10-Q 1 leet_i10q-093023.htm FORM 10-Q FOR SEPT 2023
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Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2023

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______________ to _______________.

 

Commission file number: 000-55053

 

 

LEET TECHNOLOGY INC.

(Exact name of registrant as specified in its charter)

 

Delaware 46-3590850

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

805, 8th Floor, Menara Mutiara Majestic,

Jalan Othman, Petaling Jaya 46000, Selangor, Malaysia

(Address of principal executive offices) (zip code)

 

+603 7783 1636

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
None   None   None

 

Securities registered pursuant to Section 12(g) of the Act:

 

Common Stock Par value, $0.0001

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
    Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes No

 

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. As of December 27, 2023, there were 151,096,262 shares of common stock, $0.0001 par value, issued and outstanding, and 6,898,256 shares of preferred stock issued and outstanding, par value $0.0001.

 

 

 

   

 

 

LEET TECHNOLOGY INC.

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION 3
     
ITEM 1 Unaudited Condensed Consolidated Financial Statements 3
     
ITEM 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations 26
     
ITEM 3 Quantitative and Qualitative Disclosures About Market Risk 30
     
ITEM 4 Controls and Procedures 31
     
PART II – OTHER INFORMATION 32
     
ITEM 1 Legal Proceedings 32
     
ITEM 1A Risk Factors 32
     
ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds 32
     
ITEM 3 Defaults Upon Senior Securities 32
     
ITEM 4 Mine Safety Disclosures 32
     
ITEM 5 Other Information 32
     
ITEM 6 Exhibits 32
     
SIGNATURES 33

 

 

 

 2 

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1 Financial Statements

 

LEET TECHNOLOGY INC.

 

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

  Page
   
Unaudited Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022 4
   
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2023 and 2022 5
   
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the Three and Nine Months Ended September 30, 2023 and 2022 6
   
Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 7
   
Notes to Unaudited Condensed Consolidated Financial Statements 8-25

 

 

 

 

 

 3 

 

 

LEET TECHNOLOGY INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

         
   (Unaudited)     
   September 30, 2023   December 31, 2022 
ASSETS          
Current asset:          
Cash  $14,851   $36,808 
Accounts receivable   40,941    156,585 
Deposit and other receivables   12,594    11,712 
Total current assets   68,386    205,105 
           
Non-current asset:          
Plant and equipment, net   109,580    123,458 
Right of use assets       9,046 
Total non-current assets   109,580    132,504 
           
TOTAL ASSETS  $177,966   $337,609 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
Current liabilities:          
Accounts payable  $482,403   $530,198 
Accrued liabilities and other payables   200,317    379,872 
Accrued compensation payable to officers and directors   398,337    413,443 
Contract liability   392,538    270,795 
Amounts due to related parties   2,235,471    1,157,166 
Convertible promissory note       99,624 
Operating lease liabilities       9,046 
           
Total current liabilities   3,709,066    2,860,144 
           
TOTAL LIABILITIES   3,709,066    2,860,144 
           
Commitments and contingencies        
           
MEZZANINE EQUITY          
Series B Convertible Preferred Stock, 10,000,000 shares authorized, $0.0001 par value, 5,898,256 and 5,898,256 issued and outstanding as of September 30, 2023 and December 31, 2022 respectively   5,567,953    5,284,837 
           
STOCKHOLDERS’ DEFICIT          
Preferred stock, 20,000,000 shares authorized, $0.0001 par value: Series A 1,000,000 authorized, issued and outstanding   100    100 
Common stock, $0.0001 par value; 10,000,000,000 shares authorized; 151,096,262 and 152,899,640 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively   15,110    15,290 
Common stock to be cancelled       (100)
Additional paid-in capital   2,773,081    2,773,001 
Accumulated other comprehensive income (loss)   106,131    (14,021)
Accumulated losses   (11,986,142)   (10,578,195)
Total stockholders’ deficit attributable to the Company   (9,091,720)   (7,803,925)
Non-controlling interest   (7,333)   (3,447)
Total stockholders’ deficit   (9,099,053)   (7,807,372)
           
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT  $177,966   $337,609 

 

See accompanying notes to these unaudited condensed consolidated financial statements.

 

 

 

 4 

 

 

LEET TECHNOLOGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

(Unaudited)

                 
   Three months   Nine months 
   ended September 30,   ended September 30, 
   2023   2022   2023   2022 
                 
Revenue  $34,288   $51,127   $179,424   $115,988 
Cost of revenue (includes related party expenses, $155,986 and $468,156 for the three and nine months ended September 30, 2023, and includes related party expenses, $170,796 and $464,718 for the three and nine months ended September 30, 2022)   (155,313)   (216,837)   (457,209)   (586,782)
                     
Gross loss   (121,025)   (165,710)   (277,785)   (470,794)
                     
Operating expenses:                    
Research and development (includes related party expenses, $8,952 and $26,890 for the three and nine months ended September 30, 2023, and includes related party expenses, $9,068 and $27,133 for the three and nine months ended September 30, 2022)   (8,952)   (9,077)   (26,890)   (27,142)
General and administrative expenses (includes related party expenses, $38,341 and $160,574 for the three and nine months ended September 30, 2023, and includes related party expenses, $32,139 and $114,087 for the three and nine months ended September 30, 2022)   (194,264)   (352,059)   (847,193)   (1,306,852)
Total operating expenses   (203,216)   (361,136)   (874,083)   (1,333,994)
                     
Loss from operations   (324,241)   (526,846)   (1,151,868)   (1,804,788)
                     
Other income (expense):                    
Interest income               77 
Interest expense           (5,546)    
Written off of accounts receivable   418        (32,365)    
Foreign exchange gain   1,877        17,114     
Cybersecurity service income   14,501        29,403     
Gain on disposal of subsidiaries               10,239 
Loss on settlement with related parties       (471,860)       (471,860)
Loss on early redemption of convertible promissory note           (28,340)    
Sundry income   73        42,578    111 
Total other income   16,869    (471,860)   22,844    (461,433)
                     
LOSS BEFORE INCOME TAXES   (307,372)   (998,706)   (1,129,024)   (2,266,221)
                     
Income tax expense                
                     
NET LOSS   (307,372)   (998,706)   (1,129,024)   (2,266,221)
NET GAIN (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTEREST   85        (4,193)    
NET LOSS ATTRIBUTABLE TO THE COMPANY   (307,457)   (998,706)   (1,124,831)   (2,266,221)
                     
Other comprehensive income:                    
Foreign currency translation income   93,682    265,198    120,459    531,723 
                     
COMPREHENSIVE LOSS  $(213,690)  $(733,508)  $(1,008,565)  $(1,734,498)
                     
Loss per share                    
- Basic and Diluted  $(0.00)  $(0.01)  $(0.01)  $(0.01)
                     
Weighted average number common shares outstanding                    
- Basic and Diluted   151,096,262    152,899,640    151,787,179    152,899,640 

 

See accompanying notes to these unaudited condensed consolidated financial statements.

 

 

 

 5 

 

 

LEET TECHNOLOGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(Unaudited)

                                                                   
   

Series A

Preferred stock

    Common stock     Stock to be cancelled     Additional    

Accumulated

other

          Non-     Total  
    No. of           No. of           No. of           paid-in     comprehensive     Accumulated     controlling     stockholders’  
    shares     Amount     shares     Amount     shares     Amount     capital     loss     losses     interests     deficit  
Balance as of January 1, 2022   1,000,000     $ 100     152,899,640     $ 15,290         $     $ 3,062,662     $ (12,530 )   $ (7,834,706 )   $     $ (4,769,184 )
Foreign currency translation adjustment                                         33,249                   33,249  
Net loss for the period                                               (658,415 )           (658,415 )
Balance as of March 31, 2022   1,000,000     $ 100     152,899,640     $ 15,290         $     $ 3,062,662     $ 20,719     $ (8,493,121 )   $     $ (5,394,350 )
Foreign currency translation adjustment                                         233,276                   233,276  
Net loss for the period                                               (609,100 )           (609,100 )
Balance as of June 30, 2022   1,000,000     $ 100     152,899,640     $ 15,290         $     $ 3,062,662     $ 253,995     $ (9,102,221 )   $     $ (5,770,174 )
Foreign currency translation adjustment                                         265,198                   265,198  
Net loss for the period                                               (998,706 )           (998,706 )
Balance as of September 30, 2022   1,000,000     $ 100     152,899,640     $ 15,290         $     $ 3,062,662     $ 519,193     $ (10,100,927 )   $     $ (6,503,682 )
                                                                                   
                                                                                   
Balance as of January 1, 2023   1,000,000     $ 100     152,899,640     $ 15,290     1,003,378     $ (100 )   $ 2,773,001     $ (14,021 )   $ (10,578,195 )   $ (3,447 )   $ (7,807,372 )
Dividend                                               (94,372 )           (94,372 )
Cancellation of shares             (1,003,378 )     (100 )   (1,003,378 )     100                                
Foreign currency translation adjustment                                         (6,116 )           160       (5,956 )
Net loss for the period                                               (506,793 )     (4,028 )     (510,821 )
Balance as of March 31, 2023   1,000,000     $ 100     151,896,262     $ 15,190         $     $ 2,773,001     $ (20,137 )   $ (11,179,360 )   $ (7,315 )   $ (8,418,521 )
Dividend                                               (94,372 )           (94,372 )
Cancellation of shares             (800,000 )     (80 )               80                          
Foreign currency translation adjustment                                         32,681             52       32,733  
Net loss for the period                                               (310,581 )     (250 )     (310,831 )
Balance as of June 30, 2023   1,000,000     $ 100     151,096,262     $ 15,110         $     $ 2,773,081     $ 12,544     $ (11,584,313 )   $ (7,513 )   $ (8,790,991 )
Dividend                                               (94,372 )           (94,372 )
Foreign currency translation adjustment                                         93,587             95       93,682  
Net loss for the period                                               (307,457 )     85       (307,372 )
Balance as of September 30, 2023   1,000,000     $ 100     151,096,262     $ 15,110         $     $ 2,773,081     $ 106,131     $ (11,986,142 )   $ (7,333 )   $ (9,099,053 )

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

 

 6 

 

 

LEET TECHNOLOGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

         
   Nine months ended September 30, 
   2023   2022 
Cash flows from operating activities:          
Net loss  $(1,129,024)  $(2,266,221)
Adjustments to reconcile net loss to net cash used in operating activities          
Depreciation on plant and equipment   8,519    29,370 
Amortization on intangible assets       131,961 
Amortization of debt discount   2,525     
Amortization non-cash financing cost   3,020     
Written off of accounts receivable   32,364     
Loss on early redemption of Convertible Promissory Note   28,340     
Loss on settlement with related parties       471,860 
Right of use amortization       3,664 
Gain on disposal of subsidiaries       (10,239)
           
Change in operating assets and liabilities:          
Accounts receivable   77,784    (78,367)
Deposit and other receivables   (1,665)   (7,531)
Accounts payable   (15,734)   115,556 
Accrued liabilities and other payables   (191,032)   11,169 
Accrued compensation payable to officers and directors   10,728    60,155 
Contract liability   144,042    309,005 
Operating lease liabilities       (4,859)
Net cash used in operating activities   (1,030,133)   (1,234,477)
           
Cash flows from investing activities:          
Purchase of plant and equipment   (1,973)   (9,509)
Disposal of cash from subsidiaries       (11,012)
Capitalization of development costs       (226,055)
Net cash used in investing activities   (1,973)   (246,576)
           
Cash flows from financing activities:          
Advances from (repayment to) a director   830    (613)
Advances from related parties   1,169,678    1,326,148 
Repayment of convertible promissory note   (113,300)    
Net cash provided by financing activities   1,057,208    1,325,535 
           
Effect on exchange rate change on cash   (47,059)   143,898 
           
Net increase (decrease) in cash   (21,957)   (11,620)
           
CASH, BEGINNING OF PERIOD   36,808    23,192 
           
CASH, END OF PERIOD  $14,851   $11,572 
           
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION          
Issuance of Series B Convertible Preferred Stock in exchange of balances due to related parties  $   $5,190,465 
Cash paid for tax  $   $ 
Cash paid for interest  $   $ 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

 

 7 

 

 

LEET TECHNOLOGY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

1. DESCRIPTION OF BUSINESS AND ORGANIZATION

 

Leet Technology Inc. (formerly Blow & Drive Interlock Corporation (“BDIC”)) (“the Company” or “LTES”) was incorporated on July 2, 2013 under the laws of the State of Delaware. The Company currently operates an eSports platform in Malaysia.

 

On October 2, 2020, The Doheny Group, LLC, the former shareholder of the Company, agreed to sell its 110,617,521 shares of common stock of BDIC and 1,000,000 shares of Series A Preferred Stock pursuant to the terms of a Stock Purchase Agreement (the “Agreement”) to Mr. Dai Song. The shares represent approximately 84.83%, which is 130,397,289 shares of the issued and outstanding shares of the Company’s common stock, 100% of issued and outstanding Series A Preferred Stock, and 91.41% of the voting power of all securities of the Company, which resulted in a change in control of BDIC. In addition, under the Agreement, BDIC has agreed to sell its current assets and operations to a private company in exchange for the private company assuming all of its liabilities at closing. As of this date, the Company effectively became a shell Company through the date of the reverse recapitalization with BDIC.

 

On November 18, 2020, the Company executed a Share Exchange Agreement (the “Share Exchange Agreement”) with Leet Technology Limited (“LTL”) and its shareholders. Pursuant to the Share Exchange Agreement, the shareholders of LTL agreed to sell its aggregate of 10,000 ordinary shares representing 100% of the issued and outstanding ordinary shares of LTL. As consideration, the shareholders of LTL were received 10,000,000 shares of the Company’s common stock.

 

Because the Company was a shell company, LTL will comprise the ongoing operations of the combined entity and its senior management will serve as the senior management of the combined entity, LTL is deemed to be the accounting acquirer for accounting purposes. The transaction will be treated as a recapitalization of the Company. Accordingly, the consolidated assets, liabilities and results of operations of the Company will become the historical financial statements of LTL, and the Company’s assets, liabilities and results of operations will be consolidated with LTL beginning on the acquisition date. LTL was the legal acquiree but deemed to be the accounting acquirer. The Company was the legal acquirer but deemed to be the accounting acquiree in the reverse merger. The historical financial statements prior to the acquisition are those of the accounting acquirer (LTL).

 

On August 23, 2021, the Company was approved to change its current name to Leet Technology Inc. and the trading symbol of LTES.

 

On February 15, 2022, Leet Entertainment Group Limited transferred all 1,000 ordinary shares of Leet Entertainment Sdn. Bhd to the Company at part of the Company’s plans to restructure and simplify the corporate structure.

 

On April 4, 2022, the Company sold all its 10,000 shares in Leet Technology Limited, with its wholly owned subsidiary Leet Entertainment Group Limited, to Mr. Song, the majority shareholder of the Company, for $10,000 as part of its plans to restructure and simplify the corporate structure. With the completion of this corporate restructure, the Company shall henceforth only have one wholly owned Malaysian subsidiary, Leet Entertainment Sdn Bhd. Prior to the corporate restructure, Leet Entertainment Group Limited, a wholly owned subsidiary of Leet Technology Limited, transferred all its assets, liabilities, and business operations to Leet Entertainment Sdn Bhd with the approval by the board of directors. There were no changes to the main business activities of the Company as a result of these transactions.

 

 

 

 8 

 

 

On December 13, 2021, LEET Inc. was incorporated under the laws of British Virgins Islands (BVI). On July 22, 2022, the Board of Directors of the Company approved and authorized the Company to purchase all of Mr. Song's shares in LEET Inc. for a cash consideration of $1. As of July 26, 2022, LEET Inc. became a wholly owned subsidiary of the Company.

 

On December 1, 2022, the Company acquired Leet Technology (BD) Ltd. as its direct majority-owned subsidiary from Kamal Hamidon Mohamed Ali, the Company’s Chief Financial Officer. Pursuant to the Instrument of Transfer of Shares, a total of 3900 Ordinary Shares of Leet Technology (BD) Ltd. representing 80% of the total issued and outstanding Ordinary Shares was transferred to the Company.

 

On January 11, 2023, the Company completed its merger (the “Merger) with Leet Inc. a company incorporated under the laws of the BVI (“LEET BVI”), with LEET BVI continuing as the surviving company. The Merger was completed pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), dated January 5, 2023, by and between LEET BVI and the Company. The Merger Agreement contains customary representations and warranties by each of LEET BVI and the Company. The Merger Agreement also contains customary covenants, including, among others, covenants relating to the operation of each of LEET BVI’s and the Company’s businesses during the period prior to the closing of the Merger.

 

Pursuant to the Merger Agreement, LEET BVI and the Company caused the Merger to be consummated by filing a certificate of merger (the “Certificate of Merger”) with the Secretary of State of the State of Delaware on January 11, 2023. The Merger became effective on January 11, 2023 (the “Effective Time”), as agreed to by the parties and specified in the Certificate of Merger.

 

Pursuant to the Merger, upon completing the Corporate Action with FINRA, each issued and outstanding share of the Company common stock/ preferred stock shall be transferred to Leet BVI and converted into one new ordinary share (“Ordinary Share”) or preferred share (“Preferred Share”) of LEET BVI, as the case may be. As a result, LEET BVI shall issue an aggregate of approximately 151,096,262 Ordinary Shares and 6,898,256 Preferred Shares to former the Company shareholders. The LEET BVI Ordinary Shares issued and outstanding immediately prior to the Effective Time remained outstanding upon the Effective Time and were unaffected by the Merger. As a result, immediately following the Merger, LEET BVI shall have approximately 151,096,262 Ordinary Shares outstanding and 6,898,256 Preferred Shares outstanding.

 

Description of subsidiaries

                 
               
Name  

Place of incorporation

and kind of

legal entity

  Principal activities  

Particulars of registered/ paid up share

capital

 

Effective interest

held

                 
Leet Entertainment Sdn. Bhd.   Malaysia   Provision of information technology and mobile application development and digital content publishing service   1,000 ordinary shares at par value of MYR1   100%
                 
LEET Inc.   BVI   Investment holding   1 ordinary share at par value of US$1   100%
                 
Leet Technology (BD) Ltd.   Bangladesh   Provision of information technology and mobile application development and digital content publishing service   100,000 ordinary shares at par value of Taka 100   80%

 

The Company and its subsidiaries are hereinafter referred to as (the “Company”).

 

 

 

 9 

 

 

 

2. LIQUIDITY GOING CONCERN UNCERTAINTIES

 

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared assuming the Company will continue as a going concern. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these condensed consolidated financial statements are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

 

The Company has determined that certain factors raise substantial doubt about its ability to continue as a going concern for a least one year from the date of issuance of these unaudited condensed consolidated financial statements.

 

As of September 30, 2023, the Company had $14,851 in cash, working capital deficit of $3,640,680 and accumulated loss of $11,986,142. The Company incurred a continuous net loss of $1,129,024 during the nine months ended September 30, 2023. The Company believes that its current level of cash is not sufficient to fund its operations and obligations without additional financing.

 

The continuation of the Company as a going concern through the next twelve months is dependent upon the continued financial support from its stockholders and related parties. The Company is currently pursuing additional financing for its operations. However, there is no assurance that the Company will be successful in securing sufficient funds to sustain the operations for one year from the date of the filing of the unaudited condensed consolidated financial statements.

 

These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. These unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern.

 

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The accompanying unaudited condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying unaudited condensed consolidated financial statements and notes.

 

Basis of presentation

 

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”) for interim financial reporting, and in accordance with instructions for Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements contained in this report reflect all adjustments that are normal and recurring in nature and considered necessary for a fair presentation of the financial position and the results of operations for the interim periods presented. The year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by US GAAP. The results of operations for the interim period are not necessarily indicative of the results expected for the full year. These unaudited condensed consolidated financial statements, footnote disclosures and other information should be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

 

 

 

 10 

 

 

Use of estimates and assumptions

 

In preparing these unaudited condensed consolidated financial statements, management makes 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 during the period reported. Actual results may differ from these estimates.

 

Basis of consolidation

 

The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All inter-company balances and transactions within the Company have been eliminated upon consolidation.

 

Cash

 

Cash represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.

 

Accounts receivable

 

Accounts receivable are recorded in accordance with Accounting Standards Codification (“ASC”) 310, “Receivables.” Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from completion of service. Credit is extended based on evaluation of a customer's financial condition, the customer creditworthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. At the end of each quarter, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company will consider the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. The Company does not have any off-balance-sheet credit exposure related to its customers. As of September 30, 2023 and December 31, 2022, there were no allowance for doubtful accounts.

 

Plant and equipment

 

Plant and equipment are stated at historical cost less accumulated depreciation. Leasehold improvements are amortized over the lessor of the based term of the lease or 5 years of the leasehold improvement. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:

   
    Expected useful lives
Computer and equipment   5 years
Furniture and fixtures   5 years

 

Expenditures for repairs and maintenance are expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.

 

 

 

 11 

 

 

Research and development costs

 

Research and development costs are expensed as incurred and consist of development work associated with our existing technology, customer solutions and processes. Our research and development expenses relate primarily to payroll costs for personnel, costs associated with various projects, including testing, development and other related expenses.

 

Impairment of long-lived assets

 

In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as plant and equipment, intangible assets, and right of use (“ROU”) assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. There was no impairment charge for the nine months ended September 30, 2023 and 2022.

 

Contract liability

 

Billing practices for the Company’s contracts are governed by the contract terms of each project. Billings do not necessarily correlate with revenues recognized. The Company records contract liabilities to account for these differences in timing.

 

The contract liability, represents the Company’s obligation to transfer goods or services to a customer for which the Company has been paid by the customer or for which the Company is obligated to perform under the contract. Revenue for future services reflected in this account are recognized, and the liability is reduced, as the Company subsequently satisfies the performance obligation under the contract.

 

Revenue recognition

 

The revenue of the Company is currently generated from the provision of white label solutions and esports event management and team services. The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606 – Revenue from Contracts with Customers (“ASC 606”) when control of a product or service is transferred to a customer.

 

Under ASC 606, a performance obligation is a promise within a contract to transfer a distinct good or service, or a series of distinct goods and services, to a customer. Revenue is recognized when performance obligations are satisfied, and the customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for goods or services. Under the standard, a contract’s transaction price is allocated to each distinct performance obligation. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps:

 

  · identify the contract with a customer;
  · identify the performance obligations in the contract;
  · determine the transaction price;
  · allocate the transaction price to performance obligations in the contract; and
  · recognize revenue as the performance obligation is satisfied.

 

 

 

 12 

 

 

White Label Solutions Revenue

 

The Company derives revenue from the provision of white label solutions. The Company offers white label, contracted licensed, solutions primarily to their information & communications technology (“ICT”) partners. The Company engages its ICT partners to utilize its Matchroom.net Platform. For customers who have their own platforms and apps being used, the Company will customize the design of Matchroom.net to meet the customer’s need and integrate, a customized solution into the customer’s system. The Matchroom.net platform and software solution is customizable to the specific needs of each customer and can be integrated across multiple platforms. On average it will take the Company three months to complete the customization of the platform for a customers use.

 

The Company’s typical arrangement involves customizing the Matchroom.net platform solution, which requires technical programming support to build out the platform to its customers specifications. As a result, in analyzing the performance obligations being provided to the customer the Company considers the software license and customization services as a single performance obligation as required by ASC 606. In carrying out the services under these arrangements, the Company is often provided with upfront payment which is deferred and recognized into revenue over the duration of the contract.

 

Esports Tournament Management and Team Services Revenue

 

The Company derives revenue from esports tournament management and team services. The Company offers tournament management services to their customers, whereby they are engaged to provide the service of managing and hosting a tournament of the customer’s choice. The Company provides the required manpower and skills to host and manage an esports tournament on their own Matchroom.net platform or on the platform of the customer. The hosting and management of these tournaments on behalf of the customer is deemed to be one performance obligation and is met over the period of performance (couple of days) in which the tournament is held.

 

The amount to be recognized as revenue equals the predetermined event management fee as per the agreement in place between the Company and the customer. The Company fulfills its performance obligation through the execution and completion of hosting the tournament, over the period of performance that being the multi-day tournament. The amount per the contract is based on the needs of the customer and the required level of manpower or skills needed for the relevant tournament.

 

Apart from hosting the tournaments of other customers, the Company also hosts and managed their own internally held tournaments. The Company will obtain sponsorship agreements with other third-party entities whereby the Company commits to deliver certain sponsor and promotional services in exchange for consideration. Upon completion of the tournament a work completion report will be generated and communicated to the customer. Revenue will be recording pro rata during the duration of the tournament. The Company invoices its promotional partners based on the contracted services within the agreement.

 

 

 

 13 

 

 

Disaggregation of Revenue

 

The Company has disaggregated its revenue from contracts with customers into categories based on the nature of the revenue. The following table presents the revenue streams by segments, with the presentation revenue categories presented on the statements of operation for the periods indicated:

                
   Three months ended September 30,   Nine months ended September 30, 
   2023   2022   2023   2022 
                 
White label solutions  $26,560   $42,924   $142,056   $95,659 
Esport tournament management and team services       379        8,775 
Matchroom Mini-app solutions   7,728    7,824    37,368    11,554 
   $34,288   $51,127   $179,424   $115,988 

 

Income taxes

 

Income taxes are determined in accordance with the provisions of ASC Topic 740, Income Taxes (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

 

For the year ended December 31, 2022, the Company incurred $20,000 tax penalties imposed by IRS for FY 2021 income tax return. For the nine months ended September 30, 2022, the Company did not have any interest and penalties associated with tax positions. As of September 30, 2023 and December 31, 2022, the Company did not have any significant unrecognized uncertain tax positions.

 

The Company is subject to tax in local and foreign jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the relevant tax authorities.

 

Foreign currencies translation

 

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the condensed consolidated statement of operations.

 

 

 

 14 

 

 

The reporting currency of the Company is United States Dollar (“US$”) and the accompanying condensed consolidated financial statements have been expressed in US$. The functional currencies of the Company’s operating subsidiaries are their local currencies Bangladeshi Taka (“TAKA”) and Malaysian Ringgit (“MYR”)). TAKA-denominated assets and liabilities are translated into the United States Dollar using the exchange rate at the balance sheet date 0.0092 and 0.0097, at September 30, 2023 and December 31, 2022, respectively), and revenue and expense accounts are translated using the weighted average exchange rate in effect for the period 0.0094 for the nine months ended September 30, 2023). MYR-denominated assets and liabilities are translated into the United States Dollar using the exchange rate at the balance sheet date 0.21297 and 0.22692, at September 30, 2023 and December 31, 2022, respectively), and revenue and expense accounts are translated using the weighted average exchange rate in effect for the period 0.22167 and 0.23427 for the nine months ended September 30, 2023 and 2022, respectively).

 

Comprehensive income

 

ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying unaudited condensed consolidated statements of changes in stockholders’ deficit, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.

 

Retirement plan costs

 

Contributions to retirement plans (which are defined contribution plans) are charged to general and administrative expenses in the accompanying unaudited condensed consolidated statements of operation as the related employee service is provided.

 

Leases

 

The Company accounts for leases in accordance with Topic 842, “Leases” (“ASC 842”) and determines if an arrangement is a lease at inception. Operating leases are included in operating ROU assets, other current liabilities, and operating lease liabilities in our unaudited condensed consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our unaudited condensed consolidated balance sheets.

 

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company generally use the incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

 

In accordance with the guidance in ASC 842, components of a lease should be split into three categories: lease components (e.g. land, building, etc.), non-lease components (e.g. common area maintenance, consumables, etc.), and non-components (e.g. property taxes, insurance, etc.). Subsequently, the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on the respective relative fair values to the lease components and non-lease components.

 

 

 

 15 

 

 

Net loss per share

 

The Company calculates net income or loss per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income or loss per share is computed by dividing the net income or loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is the same as basic net loss per share when their inclusion would have an anti-dilutive effect due to the continuing net losses. The following anti-dilutive equity and debt securities were excluded from the computation of net loss per share.

           
    As of  
    September 30, 2023     December 31, 2022  
      (Shares)       (Shares)  
                 
Convertible shares     58,982,560       58,982,560  

 

Contingencies

 

The Company follows the ASC 450-20 to report accounting for contingencies. Certain conditions may exist as of the date the unaudited financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s unaudited condensed consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

 

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that any matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.

 

Fair value of financial instruments

 

The Carrying amounts for cash, accounts receivable, deposits receivable, accounts payable, accrued liabilities, and other payables approximate their fair value because of their short-term maturity. The Company determined that the carrying amount of accrued compensation payable to officers and directors and amounts due to related parties approximates fair value as these amounts are indicative of the amounts the company would expect to settle in current market exchange.

 

Stock based compensation

 

The Company accounts for non-employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation—Stock Compensation, which requires all share-based payments to non-employees to be recognized in the financial statements based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital.

 

 

 

 16 

 

 

Series B Convertible Preferred Stock

 

The Company accounts for the Series B Convertible Preferred Stock in accordance with the guidance in ASC 480, Distinguishing Liabilities from Equity. Preferred stock subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally preferred stock (including preferred stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity.

 

Recent accounting pronouncements

 

Accounting Standards Issued, Adopted

 

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This ASU requires measurement and recognition of expected credit losses for financial assets. ASU 2016-13 also requires new disclosures for financial assets measured at amortized cost, loans, and available-for-sale debt securities. ASU 2016-13 is effective for the Company beginning January 1, 2023. Adopting the standard did not have a material impact on the unaudited condensed consolidated financial statements.

 

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

 

 

4. PLANT AND EQUIPMENT

 

Plant and equipment consisted of the following:

           
    As of  
    September 30, 2023     December 31, 2022  
             
Computer and equipment   $ 132,735     $ 139,407  
Furniture and fixtures     7,935       8,455  
Leasehold improvements     20,036       21,348  
      160,706       169,210  
Less: accumulated depreciation     (51,126 )     (45,752 )
    $ 109,580     $ 123,458  

 

Depreciation expense for the nine months ended September 30, 2023 and 2022 were $8,519 and $29,370, respectively.

 

 

 

 17 

 

 

 

5. LEASE LIABILITY

 

The Company entered into an operating lease for office premises. The lease term is fixed for 2 years. The Company adopted ASC 842, using the modified-retrospective approach as discussed in Note 3, and as a result, recognized a right-of-use asset and a lease liability. The Company uses 1.75% rate to determine the present value of the lease payments.

 

The Company excludes short-term leases (those with lease terms of less than one year at inception) from the measurement of lease liabilities or right-of-use assets.

 

The consolidated balance sheet allocation of assets and liabilities related to operating lease is as follows:

               
    Consolidated Balance   As of  
    Sheets Caption   September 30, 2023     December 31, 2022  
                 
Assets   Operating lease right-of-use assets   $     $ 9,046  
                     
Liabilities:                    
Current   Operating lease liability – current   $     $ 9,046  
Non-current   Operating lease liability – non-current            
                     
Total lease liabilities       $     $ 9,046  

 

For the nine months ended September 30, 2023 and 2022, the Company recorded lease expenses of $6,725 and $4,978 respectively.

 

  

6. STOCKHOLDERS’ DEFICIT

 

Preferred Stock

 

The Company’s articles of incorporation authorize the Company to issue up to 20,000,000 preferred shares of $0.0001 par value.

 

Series A Preferred Stock

 

The Company has been authorized to issue 1,000,000 shares of Series A Preferred Stock. The Series A shares have the following preferences: no dividend rights; no liquidation preference over the Company’s common stock; no conversion rights; no redemption rights; no call rights by the Company; each share of Series A Preferred stock will have one hundred (100) votes on all matters validly brought to the Company’s common stockholders.

 

As of September 30, 2023 and December 31, 2022, the total number of Series A preferred shares issued and outstanding was 1,000,000 shares.

 

 

 

 18 

 

 

Series B Convertible Preferred Stock

 

The Company has authorized 10,000,000 shares of Series B Convertible Preferred Stock. The Series B shares have the following preferences: (i) dividend rights in pari passu with the Company’s common stock on an as converted basis, (ii) liquidation preference over the Company’s common stock, (iii) conversion rights of 10 shares of common stock for each share of Series B Convertible Preferred Stock converted, (iv) no redemption rights, (v) no call rights, (vi) each share of Series B Convertible Preferred Stock will have 1,000 votes on all matters validly brought to the Company’s common stock holders.

 

As of September 30, 2023 and December 31, 2022, there was 5,898,256 Series B preferred shares issued or outstanding.

 

Common Stock

 

The Company has authorized 10,000,000,000 shares of $0.0001 par value. Holders of common stock are entitled to one vote for each share held. There are no restrictions that limit the Company’s ability to pay dividends on its common stock, subject to the requirements of the Delaware Revised Statutes. The Company has not declared any dividends since incorporation.

 

Pursuant to the Share Exchange Agreement executed on November 18, 2020, the Company issued 10,000,000 shares of its common stock to the Shareholders of LTL in exchange for 10,000 shares of all of the outstanding ordinary shares of LTL to consummate the reverse acquisition with LTL.

 

On September 3, 2021, the Company issued an aggregate of 7,000,000 shares of Common Stock pursuant to the terms of the 2021 Employee Stock Incentive Plan to its consultants. On June 30, 2022 Management recognized that the issuance was incorrect as it exceeded its mandate with the prior Form S-8 registration statement with respect to the allowance of shares registered.

 

To rectify the above, the Board of Directors approved the 2022 Stock Incentive Plan for Employees and Consultants and filed Form S-8 on June 30, 2022, to register 7,000,000 shares of Common Stock. On June 30, 2022, the Company issued 7,000,000 shares of its Common Stock to employees and consultants for services rendered and proceeded to cancel the 7,000,000 shares of Common Stock that was incorrectly issued.

 

On October 6, 2021, the Company issued 1,003,378 shares of restricted common stock to Lincoln Park Capital Fund, LLC as commitment fee pursuant to the Purchase Agreement dated on the same date. On November 3, 2022, the Company and Lincoln Park mutually agreed, in writing, to terminate the Agreements. On November 3, 2022, the Company and Lincoln Park mutually agreed, in writing, to terminate the Agreements. On February 13. 2023, the aggregate of 1,003,378 shares of restricted common stock was returned for cancellation.

 

On February 13, 2023, the aggregate of 1,003,378 shares of restricted common stock was returned for cancellation.

 

On June 15, 2023, the aggregate of 800,000 shares of restricted common stock was returned for cancellation.

 

As of September 30, 2023 and December 31, 2022, the Company had a total of 151,096,262 and 152,899,640 shares of its common stock issued and outstanding, respectively.

 

 

 

 19 

 

 

 

7. MEZZANINE EQUITY

 

On September 30, 2022, the Company issued to Porta Capital Limited, Bru Haas (B) Sdn Bhd, Bru Haas Sdn Bhd, Clicque Technology Sdn Bhd, Tilla Network Limited and Porta Network Inc., the Company’s related parties (collectively as the “Related Parties”), an aggregate of 5,898,256 shares of Series B Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”), of the Company pursuant to certain Debt Conversion Agreements, each dated September 30, 2022 (the “Debt Conversion Agreement”), between the Related Parties and the Company. Pursuant to the Board Resolution dated September 28, 2022, approving the adoption of certain rights and preferences of Series B Preferred Shares, the Agreements included the following rights: (i) dividend rights where each share of Series B Preferred Stock accrues an annual dividend of 8% and (ii) redemption rights only at the option of the Company at a rate of 110% during the period ending 360 days after the Issue Date. The price per Series B Preferred Stock is 0.80 USD. The Series B Preferred Shares were issued on September 30, 2022 in exchange for all or a portion of the balances due to each Related Party as of June 30, 2022. Because all of the shareholders of the Series B Preferred Shares are related parties of the company and majority owned by the the same majority owner of the Company, it's determined that the preferred shareholders can control the Company's ability to exercise its redemption right at any time and therefore, mezzanine equity classification is appropriate in accordance with ASC - 480, Distinguishing Liabilities from Equity.

     
Preferred Stock – Series B – As of December 31, 2021   $  
Issuance of Series B Convertible Preferred Stock on September 30, 2022     5,190,465  
Dividends of Series B Convertible Preferred Stock as of December 31, 2022     94,372  
Preferred Stock – Series B – As of December 31, 2022     5,284,837  
Dividends of Series B Convertible Preferred Stock as of September 30, 2023     283,116  
Preferred Stock – Series B – As of September 30, 2023   $ 5,567,953  

 

 

8 LOSS PER SHARE

 

Net loss per share is provided in accordance with FASB ASC 260-10, “Earnings per share”. Basic net loss per common share (“EPS”) s computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted loss per share is computed by dividing net loss by the weighted average shares outstanding, assuming all dilutive potential common shares were issued, unless doing so is anti-dilutive.

 

The following table sets forth the computation of basic and diluted net loss per share for the nine months ended September 30, 2023 and 2022:

        
   Nine months ended September 30, 
   2023   2022 
         
Net loss for the period attribute to the Company  $(1,124,831)  $(2,266,221)
           
Weighted average number of common shares outstanding, basic and diluted   151,787,179    152,899,640 
           
Basic and diluted loss per common share:  $(0.01)  $(0.01)

 

 

 

 20 

 

 

9. INCOME TAX

 

The Company recorded $0 tax provision for the nine months ended September 30, 2023 and 2022, due in large part to its expected tax losses for the year and maintaining a full valuation allowance against its net deferred tax assets in every jurisdiction that it is operating in.

 

At September 30, 2023, the Company has U.S. federal operating loss carryforwards of approximately $4 million. Due to U.S. enacted Public Law 115-97, known as the Tax Cuts and Jobs Act (the "TCJA") in 2017, U.S. federal net operating loss carryforwards in the amount of $5,600,000, generated after 2017 have an indefinite carryforward period. U.S. net operating loss carryforwards, in the amount of $2,600,000, generated prior to 2018 will expire, if unused, beginning in 2034. State net operating loss carryforwards will begin to expire, if unused, in 2034.

 

At September 30, 2023, the Company’s subsidiary operating in Malaysia has net operating loss of approximately $0.8 million. Net operating loss carryforwards will begin to expire, if unused, in 2025.

 

At September 30, 2023, the Company’s subsidiary operating in Bangladesh has net operating loss carryforwards of $20,964 which can be carried forward for a maximum period of six years.

 

The Company follows the provision of ASC 740 which prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the Company has taken or expects to take on a tax return. The Company did not have any unrecognized tax positions or benefits as of September 30, 2023 and December 31, 2022. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. We do not expect any material changes in our unrecognized tax benefits over the next 12 months.

 

The Company’s ability to utilize U.S. net operating loss carryforwards to offset future taxable income may be deferred or limited significantly if the Company were to experience an “ownership change” as defined in section 382 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law. In general, an ownership change occurs when the ownership of the Company’s stock by 5 percent or more shareholders “5-percent shareholders” exceeds 50 percentage points within a three-year period. We have not conducted a Section 382 study to determine whether the use of our U.S. net operating losses is limited. We may have experienced ownership changes in the past, and we may experience ownership changes in the future, some of which are outside our control. This could limit the amount of net operating losses that we can utilize annually to offset future taxable income or tax liabilities.

 

 

10. RELATED PARTY TRANSACTIONS

 

Related party balances consisted of the following:

        
   As of September 30,
2023
   As of December 31,
2022
 
         
Due to Porta Capital Limited (“Porta Capital”)  $656,259   $76,949 
Due to Bru Haas (B) Sdn Bhd (“Bru Haas (B)”)   949,286    561,947 
Due to Bru Haas Sdn Bhd (“Bru Haas”)   37,570    33,588 
Due to Clicque Technology Snd Bhd (“Clicque”)   186,294    79,389 
Due from Mr. Kamal Hamidon       (850)
Due from Mr. Song Dai (“Mr. Song”)   (8,752)   (8,671)
Due to Leet Entertainment Group Limited (“Leet HK”)   414,814    414,814 
   $2,235,471   $1,157,166 

 

 

 

 21 

 

 

Mr. Song is the director and major shareholder of the Company, and he is also the major shareholder of Porta Capital, Bru Haas (B), Bru Haas, Tila Network, and Porta Network. Amount due to these related companies are those trade and nontrade payables arising from transactions between the Company and the related companies, such as advances made by the related companies on behalf of the Company, and advances made by the Company on behalf of the related companies. Those advances are unsecured, non-interest bearing and have no fixed terms of repayment.

 

The advances from Mr. Song are mainly for working capital purpose. The advances are unsecured, non-interest bearing and have no fixed terms of repayment.

             
      Nine months ended September 30,  
Nature of transactions with related parties     2023     2022  
               
Research and development consulting fee to related parties:                  
- Porta Capital (a)   $ 26,890     $ 27,133  
                   
Consultancy fee to related parties                  
- Clicque (b)   $ 109,729     $ 114,096  
                   
Rent expense of Matchroom platform server to related parties:                  
- Porta Capital (c)   $ 85,150     $ 84,999  
- Bru Haas (B) (d)     221,627       218,605  
- Clicque (d)     38        
Total     $ 306,815     $ 303,604  
                   
Network Bandwidth expense to Bru Haas (B) (e)   $ 161,341     $ 161,105  
                   
Director fee                  
- Ganesha     $ 9,975     $ 10,372  
- Kamal Hamidon       17,291       37,338  
- Ding Jung Long       23,579       68,452  
                   
Total     $ 50,845     $ 116,162  

 

Both platform server rent expense and network bandwidth expense are recorded in the cost of revenue.

 

(a) The Company entered a consultancy service agreement with Porta Capital for a fixed period of 56 months commenced from May 1, 2017. The consultancy service fee is $3,000 per month and the agreement was renewed for another fixed period of 24 months on January 1, 2022.

 

(b) The Company entered two separate consultancy service agreements with Clicque for a fixed period of 36 months each commenced from June 1, 2021 and December 1, 2021. The consultancy service fees are RM 40,000 (equivalent to approximately $9,700) per month and RM 15,000 (equivalent to approximately $3,600) per month, respectively.

 

 

 

 22 

 

 

(c) The Company entered a platform server rental agreement with Porta Capital for a fixed period of 60 months commenced from March 1, 2021. The rent is $9,500 per month.

 

(d) The Company entered a platform server rental agreement with Bru Haas (B) for a fixed period of 60 months commenced from July 1, 2021. The rent is $20,000 per month. In additions, the Company entered a service agreement with Bru Haas (B) providing security operations center service for a fixed period of 12 months commenced from February 17, 2022. The service fee is $4,705 per month.

 

(e) The Company entered a network bandwidth rental agreement with Bru Haas (B) for a fixed period of 12 months commenced from January 1, 2022. The rent is $18,000 per month.

 

During the three months ended March 31, 2023 and 2022, the Company utilized space on a rent-free basis in the office located at Unit 805, 8th Floor, Menara Mutiara Majestic, Jalan Othman, Petaling Jaya 46000, Selangor, Malaysia which is owned by Mr. Song. The fair market value of the rent is RM1,500 per month.

 

Mr. Song is the director and major shareholder of the Company, and he is also the major shareholder of Porta Capital, Bru Haas (B), Bru Haas, Tila Network, and Porta Network. Amount due to these related companies are those trade and nontrade payables arising from transactions between the Company and the related companies, such as advances made by the related companies on behalf of the Company, and advances made by the Company on behalf of the related companies. Those advances are unsecured, non-interest bearing and have no fixed terms of repayment.

 

The advances to Mr. Song are mainly for working capital purpose. The advances are unsecured, non-interest bearing and have no fixed terms of repayment.

 

On September 30, 2022, the Company issued to Porta Capital Limited, Bru Haas (B) Sdn Bhd, Bru Haas Sdn Bhd, Clicque Technology Sdn Bhd, Tilla Network Limited and Porta Network Inc., the Company’s related parties (collectively as the “Related Parties”), an aggregate of 5,898,256 shares of Series B Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”), of the Company pursuant to certain Debt Conversion Agreements, each dated September 30, 2022 (the “Debt Conversion Agreement”), between the Related Parties and the Company. The effect of the Debt Conversion Agreement is that all or a portion of the Related party balances has been converted to Series B Convertible Preferred Shares.

 

 

11. CONCENTRATIONS OF RISK

 

The Company is exposed to the following concentrations of risk:

 

  (a)   Major customers

 

For the nine months ended September 30, 2023, the individual customer who accounts for 10% or more of the Company’s revenues and its outstanding receivable balances as at period-end dates, are presented as follows:

                 
    Nine months ended September 30, 2023     September 30, 2023  

 

Customers

  Revenues     Percentage
of revenues
    Accounts
receivable
 
                         
Customer A   $ 141,255       79%     $ 35,439  
                         
Total:   $ 141,255       79% Total:   $ 35,439  

 

 

 

 23 

 

 

For the nine months ended September 30, 2022, the individual customer who accounts for 10% or more of the Company’s revenues and its outstanding receivable balances as at period-end dates, are presented as follows:

                   
    Nine months ended September 30, 2022     September 30, 2022  

 

Customers

  Revenues     Percentage
of revenues
    Accounts
receivable
 
                         
Customer A   $ 73,563       63%     $ 86,398  
Customer B     16,983       15%       3,867  
                         
Total:   $ 90,546       78% Total:   $ 90,265  

 

For the three months ended September 30, 2023, the individual customer who accounts for 10% or more of the Company’s revenues and its outstanding receivable balances as at period-end dates, are presented as follows:

                   
    Three months ended September 30, 2023     September 30, 2023  

 

Customers

  Revenues     Percentage
of revenues
    Accounts
receivable
 
                   
Customer A   $ 26,408       77%     $ 35,439  
                         
Total:   $ 26,408       77% Total:   $ 35,439  

 

For the three months ended September 30, 2022, the individual customer who accounts for 10% or more of the Company’s revenues and its outstanding receivable balances as at period-end dates, are presented as follows:

                   
    Three months ended September 30, 2022     September 30, 2022  

 

Customers

  Revenues     Percentage
of revenues
    Accounts
receivable
 
                   
Customer A   $ 28,480       56%     $ 86,398  
Customer B     12,623       25%       3,867  
                         
Total:   $ 41,103       81% Total:   $ 90,265  

 

(b) Economic and political risk

 

The Company’s major operations are conducted in Malaysia. Accordingly, the political, economic, and legal environments in Malaysia, as well as the general state of Malaysia’s economy may influence the Company’s business, financial condition, and results of operations.

 

(c) Exchange rate risk

 

The Company cannot guarantee that the current exchange rate will remain steady; therefore, there is a possibility that the Company could post the same amount of profit for two comparable periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of TAKA and MYR converted to US$ on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.

 

 

 

 24 

 

 

(d) Concentration of credit risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company maintains cash with various financial institutions in Hong Kong and Malaysia. Cash  are maintained with high credit quality institutions, the composition and maturities of which are regularly monitored by management. The Perbadanan Insurans Deposit Malaysia (“PIDM”) pays compensation up to a limit of RM250,000 if the bank with which an individual/a company hold its eligible deposit fails. At September 30, 2023 and December 31, 2022, the Company did not have deposit funds that exceeded the insured limits in Malaysia.

 

 

12. COMMITMENTS AND CONTINGENCIES

 

The Company from time to time may be involved in legal proceedings and disputes arising in the normal course of business. The Company believes that there are no material claims or actions pending or threatened against the Company.

 

On April 28, 2021, the Company entered into a financial advisory agreement, (“the agreement”) with Maxim Group, LLC (“Maxim”), a leading full-service investment banking, securities and wealth management firm, pursuant to which Maxim will provide certain advisory services including strategic corporate planning, capitalization, and marketing. Additionally, Maxim, will advise the Company with respect to its objective to list on a national securities exchange. As consideration for Maxim’s services pursuant to the agreement, the Company agreed to issue restricted shares of the Company’s common stock to Maxim equal to 2% of the outstanding shares of the Company’s Common Stock. As mentioned in Note 6, the Company issued 1,403,973 restricted shares, 1% of the outstanding shares of the common stock, upon execution of the agreement. Under the terms of the agreement, the Company is committed to issue additional restricted shares of 1% of the outstanding shares of its common stock upon a successful listing of the Company’s common stock to a national exchange (NASDAQ or NYSE).

 

On November 4, 2022 (the “Issue Date”), Leet Technology Inc. (the “Company”) entered into a Securities Purchase Agreement dated as of November 4, 2022 (the “SPA”), by and between the Company and 1800 Diagonal Lending LLC, a Virginia limited liability company (the “Investor”). Pursuant to the SPA, among other things, the Company agreed to issue to the Investor a convertible note in the principal amount of $113,300.00 (the “Note” and together with the SPA, the “Agreements”). The Note contains an original issue discount amount of $10,300.00, legal fees payable to Investor’s legal counsel of $2,000.00 and to Investor a due diligence fee of $1,000.00. The Note accrues interest at an annual interest rate of 8% and a default rate of 22%, and matures on November 4, 2024 (the “Maturity Date”). The Investor may convert the Note into shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), 180 days after the Issue Date until the later of (i) Maturity Date and (ii) the date the Company pays any amounts owed in connection with an event of default. The per share conversion price into which the Note is convertible into shares of Common Stock (the “Conversion Price”) is 75% multiplied by the average of the lowest three closing bid prices for the Common Stock during the ten trading days ending on the last trading day prior to the conversion date. The Company has the right to prepay the outstanding principal amount of the Note, plus any accrued interest on the outstanding principal (including any default interest) at a rate of (x) 110% during the period ending 60 days after the Issue Date, (y) 115% during the period between 61 days and 180 days after the Issue Date and (z) 120% during the period between 180 days and 730 days after the Issue Date.

 

 

13. SUBSEQUENT EVENTS

 

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to December 28, 2023, the date that the financial statements were issued. The Company did   not identify any subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements.

 

 

 

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ITEM 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Disclaimer Regarding Forward Looking Statements

 

Our Management’s Discussion and Analysis or Plan of Operations contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.

 

Although the forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

 

Company Overview

 

The following discussion should be read in conjunction with the interim unaudited condensed consolidated financial statements and the notes thereto, which are set forth in Item 1 of this report.

 

The Company operates within the Esports industry and derives revenue from esports tournament management and team services. The Company offers tournament management services to their customers, whereby they are engaged to provide the service of managing and hosting a tournament of the customer’s choice. The Company provides the required manpower and skills to host and manage an esports tournament on their own Matchroom.net platform or on the platform of the customer. Apart from hosting the tournaments of other customers, the Company also hosts and managed their own internally held tournaments. The Company will obtain sponsorship agreements with other third-party entities whereby the Company commits to deliver certain sponsor and promotional services in exchange for consideration.

 

Going concern

 

The accompanying unaudited condensed consolidated financial statements have been prepared using the going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

 

The Company has determined that certain factors raise substantial doubt about its ability to continue as a going concern for a least one year from the date of issuance of these unaudited condensed consolidated financial statements.

 

As of September 30, 2023, the Company had $14,851 in cash, working capital deficit of $3,640,680 and accumulated deficit of $11,986,142. The Company incurred a continuous loss of $1,129,024 during the nine months ended September 30, 2023. The Company believes that its current level of cash are not sufficient to fund its operations and obligations without additional financing.

 


 

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The continuation of the Company as a going concern through the next twelve months is dependent upon the continued financial support from its stockholders and related parties. The Company is currently pursuing additional financing for its operations. However, there is no assurance that the Company will be successful in securing sufficient funds to sustain the operations for one year from the date of the filing of the unaudited condensed consolidated financial statements.

 

These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. These unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern.

 

Overview and Outlook

 

The following comparative analysis on results of operations was based primarily on the comparative unaudited condensed consolidated financial statements, footnotes and related information for the periods identified below and should be read in conjunction with the unaudited condensed consolidated financial statements and the notes to those statements that are included elsewhere in this report.

 

Three months ended September 30, 2023, compared to the three months ended September 30, 2022

 

For the three months ended September 30, 2023 and 2022, the following customers accounted for 10% or more of our total net revenues and its outstanding accounts receivable as of September 30, 2023 and 2022:

                   
    Three months ended September 30, 2023     September 30, 2023  

 

Customers

  Revenues     Percentage
of revenues
    Accounts
receivable
 
                         
Customer A   $ 26,408       77%     $ 35,439  
                         
Total:   $ 26,408       77% Total:   $ 35,439  

 

                   
    Three months ended September 30, 2022     September 30, 2022  

 

Customers

  Revenues     Percentage
of revenues
    Accounts
receivable
 
                   
Customer A   $ 28,480       56%     $ 86,398  
Customer B     12,623       25%       3,867  
                         
Total:   $ 41,103       81% Total:   $ 90,265  

 

All of our major customers are located in Malaysia, India and Philippines.

 

 

 

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Revenue increased by 32.9% to $34,288 for the three months ended September 30, 2023, from $51,127 for the three months ended September 30, 2022. The decrease in revenue is mainly attributed by our new white label project entered with Smart Communications, Inc., a large telecommunication provider in the Philippines and revenue of matchroom Mini-app solutions.

 

Cost of revenue decreased by 28.4% to $155,313 for the three months ended September 30, 2023, from $216,837 for the three months ended September 30, 2022. The decrease in cost of revenue is due to the decrease in the rental of platform server cost, network bandwidth cost, and direct labor costs incurred during the period.

 

General and administrative expenses decreased by 44.8% to $194,264 for the three months ended September 30, 2023, from $352,059 for the three months ended September 30, 2022. The decrease in general and administrative expenses is mainly attributable from the decrease in exhibition expenses, salaries and wages, and travelling expense for the expansion of business.

 

Net loss decreased by 69.2% to $307,372 for the three months ended September 30, 2023, from net loss of $998,706 for the three months ended September 30, 2022. The decrease in net loss is mainly attributed from the increase in general and administrative expenses.

 

Nine months ended September 30, 2023, compared to the nine months ended September 30, 2022

 

For the nine months ended September 30, 2023 and 2022, the following customers accounted for 10% or more of our total net revenues and its outstanding accounts receivable as of September 30, 2023 and 2022:

 

                   
    Nine months ended September 30, 2023     September 30, 2023  

 

Customers

  Revenues     Percentage
of revenues
    Accounts
receivable
 
                         
Customer A   $ 141,255       79%     $ 35,439  
                         
Total:   $ 141,255       79% Total:   $ 35,439  

 

                   
    Nine months ended September 30, 2022     September 30, 2022  

 

Customers

  Revenues     Percentage
of revenues
    Accounts
receivable
 
                   
                   
Customer A   $ 73,563       63%     $ 86,398  
Customer B     16,983       15%       3,867  
                         
Total:   $ 90,546       78% Total:   $ 90,265  

 

All of our major customers are located in Malaysia, India and Philippines.

 

 

 

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Revenue increased by 54.7% to $179,424 for the nine months ended September 30, 2023, from $115,988 for the nine months ended September 30, 2022. The increase in revenue is mainly attributed by our new white label project entered with Smart Communications, Inc., a large telecommunication provider in the Philippines and revenue of matchroom Mini-app solutions.

 

Cost of revenue decreased by 22.1% to $457,209 for the nine months ended September 30, 2023, from $586,782 for the nine months ended September 30, 2022. The decrease in cost of revenue is due to the decrease in the rental of platform server cost, network bandwidth cost, amortization of capitalized development costs and direct labor costs incurred during the period.

 

General and administrative expenses decreased by 35.2% to $847,193 for the nine months ended September 30, 2023, from $1,306,852 for the nine months ended September 30, 2022. The decrease in general and administrative expenses is mainly attributable from the decrease in exhibition expenses, company and secretarial expenses, depreciation on right-of-use assets, telecommunication expenses and investor relations fee.

 

Net loss decreased 50.2% to $1,129,024 for the nine months ended September 30, 2023, from net loss of $2,266,221 for the nine months ended September 30, 2022. The decrease in net loss is mainly attributed from the decrease in general and administrative expenses and cost of revenue.

 

Liquidity and Capital Resources

 

As of September 30, 2023, we had cash of $14,851, accounts receivable of $40,941, deposit and other receivables of $12,594. Such cash amount and other sources of liquidity are not sufficient to support our operation in the next twelve months. The Company is currently pursuing additional financing for its operations. However, there is no assurance that the Company will be successful in securing sufficient funds to sustain the operations. In the absence of such financing, our business will likely fail.

 

    Nine Months Ended September 30,  
    2023     2022  
Net cash used in operating activities   $ (1,030,133 )   $ (1,234,477 )
Net cash used in investing activities     (1,973 )     (246,576 )
Net cash provided by financing activities     1,057,208       1,325,535  

  

Net Cash Used In Operating Activities

 

For the nine months ended September 30, 2023, net cash used in operating activities was $1,030,133, which consisted primarily of a net loss of $1,129,024, an decrease in accounts receivable of $77,784, an increase in deposit and other receivables of $1,665, an decrease in accrued liabilities and other payables of $191,032, an decrease in account payables of $15,734 and offset by depreciation on plant and equipment of $8,519, amortization of debt discount of $2,525, non-cash financing cost of $3,020, written off of accounts receivable of $32,364, loss on early redemption of convertible promissory note of $28,340, an increase in accrued compensation payable to officers and directors of $10,728, and an increase in deferred revenue of $144,042.

 

For the nine months ended September 30, 2022, net cash used in operating activities was $1,234,477, which consisted primarily of a net loss of $2,266,221, a gain on disposal of subsidiaries of $10,239, a loss on settlement with related parties of $471,860, an increase in deposit and other receivables of $7,531, an increase in accounts receivable of $78,367, a decrease in operating lease liabilities of $4,859, and offset by depreciation on plant and equipment of $29,370, right of use amortization of $3,664, an increase in accrued liabilities and other payables of $11,169, an increase in accrued compensation payable to officers and directors of $60,155, increase in accounts payable of 115,556 and an increase in deferred revenue of $309,005.

 

We expect to continue to rely on cash generated through financing from our existing shareholders and private placements of our securities, to finance our operations and future acquisitions.

 

 

 

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Net Cash Used In Investing Activities.

 

For the nine months ended September 30, 2023 and 2022, net cash used in investing activities was $1,973 and $246,576, respectively which consisted primarily of capitalization of software platform costs and purchase of plant and equipment.

 

Net Cash Provided by Financing Activities.

 

For the nine months ended September 30, 2023 and 2022, net cash provided by financing activities was $1,057,208 and $1,325,535, respectively which consisted primarily of advances from related parties and repayment of convertible promissory note.

 

Off-Balance Sheet Arrangements

 

We have not entered any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered any derivative contracts that are indexed to our own shares and classified as shareholders’ equity, or that are not reflected in our condensed consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity, or market risk support to such entity. Moreover, we do not have any variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

 

Critical Accounting Policies and Estimates

 

The preparation of unaudited condensed consolidated financial statements requires management to make estimates and assumptions that impact amounts reported therein. On a regular basis, we evaluate these estimates. These estimates are based on management’s historical industry experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

 

For a description of the accounting policies that, in management’s opinion, involve the most significant application of judgment or involve complex estimation and which could, if different judgment or estimates were made, materially affect our reported financial position, results of operations, or cash flows, see the notes to consolidated financial statements included in the Form 10-K for the year ended December 31, 2022, as well as Note 3 to our unaudited condensed consolidated financial statements for the nine months ended September 30, 2023.

 

During the nine months ended September 30, 2023, there were no significant changes in our accounting policies and estimates to our unaudited condensed consolidated financial statements.

 

ITEM 3 Quantitative and Qualitative Disclosures About Market Risk

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

 

 

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ITEM 4 Controls and Procedures

 

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2023 and there have been no changes for the nine months ended September 30, 2023.

 

Remediation Plan

 

Management has implemented remediation steps to improve our internal control over financial reporting. Specifically, we are expanding and remediating our review process for revenue related transactions and contracts with our customers and ASC 606. We plan to further improve this process by enhancing access to accounting literature, identification of third-party professionals with whom to consult regarding complex accounting applications and consideration of additional staff with the requisite experience and training to supplement existing accounting professionals.

 

Changes in Internal Controls over Financial Reporting

 

There have been no changes in the Company's internal control over financial reporting during the last quarterly period covered by this report that have materially affected, and therefore has no significant impact on the company’s financial report nor internal control.

 

 

 

 

 

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PART II – OTHER INFORMATION

 

ITEM 1 Legal Proceedings

 

As of the date of this quarterly report on Form 10-Q, we are not involved in any pending legal proceedings that we believe we would likely, individually or in the aggregate, to have a material adverse effect on our financial condition or results of operations.

 

ITEM 1A Risk Factors

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds

 

During the nine months ended September 30, 2023, we did not issue any unregistered securities:

 

ITEM 3 Defaults Upon Senior Securities

 

There have been no events which are required to be reported under this Item.

 

ITEM 4 Mine Safety Disclosures

 

There have been no events which are required to be reported under this Item.

 

ITEM 5 Other Information

 

There is no other information for this period.

 

ITEM 6 Exhibits

 

31.1*   Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31.2*   Rule 13a-14(a)/15d-14(a) Certification of Chief Accounting Officer.
32.1*   Section 1350 Certification of Chief Executive Officer.
32.2*   Section 1350 Certification of Chief Accounting Officer.
101.INS*   Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH*   Inline XBRL Taxonomy Extension Schema Document
101.CAL*   Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*   Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*   Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*   Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*   Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101).

 

*filed herewith

 

 

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

    Leet Technology Inc.
     
     
Dated: December 28, 2023 /s/ Dai SONG
    Interim Chief Executive Officer

 

     
Dated: December 28, 2023 /s/ Jayaisvaran Muruhan
    Interim Chief Financial Officer and Principal Accounting Officer

 

 

 

 

 

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