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LOGIQ, INC.
QUARTERLY REPORT ON FORM 10-Q
September 30, 2022
i
PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements
LOGIQ, INC.
Consolidated Balance Sheets
| September 30 | December 31 | |||||||
| 2022 | 2021 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Non-current assets | ||||||||
| Intangible assets, net | ||||||||
| Property and equipment, net | ||||||||
| Goodwill | ||||||||
| Total non-current assets | ||||||||
| Current assets | ||||||||
| Amount due from associate | ||||||||
| Accounts receivable | ||||||||
| Right to use assets - operating lease | ||||||||
| Prepayment, deposit and other receivables | ||||||||
| Financial assets held for resale | ||||||||
| Restricted cash | ||||||||
| Cash and cash equivalents | ||||||||
| Total current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | ||||||||
| Accruals and other payables | ||||||||
| Deferred revenue | ||||||||
| Lease liability - operating lease | ||||||||
| Deposits received for share to be issued | ||||||||
| Total current liabilities | ||||||||
| Non-Current Liabilities | ||||||||
| Other loan | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | $ | $ | ||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Capital reserves | ||||||||
| Accumulated deficit brought forward | ( | ) | ( | ) | ||||
| Total stockholder's equity | ||||||||
| Total liabilities and stockholders' equity | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements
1
LOGIQ, INC.
Consolidated Statements of Operations
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Service Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of Service | ||||||||||||||||
| Gross Profit | ||||||||||||||||
| Operating Expenses | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| Research and development | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| (Loss) from Operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (Expenses)/Income, net | ||||||||||||||||
| Net (Loss) before income tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax (Corporate tax) | - | ( | ) | |||||||||||||
| Net (Loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
The accompanying notes are an integral part of these financial statements.
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LOGIQ, INC.
Consolidated Statements of Cash Flows
| For the nine months ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconciled net loss to net cash used by operating activities: | ||||||||
| Depreciation of property, plant, and equipment | ||||||||
| Amortization of intangible assets | ||||||||
| PPP Loan forgiveness | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepayments, deposit and other receivables | ( | ) | ||||||
| Accounts payable | ||||||||
| Accruals and other payables | ||||||||
| Deferred revenue | ( | ) | ( | ) | ||||
| Net cash (used in) operating activities | ( | ) | ( | ) | ||||
| INVESTING ACTIVITIES: | ||||||||
| Amount due from associate | ( | ) | ||||||
| Financial assets held for resale | ||||||||
| Net restricted cash acquired in acquisitions | ||||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| FINANCING ACTIVITIES: | ||||||||
| Proceeds from shares to be issued | ( | ) | - | |||||
| Proceeds from stock issuance, net of expenses | ||||||||
| Proceeds from stock issuance from IPO, net of expenses | ||||||||
| Net cash provided by (used in) financing activities | ||||||||
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | ( | ) | ||||||
| CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD | ||||||||
| CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD | $ | $ | ||||||
| NON-CASH TRANSACTION | ||||||||
| Issuance of shares for services received | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements
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LOGIQ, INC.
Consolidated Statements of Stockholders’ Equity
| Common stock | Amount | Additional paid-in capital | Capital reserves | Accumulated (deficit) | Stockholders' (equity) | |||||||||||||||||||
| Balance December 31 2021 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Issuance of Shares | ( | ) | - | ( | ) | |||||||||||||||||||
| Cancelation of shares | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Net loss for period | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance March 31 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Issuance of Shares | ||||||||||||||||||||||||
| Cancelation of shares | ( | ) | - | - | ||||||||||||||||||||
| Net loss for period | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance June 30 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Issuance of Shares | ||||||||||||||||||||||||
| Cancelation of shares | - | |||||||||||||||||||||||
| Net loss for period | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance September 30 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Common stock | Amount | Additional paid-in capital | Capital reserves | Accumulated (deficit) | Stockholders' (equity) | |||||||||||||||||||
| Balance December 31 2020 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Issuance of shares for proceeds | ||||||||||||||||||||||||
| Issuance of shares for acquisitions | ||||||||||||||||||||||||
| Issuance of shares for services | ||||||||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance March 31 2021 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Issuance of shares for proceeds | ||||||||||||||||||||||||
| Issuance of shares for acquisitions | - | |||||||||||||||||||||||
| Issuance of shares for services | ||||||||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance June 30 2021 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Issuance of shares for proceeds | ||||||||||||||||||||||||
| Cancellation of shares for proceeds | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Issuance of shares for acquisitions | - | |||||||||||||||||||||||
| Issuance of shares for services | ||||||||||||||||||||||||
| Cancellation of shares for service | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Issuance of shares for convertible note | ||||||||||||||||||||||||
| Cancellation of shares for convertible note | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance September 30 2021 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
The accompanying notes are an integral part of these financial statements
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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. |
5
| ● | 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 |
| ● | 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 $
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 ( |
AppLogiq Spin-Off
On December 15, 2021,
the Company entered into various agreements with GoLogiq, Inc. (then known as Lovarra), a Nevada corporation (“GoLogiq”) and
a public reporting company that, at the time, was a majority owned subsidiary of the Company, pursuant to which the Company agreed to
transfer its AppLogiq business to GoLogiq, subject to customary conditions and approvals and completion of requisite financial statement
audits (the “Separation”). GoLogiq is a fully reporting U.S. public company. In connection with the Separation, the Company
announced that it intended to distribute, on a pro rata basis,
On January 27, 2022,
the Company completed the transfer of its AppLogiq business to GoLogiq. In connection with the completion of the transfer of AppLogiq
to GoLogiq, GoLogiq issued
On July 27, 2022, the Company completed the Distribution and Spin Off. As a result, the Company no longer has a direct equity ownership of GoLogiq, and going forward, GoLogiq’s results of operations will no longer be consolidated with the Company’s at December 31, 2022.
As of September 30, 2022,
the Company controlled, through one of its subsidiaries, approximately
6
DataLogiq Spin-off
On September 9, 2022, the Company and the Company’s wholly-owned subsidiary, DLQ, Inc., a Nevada corporation (“DLQ”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Abri SPAC I, Inc., a Delaware corporation, (“Abri”), and Abri Merger Sub (“Merger Sub”) wherein Merger Sub will merge with and into DLQ with DLQ being the surviving company (“Surviving Company”), and a wholly owned subsidiary of Abri. The Merger is expected to close after obtaining the required approval by the stockholders of Abri and the Company, and upon the satisfaction of certain other customary closing conditions (“Closing”).
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 GoLogiq, Inc., which was 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 “GoLogiq” mean the Company’s reportable AppLogiq segment, which reflects the operations of GoLogiq (OTC Pink: GOLQ) 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.
7
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
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 GoLogiq, then 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
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 nine months ended September 30, 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 nine months ended
September 30, 2022 and 2021 amounted to $
8
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.
9
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
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. The Company determined that there was no impairment for right-of-use lease assets as of September 30, 2022.
10
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 September 30, 2022 and 2021, the allowance
for bad debt was approximately $
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.
11
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.
12
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 September 30, 2022 and 2021, the Company has the following amounts related to intangible assets:
| GoLogiq (formerly Lovarra) (Including CreateApp) | DataLogiq | Total | ||||||||||
| Cost as of January 1, 2022 | $ | $ | $ | |||||||||
| Additions | $ | $ | $ | |||||||||
| Cost as of September 30, 2022 | $ | $ | $ | |||||||||
| Amortization | ||||||||||||
| Brought forward as of January 1, 2022 | $ | $ | $ | |||||||||
| Charge for the period | $ | $ | $ | |||||||||
| Accumulated depreciation as of September 30, 2022 | $ | $ | $ | |||||||||
| Net intangible assets as of September 30, 2022 | $ | $ | $ | |||||||||
| Net intangible assets as of December 31, 2021 | $ | $ | $ | |||||||||
Amortization expense related to intangible assets for the three months
ended September 30, 2022 and 2021 amounted to $
13
Amortization expense related to intangible assets
for the nine months ended September 30, 2022 and 2021 amounted to $
No significant residual value is estimated for these intangible assets.
The estimated future amortization expense of intangible costs as of September 30, 2022 in the next five fiscal years and thereafter is as follows:
| Remaining of 2022 | $ | |||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 and thereafter | ||||
| $ |
NOTE 4 – PROPERTY AND EQUIPMENT, NET
As of September 30, 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 | $ | $ | $ | |||||||||
| Additions | $ | $ | ||||||||||
| Cost as of September 30, 2022 | $ | $ | $ | |||||||||
| Amortization | ||||||||||||
| Brought forward as of January 1, 2022 | $ | $ | $ | |||||||||
| Charge for the period | $ | $ | $ | |||||||||
| Accumulated depreciation as of September 30, 2022 | $ | $ | $ | |||||||||
| Net property and equipment as of September 30, 2022 | $ | $ | $ | |||||||||
| Net property and equipment as of December 31, 2021 | $ | $ | $ | |||||||||
Depreciation expense for the three months ended
September 30, 2022 and 2021 amounted to $
Depreciation expense for the nine months ended
September 30, 2022 and 2021 amounted to $
14
NOTE 5 – GOODWILL
| As of September 30, | As of December 31, | |||||||
| 2022 | 2021 | |||||||
| Goodwill at cost - Push | $ | $ | ||||||
| Goodwill at cost - Fixel | ||||||||
| Goodwill at cost - Rebel | ||||||||
| Total | ||||||||
| Accumulated impairment losses | $ | $ | ||||||
| Balance at end of period | $ | $ | ||||||
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 September 30, | As of December 31, | |||||||
| 2022 | 2021 | |||||||
| Accounts receivable - gross | $ | $ | ||||||
| Allowance for doubtful debts | ( | ) | ( | ) | ||||
| Accounts receivable - net | ||||||||
| Movement in allowance for doubtful debts | ||||||||
| Balance as at beginning of period | $ | $ | ||||||
| Provision for bad debts | ||||||||
| Reversal of the provision | ||||||||
| Balance at end of period | ||||||||
| Age of Impaired trade receivables | ||||||||
| Current | $ | % | ||||||
| 1 - 30 days | % | |||||||
| 31 - 60 days | % | |||||||
| 61 - 90 days | % | |||||||
| 91 and over | % | |||||||
| Total | % |
15
NOTE 7 – INVESTMENT IN ASSOCIATE
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 September 30, 2022.
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 $
| As of September 30, | As of December 31, | |||||||
| 2022 | 2021 | |||||||
| Amount due from associate | $ | $ | ||||||
| $ | $ | |||||||
NOTE 9 – PREPAYMENTS, DEPOSIT AND OTHER RECEIVABLES
Prepayments, deposits and other receivables consist of the following:
| As of September 30, | As of December 31, | |||||||
| 2022 | 2021 | |||||||
| Deposit | $ | $ | ||||||
| Prepayments | ||||||||
| $ | $ | |||||||
NOTE 10 – ACCRUALS AND OTHER PAYABLE
Accruals and other payable consist of the following:
| As of September 30, | As of December 31, | |||||||
| 2022 | 2021 | |||||||
| Accruals | $ | $ | ||||||
| $ | $ | |||||||
16
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
| As of September 30, 2022 | As of December 31, 2021 | |||||||
| U.S. statutory tax rate | % | % | ||||||
| Effective tax rate | % | % | ||||||
As of September 30, 2022, the Company does not have any deferred tax assets.
History of Deferred tax assets
Potential benefits of income tax losses have not been recognized in these financial statements because the Company cannot be assured that it is more likely-than-not it will utilize the net operating losses carried forward in future years.
Income tax recovery differs from what would be expected by applying the effective rates to net income (loss) as follows:
| As of December 31, | As of December 31, | |||||||
| 2015 | 2014 | |||||||
| Net Profit/(Loss) for the year | $ | $ | ( | ) | ||||
| Statutory and effective tax rates | % | % | ||||||
| Expected income tax expenses (recovery) based on effective rate | ( | ) | ||||||
| Tax losses carryforward deferred | ( | ) | ||||||
| Corporate Income Tax expenses (recovery) recognized in the accounts | ||||||||
The Company has accumulated net operating losses
totaling $
| As of December 31, | As of December 31, | |||||||
| 2015 | 2014 | |||||||
| Net operating loss carryforward | $ | $ | ||||||
| Accruals and reserves | ||||||||
| Statutory tax rate | % | % | ||||||
| Deferred tax assets | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax asset | ||||||||
17
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 $
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 $
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, at a rate of approximately 1-for-13 (the “Reverse Stock Split”).
The Reverse Stock Split did not change the Company’s
authorized number of shares of common stock or its par value. As such, the Company is authorized to issue up to
Issuance of Common Stock
In the year 2021 we had the below common stock issuances:
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,
The offering resulted in gross proceeds of approximately
$
18
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”).
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,
The offering resulted in gross proceeds of approximately
$
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,
The offering resulted in gross proceeds of approximately
$
19
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
Furthermore, the Company agreed to issue
On June 21, 2021, the Offering closed whereby
the Company sold
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.
20
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
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 $
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,
The offering resulted in gross proceeds of approximately
$
On August 6, 2021, the Company issued warrants
(each, a “Warrant”) to purchase up to
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
In the year 2022 we had the below common stock issuances:
21
Sale of Common Stock – March 2022
On March 30, 2022, 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 $
In connection with the execution of the Purchase
Agreement, the Company is registering
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
Also in connection with the execution of the
Purchase Agreement, the Company issued a Warrant to purchase
The Company intends to register the remaining
up to $
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”).
22
Battle Bridge Acquisition – March 2022
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 $
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 (
Total Stock Issuances
During the period from January 1, 2022 to March
31, 2022, a total of
During the period from April 1, 2022 to June
30, 2022, a total of
During the period from July 1, 2022 to September
30, 2022, a total of
Capital Reserve
On January 9, 2020, the Company issued
On November 2, 2020, the Company acquired substantially
all the assets of Fixel AI Inc., a Delaware corporation (“Fixel”) in exchange for
In July 2019, the Company issued a total of
23
During the year ended December 31, 2019, a total
of
During the year ended December 31, 2020, a total
of
During the year ended December 31, 2021, a total
of
During the period from January 1, 2022 to March
31, 2022, a total of
During the period from April 1, 2022 to June
30, 2022, a total of
During the period from July 1, 2022 to September
30, 2022, a total of
Cancellation of Common Stock
During the three months ended March 31, 2022,
During the three months ended June 30, 2022,
During the three months ended September 30, 2022, no shares of common stock were cancelled.
Stock-Based Compensation
For the three months ended March 31, 2022, a total
of
For the three months ended June 30, 2022, a total
of
For the three months ended September 30, 2022,
a total of
24
NOTE 14 – (LOSS) PER SHARE
The following table sets forth the computation of basic and diluted earnings per common share for the three months and nine months ended September 30, 2022 and 2021, respectively:
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Numerator - basic and diluted | ||||||||||||||||
| Net (Loss) | $ | ( | ) | $ | ( | ) | ( | ) | ( | ) | ||||||
| Denominator | ||||||||||||||||
| $ | ( | ) | $ | ( | ) | ( | ) | ( | ) | |||||||
NOTE 15 – COMMITMENTS AND CONTINGENCIES
Leases
The Company’s executive offices are currently
leased for $
Logiq Inc (Nevada) leases approximately
The operating lease is listed as separate
line item on Logiq, Inc. (Nevada)’s September 30, 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 item on the Group’s September 30, 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 $
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 September 30, 2022 | As of December 31, 2021 | |||||||
| Cash paid for operating lease liabilities | $ | |||||||
| Remaining lease term | ||||||||
| Discount rate | % | % | ||||||
Future minimum lease payments under the non-cancellable operating lease agreements are as follows:
| 2022 | $ | |||
| Less imputed interest | ( | ) | ||
| Total lease liability | $ |
25
Legal proceedings
None.
NOTE 16 – SEGMENT INFORMATION
The Group has determined that it operates in
The DataLogiq reportable segment is comprised of the subsidiaries’ accounts of Logiq, Inc. (a Nevada Corporation), Fixel AI, Inc. and Rebel AI Inc.
The GoLogiq (formerly Lovarra) reportable segment is comprised of the reportable segment of the CreateApp (formerly known as AppLogiq), which was held by the Company’s previously majority owned subsidiary, GoLogiq LLC, as of September 30, 2022.
The Logiq reportable segment is not a business segment but comprise Corporate activities.
The following table presents the segment information for the three months and nine months ended September 30, 2022 and 2021:
| For the three months ended September 30, |
For the nine months ended September 30, |
|||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Logiq (Delaware) | ||||||||||||||||
| Segment operating income | $ | $ | $ | $ | ||||||||||||
| Other corporate expenses, net | ||||||||||||||||
| Total operating (loss) income | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| GoLogiq (formerly Lovarra) incl CreateApp | ||||||||||||||||
| Segment operating income | $ | $ | $ | $ | ||||||||||||
| Other corporate expenses, net | ||||||||||||||||
| Total operating (loss) | ( |
) | ( |
) | ||||||||||||
| Logiq (Nevada) incl DATALogiq | ||||||||||||||||
| Segment operating income | $ | $ | $ | $ | ||||||||||||
| Other corporate expenses, net | ||||||||||||||||
| Total operating (loss) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Consolidated | ||||||||||||||||
| Segment operating income | $ | $ | $ | $ | ||||||||||||
| Other corporate expenses, net | ||||||||||||||||
| Total operating (loss) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Significant Customers
No revenues from any single customer exceeded
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NOTE 17 – GEOGRAPHICAL INFORMATION
Revenue by geographical region for the three months and nine months ended September 30, 2022 and 2021 were as follows:
| For the three months ended September 30, | For the three months ended September 30, | |||||||||||||||
| 2022 | % | 2021 | % | |||||||||||||
| Southeast Asia | $ | |||||||||||||||
| EU | ||||||||||||||||
| South Korea | ||||||||||||||||
| Africa | ||||||||||||||||
| North America | ||||||||||||||||
| Total revenue | $ | $ | ||||||||||||||
| For the nine months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2022 | % | 2021 | % | |||||||||||||
| Southeast Asia | $ | |||||||||||||||
| EU | ||||||||||||||||
| South Korea | ||||||||||||||||
| Africa | ||||||||||||||||
| North America | ||||||||||||||||
| Total revenue | $ | $ | ||||||||||||||
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
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 | $ | |||
| Restricted cash | ||||
| Accounts receivable, net | ||||
| Prepaid expenses and other current assets | ||||
| Property, plant and equipment | ||||
| Intangible assets | ||||
| Accounts payable | ( | ) | ||
| Accrued expenses and other current liabilities | ( | ) | ||
| Due to parent company | ( | ) | ||
| Goodwill | ||||
| Net assets acquired | $ |
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.
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On the acquisition date, goodwill of $
The Company incurred some accounting and legal fees related to the disposition of the assets of Push Holdings.
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
On the closing date, the Company issued
The fair values of assets acquired and liabilities assumed were as follows:
| Cash and cash equivalents | $ | |||
| Restricted cash | ||||
| Accounts receivable, net | ||||
| Prepaid expenses and other current assets | ||||
| Intangible assets | ||||
| Accounts payable | ||||
| Accrued expenses and other current liabilities | ( | ) | ||
| Deferred revenue | ( | ) | ||
| Goodwill | ||||
| Net assets acquired | $ |
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 $
The Company incurred some accounting and legal fees related to the acquisition of the assets of Fixel.
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.
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Rebel AI Inc.
On March 29, 2021, the Company acquired Rebel
for a total cash consideration of $
On the Closing Date, the Company issued
| Cash and cash equivalents | $ | |||
| Accounts receivable, net | ||||
| Prepaid expenses and other current assets | ||||
| Property, plant and equipment | ||||
| Intangible assets | ||||
| Accrued expenses and other current liabilities | ( | ) | ||
| Goodwill | ||||
| Net assets acquired | $ |
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 $
The Company incurred some accounting and legal fees related to the acquisition of the assets of Rebel.
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.
GoLogiq, Inc. (formerly Lovarra)
On January 27, 2022, the Company sold substantially
all the assets of CreateApp to GoLogiq, Inc. (then known as Lovarra), a fully reporting majority owned subsidiary of the Company, in
exchange for
The acquisition by GoLogiq 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 GoLogiq’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.
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As discussed above, during the period ended March 31, 2022, GoLogiq acquired substantially all of the assets of CreateApp. The fair value of assets acquired assumed were as follows:
| Intangible assets, net | $ | |||
| Goodwill | ||||
| Net assets acquired |
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 GoLogiq would have paid if GoLogiq did not own the software technology.
On the acquisition date, goodwill of $
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 disposition of the assets of CreateApp.
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
Ionic Share Issuance
As discussed elsewhere
in this report, the Company entered into a Purchase Agreement with Ionic in March 2022 for the purchase and sale of shares of the
Company’s common stock, subject to certain limitations. On March 31, 2022, the Company effected an initial purchase of $
On October 24, 2022,
pursuant to a written request from Ionic in accordance with the terms of the Purchase Agreement, the Company issued Ionic
Managed Services Agreement
On November 8, 2022, the “Company, and BattleBridge Acquisition Co., LLC, a wholly owned subsidiary of the Company (“Battlebridge”), entered into a Managed Services Agreement (the “MSA”) with a significant new client (the “Client”), pursuant to which Battlebridge will provide certain affiliate management, website development, lead generation, email management, and search engine optimization services (collectively, the “Services”) to Client through the Company’s platform. The MSA will terminate on October 31, 2023, provided that the term may be extended beyond such date by mutual written agreement of the parties. Notwithstanding the foregoing, Client may terminate the MSA at any time after January 1, 2023, without cost or any penalty, in the event that it is dissatisfied with the Services provided thereunder.
In connection with the MSA, on November 8, 2022, the Company and Client also entered into an Independent Contractor Agreement (the “IC Agreement,” and together with the MSA, the “Agreements”), pursuant to which Client will provide, on a non-exclusive basis, certain business development strategies and execution and consulting services regarding e-commerce, digital marketing, and online advertising, including lead generation, affiliate marketing and brand development to the Company. The term of the IC Agreement coincides with the term of the MSA.
As compensation for the
services to be provided by Client to the Company under the IC Agreement, the Company agreed to issue Client
Pursuant to the MSA, Client shall have certain piggyback registration rights with respect to the Registrable Shares.
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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 Tech Inc) 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 former business segment of the Company, which is now owned by GoLogiq (formerly Lovarra), which, prior to completion of the Spin Off, was a majority owned subsidiary of the Company; |
| ● | “Lovarra” refers to a Nevada corporation (“GoLogiq”) and a public reporting majority owned subsidiary of the Company at that time, pursuant to which the Company agreed to transfer its AppLogiq business to GoLogiq; |
| ● | “GOLogiq” refers to refers to a Nevada corporation (“GoLogiq”) and a public reporting company that, at the time, was a majority owned subsidiary of the Company, also formerly known as Lovarra; |
| ● | PAY/GOLogiq or Weyland International Perkasa, an Indonesian associate of the Company; |
| ● | “SEC” refers to the Securities and Exchange Commission; |
| ● | “Securities Act” refers to the Securities Act of 1933, as amended; |
| ● | “Exchange Act” refers to the Securities Exchange Act of 1934, as amended; |
| ● | “U.S. dollars,” “dollars” and “$” are to the legal currency of the United States. |
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AppLogiq Spin-Off
On December 15, 2021, the Company entered into various agreements with GoLogiq, Inc. (then known as Lovarra), a Nevada corporation (“GoLogiq”) and a public reporting majority owned subsidiary of the Company at that time, pursuant to which the Company agreed to transfer its AppLogiq business to GoLogiq, subject to customary conditions and approvals and completion of requisite financial statement audits (the “Separation”). GoLogiq is a fully reporting U.S. public company. In connection with the Separation, the Company announced that it intended to distribute, on a pro rata basis, 100% of the Company’s ownership interests in GoLogiq 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 was 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 GoLogiq. In connection with the completion of the transfer of AppLogiq to GoLogiq, GoLogiq issued 26,350,756 shares of its common stock to the Company (the “GoLogiq Shares”). The Company held the GoLogiq Shares until it distributed 100% of the GoLogiq 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) upon completion of the Distribution.
On July 27, 2022, the Company completed the Distribution and Spin Off. As a result, the Company no longer has a direct equity ownership of GoLogiq, and going forward, GoLogiq’s results of operations will no longer be consolidated with the Company’s at December 31, 2022.
As of September 30, 2022, the Company controlled, through one of its subsidiaries, approximately 12.2% of the GoLogiq’s issued and outstanding shares of common stock.
DataLogiq Spin-off
On September 9, 2022, the Company, and the Company’s wholly-owned subsidiary, DLQ, Inc., a Nevada corporation (“DLQ”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Abri SPAC I, Inc., a Delaware corporation, (“Abri”) and Abri Merger Sub (“Merger Sub”) wherein Merger Sub will merge with and into DLQ with DLQ being the surviving company (“Surviving Company”), and wholly owned subsidiary of Abri. The Merger is expected to close after obtaining the required approval by the stockholders of Abri and the Company, and upon the satisfaction of certain other customary closing conditions (“Closing”).
At Closing Abri will deliver to the Company $114 million worth of shares of Abri common stock, par value $0.0001, at $10.00 per share (the “Merger Consideration Shares”). Also at Closing, the Company will issue a dividend to its shareholders on a pro-rata basis equal to 25% of the aggregate Merger Consideration Shares (the “Dividend Shares”), payable to the Company shareholders of record as of a record date to be set shortly before Closing. More information relating to the Merger Agreement, the dividend and the various agreements associated with the Merger Agreement can be found in the Form 8-K filed by the Company on September 12, 2022.
Overview
The following overview of the Company’s business includes the AppLogiq business, which was divested by the Company via the Distribution effective July 27, 2022. Going forward, the Company will no longer consolidate the AppLogiq business segment (now owned by GoLogiq) in its financial results or business disclosures effective December 31, 2022. As a result, future results and disclosures will likely differ materially from those included in this Report.
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.
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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. |
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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.
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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
See above for information regarding the Company’s sale and Spin Off of its AppLogiq business segment to GoLogiq, which was completed on July 27, 2022.
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.
As noted above, the Purchase Agreement includes a forward pricing mechanism, pursuant to which Ionic is entitled to receive, from time-to-time at Ionic’s request, additional true-up shares of the Company’s common stock (“True-Up Shares”) at a later date, for no additional consideration. On October 24, 2022, pursuant to a written request from Ionic in accordance with the terms of the Purchase Agreement, the Company issued Ionic 3,417,500 True-Up Shares for no additional consideration.
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.
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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.
The Merger Agreement
On September 9, 2022, the Company, DLQ, Inc., a Nevada corporation and wholly-owned subsidiary of the Company, Abri SPAC I, Inc., a Delaware corporation (“Abri”) and Abri Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Abri (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), whereby Merger Sub will merge with and into Company (the “Merger”), with Company being the surviving Company (the “Surviving Company”) and a wholly-owned subsidiary of Abri, and Abri will change its name to “DataLogiq, Inc.”
The Merger is expected to be consummated after obtaining the required approval by the stockholders of Abri and the Company and upon the satisfaction of certain other customary closing conditions.
The closing of the transactions (the “Closing”) contemplated in the Merger Agreement is anticipated to occur virtually on the fifth Business Day following the satisfaction or waiver of closing conditions (the “Closing Date”). On the Closing Date, the parties to the Merger Agreement will cause the Certificate of Merger to be filed with the Delaware Secretary of State in accordance with Delaware General Corporation Law (“DGCL”) and the Articles of Merger to be filed with the Nevada Secretary of State in accordance with the Nevada Revised Statutes (“NRS”), as applicable.
At Closing, Abri will deliver to the Company $114 million worth of shares of Abri common stock, par value $0.0001, at $10.00 per share (the “Merger Consideration Shares”).
Managed Services Agreement
On November 8, 2022, the “Company, and BattleBridge Acquisition Co., LLC, a wholly owned subsidiary of the Company (“Battlebridge”), entered into a Managed Services Agreement (the “MSA”) with a significant new client (the “Client”), pursuant to which Battlebridge will provide certain affiliate management, website development, lead generation, email management, and search engine optimization services (collectively, the “Services”) to Client through the Company’s platform. The MSA will terminate on October 31, 2023, provided that the term may be extended beyond such date by mutual written agreement of the parties. Notwithstanding the foregoing, Client may terminate the MSA at any time after January 1, 2023, without cost or any penalty, in the event that it is dissatisfied with the Services provided thereunder.
In connection with the MSA, on November 8, 2022, the Company and Client also entered into an Independent Contractor Agreement (the “IC Agreement,” and together with the MSA, the “Agreements”), pursuant to which Client will provide, on a non-exclusive basis, certain business development strategies and execution and consulting services regarding e-commerce, digital marketing, and online advertising, including lead generation, affiliate marketing and brand development to the Company. The term of the IC Agreement coincides with the term of the MSA.
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As compensation for the services to be provided by Client to the Company under the IC Agreement, the Company agreed to issue Client 1,750,000 restricted shares of its common stock (the “Initial Shares”) upon execution of the Agreements. In the event that the proposed acquisition of a wholly owned subsidiary of the Company by Abri SPAC I, Inc., which proposed acquisition was previously disclosed by the Company in that Current Report on Form 8-K filed with the Securities and Exchange Commission on September 12, 2022, is not completed on or before April 1, 2023, then the Company shall issue Client an additional 1,750,000 restricted shares of its common stock (such additional shares together with the Initial Shares, the “Registrable Shares”) as further contingent consideration pursuant to the Agreements. In addition, the Company agreed to reimburse up to $25,000 of legal fees paid by Client in connection with the Agreements.
Pursuant to the MSA, Client shall have certain piggyback registration rights with respect to the Registrable Shares.
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 beginning in 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. It is unknown how long the COVID-19 will continue to impact that Company’s results of operations, and/or the extent to which it will do so.
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.
In 2020, during COVID-19, we pursued a path towards higher gross profit margins which involved an elimination of lower margin business and increase of direct sales/marketing. This caused a reduction in overall revenue but successfully yielded higher margins more than double over the course of the following year. Given the recent decline in the stock market and specifically in the price of technology stocks, we felt that it was time to replicate the same strategy and evaluate a higher margin path again. For Q3 2022, this resulted in revenues decreasing by 47.6% however, gross profit margins increased to 31.9%.
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.
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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. Prior to 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 September 30, 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 September 30, 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 GoLogiq (formerly Lovarra), which was a majority owned subsidiary of the Company until completion of the Distribution on July 27, 2022, the results of which include our AppLogiq business segment.
Consolidated Results of Operations
| For the three months ended | ||||||||||||||||||||||||
| September 30, 2022 | September 30, 2021 | Change | ||||||||||||||||||||||
| Revenue (service) | $ | 4,100,373 | 100.0 | % | $ | 7,826,249 | 100.0 | % | $ | (3,725,876 | ) | (47.6 | )% | |||||||||||
| Cost of revenues (service) | 2,792,499 | 68.1 | 5,520,862 | 70.5 | (2,728,363 | ) | (49.4 | ) | ||||||||||||||||
| Gross profit | 1,307,874 | 31.9 | 2,305,387 | 29.5 | (997,513 | ) | (43.3 | ) | ||||||||||||||||
| Depreciation and amortization | 1,021,676 | 24.9 | 1,030,932 | 13.2 | (9,256 | ) | (0.9 | ) | ||||||||||||||||
| General and administrative | 7,265,372 | 177.2 | 5,159,813 | 65.9 | 2,105,559 | 40.8 | ||||||||||||||||||
| Sales and marketing | 394,628 | 9.6 | 477,226 | 6.1 | (82,598 | ) | (17.3 | ) | ||||||||||||||||
| Research and development | 321,000 | 7.8 | 1,447,567 | 18.5 | (1,126,567 | ) | (77.8 | ) | ||||||||||||||||
| Total operating expenses | 9,002,676 | 219.8 | 8,115,538 | 103.7 | 887,138 | 10.9 | ||||||||||||||||||
| (Loss) from operations | (7,694,802 | ) | (187.7 | ) | (5,810,151 | ) | (74.2 | ) | (1,884,651 | ) | 32.4 | |||||||||||||
| Other (Expenses)/Income, net | 3 | 0.00 | 36,740 | 0.47 | (36,737 | ) | (100.0 | ) | ||||||||||||||||
| Impairment loss on investment in associate | - | - | - | - | - | - | ||||||||||||||||||
| Net (Loss) before income tax | (7,694,799 | ) | (187.7 | ) | (5,773,411 | ) | (73.8 | ) | (1,921,388 | ) | 33.3 | |||||||||||||
| Income tax (expense) | - | - | - | - | - | - | ||||||||||||||||||
| Net (Loss) | (7,694,799 | ) | (187.7 | ) | (5,773,411 | ) | (73.8 | ) | (1,921,388 | ) | 33.3 | |||||||||||||
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Logiq (Delaware) Results of Operations
| For the three months ended | ||||||||||||||||||||||||
| September 30, 2022 | September 30, 2021 | Change | ||||||||||||||||||||||
| Revenue (service) | $ | - | - | % | $ | 2,849,539 | 100.0 | % | $ | (2,849,539 | ) | (100.0 | )% | |||||||||||
| Cost of revenues (service) | - | - | 1,945,855 | 68.3 | (1,945,855 | ) | (100.0 | ) | ||||||||||||||||
| Gross profit | - | - | 903,684 | 31.7 | (903,684 | ) | (100.0 | ) | ||||||||||||||||
| Depreciation and amortization | - | - | 31,285 | 1.1 | (31,285 | ) | (100 | ) | ||||||||||||||||
| General and administrative | 3,783,861 | - | 2,525,672 | 88.6 | 1,258,189 | 49.8 | ||||||||||||||||||
| Sales and marketing | - | - | 52,550 | 1.8 | (52,550 | ) | (100.0 | ) | ||||||||||||||||
| Research and development | - | - | 1,257,220 | 44.1 | (1,257,220 | ) | (100.0 | ) | ||||||||||||||||
| Total operating expenses | 3,783,861 | - | 3,866,727 | 135.7 | (82,866 | ) | (2.1 | ) | ||||||||||||||||
| (Loss) from operations | (3,783,861 | ) | - | (2,963,043 | ) | (104.0 | ) | (820,818 | ) | 27.7 | ||||||||||||||
| Other (Expenses)/Income, net | - | - | (1,876 | ) | (0 | ) | 1,876 | - | ||||||||||||||||
| Impairment loss on investment in associate | - | - | - | - | - | - | ||||||||||||||||||
| Net (Loss) before income tax | (3,783,861 | ) | - | (2,964,919 | ) | (104.0 | ) | (818,942 | ) | 27.6 | ||||||||||||||
| Income tax (expense) | - | - | - | - | - | - | ||||||||||||||||||
| Net (Loss) | (3,783,861 | ) | - | (2,964,919 | ) | (104.0 | ) | (818,942 | ) | 27.6 | ||||||||||||||
GoLogiq (formerly Lovarra) including AppLogiq segment Results of Operations
| For the three months ended | ||||||||||||||||||||||||
| September 30, 2022 | September 30, 2021 | Change | ||||||||||||||||||||||
| Revenue (service) | $ | 334,987 | 100.0 | % | $ | - | 100.0 | % | $ | 334,987 | 100.0 | % | ||||||||||||
| Cost of revenues (service) | 179,580 | 53.6 | - | - | 179,580 | 100.0 | ||||||||||||||||||
| Gross profit | 155,407 | 46.4 | - | - | 155,407 | 100.0 | ||||||||||||||||||
| Depreciation and amortization | 31,283 | 9.3 | - | - | 31,283 | 100.0 | ||||||||||||||||||
| General and administrative | 480,286 | 143.4 | - | - | 480,286 | 100.0 | ||||||||||||||||||
| Sales and marketing | - | - | - | - | - | 100.0 | ||||||||||||||||||
| Research and development | 321,000 | 95.8 | - | - | 321,000 | 100.0 | ||||||||||||||||||
| Total operating expenses | 832,569 | 248.5 | - | - | 832,569 | 100.0 | ||||||||||||||||||
| (Loss) from operations | (677,162 | ) | (202.1 | ) | - | - | (677,162 | ) | 100.0 | |||||||||||||||
| Other (Expenses)/Income, net | - | - | - | - | - | - | ||||||||||||||||||
| Impairment loss on investment in associate | - | - | - | - | - | - | ||||||||||||||||||
| Net (Loss) before income tax | (677,162 | ) | (202.1 | ) | - | - | (677,162 | ) | 100.0 | |||||||||||||||
| Income tax (expense) | - | - | - | - | - | - | ||||||||||||||||||
| Net (Loss) | (677,162 | ) | (202.1 | ) | - | - | (677,162 | ) | 100.0 | |||||||||||||||
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Logiq (Nevada) including DataLogiq segment Results of Operations
| For the three months ended | ||||||||||||||||||||||||
| September 30, 2022 | September 30, 2021 | Change | ||||||||||||||||||||||
| Revenue (service) | $ | 3,765,386 | 100.0 | % | $ | 4,976,710 | 100.0 | % | $ | (1,211,324 | ) | (24.3 | )% | |||||||||||
| Cost of revenues (service) | 2,612,919 | 69.4 | 3,575,007 | 71.8 | (962,088 | ) | (26.9 | ) | ||||||||||||||||
| Gross profit | 1,152,467 | 30.6 | 1,401,703 | 28.2 | (249,236 | ) | (17.8 | ) | ||||||||||||||||
| Depreciation and amortization | 990,393 | 26.3 | 999,647 | 20.1 | (9254 | ) | (0.9 | ) | ||||||||||||||||
| General and administrative | 3,001,225 | 79.7 | 2,634,141 | 52.9 | 367,084 | 13.9 | ||||||||||||||||||
| Sales and marketing | 394,628 | 10.5 | 424,676 | 8.5 | (30,048 | ) | (7.1 | ) | ||||||||||||||||
| Research and development | - | - | 190,347 | 3.8 | (190,347 | ) | (100.0 | ) | ||||||||||||||||
| Total operating expenses | 4,386,246 | 116.5 | 4,248,811 | 85.4 | 137,435 | 3.2 | ||||||||||||||||||
| (Loss) from operations | (3,233,779 | ) | (85.9 | ) | (2,847,108 | ) | (57.2 | ) | (386,671 | ) | 13.6 | |||||||||||||
| Other (Expenses)/Income, net | 3 | 0.0 | 38,616 | 0.78 | (38,613 | ) | (99.99 | ) | ||||||||||||||||
| Impairment loss on investment in associate | - | - | - | - | - | - | ||||||||||||||||||
| Net (Loss) before income tax | (3,233,776 | ) | (85.9 | ) | (2,808,492 | ) | (56.4 | ) | (425,284 | ) | 15.1 | |||||||||||||
| Income tax (expense) | - | - | - | - | - | |||||||||||||||||||
| Net (Loss) | (3,233,776 | ) | (85.9 | ) | (2,808,492 | ) | (56.4 | ) | (425,284 | ) | 15.1 | |||||||||||||
Consolidated Revenue (Service)
Consolidated revenues were $4,100,373 and $7,826,249 for the three months ended September 30, 2022 and 2021, respectively.
The revenues from our AppLogiq segment increased to $334,987 compared to $nil for the three months ended September 30, 2022 and 2021, respectively, due to all revenue to the AppLogiq segment had been disposed to GoLogiq (formerly Lovarra) since AppLogiq segment was acquired by GoLogiq, Inc. (formerly Lovarra) in January 2022.
Our DataLogiq platform revenues decreased to $3,765,386 compared to $4,976,710 for the three months ended September 30, 2022 and 2021, respectively. The decrease in revenues is primarily due to regulatory changes in the Medicare vertical.
Consolidated Cost of Revenue (Service)
Consolidated Cost of revenues were $2,792,499 and $5,520,862 for the three months ended September 30, 2022 and 2021, respectively.
The Cost of revenues of the Company’s AppLogiq segment increased to $179,580 from $nil for the three months ended September 30, 2022 and 2021 respectively, due to all cost relating to AppLogiq segment had been disposed to GoLogiq (formerly Lovarra) since AppLogiq segment was acquired by GoLogiq, Inc. (formerly Lovarra) in January 2022.
Our DataLogiq platform cost of revenue was $2,612,919 compared to $3,575,007 for the three months ended September 30, 2022 and 2021 from reduced revenues.
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Consolidated Gross Profit
Consolidated Gross Profit was $1,307,874 and $2,305,387 for the three months ended September 30, 2022 and 2021, respectively.
Our consolidated gross margin increased to 31.9% from 29.5% for the three months ended September 30, 2022 and 2021.
Our AppLogiq segment gross profit was $155,407 compared to $nil for the three months ended September 30, 2022 and 2021 respectively, due to all revenue, cost relating to the AppLogiq segment had been disposed to GoLogiq (formerly Lovarra) since AppLogiq segment was acquired by GoLogiq, Inc. (formerly Lovarra) in January 2022.
Our DataLogiq platform gross profit was $1,152,467 and $1,401,703 for the three months ended September 30, 2022 and 2021, respectively. Our DataLogiq platform gross margin increased to 30.6% from 28.2% for the three months ended September 30, 2022 and 2021, respectively.
Consolidated Operating Expenses
General and Administrative (G&A)
Consolidated General and administrative expenses were $7,265,372 and $5,159,813 for the three months ended September 30, 2022 and 2021, respectively.
Our AppLogiq segment’s General and administrative expenses were $480,286 and $nil for the three months ended September 30, 2022 and 2021, respectively. AppLogiq’s general and administrative expenses reflect $212,462 of stock compensation costs including shares issued to consultants and director for services rendered.
Our DataLogiq platform General and administrative expenses were $3,001,225 and $2,634,141 for the three months ended September 30, 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 and the legal & professional and operating costs in the acquisition of Battle Bridge.
Stock-based compensation
Stock-based compensation expenses for the three months ended September 30, 2022 and 2021 was $3,643,457 and $568,505, respectively.
Sales and Marketing (S&M)
Consolidated Sales and Marketing expenses were $394,628 and $477,226 for the three months ended September 30, 2022 and 2021, respectively.
Research and Development (R&D)
Consolidated Research and Development expenses were $321,000 and $1,447,567 for the three months ended September 30, 2022 and 2021, respectively.
Our AppLogiq segment (GoLogiq formerly Lovarra) Research and Development (“R&D”) expenses were $321,000 and $nil for the three months ended September 30, 2022 and 2021, respectively, due to R&D expenses relating to the AppLogiq segment had been disposed to GoLogiq (formerly Lovarra) since AppLogiq segment was acquired by GoLogiq, Inc. (formerly Lovarra) in January 2022.
Our DataLogiq platform Research and Development (R&D) expenses were $nil and $190,347 for the three months ended September 30, 2022 and 2021, respectively.
Consolidated Other Income/(Expenses)
Consolidated Other income (expenses), net was $3 and $36,740 for the three months ended September 30, 2022 and 2021 respectively.
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Consolidated Net (Loss) Before Income Tax
The Company posted a net loss before income tax $(7,694,799) and $(5,773,411) for the three months ended September 30, 2022 and 2021, respectively.
Our AppLogiq segment (GoLogiq formerly Lovarra) incurred a net loss of $(677,162) and $nil for the three months ended September 30, 2022 and 2021, respectively.
Our DataLogiq platform incurred a net loss of $(3,233,776) and $(2,808,492) for the three months ended September 30, 2022 and 2021 respectively.
Consolidated Income Tax (Expense)
No provision for corporate taxes is made as the Company incurred a loss and based on 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 was acquired by GoLogiq (formerly Lovarra) in January 2022. All revenue, cost allocable to the AppLogiq had been transferred to the GoLogiq (formerly Lovarra).
Logiq, Inc. (Nevada) including DataLogiq Results of Operations
Revenue (Service)
DataLogiq revenues were $3,765,386 for the three months ended September 30, 2022 compared to $4,976,710 for the same period in 2021, a decrease of $1,211,324 or 24.3%. The decrease in revenues is primarily a result due to regulatory changes in the Medicare vertical.
Cost of Revenue (Service)
DataLogiq Cost of revenue was $2,612,919 for the three months ended September 30, 2022 compared to $3,575,007 for the same period in 2021, a decrease of $962,088 or 26.9%.
Gross Profit
DataLogiq gross profit was $1,152,467 for the three months ended September 30, 2022 compared to $1,401,703 for the same period in 2021, a decrease of $249,236 or 17.8%.
Depreciation and amortization
DataLogiq depreciation and amortization expenses were $990,393 for the three months ended September 30, 2022 compared to $999,647 for the same period in 2021.
General and administrative
DataLogiq general and administrative expenses were $3,001,225 for the three months ended September 30, 2022 compared to $2,634,141 for the same period in 2021, an increase of $367,084 or 13.9%. The increase is due to increase in payroll related costs and employee headcount to help support the growth of the business, and inclusion of Battle Bridge wages and contractors as well as increased legal and professional expenses relating to the Battle Bridge acquisition.
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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 $394,628 for the three months ended September 30, 2022 compared to $424,676 for the same period in 2021, a decrease of $30,048 or 7.1%.
Research and development
DataLogiq research and development expenses were $nil for the three months ended September 30, 2022 compared to $190,347 for the same period in 2021, a decrease of $190,347 or 100%.
(Loss) from Operations
DataLogiq’s loss from operations was $(3,233,779) for the three months ended September 30, 2022 compared to $(2,847,108) for the same period in 2021.
Other Income/(Expenses)
For the three months ended September 30, 2022, DataLogiq other income was $3 compared to $38,616 for the same period in 2021.
Results of Operations for the Nine Months ended September 30, 2022 and 2021
The following sets forth selected items from our statements of operations and the percentages that such items bare to net sales for the nine months ended September 30, 2022 and 2021. The consolidated results include Logiq, Inc. (a Delaware Corporation), Logiq, Inc. (a Nevada Corporation), Fixel, Rebel and Battle Bridge (collectively also known as DataLogiq business segment), as well as GoLogiq, Inc. (formerly Lovarra), which was a majority owned subsidiary of the Company until completion of the Distribution of July 27, 2022, the results of which include our AppLogiq business segment.
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Consolidated Results of Operations
| For the nine months ended | ||||||||||||||||||||||||
| September 30, 2022 | September 30, 2021 | Change | ||||||||||||||||||||||
| Revenue (service) | $ | 17,155,733 | 100.0 | % | $ | 24,210,548 | 100.0 | % | $ | (7,054,815 | ) | (29.1 | )% | |||||||||||
| Cost of revenues (service) | 11,823,582 | 68.9 | 17,230,056 | 71.2 | (5,406,474 | ) | (31.4 | ) | ||||||||||||||||
| Gross profit | 5,332,151 | 31.1 | 6,980,492 | 28.8 | (1,648,341 | ) | (23.6 | ) | ||||||||||||||||
| Depreciation and amortization | 3,083,536 | 18.0 | 2,751,208 | 11.4 | 332,328 | 12.1 | ||||||||||||||||||
| General and administrative | 16,504,135 | 96.2 | 14,296,952 | 59.1 | 2,207,183 | 15.4 | ||||||||||||||||||
| Sales and marketing | 1,266,029 | 7.4 | 1,198,479 | 5.0 | 67,550 | 5.6 | ||||||||||||||||||
| Research and development | 2,617,178 | 15.3 | 4,010,239 | 16.6 | (1,393,061 | ) | (34.7 | ) | ||||||||||||||||
| Total operating expenses | 23,470,878 | 136.8 | 22,256,878 | 91.9 | 1,214,000 | 5.5 | ||||||||||||||||||
| (Loss) from operations | (18,138,727 | ) | (105.7 | ) | (15,276,386 | ) | (63.1 | ) | (2,862,341 | ) | 18.7 | |||||||||||||
| Other (Expenses)/Income, net | 2,563 | 0.01 | 456,032 | 1.88 | (453,469 | ) | (99.4 | ) | ||||||||||||||||
| Impairment loss on investment in associate | - | - | - | - | - | - | ||||||||||||||||||
| Net (Loss) before income tax | (18,136,164 | ) | (105.7 | ) | (14,820,354 | ) | (61.2 | ) | (3,315,810 | ) | 22.4 | |||||||||||||
| Income tax (expense) | - | - | (10,441 | ) | - | 10,441 | - | |||||||||||||||||
| Net (Loss) | (18,136,164 | ) | (105.7 | ) | (14,830,795 | ) | (61.3 | ) | (3,305,369 | ) | 22.3 | |||||||||||||
Logiq (Delaware) Results of Operations
| For the nine months ended | ||||||||||||||||||||||||
| September 30, 2022 | September 30, 2021 | Change | ||||||||||||||||||||||
| Revenue (service) | $ | - | - | % | $ | 8,134,352 | 100.0 | % | $ | (8,134,352 | ) | (100.0 | )% | |||||||||||
| Cost of revenues (service) | - | - | 5,595,014 | 68.8 | (5,595,014 | ) | (100.0 | ) | ||||||||||||||||
| Gross profit | - | - | 2,539,338 | 31.2 | (2,539,338 | ) | (100.0 | ) | ||||||||||||||||
| Depreciation and amortization | - | - | 93,852 | 1.2 | (93,852 | ) | (100 | ) | ||||||||||||||||
| General and administrative | 5,291,854 | - | 8,240,873 | 101.3 | (2,949,019 | ) | (35.8 | ) | ||||||||||||||||
| Sales and marketing | - | - | 122,300 | - | (122,300 | ) | - | |||||||||||||||||
| Research and development | - | - | 3,449,720 | 42.4 | (3,449,720 | ) | (100.0 | ) | ||||||||||||||||
| Total operating expenses | 5,291,854 | - | 11,906,745 | 146.4 | (6,614,891 | ) | (55.6 | ) | ||||||||||||||||
| (Loss) from operations | (5,291,854 | ) | - | (9,367,407 | ) | (115.2 | ) | 4,075,553 | (43.5 | ) | ||||||||||||||
| Other (Expenses)/Income, net | - | - | (76,937 | ) | (0.9 | ) | 76,937 | - | ||||||||||||||||
| Impairment loss on investment in associate | - | - | - | - | - | - | ||||||||||||||||||
| Net (Loss) before income tax | (5,291,854 | ) | - | (9,444,344 | ) | (116.1 | ) | 4,152,490 | (44.0 | ) | ||||||||||||||
| Income tax (expense) | - | - | (10,441 | ) | (0.0 | ) | 10,441 | 0 | ||||||||||||||||
| Net (Loss) | (5,291,854 | ) | - | (9,454,785 | ) | (116.2 | ) | 4,162,931 | (44.0 | ) | ||||||||||||||
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GoLogiq (formerly Lovarra) including AppLogiq segment Results of Operations
| For the nine months ended | ||||||||||||||||||||||||
| September 30, 2022 | September 30, 2021 | Change | ||||||||||||||||||||||
| Revenue (service) | $ | 5,277,379 | 100.0 | % | $ | - | 100.0 | % | $ | 5,277,379 | 100.0 | % | ||||||||||||
| Cost of revenues (service) | 3,287,992 | 62.3 | - | - | 3,287,992 | 100.0 | ||||||||||||||||||
| Gross profit | 1,989,387 | 37.7 | - | - | 1,989,387 | 100.0 | ||||||||||||||||||
| Depreciation and amortization | 93,850 | 1.8 | - | - | 93,850 | 100.0 | ||||||||||||||||||
| General and administrative | 2,218,636 | 42.0 | - | - | 2,218,636 | 100.0 | ||||||||||||||||||
| Sales and marketing | 5,000 | 0.1 | - | - | 5,000 | 100.0 | ||||||||||||||||||
| Research and development | 2,386,500 | 45.2 | - | - | 2,386,500 | 100.0 | ||||||||||||||||||
| Total operating expenses | 4,703,986 | 89.1 | - | - | 4,703,986 | 100.0 | ||||||||||||||||||
| (Loss) from operations | (2,714,599 | ) | (51.4 | ) | - | - | (2,714,599 | ) | 100.0 | |||||||||||||||
| Other (Expenses)/Income, net | - | - | - | - | - | - | ||||||||||||||||||
| Impairment loss on investment in associate | - | - | - | - | - | - | ||||||||||||||||||
| Net (Loss) before income tax | (2,714,599 | ) | (51.4 | ) | - | - | (2,714,599 | ) | 100.0 | |||||||||||||||
| Income tax (expense) | - | - | - | - | - | - | ||||||||||||||||||
| Net (Loss) | (2,714,599 | ) | (51.4 | ) | - | - | (2,714,599 | ) | 100.0 | |||||||||||||||
Logiq (Nevada) including DataLogiq segment results of operations
| For the nine months ended | ||||||||||||||||||||||||
| September 30, 2022 | September 30, 2021 | Change | ||||||||||||||||||||||
| Revenue (service) | $ | 11,878,354 | 100.0 | % | $ | 16,076,196 | 100.0 | % | $ | (4,197,842 | ) | (26.1 | )% | |||||||||||
| Cost of revenues (service) | 8,535,590 | 71.9 | 11,635,042 | 72.4 | (3,099,452 | ) | (26.6 | ) | ||||||||||||||||
| Gross profit | 3,342,764 | 28.1 | 4,441,154 | 27.6 | (1,098,390 | ) | (24.7 | ) | ||||||||||||||||
| Depreciation and amortization | 2,989,687 | 25.2 | 2,657,356 | 16.5 | 332,331 | 12.5 | ||||||||||||||||||
| General and administrative | 8,993,645 | 75.7 | 6,056,079 | 37.7 | 2,937,566 | 48.5 | ||||||||||||||||||
| Sales and marketing | 1,261,029 | 10.6 | 1,076,179 | 6.7 | 184,850 | 17.2 | ||||||||||||||||||
| Research and development | 230,678 | 1.9 | 560,519 | 3.5 | (329,841 | ) | (58.8 | ) | ||||||||||||||||
| Total operating expenses | 13,475,039 | 113.4 | 10,350,133 | 64.4 | 3,124,906 | 30.2 | ||||||||||||||||||
| (Loss) from operations | (10,132,275 | ) | (85.3 | ) | (5,908,979 | ) | (36.8 | ) | (4,223,296 | ) | 71.5 | |||||||||||||
| Other (Expenses)/Income, net | 2,563 | 0.02 | 532,969 | 3.32 | (530,406 | ) | (99.5 | ) | ||||||||||||||||
| Impairment loss on investment in associate | - | - | - | - | - | - | ||||||||||||||||||
| Net (Loss) before income tax | (10,129,712 | ) | (85.3 | ) | (5,376,010 | ) | (33.4 | ) | (4,753,702 | ) | 88.4 | |||||||||||||
| Income tax (expense) | - | - | - | - | ||||||||||||||||||||
| Net (Loss) | (10,129,712 | ) | (85.3 | ) | (5,376,010 | ) | (33.4 | ) | (4,753,702 | ) | 88.4 | |||||||||||||
Consolidated Revenue (Service)
Consolidated revenues were $17,155,733 and $24,210,548 for the nine months ended September 30, 2022 and 2021, respectively.
The revenues from our AppLogiq segment increased to $5,277,379 compared to $nil for the nine months ended September 30, 2022 and 2021, respectively; due to all revenue relating to the AppLogiq segment had been disposed to GoLogiq (formerly Lovarra) since AppLogiq segment was acquired by GoLogiq, Inc. (formerly Lovarra) in January 2022.
Our DataLogiq platform revenues decreased to $11,878,354 compared to $16,076,196 for the nine months ended September 30, 2022 and 2021, respectively. The decrease in revenues is primarily a result due to regulatory changes in the Medicare vertical.
Consolidated Cost of Revenue (Service)
Consolidated Cost of revenues were $11,823,582 and $17,230,056 for the nine months ended September 30, 2022 and 2021, respectively.
The cost of revenues of the Company’s AppLogiq segment increased to $3,287,992 from $nil for the nine months ended September 30, 2022 and 2021 respectively, due to all cost relating to the AppLogiq had been disposed to GoLogiq (formerly Lovarra) since AppLogiq segment was acquired by GoLogiq, Inc. (formerly Lovarra) in January 2022.
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Our DataLogiq platform cost of revenue was $8,535,590 compared to $11,635,042 for the nine months ended September 30, 2022 and 2021, respectively.
Consolidated Gross Profit
Consolidated Gross Profit was $5,332,151 and $6,980,492 for the nine months ended September 30, 2022 and 2021, respectively.
Our consolidated gross margin increased to 31.1% from 28.8% for the nine months ended September 30, 2022 and 2021.
Our AppLogiq segment gross profit was $1,989,387 compared to $nil for the nine months ended September 30, 2022 and 2021 respectively, due to all revenue, cost relating to the AppLogiq segment had been disposed to GoLogiq (formerly Lovarra) since AppLogiq segment was acquired by GoLogiq, Inc. (formerly Lovarra) in January 2022. During COVID-19, we pursued a path towards higher gross profit margins which involved an elimination of lower margin business and increase of direct sales/marketing. This caused a reduction in overall revenue but successfully yielded higher margins more than double over the course of the following year. Given the recent decline in the stock market and specifically technology stocks, we felt that it was time to replicate the same strategy and evaluate a higher margin path again.
Our DataLogiq platform gross profit was $3,342,764 and $4,441,154 for the nine months ended September 30, 2022 and 2021, respectively. Our DataLogiq platform gross margin increased to 28.1% from 27.6% for the nine months ended September 30, 2022 and 2021, respectively.
Consolidated Operating Expenses
General and Administrative (G&A)
Consolidated General and administrative expenses were $16,504,135 and $14,296,952 for the nine months ended September 30, 2022 and 2021, respectively.
The Company including AppLogiq’s General and administrative expenses were $2,218,636 and $nil for the nine months ended September 30, 2022 and 2021, respectively. AppLogiq’s general and administrative expenses reflect $1,148,712 of stock compensation costs including shares issued to consultants and director.
Our DataLogiq platform General and administrative expenses were $8,993,645 and $6,056,079 for the nine months ended September 30, 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, and also inclusion of Battle Bridge wages and contractors as well as increased legal and professional expenses relating to the Battle Bridge acquisition.
Stock-based compensation
Stock-based compensation expenses for the nine months ended September 30, 2022 and 2021 was $5,969,804 and $3,501,236, respectively.
Sales and Marketing (S&M)
Consolidated Sales and Marketing expenses were $1,266,029 and $1,198,479 for the nine months ended September 30, 2022 and 2021, respectively.
Research and Development (R&D)
Consolidated Research and Development expenses were $2,617,178 and $4,010,239 for the nine months ended September 30, 2022 and 2021, respectively.
Our AppLogiq segment Research and Development (“R&D”) expenses were $2,386,500 and $nil for the nine months ended September 30, 2022 and 2021, respectively, due to R&D expenses relating to the AppLogiq segment had been disposed to GoLogiq (formerly Lovarra) since AppLogiq segment was acquired by GoLogiq (formerly Lovarra) in January 2022.
Consolidated Other Income/(Expenses)
Consolidated Other income (expenses), net was $2,563 and $456,032 for the nine months ended September 30, 2022 and 2021 respectively.
Consolidated Net (Loss) Before Income Tax
The Company posted a net loss before income tax $(18,136,164) and $(14,820,354) for the nine months ended September 30, 2022 and 2021, respectively.
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Our AppLogiq segment (GoLogiq formerly Lovarra) incurred a net loss of $(2,714,599) and $nil for the nine months ended September 30, 2022 and 2021, respectively.
Our DataLogiq platform incurred a net loss of $(10,129,712) and $(5,376,010) for the nine months ended September 30, 2022 and 2021 respectively.
Consolidated Income Tax (Expense)
No provision for corporate taxes is made as the Company incurred a loss with 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 was acquired by GoLogiq, Inc. (formerly Lovarra) in January 2022. All revenue, cost had been transferred to the GoLogiq (formerly Lovarra).
Logiq, Inc. (Nevada) including DataLogiq Results of Operations
Revenue (Service)
DataLogiq revenues were $11,878,354 for the nine months ended September 30, 2022 compared to $16,076,196 for the same period in 2021, a decrease of $4,197,842 or 26.1%. The decrease in revenues is primarily a result due to regulatory changes in the Medicare vertical.
Cost of Revenue (Service)
DataLogiq Cost of revenue was $8,535,590 for the nine months ended September 30, 2022 compared to $11,635,042 for the same period in 2021, a decrease of $3,099,452 or 26.6%.
Gross Profit
DataLogiq gross profit was $3,342,764 for the nine months ended September 30, 2022 compared to $4,441,154 for the same period in 2021, a decrease of $1,098,390 or 24.7%.
Depreciation and amortization
DataLogiq depreciation and amortization expenses were $2,989,687 for the nine months ended September 30, 2022 compared to $2,657,356 for the same period in 2021, an increase of $332,331 or 12.5%.
General and administrative
DataLogiq general and administrative expenses were $8,993,645 for the nine months ended September 30, 2022 compared to $6,056,079 for the same period in 2021, an increase of $2,937,566 or 48.5%. The increase is due to increase in payroll related costs and employee headcount to help support the growth of the business. and inclusion of Battle Bridge wages and contractors as well as increased legal and professional expenses relating to the Battle Bridge acquisition.
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 $1,261,029 for the nine months ended September 30, 2022 compared to $1,076,179 for the same period in 2021, an increase of $184,850 or 17.2%.
Research and development
DataLogiq research and development expenses were $230,678 for the nine months ended September 30, 2022 compared to $560,519 for the same period in 2021, a decrease of $329,841 or 58.8%. Research and development costs include developers that support and enhance our technologies.
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(Loss) from Operations
DataLogiq’s loss from operations was $(10,132,275) for the nine months ended September 30, 2022 compared to $(5,908,979) for the same period in 2021.
Other Income/(Expenses)
For the nine months ended September 30, 2022, DataLogiq other income was $2,563 compared to $532,969 for the same period in 2021.
Liquidity and Capital Resources
During the nine months ended September 30, 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.
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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.
As noted above, the Purchase Agreement includes a forward pricing mechanism, pursuant to which Ionic is entitled to receive, from time-to-time at Ionic’s request, additional true-up shares of the Company’s common stock (“True-Up Shares”) at a later date, for no additional consideration. On October 24, 2022, pursuant to a written request from Ionic in accordance with the terms of the Purchase Agreement, the Company issued Ionic 3,417,500 True-Up Shares for no additional consideration.
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 September 30, 2022, we currently have no 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 for our operations. 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.
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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 nine months ended September 30, 2022 and 2021:
| For the nine months ended September 30, | ||||||||
| Cash flows: | 2022 | 2021 | ||||||
| Net cash (used in) operating activities | $ | (10,977,411 | ) | $ | (12,411,838 | ) | ||
| Net cash provided (used in) by investment activities | $ | 7,209,381 | $ | (677,682 | ) | |||
| Net cash provided by financing activities | $ | 2,570,043 | $ | 14,961,904 | ||||
Operating Activities
During the nine months ended September 30, 2022, movement in changes in operating activities was $(10,977,411), compare to $(12,411,838) for the same period in 2021. As a result of (loss) from operations used $(18,138,727) and $(15,276,386) for the nine months ended September 30, 2022 and 2021, our net (loss) for the nine months ended September 30, 2022 increased to $(18,136,164) and $(14,830,795) respectively compared to the same period last year, depreciation and amortization increased to $3,083,536 and $2,751,208 respectively compared to the same period last year as a result of acquisitions of Fixel, Rebel and Battlebridge this year.
Investing Activities
During the nine months ended September 30, 2022, $7,209,381 arose from the disposal of our interest in amounts due from our associate WIP compared to movements in investing activities in our financial asset investment portfolio based and managed in the US, compared to $(677,682) during the nine months ended September 30, 2021.
Financing Activities
During the nine months ended September 30, 2022, we used $2,570,043 in financing activities, compared to $14,961,904 generated for the nine months ended September 30, 2021, primarily from the proceeds from the sale of common stock.
We estimate that based on current plans, assumptions and successful 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. On the above basis, 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.
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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.
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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 discussed 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.
There have been no material updates or changes to the risk factors previously disclosed in our Annual Report and Quarterly Report on Form 10-Q for the quarter ended June 30, 2022; provided, however, additional risks not currently known or currently material to us may also harm our business.
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.
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Item 6. Exhibits
| * | 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 |
| (5) | incorporated by reference to Form 8-K of the Company filed with the Securities and Exchange Commission on September 12, 2022 |
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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: November 14, 2022 | By: | /s/ Brent Suen |
Brent Suen | ||
| By: | /s/ Lionel Choong | |
| Lionel Choong Chief Financial Officer, Principal Accounting Officer & Director |
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