Coyni, Inc. - Quarter Report: 2015 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

Commission file number: 000-22711

LOGICQUEST TECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code 212-231-0033

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 filings requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

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

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes þ No ¨

APPLICABLE ONLY TO CORPORATE ISSUERS

On November 6, 2015, the registrant had outstanding 2,301,849 shares of Common Stock, $0.001 par value per share.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LOGICQUEST TECHNOLOGY, INC.

BALANCE SHEETS

See accompanying notes to unaudited financial statements

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LOGICQUEST TECHNOLOGY, INC.

STATEMENTS OF OPERATIONS

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

UNAUDITED

See accompanying notes to unaudited financial statements

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LOGICQUEST TECHNOLOGY, INC.

STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

UNAUDITED

See accompanying notes to unaudited financial statements

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LOGICQUEST TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

UNAUDITED

1. BASIS OF PRESENTATION

The accompanying unaudited interim financial statements of Logicquest Technology, Inc. (“we”, “our”, “Logicquest” or the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in Logicquest's Annual Report filed with the SEC on Form 10-K.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein.  The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which substantially duplicate the disclosure contained in the audited financial statements for the year ended December 31, 2014 as reported in the Form 10-K have been omitted.

2. GOING CONCERN CONSIDERATIONS

During the nine months ended September 30, 2015, Logicquest has been unable to generate cash flows sufficient to support its operations and has been dependent on debt raised from related parties and independent third parties. In addition to negative cash flow from operations, Logicquest has experienced recurring net losses and has a negative working capital.

These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if Logicquest is unable to continue as a going concern.

3. DUE TO RELATED PARTIES

The due to related parties is summarized below:

On April 1, 2015, the entire amount due to Ang Woon Han was assigned to Asia Prestige Holdings Limited, a company controlled by the Company’s Chief Financial Officer, Cheng Yew Siong. Thus, the balance of payable to Ang Woon Han was reduced to $0 as of September 30, 2015.

As of June 30, 2015, the Company had a balance payable to Asia Prestige Holdings Limited in the amount of $57,098. The entire amount was assigned to Logicquest Technology Limited on July 31, 2015, therefore, the balance payable to Asia Prestige Holdings Limited was reduced to $0 as of September 30, 2015.

4. EQUITY TRANSACTIONS

On October 31, 2014, the Company approved to (i) change the name of the Company from “Bluegate Corporation” to “Logicquest Technology, Inc.” (ii) increase the number of authorized shares of common stock, par value $0.001, from 50,000,000 to 200,000,000; and (iii) perform reverse stock split of the Company’s issued and outstanding shares of common stock at a ratio of one post-split share per twenty pre-split shares. The changes were effective March 19, 2015.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENT

This Management's Discussion and Analysis of Financial Condition and Results of Operations as of September 30, 2015 and for the nine months ended September 30, 2015, should be read in conjunction with the audited financial statements and notes thereto set forth in our annual report on Form 10-K for 2014.

Certain statements contained in this report, including, without limitation, statements containing the words, "likely", "forecast", "project", "believe", "anticipate", "expect", and other words of similar meaning, constitute "forward-looking statements" within the meaning of Section 27A of the Securities Exchange Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such factors or to announce publicly the results of any revision of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments. In addition to the forward-looking statements contained in this Form 10-Q, the following forward-looking factors could cause our future results to differ materially from our forward-looking statements: competition, capital resources, credit resources, funding, government compliance and market acceptance of our products and services.

OUR BUSINESS

Following the closure of the Company’s internet connectivity business in 2014, the Company moved its focus to investment opportunities in the IT sector of the Greater China Region. During the quarter ended September 30, 2015, we have identified potential investment opportunities, and have been in discussions with the owners of these companies.  We followed three basic criteria in our selection and due diligence process of these companies. First, they must be mobile related; second, they must target a niche market; and third, they must have a clear and proven revenue model.

It is our desire to acquire a majority stake in at least one of these companies, however, no agreements have been signed and there is no guarantee these discussions will translate into any acquisition.

COMPETITION

Investment companies targeting the IT sector are often driven by the lure of a large user base, with no expectant revenues. We seek to differentiate ourselves from our competitors by focusing our investment resources and efforts on revenue generating IT businesses that target niche markets of mobile users.

We believe this strategy will gain us better value for money in the investments we make, which we subsequently intend to empower with foreign (non-Chinese) technology and intellectual property to help these businesses gain an edge over less creative Chinese developers and competitors.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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.

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REVENUE RECOGNITION

Revenue is recognized based upon contractually determined monthly service charges to individual customers. Some services are billed in advance and, accordingly, revenues are deferred until the period in which the services are provided.

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, Logicquest implemented ASC 718, and accordingly, Logicquest accounts for compensation cost for stock option plans in accordance with ASC 718.

Logicquest accounts 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”.

DERIVATIVE FINANCIAL INSTRUMENTS

Logicquest does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks.  Logicquest evaluates all of it financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income.  For option-based derivative financial instruments, Logicquest uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.  Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

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 15, 2015 (included in our annual report on Form 10-K for the year ended December 31, 2014), which raises substantial doubt about our ability to continue as a going concern.

During the nine months ended September 30, 2015 and the year ended December 31, 2014, we have been unable to generate cash flows sufficient to support our operations and have been dependent on debt raised from related parties and independent third parties.

During the nine months ended September 30, 2015 and 2014, we experienced negative financial results as follows:

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. We expect to confirm our acquisition target in the next quarter and realize revenues by early 2016.

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RESULTS OF OPERATIONS

Service Revenue.

There was no Service Revenue generated in 2014 to 2015 is due to the cancellation of our networking service and operations.

Cost of Services.

The net decrease in Cost of Services of $167 from 2014 to 2015 is due to the cancellation of our networking service and operations.

Gross Profit.

Our Gross Profit increased $167 from 2014 to 2015 as a result of the changes in the Service Revenue and Cost of Services as described above.

Selling, General and Administrative Expenses (SG&A).

The SG&A increase of $27,818 from 2014 to 2015 is primarily due to low expense during 2014 attributable to the cancellation of our networking service and operations.

Interest Expense.

The Interest Expense remained constant in 2015 compared to 2014 due to no change in borrowings under the secured note payable.

Net Loss.

The Net Loss increased by $27,651 from 2014 to 2015 due to the items described above.

FINANCIAL CONDITION

Operating Activities.

The increase of cash used in operations of $101,425 from 2014 to 2015 is due to the professional fees paid for the reverse stock split transaction, the engagement of administrative supporting services and the payment for trademark registration in 2015.  

Financing Activities.

The increase of $106,148 in cash provided by financing activities from 2014 to 2015 is due to continuing financial support from related parties.

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LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2015, our cash and cash equivalents were nil; total current assets were $20,335; total current liabilities were $3,598,069 and total stockholders’ deficit was $3,577,734.

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.

Our ability to achieve profitability will depend upon our ability to start new business. Our growth is dependent on attaining profit from our operations and our raising additional capital either through the sale of stock or borrowing. There is no assurance that we will be able to raise any equity financing or sell any of our products at a profit.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures.

We are required to maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Based on their evaluation as of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure as a result of continuing weaknesses in our internal control over financial reporting.

As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014, based on management’s assessment of the effectiveness of our internal controls over financial reporting, management concluded that our internal controls over financial reporting were not effective as of December 31, 2014, due to insufficiently qualified accounting and other finance personnel with an appropriate level of U.S. GAAP knowledge and experience. Management believes that our lack of experience with U.S. GAAP constitutes a material weakness in our internal control over financial reporting. Until such time, if ever, that we remediate the material weakness in our internal control over financial reporting we expect that the material weaknesses in our disclosure controls and procedures will continue.

Changes in internal control over financial reporting.

There was no change in the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the quarter ended September 30, 2015 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

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

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

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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.

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