|
|
$ |
84,068,490 |
|
|
$ |
24,969,396 |
|
|
$ |
(86,230,637 |
) |
|
$ |
22,810,166 |
|
|
|
Common
stock |
|
|
Amount |
|
|
Additional
paid-in
capital |
|
|
Capital reserves |
|
|
Accumulated
(deficit) |
|
|
Stockholders’
(equity) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31,
2020 |
|
|
15,557,439 |
|
|
$ |
1,556 |
|
|
$ |
66,739,895 |
|
|
$ |
19,285,383 |
|
|
$ |
(62,123,326 |
) |
|
$ |
23,903,508 |
|
Issuance of
shares for proceeds |
|
|
238,194 |
|
|
|
24 |
|
|
|
1,420,389 |
|
|
|
-
|
|
|
|
-
|
|
|
|
1,420,413 |
|
Issuance of
shares for acquisitions |
|
|
1,032,056 |
|
|
|
103 |
|
|
|
-
|
|
|
|
6,192,336 |
|
|
|
-
|
|
|
|
6,192,439 |
|
Issuance of
shares for services |
|
|
998,955 |
|
|
|
100 |
|
|
|
1,525,904 |
|
|
|
-
|
|
|
|
-
|
|
|
|
1,526,004 |
|
Net loss for the
period |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(4,081,749 |
) |
|
|
(4,081,749 |
) |
Balance March
31, 2021 |
|
|
17,826,644 |
|
|
$ |
1,783 |
|
|
$ |
69,686,188 |
|
|
$ |
25,477,719 |
|
|
$ |
(66,205,075 |
) |
|
$ |
28,960,615 |
|
The accompanying notes are an integral part of these financial
statements
NOTES TO UNAUDITED CONDENSED
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 the 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 “AppLogiq” business segment
(operated as CreateApp (https://www.createapp.com/), which allows
SMBs to establish their point-of-presence on the web, and (ii) its
“DataLogiq” business segment, a digital marketing analytics
business unit that offers proprietary data management, audience
targeting and other digital marketing services that improve an
SMB’s discovery and branding within the vast e-commerce
landscape.
The Company enables SMBs to create a mobile app for their business
without the need of technical knowledge, high investment, or
background in IT by utilizing AppLogiq’s CreateApp platform that is
offered as a Platform as a Service (“PaaS”) to the Company’s
customers. The Company’s DataLogiq business segment offers online
marketing solutions on a performance marketing and self-serve,
Software as a Service (“SaaS”) basis.
We provide our PaaS and digital marketing to SMBs in a wide variety
of industry sectors. We believe that SMBs can increase their sales,
reach more customers, and promote their products and services using
our affordable and cost-effective solutions. We recognize revenue
on a pay to use subscription basis when our customers use our PaaS
platform to create mobile apps for their business and on our SaaS
platform when provisioning services for their marketing campaigns.
We also recognize revenue on CPL and other metrics for engagements
undertaken on a performance marketing basis.
The Company continues to expand its portfolio of offerings and the
industries they serve:
|
● |
In
May 2018, the Company expanded its portfolio to fintech
applications with the launch of its PayLogiq mobile payments
platform in Indonesia. |
|
● |
In
the fall of 2019, the Company expanded its portfolio to
short-distance food delivery service with the launch of GoLogiq, a
PaaS platform that provides mobile payment capabilities for the
local food delivery service industry in Indonesia. |
|
● |
In
January 2020, the Company completed the acquisition of
substantially all of the assets of Push Holdings, Inc. This
acquired business, which the Company has rebranded as its DataLogiq
division, operates a consumer data management platform powered by
lead generation, online marketing, and multichannel reengagement
strategies through its owned and operated brands. DataLogiq has
developed a proprietary data management platform and integrated
with several third-party service providers to optimize the return
on its marketing efforts. DataLogiq focuses on consumer engagement
and enrichment to maximize its return on acquisition through repeat
monetization of each consumer. DataLogiq also licenses its software
technology and provides managed technology services to various
other e-commerce companies. DataLogiq is located in Minneapolis,
Minnesota, USA. |
|
● |
On
November 2, 2020, the Company completed the acquisition of Fixel AI
Inc. (“Fixel”), thereby acquiring its self-serve MarTech Audience
Targeting platform as a further expansion of its DataLogiq product
suite. |
|
● |
On
March 29, 2021, the Company completed the acquisition of Rebel AI,
Inc., a Delaware corporation (“Rebel”). By acquiring Rebel and its
platform, the Company enables brands and agencies to securely
transact media and activate first-party data. |
|
● |
On June 21, 2021, the Company completed its
Canadian IPO offering of 1,976,434 units of its securities,
consisting of shares warrants to purchase shares of common stock,
on the NEO exchange in Canada. |
|
● |
On March 31, 2022 the Company, Battle Bridge Acquisition Co, LLC, a
company beneficially owned entirely by the Company (the “Buyer”),
Section 2383 LLC, a Wyoming limited liability company (“Seller”),
Travis Phipps, an individual (“Phipps”) and Robb Billy (“Billy”
and, together with Phipps, the “Founders”) and Travis Phipps, as
Representative, entered into an asset purchase agreement (the
“Battle Bridge Purchase Agreement”) whereby the Buyer agreed to
purchase from Seller and Seller agreed to sell to Buyer
substantially all of the assets of Seller which represents the
“Battle Bridge Labs” business (the “Battle Bridge Assets”)
(collectively, the “Transaction”). The consummation of the
Transaction (the “Closing”) occurred simultaneously with execution
of the Battle Bridge Purchase Agreement on March 31, 2022.
As consideration for the Buyer’s acquisition of the Battle Bridge
Assets, the Company agreed to pay $3,250,000 (the “Purchase Price”)
which consisted of $250,000 in cash (the “Cash Consideration”) and
the issuance of 2,912,621 shares of restricted common stock of the
Company at $1.03 per share (the “Stock Consideration”)
(representing $3,000,000 in Stock Consideration) which was the
volume weighted average price (VWAP) of the Company’s Common Stock
as reported by Bloomberg LP for the twenty (20) trading days
immediately prior to Closing. $500,000 in Stock Consideration was
retained by the Company at the Closing and held as partial security
to satisfy indemnification claims for a period of 12 months
following the Closing.
In addition, the recipients of the Stock Consideration agreed to
sign lock-up and leak-out agreements which provide that, following
a 6-month lock-period and ending 18 months after Closing, any sales
of the Company’s common stock by such recipients do not exceed one
percent (1%) of the then applicable thirty (30) day trading average
volume of the Company’s common stock as of such date.
|
AppLogiq Spin-Off
On December 15, 2021, the Company entered into various agreements
with Lovarra, a Nevada corporation (“Lovarra”), and public
reporting majority owned 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 74.9% 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 approximately six months from completion of the
Separation (the “Distribution Date”), subject to customary
conditions and approvals.
On January 27, 2022, the Company completed the transfer of its
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 GoLogic (the “Lovarra Shares”). The
Company, through GoLogiq, 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).
Until such time as the Distribution is complete, the Company 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), Fixel AI Inc. and Rebel AI
Inc., as well as the accounts of Lovarra, a majority owned
subsidiary of Logiq, Inc. Material intercompany balances and
transactions have been eliminated on consolidation.
Unless the context indicates otherwise, references in these notes
to the consolidated financial statements to “AppLogiq,” “CreateApp”
and “Lovarra” mean the Company’s reportable AppLogiq segment, which
reflects the operations of Lovarra (OTC Pink: LOVA) within Logiq,
Inc.
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 two operating business segments:
AppLogiq marketed as CreateApp is a 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. Our AppLogiq segment was sold and assigned to Lovarra, a
majority owned subsidiary of the Company, on January 27, 2022.
DataLogiq is a business segment created in January 2020 from our
acquisition of the assets of Push Holdings Inc, comprising a
consumer data management platform powered by lead generation,
online marketing, and multichannel reengagement strategies through
its owned and operated brands by Fixel AI Inc and Rebel AI Inc.
DataLogiq has developed a proprietary data management platform and
integrates with several third-party service providers to optimize
the return on its marketing efforts. DataLogiq focuses on consumer
engagement and data enrichment to maximize its return on
acquisition through repeat monetization of each consumer.
We identify our reportable business 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 three months ended
March 31, 2022 and 2021.
The Company’s intangible assets consist of software technology,
which is amortized using the straight-line method over five years.
Amortization expense for the three months ended March 31, 2022 and
2021 amounted to $1,017,203 and $677,705, respectively, which was
included in the amortization of intangible assets expense of the
accompanying consolidated statements of operations.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company classifies its long-life assets into: (i) computer and
office equipment; (ii) furniture and fixtures, (iii) leasehold
improvements, and (iv) finite – life intangible assets.
Long-life assets held and used by the Company are reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying value of such assets may not be fully
recoverable. It is possible that these assets could become impaired
as a result of technology, economy or other industry changes. If
circumstances require a long-lived asset or asset group to be
tested for possible impairment, the Company first compares
undiscounted cash flows expected to be generated by that asset or
asset group to its carrying value. If the carrying value of the
long-life asset or asset group is not recoverable on an
undiscounted cash flow basis, an impairment is recognized to the
extent that the carrying value exceeds its fair value. Fair value
is determined through various valuation techniques, including
discounted cash flow models, relief from royalty income approach,
quoted market values and third-party independent appraisals, as
considered necessary.
The Company makes various assumptions and estimates regarding
estimated future cash flows and other factors in determining the
fair values of the respective assets. The assumptions and estimates
used to determine future values and remaining useful lives of
long-lived assets are complex and subjective. They can be affected
by various factors, including external factors such as industry and
economic trends, and internal factors such as the Company’s
business strategy and its forecasts for specific market
expansion.
GROUP ACCOUNTING
Subsidiaries are entities (including special purpose entities) over
which the Group has power to govern the financial and operating
policies, generally accompanying a shareholding of more than one
half of the voting rights. The existence and effect of potential
voting rights that are currently exercisable or convertible are
considered when assessing whether the Group controls another
entity. The purchase method of accounting is used to account for
the acquisition of subsidiaries. The cost of an acquisition is
measured as the fair value of the assets given, equity instruments
issued or liabilities incurred or assumed at the date of exchange,
plus costs directly attributable to the acquisition. Identifiable
assets acquired and liabilities and contingent liabilities assumed
in a business combination are measured initially at their fair
values on the date of acquisition, irrespective of the extent of
any minority interest. Subsidiaries are consolidated from the date
on which control is transferred to the Group to the date on which
that control ceases. In preparing the consolidated financial
statements, intercompany transactions, balances and unrealised
gains on transactions between group companies are eliminated.
Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the asset transferred. Where
necessary, adjustments are made to the financial statements of
subsidiaries to ensure consistency of accounting policies with
those of the Group. Minority interest is that part of the net
results of operations and of net assets of a subsidiary
attributable to interests which are not owned directly or
indirectly by the Group. It is measured at the minorities’ share of
the fair value of the subsidiaries’ identifiable assets and
liabilities at the date of acquisition by the Group and the
minorities’ share of changes in equity since the date of
acquisition, except when the losses applicable to the minority in a
subsidiary exceed the minority interest in the equity of that
subsidiary. In such cases, the excess and further losses applicable
to the minority are attributed to the equity holders of the
Company, unless the minority has a binding obligation to, and is
able to, make good the losses. When that subsidiary subsequently
reports profits, the profits applicable to the minority are
attributed to the equity holders of the Company until the
minority’s share of losses previously absorbed by the equity
holders of the Company has been recovered.
SUBSIDIARIES
When subsidiaries are excluded from consolidation on the basis
that their inclusion involving expense and delay out of
proportion to the value to members of the Company, investments
in subsidiaries are stated at cost less accumulated impairment
losses in the Company’s balance sheet. On disposal of investments
in subsidiaries, the difference between net disposal proceeds and
the carrying amount of the investment is taken to the income
statement.
ASSOCIATES
Associates are all entities over which the group has significant
influence but not control or joint control, generally accompanying
a shareholding interest of between 20% and 50% of the voting
rights. Investments in associates are accounted for using the
equity method of accounting, after initially being recognized at
cost. The group’s investment in associates includes goodwill
identified on acquisition. The group’s share of its associates’
post-acquisition profits or losses is recognized in profit or loss,
and its share of post-acquisition other comprehensive income is
recognized in other comprehensive income. The cumulative
post-acquisition movements are adjusted against the carrying amount
of the investment. Dividends receivable from associates are
recognized as a reduction in the carrying amount of the investment.
Where the group’s share of losses in an associate equals or exceeds
its interest in the associate, including any other unsecured
long-term receivables, the group does not recognize further losses,
unless it has incurred obligations or made payments on behalf of
the associate. Unrealized gains on transactions between the group
and its associates are eliminated to the extent of the group’s
interest in the associates. Unrealized losses are also eliminated,
unless the transaction provides evidence of an impairment of the
asset transferred. Accounting policies of associates have been
changed, where necessary, to ensure consistency with the policies
adopted by the group.
FINANCIAL ASSETS
Financial assets at fair value through profit or loss are stated at
fair value, with any resultant gain or loss 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.
The Company measures certain financial assets at fair value on a
recurring basis, including the available-for-sale debt securities.
Fair value is the price the Company would receive to sell an asset
or pay to transfer a liability in an orderly transaction with a
market participant at the measurement date. The Company uses a
three-level hierarchy established by the Financial Accounting
Standards Board (FASB) that prioritizes fair value measurements
based on the types of inputs used for the various valuation
techniques (market approach, income approach and cost
approach).
The levels of the fair value hierarchy are described below:
|
● |
Level
1: Quoted prices in active markets for identical assets or
liabilities. |
|
● |
Level
2: Inputs other than quoted prices that are observable for the
asset or liability, either directly or indirectly; these include
quoted prices for similar assets or liabilities in active markets
and quoted prices for identical or similar assets or liabilities in
markets that are not active. |
|
● |
Level
3: Unobservable inputs with little or no market data available,
which require the reporting entity to develop its own
assumptions. |
The Company’s assessment of the significance of a particular input
to the fair value measurement in its entirety requires judgment and
considers factors specific to the asset or
liability. Financial assets and liabilities are classified in
their entirety based on the most conservative level of input that
is significant to the fair value measurement.
LEASE
The Company adopted ASU 2016-02, Leases (Topic 842), on January 8,
2020, using a modified retrospective approach reflecting the
application of the standard to leases existing at, or entered into
after, the beginning of the earliest comparative period presented
in the consolidated financial statements.
The Company leases its offices which are classified as operating
leases in accordance with Topic 842. Under Topic 842, lessees are
required to recognize the following for all leases (with the
exception of short-term leases) on the commencement date: (i) lease
liability, which is a lessee’s obligation to make lease payments
arising from a lease, measured on a discounted basis; and (ii)
right-of-use asset, which is an asset that represents the lessee’s
right to use, or control the use of, a specified asset for the
lease term.
At the commencement date, the Company recognizes the lease
liability at the present value of the lease payments not yet paid,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Company’s incremental
borrowing rate for the same term as the underlying lease. The
right-of-use asset is recognized initially at cost, which primarily
comprises the initial amount of the lease liability, plus any
initial direct costs incurred, consisting mainly of brokerage
commissions, less any lease incentives received. All right-of-use
assets are reviewed for impairment. No impairment for right-of-use
lease assets as of March 31, 2022.
AVAILABLE-FOR-SALES INVESTMENTS
Certain shares and debt securities held by the group are classified
as being available for sale and are stated at fair value. Gains and
losses arising from changes in fair value, impairment losses,
interest calculated using the effective interest method and foreign
exchange gains and losses on monetary assets are recognized
directly in profit or loss. Dividends on available-for-sale equity
instruments are recognized in profit or loss when the Company’s
right to receive payments is established. The fair value of
available-for-sale monetary assets denominated in a foreign
currency is determined in that foreign currency and translated at
the spot rate at end of the reporting period. The change in fair
value attributable to translation differences that result from a
change in amortized cost of the available-for-sale monetary asset
is recognized in profit or loss, and other changes are recognized
in other comprehensive income.
ACCOUNTS RECEIVABLE AND CONCENTRATION OF RISK
Accounts receivable consists of trade receivables from customers.
The Company records accounts receivable at its net realizable
value, recognizing an allowance for doubtful accounts based on our
best estimate of probable credit losses on our existing accounts
receivable. Balances are written off against the allowance after
all means of collection have been exhausted and the possibility of
recovery is considered remote.
As of March 31, 2022 and 2021, the allowance for bad debt was
approximately $155,592 and $54,619, respectively.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents represent cash on hand, demand deposits,
and other short-term highly liquid investments placed with banks,
which have original maturities of twelve months or less and are
readily convertible to known amounts of cash.
EARNINGS PER SHARE
Basic (loss) earnings per share is based on the weighted average
number of common shares outstanding during the period while the
effects of potential common shares outstanding during the period
are included in diluted earnings per share.
FASB Accounting Standard Codification Topic 260 (“ASC 260”),
“Earnings Per Share,” requires that employee equity share options,
non-vested shares and similar equity instruments granted to
employees be treated as potential common shares in computing
diluted earnings per share. Diluted earnings per share should be
based on the actual number of options or shares granted and not yet
forfeited, unless doing so would be anti-dilutive. The Company uses
the “treasury stock” method for equity instruments granted in
share-based payment transactions provided in ASC 260 to determine
diluted earnings per share. Antidilutive securities represent
potentially dilutive securities which are excluded from the
computation of diluted earnings or loss per share as their impact
was antidilutive.
REVENUE RECOGNITION
The Company’s Platform as a Service (“PaaS”) provides the
infrastructure allowing users to develop their own applications and
IT services, which users can access anywhere via a web or desktop
browser. The Company recognizes revenue on a pay-to-use
subscription basis when our customers use our platform. For the
territories licensed to our distributors and on a white label
basis, we derive royalty income from the end user use of our
platform on a white label basis.
The Company maintains the PaaS software platform at its own cost.
Any enhancements and minor customization for
our resellers/distributors are not separately billed. Major
new proprietary features are billed to the customer separately as
development income while re-usable features are added to the
features available to all customers on subsequent releases of our
platform.
COST OF REVENUE
The Company cost of revenue comprises fees from third party
cloud-based hosting services and media costs.
INCOME TAXES
The Company uses the asset and liability method of accounting for
income taxes in accordance with Accounting Standards Codification
(“ASC”) 740, “Income Taxes” (“ASC 740”). Under this method, income
tax expense is recognized as the amount of: (i) taxes payable or
refundable for the current year and (ii) future tax consequences
attributable to differences between financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years
which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the results of operations in
the period that includes the enactment date. A valuation allowance
is provided to reduce the deferred tax assets reported if based on
the weight of available evidence it is more likely than not that
some portion or all of the deferred tax assets will not be
realized.
STOCK BASED COMPENSATION
We value stock compensation based on the fair value recognition
provisions ASC 718, Compensation – Stock
Compensation, which establishes accounting for stock-based
awards exchanged for employee services and requires companies to
expense the estimated grant date fair value of stock awards over
the requisite employee service period.
We do not ascertain the fair value of restricted stock awards using
the Black-Scholes-Merton option pricing model.
See Note 13, Stockholders’ Equity, for further details on our stock
awards.
RECENT ACCOUNTING PRONOUNCEMENTS
On October 2, 2017, the FASB 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 July
20, 2017 Emerging Issues Task Force (EITF) meeting. The SEC
Observer said that the SEC staff would not object if entities that
are considered public business entities only because their
financial statements or financial information is required to be
included in another entity’s SEC filing use the effective dates for
private companies when they adopt ASC 606, Revenue from Contracts
with Customers, and ASC 842, Leases. This would include entities
whose financial statements are included in another entity’s SEC
filing because they are significant acquirees under Rule 3-05 of
Regulation S-X, significant equity method investees under Rule 3-09
of Regulation S-X and equity method investees whose summarized
financial information is included in a registrant’s financial
statement notes under Rule 4-08(g) of Regulation S-X. The ASU also
supersedes certain SEC paragraphs in the Codification related to
previous SEC staff announcements and moves other paragraphs, upon
adoption of ASC 606 or ASC 842. The Company does not expect that
the adoption of this guidance will have a material impact on its
condensed consolidated financial statements.
On November 22, 2017, the FASB ASU No. 2017-14, “Income
Statement-Reporting Comprehensive Income (Topic 220), Revenue
Recognition (Topic 605), and Revenue from Contracts with Customers
(Topic 606): Amendments to SEC Paragraphs Pursuant to Staff
Accounting Bulletin No. 116 and SEC Release 33-10403.” The ASU
amends various paragraphs in ASC 220, Income Statement - Reporting
Comprehensive Income; ASC 605, Revenue Recognition; and ASC 606,
Revenue From Contracts With Customers, that contain SEC guidance.
The amendments include superseding ASC 605-10-S25-1 (SAB Topic 13)
as a result of SEC Staff Accounting Bulletin No. 116 and adding ASC
606-10-S25-1 as a result of SEC Release No. 33-10403. The Company
does not expect that the adoption of this guidance will have a
material impact on its condensed consolidated financial
statements.
In February 2018, the FASB issued ASU No. 2018-02,
“Reclassification of Certain Tax Effects From Accumulated Other
Comprehensive Income.” The ASU amends ASC 220, Income Statement -
Reporting Comprehensive Income, to “allow a reclassification from
accumulated other comprehensive income to retained earnings for
stranded tax effects resulting from the Tax Cuts and Jobs Act.” In
addition, under the ASU, an entity will be required to provide
certain disclosures regarding stranded tax effects. The ASU is
effective for all entities for fiscal years beginning after
December 15, 2018, and interim periods within those fiscal years.
The Company does not expect that the adoption of this guidance will
have a material impact on its condensed consolidated financial
statements.
In March 2018, the FASB issued ASU 2018-05 - Income Taxes (Topic
740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting
Bulletin No. 118 (“ASU 2018-05”), which amends the FASB Accounting
Standards Codification and XBRL Taxonomy based on the Tax Cuts and
Jobs Act (the “Act”) that was signed into law on December 22, 2017
and Staff Accounting Bulletin No. 118 (“SAB 118”) that was released
by the Securities and Exchange Commission. The Act changes numerous
provisions that impact U.S. corporate tax rates, business-related
exclusions, and deductions and credits and may additionally have
international tax consequences for many companies that operate
internationally. The Company does not believe this guidance will
have a material impact on its condensed consolidated financial
statements.
In July 2018, the FASB issued ASU 2018-10, “Codification
Improvements to Topic 842, Leases.” The ASU addresses 16 separate
issues which include, for example, a correction to a cross
reference regarding residual value guarantees, a clarification
regarding rates implicit in lease contracts, and a consolidation of
the requirements about lease classification reassessments. The
guidance also addresses lessor reassessments of lease terms and
purchase options, variable lease payments that depend on an index
or a rate, investment tax credits, lease terms and purchase
options, transition guidance for amounts previously recognized in
business combinations, and certain transition adjustments, among
others. For entities that early adopted Topic 842, the amendments
are effective upon issuance of this Update, and the transition
requirements are the same as those in Topic 842. For entities that
have not adopted Topic 842, the effective date and transition
requirements will be the same as the effective date and transition
requirements in Topic 842. The Company does not believe this
guidance will have a material impact on its condensed consolidated
financial statements.
In July 2018, the FASB issued ASU 2018-11 - Leases (Topic 842):
Targeted Improvements. The ASU simplifies transition requirements
and, for lessors, provides a practical expedient for the separation
of non-lease components from lease components. Specifically, the
ASU provides: (1) an optional transition method that entities can
use when adopting ASC 842 and (2) a practical expedient that
permits lessors to not separate non-lease components from the
associated lease component if certain conditions are met. For
entities that have not adopted Topic 842 before the issuance of
this Update, the effective date and transition requirements for the
amendments in this Update are the same as the effective date and
transition requirements in Update 2016-02. For entities that have
adopted Topic 842 before the issuance of this Update, the
transition and effective date of the amendments in this Update are
as follows: 1) The practical expedient may be elected either in the
first reporting period following the issuance of this Update or at
the original effective date of Topic 842 for that entity. 2) The
practical expedient may be applied either retrospectively or
prospectively. All entities, including early adopters, that elect
the practical expedient related to separating components of a
contract in this Update must apply the expedient, by class of
underlying asset, to all existing lease transactions that qualify
for the expedient at the date elected. The Company does not believe
this guidance will have a material impact on its condensed
consolidated financial statements.
The Company has considered all new accounting pronouncements and
has concluded that there are no new pronouncements that may have a
material impact on results of operations, financial condition, or
cash flows, based on current information.
NOTE 3 – INTANGIBLE ASSETS, NET
As of March 31, 2022 and 2021, the Company has the following
amounts related to intangible assets:
|
|
Lovarra
Inc (Including CreateApp) |
|
|
DataLogiq |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
Cost as of January 1,
2022 |
|
$ |
1,885,330 |
|
|
$ |
19,718,391 |
|
|
$ |
21,603,721 |
|
Additions |
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
-
|
|
Cost as of March 31, 2022 |
|
$ |
1,885,330 |
|
|
$ |
19,718,391 |
|
|
$ |
21,603,721 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization |
|
|
|
|
|
|
|
|
|
|
|
|
Brought forward as of January 1,
2022 |
|
$ |
1,396,398 |
|
|
$ |
5,410,127 |
|
|
$ |
6,806,525 |
|
Charge for the period |
|
$ |
31,283 |
|
|
$ |
985,920 |
|
|
$ |
1,017,203 |
|
Accumulated depreciation as of March
31, 2022 |
|
$ |
1,427,681 |
|
|
$ |
6,396,047 |
|
|
$ |
7,823,728 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net intangible assets as of March 31,
2022 |
|
$ |
457,649 |
|
|
$ |
13,322,344 |
|
|
$ |
13,779,993 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net intangible assets as of December
31, 2021 |
|
$ |
488,932 |
|
|
$ |
14,308,264 |
|
|
$ |
14,797,196 |
|
Amortization expense related to intangible assets for the quarter
ended March 31, 2022 and 2021 amounted to $1,017,203 and
$677,705, respectively.
No significant residual value is estimated for these intangible
assets.
The estimated future amortization expense of intangible costs as of
March 31, 2022 in the next five fiscal years and thereafter is as
follows:
Remaining of 2022 |
|
|
$ |
3,051,608 |
|
2023 |
|
|
|
4,068,811 |
|
2024 |
|
|
|
4,068,811 |
|
2025 |
|
|
|
2,251,265 |
|
2026 and thereafter |
|
|
|
339,498 |
|
|
|
|
$ |
13,779,993 |
|
NOTE 4 – PROPERTY AND EQUIPMENT, NET
As of March 31, 2022 and 2021, the Company has the following
amounts related to property and equipment:
|
|
Leasehold
Improvements |
|
|
Computer
and Equipment |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
Cost as of January 1, 2022 |
|
$ |
165,957 |
|
|
$ |
87,405 |
|
|
$ |
253,362 |
|
Additions |
|
$ |
-
|
|
|
|
-
|
|
|
$ |
-
|
|
Cost as
of March 31, 2022 |
|
$ |
165,957 |
|
|
$ |
87,405 |
|
|
$ |
253,362 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization |
|
|
|
|
|
|
|
|
|
|
|
|
Brought forward
as of January 1, 2022 |
|
$ |
67,271 |
|
|
$ |
32,118 |
|
|
$ |
99,389 |
|
Charge for the period |
|
$ |
8,409 |
|
|
$ |
5,318 |
|
|
$ |
13,727 |
|
Accumulated depreciation as of March 31, 2022 |
|
$ |
75,680 |
|
|
$ |
37,436 |
|
|
$ |
113,116 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
property and equipment as of March 31, 2022 |
|
$ |
90,277 |
|
|
$ |
49,969 |
|
|
$ |
140,246 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
property and equipment as of December 31, 2021 |
|
$ |
98,686 |
|
|
$ |
55,287 |
|
|
$ |
153,973 |
|
Depreciation expense for the quarter ended March 31, 2022 and 2021
amounted to $13,727 and $11,641, respectively.
NOTE 5 – GOODWILL
|
|
As
of
March 31, |
|
|
As
of
December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
Goodwill at cost -
Push |
|
$ |
4,781,208 |
|
|
$ |
4,781,208 |
|
Goodwill at cost - Fixel |
|
|
296,882 |
|
|
|
296,882 |
|
Goodwill at
cost - Rebel |
|
|
499,836 |
|
|
|
499,836 |
|
Total |
|
|
5,577,926 |
|
|
|
5,577,926 |
|
|
|
|
|
|
|
|
|
|
Accumulated
impairment losses |
|
$ |
-
|
|
|
$ |
-
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period |
|
$ |
5,577,926 |
|
|
$ |
5,577,926 |
|
Goodwill has been allocated for impairment testing purposes to the
acquisition of the assets of Push Holdings Inc.
The recoverable amount of this unit is determined based on external
valuation performed by a third-party valuation firm on March 20,
2020 as updated to December 31, 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, Fixel AI Inc Consolidated Balance
Sheet as of November 2, 2020 and Rebel AI Inc Consolidated
Balance Sheet as of March 29, 2021.
NOTE 6 – ACCOUNTS RECEIVABLE
|
|
As
of
March 31, |
|
|
As
of
December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
Accounts receivable -
gross |
|
$ |
3,012,792 |
|
|
$ |
4,121,678 |
|
Allowance for
doubtful debts |
|
|
(155,592 |
) |
|
|
(155,592 |
) |
Accounts
receivable - net |
|
|
2,857,200 |
|
|
|
3,966,086 |
|
|
|
|
|
|
|
|
|
|
Movement in allowance for doubtful
debts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at beginning of period |
|
$ |
155,592 |
|
|
$ |
54,619 |
|
Provision for bad debts |
|
|
-
|
|
|
|
100,973 |
|
Reversal of the
provision |
|
|
-
|
|
|
|
-
|
|
Balance at end of period |
|
|
155,592 |
|
|
|
155,592 |
|
Age of Impaired trade
receivables
Current |
|
$ |
1,354,812 |
|
|
|
45.0 |
% |
1 - 30 days |
|
|
1,318,353 |
|
|
|
43.8 |
% |
31 - 60 days |
|
|
67,905 |
|
|
|
2.3 |
% |
61-90 days |
|
|
3,965 |
|
|
|
0.1 |
% |
91 and
over |
|
|
267,757 |
|
|
|
8.9 |
% |
Total
|
|
|
3,012,792 |
|
|
|
100.0 |
% |
NOTE 7 – 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 its 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 has not been included as the amount had been fully
impaired.
The Company held a 31% unexercised option in WIP as of December 31,
2018. Due to the continuing legal restructuring in Indonesia, all
the conditions precedent had not been satisfied and the 31% option
had not been exercised as of March 31, 2022.
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 8 – AMOUNT DUE FROM ASSOCIATE
The amount due from associate is interest free, unsecured with no
fixed repayment terms.
The amount due from associate of $7,243,700 has been acquired by
Lovarra as of January 27, 2022.
|
|
As
of
March 31, |
|
|
As
of
December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
Amount due from associate |
|
$ |
-
|
|
|
$ |
7,208,700 |
|
|
|
$ |
-
|
|
|
$ |
7,208,700 |
|
NOTE 9 – PREPAYMENTS, DEPOSIT AND OTHER RECEIVABLES
Prepayments, deposits and other receivables consist of the
following:
|
|
As
of
March 31, |
|
|
As
of
December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
Deposit |
|
$ |
401,151 |
|
|
$ |
400,801 |
|
Other receivables |
|
|
-
|
|
|
|
- |
|
Prepayments |
|
|
205,476 |
|
|
|
403,210 |
|
|
|
$ |
606,627 |
|
|
$ |
804,011 |
|
NOTE 10 – ACCRUALS AND OTHER PAYABLE
Accruals and other payable consist of the following:
|
|
As
of
March 31, |
|
|
As
of
December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
Accruals |
|
$ |
1,732,925 |
|
|
$ |
1,804,131 |
|
Other
payables |
|
|
-
|
|
|
|
-
|
|
|
|
$ |
1,732,925 |
|
|
$ |
1,804,131 |
|
NOTE 11 – 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 three months
ended March 31, 2022 and 2021, which, had the Company generated any
taxable income, would have been subject to U.S. federal corporate
income tax rate of 21% and 34%, respectively.
|
|
As of
March 31,
2021 |
|
|
As of
December 31,
2020 |
|
U.S. statutory tax rate |
|
|
21.00 |
% |
|
|
21.00 |
% |
Effective tax rate |
|
|
21.00 |
% |
|
|
21.00 |
% |
As of March 31, 2022, the Company does not have any deferred tax
assets.
NOTE 12 – NOTES PAYABLE
On April 24, 2020, the Company’s subsidiary Logiq, Inc.
(Nevada) formerly known as Origin8, Inc. received loan proceeds in
the amount of $503,700 (the “PPP Loan”) under the
Paycheck Protection Program (“PPP”) under the Coronavirus Aid,
Relief and Economic Security Act and applicable regulations (the
“CARES Act”).
Under the terms of the CARES Act, as amended by the Paycheck
Protection Program Flexibility Act of 2020, Logiq, Inc. (Nevada)
was eligible to apply for and receive forgiveness for all or a
portion of its PPP Loan. Such forgiveness was to be determined,
subject to limitations, based on the use of the loan proceeds for
certain permissible purposes as set forth in the PPP, including,
but not limited to, payroll costs (as defined under the PPP) and
mortgage interest, rent or utility costs (collectively, “Qualifying
Expenses”) incurred during the 24 weeks subsequent to funding, and
on the maintenance of employee and compensation levels, as defined,
following the funding of the PPP Loan. Logiq, Inc. (Nevada) used
the proceeds of its PPP Loan for Qualifying Expenses.
On May 20, 2021, the PPP Loan of $503,700 was fully forgiven by the
Small Business Administration of the CARES Act.
NOTE 13 – 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 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.
In the year 2022 we have below common stock issuance:
Sale of Common Stock – March 2022
On March 30, 2022, Logiq, Inc., a Delaware corporation (the
“Company”), entered into a Purchase Agreement with Ionic Ventures,
LLC (“Ionic”), whereby the Company has the right, but not the
obligation, to sell to Ionic, and Ionic is obligated to purchase up
to in the aggregate $40,000,000 worth of the Company’s common stock
(the “Purchase Shares”), par value $0.0001 per share (“Common
Stock”). Sales of Common Stock by the Company under the Purchase
Agreement will be subject to certain limitations, and may occur
from time to time, at the Company’s sole discretion, over the
24-month period commencing on March 30, 2020 (the “Primary
Commencement Date”).
In connection with the execution of the Purchase Agreement, the
Company is registering 2,926,000 shares of Common Stock to Ionic in
connection with the purchase of $3,000,000 in shares of Common
Stock (the “Primary Shares”) in connection with the initial
purchase of Common Stock under the Purchase Agreement, which
reflects an estimated value equal to the product of (A) the
quotient of (y) the purchase amount (i.e., $3,000,000) divided by
(z) the Pre-Settlement Regular Purchase Price (defined below),
multiplied by (B) 125% (which Ionic may increase at its
discretion). The “Pre-Settlement Regular Purchase Price” is equal
to 80% of the closing price of the Common Stock on the OTCQX Market
on the date immediately preceding the Company’s receipt of a
purchase notice under the Purchase Agreement.
The Regular Purchase Price, which is the price at which future
shares of Common Stock sold under the Purchase Agreement will be
sold at, for the Purchase Shares shall equal 97% of the arithmetic
average of the five lowest VWAPs during the period starting on the
date that Ionic receives Pre-Settlement Regular Purchase Shares and
ending on such date that the aggregate dollar volume of our common
stock traded on our Principal Market equals five times the Purchase
Amount, in the aggregate, subject to a five Trading Day minimum
(provided, however, that each day on which Ionic has requested
Purchase Shares which cannot be delivered to Ionic shall be
excluded from such calculation). This is a forward pricing
mechanism based on an estimate and true up and as of the date of
this filing, the Regular Purchase Price has yet to be
calculated.
Also in connection with the execution of the Purchase Agreement,
the Company issued a Warrant to purchase 631,579 shares of Common
Stock (1.5% of the total $40,000,000 commitment amount) to Ionic
for no consideration as a commitment fee, and has agreed to
register the shares issuable upon exercise of the Warrant. The
Warrant may be exercised for cash, but may also be exercised on a
cashless exercise basis, which means the Company may not receive
any proceeds from such cashless exercise. Under the Warrant, the
Company does not have the right to control the timing and amount of
any Warrant exercises by Ionic, except that there is a 9.99%
ownership limitation blocker in the Warrant. Ionic may ultimately
decide to exercise all, some or none of the Warrant.
The Company intends to register the remaining up to $37,000,000
worth of Common Stock under the Purchase Agreement, or any
additional Primary Shares that may be issued after the date hereof
to Ionic, or any Purchase Shares which may be issuable to Ionic as
a “true up” pursuant to the initial purchase described above
pursuant to a resale registration statement on Form S-1 to be filed
subsequently with the Securities and Exchange Commission (the
“SEC”). The Company and Ionic entered into a Registration Rights
Agreement (the “RRA”) dated as of March 30, 2022, for such
purpose.
Actual sales of Common Stock to Ionic under the Purchase Agreement
will depend on a variety of factors to be determined by the Company
from time to time, including, among others, an effective resale
registration statement, which is a condition to the commencement of
additional sales under the Purchase Agreement (each, a “Secondary
Commencement”), market conditions, the trading price of the Common
Stock and determinations by the Company as to the appropriate
sources of funding for the Company and its operations.
The Company expects that any net proceeds received by the Company
from sales to Ionic under the Purchase Agreement will be used for
working capital and general corporate purposes.
The purchase price of the Common Stock purchased by the Ionic under
the Purchase Agreement will be derived from prevailing market
prices of the Company’s Common Stock immediately preceding the time
of sale. The Company will control the timing and amount of future
sales, if any, of Common Stock to Ionic. Ionic has no right to
require the Company to sell any Common Stock to it, but Ionic is
obligated to make purchases as the Company directs, subject to
certain conditions.
The Purchase Agreement and the RRA each contains certain
representations, warranties, covenants, closing conditions and
indemnification and termination provisions by, between and for the
benefit of the parties which are customary of transactions of this
nature. Ionic may not assign or transfer its rights and obligations
under the Purchase Agreement.
The issuance of the Primary Shares and the shares issuable upon
exercise of the Warrant have been registered pursuant to the
Company’s effective shelf registration statement on Form S-3 (File
No. 333-259851) (the “Registration Statement”), and the related
base prospectus included in the Registration Statement dated
October 8, 2021, as supplemented by a prospectus supplement to be
filed on or about March 31, 2022 (the “Prospectus Supplement”). A
copy of the legal opinion of Procopio, Cory, Hargreaves &
Savitch LLP as to the legality of the Primary Shares and the legal
opinion of Carter Ledyard & Milburn LLP with respect to the
legality of the Warrant are filed as Exhibits 5.1 and 5.2,
respectively, attached hereto.
The foregoing is a summary description of certain terms of the
Purchase Agreement, the RRA and the Warrant and, by its nature, is
incomplete. Copies of the Purchase Agreement, RRA and Warrant are
filed as Exhibits 10.1, 10.2 and 4.1, respectively, attached
hereto. The foregoing descriptions of the Purchase Agreement, the
RRA and the Warrant are qualified in their entirety by reference to
the full text of such exhibits.
The provisions of the Purchase Agreement including any
representations and warranties contained therein, are not for the
benefit of any party other than the parties thereto and are not
intended as documents for investors and the public to obtain
factual information about the current state of affairs of the
parties thereto. Rather, investors and the public should look to
other disclosures contained in the Company’s annual, quarterly and
current reports it may file with the SEC.
On March 31, 2022 the Company, Battle Bridge Acquisition Co, LLC, a
company beneficially owned entirely by the Company (the “Buyer”),
Section 2383 LLC, a Wyoming limited liability company (“Seller”),
Travis Phipps, an individual (“Phipps”) and Robb Billy (“Billy”
and, together with Phipps, the “Founders”) and Travis Phipps, as
Representative, entered into an asset purchase agreement (the
“Battle Bridge Purchase Agreement”) whereby the Buyer agreed to
purchase from Seller and Seller agreed to sell to Buyer
substantially all of the assets of Seller which represents the
“Battle Bridge Labs” business (the “Battle Bridge Assets”)
(collectively, the “Transaction”). The consummation of the
Transaction (the “Closing”) occurred simultaneously with execution
of the Battle Bridge Purchase Agreement on March 31, 2022.
As consideration for the Buyer’s acquisition of the Battle Bridge
Assets, the Company agreed to pay $3,250,000 (the “Purchase Price”)
which consisted of $250,000 in cash (the “Cash Consideration”) and
the issuance of 2,912,621 shares of restricted common stock of the
Company at $1.03 per share (the “Stock Consideration”)
(representing $3,000,000 in Stock Consideration) which was the
volume weighted average price (VWAP) of the Company’s Common Stock
as reported by Bloomberg LP for the twenty (20) trading days
immediately prior to Closing. $500,000 in Stock Consideration was
retained by the Company at the Closing and held as partial security
to satisfy indemnification claims for a period of 12 months
following the Closing.
In addition, the recipients of the Stock Consideration agreed to
sign lock-up and leak-out agreements which provide that, following
a 6-month lock-period and ending 18 months after Closing, any sales
of the Company’s common stock by such recipients do not exceed one
percent (1%) of the then applicable thirty (30) day trading average
volume of the Company’s common stock as of such date.
During the period from January 1, 2022 to March 31, 2022, a total
of 2,951,080 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.
During the period from January 1, 2022 to March 31, 2022, a total
of 25,080 shares with par value of $0.0001 per share
were issued for consultancy services received.
Cancellation of Common Stock
During the three months ended March 31,
2022, 132,320 shares of common stock par value of
$0.0001 per share, were cancelled.
Stock-Based Compensation
For the three months ended March 31, 2022 for Logiq, Inc., a total
of 132,320 shares of common stock was returned and 25,080 shares of
common stock was issued for stock-based compensation to
consultants.
NOTE 14 – (LOSS) PER SHARE
The following table sets forth the computation of basic and diluted
earnings per common share for the three months ended March 31, 2022
and 2021, respectively:
|
|
For the three months ended
March 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
Numerator - basic
and diluted |
|
|
|
|
|
|
Net (Loss) |
|
$ |
(3,980,524 |
) |
|
$ |
(4,081,749 |
) |
|
|
|
|
|
|
|
|
|
Denominator |
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding - basic and
diluted |
|
|
26,367,804 |
|
|
|
16,345,439 |
|
(Loss)
per common share - basic and diluted |
|
$ |
(0.1510 |
) |
|
$ |
(0.2497 |
) |
NOTE 15 – COMMITMENTS AND CONTINGENCIES
Leases
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 March 31, 2022 and December 31, 2021 consolidated
balance sheets and represent the Group’s right to use the
underlying asset for the lease term. The Group’s obligations to
make lease payments are also listed as a separate line items on the
Group’s March 31, 2022 and December 31, 2021 consolidated
balance sheets. Based on the present value of the lease payments
for the remaining lease term of the Group’s existing leases, the
Group recognized right-of-use assets and lease liabilities for
operating leases of approximately $693,000, on January 8, 2020.
Operating lease right-of-use assets and liabilities commencing
after January 8, 2020 are recognized at commencement date based on
the present value of lease payments over the lease term. As of
March 31, 2022 and December 31, 2021, total operating right-of-use
assets were $173,803 and $91,571, respectively. All operating
lease expense is recognized on a straight-line basis over the lease
term.
Because the rate implicit in the lease is not readily determinable,
the Group uses its incremental borrowing rate to determine the
present value of the lease payments.
Information related to the Group’s operating lease liabilities are
as follows:
|
|
As of
March 31,
2022 |
|
|
As of
December 31,
2021 |
|
Cash paid for operating lease liabilities |
|
$ |
208,304 |
|
|
|
367,200 |
|
Remaining lease term |
|
|
9
months |
|
|
|
1
years |
|
Discount rate |
|
|
1.5 |
% |
|
|
1.5 |
% |
Future minimum lease payments under the non-cancellable operating
lease agreements are as follows:
2022 |
|
$ |
175,000 |
|
Less imputed
interest |
|
|
(1,197 |
) |
Total lease
liability |
|
$ |
173,803 |
|
Legal
proceedings
None.
NOTE 16 – SEGMENT INFORMATION
The Group has determined that it operates in two operating and
reportable business segments: DataLogiq and Lovarra (including
CreateApp (Formerly known as AppLogiq). 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 DataLogiq reportable segment is comprised of the subsidiaries’
accounts of Logiq, Inc. (a Nevada Corporation), Fixel AI, Inc. and
Rebel AI Inc.
The Lovarra reportable segment is comprised of the reportable
segment of the CreateApp (Formerly known as AppLogiq), which is
held by the Company’s majority owned subsidiary, Lovarra.
The Logiq reportable segment is not a business segment but comprise
Corporate activities.
The following table presents the segment information for the three
months ended March 31, 2022 and 2021:
|
|
For the three months ended
March 31, |
|
|
|
2022 |
|
|
2021 |
|
Logiq
(Delaware) |
|
|
|
|
|
|
Segment
operating income |
|
$ |
-
|
|
|
$ |
2,441,128 |
|
Other corporate
expenses, net |
|
|
(256,531 |
) |
|
|
5,270,305 |
|
Total operating
(loss) income |
|
|
(256,531 |
) |
|
|
(2,829,177 |
) |
|
|
|
|
|
|
|
|
|
Lovarra (including CreateApp) |
|
|
|
|
|
|
|
|
Segment operating
income |
|
$ |
3,309,017 |
|
|
$ |
-
|
|
Other corporate
expenses, net |
|
|
4,699,640 |
|
|
|
-
|
|
Total operating
(loss) |
|
|
(1,390,623 |
) |
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Logiq (Nevada) incl DataLogiq |
|
|
|
|
|
|
|
|
Segment operating
income |
|
$ |
4,796,367 |
|
|
$ |
5,639,184 |
|
Other corporate
expenses, net |
|
|
7,642,798 |
|
|
|
6,891,756 |
|
Total operating
(loss) |
|
|
(2,846,431 |
) |
|
|
(1,252,572 |
) |
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
|
|
|
|
|
|
Segment operating
income |
|
$ |
8,105,384 |
|
|
$ |
8,080,312 |
|
Other corporate
expenses, net |
|
|
12,085,908 |
|
|
|
12,162,061 |
|
Total operating
(loss) |
|
|
(3,980,524 |
) |
|
|
(4,081,749 |
) |
Significant Customers
No revenues from any single customer exceeded 10% of total net
revenues for the three months ended March 31, 2022 and 2021.
NOTE 17 – GEOGRAPHICAL INFORMATION
Revenue by geographical region for the three months ended March 31,
2022 and 2021 were as follows:
|
|
For the three months ended
March 31, |
|
|
For the three months ended
March 31, |
|
|
|
2022 |
|
|
% |
|
|
2021 |
|
|
% |
|
Southeast Asia |
|
$ |
2,398,184 |
|
|
|
29.6 |
|
|
|
1,220,564 |
|
|
|
15.1 |
|
EU |
|
|
1,199,092 |
|
|
|
14.8 |
|
|
|
610,282 |
|
|
|
7.6 |
|
South Korea |
|
|
719,455 |
|
|
|
8.9 |
|
|
|
366,169 |
|
|
|
4.5 |
|
Africa |
|
|
479,637 |
|
|
|
5.9 |
|
|
|
244,113 |
|
|
|
3.0 |
|
North
America |
|
|
3,309,017 |
|
|
|
40.8 |
|
|
|
5,639,184 |
|
|
|
69.8 |
|
Total
revenue |
|
$ |
8,105,384 |
|
|
|
100.0 |
|
|
$ |
8,080,312 |
|
|
|
100.0 |
|
NOTE 18 – 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 year ended December 31, 2020, the Company, through its
wholly-owned subsidiary, Logiq Inc (Nevada) acquired substantially
all of the assets of Push Holdings, Inc. The fair values of assets
acquired and liabilities assumed were as follows:
Cash and cash equivalents |
|
$ |
574,572 |
|
Restricted cash |
|
|
1,025,000 |
|
Accounts receivable, net |
|
|
709,053 |
|
Prepaid expenses and other current assets |
|
|
11,940 |
|
Property, plant and equipment |
|
|
225,126 |
|
Intangible assets |
|
|
8,250,000 |
|
Accounts payable |
|
|
(367,091 |
) |
Accrued expenses and other current liabilities |
|
|
(424,094 |
) |
Due to parent company |
|
|
(500,000 |
) |
Goodwill |
|
|
4,781,208 |
|
Net assets acquired |
|
$ |
14,285,714 |
|
Fair valuation methods used for the identifiable net assets
acquired in the acquisition make use of quoted prices in active
markets, discounted cash flows and risk adjusted weighted cost of
capital. The methods used in determining fair value of the
intangible assets included consideration of the three traditional
approaches to value: market, income, and cost. Accordingly, after
due consideration of other appropriate and generally accepted
valuation methodologies, the value of intangible assets acquired
from Push has been developed primarily on the basis of the income
approach. Under the income approach, the Company evaluated revenue
projections derived from the software technology and the
appropriate royalty rate that Push Holdings would have paid if Push
Holdings did not own the software technology.
On the acquisition date, goodwill of $4,781,208 and other
intangible assets of $8,250,000 were recorded. The other intangible
asset identified during the acquisition is software technology,
which has a weighted average useful life of five years, which is
management’s best estimate at the time of the acquisition.
The Company incurred some accounting and legal fees related to the
acquisition of the assets of Push Holdings. The amount attributable
to the Company has been included in general and administrative
expenses in the accompanying consolidated statement of operations
for the three months ended March 31, 2021.
In the consolidated statements of operations, revenues and expenses
include the operations of Logiq Inc (Nevada) since January 9, 2020,
which is the day after the acquisition date.
Fixel AI Inc.
On November 2, 2020, the Company acquired Fixel AI Inc., a Delaware
corporation (“Fixel”) in exchange for 564,467 shares of the
Company’s common stock. The fair value of the shares of common
stock at the close of the transaction was $8.86.
On the closing date, the Company issued 564,467 restricted shares
of its common stock to Fixel Stockholders, of which the shares
allocated to the Fixel stockholders that are residents of Israel
(“Israel Stockholders”) will be delivered to an independent
third-party escrow (the “Escrow Shares”), where (i) such shares
will be released to Israel Stockholders upon each Israel
Stockholder’s compliance with the 104H tax ruling issued by certain
tax authorities of Israel in connection with the Merger and (ii)
shares held by Founders making up approximately 20% of the shares
issued will be held subject to offset for indemnification purposes.
The Shares were issued at a trailing twenty (20) day VWAP of $8.86
per share.
The fair values of assets acquired and liabilities assumed were as
follows:
Cash and cash equivalents |
|
$ |
67,167 |
|
Restricted cash |
|
|
10,229 |
|
Accounts receivable, net |
|
|
29,036 |
|
Prepaid expenses and other current assets |
|
|
20,963 |
|
Intangible assets |
|
|
4,678,422 |
|
Accounts payable |
|
|
280 |
|
Accrued expenses and other current liabilities |
|
|
(47,021 |
) |
Deferred revenue |
|
|
(55,958 |
) |
Goodwill |
|
|
296,882 |
|
Net assets acquired |
|
$ |
5,000,000 |
|
Fair valuation methods used for the identifiable net assets
acquired in the acquisition make use of quoted prices in active
markets, discounted cash flows and risk adjusted weighted cost of
capital. The methods used in determining fair value of the
intangible assets included consideration of the three traditional
approaches to value: market, income, and cost. Accordingly, after
due consideration of other appropriate and generally accepted
valuation methodologies, the value of intangible assets acquired
from Fixel has been developed primarily on the basis of the income
approach. Under the income approach, the Company evaluated revenue
projections derived from the software technology and the
appropriate royalty rate that Fixel would have paid if Fixel did
not own the software technology.
On the acquisition date, goodwill of $296,882 and other intangible
assets of $4,678,422 were recorded. The other intangible asset
identified during the acquisition is software technology, which has
a weighted average useful life of five years, which is management’s
best estimate at the time of the acquisition.
The Company incurred some accounting and legal fees related to the
acquisition of the assets of Fixel. The amount attributable to the
Company has been included in general and administrative expenses in
the accompanying consolidated statement of operations for the three
months ended March 31, 2021.
In the consolidated statements of operations, revenues and expenses
include the operations of Fixel AI, Inc. since November 3, 2020,
which is the day after the acquisition date.
Rebel AI Inc.
On March 29, 2021, the Company acquired Rebel for a total cash
consideration of $1,126,000 and in exchange for 1,032,056 shares of
the Company’s common stock. The fair value of the shares of common
stock at the close of the transaction was $6.00.
On the Closing Date, the Company issued 1,032,056 restricted
shares of its common stock to Rebel Stockholders, and at a trailing
twenty (20) day VWAP of $6.00 per share.
Cash and cash
equivalents |
|
$ |
7,736 |
|
Accounts receivable, net |
|
|
10,052 |
|
Prepaid expenses and other current
assets |
|
|
14,617 |
|
Property, plant and equipment |
|
|
28,236 |
|
Intangible assets |
|
|
6,789,969 |
|
Accrued expenses and other current
liabilities |
|
|
(32,110 |
) |
Goodwill |
|
|
499,836 |
|
Net assets
acquired |
|
$ |
7,318,336 |
|
Fair valuation methods used for the identifiable net assets
acquired in the acquisition make use of quoted prices in active
markets, discounted cash flows and risk adjusted weighted cost of
capital. The methods used in determining fair value of the
intangible assets included consideration of the three traditional
approaches to value: market, income, and cost. Accordingly, after
due consideration of other appropriate and generally accepted
valuation methodologies, the value of intangible assets acquired
from Rebel has been developed primarily on the basis of the income
approach. Under the income approach, the Company evaluated revenue
projections derived from the software technology and the
appropriate royalty rate that Rebel would have paid if Rebel did
not own the software technology.
On the acquisition date, goodwill of $499,836 and other intangible
assets of $6,789,969 were recorded. The other intangible asset
identified during the acquisition is software technology, which has
a weighted average useful life of five years, which is management’s
best estimate at the time of the acquisition.
The Company incurred some accounting
and legal fees related to the acquisition of the assets of Rebel.
The amount attributable to the Company has been included in general
and administrative expenses in the accompanying consolidated
statement of operations for the period ended March 31,
2021.
In the consolidated statements of
operations, revenues and expenses include the operations of Rebel
AI, Inc. since March 29, 2021, which is the day after the
acquisition date.
Lovarra
On January 27, 2022, the Company sold
substantially all the assets of CreateApp to Lovarra, a fully
reporting majority owned subsidiary of the Company, in exchange for
26,350,756 of Lovarra’s common stock at a price per share of
$1.195411 (of par value $0.001). The fair value of the shares of
common stock at the close of the transaction was $31,500,000 as
determined by a valuation of the business. As a result of the
transaction, Lovarra became a majority owned subsidiary of the
Company.
The acquisition by Lovarra of
substantially all the assets of CreateApp was accounted for as a
business combination in accordance with Accounting Standards
Codification Topic 805, Business Combinations (“ASC 805”), with the
results of Lovarra’s operations included in the Company’s
consolidated financial statements from January 1, 2022. 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 March 31,
2022, Lovarra acquired substantially all of the assets of
CreateApp. The fair value of assets acquired assumed were as
follows:
Intangible
assets, net |
|
$ |
24,000,000 |
|
Goodwill |
|
|
7,500,000 |
|
Net
assets acquired |
|
|
31,500,000 |
|
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 Logiq, Inc. 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
Lovarra would have paid if Lovarra did not own the software
technology.
On the acquisition date, goodwill of $7,500,000 and
intangible assets of $24,000,000 were recorded. The intangible
asset identified during the acquisition is software technology for
CreateApp and Atoz Pay/Go platform, which has a weighted average
useful life of five years, which is management’s best estimate at
the time of the acquisition.
The CreateApp platform enables SMBs to create a mobile app
for their business without the need of technical knowledge, high
investment, or background in IT by utilizing “CreateApp,” which is
a platform that is offered as a Platform as a Service (“PaaS”) to
our customers.
AtozPay 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. AtozGo is our PaaS platform that provides mobile payment
capabilities for the local food delivery service
industry.
The Company incurred some accounting and legal fees related
to the acquisition of the assets of CreateApp. The amount
attributable to the Company has been included in general and
administrative expenses in the accompanying consolidated statement
of operations for the quarter ended March 31, 2022.
In the consolidated statements of operations, revenues and
expenses include the operations of CreateApp since January 27,
2022, which is the day after the acquisition date.
NOTE 19 – SUBSEQUENT EVENTS
None
Item 2. 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 Quarterly Report on Form
10-Q. 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, 2021 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 refer to the
following:
|
● |
“Logiq, Inc. (Delaware) (formerly known as
Weyland) the “Company,” “we,” “us,” or “our,” are to the business
of Logiq, Inc. (Delaware), a Delaware corporation; |
|
● |
DataLogiq and Logiq, Inc. (Nevada), a Nevada
corporation, a business segment of the Company; |
|
● |
AppLogiq, a business segment of the Company,
which is owned by Lovarra, a majority owned subsidiary of the
Company; |
|
● |
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 “AppLogiq” business segment
(operated as CreateApp (https://www.createapp.com/), which allows
SMBs to establish their point-of-presence on the web, and (ii)
“DataLogiq” business segment, a digital marketing analytics
business unit that offers proprietary data management, audience
targeting and other digital marketing services that improve an
SMB’s discovery and branding within the vast e-commerce
landscape.
The Company enables SMBs to create a mobile app for their business
without the need of technical knowledge, high investment, or
background in IT by utilizing AppLogiq’s CreateApp platform that is
offered as a Platform as a Service (“PaaS”) to the Company’s
customers. The Company’s DataLogiq business segment offers online
marketing solutions on a performance marketing and self-serve,
Software as a Service (“SaaS”) basis.
We provide our PaaS and digital marketing to SMBs in a wide variety
of industry sectors. We believe that SMBs can increase their sales,
reach more customers, and promote their products and services using
our affordable and cost-effective solutions. We recognize revenue
on a pay to use subscription basis when our customers use our PaaS
platform to create mobile apps for their business and on our SaaS
platform when provisioning services for their marketing campaigns.
We also recognize revenue on a cost per lead (“CPL”) basis and
other metrics for engagements undertaken on a performance marketing
basis.
The Company continues to expand its portfolio of offerings and the
industries they serve:
|
● |
In May 2018, the Company expanded its portfolio
to fintech applications with the launch of its PayLogiq mobile
payments platform in Indonesia. |
|
● |
In the fall of 2019, the Company expanded its
portfolio to short-distance food delivery service with the launch
of GoLogiq, a PaaS platform that provides mobile payment
capabilities for the local food delivery service industry in
Indonesia. |
|
● |
In January 2020, the Company completed the
acquisition of substantially all of the assets of Push Holdings,
Inc.. This acquired business, which the Company has rebranded as
its DataLogiq division, operates a consumer data management
platform powered by lead generation, online marketing, and
multichannel reengagement strategies through its owned and operated
brands. DataLogiq has developed a proprietary data management
platform and integrated with several third-party service providers
to optimize the return on its marketing efforts. DataLogiq focuses
on consumer engagement and enrichment to maximize its return on
acquisition through repeat monetization of each consumer. DataLogiq
also licenses its software technology and provides managed
technology services to various other e-commerce companies.
DataLogiq is located in Minneapolis, Minnesota, USA. |
|
● |
On November 2, 2020, the Company completed the
acquisition of Fixel AI Inc. (“Fixel”), thereby acquiring its
self-serve MarTech Audience Targeting platform as a further
expansion of its DataLogiq product suite. |
|
● |
On March 29, 2021, the Company completed the
acquisition of Rebel AI, Inc., 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. |
|
● |
On March 31, 2022 the Company, Battle Bridge Acquisition Co, LLC, a
company beneficially owned entirely by the Company (the “Buyer”),
Section 2383 LLC, a Wyoming limited liability company (“Seller”),
Travis Phipps, an individual (“Phipps”) and Robb Billy (“Billy”
and, together with Phipps, the “Founders”) and Travis Phipps, as
Representative, entered into an asset purchase agreement (the
“Battle Bridge Purchase Agreement”) whereby the Buyer agreed to
purchase from Seller and Seller agreed to sell to Buyer
substantially all of the assets of Seller which represents the
“Battle Bridge Labs” business (the “Battle Bridge Assets”)
(collectively, the “Transaction”). The consummation of the
Transaction (the “Closing”) occurred simultaneously with execution
of the Battle Bridge Purchase Agreement on March 31, 2022.
As consideration for the Buyer’s acquisition of the Battle Bridge
Assets, the Company agreed to pay $3,250,000 (the “Purchase Price”)
which consisted of $250,000 in cash (the “Cash Consideration”) and
the issuance of 2,912,621 shares of restricted common stock of the
Company at $1.03 per share (the “Stock Consideration”)
(representing $3,000,000 in Stock Consideration) which was the
volume weighted average price (VWAP) of the Company’s Common Stock
as reported by Bloomberg LP for the twenty (20) trading days
immediately prior to Closing. $500,000 in Stock Consideration was
retained by the Company at the Closing and held as partial security
to satisfy indemnification claims for a period of 12 months
following the Closing.
In addition, the recipients of the Stock Consideration agreed to
sign lock-up and leak-out agreements which provide that, following
a 6-month lock-period and ending 18 months after Closing, any sales
of the Company’s common stock by such recipients do not exceed one
percent (1%) of the then applicable thirty (30) day trading average
volume of the Company’s common stock as of such date.
|
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 (the “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.
On October 22, 2021, the Company’s board of directors unanimously
approved the Company’s Second Amended and Restated 2020
Equity Incentive Plan (the “Second A&R Plan”), subject
to stockholder approval. The Second A&R Plan amends the
Company’s Plan to (i) incorporate those changes previously included
in the First A&R Plan and (ii) increase the number of shares of
common stock authorized for issuance thereunder from 2,000,000
shares to 5,000,000 shares. In addition, the Company amended and
restated the form agreements for awards made pursuant to the
Company’s Second A&R Plan to reflect the foregoing changes.
The Company’s Second A&R Plan and amended form award agreements
were approved by the Company’s stockholders on January 25, 2022,
and adopted by the Company on the same day.
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 was therefore, subject to
shareholder approval.
On October 22, 2022, the Company’s board of directors approved the
adoption of its First Amended and Restated Bylaws (the “A&R
Bylaws”), subject to shareholder approval. The A&R Bylaws amend
and restate the Company’s Bylaws in full and incorporate the Policy
noted above, amongst other changes. The Company’s Stockholders
approved the Company’s A&R Bylaws at a special meeting of
stockholders on January 25, 2022.
Under the Policy incorporated into the A&R Bylaws, 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.
Ionic Ventures Purchase
Agreement
On March 30, 2022, the Company, entered into a Purchase Agreement
(the “Ionic Purchase Agreement”) with Ionic Ventures, LLC
(“Ionic”), whereby the Company has the right, but not the
obligation, to sell to Ionic, and Ionic is obligated to purchase up
to in the aggregate $40,000,000 worth of the Company’s common stock
(the “Purchase Shares”). Sales of common stock by the Company under
the Ionic Purchase Agreement will be subject to certain
limitations, and may occur from time to time, at the Company’s sole
discretion, over the 24-month period commencing on March 30, 2020
(the “Primary Commencement Date”).
In connection with the execution of the Ionic Purchase Agreement,
the Company registered 2,926,000 shares of common stock sold to
Ionic in connection with the purchase of $3,000,000 in shares of
common stock (the “Primary Shares”) in connection with the initial
purchase of Common Stock under the Ionic Purchase Agreement, which
reflects an estimated value equal to the product of (A) the
quotient of (y) the purchase amount (i.e., $3,000,000) divided by
(z) the Pre-Settlement Regular Purchase Price (defined below),
multiplied by (B) 125% (which Ionic may increase at its
discretion). The “Pre-Settlement Regular Purchase Price” is equal
to 80% of the closing price of the Company’s common stock on the
OTCQX Market on the date immediately preceding the Company’s
receipt of a purchase notice under the Ionic Purchase
Agreement.
The Regular Purchase Price, which is the price at which future
shares of common stock sold under the Ionic Purchase Agreement will
be sold at, for the Purchase Shares shall equal 97% of the
arithmetic average of the five lowest VWAPs during the period
starting on the date that Ionic receives Pre-Settlement Regular
Purchase Shares and ending on such date that the aggregate dollar
volume of our common stock traded on our Principal Market equals
five times the Purchase Amount, in the aggregate, subject to a five
Trading Day minimum (provided, however, that each day on which
Ionic has requested Purchase Shares which cannot be delivered to
Ionic shall be excluded from such calculation). This is a forward
pricing mechanism based on an estimate and true up and as of the
date of this filing, the Regular Purchase Price has yet to be
calculated.
Also in connection with the execution of the Ionic Purchase
Agreement, the Company issued a Warrant to purchase 631,579 shares
of Common Stock (1.5% of the total $40,000,000 commitment amount)
to Ionic for no consideration as a commitment fee, and has agreed
to register the shares issuable upon exercise of the Warrant. The
Warrant may be exercised for cash, but may also be exercised on a
cashless exercise basis, which means the Company may not receive
any proceeds from such cashless exercise. Under the Warrant, the
Company does not have the right to control the timing and amount of
any Warrant exercises by Ionic, except that there is a 9.99%
ownership limitation blocker in the Warrant. Ionic may ultimately
decide to exercise all, some or none of the Warrant.
The Company intends to register the remaining up to $37,000,000
worth of common stock issuable under the Ionic Purchase Agreement,
or any additional Primary Shares that may be issued after the date
hereof to Ionic, or any Purchase Shares which may be issuable to
Ionic as a “true up” pursuant to the initial purchase described
above pursuant to a resale registration statement on Form S-1 to be
filed subsequently with the SEC. The Company and Ionic entered into
a Registration Rights Agreement (the “RRA”) dated as of March 30,
2022, for such purpose.
Battle Bridge
Acquisition
On March 31, 2022 the Company, Battle Bridge Acquisition Co, LLC, a
company beneficially owned entirely by the Company (the “Buyer”),
Section 2383 LLC, a Wyoming limited liability company (“Seller”),
Travis Phipps, an individual (“Phipps”) and Robb Billy (“Billy”
and, together with Phipps, the “Founders”) and Travis Phipps, as
Representative, entered into an asset purchase agreement (the
“Battle Bridge Purchase Agreement”) whereby the Buyer agreed to
purchase from Seller and Seller agreed to sell to Buyer
substantially all of the assets of Seller which represents the
“Battle Bridge Labs” business (the “Battle Bridge Assets”)
(collectively, the “Transaction”). The consummation of the
Transaction (the “Closing”) occurred simultaneously with execution
of the Battle Bridge Purchase Agreement on March 31, 2022.
As consideration for the Buyer’s acquisition of the Battle Bridge
Assets, the Company agreed to pay $3,250,000 (the “Purchase Price”)
which consisted of $250,000 in cash (the “Cash Consideration”) and
the issuance of 2,912,621 shares of restricted common stock of the
Company at $1.03 per share (the “Stock Consideration”)
(representing $3,000,000 in Stock Consideration) which was the
volume weighted average price (VWAP) of the Company’s Common Stock
as reported by Bloomberg LP for the twenty (20) trading days
immediately prior to Closing. $500,000 in Stock Consideration was
retained by the Company at the Closing and held as partial security
to satisfy indemnification claims for a period of 12 months
following the Closing.
In addition, the recipients of the Stock Consideration agreed to
sign lock-up and leak-out agreements which provide that, following
a 6-month lock-period and ending 18 months after Closing, any sales
of the Company’s common stock by such recipients do not exceed one
percent (1%) of the then applicable thirty (30) day trading average
volume of the Company’s common stock as of such date.
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 2022.
Components of Results of Operations
Revenue (Service)
The Company’s AppLogiq business segment’s Platform as a Service
(“Paas”), operated as CreateApp (“PaaS”) 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 2022, 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 Operation
Results of Operations for the Three Months ended March 31,
2022 and 2021
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 March 31, 2022 and 2021. The
consolidated results include Logiq Inc. (a Delaware Corporation),
Logiq, Inc. (a Nevada Corporation), Fixel, and Rebel (collectively
also known as DataLogiq business segment), as well as Lovarra, a
majority owned subsidiary of the Company, the results of which
include our AppLogiq business segment.
Consolidated Results of Operations
|
|
For the three months ended |
|
|
|
March 31, 2022 |
|
|
March 31, 2021 |
|
|
Change |
|
Revenue (service) |
|
$ |
8,105,384 |
|
|
|
100.0 |
% |
|
$ |
8,080,312 |
|
|
|
100.0 |
% |
|
$ |
25,072 |
|
|
|
0.3 |
% |
Cost of revenues (service) |
|
|
5,900,723 |
|
|
|
72.8 |
|
|
|
5,854,056 |
|
|
|
72.4 |
|
|
|
46,667 |
|
|
|
0.8 |
|
Gross profit |
|
|
2,204,661 |
|
|
|
27.2 |
|
|
|
2,226,256 |
|
|
|
27.6 |
|
|
|
(21,595 |
) |
|
|
(1.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
1,030,930 |
|
|
|
12.7 |
|
|
|
689,345 |
|
|
|
8.5 |
|
|
|
341,585 |
|
|
|
49.6 |
|
General and administrative |
|
|
3,600,997 |
|
|
|
44.4 |
|
|
|
4,144,365 |
|
|
|
51.3 |
|
|
|
(543,369 |
) |
|
|
(13.1 |
) |
Sales and marketing |
|
|
299,316 |
|
|
|
3.7 |
|
|
|
369,261 |
|
|
|
4.6 |
|
|
|
(69,945 |
) |
|
|
(18.9 |
) |
Research and development |
|
|
1,257,084 |
|
|
|
15.5 |
|
|
|
1,103,137 |
|
|
|
13.7 |
|
|
|
153,947 |
|
|
|
14.0 |
|
Total operating expenses |
|
|
6,188,327 |
|
|
|
76.3 |
|
|
|
6,306,108 |
|
|
|
78.0 |
|
|
|
(117,782 |
) |
|
|
(1.9 |
) |
(Loss) from operations |
|
|
(3,983,666 |
) |
|
|
(49.1 |
) |
|
|
(4,079,852 |
) |
|
|
(50.5 |
) |
|
|
96,187 |
|
|
|
(2.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (Expenses)/Income, net |
|
|
3,142 |
|
|
|
0.04 |
|
|
|
(1,897 |
) |
|
|
(0.02 |
) |
|
|
5,039 |
|
|
|
(265.6 |
) |
Impairment loss on investment in associate |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net (Loss) before income tax |
|
|
(3,980,524 |
) |
|
|
(49.1 |
) |
|
|
(4,081,749 |
) |
|
|
(50.5 |
) |
|
|
101,226 |
|
|
|
(2.5 |
) |
Income tax (expense) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net (Loss) |
|
|
(3,980,524 |
) |
|
|
(49.1 |
) |
|
|
(4,081,749 |
) |
|
|
(50.5 |
) |
|
|
101,226 |
|
|
|
(2.5 |
) |
Logiq (Delaware) Results of Operations
|
|
For the three months ended |
|
|
|
March 31, 2022 |
|
|
March 31, 2021 |
|
|
Change |
|
Revenue (service) |
|
$ |
- |
|
|
|
100.0 |
% |
|
$ |
2,441,128 |
|
|
|
100.0 |
% |
|
$ |
(2,441,128 |
) |
|
|
(100.0 |
)% |
Cost of
revenues (service) |
|
|
- |
|
|
|
- |
|
|
|
1,706,165 |
|
|
|
69.9 |
|
|
|
(1,706,165 |
) |
|
|
(100.0 |
) |
Gross profit |
|
|
- |
|
|
|
- |
|
|
|
734,963 |
|
|
|
30.1 |
|
|
|
(734,963 |
) |
|
|
(100.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
- |
|
|
|
- |
|
|
|
31,283 |
|
|
|
1.3 |
|
|
|
(31,283 |
) |
|
|
(100 |
) |
General and administrative |
|
|
(256,531 |
) |
|
|
- |
|
|
|
2,538,107 |
|
|
|
104.0 |
|
|
|
(2,794,638 |
) |
|
|
(110.1 |
) |
Sales and
marketing |
|
|
- |
|
|
|
- |
|
|
|
69,750 |
|
|
|
2.9 |
|
|
|
(69,750 |
) |
|
|
(100.0 |
) |
Research and
development |
|
|
- |
|
|
|
- |
|
|
|
925,000 |
|
|
|
37.9 |
|
|
|
(925,000 |
) |
|
|
(100.0 |
) |
Total operating expenses |
|
|
(256,531 |
) |
|
|
- |
|
|
|
3,564,140 |
|
|
|
146.0 |
|
|
|
(3,820,671 |
) |
|
|
(107.2 |
) |
(Loss) from operations |
|
|
256,531 |
|
|
|
- |
|
|
|
(2,829,177 |
) |
|
|
(115.9 |
) |
|
|
3,085,708 |
|
|
|
(109.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (Expenses)/Income, net |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Impairment loss on investment in associate |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net (Loss) before income tax |
|
|
256,531 |
|
|
|
- |
|
|
|
(2,829,177 |
) |
|
|
(115.9 |
) |
|
|
3,085,708 |
|
|
|
(109.1 |
) |
Income tax (expense) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net (Loss) |
|
|
256,531 |
|
|
|
- |
|
|
|
(2,829,177 |
) |
|
|
(115.9 |
) |
|
|
3,085,708 |
|
|
|
(109.1 |
) |
Lovarra including AppLogiq Results of Operations
|
|
For the three months ended |
|
|
|
March 31, 2022 |
|
|
March 31, 2021 |
|
|
Change |
|
Revenue (service) |
|
$ |
3,309,017 |
|
|
|
100.0 |
% |
|
$ |
- |
|
|
|
100.0 |
% |
|
$ |
3,309,017 |
|
|
|
100.0 |
% |
Cost of revenues (service) |
|
|
2,235,341 |
|
|
|
67.6 |
|
|
|
- |
|
|
|
- |
|
|
|
2,235,341 |
|
|
|
100.0 |
|
Gross profit |
|
|
1,073,676 |
|
|
|
32.4 |
|
|
|
- |
|
|
|
- |
|
|
|
1,073,676 |
|
|
|
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
31,283 |
|
|
|
0.9 |
|
|
|
- |
|
|
|
- |
|
|
|
31,283 |
|
|
|
100.0 |
|
General and administrative |
|
|
1,337,516 |
|
|
|
40.4 |
|
|
|
- |
|
|
|
- |
|
|
|
1,337,516 |
|
|
|
100.0 |
|
Sales and marketing |
|
|
5,000 |
|
|
|
0.2 |
|
|
|
- |
|
|
|
- |
|
|
|
5,000 |
|
|
|
100.0 |
|
Research and development |
|
|
1,090,500 |
|
|
|
33.0 |
|
|
|
- |
|
|
|
- |
|
|
|
1,090,500 |
|
|
|
100.0 |
|
Total operating expenses |
|
|
2,464,299 |
|
|
|
74.5 |
|
|
|
- |
|
|
|
- |
|
|
|
2,464,299 |
|
|
|
100.0 |
|
(Loss) from operations |
|
|
(1,390,623 |
) |
|
|
(42.0 |
) |
|
|
- |
|
|
|
- |
|
|
|
(1,390,623 |
) |
|
|
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (Expenses)/Income, net |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
100.0 |
|
Impairment loss on investment in associate |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net (Loss) before income tax |
|
|
(1,390,623 |
) |
|
|
(42.0 |
) |
|
|
- |
|
|
|
- |
|
|
|
(1,390,623 |
) |
|
|
100.0 |
|
Income tax (expense) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net (Loss) |
|
|
(1,390,623 |
) |
|
|
(42.0 |
) |
|
|
- |
|
|
|
- |
|
|
|
(1,390,623 |
) |
|
|
100.0 |
|
Logiq (Nevada) including DataLogiq results of operations
|
|
For the three months ended |
|
|
|
March 31, 2022 |
|
|
March 31, 2021 |
|
|
Change |
|
Revenue (service) |
|
$ |
4,796,367 |
|
|
|
100.0 |
% |
|
$ |
5,639,184 |
|
|
|
100.0 |
% |
|
$ |
(842,817 |
) |
|
|
(14.9 |
)% |
Cost of revenues (service) |
|
|
3,665,382 |
|
|
|
76.4 |
|
|
|
4,147,891 |
|
|
|
73.6 |
|
|
|
(482,509 |
) |
|
|
(11.6 |
) |
Gross profit |
|
|
1,130,985 |
|
|
|
23.6 |
|
|
|
1,491,293 |
|
|
|
26.4 |
|
|
|
(360,308 |
) |
|
|
(24.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
999,647 |
|
|
|
20.8 |
|
|
|
658,062 |
|
|
|
11.7 |
|
|
|
341,585 |
|
|
|
51.9 |
|
General and administrative |
|
|
2,520,011 |
|
|
|
52.5 |
|
|
|
1,606,258 |
|
|
|
28.5 |
|
|
|
913,753 |
|
|
|
56.9 |
|
Sales and marketing |
|
|
294,316 |
|
|
|
6.1 |
|
|
|
299,511 |
|
|
|
5.3 |
|
|
|
(5,195 |
) |
|
|
(1.7 |
) |
Research and development |
|
|
166,584 |
|
|
|
3.5 |
|
|
|
178,137 |
|
|
|
3.2 |
|
|
|
(11,553 |
) |
|
|
(6.5 |
) |
Total operating expenses |
|
|
3,980,558 |
|
|
|
83.0 |
|
|
|
2,741,968 |
|
|
|
48.6 |
|
|
|
1,238,590 |
|
|
|
45.2 |
|
(Loss) from operations |
|
|
(2,849,573 |
) |
|
|
(59.4 |
) |
|
|
(1,250,675 |
) |
|
|
(22.2 |
) |
|
|
(1,598,898 |
) |
|
|
127.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (Expenses)/Income, net |
|
|
3,142 |
|
|
|
0.07 |
|
|
|
(1,897 |
) |
|
|
(0.03 |
) |
|
|
5,039 |
|
|
|
(265.63 |
) |
Impairment loss on investment in associate |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net (Loss) before income tax |
|
|
(2,846,431 |
) |
|
|
(59.3 |
) |
|
|
(1,252,572 |
) |
|
|
(22.2 |
) |
|
|
(1,593,859 |
) |
|
|
127.2 |
|
Income tax (expense) |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net (Loss) |
|
|
(2,846,431 |
) |
|
|
(59.3 |
) |
|
|
(1,252,572 |
) |
|
|
(22.2 |
) |
|
|
(1,593,859 |
) |
|
|
127.2 |
|
Consolidated Revenue (Service)
Consolidated revenues were $8,105,384 and $8,080,312 for the three
months ended March 31, 2022 and 2021, respectively.
The revenues from our AppLogiq segment increased to $3,309,017
compared to $2,441,128 for the three months ended March 31, 2022
and 2021, 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 decreased to $4,796,367 compared to
$5,639,184 for the three months ended March 31, 2022 and 2021,
respectively. The decrease in revenues is primarily due to Medicare
enrolment.
Consolidated Cost of Revenue (Service)
Consolidated Cost of revenues were $5,900,723 and $5,854,056 for
the three months ended March 31, 2022 and 2021, respectively.
The Cost of revenues of the Company’s AppLogiq segment increased to
$2,235,341 from $1,706,165 for the three months ended March 31,
2022 and 2021 respectively.
Our DataLogiq platform cost of revenue was $3,665,382 compared to
$4,147,891 for the three months ended March 31, 2022 and 2021
respectively.
Consolidated Gross Profit
Consolidated Gross Profit was $2,204,661 and $2,226,256 for the
three months ended March 31, 2022 and 2021, respectively.
Our consolidated gross margin decreased to 27.2% from 27.6% for the
three months ended March 31, 2022 and 2021.
Our AppLogiq segment gross margin was $1,073,676 compared to
$734,165 for the three months ended March 31, 2022 and 2021
respectively. Our AppLogiq gross margin increased to 32.4% from
30.1% 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 $1,130,985 and $1,491,293
for the three months ended March 31, 2022 and 2021, respectively.
Our DataLogiq platform gross margin decreased to 23.6% from 26.4%
for the three months ended March 31, 2022 and 2021,
respectively.
Consolidated Operating Expenses
General and
Administrative (G&A)
Consolidated General and administrative expenses were $3,600,997
and $4,144,365 for the three months ended March 31, 2022 and 2021,
respectively.
The Company including AppLogiq’s (Lovarra’s) General and
administrative expenses were $1,337,516 and $nil for the three
months ended March 31, 2022 and 2021, respectively. AppLogiq’s
general and administrative expenses $780,000 were reflects stock
compensation costs including shares issued to consultants and
director.
Our DataLogiq platform General and administrative expenses were
$2,520,011 and $1,606,258 for the three months ended March 31, 2022
and 2021, 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 March
31, 2022 and 2021 was $616,191 and $1,525,904, respectively.
Sales and Marketing
(S&M)
Consolidated Sales and Marketing expenses were $299,316 and
$369,261 for the three months ended March 31, 2022 and 2021,
respectively.
Research and Development
(R&D)
Consolidated Research and Development expenses were $1,257,084 and
$1,103,137 for the three months ended March 31, 2022 and 2021,
respectively.
Our AppLogiq segment (Lovarra) Research and Development (R&D)
expenses were $1,090,500 and $925,000 for the three months ended
March 31, 2022 and 2021, respectively.
Consolidated Other Income/(Expenses)
Consolidated Other income (expenses), net was $3,142 and ($1,897)
for the three months ended March 31, 2022 and 2021
respectively.
Consolidated Net (Loss) Before Income Tax
The Company posted a net loss before income tax ($3,980,524) and
($4,081,749) for the three months ended March 31, 2022 and 2021,
respectively.
The Company incorporating our AppLogiq segment (Lovarra) incurred a
net loss of ($1,390,623) and $nil for the three months ended March
31, 2022 and 2021, respectively.
Our DataLogiq platform incurred a net loss of ($2,846,431) and
($1,252,572) for the three months ended March 31, 2022 and 2021
respectively.
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.
Logiq (Delaware) Inc. Results of Operations
Our AppLogiq segment had been acquisition by Lovarra Inc. in
January 2022. All revenue, cost had been transferred to the Company
Lovarra.
Logiq, Inc. (Nevada) including DataLogiq Results of
Operations
Revenue (Service)
DataLogiq revenues were $4,796,367 for the three months ended March
31, 2021 compared to $5,639,184 for the same period in 2021, a
decrease of $842,817 or 14.9%. The decrease in revenues is
primarily a result due to Medicare enrollment.
Cost of Revenue (Service)
DataLogiq Cost of revenue was $3,665,382 for the three months ended
March 31, 2022 compared to $4,147,891 for the same period in 2021,
a decrease of $482,509 or 11.6%.
Gross Profit
DataLogiq gross profit was $1,130,985 for the three months ended
March 31, 2022 compared to $1,491,293 for the same period in 2021,
a decrease of $360,308 or 24.1%.
Depreciation and
amortization
DataLogiq depreciation and amortization expenses were $999,647 for
the three months ended March 31, 2021 compared to $658,062 for the
same period in 2021, an increase of $341,585 or 51.9%.
General and
administrative
DataLogiq general and administrative expenses were $2,520,011 for
the three months ended March 31, 2022 compared to $1,606,258 for
the same period in 2022, an increase of $913,753 or 56.9%. 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
$294,316 for the three months ended March 31, 2022 compared to
$299,511 for the same period in 2021, a decrease of $5,195 or
1.7%.
Research and
development
DataLogiq research and development expenses were $166,584 for the
three months ended March 31, 2022 compared to $178,137 for the same
period in 2021, a decrease of $11,553 or 6.5%. Research and
development costs include developers that support and enhance our
technologies.
(Loss) from Operations
DataLogiq’s loss from operations was ($2,849,573) for the three
months ended March 31, 2022 compared to ($1,250,675) for the same
period in 2021.
Other Income/(Expenses)
For the three months ended March 31, 2022, DataLogiq other income
was $3,142 compared to ($1,897) for the same period in 2021.
Liquidity and Capital Resources
During the year ended March 31, 2022, 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.
Ionic Ventures Purchase Agreement
On March 30, 2022, the Company, entered into the Ionic Purchase
Agreement with Ionic, whereby the Company has the right, but not
the obligation, to sell to Ionic, and Ionic is obligated to
purchase up to in the aggregate $40,000,000 worth of the Company’s
common stock. Sales of common stock by the Company under the Ionic
Purchase Agreement will be subject to certain limitations, and may
occur from time to time, at the Company’s sole discretion, over the
24-month period commencing on March 30, 2020.
In connection with the execution of the Ionic Purchase Agreement,
the Company registered 2,926,000 shares of common stock sold to
Ionic in connection with the purchase of $3,000,000 in shares of
common stock (the “Primary Shares”) in connection with the initial
purchase of Common Stock under the Ionic Purchase Agreement, which
reflects an estimated value equal to the product of (A) the
quotient of (y) the purchase amount (i.e., $3,000,000) divided by
(z) the Pre-Settlement Regular Purchase Price (defined below),
multiplied by (B) 125% (which Ionic may increase at its
discretion). The “Pre-Settlement Regular Purchase Price” is equal
to 80% of the closing price of the Company’s common stock on the
OTCQX Market on the date immediately preceding the Company’s
receipt of a purchase notice under the Ionic Purchase
Agreement.
The Regular Purchase Price, which is the price at which future
shares of common stock sold under the Ionic Purchase Agreement will
be sold at, for the Purchase Shares shall equal 97% of the
arithmetic average of the five lowest VWAPs during the period
starting on the date that Ionic receives Pre-Settlement Regular
Purchase Shares and ending on such date that the aggregate dollar
volume of our common stock traded on our Principal Market equals
five times the Purchase Amount, in the aggregate, subject to a five
Trading Day minimum (provided, however, that each day on which
Ionic has requested Purchase Shares which cannot be delivered to
Ionic shall be excluded from such calculation). This is a forward
pricing mechanism based on an estimate and true up and as of the
date of this filing, the Regular Purchase Price has yet to be
calculated.
Also in connection with the execution of the Ionic Purchase
Agreement, the Company issued a Warrant to purchase 631,579 shares
of common stock (1.5% of the total $40,000,000 commitment amount)
to Ionic for no consideration as a commitment fee, and has agreed
to register the shares issuable upon exercise of the Warrant. The
Warrant may be exercised for cash, but may also be exercised on a
cashless exercise basis, which means the Company may not receive
any proceeds from such cashless exercise. Ionic may ultimately
decide to exercise all, some or none of the Warrant.
The Company intends to register the remaining up to $37,000,000
worth of common stock issuable under the Ionic Purchase Agreement,
or any additional Primary Shares that may be issued after the date
hereof to Ionic, or any Purchase Shares which may be issuable to
Ionic as a “true up” pursuant to the initial purchase described
above pursuant to a resale registration statement on Form S-1 to be
filed subsequently with the SEC.
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 years, we anticipate that we will use
our liquidity and cash flows from our operations to fund our
growth, particularly to grow our data sales. In addition, as part
of our business strategy, we occasionally evaluate potential
acquisitions of businesses, products and technologies, and minority
equity investments. Accordingly, a portion of our available cash
may be used at any time for the acquisition of complementary
products or businesses or minority equity investments. Such
potential transactions may require substantial capital resources,
which may require us to seek additional debt or equity financing.
We cannot assure you that we will be able to successfully identify
suitable acquisition or investment candidates, complete
acquisitions or investments, integrate acquired businesses into our
current operations, or expand into new markets. Furthermore, we
cannot provide assurances that additional financing will be
available to us in any required time frame and on commercially
reasonable terms, if at all.
As of March 31, 2022, 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 discussed elsewhere in this Quarterly
Report on Form 10-Q and the Risk Factor section of our Annual
Report on Form 10-K for the year ended December 31, 2021.
The following table summarizes our cash flows for the three months
ended March 31, 2022 and 2021:
|
|
For the three months
March 31, |
|
Cash flows: |
|
2022 |
|
|
2021 |
|
Net cash (used in) operating activities |
|
$ |
(1,855,740 |
) |
|
$ |
(1,999,989 |
) |
Net cash provided (used in) by investment activities |
|
$ |
7,209,381 |
|
|
$ |
(445,202 |
) |
Net cash (used in) provided by financing activities |
|
$ |
(3,168,559 |
) |
|
$ |
1,822,052 |
|
Operating Activities
During the three months ended March 31, 2022, (loss) from
operations used ($1,855,740), compared to ($1,999,989) for the
three months ended March 31, 2021. Our net (loss) for the three
months ended March 31, 2022 decreased to ($3,980,524) and
($4,081,749) respectively compared to the same period last year.
Depreciation and amortization increased to $1,030,930 and $689,346
respectively compared to the same period last year as a result of
acquisitions of Fixel and Rebel.
Investing Activities
During the three months ended March 31, 2022, we used cash
$7,209,381 for investing activities in our financial asset
investment portfolio based and managed in the US, compared to
($445,202) during the three months ended March 31, 2021. The
investment is reduced as a result of the funding requirements of
the Company in three months ended March 31, 2022 compared to same
period in 2021.
Financing Activities
During the three months ended March 31, 2022, we generated
($3,168,559) from financing activities, compared to $1,822,052 for
the three months ended March 31, 2021, primarily from the proceeds
from the sale of common stock.
We estimate that based on current plans, assumptions and fund
raising, that our available cash and the cash we generate from our
core operations will generally be sufficient to satisfy our capital
expenditures under our present operating expectations, for up to 12
months. We believe that we have sufficient working capital to fund
the expansion of our operations and to provide working capital
necessary for our ongoing operations and obligations. However, we
shall continue to evaluate our capital expenditure needs based upon
factors including our growth rate, the timing and extent of
spending to support development efforts, the expansion of our sales
and marketing, the timing of new product introductions, and the
continuing market acceptance of our products and services. If cash
generated from operations is insufficient to satisfy our capital
requirements, we may open a revolving line of credit with a bank,
or we may have to sell additional equity or debt securities or
obtain expanded credit facilities to fund our operating expenses,
or delay our expansion plans or pay our obligations, diversify our
geographical reach, and grow our Company. In the event such
financing is needed in the future, there can be no assurance that
such financing will be available to us, or, if available, that it
will be in amounts and on terms acceptable to us. If we cannot
raise additional funds when we need or want them, our operations
and prospects could be negatively affected. However, if cash flows
from operations become insufficient to continue operations at the
current level, and if no additional financing were obtained, then
management would restructure the Company in a way to preserve its
business while maintaining expenses within operating cash
flows.
Critical Accounting Policies
For a description of our critical accounting policies, see Note 2 –
Summary of Significant Accounting Policies in Part 1, Item 1 of
this Quarterly Report on Form 10-Q.
Recently Issued or Newly Adopted Accounting Standards
For a description of our recently issued accounting pronouncements,
see Note 2 – Summary of Significant Accounting Policies in Part 1,
Item 1 of this Quarterly Report on Form 10-Q.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures About Market
Risk
We are a smaller reporting company as defined by Rule 12b-2 of the
Exchange Act and are not required to provide the information under
this item.
Item 4. 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 Quarterly Report on Form 10-Q. 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.
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
Quarterly Report on Form 10-Q that have materially affected, or are
reasonably likely to materially affect, our internal control over
financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently a party to any legal proceedings, litigation
or claims, nor are aware of any pending, threatened, or unasserted
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 1A. Risk Factors
Investing in our common stock involves a high degree of risk.
You should carefully consider the risks described below and the
risk factors discussed in Part I, “Item 1A. Risk Factors” included
in our Annual Report on Form 10-K for the year ended December 31,
2021, filed with the SEC on April 1, 2022 (the “Annual Report”), as
well as the other information in this Quarterly Report on Form 10-Q
(this “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. If any of the risks included in this
Quarterly Report and our Annual Report 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
risks disussed in this Quarterly Report and our Annual Report , 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.
Except as set forth below, there have been no material updates
or changes to the risk factors previously disclosed in our Annual
Report; provided, however, additional risks not currently known or
currently material to us may also harm our business.
There can be no assurance that we will be successful in
maintaining our existing contractual relationships with our
customers.
Our customers have in the past, and may in the future, negotiate
agreements that are short-term and subject to renewal,
non-exclusive and/or terminable at the option of the customer on
relatively short notice or no notice and without penalty. In the
event that such contracts are terminated, the customer is generally
required to pay the Company costs associated with any work
completed as of the date of the termination. While contract
termination is rare, there can be no assurance that long-term
contractual relationships will not be terminated, which could
adversely affect the Company.
Negative Operating Cash Flow
The Company has negative cash flow from operating activities. There
is no assurance that sufficient revenues will be generated in the
near future. To the extent that the Company has negative operating
cash flows in future periods, it may need to deploy a portion of
its existing working capital to fund such negative cash flows.
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, in some areas of our business we do not have written
policies and procedures for managing against the risks of potential
copyright or other intellectual property infringement claims made
by third parties. Enforcement of such intellectual property rights
may have an adverse effect on our business, such as, for example,
following inadvertent use of open source software that requires us
to disclose or make available the source code to related
products.
Failure to adequately protect our trademarks and other
intellectual property rights in foreign jurisdictions could
adversely affect our business.
We utilize 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. We
believe that having distinctive marks is important to our brand,
our success, and our competitive position. The laws of some
countries do not protect intellectual property rights to the same
extent as do U.S. laws, and there may be different levels of
protection and enforceability in different foreign jurisdictions in
which we do business. We have not yet pursued a global trademark
registration strategy and, as such, we may be unable to
successfully protect our brand names and related intellectual
property rights or resolve intellectual property conflicts with
others, which could adversely affect our business or financial
condition. For example, we actively use the AtozPay and AtozGo
brand names in Indonesia but have not pursued trademark protection
in that jurisdiction to date.
Additionally, the agreements we use in an effort to protect our
intellectual property, such as trade secrets, copyrightable works,
confidential information, and other proprietary information may be
ineffective or insufficient to prevent unauthorized use or
disclosure of such information. For example, a party to one of
these agreements may breach the agreement and we may not have
adequate remedies for such breach. As a result, our proprietary
information may become known to others, including our competitors.
Furthermore, our competitors or others may independently develop or
discover our trade secrets and other proprietary information, which
would render them less valuable to us.
Emerging Market Risk
The Company derives approximately 5% of its sales from emerging
markets. Emerging market investment generally poses a greater
degree of risk than investment in more mature market economies
because the economies in the developing world are more susceptible
to destabilization resulting from domestic and international
developments. The Company’s international operations are exposed to
political and economic risk, including risks relating to change in
government policy. The Company may accordingly be subject to a
number of risks stemming from change in exchange rates, inflation,
problems with the repatriation of foreign earnings, dividends and
investment capital, as well as political instability in the
international jurisdictions it operates in. Contractual
relationships in emerging markets are subject to heightened risks
and the Company may be adversely affected by, among other things,
the following risks associated with emerging market economies: (i)
political and social instability; (ii) government involvement,
including, but not limited to, currency controls and risk of
expropriation; (iii) difficulties in enforcing contractual rights;
(iv) currency volatility; (v) risk of high inflation; and (vi)
infrastructure issues.
Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds
There were no unregistered shares of equity securities sold
during this time period which were not previously
disclosed.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
There is no other information required to be disclosed under this
item which was not previously disclosed.
Item 6. Exhibits
Exhibit No. |
|
Description of
Exhibit |
2.1 |
|
Asset Purchase Agreement, dated March 31, 2022, by and among Logiq,
Inc., Battle Bridge Acquisition Co, LLC, Section 2383 LLC, Travis
Phipps and Robb Billy (1) |
3.1 |
|
Certificate of Incorporation, filed November 18, 2004
(2) |
3.2 |
|
Certificate of Amendment to the Certificate of Incorporation of the
Company, filed March 1, 2007 (2) |
3.3 |
|
Certificate of Amendment to the Certificate of Incorporation of the
Company, filed August 2, 2011 (2) |
3.4 |
|
Certificate of Amendment to the Certificate of Incorporation of the
Company, filed January 14, 2013 (2) |
3.5 |
|
Certificate of Amendment to the Certificate of Incorporation of the
Company, filed April 10, 2013 (2) |
3.6 |
|
Certificate of Amendment to the Certificate of Incorporation of the
Company, filed May 10, 2013 (2) |
3.7 |
|
Certificate of Amendment to the Certificate of Incorporation of the
Company, filed September 18, 2013 (2) |
3.8 |
|
Certificate of Amendment to the Certificate of Incorporation of the
Company, filed December 5, 2013 (2) |
3.9 |
|
Certificate of Amendment to the Certificate of Incorporation of the
Company, filed August 5, 2015 (2) |
3.10 |
|
Certificate of Amendment to the Certificate of Incorporation of the
Company, filed February 25, 2020 (2) |
3.11 |
|
Certificate of Amendment to the Certificate of Incorporation of the
Company, filed July 31, 2020 (2) |
3.12 |
|
Amended and Restated Bylaws (3) |
4.1 |
|
Warrant to Purchase Common Stock, dated March 30, 2022
(4) |
10.1 |
|
Second Amended and Restated 2020 Equity Incentive Plan and related
form agreements, dated January 25, 2022 (3) |
10.2 |
|
Purchase Agreement, dated March 30, 2022, by and between Logiq,
Inc. and Ionic Ventures, LLC (4) |
10.3 |
|
Registration Rights Agreement, dated March 30, 2022, by and between
Logiq, Inc. and Ionic Ventures, LLC (4) |
31.1* |
|
Certification of
Principal Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. |
31.2* |
|
Certification of
the Principal Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. |
32.1* |
|
Certification of
Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. |
32.2* |
|
Certification of
Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. |
101.INS* |
|
Inline XBRL Instance
Document.** |
101.SCH* |
|
Inline XBRL Taxonomy Extension
Schema Document.** |
101.CAL* |
|
Inline XBRL Taxonomy Extension
Calculation Linkbase Document.** |
101.DEF* |
|
Inline XBRL Taxonomy Extension
Definition Linkbase Document.** |
101.LAB* |
|
Inline XBRL Taxonomy Extension
Label Linkbase Document.** |
101.PRE* |
|
Inline XBRL Taxonomy Extension
Presentation Linkbase Document.** |
104* |
|
Cover Page Interactive Data File
(formatted as Inline XBRL and contained in Exhibit
101).** |
* |
Filed
herewith |
** |
The
XBRL related information in Exhibit 101 shall not be deemed “filed”
for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, or otherwise subject to liability of that section
and shall not be incorporated by reference into any filing or other
document pursuant to the Securities Act of 1933, as amended, except
as shall be expressly set forth by specific reference in such
filing or document. |
(1) |
incorporated by reference to Form 8-K of the
Company filed with the Securities and Exchange Commission on April
6, 2022 |
(2) |
incorporated by reference to Form 10-K of the
Company filed with the Securities and Exchange Commission on March
31, 2021 |
(3) |
incorporated by reference to Form 8-K of the
Company filed with the Securities and Exchange Commission on
January 26, 2022 |
(4) |
incorporated by reference to Form 8-K of the
Company filed with the Securities and Exchange Commission on March
31, 2022 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the Company has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
Logiq, Inc. |
|
|
|
Date: May
16, 2022 |
By: |
/s/ Brent Suen |
|
|
Brent
Suen
Chairman, President, Chief Executive Officer, Principal Executive
& Financial Officer & Director |
|
By: |
/s/ Lionel Choong |
|
|
Lionel
Choong
Chief Financial Officer, Principal Accounting Officer &
Director |
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