Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Note 2 – Significant Accounting Policies

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States and are expressed in U.S. dollars. The Company’s fiscal year-end is December 31.

Restatement of Previously Issued Consolidated Financial Statements

The Company has restated its Consolidated Balance Sheets as of June 30, 2023, Consolidated Statements of Operations and Comprehensive Loss, Statements of Stockholder’s Equity (Deficit), Statements of Cash Flows and its Notes to the Consolidated Financial Statements of the six months ended June 30, 2023, which was originally filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 21, 2023 (the “Original Form 10-Q”). These consolidated financial statements have been restated to reflect a capital transaction which would not have resulted in the recognition of goodwill and intangible assets.

1. Restatement of Financial Statements:

In connection with a review of the Company’s periodic reports by the Staff of the SEC, and upon consultation with the Company’s auditor Centurion ZD CPA & Co. (“Centurion”), management reassessed the accounting treatment of the spin-off of Logiq’s AppLogiq/CreateApp business to the Company (then named Lovarra). Management determined that the Company is the accounting acquiree in the AppLogiq/CreateApp business acquisition. As the Company was a nonoperating shell corporation at the time of the transaction and did not meet the definition of a business, this transaction cannot be considered a business combination. Instead, this transaction should be considered a capital transaction by Lovarra (the legal acquiree) where Gologiq issues shares for the net monetary assets of Lovarra accompanied by a recapitalization. The excess of the fair value of the shares issued by Gologiq over the value of the net monetary assets of Lovarra will be recognized as a reduction to equity. Based upon the above analysis, the Company will restate the transaction accordingly. In light of the above, the Company is restating its financial statements as of and for the six months ended June 30, 2023 and December 31, 2022.

The reason for the Company restatement of the acquisition of AppLogiq/CreateApp by Lovarra from that of a reverse merger to that of a capital transaction is that Lovarra does not meet the definition of a business under ASC 805. Under ASC 805, a business consists of inputs and processes applied to those inputs that have the ability to create outputs. Although businesses usually have outputs, outputs are not required for an integrated set to qualify as a business. In the context of Lovarra and its previous SEC filings, Lovarra was disclosed as a going concern risk and was not producing any outputs nor generating business revenue and, therefore, does not meet the definition of a business. So in this situation, the merger of Gologiq (a private operating entity) into Lovarra (a non-operating public shell corporation with nominal net assets) resulted in the owners of Gologiq (the private entity) gaining control over the combined entity after the transaction, and the shareholders of Lovarra (the former public shell corporation) continuing only as passive investors. Because the accounting acquiree (Lovarra) is a non-operating public shell corporation and does not meet the definition of a business, this transaction cannot be considered a business combination. Instead, this transaction should be considered a capital transaction by Lovarra (the legal acquiree) where Gologiq issues shares for the net monetary assets of Lovarra accompanied by a recapitalization. The excess of the fair value of the shares issued by Gologiq over the value of the net monetary assets of Lovarra will be recognized as a reduction to equity. Based upon the above analysis, the company will restate the transaction accordingly.

2. Change in Accounting Treatment of Reverse Acquisition:

The Company has revised its accounting treatment for a reverse acquisition that was previously reported in its Original Form 10-Q. Upon further evaluation, the Company determined that prior year adjustments were necessary. The Company acquired substantially all the CreateApp assets from Logiq in exchange for 26,350,756 of the Company’s common shares at a price per share of $1.195411 (par value $0.001). The fair value of the common shares at the close of the transaction was $31,500,000, as determined by a valuatio

n of the business, on the acquisition date, goodwill of $7,500,000 and intangible assets of $24,000,000 were recorded. The value of CreateApp platform was revalued to $11,800,000 on February 28, 2023. This Amendment presents the Company’s financial statements with reversed goodwill and intangible assets, and corresponding impairment loss on

June 30, 2023

The following presents a reconciliation of the impacted financial statement line items as filed to th

e res

tated amounts as of June 30, 2023. The previously reported amounts reflect those included in the Original Filing of our Quarterly Report on Form 10-Q as of and for the months ended June 30, 2023 filed with the SEC on August 21, 2023. These amounts are labeled as “As Filed” in the tables below. The amounts labeled “Restatement Adjustments” represent the effects of this restatement due to the Company is the accounting

acquiree

in the CreateApp business acquisition and the transactions was a reverse acquisition which would not have resulted in the recognition of goodwill and intangible assets.

				June 30, 2023									December 31, 2022
	As Filed			Restatement Adjustment			Restated			As Filed			Restatement Adjustment			Restated

ASSETS

Current Assets
Cash and cash equivalents		2,885			-			2,885			35,254			-			35,254
Intangible assets, net		8,968,000			(8,968,000	)		-			8,968,000			(8,968,000	)		-
Goodwill		2,832,000			(2,832,000	)		-			2,832,000			(2,832,000	)		-

TOTAL ASSETS		11,802,885			(11,800,000	)		2,885			11,835,254			(11,800,000	)		35,254

LIABILITIES AND STOCKHOLDER’S DEFICIT

Current Liabilities
Accounts payable and accrued liabilities		1,123,771			23,394			1,147,165			1,321,483			-			1,321,483
Notes payable		-			217,446			217,446			-			-			-
Due to a related party		483,921			-			483,921			788,045			-			788,045

Total Liabilities		1,607,692			240,840			1,848,532			2,109,528			-			2,109,528

Stockholder’s Funds (Deficit)

Common stock
Common stock Authorized: 200,000,000 shares of common stock, $0.001 par value 134,127,556 and 40,444,083 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively		134,128			-			134,128			40,444			-			40,444
Preferred stock Authorized: 10,000,000 shares of preferred stock, 2,000,000 shares was extinguished as of June 30, 2023 and outstanding as of December 31, 2022, respectively		2,000			(2,000	)		-			2,000			-			2,000
Additional paid-in capital		38,686,047			(28,356,929	)		10,329,118			34,003,212			(28,138,929	)		5,864,283
Share subscriptions receivable		(58	)		-			(58	)		(58	)		-			(58	)
Deficit		(28,626,924	)		16,318,089			(12,308,835	)		(24,319,872	)		16,338,929			(7,980,943	)

Total Stockholder’s Funds (Deficit)		10,195,193			(12,040,840	)		(1,845,647	)		9,725,726			(11,800,000	)		(2,074,274	)

TOTAL LIABILITIES AND STOCKHOLDER’S FUNDS		11,802,885			(11,800,000	)		2,885			11,835,254			(11,800,000	)		35,254

	Three months ended June 30, 2023									Six months ended June 30, 2023
	As Filed			Restatement Adjustment			Restated			As Filed			Restatement Adjustment			Restated
Service Revenue		2,573			-			2,573			74,489			-			74,489
Cost of Service		1,486			-			1,486			40,131			-			40,131
Gross Profit		1,087			-			1,087			34,358			-			34,358

Operating Expenses
General and administrative		2,371,426			20,020			2,391,446			4,271,910			20,840			4,292,750
Research and development		14,500			-			14,500			69,500			-			69,500
Total Operating Expenses		2,385,926			20,020			2,405,946			4,341,410			20,840			4,362,250

Net (Loss) and Comprehensive (Loss)		(2,384,839	)		(20,020	)		(2,404,859	)		(4,307,052	)		(20,840	)		(4,327,892	)

Basic and Diluted Net (Loss) per Common Share		(0.019	)		-			(0.019	)		(0.048	)		-			(0.048	)

Weighted Average Number of Common Shares Outstanding		128,591,308			-			128,591,308			90,247,375			-			90,247,375

				Six months ended June 30, 2023									Six months ended June 30, 2022
	As Filed			Restatement Adjustment			Restated			As Filed			Restatement Adjustment			Restated

OPERATING ACTIVITIES

Net (Loss) for the Period		(4,307,052	)		(20,840	)		(4,327,892	)		(2,037,440	)		-			(2,037,440	)
Changes in Operating Assets and Liabilities:
Prepaid expense and deposits		-			-			-			(271,801	)		271,801			-
Accounts payable and accrued liabilities		(126,460	)		(47,858	)		(174,318	)		28,060			(28,060	)		-
Issuance of shares for service received		4,776,518			(220,000	)		4,556,518			936,250			-			936,250
Net Cash Provided by (Used in) Operating Activities		343,006			(288,698	)		54,308			(1,344,931	)		243,741			(1,101,190	)

FINANCING ACTIVITIES
Due to related party		(375,375	)		71,252			(304,123	)		598,729			(848,595	)		1,447,324
Notes payable		-			217,446			217,446
Net Cash Provided by (Used in) Financing Activities		(375,375	)		288,698			(86,677	)		598,729			(848,595	)		1,447,324

INVESTING ACTIVITIES
Arising from transitional arrangements and carve out assumptions on allocation of CreateApp and GoLogiq costs from Logiq, Inc. to the Company		-			-			-			746,202			(1,092,336	)		(346,134	)
Net Movement in Investing Activities		-			-			-			746,202			(1,092,336	)		(346,134	)

Change in Cash		(32,369	)		-			(32,369	)		-			-			-

Cash, Beginning of Year		35,254			-			35,254			-			-			-

Cash, End of Period		2,885			-			2,885			-			-			-

NON-CASH TRANSACTION
Issuance of shares for services received		4,121,618			-			4,121,618			936,250			-			936,250

Use of Estimates and Judgments

The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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. The Company regularly evaluates estimates and assumptions related to deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

The Company applies judgment in the application of the going concern assumption which requires management to take into account all available information about the future, which is at least, but not limited to, 12 months from the end of the reporting period.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of six months or less at the time of purchase to be cash equivalents.

Loss Per Share

The Company computes income (loss) per share in accordance with ASC 260 “

Earnings per Share

”. Basic loss per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.

Income Taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Income Taxes”. The asset and liability method provides that deferred income tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred income tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred income tax assets to the amount that is believed more likely than not to be realized.

As of June 30, 2023 and 2022, the Company did not have any amounts recorded pertaining to uncertain tax positions.

Fair Value Measurements

The Company measures and discloses the estimated fair value of financial assets and liabilities using the fair value hierarchy prescribed by U.S. generally accepted accounting principles. The fair value hierarchy has three levels, which are based on reliable available inputs of observable data. The hierarchy requires the use of observable market data when available. The three-level hierarchy is defined as follows:

Level 1 – quoted prices for identical instruments in active markets.

Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which significant inputs and significant value drivers are observable in active markets; and

Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Financial instruments consist of cash, accounts payable and accrued liabilities, and amounts due to a related party. The recorded values of all financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Foreign Currency Translation

The Company’s functional and reporting currency is the U.S. dollar. Transactions may occur in foreign currencies and management has adopted ASC 830,

“Foreign Currency Translation Matters”

. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Average monthly rates are used to translate revenues and expenses. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the statement of operations.

Comprehensive Loss

ASC 220, “

Comprehensive Income

” establishes standards for the reporting and display of comprehensive income and its components in the financial statements. As of June 30, 2023 and 2022, the Company had no items that affected comprehensive loss.

Intangible assets.

The Company’s intangible assets consist of its proprietary software platform and technologies namely CreateApp and AtoZ PAY/GO, which is amortized using the straight-line method over five years, commencing April 1, 2022.

Recent Accounting Pronouncements

In February 2016, Topic 842, Leases was issued to replace the leases requirements in Topic 840, Leases. The main difference between previous GAAP and Topic 842 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. The Company adopted Topic 842 on January 1, 2019 and there was no material impact on the Company’s financial statements.

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

GoLogiq, Inc. 10-Q/A