10-Q 1 lbuy_10q.htm FORM 10-Q lbuy_10q.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended December 31, 2023

 

or

 

     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______________ to ______________

 

Commission file number: 333-206745

 

LEAFBUYER TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

 

Nevada

 

38-3944821

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

6888 S. Clinton Street, Suite 300, Greenwood Village, CO 80112

(Address of principal executive offices, including zip code)

 

Registrant’s telephone number, including area code (720)-235-0099

 

Securities registered pursuant to Section 12(b) of the Exchange Act:

 

Title of Each Class

Trading Symbol(s)

Name of each exchange on which registered

None

None

None

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 Company is a larger accelerated filer, an accelerated filer, a non-accelerated filer, 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.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes      No ☒

 

The number of shares of outstanding of the Registrant’s Common Stock as of February 14, 2024 was 99,428,575

 

 

 

 

Table of Contents

 

PART I – FINANCIAL INFORMATION

 

 

 

 

Item 1.

Interim Condensed Consolidated Financial Statements

 

3

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

15

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

20

 

Item 4.

Controls and Procedures

 

20

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

 

21

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

21

 

Item 3.

Defaults Upon Senior Securities

 

21

 

Item 4.

Mine Safety Disclosures

 

21

 

Item 5.

Other Information

 

21

 

Item 6.

Exhibits

 

22

 

 

SIGNATURES

 

23

 

   

 
2

Table of Contents

    

PART I – FINANCIAL INFORMATION

 

Item 1. Interim Condensed Consolidated Financial Statements 

 

The unaudited interim condensed consolidated financial statements of Leafbuyer Technologies, Inc. (“we”, “our”, “us”, the “Company”) follow. All currency references in this report are to US dollars unless otherwise noted.

 

PART I. Financial Information

 

Item 1. Financial Statements 

 

LEAFBUYER TECHNOLOGIES INC.

 

 

 

 

 

 

UNAUDITED CONDENSED CONSOLDIATED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

2023

 

 

June 30,

2023

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$226,681

 

 

$445,721

 

Accounts receivable (net of allowance for doubtful accounts of $49,982 and $0, respectively,)

 

 

145,071

 

 

 

135,476

 

Prepaid expenses and other current assets

 

 

16,600

 

 

 

29,268

 

Total current assets

 

 

388,352

 

 

 

610,465

 

Noncurrent assets:

 

 

 

 

 

 

 

 

Fixed assets and intangible assets, net

 

 

862,811

 

 

 

1,225,034

 

Total assets

 

$1,251,163

 

 

$1,835,499

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$341,405

 

 

$308,840

 

Accrued liabilities

 

 

1,092,520

 

 

 

1,165,815

 

Deferred revenue

 

 

1,680

 

 

 

10,029

 

Debt, related party (Note 9)

 

 

107,817

 

 

 

107,817

 

Debt

 

 

968,802

 

 

 

1,036,491

 

Total current liabilities

 

 

2,512,224

 

 

 

2,628,992

 

Debt, net of current portion

 

 

463,445

 

 

 

485,378

 

Total liabilities

 

 

2,975,669

 

 

 

3,114,370

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 6)

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity (Deficit):

 

 

 

 

 

 

 

 

Convertible Preferred Stock, $0.001 par value; 10,000,000 shares authorized

 

 

 

 

 

 

 

 

Convertible Preferred Stock Series A, $0.001 par value; 324,325 designated; 324,325 and 324,325 shares issued and outstanding at December 31, 2023 and June 30, 2023, respectively

 

 

324

 

 

 

324

 

Convertible Preferred Stock, $0.001 par value; 10,000,000 shares authorized

 

 

 

 

 

 

 

 

Convertible Preferred Stock Series B, $0.001 par value; 27,027 designated; 7,568 and 7,568 shares issued and outstanding at December 31, 2023 and June 30, 2023, respectively

 

 

8

 

 

 

8

 

Common stock, $0.001 par value; 700,000,000 shares authorized; 99,428,575 shares issued and outstanding at December 31, 2023 and 99,428,575 shares issued and outstanding at June 30, 2023

 

 

99,428

 

 

 

99,428

 

Additional paid in capital

 

 

23,230,040

 

 

 

23,057,067

 

Accumulated deficit

 

 

(25,054,306 )

 

 

(24,435,698 )

Total stockholders’ equity (deficit)

 

 

(1,724,506 )

 

 

(1,278,871 )

Total liabilities and stockholders’ equity (deficit)

 

$1,251,163

 

 

$1,835,499

 

 

See accompanying notes to condensed consolidated financial statements.

 

 
3

Table of Contents

    

LEAFBUYER TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three months Ended

December 31,

 

 

Six months Ended

December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

1,434,132

 

 

 

1,341,750

 

 

$2,603,753

 

 

$2,470,415

 

Cost of sales

 

 

985,467

 

 

 

625,604

 

 

 

1,798,811

 

 

 

1,278,124

 

Gross profit

 

 

448,665

 

 

 

716,146

 

 

 

804,942

 

 

 

1,192,291

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling expenses

 

 

181,379

 

 

 

129,281

 

 

 

377,750

 

 

 

290,595

 

General and administrative

 

 

174,732

 

 

 

195,196

 

 

 

424,235

 

 

 

358,359

 

Personnel expenses

 

 

203,146

 

 

 

203,414

 

 

 

388,072

 

 

 

391,624

 

Stock based compensation expense

 

 

86,487

 

 

 

52,087

 

 

 

172,973

 

 

 

174,536

 

Total operating expenses

 

 

645,744

 

 

 

579,978

 

 

 

1,363,030

 

 

 

1,215,114

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(197,079)

 

 

136,168

 

 

 

(558,088)

 

 

(22,823 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(22,944)

 

 

(44,107)

 

 

(60,568)

 

 

(95,134 )

Unrealized gain (loss) on derivative

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Forgiveness of PPP loan

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Other Income

 

 

13

 

 

 

3,335

 

 

 

48

 

 

 

3,381

 

Net income

 

 

(220,010)

 

 

95,396

 

 

$(618,608)

 

$(114,576)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

(0.00)

 

 

(0.00)

 

$(0.00)

 

$(0.00)

Fully diluted

 

 

 

 

 

 

0.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

99,428,575

 

 

 

95,030,830

 

 

 

99,428,575

 

 

 

94,510,788

 

Fully diluted

 

 

 

 

 

 

145,749,028

 

 

 

 

 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements

  

 
4

Table of Contents

    

LEAFBUYER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

Preferred Stock A

 

 

Preferred Stock B

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

# of

Shares

 

 

Amount

 

 

# of

Shares

 

 

Amount

 

 

# of

Shares

 

 

Amount

 

 

APIC

 

 

Acc

Deficit

 

 

Total

 

Balance, June 30, 2022

 

 

324,325

 

 

$324

 

 

 

7,567

 

 

$8

 

 

 

93,316,288

 

 

$93,315

 

 

$22,344,293

 

 

$(23,850,489 )

 

$(1,412,547 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

187,132

 

 

 

-

 

 

 

187,132

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for vendor payments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

600,000

 

 

 

600

 

 

 

27,900

 

 

 

-

 

 

 

28,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock as employee compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,114,542

 

 

 

1,115

 

 

 

49,339

 

 

 

-

 

 

 

50,454

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(114,576 )

 

 

(114,576 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2022

 

 

324,325

 

 

$324

 

 

 

7,567

 

 

$8

 

 

 

95,030,830

 

 

$95,030

 

 

$22,608,664

 

 

$(23,965,065 )

 

$(1,261,040 )

 

 

 

Preferred Stock A

 

 

Preferred Stock B

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

# of

Shares

 

 

Amount

 

 

# of

Shares

 

 

Amount

 

 

# of

Shares

 

 

Amount

 

 

APIC

 

 

Acc

Deficit

 

 

Total

 

Balance, June 30, 2023

 

 

324,325

 

 

$324

 

 

 

7,567

 

 

$8

 

 

 

99,428,575

 

 

$99,428

 

 

$23,057,067

 

 

$(24,425,698 )

 

$(1,278,871 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

172,973

 

 

 

 

 

 

 

172,973

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for vendor  payments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock as employee compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(618,608 )

 

 

(618,608 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2023

 

 

324,325

 

 

$324

 

 

 

7,567

 

 

$8

 

 

 

99,428,575

 

 

$99,428

 

 

$23,230,040

 

 

$(25,054,306 )

 

$(1,724,506 )

 

See accompanying notes to condensed consolidated financial statements.

 

 
5

Table of Contents

    

LEAFBUYER TECHNOLOGIES INC.

 

 

 

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months Ended

December 31,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net Loss

 

$(618,608 )

 

$(114,576 )

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

 

 

 

 

Stock based compensation

 

 

172,973

 

 

 

237,587

 

Stock for services

 

 

-

 

 

 

28,500

 

Amortization of note payable discount

 

 

-

 

 

 

-

 

Loss (gain) on derivative liability

 

 

-

 

 

 

-

 

Forgiveness of PPP loan

 

 

-

 

 

 

-

 

Depreciation and amortization

 

 

362,223

 

 

 

362,223

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(9,595)

 

 

(29,573

Prepaid expenses and other

 

 

12,668

 

 

 

(1,274 )

Accounts payable

 

 

32,565

 

 

 

(162,151 )

Accrued liabilities

 

 

(81,644 )

 

 

(244,094 )

Net cash used in operating activities

 

 

(129,418 )

 

 

76,642

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Repayment of Debt

 

 

(89,622 )

 

 

(145,644 )

Net cash provided by financing activities

 

 

(89,622 )

 

 

(145,644 )

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

 

(219,040 )

 

 

(69,002 )

Cash and cash equivalents, beginning of period

 

 

445,721

 

 

 

367,245

 

Cash and cash equivalents, end of period

 

$226,681

 

 

$298,243

 

 

 

 

 

 

 

 

 

 

Cash paid for interest

 

$-

 

 

$-

 

Cash paid for taxes

 

$-

 

 

$-

 

Supplemental information for non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Issuance of common stock for vendor payments

 

$-

 

 

$28,500

 

 

See accompanying notes to condensed consolidated financial statements.

 

 
6

Table of Contents

   

LEAFBUYER TECHNOLOGIES INC.

Notes to Unaudited Condensed Consolidated Financial Statements

 

Note 1 — Description of Business

 

Description of Business

 

The Company was founded in 2012 by a group of technology and industry veterans and provides online resources for cannabis deals and specials. Our headquarters is located in Greenwood Village, Colorado.

 

Our subsidiary, LB Media Group, LLC has evolved and grown as a listing website to a comprehensive marketing technology platform. Our clients, medical and recreational dispensaries in legalized cannabis states, along with cannabis product companies subscribe to our technology platform to assist in new customer acquisition and provide retention tools that include texting/loyalty and order ahead technology.

 

Basis of Presentation

 

The accompanying condensed consolidated balance sheet as of December 31, 2023, has been derived from audited financial statements. The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements being audited and in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. In the opinion of management, such unaudited information includes all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of this interim information. All intercompany transactions have been eliminated in consolidation. Operating results and cash flows for interim periods are not necessarily indicative of results that can be expected for the entire year. The Company uses the same accounting policies in preparing quarterly and annual financial statements. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. The information included in this report should be read in conjunction with our audited financial statements and notes thereto.

 

Going Concern

 

As of December 31, 2023, we had $226,681 in cash and cash equivalents and a working capital deficit of $2,123,872. We are dependent on funds raised through equity financing. Our cumulative net loss of $25,054,306 was funded by debt and equity financing and we reported a net loss from operations of $618,608 for the six months ended December 31, 2023. Accordingly, there is substantial doubt about our ability to continue as a going concern within one year after the date the financial statements are issued.

 

Our ability to continue as a going concern is dependent upon our generating profitable operations in the future and / or obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Management believes that actions presently being taken to further implement our business plan of expansion of products, geographical locations we sell our services and deeper market penetration will generate additional revenues and eventually positive cash flow and provide opportunity for the Company to continue as a going concern. While we believe in the viability of our strategy to generate additional revenues and our ability to raise additional funds, there can be no assurances to that effect.

 

 
7

Table of Contents

    

Note 2 — Summary of Significant Accounting Policies

 

Principles of Consolidation

 

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, LB Media. All significant inter-company transactions and balances have been eliminated in consolidation.

 

For a detailed discussion about the Company’s significant accounting policies, refer to Note 2 — “Summary of Significant Accounting Policies,” in the Company’s consolidated financial statements included in the Company’s June 30, 2023 Form 10-K. During the six months ended December 31, 2023, there were no significant changes made to the Company’s significant accounting policies

 

Use of Estimates

 

Management uses estimates and assumptions in preparing these condensed consolidated financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Examples of estimates include loss contingencies; useful lives of our tangible and intangible assets; allowances for doubtful accounts; and stock-based compensation forfeiture rates. Examples of assumptions include: the elements comprising a software arrangement, including the distinction between upgrades or enhancements and new products; when technological feasibility is achieved for our products; the potential outcome of future tax consequences of events that have been recognized in our financial statements or tax returns. Actual results could differ from those estimates.

 

Reclassifications

 

Certain prior period amounts have been reclassified to conform with the current period presentation.

 

Earnings (Loss) per Share

 

Basic loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the reporting period. Diluted loss per share is computed similarly to basic loss per share, except that it includes the potential dilution that could occur if dilutive securities are exercised. Dilutive instruments had no effect on the calculation of earnings or loss per share during the quarter ended December 31, 2023.

 

Recently Issued Accounting Pronouncements

 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which introduces new guidance for the accounting for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale (AFS) debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The pronouncement will be effective for public business entities that are SEC filers in fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The effect of the adoption of this pronouncement to the Company was immaterial.

 

In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s own Equity (Subtopic 815-40). ASU 2020-06 requires entities to provide expanded disclosures about the terms and features of convertible instruments and reduces the number of accounting models for convertible instruments and allows more contracts to qualify for equity classification. The pronouncement will be effective for public business entities that are SEC filers in fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted but no earlier than fiscal years beginning December 15, 2020.

 

No other recent accounting pronouncements were issued by FASB and the SEC that are believed by management to have a material impact on the Company’s present or future condensed consolidated financial statements.

 

 
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Note 3 — Fixed Assets and Intangible Assets

 

Fixed Assets and intangible assets consist of the following 

 

 

 

December 31,

2023

 

 

June 30,

2023

 

 

 

 

 

 

 

 

Software platform

 

$4,482,225

 

 

$4,482,225

 

Furniture and fixtures

 

 

1,500

 

 

 

1,500

 

Less accumulated amortization

 

 

(3,620,914 )

 

 

(3,258,691 )

Property and equipment, net

 

$862,811

 

 

$1,225,034

 

 

On November 6, 2018, the Company acquired a customer facing software (“Loyalty Software”) through a Stock Purchase Agreement, where the Company acquired all the issued and outstanding capital stock of Greenlight Technologies, Inc. (“GTI”) from its shareholders. At the time of the transaction, there were no employees working for GTI, no systems and no assets, other than the Loyalty Software. GTI’s legal entity will be dissolved in the transition and the Loyalty Software will be assumed by the Company. Management determined that the purchase of GTI did not constitute a business purchase and recorded the transaction as a purchase of software. The consideration for the Loyalty Software was 2,916,667 shares of common stock and cash of approximately $450,000. Total value of the Loyalty Software was estimated at approximately $3,010,000. The additional consideration for future developments will be evaluated and considered enhancements which will either be capitalized to the software or expensed as research and development costs. During the year ended June 30, 2020 additional Incentive Shares of 366,667 for a value of $262,500 was issued to shareholders of GTI as final settlement of the 2018 agreement. Since the period ended September 30, 2021 there has been no software capitalized.

 

GTI provides cannabis consumers real-time mobile ordering and loyalty rewards through an internally developed application that integrates with the local dispensary’s point of sale system. The Company plans to fully integrate this technology into the current platform and create an “Ultimate Bundle” of services for the cannabis industry. The current revenues of GTI are minimal, and the Company expects higher sales in the California market as the system is fully integrated.

 

Amortization expense, recorded as cost of revenue, related to internal use software totaled $181,112 during the three months ended December 31, 2023 and for the same period ended 2022 amortization expenses was $181,111. Amortization expense for the next five years is as follows:

 

2024

 

$724,445

 

2025

 

 

138,366

 

Total Unamortized Expense

 

$862,811

 

 

Note 4 — Capital Stock and Equity Transactions

 

The Company has 700,000,000 shares of common stock authorized with a par value of $0.001 per share as of September 30, 2023. On August 13, 2021 the Company filed Articles of Amendment to Amended and Restated Articles of Incorporation with the State of Nevada increasing the number of common shares from 150,000,000 to 700,000,000.

 

In addition, the Company has 10,000,000 preferred stock authorized with a par value of $0.001 per share as of December 31, 2023.

 

Effective October 13, 2021, the Company executed and filed with the State of Nevada a Certificate of Designation of Preferred Stock of the Corporation fixing the designations, power, preferences, and rights of the shares. The total of 324,325 shares of preferred stock series A with a par value of $0.001 per share, of the Corporation are herby designated as Series A Super Voting Preferred Stock. These shares are not entitled to receive dividends and shall not be entitled to any liquidation preference. Further the holders shall have no conversion rights and the holders shall have the right to vote in an amount equal to 600 votes per share of Series A Preferred Stock.

 

The 7,567 shares of Series B Convertible Preferred Stock are convertible into 1,120,064 shares of common stock.

 

Issuance of Common Stock

 

During the six months period ended December 31, 2022 the Company issued 1,114,542 shares of Common Stock to employees. These shares were valued at fair market value of $50,454 and expensed in the accompanying Condensed Consolidated Statement of Operations.

 

During the six months ended December 31, 2022, the Company issued 600,000 shares of Common Stock to vendors for services rendered. These shares were valued at fair market value of $29,500 and expensed in the accompanying Condensed Consolidated Statement of Operations.

 

There have been no issuance of Common Stock for the six months period ended December 31, 2023.

    

 
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Note 5 — Debt

 

During February 2018, the Company issued a promissory note in favor of an investor of the Company in the amount of $150,000 in exchange for $132,000 cash. The note has an original issue discount of $18,000 that is being amortized to interest expense over the term of the note. The loan maturity date was extended to August 8, 2019, the discount is fully amortized and total unpaid principal and interest is approximately $255,929, accruing at 12% at December 31, 2023, and is payable upon demand.

 

On September 21, 2018, the Company entered into a promissory note with an investor of the Company with a face value of $440,000 in exchange for $400,000 cash payment (“the Convertible Note”), the discount of the Convertible Note will be amortized over the life of the Convertible Note and have an interest rate of 10%. The Convertible Note has a twelve-month term with no payment required for the initial six months; after six months, the Company will repay the investors interest and principal in six equal installments. The principal and interest of the note is convertible into the Company’s common stock at a purchase price of $0.70 per common share after the six months. If the Company defaults on the Convertible Note, the interest is increased to 12% and at the investors’ option, the principal and interest can be converted into the Company’s common stock at a 20% discount to the then current market. In addition, the Company issued five-year warrants to purchase up to 200,000 common shares of the Company’s common stock at a price of $0.75 per share. The value assigned to the warrants of $125,723 has been fully amortized. The cash for this Convertible Note was received prior to September 30, 2018. As of December 31, 2023, the Convertible Note is payable upon demand and total unpaid principal and interest outstanding is approximately $242,034.

   

On September 21, 2018, the Company entered several promissory notes with various investors of the Company with a face value of $440,000 in exchange for $400,000 cash payment (“the Notes”), the discount of the Notes will be amortized over the life of the Note and have an interest rate of 10%. The Notes have a twelve-month term with no payment required for the initial six months; after six months, the Company will repay the investors interest and principal in six equal installments. The principal and interest of the note is convertible into the Company’s common stock at a purchase price of $0.70 per common share after the six months. If the Company defaults on the Notes, the interest is increased to 12% and at the investors’ option, the principal and interest can be converted into the Company’s common stock at a 20% discount to the then current market price. In addition, the Company issued five-year warrants to purchase up to 200,000 of the Company’s common shares at a price of $0.75 per share. The cash for these Notes was received prior to September 30, 2018. The value assigned to the warrants of $62,862 has been fully amortized. In March 2020, $220,000 of the 2018 Notes have been fully extinguished and the remaining $220,000 is in default and payable upon demand. As of December 31, 2023, the total unpaid principal and interest is approximately $352,265.

 

During the year ended June 30, 2019, the Company entered into several promissory notes with various investors of the Company with a face value of $960,000 in exchange for a total of $900,000 cash payments. The Notes have a beneficial conversion feature valued at $839,378, which is recorded as a discount. The total discount on the Notes will be amortized over the life of the Notes and recorded as interest expense. The notes have an interest rate of 7% and have an eighteen-month term with no payment required for the initial six months; after six months, the Company will repay the investors interest and principal in twelve equal installments. The principal and interest of the note is convertible into the Company’s common stock at a purchase price of $0.75 per common share at any time after the Original Issue Date. In March 2020, the Company did not make its required principal and interest payment which put the Notes in default. The interest rate increased to 15% and at the investors’ option, the principal and interest can be converted into the Company common stock at a 20% discount to the then current market price. The beneficial ownership value assigned to the conversion feature of $801,741 has been fully amortized. As of March 31, 2020, $533,000 of the 2019 Notes have been fully extinguished as $402,000 of debt repayment and the issuance of common stock valued at $131,000. On January 25, 2021, $300,000 of the 2019 Notes have been fully extinguished with the issuance of 4,000,000 of common stock at a price of $0.075 per share. The remaining principal of $90,125 is in default and payable upon demand. As of December 31, 2023, the total unpaid principal and interest is approximately $385,913.

 

During the year ended June 30, 2020, the Company entered into a promissory note with a related party (see Note 9) with a face value of $600,000 in exchange for a total of $565,000 cash payments. The total discount of the Note will be amortized over the life of the Note and recorded as interest expense which matured on December 1, 2020. In January 2021, the Company repaid $300,000 and in July 2022 the Company repaid $100,000 of the promissory note balance. The note is in default and due upon demand and the interest rate was increased to 12%. As of December 31, 2023, the total unpaid principal and interest is approximately $151,355.

 

During the year ended June 30, 2020, the Company entered into a promissory note with a related party (see Note 9) with a face value of $50,000. In January 2021, the Company repaid $25,000 and in July 2022 repaid $8,333 of the promissory note balance. The note is in default and the interest rate increased to 12%. As of December 31, 2023, the total unpaid principal and interest is approximately $13,048.

 

On April 30, 2020 the Company executed the standard loan documents required for securing a loan (the “EIDL Loan”) from the United States Small Business Administration (the “SBA”) under its Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the Company’s business. The principal amount of the EIDL Loan is $500,000, with proceeds to be used for working capital purposes. Interest on the EIDL Loan accrues at the rate of 3.75% per annum and installment payments, including principal and interest, are due monthly beginning twelve months from the date of the EIDL Loan in the amount of $2,437. The balance of principal and interest is payable thirty years from the date of the promissory note.

 

 
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The Company recognized 60,568 and 95,134 of interest expense for the six months ended December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, accrued interest on the above notes was $774,749 and $646,985, respectively. The weighted average interest rates as of December 31, 2023 and 2022 was 5.42% and 6.46%. 

 

Notes payable and long-term debt outstanding as of December 31, 2023 and June 30, 2023 are summarized below:

 

 

 

Maturity Date

 

December 31,

2023

 

 

June 30,

2023

 

12% $150,000 Convertible Note Payable, net of unamortized discount of $0 and $0, respectively

 

Due on Demand

 

$150,000

 

 

$150,000

 

12% $440,000 Convertible Note Payable, net of unamortized discount of $0 and $0, respectively

 

Due on Demand

 

 

4,000

 

 

 

79,000

 

12% $220,000 Convertible Note Payable, net of unamortized discount of $0 and $0, respectively

 

Due on Demand

 

 

220,000

 

 

 

220,000

 

 

 

 

 

 

 

 

 

 

 

 

7% $213,333 Convertible Note Payable, net of unamortized discount of $0 and $0, respectively

 

Due on Demand

 

 

244,802

 

 

 

244,802

 

8% $600,000 Related Party Note Payable, net of unamortized discount of $0 and $0 respectively

 

Due on Demand

 

 

100,000

 

 

 

100,000

 

8% $50,000 Related Party Note Payable

 

Due on Demand

 

 

7,817

 

 

 

7,817

 

5% Note Payable

 

Due on Demand (1)

 

 

350,000

 

 

 

350,000

 

 

 

 

 

 

-

 

 

 

-

 

3.75% SBA EIDL Note Payable

 

April 30, 2050

 

 

470,756

 

 

 

478,067

 

Total notes payable

 

 

 

 

1,540,064

 

 

 

1,629,686

 

Less current portion of notes payable

 

 

 

 

1,076,619

 

 

 

1,144,108

 

Notes payable, net of current portion

 

 

 

$463,445

 

 

$485,378

 

 

(1) The Company entered two promissory notes with an investor of the Company in the amount of $350,000. The investor had agreed to convert the loan into 437,500 shares of common stock in 2018. The Company has not issued these shares to the investor and booked the notes as a short-term loan. This loan is considered payable upon demand.

 

 
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Note 6 — Commitments and Contingencies

 

The Company records tax contingencies when the exposure item becomes probable and reasonably estimable. As of December 31, 2023, the Company had a tax contingency related to stock options granted below the fair market value on date of grant. The Company is in the process of determining the possible exposure and necessary expense accrual for the related tax, penalties and interest. Management has not been able to determine the amount as of the date of this report, however, does not expect the amount to be material to the financial statements.

 

To the best of the Company’s knowledge and belief, no legal proceedings of merit are currently pending or threatened against the Company.

 

Note 7 — Risks and Uncertainties

 

The Company does not have a concentration of revenues from any individual customer (less than 10%).

 

The Company operates in a rapidly evolving and highly regulated industry and will only conduct business in state legal cannabis markets.

 

Note 8 — Stock Based Compensation

 

The equity incentive plan of the Company was established in February of 2017. The Board of Directors of the Company may from time to time, in its discretion grant to directors, officers, consultants and employees of the Company, non-transferable options to purchase common shares, provided that the number of options issued do not exceed 20,000,000. The options are exercisable for a period of up to 4 years from the date of the grant. The number of shares authorized to be issued under the equity incentive plan was increased from 10,000,000 to 25,000,000 through consent of stockholders to amend and restate the equity incentive plan.

 

The average fair value of stock options granted was estimated to be $0.14 and $0.07. This estimate was made using the Black-Scholes option pricing model and the following weighted average assumptions:

 

Expected option life (years)

 

2-4

 

Expected stock price volatility

 

227 to 258%

 

Expected dividend yield

 

 

-

 

Risk-free interest rate

 

0.44 to 0.54%

 

 

 
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A summary of option activity under the employee share option plan as of December 31, 2023 and changes during the year then ended is presented below.

 

 

 

Shares

 

 

Weighted-Average Exercise Price

 

 

Weighted-Average Remaining Contractual Price

 

 

Aggregate Intrinsic Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options:

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding at July 1, 2023

 

 

17,774,000

 

 

$0.06

 

 

 

 

 

 

 

Granted

 

 

-

 

 

$0.00

 

 

 

 

 

 

 

Exercised, converted

 

 

-

 

 

$0.00

 

 

 

 

 

 

 

Forfeited / exchanged / modification

 

 

-

 

 

$0.00

 

 

 

 

 

 

 

Outstanding at December 31, 2023

 

 

17,774,000

 

 

$0.06

 

 

 

0.5

 

 

$-

 

Exercisable at December 31, 2023

 

 

17,630,575

 

 

$0.11

 

 

 

1.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of options available for grant at end of period

 

 

426,870

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A summary of the status of the Company’s nonvested shares as of December 31, 2023, and changes during the quarter December 31, 2023, is presented below:

 

Options

 

Shares

 

 

Weighted-Average Grant-Date Fair Value

 

Nonvested at July 1, 2023

 

 

662,608

 

 

$0.11

 

Granted

 

 

0

 

 

$0.00

 

Vested

 

 

519,183

 

 

$0.11

 

Forfeited

 

 

-

 

 

$0.00

 

Nonvested at December 31, 2023

 

 

143,425

 

 

$0.11

 

 

Stock-based compensation expense attributable to stock options was approximately $86,487 for the quarter ended December 31, 2023. As of December 31, 2023, there was approximately $155,226 of unrecognized compensation expense related to 143,425 nonvested stock options outstanding, and the weighted average vesting period for those options was 1 year.

 

 
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Warrants

 

At December 31, 2023, the Company had outstanding warrants to purchase the Company’s common stock which were issued in connection with multiple financing arrangements. Information relating to these warrants is summarized as follows:

 

Warrants

 

Remaining

Number

Outstanding

 

 

Weighted

Average

Remaining

Life (Years)

 

 

Weighted

Average

Exercise

Price

 

Warrants A - Securities Purchase Agreement

 

 

28,072,364

 

 

 

0.50

 

 

$0.17

 

Total

 

 

28,072,364

 

 

 

 

 

 

 

 

 

Aggregate intrinsic value at December 31, 2023

 

$0

 

 

 

 

 

 

 

 

 

 

Note 9 — Related Party Transactions

 

In March 2020, the Company entered into a promissory note with the Chief Executive Officer for $600,000 in exchange for a total of a $565,000 cash payment. The note matured in December 2020 and $500,000 of principal payments have been made to date. The note is in default and due upon demand and the interest rate was increased to 12%.

 

In March 2020, the Company entered into a promissory note with the Chief Technology Officer for $50,000. The note matured on January 1, 2021 and $42,183 of principal payments have been made to date. The note is in default and due upon demand and the interest rate was increased to 12%.

 

Note 10 — Leases

 

On January 1, 2023 the Company extended its Denver Colorado headquarter lease for 12 months through December 31, 2023. During the past fiscal year a majority of the Company’s employee have been working remotely and the Company does not know if they will continue to keep this location or relocate to a small facility. Therefore, in accordance with ASC 842 the Company will not record an operating right of use asset and operating lease liability because of the short term nature of this amendment. The Company will recognize lease expense on a monthly basis through the life of this lease of approximately $51,786.

 

Note 11 — Subsequent Events – nothing to report

 

 
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 

 

Forward Looking Statements

 

This quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. 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.

 

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this report. Except as required by applicable law, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our unaudited interim condensed consolidated financial statements for the three months ended December 31, 2023 are expressed in US dollars and are prepared in accordance with generally accepted accounting principles in the United States of America. They reflect all adjustments (all of which are normal and recurring in nature) that, in the opinion of management, are necessary for fair presentation of our interim financial information. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for our fiscal year ending December 31, 2023. Our unaudited consolidated financial statements and notes included therein have been prepared on a basis consistent with and should be read in conjunction with our audited financial statements and notes for the year ended June 30, 2023, as filed in our annual report on Form 10-K.

 

The following discussion should be read in conjunction with our interim financial statements and the related notes that appear elsewhere in this quarterly report.

 

Business Overview

 

Our wholly owned subsidiary, LB Media Group, LLC has evolved and grown from a listing website to a comprehensive marketing technology platform. Our clients, medical and recreational dispensaries, in legalized cannabis states, along with cannabis product companies subscribe to our technology platform to assist in new customer acquisition. We provide retention tools to those companies that include texting/loyalty and ordering ahead technology.

 

The Leafbuyer Technology Platform reaches millions of cannabis consumers every month through its web-based platform, loyalty platform and smart application technology. Our website’s sophisticated vendor dashboard allows our clients to update their menus, deals and create real-time messages to communicate with consumers 24/7/365. The platform also provides a robust reporting feature to track the vendors’ return on investment. With the increased popularity of Leafbuyer texting/loyalty program, clients can communicate through SMS, MMS as well as push notifications within a custom branded application. Our website, Leafbuyer.com, and its progressive web application, hosts a robust search algorithm like popular travel or hotel sites, where our clients’ customers can search the database for appealing offers. They can also search through thousands of menu items and products, create a profile, sign up to receive deal alerts and place online orders for pick up or delivery. In November of 2020 Leafbuyer Technologies Inc. completed a customizable white label application for the dispensary clients. Consumers can search, shop, earn rewards, place orders, and communicate with their favorite stores all in one convenient application. The application can also be completely branded for the dispensary and allows for 24/7 communication with their patrons.

 

We continue an aggressive push into all legal cannabis states. Increasing our marketing and sales presence in new markets is a primary objective. Along with this expansion, we continue to develop innovative technologies that will serve cannabis dispensaries and product companies in attracting and retaining consumers.

 

Leafbuyer operates in a rapidly evolving and highly regulated industry that, as has been estimated by grandviewresearch.com, to exceed $70 billion in revenue by the year 2028. Our founders and our Board of Directors have been, and will continue to be, aggressive in pursuing long-term opportunities.

 

We plan to grow organically through the aggressive deployment of sales and marketing resources into legal cannabis states. We understand that to obtain a significant market share we may need to look for acquisitions for a sizable portion of that growth. However, there can be no assurance that we will be able to locate and acquire such opportunities or that they will be on terms that are favorable to us.

 

 
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The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Comparison of results of operations for the three months ended December 31, 2023 and 2022

 

 

 

Three months Ended

December 31,

 

 

 

 

 

 

 

2023

 

 

2022

 

 

Change

 

 

%

 

Revenue

 

$1,434,132

 

 

$1,341,750

 

 

$92,382

 

 

 

7%

Cost of revenue

 

 

985,467

 

 

 

625,604

 

 

 

359,863

 

 

 

58%

Gross profit

 

 

448,665

 

 

 

716,146

 

 

 

(267,481 )

 

 

(37 )%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

645,744

 

 

 

579,978

 

 

 

65,766

 

 

 

11%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain (loss) on derivative liability

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain of PPP Forgiveness

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

Interest expense & other income

 

 

(22,931)

 

 

(40,772)

 

 

(17,841 )

 

 

(44 )%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$(220,010)

 

$95,397

 

 

$(315,406 )

 

 

(331 )%

 

Revenues

 

During the three months ended December 31, 2023, we generated $1.4 million of revenues, compared to revenues of $1.3 million during the three months ended December 31, 2022. The slight increase was primarily due to the additional text services.

 

Gross Profit

 

Gross profit decreased to $448,665 for the period ended December 31, 2023 which was an decrease over the same period ended December 31, 2022 of 267,481. Gross profits decreased significantly in the quarter due to industry-wide increased provider costs. The company has been able to pass along most of the recent cost increases and is hopeful that gross margins return to mid-year 2023 levels going forward.

 

Expenses

 

During the three months ended December 31, 2023, we incurred total operating expenses of $645,744 compared to $579,978 for the same period ending in 2023. The 11% increase in operating costs is primarily because of additional commissions paid for the increase in sales.

 

Interest expense was $22,944 for the three months ended December 31, 20232 compared to interest expense of $44,107 for the same period ending December 31, 2022, because of the reduction in notes payable during the year.

 

Net Income

 

During the three months ended December 31, 2023 we realized a net loss of $220,010, compared to a net income of $95,397 for the three months ended December 31, 2022.

 

 
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Comparison of results of operations for the six months ended December 31, 2023 and 2022

 

 

 

Six months Ended

December 31,

 

 

 

 

 

 

 

2023

 

 

2022

 

 

Change

 

 

%

 

Revenue

 

$2,603,753

 

 

$2,470,415

 

 

$92,382

 

 

 

7%

Cost of revenue

 

 

1,798,811

 

 

 

1,278,124

 

 

 

359,863

 

 

 

58%

Gross profit

 

 

804,942

 

 

 

1,192,291

 

 

 

(267,481 )

 

 

(37 )%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

1,363,030

 

 

 

1,215,114

 

 

 

65,766

 

 

 

11%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain (loss) on derivative liability

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

Gain of PPP Forgiveness

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

Interest expense & other income

 

 

(60,520)

 

 

(91,753)

 

 

(17,841 )

 

 

(44 )%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$(618,608)

 

$(114,576)

 

$(315,406 )

 

 

(331 )%

 

Revenues

 

During the six months ended December 31, 2023, we generated $2.6 million of revenues, compared to revenues of $2.5 million during the six months ended December 31, 2022. The slight increase was primarily due to the additional text services.

 

Gross Profit

 

Gross profit decreased to $804,9842 for the period ended December 31, 2023 which was an decrease over the same period ended December 31, 2022 of 1,215,114. Gross profits decreased significantly in the quarter due to industry-wide increased provider costs. The company has been able to pass along most of the recent cost increases and is hopeful that gross margins return to mid-year 2023 levels going forward.

 

Expenses

 

During the six months ended December 31, 2023, we incurred total operating expenses of $1,363,030 compared to $1,215,114 for the same period ending in 2023. The 12% increase in operating costs is primarily because of additional commissions paid and one-time recruiting fee and increase computer and internet fees during the period.

 

Interest expense was $60,568 for the six months ended December 31, 20232 compared to interest expense of $95,134 for the same period ending December 31, 2022, because of the reduction in notes payable during the year.

 

 
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Net Income

 

During the six months ended December 31, 2023 we realized a net loss of $618,608, compared to a net loss of $114,576 for the six months ended December 31, 2022.

 

Liquidity and Capital Resources

 

The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months from the date of the issuance of these unaudited condensed consolidated financial statements with existing cash on hand and/or the private placement of common stock or obtaining debt financing. There is, however, no assurance that the Company will be able to raise any additional capital through any type of offering on terms acceptable to the Company, as existing cash on hand will be insufficient to finance operations over the next twelve months.

 

At December 31, 2023 we had $226,681 in cash and cash equivalents.

 

Cash Flows

 

Our cash flows from operating, investing and financing activities were as follows:

 

 

 

Six months Ended September,

 

 

 

2023

 

 

2022

 

Net cash used in operating activities

 

$(129,418 )

 

$76,642

 

Net cash used in investing activities

 

$-

 

 

$-

 

Net cash provided by financing activities

 

$(89,622 )

 

$(145,644 )

 

As of December 31, 2023, we had $226,681 in cash and cash equivalents and a working capital deficit of $2,123,872. We are dependent on funds raised through equity financing. Our cumulative net loss of $25,054,306 was funded by equity financing and we reported a net loss from operations of $618,608 for the six months ended December 31, 2023. During the six months ending December 31, 2023, we did not raise or expended any monies through financing activities, and we did not expend any monies through investing activities (acquiring assets).

 

Off-Balance Sheet Arrangements

 

We had no off-balance sheet arrangements as of December 31, 2023 and June 30, 2023.

 

Critical Accounting Estimates

 

Our condensed consolidated financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates, judgments and assumptions that affect reported amounts of assets, liabilities, revenues and expenses. We continually evaluate the accounting policies and estimates used to prepare the condensed consolidated financial statements. The estimates are based on historical experience and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management. Certain accounting policies that require significant management estimates and are deemed critical to our results of operations or financial position are discussed in our June 30, 2023 form 10-K in the Critical Accounting Policies section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

 
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Critical Accounting Policies

 

Our unaudited condensed consolidated interim financial statements are affected by the accounting policies used and the estimates and assumptions made by management during their preparation. For a detailed discussion about the Company’s significant accounting policies, refer to Note 2 — “Summary of Significant Accounting Policies,” in the Company’s consolidated financial statements included in the Company’s June 30, 2023 Form 10-K. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by our management. Management has carefully considered the recently issued accounting pronouncements that altered generally accepted accounting principles and does not believe that any other new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term.

 

Use of Estimates

 

Management uses estimates and assumptions in preparing these condensed consolidated financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates.

 

Revenue Recognition

 

For revenue recognition arrangements that we determine are within the scope of Topic ASC 606, we perform the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We only apply the five-step model to arrangements that meet the definition of a contract under Topic 606, including when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, we evaluate the goods or services promised within each contract related performance obligation and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

 

We recognize revenue upon completion of our performance obligations or expiration of the contractual time to use services such as bulk texting.

 

Recent Accounting Guidance Adopted

 

We have implemented all new accounting pronouncements that are in effect and applicable to us. These pronouncements did not have any material impact on our financial statements unless otherwise disclosed, and we do not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position or results of operations.

 

 
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Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

We are a smaller reporting company as defined by 17 C.F.R. 229 (10)(f)(i) and are not required to provide information under this item.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2023. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such officer also confirmed that there was no change in our internal control over financial reporting during the three months ended December 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Changes in Internal Control Over Financial Reporting

 

There were no changes in our internal control over financial reporting that occurred during the six months ended December 31, 2023, which have materially affected or would likely materially affect our internal control over financial reporting. The Company continues to invest resources in order to upgrade internal controls.

 

 
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PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are not aware of any legal proceedings to which we are a party or of which our property is the subject. None of our directors, officers, affiliates, any owner of record or beneficially of more than 5% of our voting securities, or any associate of any such director, officer, affiliate or security holder are (i) a party adverse to us in any legal proceedings, or (ii) have a material interest adverse to us in any legal proceedings. We are not aware of any other legal proceedings that have been threatened against us.

 

Item 2. Unregistered Sales of Equity Securities

 

None

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None

 

 
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Item 6. Exhibits

 

Exhibit Number

 

Exhibit Description

 

 

31.1

 

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

 

31.2

 

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

 

32.1

 

Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **

 

32.2

 

Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **

 

 

 

101.INS

 

101.INS Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

 

 

 

101.SCH

 

101.SCH Inline XBRL Taxonomy Extension Schema Document.

 

 

 

101.CAL

 

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.

 

 

 

101.DEF

 

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.

 

 

 

101.LAB

 

101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document.

 

 

 

101.PRE

 

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document.

 

 

 

104

 

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

 

* Filed herewith.

 

** Furnished herewith.

 

 
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SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

LEAFBUYER TECHNOLOGIES, INC.

 

 

 

Date: February 14, 2024

By:

/s/ Kurt Rossner

 

 

Kurt Rossner

 

 

Chief Executive Officer, Director

(principal executive officer)

 

 

 

 

By:

/s/ Mark Breen

 

 

Mark Breen

 

 

Chief Financial Officer and Director

 

 

 
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