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spk11: Good morning, ladies and gentlemen, and thank you for joining us today to discuss the results of LOGIC's fourth quarter and full year 2021, ended December 31st, 2021. Joining us today are LOGIC's Chief Executive Officer, Brent Sun, the President of DataLogic, Heg Newton, and Chief Financial Officer of DataLogic, Lionel Chung. Following your remarks, we will open the call for your questions. I'll provide some important cautions regarding forward-looking statements made by management during today's call. I'll also like to remind everyone that today's call is being recorded and it will be made available for telephone replay following the instructions provided in today's press release that was issued pre-market. At this time, while a few more listeners are dialing in, I will read the obligatory safe harbor statement. This teleconference contains certain forward-looking statements and information as defined within the meanings of Section 27A of the Securities Act of 1933 and as amended in Section 21E of Security Exchange Act of 1934, as amended and is subject to the safe harbor created by those sections. This press release also contains forward-looking statements and forward-looking information within the meaning of Canadian securities legislation that relate to LOGIC's current expectation and views of future events. Any statement that expresses or involves discussions as to expectations, beliefs, plans, objectives, assumptions, or forward-looking or future events or performances, often but not always through the use of the words or phrases such as will likely result, are expected to, expects, will contain, is anticipated, anticipates, believes, estimated, intends, plans, forecast, projection, strategy, objective, and outlook are not historical facts and may be forward-looking statements and may involve estimates, assumptions, and uncertainties which could cause actual results or outcomes to differ materially from those expressed in such forward-looking statements. No assurance can be given that these expectations will prove to be correct, and such forward-looking statements included in this press release should not be unduly relied upon. These statements speak only as of the date of this conference, teleconference. Forward-looking statements are based on a number of assumptions and are subject to a number of risks and uncertainties which are beyond logic's control, which could cause actual results and events to differ materially from those that are disclosed or implied by such forward-looking statements. In particular, without limitation, this press release contains forward-looking statements regarding our products and services, the use and or ongoing demand for our products and services, expectations regarding our revenue and the revenue generation potential of our products and services, our partnership and strategic alliance, potential strategic transactions, the impact of global pandemics, including COVID-19, On the demand of our products and services, industry trends, overall market growth rates, our growth strategy, and continued growth of the addressable market for our products and solutions, our business plans and strategies, including without limitation our ability to successfully negotiate and finalize purchase agreement governing the terms of such acquisition. The structure of this transaction, timing of the transaction, the value of the success of the company's prior press release and its filings with security and exchange, Commission SEC, including its annual report on Form 10-K and any subsequent public filings and filings made pursuant to Canadian securities legislations that are available on the www.theater.com, including under the heading Risk Factors in the Company's Canadian Prospectus. Logic undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by law. New factors emerge from time to time. It is not possible for logic to predict all of them or assess the impact of each such factor or the extent to which any factor or combination of factors may cause results to differ materially from those contained in any forward-looking statement. Any forward-looking statements contained in this press released are expressly qualified in their entirety by this cautionary statement. At this time, I'd like to turn the conference over to Brent Sun, Chief Executive Officer. Please go ahead.
spk02: Thanks, Keith. I wanted to thank everyone for joining us today. Apologies for any inconveniences caused from the postponement of our call from the day before yesterday. We actually had two strongly positive corporate developments in the past 72 hours that converged concurrently with closing out the audited fiscal year and preparation for this call. As we announced yesterday, we closed the BattleBridge acquisition right on schedule. It's an important and exemplary deal. It is an acquisition of accretive cash flow and what we believe to be excellent synergistic business fundamentals. This is the type of deal that we plan to replicate over the year. Secondly, we also just completed a $3 million equity capital raise, strengthening our balance sheet with the liquidity to do more deals like BattleBridge. We issued 3 million shares for approximately $3 million. Certainly no one has been happy with the share price recently, least of all myself. having bought 145,000 shares in the open market last year at a cost average of about $3.60. Not necessarily making me the savviest stock picker, but I believe it does indicate my belief in what we're doing. I'd like to address the fourth quarter and fiscal year results and outlook, and then circle back for further discussion of the BattleBridge highlights. after which we'll open up for questions. As Keith, our operator, mentioned, joining us today are Haig Newton, who is the incoming president and chief strategy officer of Logic. Haig founded Push Interactive, which we acquired a couple of years ago and have rebranded it as DataLogic. Our chief operating officer, John McNeil, who's been working with us for six and a half years now, and then our chief financial officer, Lionel Chung, who has been with us for nearly eight years since we started. Although most of you have communications with me or have heard me speak on calls and interviews, I thought it's important for you to know that there are many talented people who work here. And incidentally, I just got back from our main offices in Minneapolis where the team overviewed their growth and strategic plans And I can readily say that this is the highest morale and sense of optimism I've seen. And I'm extremely proud of the team there. I'm happy to report this morning that Logic posted solid fiscal year 2021 results. Our financial performance and business achievements were excellent. And we have built a solid foundation to set our business upon a good trajectory of revenue growth and margin expansion. through this year and beyond. I'm also happy to say that we closed the BattleBridge deal on schedule as per the letter of intent announced on February 17th. And as that's the newest news, I'll discuss it before circling back to fiscal year results. BattleBridge is a leading boutique provider of digital brand marketing services that include what are called pay-per-click management, social media marketing, funnel creation and optimization, SEO, web design, conversion optimization, and a lot more. I know that sometimes the jargon's a bit daunting in the tech sector, so we'll try our best to make it simple. They have a number of big tech partner accreditations, and they've been solidly visible in the trade media over the years. We anticipate booking approximately three to four million in revenue over the next 12 months of operations. And more importantly, we expect the acquisition will be accretive to our EBITDA numbers, adding over a million dollars in EBITDA cash flow in the same timeframe. We acquired the BattleBridge assets, which include their customer lists and contracts, trade names and trademarks, marketing resources and assets, proprietary tech and processes, and more, and especially their team for 3.25 million, which the total consideration is predominantly restricted stock. And as part of this deal, we are very happy to be retaining numerous key employees with many years of digital marketing expertise. The valuation is approximately three times this year's EBITDA. And to put that in perspective, the average price to EBITDA on acquisitions this past year. We've seen between 8 to 10x. Those are actually benchmark numbers per the databases that track merger and acquisition activity. We've also seen them as high as 12 to 15x. So at 3x, it was an extremely attractive valuation. This was made possible by both our teams understanding that our evaluation at Logic is extremely attractive. I'll add that our industry is highly fragmented and ripe for consolidation. And while every deal is different, BattleBridge is a perfect example of the solid businesses and smart management teams that we're currently evaluating that only need scale to reach their full potential. There are a lot of companies that we're seeing that are offered at low valuation multiples. And they saw their business go away during the pandemic and have struggled to regain their footing. We are looking at acquisitions and integrations of others. Some are much larger, some are smaller. And as we pinpoint them and move forward on them, we'll certainly let everyone know. That reminds me of the acquisition of Push Interactive back in January 2020. Most of you all know it as Datalogic. I wanted to speak to this because not as a pat on the back, but I think as being exemplary of what strategic acquisitions can do. The team there had revenues in 2019 of $9 million. In 2020, they expanded to $15 million, and then last year contributed nearly $24 million in revenue, and at the same time increased gross profit margins significantly. That's almost a 40% compound annual growth rate, which I think many of you will agree that that is significant. Again, I point this out because the importance of a business and the team's ability to execute on growth is something that is paramount. We firmly believe that the BattleBridge acquisition combined with Logic will create the same type of growth opportunity. Going back to the fourth quarter and fiscal year, we have pivoted our business to focus on higher quality and more profitable revenue streams, and this has already more than doubled our fourth quarter gross margins to 30% from one year ago. We also announced record fourth quarter revenues, which also doubled over the previous year to $13.1 million and exceeded our company's January 6th pre-announcement by $800,000. Excluding the AppLogic business, which we have rebranded as GoLogic, which is the spinoff, Logic 2021 full-year revenues increased 51.8% last year. Our strong revenue growth and margin expansion achieved last year demonstrates that our retooled business plan is succeeding and is still early in the phase. In 2021, we took several steps to enable much higher levels of growth and profitability on our advertising tech and marketing tech digital platforms that we expect will now allow us to scale to over 100 million in annual sales without significant capital expenditures. While that entailed letting some low margin customers go through attrition and shifting to somewhat longer sales cycles to close larger, higher margin customers, we believe that that pivot is largely behind us and we now have an active and growing pipeline of more profitable customers with whom we will build our business by helping them build theirs. We've also restructured our management to provide dedicated expert teams for both Logic and GoLogic. In the fourth quarter and in the first part of the first quarter of this year, we transferred the GoLogic assets to Levara, which is currently on the OTC market. Logic controls 97% until the spinoff of those shares is completed to our shareholders of record of December 30th last year. That will happen in another three months or so. And all of this frees up both companies to focus on their respective businesses and markets. By spinning off the GoLogic assets, it allows GoLogic to more nimbly pursue highly scalable, profitable businesses in its underserved Southeast Asian marketplace and focus on its own higher quality customers and revenue. We've applied to FINRA to change the name to GoLogic and secure a new corresponding ticker symbol. so it will change from Levara. Incidentally, FINRA is currently taking about three to four months for things as benign as name change, but that's their issue. Additionally, the separation of Logic and GoLogic strengthens both ability to close strategic accretive mergers and acquisitions in fast-growing and highly fragmented industries. Logic's acquisition criteria, while screening for a creative EBITDA, is specifically targeting prospects that provide excellent customer-based cross-selling and upselling opportunities as a post-acquisition growth driver. And I would finally add that the management team at GoLogic, led by Matthew Brent, and Chris Metcalfe are operating with a high level of discretion and will only announce things on their end when they are required to by regulators. Being on the board of directors there, I'm privileged to see the rapid progress and believe that shareholders will be duly impressed when things start getting announced. COVID-19 has obviously had a depressing effect on most small businesses and their current valuations. And we see that the pursuit of strategic accretive acquisitions as a fast and logical way to gain operational and financial scale to drive growth and margin expansion while also increasing market share and penetration. Our strategic M&A pipeline of accretive acquisitions is expected to be a key catalyst for this year's revenue growth and certainly onwards. margin expansion, and market share gains. So looking ahead through 2022, we are also actively planning to create and integrate our own NFTs, non-fungible tokens. I know many of you have heard that as a buzzword. Hague Newton will speak about it. This is by no means a late stage participation. It's something that we've been looking at for a long time. Hague and the team have been working on it, and we will start to describe that as we approach the go-to-market. At this time, I would like to turn the call over to our Chief Operating Officer, John McNeil, who will quickly review our fourth quarter and full-year 2021 results. John?
spk09: Thanks, Brent. We want to leave plenty of time for Q&A, so I'll go through these numbers quickly. For the fourth quarter of 2021, consolidated revenue increased 99.5% to a record of $13.1 million, compared with $6.6 million in the year-ago quarter, as the COVID-19 impacts began fading and we shifted our focus and business mix to higher margin revenue. For the AppLogic segment, soon to be known as GoLogic, Our M-Commerce platform as a service contributed $6.2 million, or 47.3% of fourth quarter consolidated revenue, increasing by 193.7% from $2.1 million in the year-ago period. The increase was driven by the strategic shift toward higher margin end customers and away from low margin, high volume white label resellers. Turning to the DataLogic segment, DataLogic platform revenues contributed $6.9 million or 52.7% of consolidated revenue, increasing 55% from $4.5 million a year ago. The revenue increase was primarily due to a large increase in our data monetization business, particularly in the Medicare and home improvement verticals. Fourth quarter consolidated gross profits, increased by 193.6% to $4.1 million for a 31% gross margin compared to $1.4 million or 21.1% in the year earlier quarter. So good improvement there. The gross profit improvement reflects better scale from higher revenues as well as the strategic shift to higher margin and customer segments. Total operating expenses increased just 9.8% to $9.4 million from $8.5 million in the year-ago period. largely due to the inclusion of the operations of Rebel AI and increased sales commissions associated with higher revenues. Data logic operating expenses were $2.9 million in general administrative expense, sales and marketing of $1.1 million, and research and development of $3.4 million. The fourth quarter net loss was $5.3 million versus net loss of $7.1 million a year ago, so an improvement there. As of December 31st, 2021, the company's cash, cash equivalents, and restricted cash totaled $1.6 million. Now moving on to our full-year financial results ended December 31, 2021. Consolidated revenues decreased 1.5% to $37.3 million compared with $37.9 million for 2020, primarily due to the 37% decrease in AppLogic revenues due to the shift away from white label app resellers and towards higher margin direct marketing customers. Excluding the app logic business, logic revenues increased 51.8% to $23 million from $15.2 million for 2020. Gross profit increased a robust 73.8% to $11.1 million for a 29.6% gross margin as compared to $6.4 million and a 16.8% gross margin for 2020, so a nice improvement there. Total operating expenses increased 53.4% to $31.6 million for the full year of 2021, up from $20.6 million in the year-earlier period, primarily from higher data logic operating expenses that increased $8.5 million in the year-over-year period. Net loss was $20.1 million, or $0.95 per basic and fully diluted share, in the full year of 2021, compared to a net loss of $14.5 million, or $1.14 per basic and fully diluted share in 2020. The increase in the net loss was primarily due to the net loss from data logic, higher R&D, general and administrative expense, as well as stock-based compensation and an increase in depreciation and amortization. So a couple of non-cash items in there. As of the end of fiscal 2021, December 31st, 2021, cash and cash equivalents totaled $1.6 million. For the full year 2022, we are targeting revenues to be in a broad range of $50 million to $75 million, with variance driven by the pace of M&A closing, as Brent was referring. At the lower of that range, we would expect to be breakeven on an EBITDA basis. On an organic basis, that is with deals that have already closed, we would expect to be EBITDA breakeven by mid-2023 and would expect to attain profitability by late 2023. Again, these expectations are based in part on our potential deal pipeline, which includes M&A, partnerships, and other client relationships. Now, I'd like to turn the call over to Haig Newton, who heads our data logic business, and Haig is our incoming president and chief strategy officer. Over to you, Haig.
spk12: Thank you, John. Excellent results in Q4, and congrats to all teams on the efforts for a record quarter. I wanted to briefly touch upon what we plan to do to improve upon this success while capturing movements into the current digital transformation phase. It's an exciting time in the technology space, and I'm happy to be able to discuss it with you today. For context, our track record of success has been driven by creating harmonious relationships between both buyers and sellers that use paid advertising. creating a positive business outcome. This outcome in harmony drives everything we do at Logic. Today, we execute this in two ways, which are commonly referred to as LCM, Logic Consumer Marketplace, and LDM, Logic Digital Marketing, within our marketing collateral. LCM is a performance-based marketing unit that generates results for buyers on a cost-per-lead or cost-per-sale basis. We utilize a portfolio of brands in a variety of markets that create first and zero-party data. This allows Logic to capture consumer interest or intent into these vertical markets. LDM is a SaaS-driven digital marketing all-in-one platform that creates access or campaigns into any channel. It combines a DMP and DSP for users to amplify messaging using a client's first-party data. This allows Logic to provide actionable data for syndication quickly and easily. Both LCM and LDM share a core element. This core includes data, insights, brands, placements, and intelligence as a way to mine for those positive business outcomes. We commonly refer to this as Logic's consumer intent core. This flywheel of data provides us an advantage in capturing higher quality consumer data at a lower cost through intelligently targeting consumers, activating smart campaigns, and amplifying our messaging across any media channel or even within our brands and communities that we build. To put it simply, growing this core is a primary objective for Logic in 2022, and we believe that a focus on creating actionable consumer intent will be a primary value driver for all aspects of our business. The contribution LCM provides to Logic are powered by our commitment to creating brands and communities which address the pains of consumers across multiple verticals. By adding BattleBridge, we gain a driver to grow and deepen our set of first-party brands as communities. We began working with BattleBridge many months ago, completing an API integration, and have recently launched our new brand, Quotopia, aimed at the insure tech market. This expands the reach of our lead generation team by offering the consumer deeper insights and experiences to make finding the right insurance plan easier. BattleBridge also brings a seasoned team of digital marketing experts with a track record of success as a growth marketing agency. With critical production and content resources from BattleBridge, Logic can expand our presence into larger addressable markets faster. Logic can participate in an agency role as a SaaS do-it-yourself solution or in a results-based format. We look forward to working closely with the BattleBridge team as they integrate into Logic. From a product perspective, we have been focusing on going direct and closing the loop. We have launched the first iteration of our platform, targeted at the SMB market, to deliver leads directly to the businesses engaging with our consumers. This allows new clients to, first, independently onboard, review, and acquire consumer data through a do-it-yourself web application. Second, set filters and thresholds around the rate, cost, and various aspects of each lead delivered. And third, engaging with both our internal machine learning algorithms and third-party scoring metrics to evaluate this prospect data in aggregate. These efforts in going direct allow Logic to close the loop on attribution, giving both traffic generators and buyers full transparency into the consumer journey, from the bid stream through the consumer's request for services and products. Transparency will enable Logic to step forward as a market leader in regards to the pricing, quality, and traceability of our results. Lastly, and from our incubation lab, We have been quietly working in Web3 using blockchain technology and non-fungible utility tokens in a marketplace format, using our zero-party data communities as a guide. Within Web3 frameworks, we see an opportunity to address the growing concerns around data privacy. We are actively exploring concepts around loyalty tokens and consumer participation in conjunction with identity wallets to deliver transparency, control, and even compensation, providing fresh zero-party data to our clients. This is just one example of the many opportunities which Logic is actively exploring to deliver sustainable growth for Logic shareholders within an evolving technological and regulatory landscape. We are excited for the year ahead and continue the growth we have achieved. Brent?
spk03: Thanks, Haig. And with that, Keith, let's open it up for questions, please.
spk11: Thank you. Ladies and gentlemen, if you'd like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, please press star 1 to ask a question. We'll pause for just a moment to give everyone an opportunity to signal for questions.
spk07: We'll take our first question from Tony Forte, private investor. Please go ahead.
spk05: Thank you. This is an excellent conference call, Brent, and individuals who have logic. Thank you very much. And I agree this has been a great year for logic, except for one thing, the share price. My name is Tony Forte. Before I retired, I was in charge of the trade analysis division at the American Stock Exchange. During my tenure there, I had significant interaction with the SEC. I am pretty sure that all shareholders on this call are extremely concerned about the share price of Logic. Despite a super report, today the stock traded down to 85, an all-time low, down another 7 cents on active trading of about 115,000 shares. I want to emphasize that in my opinion, There is absolutely nothing wrong with logic. It is one of the most undervalued stocks in the marketplace. However, the share price is faced with continuous and substantial manipulation on a daily basis. The manipulation began in October 2021 and resulted from the logic offering in June of 2021. The firms who are engaging in this manipulation purchase a substantial number of the units that were sold in the offering. Following the offering, the firm sold all of their common shares and subsequently exercised approximately 50% of their warrants and sold those shares. They had unexercised warrants which were held as a hedge against a possible tender offer for logic. During every trading session, the manipulating firms enter substantial offers to sell logic within a few minutes after the opening. I'm sure most shareholders who look at the trades can see that. The orders are all computer generated, utilizing a developed algorithm. The orders are designed to push logic lower. so that shareholders will panic and sell their positions. As logic declines, additional sell orders are placed at or slightly above the last sale. The computer then generates buy orders below the last sale in an effort to cover their short positions and make a profit. This strategy can occur multiple times during each trading session. it is extremely important for shareholders to realize that the manipulative strategy will only work if shareholders panic and sell their positions. Without shareholders selling, the manipulating firms will have no choice but to move on to another victim, which is what we hope. When the stock rallies into the $3 range, That would mean that the Canadian share price would be approximately $4. The manipulating firms will exercise their warrants, sell the shares, and probably move on to another issue. They've made substantial amounts of money on this, and the money started in October of 2021. because by holding these unexercised shares as a hedge, they were able to manipulate the stock daily, and they do it every single day. They're not interested in driving the stock down 20, 30 cents in a session. All they're interested in doing is dropping the stock three or four cents, have a substantial amount of offers around the last sale, which will panic shareholders into selling. They will buy the shares. make the three or four cents, and then continue that process all the time. They are not concerned about what the company is doing. I don't believe these firms even have an analyst that looks at what the companies are doing. They have a certain computer strategy, they use the computer-generated orders, and they push the stock down. And they've been successful up to this point. I know that Brent... is trying to do everything possible to eliminate the manipulation and to enhance shareholder value. And I'm sure he will be successful. But in the meantime, if shareholders panic because they see the price going down, it just allows them to continue their manipulation. I personally have written letters to some of the firms, strong letters, that I was told And I told them they were manipulating the stock, and I explained how they were doing it, but there was to no avail. They're continuing to do it. I also wrote letters to some of the market makers accepting the orders and reminded them of the know-your-customer rules of the SEC and FINRA. Some of the market makers stopped taking the orders, but it is relatively easy for these firms to find a new market maker. Calling or writing to the SEC or FINRA is probably a waste of time. They do not have the manpower to check all the manipulation that occurs on the OTC market. So I don't believe they do much at all on the OTC market. And if for some reason they were going to do it, it would take them a year or two to actually complete any kind of a study. The problem is that people that go to the SEC for a job, they go to the SEC to get it on their resumes. and a year or so after they leave the SEC, and they get a job on the street for three or four times the money. So I appreciate this opportunity of talking to you. I believe this is one of the most undervalued stocks on the marketplace in general, and I think eventually, with Brent's help, the stock will move up to the level it should be trading at. Thank you very much.
spk07: Thank you, Tony. I appreciate that. We'll take our next question from Venkatavi with Research Capital.
spk11: Please go ahead.
spk00: Thanks for taking my questions. Congrats, Brent, John, and Haig. This is an excellent quarter. Firstly, I want to ask about your guidance for next year. You mentioned the guidance seems to be very good, 50 to 75 million of revenue. But how should we think about the guidance for just data logic segment?
spk09: Yeah, Van, I think that what we are, the way I described it, for the data logic segment. So the organic growth, which was my second comment, without those acquisitions is, you know, more or less in line with discussions that we've had. but that the inorganic growth is what we would be adding through the M&A pipeline. So that may not answer your question directly, but I don't want to give too much more specifics in terms of the absolute numbers. But in terms of talking about EBITDA break-even and things like that, I think we've given you some indication as to what we think the organic capacity is versus the capacity with M&A.
spk00: Okay, excellent. And I was looking at the Battle Bridge economics. This company seems to be a really good company because they have like annual revenue around 4 million and are able to generate positive EBITDA. And when we look at, I mean, just on a standalone basis, data logics margins, These data logic is currently at an annualized revenue of around 20 million, but marginally struggling to make positive EBITDA. So what might be the difference between BattleBridge and data logic? Because is the difference coming from operating expenses or is there a difference in gross margin profile of both companies? How should we think about this?
spk09: Yeah, BattleBridge's gross margins are better than our corporate averages. They're probably not as high as what we would see from LDM. I would say also that as a private company, it doesn't have the corporate overhead associated with public market functions that we need. So that's one reason that you see it. But we can you know, hopefully tuck it in as it is and just, you know, gain the benefit of the EBIT performance that you called out. You know, just to be clear, the $3 million to $4 million target that was discussed is a forward look, though they have certainly done such revenue in the past and in the recent past as well. So it's, you know, you're basically on track there. But we expect it would be beneficial to gross margins and beneficial to the top line as well beyond what we've discussed as organic growth for data logic.
spk00: Okay. So the impact of BattleBridge will be felt in the last three quarters of 2022, right? That is correct. Okay, thanks a lot, John, and thanks a lot, guys, and all the best for next quarter. Thank you.
spk03: Thanks, Ben. Thank you, Ben.
spk11: We'll take our next question from Lisa Thompson with Zacks Investment Research. Please go ahead.
spk06: Good morning, guys. So let's go back to BattleBridge. Just a little clarity on that. Are they bringing you new verticals? or new customers? What's the attraction?
spk09: Well, they're most definitely bringing new customers. And some of the verticals overlap, but they're, by and large, new verticals. I think one of the interesting aspects of it is that they do a significant amount of creative work that is providing more engaging content. So where we do overlap, we expect to improve, you know, improve that part of the engagement within vertical.
spk07: Sorry. Yes, please. I would. You there? I believe we just lost connection. To whom? I'm verifying one moment. I believe it was Brent. Okay. One moment. I'll attempt to reconnect. Okay.
spk09: But if, uh, Hey, if you're, you're on, you might want to speak to this, but, but Lisa, yes, we're gaining, we're definitely gaining customers. It's a creative both top and bottom line margins. There is some overlap, but it's helpful overlap in the verticals that we are, you know, that we share because we want to come to more engaging content and they're experts at creating that.
spk06: Okay, that sounds good. So when do they get their shares? Or did they get them already?
spk10: Well, they will have been delivered them as a result of the close of the acquisition, but they would be restricted shares.
spk07: So subject to a lockup. and leak out. So I'm just trying to figure it out. Oh, hi, Brent.
spk09: Hey, sorry, Brent. You were about to speak when I guess you got dropped. So if you want.
spk02: Oh, yeah. I hope you hadn't already covered it. I was going to also illustrate an example of where we see the the additive impact of BattleBridge. So, John is correct on them bringing us new vertical participation and also additional customers. To give an example, BattleBridge is currently doing digital marketing services for all of their clients But that is limited to Facebook and Google specific ads. That does not include what's called programmatic advertising, which they believe is significantly higher than the revenue that's generated from Google and Facebook that they're covering. The acquisition we made last year of Rebel AI brings the ability to offer programmatic advertising to the BattleBridge clients. You combine that with what we're doing at Logic Consumer Marketing and being able to offer additional services that we have in-house and that BattleBridge is not currently doing is also an attractive upside. So there are things that are beyond just the numbers, and I believe that what we'll see with BattleBridge is very similar to what we saw with the acquisition of Push Interactive, now DataLogic. Again, they went from 9 million in 2019 to nearly 24 million last year. We had a huge margin improvement during that time. And I think that adding in BattleBridge and then cross-selling and up-selling together becomes a significantly important part of our business. Hope that helped. I hope I didn't say the same thing that John did when I was off.
spk06: No, you didn't. That's good. Okay, so just to clarify, so now we'll take the ending share count on December 31st and add like about $3 million for this acquisition and another $3 million for the ionic ionizing? Correct. Is that correct? Correct. Okay. Yes. So that's where we are now. Okay. I wasn't sure when that was going to happen. Ionic didn't happen. Did it happen that day? Yes. Okay. All right. Okay. So you got to help me with the quarters here because I'm still not sure how seasonality works. So let's start with like AppLogic, right? You did $6.2 million in the fourth quarter, which was double what you did in the third quarter. Is that seasonal or does that go up sequentially from here?
spk02: That is mostly due to enhanced commissions that salespeople had. in offering a package sale with other add-ons. So I'd say that that was actually quite successful, significantly more successful than we had expected. Whether or not we continue that into Q1 and Q2, we'll see. We're also offering additional functionality on that platform. that rolls in in Q2. So we may back it out a bit and then gear it up again in Q2. But that is actually in the hands of our respective team over at AppLogic.
spk06: So, yeah.
spk09: Sorry, go ahead.
spk06: No, go ahead, John.
spk09: No, I was just going to say that, you know, just to be clear that this is, only going to be consolidated into LGIQ until the distribution of the shares in LOVA is complete. So with that happening by the June quarter, well, expected to be happening towards the end of the June quarter into July, there may be another quarter of consolidation, I believe. And then, you know, you'll be talking only about data logic. But So what you're focused on is going to be actually a conversation about LOVA once the distribution of those shares takes place.
spk06: Okay. And their revenues, are they like grand majority CreateApp? Because you have all those other businesses, and I'm not quite sure how significant they are.
spk02: They are. The majority is CreateApp. Yeah, CreateApp. And then we also launched a data analytics product, I'm sorry, platform called Radix that the team built. So there's a little bit from that we would expect to try to scale that up. But I think that that's better discussed by the team there when they start to do their calls. So they're completing the year end and they'll start to report soon.
spk03: So that would be a separate topic. It would be a separate call.
spk06: Okay. So data logic then. I know Medicare is a big deal. Is the quarters this year still going to be seasonal, or is other business making up for it? How do we look at the quarters?
spk09: Well, I would think that we're going to see seasonality. Last year was unusual because they extended the enrollment period, and so we had sequential strength, which was pretty atypical as a result of the follow-through on that. So I would say that we wouldn't see that, and I've looked at the ACA data that we can share with you if you'd like, but 2021 was very front-end loaded because you had a lot of sign-ups early in 2021, and the back end, we did well. But just from a total opportunity, it was, you know, in the fourth quarter, you know, so-so. So, my guess is that we're going to see it. There will be some upticks that we see, but seasonally speaking, it's, you know, not expected to be as strong as it was before.
spk06: Okay. So, that's down sequentially just based on Medicare.
spk07: That would be my expectation.
spk06: Okay. And then does it stay flat or does it grow sequentially each quarter from there? Or does it pop back up again?
spk09: Yeah, no, it does. I mean, one of the reasons that we've talked about acquisitions and battle verges, one example, and I think we discussed this a bit, is that, you know, we talk about seasonality and it isn't always in the calendar, you know, so that extended enrollment period last year kind of messed up the seasonality, if you will, by making the thing extend from Q4 to Q1. Well, now we're going back to more normal seasonality. So, yes, you're going to see things, you know, pick up again probably, you know, in the second quarter even. But, you know, seeing it more normally trend, you know, to Q4 again being strong and just sort of normal cycle of things. But that's why we've been wanting to layer in other things which are sort of counter-cyclical to what is sort of normal e-commerce, strong Q4, weaker Q1, which is, I think, sort of the generic view of digital spend. So that's why we're looking at other verticals which have different seasonality than, say, Medicare does, for example.
spk06: So is the next biggest vertical home improvement, is that also seasonal? It's a strong spring or something?
spk09: Well, I mean, I don't know, Haig, if you'd like to talk to the seasonality of it. I mean, there is seasonality, but the seasons may not be quite as you expect. In other words, you may get a lot of indoor home improvement done in the in the darker days of winter than you will in the summer. But it's, you know, hey, I don't know. Is there any color you'd like to provide around sort of what you expect or would think the seasonality around home improvement might be?
spk12: Yeah, that's an excellent question. Yeah, we see home improvement, at least historically, really start to ramp up in the spring. That includes roofing, windows, even interior remodels and exterior landscaping. Also, you know, with improved insurance offerings such as auto insurance, health insurance, et cetera, you know, those also help the seasonality. ACA slash Medicare is truly a bit of a – that is our seasonal constraint per se, but I also believe that we're highly diversified into over 10 vertical markets, and by going deeper and offering the insights which we talked about, we believe we'll be able to smooth out that seasonality.
spk09: Yeah, and I think that's a good point, Hague, that Hague brought up with regards to the auto insurance vertical. So, we're going, you know, along in financial services and adding layers there, both going deeper, but adding other things that we can offer, much as you would in home improvement setting, doors, roofs, tubs, you know, all sorts of things that you can add. So, There's a good opportunity organically, I would say, but also part of it is the acquisition strategy to smooth things out.
spk06: All right. And, John, do you have a number for what you think your operating expenses might be for this year?
spk09: Well, we can take that offline. There's a reasonable amount of it is what I would characterize as success-based, meaning that the more successful we are with some of the new verticals, the more hiring there would be around them to support it. So I'd kind of like to take that offline and discuss that with you in your model, if that's okay.
spk06: All right. I was just trying to share. That's okay. We can talk about it later. Yeah. All right. I think that's all my questions. Thank you.
spk11: We'll take our next question from Rich Marshall, private investor. Please go ahead.
spk08: I think we're all trying to get at the same answer here. So let's assume there's no further M&A. In the disclosure today, you said Logic did about 23 million in revenues for the year. If we add in BattleBridge, another 4 million. So that's about 27 million. So are we looking at about 27 million for 2022 out of Logic without AppLogic? and some growth on top of that without any further M&A? Or is the underlying business not going to achieve that with BattleBridge?
spk09: No, it is expected to be higher than that, than what you penciled out there. We expect that the organic growth of data logic to continue to reflect, I won't say it was the same growth as we experienced last
spk08: year but similar okay so we do expect without further acquisition data logic uh and battle bridge to grow um absolutely yes yeah one other question here um there was a lot of shares issued kind of last summer last fall on marketing awareness for investors you know, emerging market reports. I think we're now paying fees to research capital on a monthly basis. Was Earth engaged as a new IR? And, you know, what kind of awareness activities should we expect? Because, you know, quite frankly, if we look at the beginning of April in 2021, we're down 87% today There's more overhead and I know everyone can talk about algorithms in our face, but something's not, there's a disconnect here and how do we offset that at this point?
spk02: That's quite complex and I did get your email the other day. We should follow up separately, but what I would say out loud is Without diving in too deep to what Tony Forty was describing earlier, I think it's clear that since the IPO on the NEO last year, which personally, and again, this is my personal opinion, I believe was poorly handled, very poorly handled. Most of the shares were placed in the hands of several funds. That as Tony pointed out, and I also know by looking at our DTC list, they sold shares and used the warrants as what's called a box to short against. And the two market awareness initiatives that we undertook, one in August and then one in November, Rich, were met with such resistance on the sell side that it crushed both attempts. I'm probably not supposed to describe that, but really, I don't care. I'm extremely angry about it. What I would say to also address your point, yes, those market awareness campaigns and other ancillary activities did involve shares. You won't see a replication of that this year as we figure out other larger strategic initiatives that would eliminate the pressure on the stock. Those might include something in the order of doing a registered direct IPO of DataLogic out of the OTC listing onto the New York Stock Exchange or NASDAQ, which incidentally we do and we have qualified on a quantitative basis for NASDAQ on everything except share price. So unfortunately, the only thing that has hindered us has been share price. So unfortunately, these guys are currently winning, but we will find a way to mitigate that. I hope I answered your question, but I'm happy to talk with you about it offline.
spk03: You answered the best you can. I appreciate it. Thank you.
spk11: We'll take our next question from Bill Ferrand with Blue Flame Capital. Please go ahead.
spk01: Hi, thank you. I have three questions. My first one is a little bit of a regurgitation of what Tony started with. And so I'll be short on that. I thought Tony did an excellent job. And Brent, your answer shows that you understand what's going on. Where I differ slightly with Tony is I think these short sellers and supposed short suppliers of capital to you, they're just giving you your own money. As soon as you go to them, they go to their institutional so-called investors, and those guys start shorting your company. When the offering's done, they just give you your own money back. And then since they're not really buyers, they have no long-term interest in the company, they keep selling. You're like a fatted calf that they can slaughter. And where I think And by the way, it's not just they, it's other short sellers. Where I think it misses the mark is it does hurt you. When you're using your stock as currency to buy other companies and buy other revenues, you do it at such much lower prices. And this MetaRee research, or whatever the company's called that took you public on NEO, I personally, when I run a company, I hope in the future, would never use them. They did you at $3, and now they have a research report that comes out valuing you at $2. Who are they loyal to? They're loyal to the capital that keeps buying their deals so they can keep making money. And I think you should ask for your investment banking fees back. So my three questions. One, are you talking to any true buyers? Because you need true buyers, not these fake manipulators. And secondly, Brent, and I'm a friend of the company, even though I'm getting a little worked up, are you aware of any other valuations over the last period of time that you've been working so hard and doing your yeoman's job? Are there any other valuations that you're allowed to talk about with us And then finally, my final question is, what metric matters in this space in terms of if someone were to come to buy Logic six months from now? What is the metric they're focusing on? Is it cash flow per share? Is it revenue per share? It certainly probably isn't profitability. So thank you for listening to me.
spk02: No, I appreciate that, Bill. I'm going to do two things. I'm going to answer your questions very directly, and I'm sure I'm going to catch flack afterwards by counsel and IR. But at this point, I will speak to them on a personal and professional basis. Valuations, and I will attempt to answer all three. of your questions, but valuations in our space are as low as one times revenue, but those are for companies like Fluent, FLNT, which only does what's called lead generation. We do have elements of our business that are in lead generation, but our margins are higher than what you see in that sector. We have elements of our business through the acquisition of Rebel and what we will be upselling through the new BattleBridge acquisition that are comparable with the Trade Desk and companies like Magnite where those valuations are still up at 8 to 12 times revenues. Revenues, not earnings, not EBITDA, but 8 to 12 times revenues. Incidentally, Um, the trade desk is 46 times revenues. So valuations are absolutely higher than where we are. Our banker benchmark has evaluation analysis of us. Um, that is very recent and it pencils out to 108 million. We had an evaluation analysis done by some friends of ours that came out to 133 million in the ways that these, in these inputs are used. Bill, you and I could do the same thing. We can pull databases from public companies in our sector. We can apply a blended ratio. It'll still come out much higher. If you look at M&A valuations, same thing, much higher. And if you look at a discounted cash flow just based on where we are and where we're going, it will also come out higher. So in terms of valuations, are we extremely undervalued? Yes. What could we do about it to achieve those valuations? Well, outside of traditional IR or market awareness, there are some things that can be done. We have been in discussions with larger strategic buyers and will continue to do so. Whether or not we could attain a valuation that would be comparable to our peers, is going to be a combination of what they would be willing to pay, what that would be in stock or cash, and based on our market cap and share price as well. So I hope that answers your questions, and that's a combination of my personal opinion.
spk01: I think that's a terrific answer. Thank you. But the one thing, because I'm kind of a rookie in your space, what is the metric to look at per share or total that you base your valuations on? Is it revenue or is it cash flow per share? Anyway, I don't know what it is. It's obviously not profit.
spk02: Anyway, go on. It's not. It's not. There are very few companies that operate with a net profitability. What we've seen are, so Lisa Thompson at Zacks utilizes comparables that are weighted more towards ad tech and programmatic, which we absolutely have elements of. So her target price is much higher. I believe it's in the low teens. Then over at Research Capital, used more comps from the lead gen space, which are a combination of multiples of gross profit. But I think the key to us is looking at how we evolve over this year. And even if you take a blend of lead gen and programmatic advertising and data companies, it still comes in at a multiple of revenue bill. So, you know, what's fair? Eight to ten. Okay.
spk07: Okay. Thank you very much. You're welcome. Thank you all.
spk11: Mr. Sun, we're back to you for closing remarks.
spk02: Great. Thanks, Keith. So I just want to reiterate that 2021 was a solid year of progress for us on all fronts, on the business side. Looking ahead, both Logic and GoLogic have strong merger and acquisition pipelines that are actively in process, and our operations are becoming much more efficient, effective, and scalable, and we continue to believe our industry is extremely ripe for consolidation as we see valuation multiples at the lowest they've been at for years. We intend to be a leader in that process, enabling us to leapfrog over the less imaginative in strategic competition and take our place as a scalable leader in a great and fast-growing industry. So thank you all, and Keith, with that, we can wind up the call.
spk11: Thank you. Ladies and gentlemen, this concludes today's conference. We appreciate your participation. You may now disconnect.
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