LQWD TECHNOLOGIES CORP. TSXV: LQWD | OTCQB: LQWDF
LQWD FINTECH CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FORM 51-102F1
FOR THE THREE MONTHS ENDED MAY 31, 2022
LQWD FINTECH CORP.
1050 W. Pender St., Suite 1710
Vancouver, BC, Canada V6E 3S7
Table of Contents | |
CURRENT DEVELOPMENTS .......................................................................................................................... | |
CORPORATE ................................................................................................................................................... | |
COMPANY OVERVIEW .................................................................................................................................. | |
OVERALL PERFORMANCE ............................................................................................................................ | |
FINANCIAL RESULTS OF OPERATIONS....................................................................................................... | |
SUMMARY OF QUARTERLY RESULTS ......................................................................................................... | |
LIQUIDITY AND CAPITAL RESOURCES........................................................................................................ | |
RELATED PARTY TRANSACTIONS ............................................................................................................... | |
SHARE CAPITAL.............................................................................................................................................. | 6 |
SUBSEQUENT EVENTS .................................................................................................................................. | 6 |
CAPITAL MANAGEMENT .............................................................................................................................. | 6 |
COMPETITION................................................................................................................................................ | 6 |
CRITICAL ACCOUNTING ESTIMATES .......................................................................................................... | 6 |
PROPOSED TRANSACTIONS ........................................................................................................................ | 7 |
FINANCIAL INSTRUMENTS RISK.................................................................................................................. | 7 |
FINANCIAL INSTRUMENTS........................................................................................................................... | 8 |
DIGITAL CURRENCY AND RISK MANAGEMENT........................................................................................ | 8 |
RISKS ............................................................................................................................................................... | 9 |
OFF-BALANCESHEET ARRANGMENTS ...................................................................................................... | 9 |
ADDITIONAL INFORMATION....................................................................................................................... | 9 |
FORWARD LOOKING STATEMENTS............................................................................................................ | 9 |
The following Management's Discussion and Analysis ("MD&A") is dated August 2, 2022, for the period ended May 31, 2022 and should be read in conjunction with LQwD FinTech Corp. ("LQwD" or the "Company") accompanying audited consolidated financial statements for the years ended February 28, 2022 and February 28, 2021.
These condensed consolidated financial statements for the period ended May 31, 2022 have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting as issued by the International Accounting Standards Board ("IASB"). These consolidated financial statements have been prepared on a historical cost basis and have been prepared using the accrual basis of accounting, except for cash flow information. The MD&A supplement does not form part of the unaudited condensed consolidated interim financial statements for the three month period ended May 31, 2022 or the audited financial statements of the Company and the notes thereto for the year ended February 28, 2022. All amounts are expressed in Canadian dollars unless otherwise indicated. In addition, readers are directed herein to discussions under the headings "Forward-LookingStatements", "Critical Accounting Estimates" and "Risk Factors".
LQwD management is responsible for the integrity of the information contained in this report and for the consistency between the MD&A and the financial statements.
LQWD FINTECH CORP. | MANAGEMENT'S DISCUSSION AND ANALYSIS |
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CURRENT DEVELOPMENTS
CORPORATE
On July 18, 2022, Aziz Pulatov was appointed as Chief Technology Officer of the Company replacing Albert Szmigielski who resigned on that date.
On May 27, 2022, Peter Loretto was appointed as a director of the Company replacing Dean Sutton who resigned on that date. Mr. Loretto subsequently resigned on June 15, 2022.
On May 20, 2022, operation of coincurve.com was temporarily halted as the Company focuses on expanding its Lightning Network business.
On December 23, 2021, the Company announced that it granted 1,825,000 stock options exercisable for a period of five years at a price of $0.45 per share to various directors, officers, employees, and consultants, and will be subject to deferred vesting over two years.
On October 28, 2021, the Company completed an offering of 20,000,000 units at a price of $0.35 per unit for gross proceeds of $7,000,000. The offering was conducted by a syndicate of underwriters. The underwriters also exercised their over-allotment option in full to purchase an additional 3,000,000 units for additional gross proceeds of $1,050,000. Including the proceeds from the exercise of the over-allotment option, the total gross proceeds of the offering are $8,050,000 with an aggregate of 23,000,000 units issued. Each unit consists of one common share and one half of one common share purchase warrant. Each whole warrant is exercisable to acquire one common share until October 28, 2023, at an exercise price of $0.50.
On September 16, 2021, the Company filed a final short form base shelf prospectus (the "Final Shelf Prospectus") with the securities commissions in each of the provinces and territories of Canada, except Québec. The Final Shelf Prospectus allows the Company to offer and issue up to $50 million of common shares, warrants, subscription receipts, units, debt securities or any combination of such securities during the 25-month period that the Final Shelf Prospectus is effective.
On June 9, 2021, the Company acquired 100% of the issued and outstanding shares of LQwD Financial Corp. ("LQwD Financial") (the "Transaction"). Under the terms of the Transaction, each outstanding LQwD Financial share was exchanged for one LQwD share, resulting in an aggregate issuance of 22,400,001 LQwD shares at a deemed price of $0.25 per share. Upon completion of the Transaction, the Company changed its name from "Interlapse Technologies Corp." to "LQwD FinTech Corp." and LQwD Financial became a wholly owned subsidiary of LQwD.
In connection with the Transaction, on March 23, 2021, the Company closed a non-brokered private placement of 20,000,000 subscription receipts at a price of $0.25 per subscription receipt for gross proceeds of $5,000,000 (the "Concurrent Financing"). Each subscription receipt entitled the holder thereof to receive one share and one-half of a share purchase warrant. Each whole warrant entitles the holder thereof to purchase one additional share at a price of $0.40 per share at any time for a period of 12 months following the date of conversion of the subscription receipts.
COMPANY OVERVIEW
The Company was incorporated under the Business Corporations Act (British Columbia) and its head office is in Vancouver, British Columbia, Canada. LQwD is a technology company that is focused on developing various web- based platforms, solutions and applications. The Company's common shares trade on the TSX Venture Exchange (the "TSX-V") under the symbol "LQWD" and on the OTCQB market under the symbol "LQWDF" and as at May 31, 2022, had 97,777,807 common shares issued and outstanding.
LQWD FINTECH CORP. | MANAGEMENT'S DISCUSSION AND ANALYSIS |
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The executive team of the Company is as follows:
- Shone Anstey - Chief Executive Officer
- Barry MacNeil - Chief Financial Officer
- Aziz Pulatov - Chief Technology Officer
- Giuseppe (Pino) Perone - Corporate Secretary
OVERALL PERFORMANCE
The Company's objective has been to pursue value generating opportunities for the shareholders. The overall performance for the three-month period ended May 31, 2022, reflected a net loss of $3,773,437 and working capital of $6,176,062. LQwD can fund its operations for a further 12 months. The Company recorded revenue of $4,878 from transaction fees from its coincurve.com platform for the three month period ended May 31, 2022.
2023 | 2022 | 2022 | ||||
Q1 | Q4 | Q1 | ||||
Revenue | $ | 4,878( | $ | 7,464( | $ | 35,210( |
Loss for the period | $ | (3,773,437) | $ | (19,372,355) | $ | (495,351) |
The largest cash expenditures incurred by the Company during the period included consulting fees of $118,816, research and development of $111,704 and marketing of $98,225. The Company recorded total non-cash expenses of $3,276,250 for share-based compensation of $422,611, amortization of intangible assets of $687,916, amortization of property and equipment of $14,895, write-off of property and equipment of $3,857 and loss on revaluation of $2,146,971. During the comparative three-month period ended May 31, 2022, the Company had the addition expense of running LQwD Financial. This resulted in the significant increases in amortization of intangible assets, amortization of property and equipment, audit and accounting, consulting fees, and salaries and benefits. There was also a significant increase in share-based compensation due to the amortization over the vesting period of the calculated cost of the options issued in December 2021. In other items the Company calculated a loss on revaluation of Bitcoin held in the amount of $2,146,971 representing the change in the current price compared to the Canadian dollar.
FINANCIAL RESULTS OF OPERATIONS
SUMMARY OF QUARTERLY RESULTS
Three Months Ended | ||||||||||||||
May 31, | February 28, | November 30, | August 31, | |||||||||||
2022 | 2022 | 2021 | 2021 | |||||||||||
Revenue | $ | 4,878( | $ | 7,464( | $ | 10,921( | $ | 15,928( | ||||||
Gross profit | $ | 4,878( | $ | 7,464( | $ | 10,921( | $ | 15,928( | ||||||
Loss for the period | $ | (3,773,437) | $ (19,372,355) | $ | (1,840,950) | $ | (1,251,295) | |||||||
Loss per share | $ | (0.04) | $ | (0.20) | $ | (0.02) | $ | (0.02) | ||||||
May 31, | February 28, | November 30, | August 31, | |||||||||||
2021 | 2021 | 2020 | 2020 | |||||||||||
Revenue | $ | 35,210( | $ | 34,505( | $ | 22,590) | $ | 31,361) | ||||||
Gross profit | $ | 35,210( | $ | 34,505( | $ | 22,590) | $ | 31,361) | ||||||
Loss for the period | $ | (495,351) | $ | (204,214) | $ | (230,125) | $ | (207,476) | ||||||
Loss per share | $ | (0.02) | $ | (0.01) | $ | (0.01) | $ | (0.01) |
LQWD FINTECH CORP. | MANAGEMENT'S DISCUSSION AND ANALYSIS |
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The Company's operations for the three months ended May 31, 2022 produced a loss of $3,773,437 compared to a loss of $495,351 for the same quarter in the previous year.
LIQUIDITY AND CAPITAL RESOURCES
2023 | 2022 | 2022 | |||
Q1 | Q4 | Q1 | |||
Cash and cash equivalents | $ | 962,854 | $ 871,449 | $ | 461,111 |
Working capital | $ | 6,176,062 | $ 8,801,613 | $ | 5,818,432 |
As at the date of this report, the Company has adequate cash and working capital to fund its operations and planned capital expenditures for the next 12 months. Any additional material capital expenditures or commitments may require a source of additional financing, which may come from funds through equity financing.
2023 | 2022 | 2022 | |
Q1 | Q4 | Q1 | |
Issued and outstanding shares | 97,777,807 | 97,627,807 | 31,266,521 |
Issued and outstanding shares, fully diluted | 132,254,072 | 136,024,952 | 37,211,387 |
During the period ended May 31, 2022, 150,000 warrants, redeemable for one share at a price of $0.20 per share, for proceeds of $30,000, were exercised.
The technology business may affect the Company's ability to raise capital to acquire properties and/or pursue other opportunities in the future.
RELATED PARTY TRANSACTIONS
The aggregate value of transactions and outstanding balances relating to key management personnel were as follows:
2023 | 2022 | 2022 | ||||
Q1 | Q4 | Q1 | ||||
Consulting fees | $ | - | $ | - | $ | 12,000 |
Salaries | 78,440 | 101,250 | ||||
Share-based compensation | 263,131 | 385,316 | 53,271 | |||
$ | 341,571 | $ | 486,566 | $ | 65,271 |
The breakdown for the related party transactions during the three months ended March 31, 2022 are as follows:
Related Party | Role | Share-based | |||||
Salaries | compensation | Total | |||||
Barry MacNeil | CFO* | $ | 15,000 | $ | 76,787 | $ | 91,787 |
Albert Szmigielski | CTO | 25,940 | - | 25,940 | |||
Giuseppe (Pino) Perone | Corporate Secretary | 15,000 | 93,172 | 108,172 | |||
Ashley Garnot | Independent Director* | 22,500 | 93,172 | 115,672 | |||
$ | 78,440 | $ | 263,131 | $ | 341,571 |
All transactions and balances are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.
LQWD FINTECH CORP. | MANAGEMENT'S DISCUSSION AND ANALYSIS |
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LQwD FinTech Corp. published this content on 02 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 August 2022 22:21:04 UTC.
