Logiq Inc

OTC:LGIQ

Earnings Call Transcript 2023-Q1

[Brent Suen, executive]

Good morning, and thank you, everyone, for joining us today to discuss the results for Logiq year ended December 31, 2022. Joining us today are myself; our Chief Operating Officer, Chris Andrews; and the founder of the company's new Park Place subsidiary, Samantha Ettus and her brother, Tim, he was a co-founder; our former COO and probably busier than ever on the M&A and strategy side, John McNeil, folks from CMA, and about 40-some-odd participants from the shareholder base.

So thanks, everyone, for joining. Much appreciated. I will go through some prepared remarks, winging it a little bit. And then I've invited Chris and Sam to say a few words as well as our new director, Peter Bordes, and I see them right there. You can wave, if you like, Pete. Yes. And also, one of our shareholders who has made some very keen observations and some advice, I've taken to heart, brought it up the other day that I should probably expand the speakers who are on the calls because lately, it's just been me. And perhaps some people might think, hey, is this just a one-man show and it's Brent and his basement? Or is there really still a team here? . Yes, there is. So I see a bunch of them on here. I won't say hi to everyone because they're numerous, but you guys can see there's Samantha Ettus , Tim Ettus , Chris Andrews, John McNeil, and Peter Bordes, who's just joined our Board. So after the presentation, I will take some Q&A. [Operator Instructions].

Okay. So last week, as you saw, we reported our financial results for the fourth quarter and year-end 2022. To mention that in July, of last year, we completed the spin-off of our GoLogiq business, which included the CreateApp and AppLogiq e-commerce technologies. So in the press release that we issued and in the financial results, on Form 10-K. We reported pro forma financial results that exclude the divested business. And so we only provide the results from our continuing Datalogiq operations.

For those of you who are interested, our GAAP results for the full year 2022 can be found at sec.gov in the annual report we filed on Form 10-K. Financial highlights. On a pro forma basis, our fourth quarter 2022 revenues totaled $8.4 million, which was up 121% from the previous quarter, if you segment it out and up 22% over the same year ago quarter.

Our full year revenues totaled $20.3 million, which was down 12%, predominantly in the first half of the year, and that was partly due to lower digital advertising spend industry-wide and only about 9 months of contribution from our Battle Bridge acquisition, which we closed on March 31 of last year. Based on the strong existing contracts, and revenue streams that we secured in the second half of the year actually it was in September and October, we officially on-boarded one particular client in mid-November, which contributed a substantial amount to revenues.

So we entered this year at a more than $40 million annualized revenue run rate. And so we do expect with the recent acquisition of Park Place payments, we are estimating our annualized run rate increased to more than $45 million for this year.

Q4 2022 operational highlights. In terms of operational progress for the quarter, we continued to advance the completion of the merger of our Datalogiq business in the filings and in the press releases, you'll see it as DLQ but that is our core business. And that is a business combination with the NASDAQ traded SPAC, [indiscernible] that we announced last September. We have been processing comments that we received from the Securities and Exchange Commission regarding the merger and our related Form S-4 filing.

We had to do a stand-alone audit of 2020, 2021 and last year of DQ on its own minus the corporate expenses of being public and other ancillary costs that would have included AppLogiq, that is why we were late filing because we did not complete that until after the deadline for filing.

So we extended a bit beyond. So there's actually 2 audits, DLQ itself and then what we had to roll into the public company financials.

We did have a great fourth quarter, and it was because we were awarded a major managed services contract valued at around $3 million in revenue per month. And this year, it's been a little higher for a couple of months. That was from contribution of Battle bridge in one of the main reasons we acquired Battle Bridge last year was their strong customer pipeline. And certainly, they're Head of Sales and Founder, Travis Phipps, who has secured that contract and has more in the pipeline. This is actually the largest such contract in our history, and it contributed significantly to the $8.4 million in revenues that we booked in the fourth quarter.

Also in the fourth quarter, we formed a strategic alliance with MediaJel, which is a leading marketing platform that primarily serves regulated industries. Our consumer targeting and acquisition capabilities have been greatly enhanced by access to MediaJel's consumer audience engine and programmatic digital marketing platform. I'm going to have Chris Andrews speak more to this in a few moments.

And I'm also going to fast forward here to the end of last month, when we announced that we acquired Park Place Payments, which is an award-winning fintech company, which has been delivering innovative merchant payment solutions and adjacent financial services to SMBs through its nationally distributed local sales force. I'm sure it sounded like it was written for me and I read it because I did Park Place's annualized transaction volume currently totals around $180 million. which it expects to generate around $5 million in revenue and anticipating positive cash flow exiting this year. And this additional revenue has increased our overall annualized revenue run rate to more than $45 million for this year.

That excludes other acquisitions that I have said we are targeting and we'll move forward on Sam will share more about Park Place and her goals for the company shortly. So over the course of the last year, we completed the integration of Battle bridge along with a very challenging restructuring plan designed to better position us for growth, both organically and through acquisition.

This involved completing the spin out of the GoLogiq business and our strategy for this spin out has gone relatively well with Go Logiq recently completing a transformative major acquisition and a number of letters of intent for continued acquisitions. We anticipate retaining our minority ownership along with those shareholders who received GoLogiq share to become great beneficiaries of this progress.

We expect to announce some more very exciting news before the end of the week -- this week actually. So we're quite excited about that. For continuing operations, by late last November, we began to see strong traction with our growth strategy in the major client win from Battle Bridge. As I mentioned, this helped us begin the year and an estimated annualized revenue run rate of more than $40 million. I think I've said that 3 times, 4 times. We do continue to see industry environment presenting many accretive M&A opportunities for us. This includes companies involved in ad tech, direct-to-consumer sales, specialized digital advertising and performance marketing, all of which are generating significant revenue growth in our breakeven to -- breakeven to profitable. And we have been evaluating a number of potential acquisitions that are at various stages and could significantly strengthen our platform.

What I would point out is that the addition of Peter Bordes to the Board, certainly Chris Andrews is our COO. We hoped it would free John up a bit more on the M&A side. But with the addition of Sam and Tim on the Parkway side, Tim is going to be able to certainly assist on the M&A and strategy side while letting Sam continue to focus on building the sales team. Sorry, I'm just still admitting people from the waiting room to the call. Peter is a 25-year ad tech veteran and again, recently joined our Board. Pete is going to be helping us on acquisitions and certainly developing strategy.

Pete, you can weigh again if you want.

[Peter Bordes, executive]

Everyone. Good to be here.

[Brent Suen, executive]

Great. Okay. So at the beginning of this year, we appointed Chris Andrews as our new Chief Operating Officer, and he succeeded John, who was appointed to the new role of SVP of Mergers and Acquisitions. Chris brings us more than 20 years of leadership experience and a great talent for unlocking revenue opportunities. As former Ogilvy Health and WPP Chief Technology and Information Officer, he has an extensive record of achievement, including creating $150 million plus revenue streams through technology innovation.

And with that introduction, I would like to hand it off to Chris to talk a little bit about MediaJel.

[Christopher Andrews, executive]

Thanks, Brent, and thanks, everyone, for joining us today. Last year, we launched an initiative to enter a regulated industry verticals. And as Brent stated, this resulted in us forming a strategic alliance with MediaJel. In addition to the regulated brands, this partnership gained us access to MediaJel's consumer intelligence platform and increased our channel reach, allowing us to strengthen our capabilities for consumer targeting and new customer acquisition. We are continuing the process of integrating MediaJel's platform from our AI-powered programmatic advertising platform, Rebel AI, which you probably heard about, which enables brands and agencies to securely buy media and activate their first-party data.

We anticipate the results of this integration to enhance our revenue generation and expand our gross margins beginning in this quarter. MediaJel represents an ideal partner with domain expertise in a regulated industry, solid customer base, new targeting tools for customer acquisition engagement and a transparent attribution technology. Together, we expect to become a key player in the cannabis digital marketing and advertising space. And as just to give you guys a Heads Up as of today, we have several brands already successfully launched and running because of this partnership. Now I'd like to turn the call over to Sam to talk a little bit about Park Place. Thanks, Sam.

[Samantha Ettus, executive]

Thanks so much, Chris. So it has been an amazing few weeks. We are so excited to be part of the Logiq family. I can't even express what a synergistic culture it is, and we're just thrilled. And now I think given the capabilities of Logiqs powerful AI-driven digital advertising and marketing platform, that Chris spoke about, it really allows us to harness the capabilities and make it so that we can experience unprecedented growth.

Migrates has focus over the next year, we'll be unlaunching our expanded sales force as a Service platform and increasing our localized sales force to 2,500 from 1,500 where we are today. We'll also be widening our array of product offerings. So right now, we sell payment processing, but we're going to be expanding that to a number of other products. I saw in the chat, someone asked about selling Logiq's products.

And definitely, that is in the works, we have a lot of things that we're excited about adding to our suite of offering them a lot of higher-margin products, which we're really excited about. We'll also be expanding our base of merchant customers to generate approximately $15 million in revenue over the next year. And within 24 months, we expect to have more than 5,000 sales agents, which we call account executives, which we intend to blend at every ZIP code in the U.S., and this is just the start. So we're really excited.

[Brent Suen, executive]

Awesome so are we. Well, we is now we. Thanks, Sam and Chris. As I mentioned, now the sixth time, we're starting the year at a $40 million-plus run rate. And now with Park Place, we should see an additional $5 million. So we're definitely poised for a great year. That's for sure. I'll try not to mention that a seventh time. We are extremely excited about it. And that's why it's written into my note too many times.

Further, with DLQ or our core business being NASDAQ-listed through the pending De-SPAC and with additional strategic acquisitions lined up and ready to complete within the next 90 to 120 days, plus plenty of exciting customers in the pipeline, this certainly creates many terrific opportunities that benefit our shareholders. One additional highlight I'd like to add and most of you realize, there is an opportunity to utilize the logiq publicly listed status to acquire a business into as we move our core business and Park Place, which is also going to be part of our core business into the Ogilvy SPAC.

We did make an announcement last November that we had an exclusive merger agreement with the company valued at around $200 million that exclusivity expired December 31, we chose not to renew it. We went for something a little larger because there were other ones being presented to us. And we're currently in late-stage discussions with one in particular that could command over $300 million in value. So what does that mean to shareholders? Public shareholders of what goes into the Logiq platform -- I'm sorry, it goes into the Logiq listed vehicle post de-SPAC will retain a 10% ownership. And so if the valuation is, call it, $300 million, there would be a $30 million participation from our current shareholders.

All of those shares would be free traded because we would be the float. If they grow dramatically like this particular target is, that could end up being significantly more. So we plan to update everyone on this shortly as terms solidify. And for right now, we are happy to take questions.

[Brent Suen, executive]

And so I am looking at the message is here. A couple from Rich, any new contracts like the one Battle Bridge got at the end of 2022, that has a plus or minus $3 million a month run rate in the works. Sure. Okay. So the client that we picked up, there are currently 7 others that are similar in size and their management. Well, actually not their management, their founders and/or CEOs are actually in discussions with us right now about potential onboarding sometime later in the year. One of the things that we're looking at doing, and Chris touched on it earlier, with the MediaJel platform tying up with what we have, we're able to offer companies that are in the e-commerce space, both in the regulated industries, which would be cannabis, certain elements of Fintech, pharmaceutical, insurance, the ability to have highly effective marketing and advertising campaigns that have an AI component in there that teaches the platform based on current and past add marketing campaigns and how to optimize it. So maybe if it does such a great job, we'll all be out of jobs and it will be a bot speaking next time. But in answer to your question, Rich, Yes, there are other ones just like that in the works.

Park Play sales team, adding DataLogiq advertising product offerings to their payment solution vendors? Yes. And that is something that Peter and Chris and Sam and Tim are currently working on along with the rest of our team. So we'll be able to announce those initiatives throughout the year.

So Sam, this one is for you. This is Rich.

[Samantha Ettus, executive]

Yes. So Rich, it's a great question. We have not been regionally focused. I would say that we are definitely specialized in certain industries, but we have account executives in all 50 states and not to make this a sales pitch, but certainly, if you have a business in your orbit that needs payment processing, send them to Park Place because we do work nationally in all 50 states, and we are just planning on expanding in all of our national reach. So to get 2 superstars in every ZIP code in America is our goal, and we're on that path.

[Brent Suen, executive]

Great. Thanks, Sam. Here's one. Please update on Canadian Neo Exchange on HOLD as they are looking for financial documents to upload on Ontario Securities Exchange? Can you please update on this? I had us uplist Ontario NEO Exchange in 2021. We used an investment bank, Mackie, which is now known as Research Capital. And they placed 78% of the shares in the hands of 5 groups that like to paint themselves as funds, but they are essentially toxic lenders or toxic financiers. They subsequently sold all of their shares into the market and held on to their warrants, which they then used to short our stock over the subsequent 6 months. I would call that a disaster. . I have been trying to get delisted from the Neo for quite some time, and they actually would not let us delist. And so I took a different route and stopped reporting to the Ontario Securities Commission and hopes that they would delist us. When we didn't file our 10-K with them, they halted trading and I've gotten a number of request about that. The unfortunate part about that is not that we were halted in trading, but that Canadian shareholders could not execute trades via the OTC. Now the shares are fungible, meaning that if you hold shares and we delist officially delist on the NEO, then you can sell your shares by way of the OTC. And I am personally pleased to report that I received an official delisting notice from the NEO last week.

So we will no longer trade on the NEO. And if you are a Canadian shareholder and you desire to buy or sell, I would hope you would buy, you can do so through your broker and those trades will be executed on the OTC now that we are officially delisted. Delisting is usually a bad thing, but in this instance, I think, given the predatory nature of the NCR who took nearly 80% of the IPO and still hold those warrants, it's not a good thing. So that's the status update. If you need more, please reach out, again, bear with me, I'm not able to respond as quickly as I can, but I'll do my best.

Oh, here's one. Okay. Any timeline with Logiq exchange restriction will be removed. I think that was answered in that last one, Tony. And what else? Anyone? All right. Well, with that, I will thank everyone for joining us today and for the questions. Thanks to Chris and Sam and Peter and the rest of our team for joining us today. Before we conclude today's call, I need to provide our safe harbor statement that includes important cautions. This is the point in time where everyone hangs up, includes some important cautions regarding forward-looking statements made during today's call. Actually, no one has to listen to this. It's going to take me about 4 minutes to read. So thanks, everyone, for joining. I'll read this to myself.

[Samantha Ettus, executive]

Thank you.

[Brent Suen, executive]

Thanks Sam, Statements made by us during today's call may have contained forward-looking statements within the definition of Section 27A in the Securities Act of 1933 as amended in Section 21E of the Securities Act of 1934 as amended. Such forward-looking statements should not be used to make an investment decision. All statements other than statements of historical fact included herein are forward-looking statements, including statements regarding the continued growth of the e-commerce segment and the ability of the company to continue its expansion into that segment, the ability of the company to attract customers and partners and generate revenues, the ability of the company to successfully execute its business plan, the business strategy, plans and objectives of the company and any other statements of nonhistorical information. . Such forward-looking statements are often identified by the use of forward-looking terminologies such as believes, expects or similar expressions and involve known and unknown risks and uncertainties. While we believe the expectations reflected in such forward-looking statements are reasonable, involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect.

Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this conference call. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in our periodic reports filed with the Securities and Exchange Commission and available on its website, www.sec.gov. All forward-looking statements attributable to the company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the company does not assume any duty to update these forward-looking statements. Thank you again for joining us today. This concludes today's conference call. You may now disconnect.