U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 000-22711
COYNI, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
Nevada
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
76-0640970
(IRS EMPLOYEE IDENTIFICATION NO.)
3131 Camino Del Rio N, Suite 1400, San Diego, CA 92108
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(855) 201-1613
(ISSUER TELEPHONE NUMBER)
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Non-accelerated filer ☒ | Smaller reporting company ☒ |
| | Emerging Growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Act:
|
Title of Each Class
|
|
Trading Symbol
|
|
Name of Exchange on Which Registered
|
|
N/A
|
|
N/A
|
|
N/A
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
On May 13, 2024, the registrant had outstanding 101,301,968 shares of Common Stock, $0.001 par value per share.
TABLE OF CONTENTS
Item 1. Financial Statements
COYNI, INC.
BALANCE SHEETS
| |
|
March 31,
|
|
|
December 31,
|
|
| |
|
2024 (Unaudited)
|
|
|
2023
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
$ |
1,261 |
|
|
$ |
2,011 |
|
|
Total current assets
|
|
|
1,261 |
|
|
|
2,011 |
|
|
Total assets
|
|
$ |
1,261 |
|
|
$ |
2,011 |
|
| |
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accrued liabilities and other payables
|
|
$ |
76,706 |
|
|
$ |
76,706 |
|
|
Due to related party
|
|
|
110,918 |
|
|
|
82,142 |
|
|
Total current liabilities
|
|
|
187,624 |
|
|
|
158,848 |
|
| |
|
|
|
|
|
|
|
|
|
Stockholders' deficit:
|
|
|
|
|
|
|
|
|
| Undesignated preferred stock, $0.001 par value, 9,999,942 shares authorized, none issued and outstanding |
|
|
- |
|
|
|
- |
|
| Series C convertible non-redeemable preferred stock, $0.001 par value, 48 shares authorized, issued and outstanding at March 31, 2024 and December 31, 2023; $12,500 per share liquidation preference ($600,000 aggregate liquidation preference at March 31, 2024) |
|
|
- |
|
|
|
- |
|
| Series D convertible non-redeemable preferred stock, $0.001 par value, 10 shares authorized, issued and outstanding at March 31, 2024 and December 31, 2023; $8,725 per share liquidation preference ($87,250 aggregate liquidation preference at March 31, 2024) |
|
|
- |
|
|
|
- |
|
| Common stock, $0.001 par value, 200,000,000 shares authorized, 101,301,968 shares issued and outstanding at March 31, 2024 and December 31, 2023 |
|
|
101,302 |
|
|
|
101,302 |
|
|
Additional paid-in capital
|
|
|
29,321,475 |
|
|
|
29,321,475 |
|
|
Accumulated deficit
|
|
|
(29,609,140 |
) |
|
|
(29,579,614 |
) |
|
Total stockholders' deficit
|
|
|
(186,363 |
) |
|
|
(156,837 |
) |
|
Total liabilities and stockholders' deficit
|
|
$ |
1,261 |
|
|
$ |
2,011 |
|
The accompanying notes are an integral part of these financial statements.
COYNI, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
(UNAUDITED)
| |
|
For the Three Months Ended March 31,
|
|
| |
|
2024
|
|
|
2023
|
|
| |
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
Stock compensation expense
|
|
$ |
- |
|
|
$ |
221,702 |
|
|
General and administrative expenses
|
|
|
29,526 |
|
|
|
54,524 |
|
|
Loss from operations
|
|
|
(29,526 |
) |
|
|
(276,226 |
) |
| |
|
|
|
|
|
|
|
|
|
Non-operating income
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
- |
|
|
|
- |
|
|
Total non-operating income, net
|
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(29,526 |
) |
|
$ |
(276,226 |
) |
| |
|
|
|
|
|
|
|
|
|
Net loss per share – basic and diluted
|
|
$ |
(0.00 |
) |
|
$ |
(0.01 |
) |
| |
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding
|
|
|
101,301,968 |
|
|
|
40,581,181 |
|
The accompanying notes are an integral part of these financial statements.
COYNI, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
(UNAUDITED)
| |
|
|
|
|
|
|
|
|
|
PREFERRED STOCK
|
|
|
ADDITIONAL
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
SERIES C
|
|
|
SERIES D
|
|
|
PAID-IN
|
|
|
ACCUMULATED
|
|
|
|
|
|
| |
|
SHARES
|
|
|
CAPITAL
|
|
|
SHARES
|
|
|
CAPITAL
|
|
|
SHARES
|
|
|
CAPITAL
|
|
|
CAPITAL
|
|
|
DEFICIT
|
|
|
TOTAL
|
|
|
Balance at December 31, 2023
|
|
|
101,301,968 |
|
|
$ |
101,302 |
|
|
|
48 |
|
|
$ |
- |
|
|
|
10 |
|
|
$ |
- |
|
|
$ |
29,321,475 |
|
|
$ |
(29,579,614 |
) |
|
$ |
(156,837 |
) |
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(29,526 |
) |
|
|
(29,526 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2024
|
|
|
101,301,968 |
|
|
$ |
101,302 |
|
|
|
48 |
|
|
$ |
- |
|
|
|
10 |
|
|
$ |
- |
|
|
$ |
29,321,475 |
|
|
$ |
(29,609,140 |
) |
|
$ |
(186,363 |
) |
| |
|
|
|
|
|
|
|
|
|
PREFERRED STOCK
|
|
|
ADDITIONAL
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
SERIES C
|
|
|
SERIES D
|
|
|
PAID-IN
|
|
|
ACCUMULATED
|
|
|
|
|
|
| |
|
SHARES
|
|
|
CAPITAL
|
|
|
SHARES
|
|
|
CAPITAL
|
|
|
SHARES
|
|
|
CAPITAL
|
|
|
CAPITAL
|
|
|
DEFICIT
|
|
|
TOTAL
|
|
|
Balance at December 31, 2022
|
|
|
2,301,968 |
|
|
$ |
2,302 |
|
|
|
48 |
|
|
$ |
- |
|
|
|
10 |
|
|
$ |
- |
|
|
$ |
29,198,773 |
|
|
$ |
(29,229,526 |
) |
|
$ |
(28,451 |
) |
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(276,226 |
) |
|
|
(276,226 |
) |
|
Stock Compensation expense
|
|
|
98,000,000 |
|
|
|
98,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
123,702 |
|
|
|
- |
|
|
|
221,702 |
|
|
Balance at March 31, 2023(Restated)
|
|
|
100,301,968 |
|
|
$ |
100,302 |
|
|
|
48 |
|
|
$ |
- |
|
|
|
10 |
|
|
$ |
- |
|
|
$ |
29,322,475 |
|
|
$ |
(29,505,752 |
) |
|
$ |
(82,975 |
) |
The accompanying notes are an integral part of these financial statements.
COYNI, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
(UNAUDITED)
| |
|
2024
|
|
|
2023
|
|
| |
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(29,526 |
) |
|
$ |
(276,226 |
) |
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
Stock Compensation expense
|
|
|
- |
|
|
|
221,702 |
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
750 |
|
|
|
- |
|
|
Accrued liabilities and other payables
|
|
|
28,776 |
|
|
|
54,524 |
|
|
Net cash used in operating activities
|
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
- |
|
|
|
- |
|
|
Cash and cash equivalents at beginning of period
|
|
|
- |
|
|
|
- |
|
|
Cash and cash equivalents at end of period
|
|
$ |
- |
|
|
$ |
- |
|
| |
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flows Information:
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$ |
- |
|
|
$ |
- |
|
|
Cash paid for income taxes
|
|
$ |
- |
|
|
$ |
- |
|
| |
|
|
|
|
|
|
|
|
|
Non-cash transactions:
|
|
|
|
|
|
|
|
|
|
Operating expenses directly paid by a related party
|
|
$ |
28,776 |
|
|
$ |
39,423 |
|
The accompanying notes are an integral part of these financial statements.
COYNI, INC.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Coyni, Inc. (“we”, “our”, the “Company” or “Coyni”) is a Nevada Corporation that previously consisted of the networking service (carrier/circuit) business. It provided internet connectivity to corporate clients on a subscription basis; essentially operating as a value-added provider until it ceased operations effective June 30, 2014.
The Company was originally incorporated as Solis Communications, Inc. on July 23, 2001. On March 19, 2015, the Company changed its name to Logicquest Technology, Inc. (“Logicquest”) from Bluegate Corporation. On June 23, 2023, the Company changed its name to Coyni, Inc. (“Coyni”).
The Company currently has no operations and the Company’s Board of Directors is currently seeking investment opportunities. Effective on April 7, 2023, the selling shareholder of our Company, who owned 97.70% equity ownership of the Company and also held a control position in the Company sold all of his equity interest in the Company (consisting of 98,000,000 shares of restricted common stock, 48 shares of Series C convertible non-redeemable preferred stock and 10 shares of Series D convertible non-redeemable preferred stock) to RYVYL, Inc. for a total purchase price of $225,000. After giving effect to the purchases, RYVYL, Inc. became the major and controlling shareholder of the Company and the transaction.
On June 8, 2023, the Company entered an Agreement and plan of Merger with Coyni, Inc. (“old Coyni”), old Coyni shall be merged with and into the Company (or “Coyni”). However, the Merger Agreement has been rescinded and revoked due to a change in business strategy. On or about December 6, 2023, the Company filed a Termination of Merger (“Termination of Merger”) with the Nevada Secretary of State. Once approved and processed, this will result in the termination of the Merger Agreement entered on June 8, 2023. The filing of the Termination of Merger was not self-effectuating, and must be approved by the Nevada Secretary of State. In February 2024, the termination of merger was rejected by NV Secretary of State. As a result, the Company has not pursued moving the termination along.
Following is a summary of the Company’s significant accounting policies:
BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of the Company, have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) 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 Coyni’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.
SIGNIFICANT ESTIMATES
The preparation of financial statements in conformity with U.S. GAAP 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 dates of the financial statements and the reported amounts of revenues and expenses during the periods. Actual results could differ from estimates making it reasonably possible that a change in the estimates could occur in the near term.
RELATED PARTY TRANSACTIONS
A related party is generally defined as (i) any person that holds 10% or more of the Company’s securities and their immediate families, (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.
FAIR VALUE OF FINANCIAL INSTRUMENTS
For certain of the Company’s financial instruments, including prepaid expenses and accrued liabilities, the carrying amounts approximate fair values due to their short maturities.
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.
It is not, however, practical to determine the fair value of amounts due to related parties and lease and management arrangement with related parties, if any, due to their related party nature.
INCOME TAXES
The Company uses the liability method of accounting for income taxes. Under this method, deferred income taxes are recorded to reflect the tax consequences on future years of temporary differences between the tax basis of assets and liabilities and their financial amounts at year-end. The Company provides a valuation allowance to reduce deferred tax assets to their net realizable value.
The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement.
LOSS PER SHARE
Basic and diluted net loss per share is computed on the basis of the weighted average number of shares of common stock outstanding during each period. The Company does not have any potentially dilutive instruments for the three months ended March 31, 2024 and 2023. Accordingly, basic and diluted losses per share were identical for the three months ended March 31, 2024 and 2023.
STOCK BASED COMPENSATION
The Company accounts for share-based compensation awards in accordance with ASC 718, “Compensation – Stock Compensation”. The cost of services received from employees and non-employees in exchange for awards of equity instruments is recognized in the statement of operations based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service period or vesting period. The Company records forfeitures as they occur.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
All new accounting pronouncements issued but not yet effective or adopted have been deemed not to be relevant to us, hence are not expected to have any impact once adopted.
2. GOING CONCERN CONSIDERATIONS
During the three months ended March 31, 2024 and 2023, and as of March 31, 2024 and December 31, 2023, we have been unable to generate cash flows sufficient to support our operations and have been dependent on debt raised from related parties We experienced negative financial results as follows:
| | | 2024 | | | 2023 | |
| Net loss for the three months ended March 31, 2024 and 2023 | | $ | (29,526 | ) | | $ | (276,226 | ) |
| Negative working capital as of March 31, 2024 and December 31, 2023 | | | (186,363 | ) | | | (156,837 | ) |
| Stockholders’ deficit as of March 31, 2024 and December 31, 2023 | | | (186,363 | ) | | | (156,837 | ) |
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.
3. ACCRUED LIABILITIES AND OTHER PAYABLES
The accrued liabilities are summarized below:
| |
|
March 31,
2024
|
|
|
December 31,
2023
|
|
|
Accrued general and administrative expenses
|
|
$ |
37,283 |
|
|
$ |
37,283 |
|
|
Other payables
|
|
|
39,423 |
|
|
|
39,423 |
|
|
Accrued liabilities and other payables
|
|
$ |
76,706 |
|
|
$ |
76,706 |
|
As of March 31, 2024 and December 31, 2023, accrued liabilities mainly consists of unpaid professional fee such as legal and audit fee, other payable mainly consist of due to ex-shareholder.
4. DUE TO RELATED PARTY
As of March 31, 2024 and December 31, 2023, the Company had due to related parties of $110,918 and $82,142, respectively, mainly was the Company’s expenses that were paid by RYVYL Inc., the controlling shareholder.
5. INCOME TAXES
On December 22, 2017 U.S. tax reform legislation known as the Tax Cuts and Jobs Act (the “2017 Act”) was signed into law. The 2017 Act made substantial changes to U.S. tax law, including a reduction in the corporate tax rate from 34% to 21%, a limitation on deductibility of interest expense, a limitation on the use of net operating losses to offset future taxable income, the allowance of immediate expensing of capital expenditures, deemed repatriation of foreign earnings through a transition tax and significant changes to the taxation of foreign earnings going forward. As a result of the 2017 Act, NOL carryforwards generated in years beginning after December 31, 2017 would carryforward indefinitely, and would apply to 80% of future taxable income. Under the Act, carrybacks of NOLs were disallowed. In March 2021, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was enacted providing a five-year carryback for losses incurred in 2018, 2019, 2020 or 2021, which allows companies to modify tax returns up to five years prior to offset taxable income from those tax years. The CARES Act also suspended the NOL limit of 80% of taxable income, but the NOLs generated in 2018 and forward will still carryforward indefinitely.
The composition of deferred tax assets at March 31, 2024 and December 31, 2023 were as follows:
| |
|
March 31,
2024
|
|
|
December 31,
2023
|
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
|
Benefit from carryforward of net operating loss
|
|
$ |
2,366,658 |
|
|
$ |
2,360,457 |
|
|
Less valuation allowance
|
|
|
(2,366,658 |
) |
|
|
(2,360,457 |
) |
|
Net deferred tax asset
|
|
$ |
- |
|
|
$ |
- |
|
The difference between the income tax benefit in the accompanying statement of operations and the amount that would result if the U.S. Federal statutory rate of 21% were applied to pre-tax loss for 2024 and 2023, is attributable to the valuation allowance.
At March 31, 2024, for federal income tax reporting purposes, the Company has $9,108,809 in unused net operating losses available for carryforward to future years which will expire in various years through 2037, and $2,160,990 that will carryforward indefinitely.
6. SHAREHOLDERS’ EQUITY
On February 24, 2023, the Board of Directors agreed to issue 98,000,000 shares of the Company’s to Ang Woon Han (the former major shareholder of the Company) to serve as the Company’s director. The fair value of the shares issued to Ang Woon Han was $221,702 on the grant date and the shares were vested immediately, which was fully recognized as stock-based compensation expense during the year ended December 31, 2023.
On June 8, 2023, the Company executed a merger agreement which provided for an additional 1,000,000 shares to be issued to RYVYL, as a result, RYVYL owns 99,000,000 common shares of the Company.
7. CONTINGENCY
On November 8, 2022, the Company’s majority shareholder, RYVYL, Inc. (“RYVYL”) filed a complaint against its former Chief Operating Officer Vanessa Luna, Luna Consultant Group, LLC and Doe(s) 1 through 50 in San Diego Superior Court (the “RYVYL Filing”). RYVYL is alleging that Ms. Luna abused her position for additional compensation, failed to follow proper protocols and breached her fiduciary duties and duty of loyalty by secretly maintaining alternative employment. The action seeks damages, including interest and costs of suit incurred.
On November 10, 2022, Ms. Luna filed her own complaint against RYVYL and Fredi Nisan in San Diego Superior Court (the “Luna Filing”). Ms. Luna alleges that Mr. Nisan used contract negotiations to coerce her, that RYVYL improperly coded transactions and misled investors, and that when her concerns were reported to management, she was wrongfully terminated, resulting in a number of claims. Ms. Luna also alleges sexual misconduct on the part of Mr. Nisan. Ms. Luna is seeking damages including compensatory damages, unpaid wages (past and future), loss of wages and benefits (past and future), and other damages to be proven at trial. RYVYL and Mr. Nisan deny all allegations of the Luna Filing.
In April 2024, Luna sought to add the Company as a defendant with regard to her claims. She was granted permission to file a Second Amended Complaint to add the Company as a defendant. The Company is evaluating the allegations to determine whether to challenge the filing by way of demurrer or otherwise.
As the Company cannot predict the outcome of the matter, the probability of an outcome cannot be determined. The Company intends to vigorously defend against all claims asserted by Luna. The San Diego Superior Court consolidated the RYVYL Filing and Luna Filing into a single proceeding, RYVYL Inc. v. Luna, on August 4, 2023. The parties are currently in the discovery phase.
8. SUBSEQUENT EVENTS
The Company follows the guidance in FASB ASC 855-10 for the disclosure of subsequent events. The Company evaluated subsequent events through the date the financial statements were issued and determined the Company has no material subsequent event that needs to be disclosed.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operation.
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 industry’s 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 (“US GAAP”). 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”, “our company” and “Logicquest” mean Logicquest Technology, Inc., unless otherwise indicated.
Business 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. On June 23, 2023, the Company changed its name to Coyni, Inc. (“Coyni”).
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.
We are currently a company with no operations. To sustain our company’s 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.
Effective on April 7, 2023, the selling shareholder of our Company, who owns 97.7% equity ownership of the Company and also holds a control position in the Company sold all of his equity interest in the Company (consisting of 98,000,000 shares of restricted common stock, 48 shares of Series C convertible non-redeemable preferred stock and 10 shares of Series D convertible non-redeemable preferred stock) to RYVYL, Inc. for a total purchase price of $225,000. After giving effect to the purchases, RYVYL Inc. became the major and controlling shareholder of the Company.
On June 8, 2023, the Company entered an Agreement and plan of Merger with Coyni, Inc. (“old Coyni”), old Coyni shall be merged with and into the Company (or “Coyni”). On or about December 6, 2023, the Company filed a Termination of Merger (“Termination of Merger”) with the Nevada Secretary of State. Once approved and processed, this will result in the termination of the Merger Agreement entered on June 8, 2023. The Merger Agreement has been rescinded and revoked due to a change in business strategy. The filing of the Termination of Merger is not self-effectuating, and must be approved by the Nevada Secretary of State. In February 2024, the termination of merger was rejected by NV Secretary of State. As a result, the Company has not pursued moving the termination along.
Results of Operations
Three Months Ended March 31, 2024 compared to the Three Months Ended March 31, 2023
We had a net loss of $29,526 for the three months ended March 31, 2024, which was $246,700 less than the net loss of $276,226 for the three months ended March 31 2023. The decrease in our net loss was mainly due to the decrease in stock-based compensation expense and professional fee.
The following table summarizes key items of comparison and their related increase (decrease) for the three months ended March 31, 2024 and 2023:
| |
|
|
|
|
|
|
|
|
|
Increase
(Decrease)
|
|
| |
|
2024
|
|
|
2023
|
|
|
2024 from 2023
|
|
|
Revenue
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
Stock-based compensation
|
|
|
- |
|
|
|
221,702 |
|
|
|
(221,702 |
) |
|
General and administrative expenses
|
|
|
29,526 |
|
|
|
54,524 |
|
|
|
(24,998 |
) |
|
Loss from operations
|
|
|
(29,526 |
) |
|
|
(276,226 |
) |
|
|
(246,700 |
) |
|
Net loss
|
|
$ |
(29,526 |
) |
|
$ |
(276,226 |
) |
|
$ |
(246,700 |
) |
Revenue
We did not earn any revenues during the three months ended March 31, 2024 or 2023.
Operating expenses
We had $29,526 general and administrative expenses for the three months ended March 31, 2024, a decrease of $24,998 from $54,524 general and administrative expenses for the three months ended March 31, 2023, the decrease was mainly due to decreased professional fees of $24,998. For the three months ended March 31, 2023, we had stock-based compensation expense of $221,702 paid to the Company’s former major shareholder and the director.
Liquidity and Capital Resources
As of March 31, 2024, our cash and cash equivalents were $0; total current liabilities were $187,624 and total stockholders’ deficit was $186,363.
Working Capital
| |
|
At
March 31,
2024
|
|
|
At
December 31,
2023
|
|
|
Current assets
|
|
$ |
1,261 |
|
|
$ |
2,011 |
|
|
Current liabilities
|
|
|
187,624 |
|
|
|
158,848 |
|
|
Working capital deficit
|
|
$ |
(186,363 |
) |
|
$ |
(156,837 |
) |
We anticipate generating losses and, therefore, may be unable to continue operations further in the future.
Financial Condition
We did not generate any revenues nor have any cash activities during the three months ended March 31, 2024 and 2023; however, we had $29,526 G&A expenses (mainly consisted of professional fees).
We did not have any investing activities during the three months ended March 31, 2024 and 2023.
We did not have any financing activities during the three months ended March 31, 2024 and 2023.
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.
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. See Note 1 of the Notes to Financial Statements included in this quarterly report for a summary of significant accounting policies and the effect on our unaudited financial statements.
Going Concern
During the three months ended March 31, 2024 and 2023, and as of March 31, 2024 and December 31, 2023, 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. We experienced negative financial results as follows:
| |
|
2024
|
|
|
2023
|
|
|
Net loss for the three months ended March 31, 2024 and 2023
|
|
$ |
(29,526 |
) |
|
$ |
(276,226 |
) |
|
Negative working capital as of March 31, 2024 and December 31, 2023
|
|
|
(186,363 |
) |
|
|
(156,837 |
) |
|
Stockholders’ deficit as of March 31, 2024 and December 31, 2023
|
|
|
(186,363 |
) |
|
|
(156,837 |
) |
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.
Prior to April 7, 2023, our operations was primarily funded by Logicquest Technology Limited, a company controlled by the Company’s former Chief Financial Officer, Mr. Cheng Yew Siong. Effective on April 7, 2023, the selling shareholder of the Company, who owns 99.16% equity ownership of the Company and also holds a control position in the Company sold all of his equity interest in the Company (consisting of 98,000,000 shares of restricted common stock, 48 shares of Series C convertible non-redeemable preferred stock and 10 shares of Series D convertible non-redeemable preferred stock) to RYVYL, Inc. for a total purchase price of $225,000.
These steps have provided us with the cash flows to continue our business, but have not resulted in significant improvement in our financial position. We are considering alternatives to address our cash flow situation that include:
|
|
●
|
Raising capital through additional sale of our common stock and/or debt securities.
|
|
|
●
|
Reducing cash operating expenses to levels that are in line with current revenues.
|
These alternatives could result in substantial dilution of existing stockholders. There can be no assurance that our current financial position can be improved, that we can raise additional working capital or that we can achieve positive cash flows from operations. Our long-term viability as a going concern is dependent upon the following:
|
|
●
|
Our ability to locate sources of debt or equity funding to meet current commitments and near-term future requirements.
|
|
|
●
|
Our ability to achieve profitability and ultimately generate sufficient cash flow from operations to sustain our continuing operations.
|
Off Balance Spreadsheet 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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a smaller reporting company, as defined in 17 CFR § 229.10(f)(1), we are not required to provide the information requested by this Item.
Item 4. Controls and Procedures.
We maintain disclosure controls and procedures (as defined in Rules 13a-15I and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed by us in reports that we file under the Exchange Act are recorded, processed, summarized and reported as specified in the SEC’s rules and forms and that such information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officer, to allow timely decisions regarding required disclosure. Management, with the participation of our principal executive and financial officer, performed an evaluation of the effectiveness of our disclosure controls and procedures as of March 31, 2024. Based on that evaluation and as described below under “Management’s Report on Internal Control over Financial Reporting,” we have identified material weaknesses in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) ). These weaknesses involve our lack of experience with U.S. GAAP requirements, as described in more detail in the next section. Solely as a result of these material weaknesses, our management, including our principal executive and financial officer, concluded that our disclosure controls and procedures were not effective as of March 31, 2024.
Management’s Report on Internal Control over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
The Company’s internal control over financial reporting included policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; (2) provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of Coyni, Inc.; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Coyni.’s assets that could have a material effect on our financial statements.
Because of its inherent limitation, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of Coyni, Inc.’s internal control over financial reporting as of March 31, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on that evaluation, our management concluded that, due to the material weaknesses described below, our internal control over financial reporting was not effective as of March 31, 2024.
A “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements would not be prevented or detected on a timely basis.
As of March 31, 2024, the Company has not yet established an internal control over financial reporting systems, as the company is a shell company without ordinary business operations.
Changes in Internal Controls over Financial Reporting
There were no changes that occurred during the first quarter of the fiscal year covered by the Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On November 8, 2022, the Company’s majority shareholder, RYVYL, Inc. (“RYVYL”) filed a complaint against its former Chief Operating Officer Vanessa Luna, Luna Consultant Group, LLC and Doe(s) 1 through 50 in San Diego Superior Court (the “RYVYL Filing”). RYVYL is alleging that Ms. Luna abused her position for additional compensation, failed to follow proper protocols and breached her fiduciary duties and duty of loyalty by secretly maintaining alternative employment. The action seeks damages, including interest and costs of suit incurred.
On November 10, 2022, Ms. Luna filed her own complaint against RYVYL and Fredi Nisan in San Diego Superior Court (the “Luna Filing”). Ms. Luna alleges that Mr. Nisan used contract negotiations to coerce her, that RYVYL improperly coded transactions and misled investors, and that when her concerns were reported to management, she was wrongfully terminated, resulting in a number of claims. Ms. Luna also alleges sexual misconduct on the part of Mr. Nisan. Ms. Luna is seeking damages including compensatory damages, unpaid wages (past and future), loss of wages and benefits (past and future), and other damages to be proven at trial. RYVYL and Mr. Nisan deny all allegations of the Luna Filing.
In April 2024, Luna sought to add the Company as a defendant with regard to her claims. She was granted permission to file a Second Amended Complaint to add the Company as a defendant. The Company is evaluating the allegations to determine whether to challenge the filing by way of demurrer or otherwise.
As the Company cannot predict the outcome of the matter, the probability of an outcome cannot be determined. The Company intends to vigorously defend against all claims asserted by Luna. The San Diego Superior Court consolidated the RYVYL Filing and Luna Filing into a single proceeding, RYVYL Inc. v. Luna, on August 4, 2023. The parties are currently in the discovery phase.
We know of no material, active or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
COYNI, INC.
/s/ Ben Errez
By: Ben Errez
Its: Director, Chief Executive Officer,
and Principal Accounting Officer
Date: May 15, 2024
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1. I have reviewed this Form 10-Q of Coyni Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. I am the registrant’s principal executive officer and thus am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the registrant's board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information, including but not limited to those identified in Item 4 (Controls and Procedures) in the registrant’s quarterly report on Form 10-Q; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
1. I have reviewed this Form 10-Q of Coyni Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. I am the registrant’s principal financial officer and am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the registrant's board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information in the registrant’s quarterly report on Form 10-Q; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
In connection with the Quarterly Report of Coyni Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ben Errez, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906 has been provided to Ben Errez and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
In connection with the Quarterly Report for Coyni Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ben Errez, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906 has been provided to Ben Errez and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.