NT 10-Q 1 airfox_12b25.htm NOTIFICATION OF LATE FILING

 

  UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
     
 
   
  FORM 12b-25

 

 

  NOTIFICATION OF LATE FILING

 

 

 

(Check one):    Form 10-K     Form 20-F     Form 11-K  ü  Form 10-Q     Form 10-D     Form N-CEN     Form N-CSR

 

  For Period Ended:   March 31, 2021
     
     Transition Report on Form 10-K
     
     Transition Report on Form 20-F
     
     Transition Report on Form 11-K
     
     Transition Report on Form 10-Q
     
  For the Transition Period Ended:   
     
         

 

Read Instructions (on back page) Before Preparing Form. Please Print or Type.
Nothing in this form shall be construed to imply that the Commission has verified any information contained herein.
If the notification relates to a portion of the filing checked above, identify the Item(s) to which the notification relates:
 
 
PART I — REGISTRANT INFORMATION

 

Carrier EQ, LLC
Full Name of Registrant.
 
 
Former Name if Applicable
 
186 Lincoln Street, Third Floor
Address of Principal Executive Office (Street and Number)  
 
Boston, MA 02111
City, State and Zip Code:

 

PART II — RULES 12b-25(b) AND (c)
 
If the subject report could not be filed without unreasonable effort or expense and the registrant seeks relief pursuant to Rule 12b-25(b), the following should be completed. (Check box if appropriate)

 

      (a) The reason described in reasonable detail in Part III of this form could not be eliminated without unreasonable effort or expense;
     
ü (b) The subject annual report, semi-annual report, transition report on Form 10-K, Form 20-F, Form 11-K, Form N-CEN or Form N-CSR, or portion thereof, will be filed on or before the fifteenth calendar day following the prescribed due date; or the subject quarterly report or transition report on Form 10-Q or subject distribution report on Form 10-D, or portion thereof, will be filed on or before the fifth calendar day following the prescribed due date; and
 
 
     
  (c) The accountant’s statement or other exhibit required by Rule 12b-25(c) has been attached if applicable.

 

 
 

 

PART III — NARRATIVE
 

State below in reasonable detail the reasons why Forms 10-K, 20-F, 11-K, 10-Q, 10-D, N-CEN, N-CSR, or the transition report or portion thereof, could not be filed within the prescribed time period. (Attach extra Sheets if Needed)

 

Please see the attachment to this Form 12b-25.

 
 
PART IV — OTHER INFORMATION

 

(1) Name and telephone number of person to contact in regard to this notification
 
  Victor Santos, Chief Strategy Officer   (617)   841-7207
  (Name)   (Area Code)   (Telephone Number)
 
(2) Have all other periodic reports required under Section 13 or 15(d) of the Securities Exchange Act of 1934 or Section 30 of the Investment Company Act of 1940 during the preceding 12 months or for such shorter period that the registrant was required to file such report(s) been filed? If answer is no, identify report(s).
Yes  ü No     
   
 
(3) Is it anticipated that any significant change in results of operations from the corresponding period for the last fiscal year will be reflected by the earnings statements to be included in the subject report or portion thereof?
Yes  ü No     
 
 

If so, attach an explanation of the anticipated change, both narratively and quantitatively, and, if appropriate, state the reasons why a reasonable estimate of the results cannot be made.

 

Please see attachment to this Form 12b-25.

 

   
 
                   

 

 
Carrier EQ, LLC
(Name of Registrant as Specified in Charter)
 
has caused this notification to be signed on its behalf by the undersigned hereunto duly authorized.
 
Date: May 17, 2021   By: /s/ Victor Santos
       

Victor Santos

Chief Strategy Officer

 

 

 
 

 

 

Attachment to Form 12b-25

 

On May 10, 2021, the authorized officers of Carrier EQ, LLC's (the “Company”), concluded that the previously issued unaudited condensed consolidated financial statements covering the Company’s fiscal quarters ended December 31, 2019, March 31, 2020, June 30, 2020, December 31, 2020, along with the previously issued audited consolidated financial statements related to the fiscal year ended September 30, 2020 (collectively, the “Restated Periods”), require restatement and should no longer be relied upon.

 

Specifically, during the preparation of the quarterly condensed consolidated financial statements related to the fiscal quarter ended March 31, 2021, the Management reviewed the methodology used to estimate the March 2022 completion date for the AirToken project, which, commencing on October 1, 2019, is the date used to calculate the amount of deferred revenue from the Initial Coin Offering ("ICO Revenue") to be recognized as revenue in the Company's financial statements and is also the date used to calculate the amount of deferred gain on AirTokens issued for services ("AirToken Gains") to be recognized as other income in the Company's financial statements. The AirToken project involves various milestones that can be difficult to forecast. Over time, the achievement of some milestones are determined to be much more difficult than originally projected. Upon the review of the methodology used to estimate the March 2022 completion date, the Company realized that the methodology should have been weighted more heavily on the fact that the completion date is highly dependent on the future rules and approvals from regulatory authorities, such as the Securities and Exchange Commission ("SEC"). These issues are out of the Company's control and thus it is very difficult to estimate when/if these issues might be resolved. These regulatory and license concerns are hindering the Company from further developing the Airtoken project and launching it to the public. Although the Company has advanced in many fronts toward the development of the Airtoken project, there are also business obstacles regarding scaling the loan product and making it profitable with our own capital first before opening it to additional third party lenders. Due to the situation aforementioned, the Company is analyzing the future of the Airtoken project, as its continuity is deeply dependent of the milestones that are completely out of the Company’s control. Once, the regulatory and business obstacles can be overcome, then the Company will be able to decide to resume further development of the Airtoken project, since overcoming these hurdles is a prerequisite before spending time on the actual blockchain components and launching a “decentralized lending market-place”.

 

Based on the factors mentioned above, the Company reevaluated the methodology used to arrive at an estimated March 2022 completion date for the AirToken project was faulty and that since the completion date is highly dependent on milestones that are out of the Company's control, the Company is not able to accurately estimate an accurate completion date and thus, should have ceased recognizing any ICO Revenue and AirToken Gains starting on October 1, 2019. Based on Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 250, Accounting Changes and Error Corrections, the Company deemed this issue to be a correction of an error, resulting in the overstatement of revenue and other income and an understatement of deferred revenue, deferred gain and cost of revenue gain for the Restated Periods. The error described above was material to the Restated Periods. and will be corrected in the restatements of the Company's financial statements for the Restated Periods.

 

 

 

 

 
 

Preliminary Expected Impact of the Restatements

 

The restatements will correct an accounting error impacting the Company’s financial statements and other financial data in the Restated Periods. The amounts disclosed below should reflect the preliminary Company’s current expectations relating to the effect of each of these errors on the Restated Periods. The Company has determined that the net cumulative effect on each of the Restated Periods is material, and the Company expects to discuss in more detail the impact of the individual errors and its decision in the Company’s restated financial statements and other financial data in the restated filings.

 

In addition, as a result of the foregoing errors, the Company has determined that there was a material weakness in internal control over financial reporting related to its ICO and Airtoken Gains revenue recognition procedures. Our management has re-evaluated its assessment of our disclosure controls and procedures and internal control over financial reporting as of September 30, 2020 and concluded that each was ineffective as of that date due to the existence of the foregoing material weakness.

 

A material weakness is a deficiency, or a 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.

 

As part of our Amended Form 10-Q and 10-K for the Restated Period, we will update and reflect the change in management’s conclusion regarding the effectiveness of our disclosure controls and procedures and internal control over financial reporting as of September 30, 2020. As a result, the Company will not file the Form 10-Q for the quarter ended March 31, 2021 until after filling of the Amended Forms 10-Q and 10-K related to Restated Periods. The Company currently expects to file its Form 10-Q on a timely basis; however, there can be no assurance that we will be able to do so.

 

Based on its review to date, the Company preliminarily anticipates that the restatements will result in the estimated adjustments to its audited and unaudited statement of operations and comprehensive loss identified in the tables below:

 

   Three months ended 
   December 31, 2019 (unaudited) 
   As reported   Adjustments   As restated 
Revenue  $1,254,739    (1,252,977)  $1,762 
                
Other income:               
Gain on AirToken issuance for services  $39,678    (39,678)  $ 
                
Net Loss  $(3,899,283)   (1,292,655)  $(5,191,938)
                
Comprehensive net loss  $(4,000,611)   (1,292,655)  $(5,293,266)

 

 

 

 
 

 
   Three months ended   Six months ended 
   March 31, 2020 (unaudited)   March 31, 2020 (unaudited) 
   As reported   Adjustments   As restated   As reported   Adjustments   As restated 
                         
Revenue  $1,275,053    (1,252,984)  $22,069    2,529,792    (2,505,961)  $23,831 
                               
Other income:                              
Gain on AirToken issuance for services  $39,678    (39,678)  $    79,356    (79,356)  $ 
                               
Net Loss  $(4,160,276)   (1,292,662)  $(5,452,938)   (8,059,559)   (2,585,317)  $(10,644,876)
                               
Comprehensive net loss  $(3,060,174)   (1,292,662)  $(4,352,836)   (7,060,785)   (2,585,317)  $(9,646,102)

 

   Three months ended   Nine months ended 
   June 30, 2020 (unaudited)   June 30, 2020 (unaudited) 
   As reported   Adjustments   As restated   As reported   Adjustments   As restated 
Revenue  $1,172,718    (1,138,142)  $34,576   $3,702,510    (3,644,103)  $58,407 
                               
Cost of revenue  $    (114,839)  $(114,839)  $    (114,839)  $(114,839)
                               
Other income:                              
Gain on AirToken issuance for services  $39,678    (39,678)  $   $119,034    (119,034)  $ 
                               
Net Loss  $(4,829,920)   (1,292,659)  $(6,122,579)  $(12,889,479)   (3,877,976)  $(16,767,455)
                               
Comprehensive net loss  $(4,709,319)   (1,292,659)  $(6,001,978)  $(11,770,104)   (3,877,976)  $(15,648,080)

  

   Year ended   Three months ended 
   September 30, 2020 (audited)   December 31, 2020 (unaudited) 
   As reported   Adjustments   As restated   As reported   Adjustments   As restated 
Revenue  $5,143,430    (4,897,086)  $246,344   $1,620,383    (1,252,982)  $367,401 
                               
Cost of revenue  $    (114,839)  $(114,839)  $       $ 
                               
Other income:                              
Gain on AirToken issuance for services  $158,713    (158,713)  $   $39,679    (39,679)  $ 
                               
Net Loss  $(16,146,355)   (5,170,638)  $(21,316,993)  $(5,607,169)   (1,292,661)  $(6,899,830)
                               
Comprehensive net loss  $(14,683,553)   (5,170,638)  $(19,854,191)  $(6,168,238)   (1,292,662)  $(7,460,900)

 

 
 

Additionally, the Company’s audited and unaudited balance sheets and cash flow statement will be restated as follows:

 

   December 31, 2019 (unaudited) 
   As reported   Adjustments   As restated 
Total assets  $21,577,457       $21,577,457 
                
Current liabilities:   20,752,167        20,752,167 
Deferred revenue - AirToken Project, current portion   5,011,926    (5,011,926)    
Deferred gain on issuance of AirTokens for services, current portion   158,713    (158,713)    
Total Current Liabilities   25,922,806    (5,170,639)   20,752,167 
                
Long-term liabilities:   12,256,663        12,256,663 
Deferred revenue - AirToken Project, net of current portion   6,264,921    6,264,903    12,529,824 
Deferred gain on issuance of AirTokens for services, net of current portion   198,399    198,391    396,790 
Total liabilities   44,642,789    1,292,655    45,935,444 
                
Stockholders' deficit:   (500)       (500)
Accumulated deficit   (23,064,832)   (1,292,655)   (24,357,487)
Total stockholders' deficit   (23,065,332)   (1,292,655)   (24,357,987)
Total liabilities and stockholders' deficit  $21,577,457   $   $21,577,457 

 

   March 31, 2020 (unaudited) 
   As reported   Adjustments   As restated 
Total assets  $13,214,669   $   $13,214,669 
                
Current liabilities:   3,734,928        3,734,928 
Deferred revenue - AirToken Project, current portion   5,011,926    (5,011,926)    
Deferred gain on issuance of AirTokens for services, current portion   158,713    (158,713)    
Total Current Liabilities   8,905,567    (5,170,639)   3,734,928 
                
Long-term liabilities:   24,941,735        24,941,735 
Deferred revenue - AirToken Project, net of current portion   5,011,938    7,517,886    12,529,824 
Deferred gain on issuance of AirTokens for services, net of current portion   158,721    238,069    396,790 
Total liabilities   39,017,961    2,585,316    41,603,277 
                
Stockholders' deficit:   3,281,625    2    3,281,627 
Accumulated deficit   (29,084,917)   (2,585,318)   (31,670,235)
Total stockholders' deficit   (25,803,292)   (2,585,316)   (28,388,608)
Total liabilities and stockholders' deficit  $13,214,669   $   $13,214,669 

 

 
 

 

   June 30, 2020 (unaudited) 
   As reported   Adjustments   As restated 
Total assets  $10,158,760   $   $10,158,760 
                
Current liabilities:   2,347,198        2,347,198 
Deferred revenue - AirToken Project, current portion   5,011,926    (5,011,926)    
Deferred gain on issuance of AirTokens for services, current portion   158,713    (158,713)    
Total Current Liabilities   7,517,837    (5,170,639)   2,347,198 
                
Long-term liabilities:   13,907,072        13,907,072 
Deferred revenue - AirToken Project, net of current portion   3,758,955    8,770,869    12,529,824 
Deferred gain on issuance of AirTokens for services, net of current portion   119,043    277,747    396,790 
Total liabilities   25,302,907    3,877,977    29,180,884 
                
Stockholders' deficit:   (711)   (2)   (713)
Accumulated deficit   (15,143,436)   (3,877,975)   (19,021,411)
Total stockholders' deficit   (15,144,147)   (3,877,977)   (19,022,124)
Total liabilities and stockholders' deficit  $10,158,760   $   $10,158,760 

 
   September 30, 2020 (audited) 
   As reported   Adjustments   As restated 
Total assets  $13,708,046   $   $13,708,046 
                
Current liabilities:   6,749,448        6,749,448 
Deferred revenue - AirToken Project, current portion   5,011,932    (5,011,932)    
Deferred gain on issuance of AirTokens for services, current portion   158,713    (158,713)    
Total Current Liabilities   11,920,093    (5,170,645)   6,749,448 
                
Long-term liabilities:   13,360,541        13,360,541 
Deferred revenue - AirToken Project, net of current portion   2,505,966    10,023,858    12,529,824 
Deferred gain on issuance of AirTokens for services, net of current portion   79,365    317,425    396,790 
Total liabilities   27,865,965    5,170,638    33,036,603 
                
Stockholders' deficit:   (1,035)       (1,035)
Accumulated deficit   (14,156,884)   (5,170,638)   (19,327,522)
Total stockholders' deficit   (14,157,919)   (5,170,638)   (19,328,557)
Total liabilities and stockholders' deficit  $13,708,046   $   $13,708,046 

 

 

 

 

 
 

 

   December 31, 2020 (unaudited) 
   As reported   Adjustments   As restated 
Total assets  $13,310,787   $   $13,310,787 
                
Current liabilities:   12,624,501        12,624,501 
Deferred revenue - AirToken Project, current portion   5,011,932    (5,011,932)    
Deferred gain on issuance of AirTokens for services, current portion   158,713    (158,713)    
Total Current Liabilities   17,795,146    (5,170,645)   12,624,501 
                
Long-term liabilities:   14,549,571        14,549,571 
Deferred revenue - AirToken Project, net of current portion   1,252,983    11,276,841    12,529,824 
Deferred gain on issuance of AirTokens for services, net of current portion   39,687    357,103    396,790 
Total liabilities   33,637,387    6,463,299    40,100,686 
                
Stockholders' deficit:   (1,478)       (1,478)
Accumulated deficit   (20,325,122)   (6,463,299)   (26,788,421)
Total stockholders' deficit   (20,326,600)   (6,463,299)   (26,789,899)
Total liabilities and stockholders' deficit  $13,310,787   $   $13,310,787 

 

   Three Months Ended
December 31, 2019 (unaudited)
 
   As reported   Adjustments   As restated 
CASH FLOWS FROM OPERATING ACTIVITIES:               
Net loss  $(3,899,283)   (1,292,655)  $(5,191,938)
                
Gain on issuance of AirTokens for services   (39,678)   39,678     
Deferred revenue - AirToken Project   (1,252,977)   1,252,977     
Net cash used in operating activities  $9,362,354   $   $9,362,354 
                
CASH FLOWS FROM INVESTING ACTIVITIES:               
Net cash used in investing activities  $(1,340,616)  $   $(1,340,616)
                
CASH FLOWS FROM FINANCING ACTIVITIES:               
Net cash provided by financing activities  $33,923   $   $33,923 

 

 

 

 
 

 

   Six Months Ended
March 31, 2020 (unaudited)
 
   As reported   Adjustments   As restated 
CASH FLOWS FROM OPERATING ACTIVITIES:               
Net loss  $(8,059,559)   (2,585,316)  $(10,644,875)
                
Gain on issuance of AirTokens for services   (79,356)   79,356     
Deferred revenue - AirToken Project   (2,505,960)   2,505,960     
Net cash used in operating activities  $2,418,247   $   $2,418,247 
                
CASH FLOWS FROM INVESTING ACTIVITIES:               
Net cash used in investing activities  $(2,040,311)  $   $(2,040,311)
                
CASH FLOWS FROM FINANCING ACTIVITIES:               
Net cash provided by financing activities  $188,380   $   $188,380 

 

   Nine Months Ended
June 30, 2020 (unaudited)
 
   As reported   Adjustments   As restated 
CASH FLOWS FROM OPERATING ACTIVITIES:               
Net loss  $(12,889,479)   (3,877,977)  $(16,767,456)
                
Gain on issuance of AirTokens for services   (119,034)   119,034     
Deferred revenue - AirToken Project   (3,758,943)   3,758,943     
Net cash used in operating activities  $(1,686,446)  $   $(1,686,446)
                
CASH FLOWS FROM INVESTING ACTIVITIES:               
Net cash used in investing activities  $(2,684,767)  $   $(2,684,767)
                
CASH FLOWS FROM FINANCING ACTIVITIES:               
Net cash provided by financing activities  $2,109,384   $   $2,109,384 

 

 

 

 

 
 

 

   Years Ended
September 30, 2020 (audited)
 
   As reported   Adjustments   As restated 
CASH FLOWS FROM OPERATING ACTIVITIES:               
Net loss  $(16,146,355)   (5,170,644)  $(21,316,999)
                
Gain on issuance of AirTokens for services   (158,712)   158,712     
Deferred revenue - AirToken Project   (5,011,932)   5,011,932     
Net cash used in operating activities  $(5,792,775)  $   $(5,792,775)
                
CASH FLOWS FROM INVESTING ACTIVITIES:               
Net cash used in investing activities  $(3,392,979)  $   $(3,392,979)
                
CASH FLOWS FROM FINANCING ACTIVITIES:               
Net cash provided by financing activities  $7,581,508   $   $7,581,508 

 

   Three Months Ended
December 31, 2020 (unaudited)
 
   As reported   Adjustments   As restated 
CASH FLOWS FROM OPERATING ACTIVITIES:               
Net loss  $(5,607,169)   (1,292,661)  $(6,899,830)
                
Gain on issuance of AirTokens for services   (39,678)   39,678     
Deferred revenue - AirToken Project   (1,252,983)   1,252,983     
Net cash used in operating activities  $(1,048,622)  $   $(1,048,622)
                
CASH FLOWS FROM INVESTING ACTIVITIES:               
Net cash used in investing activities  $(736,355)  $   $(736,355)
                
CASH FLOWS FROM FINANCING ACTIVITIES:               
Net cash provided by financing activities  $2,916,007   $   $2,916,007 

 

The above statements regarding the preliminary expected impact of the restatements and the expected timing of the Company’s restated filings for the Restated Periods constitute forward-looking statements that are based on the Company’s current expectations. The final amounts and the detailed presentation of the restatements will be included in the restated filings for the Restated Periods after the Company has completed its work on the restatements and our independent registered public accountants have completed its final review of the financial statements and other financial data for the Restated Periods. There can be no assurance that this financial information will not change, possibly materially, before the Company files its restated filings for the Restated Periods. See “Caution Regarding Forward-Looking Statements” below.

 

 

 
 

Caution Regarding Forward-Looking Statements

 

This Form 12b-25 includes information that constitutes forward-looking statements. Forward-looking statements often address our expected future business and financial performance, and often contain words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” or “will.” By their nature, forward-looking statements address matters that are subject to risks and uncertainties. Any such forward-looking statements may involve risk and uncertainties that could cause actual results to differ materially from any future results encompassed within the forward-looking statements. Examples of such forward-looking statements include, but are not limited to, statements regarding our plans to restate our financial statements for the Restated Periods and file amended Form 10-Q’s and an amended Form 10-K, our plans to correct errors in our financial statements for the Restated Periods, and our expectations with regard to changes in revenue and net loss with respect to the Restated Periods. Factors that could cause or contribute to such differences include: the review of the Company’s accounting, accounting policies and internal control over financial reporting; the preparation of and the audit or review, as applicable, of the amended Form 10-Q’s or the amended Form 10-K; and the subsequent discovery of additional adjustments to the Company’s previously issued financial statements. Actual events or results may differ materially from the Company’s expectations. In addition, our financial results may suffer as a result of this review and any subsequent determinations from this process, or any actions taken by governmental or other regulatory bodies as a result of this process. We do not undertake to update our forward-looking statements, except as required by applicable securities laws.