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EX-32.2 - CERTIFICATION - LOGIQ, INC.f10q0920ex32-2_logiqinc.htm
EX-32.1 - CERTIFICATION - LOGIQ, INC.f10q0920ex32-1_logiqinc.htm
EX-31.2 - CERTIFICATION - LOGIQ, INC.f10q0920ex31-2_logiqinc.htm
EX-31.1 - CERTIFICATION - LOGIQ, INC.f10q0920ex31-1_logiqinc.htm
EX-10.1 - CONVERTIBLE PROMISSORY NOTE AGREEMENT - LOGIQ, INC.f10q0920ex10-1_logiqinc.htm

 

 

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, 2020

 

or

 

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

 

For the transition period from ______ to ______

 

Commission File Number: 000-51815

 

LOGIQ INC.

(Exact name of registrant as specified in its charter)

 

Delaware   46-5057897
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)

 

85 Broad Street, 16-079

New York, NY 10004

(Address of principal executive offices)

 

(501) 507 9229

(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
         

 

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 Act). ☐ Yes ☒ No

 

As of November 13, 2020, the issuer had 13,671,763 shares of common stock issued and outstanding.

   

 

 

 

 

 

LOGIQ INC.

QUARTERLY REPORT ON FORM 10-Q

September 30, 2020

 

PART I – FINANCIAL INFORMATION   1
     
Item 1. Financial Statements   1
  Unaudited Condensed Consolidated Balance sheets as of September 30, 2020 and Audited Condensed Balance Sheet as of December 31, 2019.   1
  Unaudited Condensed Consolidated Statements of Operations for the three months and nine months ended September 30, 2020 and 2019.   2
  Unaudited Condensed Consolidated Statement of Stockholder’s Equity for the nine months ended September 30, 2020 and Audited Statement of Stockholder’s Equity as of December 31, 2019   3
  Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019.   4
  Notes to Unaudited Condensed Consolidated Financial Statements   5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations   18
Item 3. Quantitative and Qualitative Disclosures About Market Risk   25
Item 4. Controls and Procedures   25
       
PART II – OTHER INFORMATION   26
     
Item 1. Legal Proceedings   26
Item 1A.  Risk Factors   26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds   27
Item 3. Defaults Upon Senior Securities   27
Item 4. Mine Safety Disclosures   27
Item 5. Other Information   27
Item 6. Exhibits   28
       
SIGNATURES   29

 

i

 

 

PART 1 - FINANCIAL INFORMATION

 

ITEM 1. Financial Statements

 

LOGIQ INC.

Consolidated Balance Sheets

 

   September 30   December 31 
   2020   2019 
   (Unaudited)   (Audited) 
ASSETS        
Non-current assets        
Intangible assets, net   7,657,848    611,598 
Property and equipment, net   190,202    - 
Goodwill   4,781,208    - 
Total non-current assets   12,629,258    611,598 
           
Current assets          
Amount due from associate   5,023,700    2,825,700 
Accounts receivable   1,567,852    - 
Other amount recoverable   49,550    549,550 
Prepayment, deposit and other receivables   121,723    1,641,684 
Financial assets held for resale   996,414    2,730,363 
Cash and cash equivalents   4,847,284    2,972,649 
Total current assets   12,606,523    10,719,946 
Total assets  $25,235,781   $11,331,544 
           
Liabilities and Stockholders’ Equity          
Current liabilities          
Accounts payable   961,310    - 
Accruals and other payables   917,571    298,453 
Deposits received for shares to be issued   2,235,184    - 
Convertible promissory notes   2,911,000    - 
Amount due to director   77,500    77,500 
Total current liabilities   7,102,565    375,953 
           
Non-current liabilities          
Other loan   10,000    - 
Bank loan   -    500,000 
Notes payable   503,700    - 
Total non-current liabilities   513,700    500,000 
Total liabilities  $7,616,265   $875,953 
           
Stockholders’ Equity          
Common stock, $0.0001 par value, 250,000,000 shares authorized, 13,205,355 and 8,561,704 shares issued and outstanding as of September 30, 2020 and December 31, 2019 respectively*   17,167    11,130 
Additional paid-in capital   58,301,051    58,058,118 
Capital reserves   14,282,143    - 
Accumulated deficit carried forward   (54,980,845)   (47,613,657)
Total shareholders’ equity   17,619,516    10,455,591 
Total liabilities and stockholders’ equity  $25,235,781   $11,331,544 

 

*The number of shares of common stock has been retroactively restated to reflect the 1 for 13 reverse stock-split on February 25, 2020.

 

 The accompanying notes are an integral part of these consolidated financial statements.

  

 1 
 

 

LOGIQ INC.

Consolidated Statements of Operations

 

   For the three months ended
September 30,
   For the nine months ended
September 30,
 
   2020   2019   2020   2019 
   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited) 
                 
Service Revenue  $7,030,305   $8,996,441   $31,326,759   $24,630,065 
Cost of Service   5,919,848    7,399,583    26,351,514    20,258,258 
Gross Profit   1,110,457    1,596,858    4,975,245    4,371,807 
                     
Operating Expenses                    
General and administrative   1,968,763    1,557,960    6,346,531    3,479,751 
Research and development   1,018,389    1,126,165    3,681,162    3,236,713 
Sales and marketing   544,970    -    697,190    389,610 
Depreciation and amortization   455,424    25,483    1,354,674    76,450 
Total Operating Expenses   3,987,546    2,709,609    12,079,557    7,182,524 
                     
(Loss) from Operations   (2,877,089)   (1,112,751)   (7,104,312)   (2,810,717)
                     
Other Expenses   2,868    -    306,997    - 
Other Income   1,408    32,094    44,121    32,094 
Other income/(expenses),net   (1,460)   32,094    (262,876)   32,094 
                     
Net (Loss) before income tax   (2,878,549)   (1,080,657)   (7,367,188)   (2,778,623)
Income tax (Corporate tax)   -    -    -    - 
Net (Loss)  $(2,878,549)  $(1,080,657)  $(7,367,188)  $(2,778,623)
                     
Net (loss) profit per common share - basic and fully diluted  $(0.2257)  $(0.1937)  $(0.6037)  $(0.6892)
                     
Weighted average number of basic and fully diluted common share outstanding*   12,753,230    5,578,806    12,203,769    4,031,809 

 

*The weighted average number of shares of common stock has been retroactively restated to reflect the 1 for 13 reverse stock-split on February 25, 2020

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 2 
 

  

LOGIQ INC

Consolidated Statements of Stockholders’ Equity

  

   Common
Stock*
   Amount   Additional
paid-in
capital
   Subscriptions
received/
Capital
reserves
   Accumulated
(Deficit)
  

Stockholders’
(Deficit)/
Equity

 
                         
Balance January 1, 2019   36,915,343   $3,692   $46,177,521   $-   $(41,071,971)  $5,109,242 
Issuance of shares   5,103,121    510    585,129    -    -    585,639 
Net loss for the period   -    -    -    -    (26,853)   (26,853)
Balance March 31, 2019   42,018,464   $4,202   $46,762,650   $-   $(41,098,824)  $5,668,028 
Issuance of shares   9,983,688    998    1,324,668    -    -    1,325,666 
Net loss for the period   -    -    -    -    (1,671,112)   (1,671,112)
Balance June 30, 2019   52,002,152   $5,200   $48,087,318   $-   $(42,769,936)  $5,322,582 
Issuance of shares   44,819,342    4,482    5,235,100         -    5,239,582 
Net loss for the period   -    -    -    -    (1,080,657)   (1,080,657)
Balance Sep 30, 2019   96,821,494   $9,682   $53,322,418   $-   $(43,850,593)  $9,481,507 
                               
Balance January 1, 2020   111,304,253   $11,130   $58,058,118   $-   $(47,613,657)  $10,455,591 
Effect of reverse split from 13 shares to 1 share   (102,742,549)  $11,130   $58,058,118   $-   $(47,613,657)  $10,455,591 
Issuance of shares   3,355,012    4,362    (790)   14,282,143    -    14,285,714 
Cancelation of shares   (589)   (1)   1    -    -    - 
Shares issued for services   437,503    569    667,717    -    -    668,286 
Net loss for the period   -    -    -    -    (2,813,092)   (2,813,092)
Balance March 31, 2020   12,353,630    16,060    58,725,046    14,282,143    (50,426,750)   22,596,499 
Issuance of shares   11,500   $15   $(180)  $-   $-   $(165)
Cancelation of shares   (296,157)   (385)   385         -    - 
Shares issued (cancelled) for services   127,000    165    (258,387)        -    (258,222)
Net loss for the period        -    -         (1,675,546)   (1,675,546)
Balance June 30, 2020   12,195,973    15,855    58,466,864    14,282,143    (52,102,296)   20,662,566 
Issuance of shares   1,075,057   $1,397   $(1,452)  $-   $-   $(55)
Cancelation of shares   (107,693)   (140)   140         -    - 
Shares issued (cancelled) for services   42,018    55    (164,501)        -    (164,446)
Net loss for the period        -    -         (2,878,549)   (2,878,549)
Balance September 30, 2020   13,205,355    17,167    58,301,051    14,282,143    (54,980,845)   17,619,516 

 

*The number of shares of common stock has been retroactively restated to reflect the 1 for 13 reverse stock-split on February 25, 2020

 

The accompanying notes are an integral part of these consolidated financial statements

 

 3 
 

 

LOGIQ INC.

Consolidated Statements of Cash Flows

 

   For the nine months ended
September 30,
 
   2020   2019 
   (Unaudited)   (Unaudited) 
         
OPERATING ACTIVITIES:        
Net loss  $(7,367,188)  $(2,778,623)
Adjustments to reconciled net loss to net cash used by operating activities:          
Depreciation of property and equipment   34,924    - 
Amortization of intangible assets   1,319,750    76,450 
         - 
Changes in operating assets and liabilities:          
(Increase) decrease in intangible assets   (116,000)   - 
(Increase) decrease in trade and other receivables   (858,799)   (34,500)
(Increase) decrease in amount due from associate   (2,198,000)   (1,163,250)
(Increase) decrease in prepaid expenses and current other assets   1,531,900    - 
(Increase) decrease in accounts payable   594,219    - 
(Increase) decrease in other accrued liabilities   195,025    (79,417)
(Increase) decrease in amount due from director   -    19,000 
Net cash (used in) operating activities   (6,864,169)   (3,960,340)
           
INVESTING ACTIVITIES:          
Financial assets held of resale - sales   2,733,949    - 
Financial assets held of resales - purchase   (1,000,000)   - 
Net restricted cash acquired in acquisition   1,599,572    - 
Net cash provided by (used in) investing activities   3,333,521    - 
           
FINANCING ACTIVITIES:          
Repayment of bank loan   (500,000)   - 
Borrowings under Other loan   10,000    - 
Proceeds from Convertible promissory notes   2,911,000      
Proceeds from notes payable   503,700    - 
Proceeds from shares to be issued   2,235,184    1,898,726 
Proceeds from stock issuance   245,399    7,150,888 
Net cash provided by (used in) financing activities   5,405,283    9,049,614 
           
INCREASE IN CASH AND CASH EQUIVALENTS   1,874,635    5,089,274 
           
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD   2,972,649    731,355 
           
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD  $4,847,284   $5,820,629 
           
NON-CASH TRANSACTION          
Issuance of shares for services received  $309,580   $1,553,404 

 

The accompanying notes are an integral part of these consolidated financial statements

 

 4 
 

  

NOTES TO UNAUDITED CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 – ORGANIZATION AND BUSINESS DESCRIPTION

 

Logiq Inc (formerly known as Weyland Tech Inc) (the “Company”) is a global e-commerce, mCommerce, MArTech and Fintech enablement platform to empower Mobile users.

 

APPLogiq: Subscription-based, platform-as-a-service (“PaaS”) platform for users to create mobile apps to market, sell and deliver goods and services. APPLogiq offers a mobile presence to businesses in emerging markets, with partnerships on 3 continents and growing. This Do It Yourself (“DIY”) mobile application platform, offered in 14 languages with over 70 integrated modules, enables small and medium sized businesses (“SMBs”) to create native mobile applications (“apps”) for Apple’s iOS and Google Android without technical knowledge or background, empowering SMBs to increase sales, reach more customers and promote their products and services in an easy, affordable and efficient manner.

 

DATALogiq: MarTech AI-driven data engine captures and directs consumer intent to promote customers leads, engagement and monetary conversion for enterprises & brands.

 

In May 2018, the Company expanded its portfolio to fintech applications with the launch of its AtozPay mobile payments platform.

 

In the fall of 2019, the Company expanded its portfolio to short-distance food delivery service with the launch of AtozGo.

 

In January 2020, the Company, through its wholly-owned subsidiary, Logiq, Inc., also known as DATALogiq (formerly known as Origin8, Inc.) (“DATALogiq”), completed the acquisition of substantially all of the assets of Push Holdings, Inc. DATALogiq operates a consumer data management platform powered by lead generation, online marketing, and multichannel reengagement strategies through its owned and operated brands. DATALogiq has developed a proprietary data management platform and integrated with several third-party service providers to optimize the return on its marketing efforts. DATALogiq focuses on consumer engagement and enrichment to maximize its return on acquisition through repeat monetization of each consumer. DATALogiq also licenses its software technology and provides managed technology services to various other e-commerce companies. DATALogiq is located in Minneapolis, Minnesota, USA.

 

The Company has rebranded its corporate name and logo to Logiq Inc. by amending the Delaware Certificate of Incorporation, filed form 8-K with the Securities and Exchange Commission on August 6, 2020 and has changed its ticker to “LGIQ”. The name change and ticker symbol change were approved by FINRA.

 

The accompanying unaudited consolidated financial statements include the financial position of the Company and its wholly owned subsidiary, DATALogiq, as of September 30, 2020, and the results of operations, changes in stockholders’ equity (deficit), and cash flows for the nine-month period ended September 30, 2020.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

BASIS OF PRESENTATION

 

The financial statements have been prepared on a historical cost basis to reflect the financial position and results of operations of the Company in accordance with the accounting principles generally accepted in the United States of America (“GAAP”).

 

USE OF ESTIMATES

 

The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Actual results could differ from those estimates.

 

 5 
 

 

PRINCIPLES OF CONSOLIDATION

 

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Logiq Inc (formerly known as Origin8 Inc, incorporating Push Holdings Inc. (“DATALogiq”). Material intercompany balances and transactions have been eliminated on consolidation.

 

CERTAIN RISKS AND UNCERTAINTIES

 

The Company relies on cloud-based hosting through a global accredited hosting provider. Management believes that alternate sources are available; however, disruption or termination of this relationship could adversely affect our operating results in the near-term.

 

BUSINESS COMBINATIONS

 

The Company accounts for acquisition of entities that include inputs and processes and has the ability to create outputs as business combinations. The Company allocates the purchase price of the acquisition to the tangible assets, liabilities and identifiable intangible assets acquired based on their estimated fair values. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses and integration costs are expensed as incurred.

 

SEGMENT REPORTING

 

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by our chief operating decision maker, or decision- making group, in deciding how to allocate resources and in assessing performance.

 

The Company is focused on mobile commerce enablement via our APPLogiq platform acquired in 2015 and subsequently enhanced in 2016 and 2017, offered on a Platform-as-a-Service (“PaaS”) basis. We identify our reportable segments as those customer groups that represent more than 10% of our combined revenue or gross profit or loss of all reported operating segments.

 

On January 8, 2020, the Company, through its wholly-owned subsidiary, DATALogiq, completed the acquisition of substantially all of the assets of Push Holdings, Inc. DATALogiq provides a consumer data management platform powered by lead generation, online marketing, and multichannel reengagement strategies through its owned and operated brands. DATALogiq develops proprietary technology solutions including, among other things, artificial intelligence powered media buying optimization, customer relationship management, payment processing, and fulfillment and customer lifecycle management platforms. DATALogiq utilizes its technologies to sell a multitude of products directly to consumers with a focus on recurring subscription-based models. DATALogiq also licenses its software technology and provides managed technology services to various other ecommerce companies.

 

We manage our business on the basis of the two reportable segments: mobile commerce enablement via our APPLogiq platform service provider and DATALogiq consumer data management platform powered by lead generation, online marketing, and multichannel reengagement strategies through its owned and operated brands.

 

The accounting policies for segment reporting are the same as for the Company as a whole. We do not segregate assets by segments since our chief operating decision maker, or decision-making group, does not use assets as a basis to evaluate a segment’s performance.

  

IMPAIRMENT OF LONG-LIVED ASSETS

 

The Company classifies its long-life assets into: (i) computer and office equipment; (ii) furniture and fixtures, (iii) leasehold improvements, and (iv) finite – life intangible assets.

 

Long-life assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be fully recoverable. It is possible that these assets could become impaired as a result of technology, economy or other industry changes. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-life asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, relief from royalty income approach, quoted market values and third-party independent appraisals, as considered necessary.

 

The Company makes various assumptions and estimates regarding estimated future cash flows and other factors in determining the fair values of the respective assets. The assumptions and estimates used to determine future values and remaining useful lives of long-lived assets are complex and subjective. They can be affected by various factors, including external factors such as industry and economic trends, and internal factors such as the Company’s business strategy and its forecasts for specific market expansion.

 

 6 
 

 

ASSOCIATES

 

Associates are all entities over which the Company has significant influence but not control or joint control, generally accompanying a shareholding interest of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting, after initially being recognized at cost. The Company’s investment in associates includes goodwill identified on acquisition. The Company’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition other comprehensive income is recognized in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Dividends receivable from associates are recognized as a reduction in the carrying amount of the investment. Where the Company’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured long-term receivables, the Company does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate. Unrealized gains on transactions between the group and its associates are eliminated to the extent of the Company’s interest in the associates. Unrealized losses are also eliminated, unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed, where necessary, to ensure consistency with the policies adopted by the Company.

  

FINANCIAL ASSETS

 

Financial assets at fair value through profit or loss are stated at fair value, with any resulting gain or loss recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividend or interest earned on the financial asset and is included in ‘other gains and losses’ line in the statement of profit or loss and other comprehensive income. Fair value is determined in the manner described in Note 7.

 

The Company measures certain financial assets at fair value on a recurring basis, including the available-for-sale debt securities. Fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date. The Company uses a three-level hierarchy established by the Financial Accounting Standards Board (FASB) that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach).

 

The levels of the fair value hierarchy are described below:

 

  Level 1: Quoted prices in active markets for identical assets or liabilities.

 

  Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

 

  Level 3: Unobservable inputs with little or no market data available, which require the reporting entity to develop its own assumptions.

 

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Financial assets and liabilities are classified in their entirety based on the most conservative level of input that is significant to the fair value measurement.

 

Available-for-sale investments

 

Certain shares and debt securities held by the Company are classified as being available for sale and are stated at fair value. Fair value is determined in the manner described in Note 7. Gains and losses arising from changes in fair value, impairment losses, interest calculated using the effective interest method and foreign exchange gains and losses on monetary assets are recognized directly in profit or loss. Dividends on available-for-sale equity instruments are recognized in profit or loss when the Company’s right to receive payments is established. The fair value of available-for-sale monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. The change in fair value attributable to translation differences that result from a change in amortized cost of the available-for-sale monetary asset is recognized in profit or loss, and other changes are recognized in other comprehensive income.

 

PROPERTY AND EQUIPMENT, NET

 

Property and equipment are stated at historical cost, less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which are three to five years for computer and related equipment. Leasehold improvements are amortized over the lesser of the related lease term or their estimated useful life. Expenditures for major renewals and betterments are capitalized, while minor replacements, maintenance and repairs, which do not extend the asset lives, are charged to operations as incurred. Upon sale or disposition, the cost and related accumulated depreciation and amortization are removed from the accounts, and any gain or loss is included in the Company’s results from operations.

 

 7 
 

 

GOODWILL AND INTANGIBLES ASSETS, NET

 

Goodwill is recorded as the difference between the aggregate consideration paid for in a business combination and the fair value of the acquired net tangible and intangible assets acquired. The Company evaluates goodwill for impairment on an annual basis in the fourth quarter or more frequently if indicators of impairment exist that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. Based on that qualitative assessment, if it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company conducts a quantitative goodwill impairment test, which involves comparing the estimated fair value of the reporting unit with its carrying value, including goodwill. The Company estimates the fair value of a reporting unit using a combination of the income and market approach. If the carrying value of the reporting unit exceeds its estimated fair value, an impairment loss is recorded for the difference.

 

The Company’s intangible assets consist of software technology which are amortized using the straight-line method over five years. Amortization expenses related to intangible assets for the three months ended September 30, 2020 and 2019 amounted to $443,782 and $25,483, respectively. Amortization expenses related to intangible assets for the nine months ended September 30, 2020 and 2019 amounted to $1,319,750 and $76,450, respectively.

 

RESEARCH AND DEVELOPMENT COSTS

 

Research and development expenses consist primarily of salaries and related expenses, consulting services and other direct expenses and developments to our website, e-commerce, and mobile app and web based digital platforms. We expect our research and development expenses to increase in absolute dollars as we continue to invest in new and existing products and services.

 

ACCOUNTS RECEIVABLE AND CONCENTRATION OF RISK

 

The Company’s APPLogiq business effective September 1, 2015 is based on a nil accounts receivable balance as subscriptions are collected on a usage basis.

 

Our subsidiary, DATALogiq (renamed as Logiq, Inc.,formerly known as Origin8 Inc, incorporating Push Holdings Inc. (“DATALogiq”), accounts receivable, net is stated at the amount DATALogiq expects to collect, or the net realizable value. DATALogiq provides a provision for allowances that includes returns, allowances and doubtful accounts equal to the estimated uncollectible amounts. DATALogiq estimates its provision for allowances based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that DATALogiq’s estimate of the provision for allowances will change.

 

As of September 30, 2020 and 2019, the allowance for bad debt was approximately $54,619 and $0, respectively.

 

CASH AND CASH EQUIVALENTS

 

Cash and cash equivalents represent cash on hand, demand deposits, and other short-term highly liquid investments placed with banks, which have original maturities of twelve months or less and are readily convertible to known amounts of cash.

 

 8 
 

 

EARNINGS PER SHARE

 

Basic (loss) earnings per share is based on the weighted average number of common shares outstanding during the period while the effects of potential common shares outstanding during the period are included in diluted earnings per share.

 

FASB Accounting Standard Codification Topic 260 (“ASC 260”), “Earnings Per Share,” requires that employee equity share options, non-vested shares and similar equity instruments granted to employees be treated as potential common shares in computing diluted earnings per share. Diluted earnings per share should be based on the actual number of options or shares granted and not yet forfeited, unless doing so would be anti-dilutive. The Company uses the “treasury stock” method for equity instruments granted in share-based payment transactions provided in ASC 260 to determine diluted earnings per share. Anti-dilutive securities represent potentially dilutive securities which are excluded from the computation of diluted earnings or loss per share as their impact was anti-dilutive.

 

REVENUE RECOGNITION

 

The Company’s APPLogiq Platform as a Service (“PaaS”) provides the infrastructure allowing users to develop their own applications and IT services, which users can access anywhere via a web or desktop browser. The Company recognizes revenue on a pay-to-use subscription basis when our customers use our platform. For the territories licensed to our distributors and on a white label basis, we derive royalty income from the end user use of our platform on a white label basis.

 

The Company maintains the PaaS software platform at its own cost. Any enhancements and minor customization for our resellers/distributors are not separately billed. Major new proprietary features are billed to the customer separately as development income while re-usable features are added to the features available to all customers on subsequent releases of our platform.

 

Our subsidiary, DATALogiq, provides a consumer data management platform powered by lead generation, online marketing, and multichannel reengagement strategies through its owned and operated brands. DATALogiq develops proprietary technology solutions including, among other things, artificial intelligence powered media buying optimization, customer relationship management, payment processing, and fulfillment and customer lifecycle management platforms. DATALogiq also licenses its software technology and provides managed technology services to various other e-commerce companies.

 

COST OF SERVICE

 

Cost of service comprises fees from third party cloud-based hosting services. DATALogiq’s cost of revenue comprises online traffic sources.

 

INCOME TAXES

 

The Company uses the asset and liability method of accounting for income taxes in accordance with Accounting Standards Codification (“ASC”) 740, “Income Taxes” (“ASC 740”). Under this method, income tax expense is recognized as the amount of: (i) taxes payable or refundable for the current year and (ii) future tax consequences attributable to differences between financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of available evidence it is more likely than not that some portion or all of the deferred tax assets will not be realized.

 

 9 
 

 

RECENT ACCOUNTING PRONOUNCEMENTS

 

In July 2018, the FASB issued ASU No. 2018-09, “Codification Improvements” (“ASU 2018-09”). These amendments provide clarifications and corrections to certain ASC subtopics including the following: Income Statement - Reporting Comprehensive Income – Overall (Topic 220-10), Debt - Modifications and Extinguishments (Topic 470-50), Distinguishing Liabilities from Equity – Overall (Topic 480-10), Compensation - Stock Compensation - Income Taxes (Topic 718-740), Business Combinations - Income Taxes (Topic 805-740), Derivatives and Hedging – Overall (Topic 815-10), and Fair Value Measurement – Overall (Topic 820-10). The majority of the amendments in ASU 2018-09 will be effective in annual periods beginning after December 15, 2019. The adoption of ASU 2018-09 is not expected to have a material impact on our consolidated financial statements or disclosures.

 

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). The amendments in ASU 2018-13 modify the disclosure requirements associated with fair value measurements based on the concepts in the Concepts Statement, including the consideration of costs and benefits. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments are effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The adoption of ASU 2018-13 it not expected to have a material impact our consolidated financial statements.

 

In December 2019, the FASB issued ASU 2019-12, Income Taxes – Simplifying the Accounting for Income Taxes. The new guidance simplifies the accounting for income taxes by removing several exceptions in the current standard and adding guidance to reduce complexity in certain areas, such as requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. We are currently assessing the impact that adopting this guidance will have on our consolidated financial statements.

 

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC did not, or are not believed by management to, have a material impact on the Company’s present or future consolidated financial position, results of operations or cash flows. 

 

NOTE 3 – INTANGIBLE ASSETS, NET

 

As of September 30, 2020, and December 31, 2019, the Company has the following amounts related to intangible assets:

 

   Software acquired   Other intangible assets   DATALogiq technology platform   Total 
Cost at January 1, 2020  $1,764,330   $5,000   $-   $1,769,330 
Additions  $116,000   $-   $8,250,000   $8,366,000 
Cost at September 30, 2020  $1,880,330   $5,000   $8,250,000   $10,135,330 
                     
Amortization                    
Brought forward at January 1, 2020  $1,155,732   $2,000   $-   $1,157,732 
Charge for the period  $81,875   $375   $1,237,500    1,319,750 
Accumulated depreciation at September 30, 2020  $1,237,607   $2,375   $1,237,500   $2,477,482 
                     
Net intangible assets at September 30, 2020  $642,723   $2,625   $7,012,500   $7,657,848 
                     
Net intangible assets at December 31, 2019  $608,598   $3,000   $-   $611,598 

 

Amortization expenses related to intangible assets for the three months ended September 30, 2020 and 2019 amounted to $443,782 and $25,483, respectively. Amortization expenses related to intangible assets for the nine months ended September 30, 2020 and 2019 amounted to $1,319,750 and $76,450, respectively.

 

No significant residual value is estimated for these intangible assets.

 

The estimated future amortization expense of intangible costs as of September 30, 2020 in the following fiscal years is as follows:

 

Remaining of 2020  $443,782 
2021   1,775,132 
2022   1,775,132 
2023   1,775,132 
2024   1,775,132 
After 2024   113,538 
   $7,657,848 

 

 10 
 

 

NOTE 4 – PROPERTY AND EQUIPMENT, NET

 

As of September 30, 2020, and December 31, 2019, the Company has the following amounts related to property and equipment:

 

   Leasehold Improvements   Computers and Equipment   Total 
Cost at January 1, 2020   -    -    - 
Additions  $165,957   $59,169   $225,126 
Cost at September 30, 2020  $165,957   $59,169   $225,126 
                
Amortization               
Brought forward at January 1, 2020   -    -    - 
Charge for the period  $25,227   $9,697   $34,924 
Accumulated depreciation at September 30, 2020  $25,227   $9,697   $34,924 
                
Net property and equipment assets at September 30, 2020  $140,730   $49,472   $190,202 
                
Net property and equipment assets at December 31, 2019   -    -    - 

 

Depreciation expenses for the three months ended September 30, 2020 and 2019 amounted to $11,642 and $nil, respectively.

 

Depreciation expenses for the nine months ended September 30, 2020 and 2019 amounted to $34,924 and $nil, respectively.

 

NOTE 5 – GOODWILL

  

   As of
September 30,
2020
   As of
December 31,
2019
 
Goodwill at cost  $4,781,208       - 
Accumulated impairment losses   -    - 
Balance at end of period  $4,781,208    - 

 

Goodwill has been allocated for impairment testing purposes to the acquisition of the assets of Push Holdings Inc.by our wholly-owned subsidiary, DATALogiq.

 

The recoverable amount of this unit is determined based on external valuation performed by CBI Advisory Partners on March 20, 2020.

 

The assets were valued using a Fair Market Value basis as defined by The Financial Accounting Standards Board (FASB ASC 820-10-20). Liabilities were taken from Push Holdings Inc Consolidated Balance Sheet as of January 8, 2020.

 

 11 
 

 

NOTE 6 – ACCOUNTS RECEIVABLE

 

   As of
September 30,
2020
   As of
December 31,
2019
 
Balance as at beginning of period  $-         - 
Additions charges to operations   1,622,471    - 
Allowance for doubtful debts   (54,619)   - 
Recoveries   -    - 
Balance at end of period   1,567,852    - 

 

Movement all in allowance for doubtful debts

 

Balance at beginning of period  $54,619 
Impairment losses recognized   - 
Balance at end of period   54,619 

  

Age of Impaired trade receivables

  

Current  $1,107,756 
1 - 30 days   366,568 
31 - 60 days   19,539 
61 - 90 days   7,600 
91 and over   121,008 
Total   1,622,471 

 

NOTE 7 – FINANCIAL ASSETS

 

   Fair value 
  

As of
September 30,

2020

  

As of
December 31,

2019

 
   Assets   Liabilities   Assets   Liabilities 
                     
Held-for-trading investments  $996,414    -   $2,730,363    - 

 

The investments above include investments in quoted fixed income securities that offer the Company the opportunity for return through interest income and fair value gains. They have various fixed maturity and coupon rate. The fair values of these securities are based on closing quoted market prices on the last market day of the financial year.

  

Fair value of the Company’s financial assets and financial liabilities are measured at fair value on recurring quoted bid prices on an active market basis. All the available for sale financial assets are classified as Level 1 as described in the Company’s accounting policies.

 

During the quarter ended June 30, 2020, certain investments were disposed and the proceeds utilized to repay the Company’s loan in note 12 below

 

NOTE 8 – INVESTMENT IN ASSOCIATE

 

On April 23, 2018, the Company participated in the incorporation of a company in Indonesia, PT Weyland Indonesia Perkasa (“WIP’), an Indonesian limited liability company of which the Company held a 49% equity interest with the option to purchase an additional 31% equity interest at a later date. In April 2019, the Company completed the distribution as a dividend in specie, to the Company’s shareholders of record at October 12, 2018 of 49% equity interest in WIP to Weyland AtoZPay Inc. and now holds an equitable interest of 31% in WIP.

 

The results of operations of WIP from April 23, 2018 to September 30, 2020 has not been included as the amount had been fully impaired.

 

The Company held an 31% unexercised option in WIP as at December 31, 2018. Due to the continuing legal restructuring in Indonesia, all the conditions precedent had not been satisfied and the 31% option had not been exercised as September 30, 2020.

  

The Company is in the process of increasing its equity interest in WIP to 51% in order to consolidate the financial results of WIP on a going-forward basis.

 

NOTE 9 – AMOUNT DUE FROM ASSOCIATE

 

The amount due from Associate is interest free, unsecured with no fixed repayment terms.

 

 12 
 

  

NOTE 10 – PREPAYMENTS, DEPOSIT AND OTHER RECEIVABLES

 

The following amounts are outstanding at September 30, 2020 and December 31, 2019:

 

  

As of
September 30,

2020

   As of
December 31,
2019
 
Deposit  $-   $1,619,808 
Other receivables   1,638    1,876 
Prepayments   120,085    20,000 
    121,723    1,641,684 

  

NOTE 11 – ACCRUALS AND OTHER PAYABLES

 

Accruals and other payable consist of the following:

 

  

As of
September 30,

2020

  

As of
December 31,

2019

 
Accruals  $685,833    298,453 
Other payables   231,738    - 
   $917,571    298,453 

  

NOTE 12 – BANK LOAN

 

The bank loan is part of a US Line of credit facility dated December 17, 2019 for a maximum principal of $2,296,805 expiring December 17, 2021 at an interest rate of LIBOR +3%. During the period ended June 30, 2020, this loan is secured against the Company’s financial asset of $2,820,625 as disclosed in note 7 above. In the quarter ended June 30, 2020, certain investments were disposed and this loan was fully repaid. .At September 30, 2020, there was no loan outstanding.

 

Interest expenses for the three months ended September 30, 2020 and 2019 amounted to $3,853 and $nil, respectively.

 

Interest expenses for the nine months ended September 30, 2020 and 2019 amounted to $52,388 and $nil, respectively.

 

NOTE 13 – INCOME TAX

 

The United States of America

 

Logiq, Inc. is incorporated in the State of Delaware in the U.S., and is subject to a gradual U.S. federal corporate income tax of 21%. The Company generated no taxable income for the year ended December 31, 2019 and 2018, and which is subject to U.S. federal corporate income tax rate of 21% and 34%, respectively.

   

   As of
September 30,
2020
   As of
December 31,
2019
 
U.S. statutory tax rate   21.00%   21.00%
Effective tax rate   21.00%   21.00%

 

DATALogiq (Logiq, Inc. formerly known as Origin8, Inc.)

 

As of September 30, 2020, this company does not have any deferred tax asset.

  

NOTE 14 – NOTES PAYABLE

 

On April 24, 2020, the Company’s subsidiary DATALogiq, (Logiq Inc formerly known as Origin8, Inc.) (“DATALogiq” received loan proceeds in the amount of $503,700 (the “PPP Loan”) under the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief and Economic Security Act and applicable regulations (the “CARES Act”).

 

Under the terms of the CARES Act, as amended by the Paycheck Protection Program Flexibility Act of 2020, DATALogiq is eligible to apply for and receive forgiveness for all or a portion of its PPP Loan. Such forgiveness will be determined, subject to limitations, based on the use of the loan proceeds for certain permissible purposes as set forth in the PPP, including, but not limited to, payroll costs (as defined under the PPP) and mortgage interest, rent or utility costs (collectively, “Qualifying Expenses”) incurred during the 24 weeks subsequent to funding, and on the maintenance of employee and compensation levels, as defined, following the funding of the PPP Loan. DATALogiq intends to use the proceeds of its PPP Loan for Qualifying Expenses. However, no assurance is provided that DATALogiq will be able to obtain forgiveness of the PPP Loan in whole or in part. Any amounts that are not forgiven incur interest at 1.0% per annum and monthly repayments of principal and interest are deferred until the Small Business Administration makes a determination on forgiveness. While DATALogiq’s PPP Loan currently has a two-year maturity, the amended law will permit DATALogiq to request a five-year maturity.

 

 13 
 

 

NOTE 15 – CONVERTIBLE PROMISSORY NOTES

 

From April to August 20, 2020, the Company entered into convertible promissory notes issued to various investors (the “2020 Notes”), whereby the Company borrowed $2,911,000. Proceeds received by the Company are in consideration for convertible promissory notes issued to the investors. The maturity date is July 20, 2021 and interest accrues at 10% per annum throughout the term of the 2020 Notes.

 

The 2020 Notes contained a contingent conversion feature as follows:

 

Qualifying Event shall be any of the following events: (i) a sale of any subsidiary. (ii) repayment to the Company in cash in full of amounts advanced to Weyland Indonesia Perkasa (“WIP”), an Indonesian limited liability company, an “Associate” of the Company, or (iii) upon the closing of a financing (or aggregated financings) of five million dollars ($5,000,000) or more, in gross proceeds to the Company.

 

The derivative liability is recorded at fair value with changes in fair value recognized in interest income (expense), net.

 

Contingent Conversion Upon a Qualifying Event –Effective upon closing a qualifying event, as defined above, the 2020 Notes will automatically be converted into common stock at a conversion price of $2.50. In the event there is no Qualifying event prior to Maturity Date, the Note holders would have the right either to be paid back principal with interest or to convert the outstanding principal and accrued interest at a conversion price of $1.20.

  

NOTE 16 – STOCKHOLDERS’ EQUITY

 

Common Stock

 

On February 25, 2020, the Company filed a certificate of amendment (the “Certificate of Amendment”) to the Company’s Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware, to effect a reverse stock split of the Company’s common stock, $0.0001 par value per share (“Common Stock”), at a rate of approximately 1-for-13 (the “Reverse Stock Split”).

 

Upon the filing of the Certificate of Amendment, and the resulting effectiveness of the Reverse Stock Split, every 13 outstanding shares of the Company’s Common Stock were, without any further action by the Company, or any holder thereof, combined into and automatically became 1 share of the Company’s Common Stock. No fractional shares were issued as a result of the Reverse Stock Split. In lieu thereof, fractional shares were cancelled, and stockholders received a cash payment in an amount equal to the fair market value of such fractional shares on the effective date. All shares of Common Stock eliminated as a result of the Reverse Stock Split have been returned to the Company’s authorized and unissued capital stock, and the Company’s capital was reduced by an amount equal to the par value of the shares of Common Stock so retired.

 

The Reverse Stock Split did not change the Company’s current authorized number of shares of Common Stock or its par value. As such, the Company is authorized to issue up to 250,000,000 shares of Common Stock, par value $0.0001.

 

Issuance of Common Stock

 

During the period from January 1, 2015 to June 8, 2015, 580,067,155 shares with par value of $0.0001 per share were issued to various stockholders.

 

During the period from September 2, 2015 to December 31, 2015, 1,163,600 shares with par value of $0.0001 per share were issued for legal and professional services, and 10,838,764 shares with par value of $0.0001 per share were issued to various stockholders.

 

During the year ended December 31, 2016, 9,747,440 shares with par value of $0.0001 per share were issued to various stockholders.

 

During the year ended December 31, 2017, 1,412,000 shares with par value of $0.0001 per share were issued for consultancy services received and 1,370,500 shares with par value of $0.0001 per share were issued to various stockholders.

 

During the year ended December 31, 2018, a total of 9,197,104 shares with par value of $0.0001 per share were issued for consultancy services received including shares issued to Senior Management, Directors, Operational Staff, Legal Consultants, Strategy Advisors and Technology Consultants received and 4,320,575 shares with par value of $0.0001 per share were issued to various stockholders.

 

In July 2019, the Company issued a total of 51,762,839 Reg S shares to high net worth individuals and family offices in South East Asia.

 

During the year ended December 31, 2019, a total of 19,311,309 shares with par value of $0.0001 per share were issued for consultancy services received including shares issued to Senior Management, Directors, Operational Staff, Legal Consultants, Strategy Advisors and Technology Consultants received and 58,627,601 shares with par value of $0.0001 per share were issued to various stockholders.

 

 14 
 

 

During the period from January 1, 2020 to March 31, 2020, a total of 3,792,515 shares (post reverse split of approximately 13: 1) with par value of $0.0001 per share were issued to various stockholders.

 

During the period from April 1, 2020 to June 30, 2020, a total of 138,500 shares (post reverse split of approximately 13: 1) with par value of $0.0001 per share were issued to various stockholders.

 

During the period from July 1, 2020 to September 30, 2020, a total of 1,117,075 shares (post reverse split of approximately 13: 1) with par value of $0.0001 per share were issued to various stockholders.

 

Capital reserve

 

On January 9, 2020, the Company issued 35,714,285 shares to Conversion Point Technologies Inc. as consideration for the acquisition of all the assets of DATALogiq (Logiq Inc formerly known as Origin8, Inc. incorporating Push Holdings Inc) in the amount of $14,284,714 and represents the excess of consideration over the par value of common stock of $0.0001 issued.

 

Cancellation of Common Stock

 

During the year ended December 31, 2016, 1,598,000 shares with par value of $0.0001 per share were cancelled by various stockholders.

 

During the year ended December 31, 2017, 100,000 shares with par value of $0.0001 per share were cancelled by various stockholders.

 

During the year ended December 31, 2018, 62,964 shares with par value of $0.0001 per share were cancelled by various stockholders.

 

During the year ended December 31, 2019, 3,550,000 shares with par value of $0.0001 per share were cancelled.

 

During the quarter ended March 31, 2020, 589 shares (post reverse split of approximately 13: 1) with par value of $0.0001 per share were cancelled.

 

During the quarter ended June 30, 2020, 296,157 shares (post reverse split of approximately 13: 1) with par value of $0.0001 per share were cancelled and reversed previously issued to consultants.

 

During the quarter ended September 30, 2020, 107,693 shares (post reverse split of approximately 13: 1) with par value of $0.0001 per share were cancelled and reversed previously issued to consultants.

 

Stock-Based Compensation

 

For the three months ended September 30, 2020, a total of 42,018 shares (post reverse split of approximately 13: 1) of common stock were issued as stock-based compensation to consultants.

 

NOTE 17 – (LOSS) PER SHARE

 

The following table sets forth the computation of basic and diluted earnings per common share for the nine months ended September 30, 2020 and 2019, respectively:

 

   For the three months ended
September 30,
   For the nine months ended
September 30,
 
   2020   2019   2020   2019 
                 
Numerator - basic and diluted                
Net (Loss)  $(2,878,549)  $(1,080,657)  $(7,367,188)  $(2,778,623)
                     
Denominator                    
Weighted average number of common shares outstanding —basic and diluted   12,753,230    5,578,806    12,203,769    4,031,809 
(Loss) per common share — basic and diluted  $(0.2257)  $(0.1937)  $(0.6037)  $(0.6892)

 

 15 
 

 

NOTE 18 – COMMITMENTS AND CONTINGENCIES

 

Operating lease

 

The Company’s current executive offices are currently leased for $820 per month.

 

DATALogiq, effective January 8, 2020, subleases approximately 350 square feet of office space in Irvine, CA, at a rate of $2,900 per month on a month to month basis. DATALogiq also leases approximately 30,348 square feet comprising 12,313 square feet of office space and 18,217 square feet of warehouse space in Minneapolis, Minnesota, at a rate of $367,200 per annum. The leased office space from a related party under common ownership is under a 7.5-year lease expiring December 31, 2021. The lease on the primary offices has a renewal option providing for additional lease periods. The related rent expense for the leases is calculated on a straight-line basis with the difference recorded as deferred rent.

 

The table below includes future minimum lease payments for leases renewed and entered into.

 

Future minimum lease payments under the non-cancellable operating lease agreements are as follows:

 

Remaining of 2020   $ 91,800  
2021   $ 367,200  

 

Legal proceedings

 

None.  

  

NOTE 19 – SEGMENT INFORMATION

 

Segment information

 

     APPLogiq     DATALogiq     Total  
For the three months ended September  30, 2020                  
External revenue   $ 3,206,346     $ 3,823,959     $ 7,030,305  
Inter-segment revenue     -       -       -  
Segment (Loss) before tax   $ (1,965,038 )   $ (913,511 )   $ (2,878,549 )
                         
For the three months ended September 30, 2019                        
                         
External revenue   $ 8,996,441       -     $ 8,996,441  
Inter-segment revenue     -       -       -  
Segment (Loss) before tax   $ (1,080,657 )     -     $ (1,080,657 )

 

   
 APPLogiq
    DATALogiq     Total  
For the nine months ended September  30, 2020                  
External revenue   $ 20,645,584     $ 10,681,175     $ 31,326,759  
Inter-segment revenue     -       -       -  
Segment (Loss) before tax   $ (4,175,045 )   $ (3,192,143 )   $ (7,367,188 )
                         
For the nine months ended September 30, 2019                        
                         
External revenue   $ 24,630,065       -     $ 24,630,065  
Inter-segment revenue     -       -       -  
Segment (Loss) before tax   $ (2,778,623 )     -     $ (2,778,623 )

 

 16 
 

 

NOTE 20 – SUBSEQUENT EVENTS

 

Weyland Indonesia Perkasa (WIP) 

 

On October 7, 2020 the Company entered into an agreement to convert a portion approximately $4,073,700 of the Amount due from Associate to a Preferred Equity in the same amount. The issuance of the preferred equity is pending a resolution by Weyland Indonesia Perkasa's (“WIP”) Board. The conversion to preferred equity is necessary to enable the exercise of the Company’s 31% Option for WIP equity referred to in Note 8 above.

 

Registered Offering of Common Stock

 

On October 13, 2020, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with an investor (the “Purchaser”), pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “Registered Offering”), 150,000 shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), to the Purchaser at an offering price of $5.00 per share.

 

The Registered Offering resulted in gross proceeds of approximately $750,000 before deducting offering expenses. The Shares were offered by the Company pursuant to a prospectus supplement to the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-248069), which was initially filed with the Securities and Exchange Commission (the “Commission”) on August 17, 2020, and was declared effective on August 26, 2020. The Registered Offering closed on October 15, 2020.

 

Fixel Merger Agreement

 

On October 30, 2020, the Company, Fixel AI Inc., a Delaware corporation (“Fixel”), Logiq Fixel Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company (“Merger Sub”), Etgar Shpivak, Hadar Shpivak and Elad Levy (collectively, the “Founders”) entered into an Agreement and Plan of Merger (the “Merger Agreement”), whereby Merger Sub merged with an into the Fixel with Fixel as the surviving corporation and a wholly-owned subsidiary of the Company (the “Merger”). Pursuant to the Merger among other things, all of the shares of common stock of Fixel (“Fixel Shares”) were converted into shares of common stock of the Company.

 

The closing of the transactions (the “Closing”) contemplated in the Merger Agreement occurred on November 2, 2020 (the “Closing Date”). On the Closing Date, the parties to the Merger Agreement caused the Certificate of Merger to be filed with the Delaware Secretary of State in accordance with Delaware General Corporation Law (“DGCL”).

 

On the Closing Date, the Company issued 564,467 restricted shares of its common stock to Fixel Stockholders, of which the shares allocated to the Fixel stockholders that are residents of Israel (“Israel Stockholders”) will be delivered to an independent third-party escrow (the “Escrow Shares”), where (i) such shares will be released to Israel Stockholders upon each Israel Stockholder’s compliance with the 104H tax ruling issued by certain tax authorities of Israel in connection with the Merger and (ii) shares held by Founders making up approximately 20% of the shares issued will be held subject to offset for indemnification purposes. The Shares were issued at a trailing twenty (20) day VWAP of $8.86 per share.

 

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

 

Forward Looking Statements

 

This quarterly report on Form 10-Q and other reports that we file with the SEC contain statements that are considered forward-looking statements. Forward-looking statements give the Company’s current expectations, plans, objectives, assumptions or forecasts of future events. All statements other than statements of current or historical fact contained in this quarterly report, including statements regarding the Company’s future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “estimate,” “plans,” “potential,” “projects,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend,” and similar expressions. These statements are based on the Company’s current plans and are subject to risks and uncertainties, and as such the Company’s actual future activities and results of operations may be materially different from those set forth in the forward-looking statements. Any or all of the forward-looking statements in this periodic report may turn out to be inaccurate and as such, you should not place undue reliance on these forward-looking statements. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs. The forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and assumptions due to a number of factors, including:

 

  dependence on key personnel;

 

  competitive factors;

 

  degree of success of research and development programs;

 

  the operation of our business; and

 

  general economic conditions in the ASEAN, Asia-Pacific Region and in the United States.

 

These forward-looking statements speak only as of the date on which they are made, and except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements contained in this quarterly report.

 

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Use of Terms

 

Except as otherwise indicated by the context and for the purposes of this report only, references in this report to:

 

  “Logiq” the “Company,” “we,” “us,” or “our,” are to the business of Logiq Inc  (formerly known as Weyland Tech Inc.), a Delaware corporation;

 

  “SEC” are to the Securities and Exchange Commission;

 

  “Securities Act” are to the Securities Act of 1933, as amended;

 

  “Exchange Act” are to the Securities Exchange Act of 1934, as amended;

 

  “U.S. dollars,” “dollars” and “$” are to the legal currency of the United States.

 

You should read the following plan of operation together with our financial statements and related notes appearing elsewhere in this quarterly report and the most recent Form 10-K and Form 10-Q. This plan of operation contains forward-looking statements that involve risks, uncertainties, and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors.

 

Overview

 

Logiq Inc (formerly known as Weyland Tech Inc) (the “Company”) is a global e-commerce, m-Commerce, MArTech and Fintech enablement platform to empower Mobile users.

 

APPLogiq: Subscription-based, platform-as-a-service (“PaaS”) platform for users to create mobile apps to market, sell and deliver goods and services. APPLogiq offers a mobile presence to businesses in emerging markets, with partnerships on 3 continents and growing. This Do It Yourself (“DIY”) mobile application platform, offered in 14 languages with over 70 integrated modules, enables small and medium sized businesses (“SMBs”) to create native mobile applications (“apps”) for Apple’s iOS and Google Android without technical knowledge or background, empowering SMBs to increase sales, reach more customers and promote their products and services in an easy, affordable and efficient manner.

 

DATALogiq: MarTech AI-driven data engine captures and directs consumer intent to promote customers leads, engagement and monetary conversion for enterprises & brands.

 

In May 2018, the Company expanded its portfolio to fintech applications with the launch of its AtozPay mobile payments platform. (PAYLogiq)

 

In the fall of 2019, the Company expanded its portfolio to short-distance food delivery service with the launch of AtozGo. (GOLogiq)

 

In January 2020, the Company, through its wholly-owned subsidiary, Logiq, Inc., also kwown as DATALogiq, (formerly known as Origin8, Inc.) (“DATALogiq”), completed the acquisition of substantially all of the assets of Push Holdings, Inc. DATALogiq operates a consumer data management platform powered by lead generation, online marketing, and multichannel reengagement strategies through its owned and operated brands. DATALogiq has developed a proprietary data management platform and integrated with several third-party service providers to optimize the return on its marketing efforts. DATALogiq focuses on consumer engagement and enrichment to maximize its return on acquisition through repeat monetization of each consumer. DATALogiq also licenses its software technology and provides managed technology services to various other e-commerce companies. DATALogiq is located in Minneapolis, Minnesota, USA.

 

COVID-19 Effect

 

Due to the unprecedented effect and related impact of Covid-19 pandemic, the Company has experienced a push back from the Company’s resellers and white label distributors, for its Platform as a Service pay-to-use subscription basis, noted in April 2020 to the date of this report. The Company is expecting a continuing reduction in its service revenues, as it provides complimentary services to maintain customers and loss of customers, in the remaining period to December 31, 2020 on an as needed basis.

  

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Results of Operation

 

Results of Operations for the Three Months ended September 30, 2020 and 2019

 

The following tables set forth our results of operations for the three months period ended September 30, 2020 and 2019 respectively, presented in dollars and as a percentage of net revenue:

 

   Three Months ended 
   September 30, 2020   September 30, 2019 
Revenue (service)  $7,030,305    100.00%  $8,996,441    100.00%
Cost of revenues (service)   5,919,848    84.20    7,399,583    82.25 
Gross profit   1,110,457    15.80    1,596,858    17.75 
                     
Depreciation and Amortization   455,424    6.48    25,483    0.28 
General and administrative   1,968,763    28.00    1,557,960    17.32 
Sales and Marketing   544,970    7.75    -    - 
Research and development   1,018,389    14.49    1,126,165    12.52 
Total operating expenses   3,987,546    56.72    2,709,609    30.12 
(Loss) from operations   (2,877,089)   (40.92)   (1,112,751)   (12.37)
                     
Other Income (Expenses), net   (1,460)   (0.02)   32,094    0.36 
Impairment loss on investment in associate   -    -    -    - 
Net (loss) before income tax   (2,878,549)   (40.94)   (1,080,657)   (12.01)
Income tax (expense)   -    -    -    - 
Net (loss)  $(2,878,549)   (40.94)  $(1,080,657)   (12.01)

 

Segment Reporting

 

We consolidated the results of our subsidiary, Logiq Inc, also known as DATALogiq, (formerly known as “Origin8 Inc” incorporating the business and assets of Push Holdings Inc) from January 8, 2020 and the comparatives for the three months ended September 30, 2019 are not applicable (“N/A”).  

 

Revenue

 

Consolidated Revenues were $7,030,305 and $8,996,441 for the three months ended September 30, 2020 and 2019, respectively.

 

The revenues from the our APPLogiq platform decreased to $3,206,346 compared to $8,996,441 for the three months ended September 30, 2020 and 2019, respectively as a result of providing complimentary subscriptions to retain our customers impacted by Covid-19 pandemic and discontinuing certain white-label relationships deemed to be both low margin income and high operating expense (“OPEX”) areas of business. In late Q3, the CreateApp platform, renamed APPLogiq, introduced a pilot program through a 100% digital, direct sales channel which has shown higher profit margins (35-40%), at a significantly reduced cost from the previous white label partnerships. We believe that through this model, the lower margin/high operating cost white label partnerships can be replaced with this digital model offering higher profit margin business and considerably lower costs.

 

Our data logic platform DATALogiq revenues were $3,823,959 (2019: N/A).

 

Cost of Revenue

 

Consolidated Cost of revenues were $5,919,848 and $7,399,583 for the three months ended September 30, 2020 and 2019, respectively.

 

The Cost of revenues of the Company’s APPLogiq platform decreased to $2,818,956 and $7,399,583 for the three months ended September 30, 2020 and 2019,

 

Our data logic platform cost of revenue from DATALogiq were $3,100,892 (2019: N/A).

 

Gross margin

 

Our consolidated gross margin reduced to 15.80% from 17.75% for the three months ended September 30, 2020 and 2019.

 

Our APPLogiq platform gross margin reduced to 12.08% from 17.75% as a result of providing complimentary services and discounting to maintain customers during Covid-19 pandemic. However, the Company’s management believes that moving forward, gross margins will increase when providing complimentary services ends and from the discontinued lower margin white label resellers. In late Q3, the CreateApp platform, renamed APPLogiq, introduced a pilot program through a 100% digital, direct sales channel which has shown higher profit margins (35-40%), at a significantly reduced cost from the previous white label partnerships. We believe that through this model, the lower margin/high operating cost white label partnerships can be replaced with this digital model offering higher profit margin business and considerably lower costs.

 

Our data logic platform DATALogiq gross margin was 18.91% for the three months September 30, 2020. (2019: N/A).

 

Other Income/(Expenses), net

 

Consolidated Other income (expenses), net were ($1,460) and $32,094 for the three months ended September 30, 2020 and 2019, respectively.

 

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Operating Expenses

 

General and administrative: Consolidated General and administrative expenses were $1,968,763 and $1,557,960 for the three months ended September 30 2020 and 2019, respectively.

 

The APPLogiq’s General and administrative expenses were $905,200 and $1,557,960 for the three months ended September 30, 2020 and 2019, respectively. This included a reversal of Consultancy fees of ($164,501) due to cancellation of shares issued previously for the three months ended September 30, 2020.

 

Our data logic platform DATALogiq’s General and administrative expenses were $1,063,563 (2019: N/A).

 

Research and Development: Consolidated Research and Development expenses were $1,018,389 and $1,126,165 for the three months ended September 30, 2020 and 2019, respectively.

 

Our APPLogiq platform Research and Development expenses were $954,500 and $ 1,126,165 for the three months ended September 30, 2020 and 2019, respectively which were scaled back from Q2 on the onset of the Covid-19 pandemic. Our data logic platform DATALogiq’s Research and Development expenses was $63,889. (2019: N/A).

 

Sales and Marketing: Consolidated Sales and Marketing expenses were $544,970 for the three months ended September 30, 2020 (2019:N/A).

 

The Company’s Sales and Marketing activities was curtailed due to Covid-19 to $459,000 for the three months ended September 30, 2020. (2019:N/A)

 

Our data logic platform DATALogiq’s Sales and Marketing expenses was $85,970 (2019: N/A).

 

Net (Loss)

 

The Company reports a Consolidated net loss of ($2,878,549) for the three months ended September 30, 2020 as compared to a net loss ($1,080,657) for the three months ended September 30, 2019.

 

The Company incorporating our APPLogiq platform incurred a net loss of ($1,965,038) and ($1,080,657) for the three months ended September 30, 2020 and 2019, respectively.

 

Our data logic platform DATALogiq incurred a net loss of ($913,511) for the three months ended September 30, 2020 (2019: N/A).

 

Results of Operations for the Nine Months ended September 30, 2020 and 2019

 

The following tables set forth our results of operations for the nine months period ended September 30, 2020 and 2019 respectively, presented in dollars and as a percentage of net revenue:

 

   Nine Months ended 
   September 30, 2020   September 30, 2019 
Revenue (service)  $31,326,759    100.00%  $24,630,065    100.00%
Cost of revenues (service)   26,351,514    84.12    20,258,258    82.25 
Gross profit   4,975,245    15.88    4,371,807    17.75 
                     
Depreciation and Amortization   1,354,674    4.32    76,450    0.31 
General and administrative   6,346,531    20.26    3,479,751    14.13 
Sales and Marketing   697,190    2.23    389,610    1.58 
Research and development   3,681,162    11.75    3,236,713    13.14 
Total operating expenses   12,079,557    38.56    7,182,524    29.16 
(Loss) from operations   (7,104,312)   (22.68)   (2,810,717)   (11.41)
                     
Other Income (Expenses), net   (262,876)   (0.84)   32,094    0.13 
Impairment loss on investment in associate   -    -    -    - 
Net (loss) before income tax   (7,367,188)   (23.52)   (2,778,623)   (11.28)
Income tax (expense)   -    -    -    - 
Net (loss)  $(7,367,188)   (23.52)  $(2,778,623)   (11.28)

 

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Segment Reporting

 

We consolidated the results of our subsidiary, Logiq Inc, also known as DATALogiq, (formerly known as “Origin8 Inc” incorporating the business and assets of Push Holdings Inc) from January 8, 2020 and the comparatives for the nine months ended September 30, 2019 are not applicable (“N/A”).  

 

Revenue

 

Consolidated Revenue was $31,326,759 and $24,630,065 for the nine months ended September 30, 2020 and 2019, respectively.

 

The revenues from the our APPLogiq platform were $20,645,584 and $24,630,065 for the nine months ended September 30, 2020 and 2019, respectively. Our Q3 APPLogiq revenues were adversely impacted as a result of providing complimentary subscriptions to retain our customers affected by Covid-19 pandemic and discontinuing certain white-label relationships, deemed to be both low margin income and high operating expense (“OPEX”) areas of business, reduced to $ 3,206,346 from $5,653,495 in Q2. In late Q3, the CreateApp platform, renamed APPLogiq, introduced a pilot program through a 100% digital, direct sales channel which has shown higher profit margins (35-40%), at a significantly reduced cost from the previous white label partnerships. We believe that through this model, the lower margin/high operating cost white label partnerships can be replaced with this digital model offering higher profit margin business and considerably lower costs.

 

Our data logic platform DATALogiq’s revenue effective January 9, 2020 were $10,681,175. (2019: N/A)

 

Cost of Revenue

 

Consolidated Cost of revenue were $26,351,514 and $20,258,258 for the nine months ended September 30, 2020 and 2019, respectively.

 

The Cost of revenues of the Company’s APPLogiq platform reduced to $17,513,193 and $20,258,258 for the nine months ended September 30, 2020 and 2019.

 

Our data logic platform DATALogiq’s Cost of revenues was $8,838,321 (2019: N/A).

 

Gross margin

 

Our Consolidated gross margin reduced to 15.88% from 17.75% for the nine months ended September 30, 2020 and 2019, as a result of providing complimentary services and discounting to maintain customers during Covid-19 pandemic.

 

Our APPLogiq platform gross margin reduced to 15.17% from 17.75% as a result of providing complimentary services and discounting to maintain customers during Covid-19 pandemic as well as discontinuing certain white-label relationships deemed to be both low margin income and high operating expense (“OPEX”) areas of business. In late Q3, the CreateApp platform, renamed APPLogiq, introduced a pilot program through a 100% digital, direct sales channel which has shown higher profit margins (35-40%), at a significantly reduced cost from the previous white label partnerships. We believe that through this model, the lower margin/high operating cost white label partnerships can be replaced with this digital model offering higher profit margin business and considerably lower costs.

 

Our data logic platform DATALogiq gross margin was 17.25% for the nine months ended September 30, 2020 (2019: N/A).

 

Other Income/(Expenses), net

 

Consolidated Other income (expenses), net was ($262,876) and $32,094 for the nine months ended September 30, 2020 and 2019, respectively.

 

The Company received interest from US fixed income money market funds $44,121 against loss on change in fair value of ($52,077).

 

Our data logic platform DATALogiq incurred other expense of $254,609 due to the early withdrawal from an escrow account.

 

Operating Expenses

 

General and administrative: Consolidated General and administrative expenses were $6,346,531 and $3,479,751 for the nine months ended September 30, 2020 and 2019, respectively.

 

APPLogiq’s General and administrative expenses were $3,259,419 and $3,479,751 for the nine months ended September 30, 2020 and 2019, respectively. During the period, we incurred Investor and public relations costs of $832,843 (2019: $514,264) in connection with our up-listing plans to a more senior stock exchange and related fund raising.

 

Our data logic platform DATALogiq’s General and administrative expenses was $3,087,112 (2019: N/A).

 

Research and Development: Consolidated Research and Development expenses were $3,681,162 and $3,236,713 for the nine months ended September 30, 2020 and 2019, respectively.

 

Our APPLogiq platform Research and Development expenses were $3,498,500 and $3,236,713 for the nine months ended September 30, 2020 and 2019, respectively. Our Research and Development plans were scaled back from Q2 on onset of Covid-19 to $954,500 for the three months ended September 2020.

 

Our data logic platform DATALogiq’s Research and Development expenses was $182,662. (2019: N/A).

 

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Sales and Marketing: Consolidated Sales and Marketing expenses were $697,190 and $389,610 for the nine months ended September 30, 2020 and 2019, respectively.

 

The Company’s Sales and Marketing activities $459,000 and $389,610 for the nine months ended September 30, 2020 and 2019, respectively.

 

Our data logic platform DATALogiq’s Sales and Marketing expenses was $238,190 (2019: N/A)

 

Net (Loss)

 

The Company reports a Consolidated net loss of ($7,367,188) for the nine months ended September 30, 2020 as compared to a net loss ($2,778,623) for the nine months ended September 30, 2019.

 

The Company incorporating our APPLogiq platform incurred a net loss of ($4,175,045) and ($2,778,623) for the nine months ended September 30, 2020 and 2019, respectively.

 

Our data logic platform DATALogiq incurred a net loss of ($3,192,143) for the nine months ended September 30, 2020 (2019: N/A).

 

Liquidity and Capital Resources

 

During the nine months period ended September 30, 2020, our primary sources of capital came from our operations, existing cash, government loans and third-party financing.

 

Our future capital requirements will depend on many factors including our growth rate, the timing and extent of spending to support development efforts, the expansion of our sales and marketing, the timing of new product introductions and the continuing market acceptance of our products and services. If cash generated from operations is insufficient to satisfy our capital requirements, we may open a revolving line of credit with a bank, or we may have to sell additional equity or debt securities or obtain expanded credit facilities to fund our operating expenses, pay our obligations, diversify our geographical reach and grow our company. In the event such financing is needed in the future, there can be no assurance that such financing will be available to us, or, if available, that it will be in amounts and on terms acceptable to us. If cash flows from operations became insufficient to continue operations at the current level, and if no additional financing was obtained, then management would restructure the Company in a way to preserve its business while maintaining expenses within operating cash flows.

 

However, we estimate that based on current plans and assumptions, that our available cash will be sufficient to satisfy our cash requirements under our present operating expectations, without further financing, for up to 12 months. We have sufficient working capital to fund the expansion of our operations and to provide working capital necessary for our ongoing operations and obligations.

 

A summary of our changes in cash flows for the nine months ended September 30, 2020 and 2019 is provided below:

 

   Nine months ended
September 30,
 
   2020   2019 
Net cash flows provided by (used in):        
Operating activities  $(6,864,169)  $(3,960,340)
Investing activities   3,333,521    - 
Financing activities   5,405,283    9,049,614 
Net increase in cash and cash equivalents   1,874,635    5,089,274 
Cash, cash equivalents, beginning of period   2,972,649    731,355 
Cash, cash equivalents end of period  $4,847,284   $5,820,629 

 

As of September 30, 2020, we had total assets of $25,235,781 and $7,616,265 in liabilities. We have a total shareholders’ equity of $17,619,516 as of September 30, 2020.

 

As of September 30, 2020, we had cash and cash equivalents of $4,847,284, including our subsidiary DATALogiq (Logiq Inc formerly known as Origin8 Inc incorporating Push Holdings Inc) cash and cash equivalents of $904,437.

 

Cash Used Provided by Operating Activities

 

Operating activities used ($6,864,169) in operations for the nine months ended September 30, 2020, as compared to ($3,960,340) for the nine months ended September 30, 2019. This increase is attributable to net loss from consolidated operations of ($7,367,188) comprising the Company and APPLogiq’s loss of ($4,175,045) and that of our subsidiary DATALogiq Inc of ($3,192,143).

 

Cash Used in Investing Activities

 

The Company invested in Financial assets held for resale of $1,000,000 and disposed $2,733,949 during in the nine months ended September 2020 and net cash held by our subsidiary DATALogiq of $1,599,572.

 

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Cash Provided by Financing Activities

 

Financing activities provided $5,405,283 in cash for the nine months ended September 30, 2020, as compared to $9,049,614 for the nine months ended September 30, 2019. This overall decrease in proceeds from issuance of convertible promissory notes of $2,911,000 by the Company and a new Covid-19 loan in the form of Notes payable by our subsidiary DATALogiq (formerly Origin8 Inc incorporating Push Holdings Inc) of $503,700 compared to prior period a $6,411,851 gross aggregate proceeds less costs $775,000 from non U.S. Persons (per Rule 902(k) of Regulation S of Securities Act of 1933) placement to high net worth individuals and family offices in South East Asia in August 19, 2019.

 

As reflected in the financial statements, the Company had net cash, cash equivalents in operations of $4,847,284, a net consolidated loss of $7,367,188 and an accumulated deficit of $54,980,845 as at September 30, 2020.

 

We estimate that based on current plans and assumptions, that our available cash will be sufficient to satisfy our cash requirements under our present operating expectations, without further financing, for up to 12 months. We have sufficient working capital to fund the expansion of our operations and to provide working capital necessary for our ongoing operations and obligations. We may continue to raise significant additional capital to fund our operating expenses, pay our obligations, diversify our geographical reach and grow our company.

 

Critical Accounting Policies

 

For a description of our critical accounting policies, see Note 2 – Summary of Significant Accounting Policies in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

 

Recently Issued Accounting Pronouncements

 

For a description of our recently issued accounting pronouncements, see Note 2 – Summary of Significant Accounting Policies in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

 

Off-Balance Sheet Arrangements

 

The Company has no off-balance sheet arrangements.

 

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

 

Item 4. Controls and Procedures.

 

a) Evaluation of Disclosure Controls and Procedures

 

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

As of the end of the period covered by this report, we have carried out an evaluation of the effectiveness of the design and operation of our company’s disclosure controls and procedures, and our current procedures are in full compliance with disclosure controls and procedures.

 

b) Management’s Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Our internal control system was designed to, in general, provide reasonable assurance to the Company’s management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Our management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2020. The framework used by management in making that assessment was the criteria set forth in the document entitled “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on this assessment, our management has concluded that our internal controls were effective as of September 30, 2020.

 

c) Changes in Internal Control over Financial Reporting

  

Except as disclosed in the preceding paragraphs, there have been no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

 

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PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations, except as set forth below. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

 

Item 1A. Risk Factors

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

 

We must successfully navigate the demand, supply and operational challenges associated with the ongoing coronavirus (COVID-19) pandemic.

 

Certain segments of our business has begun to be negatively affected by a range of external factors related to COVID-19 that are not within our control. For example, numerous measures have been implemented by governmental authorities across the globe to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place orders, restrictions and limitations of public gatherings, and business limitations and shutdowns. Many of our customers’ businesses have been severely impacted by these measures and some have been required to reduce employee headcount as a result. If a significant number of our customers are unable to continue as a going concern, this would have an adverse impact on our business and financial condition. In addition, many of our customers are working remotely, which may delay the timing of new business and implementations of our services. If COVID-19 continues to have a substantial impact on our partners, customers, vendors, resellers, or suppliers, our results of operations and overall financial performance will be harmed.

 

The impacts of COVID-19 on our business, customers, partners, vendors, resellers, suppliers, employees, markets and financial results and condition are uncertain, evolving and dependent on numerous unpredictable factors outside of our control, including:

 

  the spread, duration and severity of COVID-19 as a public health matter and its impact on governments, businesses and society generally and our clients, partners, vendors, resellers, suppliers and our business more specifically;

 

  the measures being taken by governments, businesses and society in response to COVID-19 and the effectiveness of those measures;

 

  the scope and effectiveness of fiscal and monetary stimulus programs and other legislative and regulatory measures being implemented by federal, state and local governments in response to COVID-19;

 

  the duration and impact of the numerous measures implemented by governmental authorities throughout the country to contain COVID-19, including travel bans and restrictions, quarantines, shelter-in-place orders, restrictions and limitations on public gatherings, and business limitations and shutdowns;

 

  the increase in business failures or slowdowns among our customers, vendors, resellers, suppliers, and other businesses;

 

  the pace and extent to which our customers and other businesses are able to operate and/or reduce their number of employees and other compensated individual;

 

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  the willingness of current and prospective clients to invest in our products and services;

 

  the willingness of current and prospective clients to buy and install products and services remotely;

 

  the satisfaction of customers with product and service remote delivery and support; and

 

  the continuing extension of complimentary subscriptions to retain our customers.

 

If we are not able to respond to and manage the impact of such events effectively, our business will be adversely impacted.

 

At present, it is clear the global economy has been negatively impacted by COVID-19, and demand for some of our products and services have been reduced due to uncertainty and the economic impact of COVID-19.

 

More generally, COVID-19 raises the possibility of an extended global economic downturn, which could affect demand for our products and services and impact our results and financial condition even after the pandemic is contained and remediation/restriction measures are lifted. For example, we may be unable to collect receivables from customers that are significantly impacted by COVID-19. COVID-19 may also have the effect of heightening many of the other risks described in the “Risk Factors” section of our Annual Report on Form 10-K. We will continue to evaluate the nature and extent of the impact of COVID-19 may have on our business.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

There were no unregistered shares of equity securities sold during this time period which were not previously disclosed.

 

Item 3. Defaults Upon Senior Securities

 

None

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

There is no other information required to be disclosed under this item which was not previously disclosed.

 

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Item 6. Exhibits

 

Exhibit No.   Description of Exhibit
10.1   Convertible promissory note Agreement
31.1*   CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a) AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
31.2*   CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a) AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
32.1*   CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
32.2*   CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 
101.INS   XBRL Instance Document*
101.SCH   XBRL Taxonomy Extension Schema Document*
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB   XBRL Taxonomy Extension Label Linkbase Document*
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document*

 

* 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.

 

  LOGIQ, INC.
   
November 16, 2020 /s/ Brent Y Suen
  President
  (Principal Executive Officer
  and Principal Financial Officer)
   
  /s/ Lionel Choong
  Lionel Choong
  Chief Accounting Officer

 

 

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