ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENT
This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as may, should, expects, plans, anticipates, believes, estimates, predicts, potential or continue or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industrys actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. All references to common shares refer to the common shares in our capital stock.
The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.
As used in this quarterly report, the terms we, us, our and our company mean Logicquest Technology, Inc., unless otherwise indicated.
General Overview
Our company was formed on July 23, 2001 when Solis Communications, Inc., a company incorporated in the State of Texas on February 26, 2001, completed the acquisition of Berens Industries, Inc., a company originally incorporated in the State of Nevada on January 9, 1985. On September 17, 2001, we changed our name to Crescent Communications Inc. d.b.a Crescent Broadband. On November 15, 2004, we changed our name to Bluegate Corporation. On March 19, 2015, we changed our name to Logicquest Technology, Inc.
We are a Nevada corporation that previously operated as a broadband network service provider, providing internet connectivity to corporate clients on a subscription basis. During May 2014 our board of directors authorized an orderly wind-down of our Company's internet connectivity business which ceased effective June 30, 2014.
Our Current Business
We are currently a company with no operations. To sustain our companys operation, our board is currently seeking investment opportunities.
At this stage, we can provide no assurance that we will be able to locate compatible business opportunities, what additional financing we will require to complete a business opportunity, or whether the opportunity's operations will be profitable.
If we are unable to secure adequate capital to continue our business, our shareholders will lose some or all of their investment and our business will likely fail.
5
Results of Operations
Three Months Ended March 31, 2018 compared to the Three Months Ended March 31, 2017
We had a net loss of $128,539 for the three month period ended March 31, 2018, which was $12,570 more than the net loss of $115,969 for the three month period ended March 31, 2017. The change in our results over the two periods is a result of an increase in Selling, general and administrative expenses.
The following table summarizes key items of comparison and their related increase for the three month periods ended March 31, 2018 and 2017:
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Three Months Ended
March 31, 2018
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Three Months Ended
March 31, 2017
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Increase
2018 from 2017
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Revenue
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$
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$
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$
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Selling, general and administrative expenses
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49,066
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36,496
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12,570
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Loss from operations
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(49,066
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)
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(36,496
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)
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12,570
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Interest expense
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(79,473
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)
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(79,473
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)
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Net loss
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$
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(128,539
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)
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$
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(115,969
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)
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$
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12,570
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Revenue
We have not earned any revenues during the quarter of March 31, 2018 and we do not anticipate earning revenues in the upcoming quarter.
Liquidity and Capital Resources
As of March 31, 2018, our cash and cash equivalents were nil; total current liabilities were $4,865,258 and total stockholders deficit was $4,864,748.
Working Capital
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At
March 31,
2018
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At
December 31,
2017
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Current assets
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$
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510
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$
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510
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Current liabilities
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4,865,258
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4,736,719
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Working capital
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$
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(4,864,748
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)
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$
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(4,736,209
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)
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We anticipate generating losses and, therefore, may be unable to continue operations further in the future.
Financial Condition
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Increase
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Three Months Ended
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(Decrease)
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March 31
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2018 from
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2018
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2017
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2017
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Net cash used in operating activities
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$
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$
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$
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Net cash provided by financing activities
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Net decrease in cash during period
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$
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$
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$
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Cash balance at end of period
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Operating Activities
Net cash used in operating activities during the three months ended March 31, 2018 was $0 and $0 during the three months ended March 31, 2017.
6
Financing Activities
Cash provided by financing activities during the three months ended March 31, 2018 was $0 and $0 during the three months ended March 31, 2017.
To date we have relied on proceeds from the sale of our shares and on loans from officers and directors, related companies and an independent third party in order to sustain our basic, minimum operating expenses; however, we cannot guarantee that we will secure any further sales of our shares or that our officers and directors, related companies or the independent third party will provide us with any future loans. We intend to use debt to cover the anticipated negative cash flows until we can operate at a break-even cash flow mode. We may seek additional capital to fund potential costs associated with possible expansion and/or acquisitions. We believe that future funding may be obtained from public or private offerings of equity securities, debt or convertible debt securities, or other sources. Stockholders should assume that any additional funding will likely be dilutive.
We are not aware of any known trends, demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in our liquidity increasing or decreasing in any material way.
Future Financings
We anticipate continuing to rely on loans from a related company. We may obtain funding through equity sales of our common stock in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned business activities.
We presently do not have any arrangements for additional financing for the expansion of our exploration operations, and no potential lines of credit or sources of financing are currently available for the purpose of proceeding with our plan of operations.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, and capital expenditures or capital resources that are material to stockholders.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations are based upon financial statements which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate these estimates. We base our estimates on historical experience and on assumptions that are believed to be reasonable. These estimates and assumptions provide a basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, and these differences may be material.
We believe that the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements.
Stock-Based Compensation
Accounting Standard 718, "Accounting for Stock-Based Compensation" ("ASC 718") established financial accounting and reporting standards for stock-based employee compensation plans. It defines a fair value based method of accounting for an employee stock option or similar equity instrument. In January 2006, we implemented ASC 718, and accordingly, we account for compensation cost for stock option plans in accordance with ASC 718.
We account for share based payments to non-employees in accordance with ASC 505-50 Accounting for Equity Instruments Issued to Non-Employees for Acquiring, or in Conjunction with Selling, Goods or Services.
7
Going Concern
We remain dependent on outside sources of funding for continuation of our operations. Our independent registered public accounting firm issued a going concern qualification in their report dated April 17, 2018 (included in our annual report on Form 10-K for the year ended December 31, 2017), which raises substantial doubt about our ability to continue as a going concern.
During the three months ended March 31, 2018 and the year ended December 31, 2017, we have been unable to generate cash flows sufficient to support our operations and have been dependent on debt raised from a related party.
During the three months ended March 31, 2018 and 2017, we experienced negative financial results as follows:
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Three Months Ended
March 31,
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2018
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2017
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Net loss
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$
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(128,539
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)
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$
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(115,969
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Negative working capital
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(4,864,748
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)
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(4,343,904
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Stockholders deficit
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(4,864,748
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)
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(4,323,899
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)
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These factors raise substantial doubt about our ability to continue as a going concern. The financial statements contained herein do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should we be unable to continue in existence. Our ability to continue as a going concern is dependent upon our ability to generate sufficient cash flows to meet our obligations on a timely basis, to obtain additional financing as may be required, and ultimately to attain profitable operations. However, there is no assurance that profitable operations or sufficient cash flows will occur in the future.