Background
LifeLogger Technologies Corporation (LOGG) has a lot of the markings of something that I would expect to see in a paid stock promotion, but has not seen a bombastic advertising campaign yet. It has many of the same properties of companies that I have seen before (i.e. IFAN Financial (OTC:IFAN), New Media Insight (NMED), Mobile Lads (OTCPK:MOBO)), such as few to no employees, a pathetic balance sheet, ambitious goals, and a recent change of business and stock dilution or split. As such, while I have not seen a large-scale promotion for it yet, I still maintain that investors should be very careful if considering a long position in the company.
Financials
The company's financials are quite dismal and show that the company has only $214,000 in cash. Additionally, the company has only one full-time employee (and one part-time employee), and 61.7% of the company's common stock is held by a single third-party entity, Consumer Electronics Ventures Corp. Upon searching for Consumer Electronics Ventures Corp., the only relevant results direct to LifeLogger's filings.
Furthermore, the company claimed to use $1,708 in cash for its operating activities through the first nine months of the year, which sounds like a wholly inadequate amount for the technology that it claims to be working on.
Business
From the most recent 10-Q, the company's business model is,
"We are developing LifeLogger, a video camera that is wearable on a person's head utilizing true point of view ("POV") recording. It is the principle of having a wearable device that can either take video or still pictures of a user's activities automatically or on command. We are currently redesigning a new prototype LifeLogger wearable video camera that will be worn with an attachment on the user to give true POV recording.
It will have one-touch controls accessible from Android and IOS based devices and applications (or APPs). The LifeLogger camera will have the ability to electronically link to a cloud-based data service that will be capable of seamlessly and effortlessly processing and organizing the users video and captured data based on the users search preferences. Prior to our name change in January 31, 2014, we were engaged in providing a full range of web based marketing services."
LOGG's stated business model is to market a portable video technology (i.e. hardware, not just software), and this is certainly not a new or unique business angle. Companies such as GoPro have done an outstanding job of building a reputation in the realm of high quality, portable video recording, and I fail to see what is so exciting, especially with such a shoestring budget.
Additionally, as of the company's latest 10-K filing, it states,
"We presently have one full-time employee, Stewart Garner, our Chief Executive Officer, and one part-time employee. We are dependent upon Mr. Garner for execution of our Lifelogger business."
One full-time employee of a publicly traded company sounds fishy in itself, but it further establishes that the company's stated goals are inconsistent with the reality that it has disclosed in its filings.
Another major red flag is that the company simply switched business models and changed its name at the beginning of 2014 without giving any reason for the change or background. If a publicly traded company is going to change its business strategy, I'd expect a bit more transparency than simply mentioning it in passing.
Management history
CEO Stewart Garner is the only employee of LifeLogger, and in the company's financials, there is an item labeled, "Consulting services from Officer" in the amount of $96,385. The "consulting services" are from none other than the CEO of the company - in other words, the CEO is paying himself for "consulting services" in an amount that vastly exceeds the company's means.
Regarding Garner's management history, the 10-K states,
"From January 2007 through the present, Mr. Garner was the founder and sole officer and director of 2128112 Ontario, Inc., an entity which invests in and develops real estate projects and invests in and consults with public and private entities."
If one does a quick Google search for 2129112 Ontario, Inc., nearly all of the results redirect to LifeLogger. I'd expect that a company that is actively involved in developing real estate projects and consulting would have a website, an address or an office that has some sort of contact information available, but alas, there is nothing.
Snap Online, Inc. and initial shareholder dilution
Remember when we found out that the company changed its name and business earlier? Well, if one looks through the company's 10-Q closely enough, the following line appears,
"Effective as of January 31, 2014, the Company amended and restated its articles of incorporation to (1) increase the number of authorized shares of common stock from 75,000,000 to 120,000,000, (2) create a class of preferred stock consisting of 5,000,000 shares, the designations and attributes of which were left for future determination by the Company's board of directors and (ii) effectuated a 10 for 1 stock split of the Company's issued and outstanding common stock."
So it looks like management issued an additional 45 million shares, thereby diluting the share pool, and then did a 10:1 forward split in conjunction with the company's change from "Snap Online" to "LifeLogger Technologies."
While it is troubling that management would choose to dilute shareholders by so much, it seems like it's an attempt to distance LifeLogger from Snap Online by altering the company's capital structure in such a way.
Recent Dilution
While the company has over $200,000 in cash currently, it is important to note that in the Statement of Cash Flows, the company received $250,000 from issuing stock in the most recent quarter. So the company's operations are not generating any cash, and it is unable to receive a superior source of funding, such as a bank loan or venture capital - never a good sign.
Conclusion
While I haven't seen a hard mailer promotion for this company yet, it would not surprise me at all if one were to show up, or if there was a large email campaign. The company's business model makes no sense when you look at the resources that it has to work with, and the recent dilution coupled with the name, business change, and split just sends red flags all over the place. Anyone considering a long position in the company should take a good look at the company's filings and management history before spending his or her money.
Form 10-K available here. Most recent 10-Q available here.
Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.
