0001477932-19-002851.txt : 20190516 0001477932-19-002851.hdr.sgml : 20190516 20190516061317 ACCESSION NUMBER: 0001477932-19-002851 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 48 CONFORMED PERIOD OF REPORT: 20190331 FILED AS OF DATE: 20190516 DATE AS OF CHANGE: 20190516 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEAFBUYER TECHNOLOGIES, INC. CENTRAL INDEX KEY: 0001643721 STANDARD INDUSTRIAL CLASSIFICATION: TRANSPORTATION SERVICES [4700] IRS NUMBER: 383944821 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-55855 FILM NUMBER: 19830508 BUSINESS ADDRESS: STREET 1: 6888 S. CLINTON STREET, SUITE 300 CITY: GREENWOOD VILLAGE STATE: CO ZIP: 80112 BUSINESS PHONE: 720-235-0099 MAIL ADDRESS: STREET 1: 6888 S. CLINTON STREET, SUITE 300 CITY: GREENWOOD VILLAGE STATE: CO ZIP: 80112 FORMER COMPANY: FORMER CONFORMED NAME: AP EVENT INC. DATE OF NAME CHANGE: 20150529 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

 

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

 

For the quarterly period ended March 31, 2019

 

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)

 

(720)-235-0099

(Registrant’s telephone number, including area code)

 

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Exchange Act: None

 

Securities registered pursuant to Section 12(g) of the Exchange Act: Common Stock, Par Value $0.001

 

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 x No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

 

Indicate by check mark whether the registrant is a large 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

x

Smaller reporting company

x

(Do not check if a smaller reporting company)

Emerging growth company

x

 

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     x NO

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS 

 

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.. ¨ YES     ¨ NO 

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Title of each class

 

Trading

 

Name of each exchange on
which registered Symbol(s)

None

 

None

 

None

 

APPLICABLE ONLY TO CORPORATE ISSUERS  

 

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.  

 

As of May 9, 2019, the Registrant had 47,749,427 shares of common stock outstanding.

 

 
 
 
 
 

  

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

 

19

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

23

 

Item 4.

Controls and Procedures

 

23

 

 

 

PART II – OTHER INFORMATION

 

 

 

Item 1.

Legal Proceedings

 

26

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

26

 

Item 3.

Defaults Upon Senior Securities

 

26

 

Item 4.

Mine Safety Disclosures

 

26

 

Item 5.

Other Information

 

26

 

Item 6.

Exhibits

 

27

 

 

 

SIGNATURES

 

28

 

 

 
2
 
 

  

PART 1 – 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 INTERIM CONDENSED CONSOLDIATED BALANCE SHEETS

 

 

 

March 31,
2019

 

 

June 30,
2018

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$563,383

 

 

$375,938

 

Accounts receivable, net (allowance for doubtful accounts was $53,815 at March 31, 2019 and $6,617 at June 30, 2018)

 

 

58,318

 

 

 

8,279

 

Inventory

 

 

3,530

 

 

 

3,530

 

Prepaid expenses and other current assets

 

 

147,721

 

 

 

172,566

 

Total current assets

 

 

772,952

 

 

 

560,313

 

Noncurrent assets:

 

 

 

 

 

 

 

 

Intangible assets, net

 

 

3,215,250

 

 

 

-

 

Fixed assets, net

 

 

495

 

 

 

873

 

Total noncurrent assets

 

 

3,215,745

 

 

 

873

 

Total assets

 

$3,988,697

 

 

$561,186

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$194,498

 

 

$290,783

 

Accrued liabilities

 

 

459,086

 

 

 

66,087

 

Deferred revenue

 

 

221,715

 

 

 

156,530

 

Debt, current

 

 

1,640,197

 

 

 

805,684

 

Total current liabilities

 

 

2,515,496

 

 

 

1,319,084

 

    Debt, long-term

 

 

110,145

 

 

 

-

 

Total liabilities

 

 

2,625,641

 

 

 

1,319,084

 

 

 

 

 

 

 

 

 

 

    Commitments and contingencies (Note 7)

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value; 10,000,000 shares authorized; 6,750,000 shares issued and outstanding for class A convertible preferred stock and 70,000 shares issued and outstanding for class B convertible preferred stock at March 31, 2019 and June 30, 2018, respectively

 

 

6,820

 

 

 

6,820

 

Common stock, $0.001 par value; 150,000,000 shares authorized; 47,147,804 shares issued and outstanding at March 31, 2019 and 42,661,228 shares issued and outstanding at June 30, 2018

 

 

47,148

 

 

 

42,661

 

Additional paid in capital

 

 

10,064,214

 

 

 

3,130,831

 

Accumulated deficit

 

 

(8,755,126)

 

 

(3,938,210)

Total equity (deficit)

 

 

1,363,056

 

 

 

(757,898)

    Total liabilities and equity

 

$3,988,697

 

 

$561,186

 

 

See accompanying notes to condensed consolidated financial statements.

 
 
3
 
Table of Contents

 

LEAFBUYER TECHNOLOGIES INC. 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

Three Months Ended
March 31,

 

 

Nine Months Ended
March 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Sales revenue

 

$489,320

 

 

$287,224

 

 

$1,296,550

 

 

$785,969

 

    Cost of sales

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

    Gross profit

 

 

489,320

 

 

 

287,224

 

 

 

1,296,550

 

 

 

785,969

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling expenses

 

 

70,025

 

 

 

53,966

 

 

 

200,300

 

 

 

138,821

 

General and administrative

 

 

1,947,795

 

 

 

1,060,829

 

 

 

5,556,901

 

 

 

1,945,141

 

    Total operating expenses

 

 

2,017,820

 

 

 

1,114,795

 

 

 

5,757,201

 

 

 

2,083,962

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(1,528,500)

 

 

(827,571)

 

 

(4,460,651)

 

 

(1,297,993)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Interest expense

 

 

(181,643)

 

 

(12,919)

 

 

(356,265)

 

 

(12,948)

    Other income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

    Other income (expense), net

 

 

(181,643)

 

 

(12,919)

 

 

(356,265)

 

 

(12,948)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Income tax expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

    Net loss

 

$(1,710,143)

 

$(840,490)

 

$(4,816,916)

 

$(1,310,941)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Net loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Basic and diluted

 

$(0.04)

 

$(0.02)

 

$(0.10)

 

$(0.03)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Basic and diluted

 

 

45,418,004

 

 

 

40,418,163

 

 

 

48,337,990

 

 

 

39,197,367

 

 

See accompanying notes to condensed consolidated financial statements

 

 
4
 
Table of Contents

 

LEAFBUYER TECHNOLOGIES, INC. 

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

 

 

 

 Preferred Stock

 

 

 Common Stock

 

 

 

 

 

Accumulated  

 

 

 

 

 

 

 # of Shares

 

 

 Amount

 

 

 # of Shares

 

 

 Amount

 

 

 APIC

 

 

 Deficit

 

 

 Total

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2018

 

 

6,820,000

 

 

$6,820

 

 

 

42,661,228

 

 

$42,661

 

 

$3,130,831

 

 

$(3,938,210)

 

$(757,898)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for exercise of options

 

 

-

 

 

 

-

 

 

 

86,000

 

 

 

86

 

 

 

21,414

 

 

 

-

 

 

 

21,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock in conversion of notes payable and accrued interest

 

 

-

 

 

 

-

 

 

 

123,324

 

 

 

123

 

 

 

119,800

 

 

 

-

 

 

 

119,923

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

598,076

 

 

 

-

 

 

 

598,076

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of warrant in connection with convertible notes payable

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

85,724

 

 

 

-

 

 

 

85,724

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the three month's ended September 30, 2018

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,428,903)

 

 

(1,428,903)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2018

 

 

6,820,000

 

 

$6,820

 

 

 

42,870,552

 

 

$42,870

 

 

$3,955,845

 

 

$(5,367,113)

 

$(1,361,578)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for cash

 

 

-

 

 

 

-

 

 

 

1,116,738

 

 

 

1,117

 

 

 

1,043,883

 

 

 

-

 

 

 

1,045,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for services

 

 

-

 

 

 

-

 

 

 

60,000

 

 

 

60

 

 

 

39,540

 

 

 

-

 

 

 

39,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for exercise of options

 

 

-

 

 

 

-

 

 

 

92,947

 

 

 

93

 

 

 

23,144

 

 

 

-

 

 

 

23,237

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for acquisition

 

 

-

 

 

 

-

 

 

 

2,666,667

 

 

 

2,667

 

 

 

2,557,333

 

 

 

-

 

 

 

2,560,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of warrant in connection with convertible notes payable

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

171,447

 

 

 

-

 

 

 

171,447

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

597,293

 

 

 

-

 

 

 

597,293

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the three month's ended December 31, 2018

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,677,870)

 

 

(1,677,870)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2018

 

 

6,820,000

 

 

$6,820

 

 

 

46,806,904

 

 

$46,807

 

 

$8,388,485

 

 

$(7,044,983)

 

$1,397,129

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for exercise of options

 

 

-

 

 

 

-

 

 

 

88,900

 

 

 

89

 

 

 

22,136

 

 

 

-

 

 

 

22,225

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for services

 

 

-

 

 

 

-

 

 

 

2,000

 

 

 

2

 

 

 

958

 

 

 

-

 

 

 

960

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

573,507

 

 

 

-

 

 

 

573,507

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for acquisition

 

 

-

 

 

 

-

 

 

 

250,000

 

 

 

250

 

 

 

239,750

 

 

 

-

 

 

 

240,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beneficial Conversion Feature of Notes Payable

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

839,378

 

 

 

-

 

 

 

839,378

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the three month's ended March 31, 2019

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,710,143)

 

 

(1,710,143)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2019

 

 

6,820,000

 

 

$6,820

 

 

 

47,147,804

 

 

$47,148

 

 

$10,064,214

 

 

$(8,755,126)

 

$1,363,056

 

 

See accompanying notes to condensed consolidated financial statements.

 
 
5
 
 

  

 

 

 Preferred Stock

 

 

 Common Stock

 

 

 

 

 

 

 

 

 

 # of Shares

 

 

 Amount

 

 

 # of Shares

 

 

 Amount

 

 

 APIC

 

 

 Deficit

 

 

 Total

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2017

 

 

7,000,000

 

 

$7,000

 

 

 

38,000,663

 

 

$38,000

 

 

$1,010,000

 

 

$(958,535)

 

$96,465

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for cash

 

 

-

 

 

 

-

 

 

 

380,000

 

 

 

380

 

 

 

(380)

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

120,000

 

 

 

-

 

 

 

120,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the three month's ended September 30, 2017

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(229,814)

 

 

(229,814)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2017

 

 

7,000,000

 

 

$7,000

 

 

 

38,380,663

 

 

$38,380

 

 

$1,129,620

 

 

$(1,188,349)

 

$(13,349)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the three month's ended December 31, 2017

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(240,636)

 

 

(240,636)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2017

 

 

7,000,000

 

 

$7,000

 

 

 

38,380,663

 

 

$38,380

 

 

$1,129,620

 

 

$(1,428,985)

 

$(253,985)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for cash

 

 

-

 

 

 

-

 

 

 

240,000

 

 

 

240

 

 

 

119,760

 

 

 

-

 

 

 

120,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for exercise of options

 

 

-

 

 

 

-

 

 

 

8,000

 

 

 

8

 

 

 

1,992

 

 

 

-

 

 

 

2,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

119,133

 

 

 

-

 

 

 

119,133

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock in conversion of preferred stock

 

 

(90,000)

 

 

(90)

 

 

1,440,000

 

 

 

1,440

 

 

 

(1,350)

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for services 

 

 

 

 

 

 

 

 

 

 

137,000

 

 

 

137

 

 

 

280,713

 

 

 

-

 

 

 

280,850

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the three month's ended March 31, 2018

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(840,490)

 

 

(840,490)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2018

 

 

6,910,000

 

 

$6,910

 

 

 

40,205,663

 

 

$40,205

 

 

$1,649,868

 

 

$(2,269,475)

 

$(572,492)
 

See accompanying notes to condensed consolidated financial statements.

 

 
6
 
Table of Contents

 

LEAFBUYER TECHNOLOGIES INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

 

 

 

Nine Months Ended March 31,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$(4,816,916)

 

$(1,310,941)

Adjustments to reconcile net income to net cash (used in)

 

 

 

 

 

 

 

 

provided by operating activities:

 

 

 

 

 

 

 

 

Stock compensation expense

 

 

1,768,876

 

 

 

239,133

 

Stock issued for services

 

 

40,560

 

 

 

280,850

 

Amortization of note payable discount

 

 

281,130

 

 

 

-

 

Depreciation and amortization expense

 

 

234,369

 

 

 

214

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(50,039)

 

 

(9,538)

Inventory

 

 

-

 

 

 

(3,652)

Prepaid expenses and other

 

 

24,845

 

 

 

(187,547)

Accounts payable

 

 

(96,285)

 

 

-

 

Accrued liabilities

 

 

258,184

 

 

 

109,791

 

Net cash used in operating activities

 

 

(2,355,276)

 

 

(881,690)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Software acquisition

 

 

(449,241)

 

 

-

 

Net cash provided by (used in) investing activities

 

 

(449,241)

 

 

-

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

1,111,962

 

 

 

122,000

 

Proceeds from issuance of debt

 

 

2,100,000

 

 

 

790,603

 

Repayment of debt

 

 

(220,000)

 

 

-

 

Net cash provided by financing activities

 

 

2,991,962

 

 

 

912,603

 

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

 

187,445

 

 

 

30,913

 

Cash and cash equivalents, beginning of period

 

 

375,938

 

 

 

164,680

 

Cash and cash equivalents, end of period

 

$563,383

 

 

$195,593

 

 

 

 

 

 

 

 

 

 

Cash paid for interest

 

$-

 

 

$-

 

Cash paid for taxes

 

$-

 

 

$-

 

Supplemental information for non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Conversion of debt and interest plus issuance of warrants

 

$377,094

 

 

$-

 

Software acquisition

 

$2,800,000

 

 

$-

 

 

 See accompanying notes to condensed consolidated financial statements.

 

 
7
 
Table of Contents

 

LEAFBUYER TECHNOLOGIES INC.

Notes to Unaudited Condensed Consolidated Financial Statements

 

Note 1 — Description of Business

 

Formation of the Company

 

On March 23, 2017, AP Event Inc. (“AP” or the “Registrant”) consummated an Agreement and Plan of Merger (the “Merger Agreement”) with LB Media Group, LLC, a Colorado limited liability Company (“LB Media”), August Petrov (the principal stockholder of AP), and LB Acquisition Corp., a Colorado corporation and a wholly-owned subsidiary of AP (“Acquisition”) whereby Acquisition was merged with and into LB Media (the “Merger”). (See Note 3).

 

As a result of the Merger, LB Media became a wholly-owned subsidiary of the Registrant, and immediately following the consummation of the Merger and giving effect to the securities sold in the Offering, the members of LB Media beneficially owned approximately fifty-five percent (55%) of the issued and outstanding Common Stock of the Registrant. The Merger Agreement contains customary representations, warranties, and covenants of the Registrant and LB Media for like transactions.

 

As a result of the reorganization and name change discussed later, Leafbuyer Technologies, Inc. (“Leafbuyer”) became the publicly quoted parent holding company with LB Media becoming a wholly-owned subsidiary of Leafbuyer. Upon consummation of the Agreement, Leafbuyer common stock was deemed to be registered under Section 12(b) of the Securities Exchange Act of 1934, as amended, pursuant to Rule 12g-3(a) promulgated thereunder. For purposes of Rule 12g-3(a), Leafbuyer is the successor issuer to AP.

 

AP was established under the corporation laws in the State of Nevada on October 16, 2014. On March 24, 2017, the Registrant changed its name to Leafbuyer Technologies, Inc.

 

All references herein to “us,” “we,” “our,” “Leafbuyer,” or the “Company” refer to Leafbuyer Technologies, Inc. and its subsidiary, LB Media.

 

Description of Business

 

We are focused on providing valuable information for the savvy cannabis consumer looking to make a purchase via deals and a dispensary database. We connect consumers with dispensaries by working alongside businesses to showcase their unique products and build a network of loyal patrons. Our national network of cannabis deals and information reaches millions of consumers monthly.

 

LB Media 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.

 

Basis of Presentation

 

The accompanying condensed consolidated balance sheet as of March 31, 2019, 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 information included in this report should be read in conjunction with our audited financial statements and notes thereto. 

 
 
8
 
Table of Contents

 

Going Concern

 

As shown in the accompanying condensed consolidated financial statements, we had equity of approximately $1,363,056 and a working capital deficit of $1,742,544 as of March 31, 2019. We reported a net loss of $4,816,916 for the nine months ended March 31, 2019, and we anticipate further losses in the development of our business. Accordingly, there is substantial doubt about our ability to continue as a going concern.

 

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 and generate additional revenues 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.

 

Reclassifications

 

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

 

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.

 

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.

 

Fair Value Measurements

 

The Company adopted the provisions of FASB Accounting Standards Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.

 

The estimated fair value of certain financial instruments, including cash and cash equivalents are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

 
 
9
 
Table of Contents

 

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

 

Level 1 — quoted prices in active markets for identical assets or liabilities

 

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable

 

Level 3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

 

The Company has no assets or liabilities valued at fair value on a recurring basis.

 

Revenue Recognition

 

Topic ASC 606 is effective as of the annual reporting period beginning after December 15, 2017 using either of two methods: (1) retrospective application of Topic ASC 606 to each prior reporting period presented with the option to elect certain practical expedients as defined within Topic ASC 606 or (2) retrospective application of Topic ASC 606 with the cumulative effect of initially applying Topic ASC 606 recognized at the date of initial application and providing certain additional disclosures as defined per Topic ASC 606. We adopted Topic ASC 606 pursuant to the method (2) and we determined that any cumulative effect for the initial application did not require an adjustment to retained earnings at July 1, 2018.

 

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.

 

Cash and Cash Equivalents

 

For purposes of the condensed consolidated statements of cash flows, cash and cash equivalents includes demand deposits, time deposits, certificates of deposit and short-term liquid investments with original maturities of three months or less when purchased. As of March 31, 2019 and June 30, 2018, the Company did not hold any cash equivalents. The Federal Deposit Insurance Corporation provides coverage for all accounts of up to $250,000.

 

Accounts Receivable, Net

 

Accounts receivable are stated at the amount management expects to collect. An allowance for doubtful accounts is recorded, as a charge to bad debt expense, where collection is considered to be doubtful due to credit issues. These allowances together reflect the Company’s estimate of potential losses inherent in accounts receivable balances, based on historical loss and known factors impacting its customers. Management has determined that an allowance is required at March 31, 2019 and June 30, 2018 of $53,815 and $6,617, respectively. The Company does not accrue interest on past due receivables.

 
 
10
 
Table of Contents

 

Inventory

 

Inventory consists of merchandise and is stated at the lower of cost, determined by last-in, first-out method or market. Market is determined based on the net realizable value, with appropriate consideration given to obsolescence, excessive levels, deterioration and other factors. At March 31, 2019 and June 30, 2018, the Company had $3,530 and $3,530 of inventory, respectively. A write-off is recorded for any inventory deemed excessive or obsolete. No write off was necessary at March 31, 2019 and at June 30, 2018.

 

Internal Use Software

 

Software development costs associated with internal use software are incurred in three stages of development: the preliminary project stage, the application development stage, and the post-implementation stage. Costs incurred during the preliminary project and post-implementation stages are expensed as incurred. Certain internal and external qualifying costs incurred during the application development stage are capitalized as property and equipment. Internal use software is amortized on a straight-line basis over its estimated useful life of seven years, beginning when the software is ready for its intended use.

 

During the nine months ended March 31, 2019, the Company capitalized approximately $3.4 million of software acquisition costs. Amortization expense related to internal use software totaled $233,991 during the nine months ended March 31, 2019.

 

Identified Intangible Assets

 

The Company reviews identified intangible assets and long-lived assets to be held-and-used for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. If the sum of the undiscounted expected future cash flows over the remaining useful life of a long-lived asset is less than its carrying amount, the asset is considered to be impaired. Impairment losses are measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset. When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risks associated with the recovery of the asset. As of March 31, 2019 and June 30, 2018, there were no impairments of intangible assets.

 

Stock-Based Compensation

 

The Company accounts for stock-based awards to employees in accordance with applicable accounting principles, which requires compensation expense related to share-based transactions, including employee stock options, to be measured and recognized in the financial statements based on a determination of the fair value of the stock options. The grant date fair value is determined using the Black-Scholes-Merton (“Black-Scholes”) pricing model. For all employee stock options, we recognize expense over the requisite service period on an accelerated basis over the employee’s requisite service period (generally the vesting period of the equity grant). The Company’s option pricing model requires the input of highly subjective assumptions, including the expected stock price volatility and expected term. Any changes in these highly subjective assumptions significantly impact stock-based compensation expense.

 

Options awarded to purchase shares of common stock issued to non-employees in exchange for services are accounted for as variable awards in accordance with applicable accounting principles. Such options are valued using the Black-Scholes option pricing model.

 

See Note 9 for the assumptions used to calculate the fair value of stock-based employee and non-employee compensation.

 

The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of ASC 505-50 Equity-Based Payments to Non-Employees. Stock-based compensation related to non-employees is accounted for based on the fair value of the related stock or options or the fair value of the services, whichever is more readily determinable. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.

 
 
11
 
Table of Contents

 

Income Taxes

 

The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

 

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. As of March 31, 2019, the Company had approximately $7,652,000 of net operating loss carry forward that was unrecognized tax benefits.

 

Under Internal Revenue Code 382, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. We have not completed a study to assess whether an “ownership change” has occurred or whether there have been multiple ownership changes since we became a “loss corporation” as defined in Section 382. Future changes in our stock ownership, which may be outside of our control, may trigger an “ownership change”. In addition, future equity offerings or acquisitions that have equity as a component of the purchase price could result in an “ownership change.” If an “ownership change” has occurred or does occur in the future, utilization of the NOL carryforwards or other tax attributes may be limited, which could potentially result in increased future tax liability to us.

 

ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. There are no material uncertain tax positions at March 31, 2019.

 

On December 22, 2017, the U.S. government enacted the Tax Act, which made significant changes to the Internal Revenue Code of 1986, as amended, including, but not limited to, reducing the U.S. corporate statutory tax rate and the net operating loss incurred after December 31, 2017 can be carried forward indefinitely and the two-year net operating loss carried back was eliminated. We continue to evaluate the impact of the Tax Act.

 

New Accounting Pronouncements

 

In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes the existing guidance for lease accounting, Leases (Topic 840). ASU 2016-02 requires lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early application is permitted for all entities. ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after, the date of initial application, with an option to elect to use certain transition relief. In July 2018, the FASB issued ASU No. 2018-10, “Codification Improvements to Topic 842, Leases.” The amendments in ASU 2018-10 clarify, correct or remove inconsistencies in the guidance provided under ASU 2016-02 related to sixteen specific issues identified. Also in July 2018, the FASB issued ASU No. 2018-11 “Leases (Topic 842): Targeted Improvement” which now allows entities the option of recognizing the cumulative effect of applying the new standard as an adjustment to the opening balance of retained earnings in the year of adoption while continuing to present all prior periods under previous lease accounting guidance. The effective date and transition requirements for these two ASUs are the same as the effective date and transition requirements as ASU 2016-02. The standard will be effective for the Company for the quarter ended September 30, 2019.

 
 
12
 
Table of Contents

 

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The standard will be effective for the Company in the first quarter of 2020. The adoption of this standard does not have a material impact on the condensed consolidated financial statements.

 

In June 2018, the FASB issued ASU 2018-07, which simplifies the accounting for non-employee share-based payment transactions.  The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor's own operations by issuing share-based payment awards.  The standard will be effective in the first quarter of fiscal year 2019, although early adoption is permitted. The adoption of this standard does not have a material impact on the condensed consolidated financial statements.

 

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.

 

Note 3 — Recapitalization and Preferred Shares

 

On March 23, 2017, we completed the Merger Agreement with AP. The impact to equity of the Merger Agreement includes a) the issuance of 2,351,355 new pre-split shares of the Company’s common stock; b) the issuance of 324,327 new pre-split shares of the Company’s Series A Convertible Preferred Stock; c) the retirement of 5,000,000 shares of the Company’s pre-split common stock; and d) removing the Company’s accumulated deficit and adjusting equity for the recapitalization. Simultaneously with the Merger, the Company accepted subscriptions in a private placement offering of 476,092 new pre-split shares of the Company’s common stock in the amount of $600,000 as well as 27,027 new pre-split shares of the Company’s Series B Convertible Preferred Stock in the amount of $250,000. These shares are considered to be outstanding beginning January 1, 2015. However, as the cash to purchase these shares was received in 2017, we have recorded the cash received in connection with these shares in additional paid-in capital during 2017.

 

Series A Convertible Preferred Stock was originally convertible into 3,000,000 common shares based on the total outstanding equity as of March 23, 2017.  As of March 31, 2019, the Series A Convertible Preferred Stock would be convertible into approximately 10,660,000 common shares, based on 47,747,804 common shares outstanding as of March 31, 2019.  The Series B Convertible Preferred Stock is convertible into 1,120,000 common shares.   

 

Note 4 — Intangible Assets

 

Intangible assets consist of the following:

 

 

 

March 31,

2019

 

 

March 31,

2018

 

 

 

 

 

 

 

 

Loyalty software

 

$3,449,241

 

 

 

-

 

Less accumulated amortization

 

 

(233,991)

 

 

-

 

Intangible assets, net

 

$3,215,250

 

 

$-

 

 
 
13
 
Table of Contents

 

On November 6, 2018, the Company acquired an identified intangible asset (“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 2,666,667 shares of common stock, par value $0.001 per share 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.  The additional Incentive Shares is approximately $1,152,000. During the period ended March 31, 2019 the Company capitalized approximately $360,100 of software enhancements.

 

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.

 

Note 5 — Capital Stock and Equity Transactions

 

The Company has 150,000,000 shares of common stock authorized with a par value of $0.001 per share as of March 31, 2019. In addition, the Company has 10,000,000 preferred stock authorized with a par value of $0.001 per share as of March 31, 2019.

 

On April 19, 2018, the Company entered into a Standby Equity Distribution Agreement (the “SEDA”) with YA II PN Ltd. (“Investor”), a Cayman Island exempt limited partnership and an affiliate of Yorkville Advisors Global, LLC, whereby the Company sold and the Investor purchased 869,565 shares (the “Initial Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”) for the purchase price of One Million Dollars ($1,000,000), Additionally, under the SEDA the Company may sell to the Investor up to $5 million of shares of Common Stock over a two-year commitment period. Under the terms of the SEDA, the Company may from time to time, in its discretion, sell newly-issued shares of its common stock to the Investor at a discount to market of 8% of the lowest daily volume weighted average price during the relevant pricing period. The Company is obligated to register the Initial Shares, the Commitment Shares (as defined below), and the shares of Common Stock issuable under the SEDA pursuant to a registration statement under the Securities Act of 1933, as amended (the “Securities Act”).

 

The Company is not obligated to utilize any portion of the SEDA and there are no minimum commitments or minimum use penalties provided the Company does not terminate the SEDA within 18 months wherein the Company would be required to pay a termination fee of $100,000. The Company issued One Hundred Thousand (100,000) shares of Common Stock as a commitment fee (the “Commitment Shares”) to an affiliate of the Investor. The total amount of funds that ultimately can be raised under the SEDA over the two-year term will depend on the market price for the Company’s common stock and the number of shares actually sold.

 

The SEDA does not impose any restrictions on the Company’s operating activities. During the term of the SEDA, the Investor is prohibited from engaging in any short selling or hedging transactions related to the Common Stock.

 

In connection with the SEDA, the Company engaged Garden State Securities, Inc. (“GSS”) as its exclusive selling/placement agent. In connection with the transactions set forth in the SEDA, GSS shall receive a fee equal to 10% of the purchase price of the Initial Shares in cash plus warrants to purchase 86,957 shares of Common Stock at an exercise price of $1.15 per share, expiring in five years. GSS will also receive a cash fee equal to 5% of the amount paid by the Investor for each Advance under the SEDA.

 

On October 9, 2018, the Company used the SEDA to receive $400,000. The Company issued 274,292 common shares for a per share price of the issuance of approximately $1.46 per common share.

 

On October 22, 2018, the Company used the SEDA to receive $300,000. The Company issued 300,000 common shares for a per share price of the issuance of approximately $1.00 per common share.

 

 
14
 
Table of Contents

  

Merger Agreement

 

All shares issued in accordance with the Merger Agreement are considered to be outstanding beginning January 1, 2015 as these shares relate to the change in capital structure. Furthermore, 5,000,000 pre-split shares of common stock were retired in accordance with the Merger Agreement. In connection with the Merger Agreement, the Company made distributions totaling $600,000 to officers of the Company. Both Series A Convertible Preferred Stock and Series B Convertible Preferred Stock have rights to dividends when declared; however, there is no stated dividend rate and no such dividends have yet been declared by the Company. We evaluated the convertible preferred stock agreements for derivatives and determined that they do not qualify for derivative treatment for financial reporting purposes. We also determined this does not qualify as a beneficial conversion feature. Accordingly, the balances have been reported at the carrying amounts.

 

On March 24, 2017, the Company effected a forward split such that 9.25 shares of Common Stock were issued for every 1 share of Common Stock issued and outstanding immediately prior to the forward split. Immediately following the forward split, there were 38,000,663 shares of post-split common stock, 3,000,000 shares of post-split Series A Convertible Preferred Stock, and 250,000 shares of post-split Series B Convertible Preferred Stock outstanding. The par value of all classes of shares remained at $0.001 per share after the forward split. In March of 2017, an additional 3,750,000 shares of post-split Series A Convertible Preferred Stock were purchased from the Company. All references to shares herein refer to post-split shares, unless otherwise noted.  

 

Issuance of Common Stock 

 

During the year ended June 30, 2018, the Company accepted subscriptions for the issuance of 1,589,565 shares of Common Stock for total subscriptions of $1,020,000 in cash. 

 

During the year ended June 30, 2018, the Company issued 54,000 shares of Common Stock for the exercise of options and $13,500 cash. The Company also received notice from a Preferred Stock Series B stockholder to convert 180,000 shares of preferred stock into 2,880,000 shares of Common Stock.

 

During the year ended June 30, 2018, the Company issued 137,000 shares of Common Stock to vendors for services rendered. These shares were valued at fair market value of $280,850 and expensed in the accompanying Condensed Consolidated Statements of Operations.

 

During February 2018, the Company entered into two promissory notes with an investor of the Company in the amount of $28,000 and $84,000 in exchange for $25,000 and $75,000, respectively. Each of the notes have an original issue discount of $3,000 and $9,000, respectively that is being amortized to interest expense over the term of the notes. The principle and interest were converted into common stock during the quarter. The Company issued 123,324 shares of Common Stock in full satisfaction of the note on September 24, 2018.

 

During the nine months ended March 31, 2019, the Company issued 267,847 shares of Common Stock to employees and consultants related to the exercise of stock options. The Company received $66,962 for the issuance of these shares.

 

During the nine months ended March 31, 2019, the Company accepted subscriptions for the issuance of 1,116,738 shares of Common Stock for total subscriptions of $1,045,000 in cash.

 

During the nine months ended March 31, 2019, the Company issued 62,000 shares of Common Stock to vendors for services rendered. These shares were valued at fair market value of $40,560 and expensed in the accompanying Condensed Consolidated Statements of Operations. 

 
 
15
 
Table of Contents

 

Note 6 — Debt

 

The Company follows beneficial conversion feature guidance in ASC 470-20, which applies to convertible stock as well as convertible debt. A beneficial conversion feature is defined as a nondetachable conversion feature that is in the money at the commitment date. The beneficial conversion feature guidance requires recognition of the conversion option’s in-the-money portion, the intrinsic value of the option, in equity, with an offsetting reduction to the carrying amount of the instrument. The resulting discount is amortized as interest over the life of the instrument, if a stated maturity date exists, or to the earliest conversion date, if there is no stated maturity date. If the earliest conversion date is immediately upon issuance, the expense must be recognized at inception. When there is a subsequent change to the conversion ratio based on a future occurrence, the new conversion price may trigger the recognition of an additional beneficial conversion feature on occurrence.

 

On September 28, 2017, the Company entered into a promissory note with an investor of the Company in the amount of $200,000. The note bears no interest and was payable in full on September 30, 2018. In addition, on December 20, 2017, the Company entered into a promissory note with the same investor of the Company in the amount of $150,000. During January 2018, the Company entered into a note with an investor of the Company in the amount of $224,000 in exchange for $200,000. As of December 31, 2018, the discount was fully amortized. The notes bear interest at 12% and were payable in full in July 2018. As of March 31, 2019, the amounts were fully repaid to the investor.

 

During February 2018, the Company entered into two promissory notes with an investor of the Company in the amount of $28,000 and $84,000 in exchange for $25,000 and $75,000, respectively. Each of the notes have an original issue discount of $3,000 and $9,000, respectively that was amortized to interest expense over the term of the notes. The principle and interest were converted into common stock during the quarter. The Company issued 123,324 shares of Common Stock in full satisfaction of the notes.

 

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. As of March 31, 2019, the loan maturity date was extended to August 8, 2019, the discount is fully amortized and total unpaid principal and interest is approximately $170,564, accruing at 12%. Subsequent to March 31, 2019, the investor agreed to accept 245,207 shares of common stock for accrued interest and principal. 

 

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 principle in six equal installments. The principle 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 principle 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 cash for this Convertible Note was received prior to September 30, 2018.  As of April 15, 2019, the investor has agreed to extend the Convertible Note for six months to September 2019.

 

On September 21, 2018, the Company entered several promissory notes with various investors of the Company with a face value of $880,000 in exchange for $800,000 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 principle in six equal installments. The principle 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 principle 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 400,000 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.  One investor has agreed to extend the Convertible Note of $220,000 to September 2019, while the other investors have agreed to convert notes with a face value of $660,000 and accrued interest into 987,641 share of the Company’s common stock.   

 
 
16
 
Table of Contents

 

During the three month’s ended March 31, 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”). 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 and 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 principle in twelve equal installments. The principle 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.  If the Company defaults on the Notes, the interest is increased to 15% and at the investors’ option, the principle and interest can be converted into the Company common stock at a 20% discount to the then current market price.  Subsequent to March 31, 2019, the Company entered into an additional note with a face value of $233,334 under similar terms as above.

 

Note 7 — Commitments and Contingencies

 

The Company leases office space. Future minimum lease payments are as follows:

 

June 30, 2019, remaining

 

$30,432

 

June 30, 2020

 

$171,727

 

June 30, 2021

 

$125,419

 

June 30, 2022

 

$70,842

 

 

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

 

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

 

Note 8 — Earnings or Loss per Share

 

Basic earnings or loss per share is computed by dividing net income 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. We have prepared the calculation of earnings or loss per share using the weighted-average number of common shares of the Company that were outstanding during the three and nine months ended March 31, 2019 and 2018.

 

Dilutive instruments had no effect on the calculation of earnings or loss per share during the three and nine months ended March 31, 2019 and 2018.

 

Note 9 — 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 10,000,000. The options are exercisable for a period of up to 10 years from the date of the grant.  The number of options to purchase common shares was increased from 5,000,000 to 10,000,000 through a consent of stockholders to amend and restate the equity incentive plan.

 

The following table reflects the continuity of stock options for the nine months ended March 31, 2019:

 
 
17
 
Table of Contents

 

A summary of stock option activity is as follows:

 

 

 

March 31,
2019

 

 

 

 

 

Number of options outstanding:

 

 

 

Beginning of year

 

 

4,145,735

 

Granted

 

 

1,698,239

 

Exercised, converted

 

 

(267,847)

Forfeited / exchanged / modification

 

 

(138,535)

 

 

 

 

 

End of period

 

 

5,437,592

 

 

 

 

 

 

Number of options exercisable at end of period

 

 

763,453

 

Number of options available for grant at end of period

 

 

4,562,408

 

 

 

 

 

 

Weighted average option prices per share:

 

 

 

 

Granted during the period

 

$0.66

 

Exercised during the period

 

$0.25

 

Terminated during the period

 

$1.19

 

Outstanding at end of period

 

$0.25

 

Exercisable at end of period

 

$0.25

 

 

The average fair value of stock options granted was estimated to be $0.61 per share for the period ended March 31, 2019. This estimate was made using the Black-Scholes option pricing model and the following weighted average assumptions: 

 

 

 

2019

 

 

 

 

 

Expected option life (years)

 

3 - 5

 

Expected stock price volatility

 

147%-170

%

Expected dividend yield

 

 

%

Risk-free interest rate

 

2.35-3.01

%

 

Stock-based compensation expense attributable to stock options was approximately $1,768,876 for the nine-month period ended March 31, 2019. As of March 31, 2019, there was approximately $4,050,975 of unrecognized compensation expense related to unvested stock options outstanding, and the weighted average vesting period for those options was 3 years.

 

Note 10 — Subsequent Events

 

The Company has evaluated subsequent events through May 14, 2019 and has not identified any items requiring additional disclosure. 

 
 
18
 
Table of Contents

 

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 and nine months ended March 31, 2019 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 June 30, 2019. 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, 2018, 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

 

Leafbuyer.com Platform

 

The Company’s wholly-owned subsidiary, LB Media Group, LLC has evolved and grown from a listing website focused on helping consumers find local cannabis-related retail establishments, into a comprehensive technology company with a suite of marketing tools designed to serve legal cannabis businesses. The Company’s website, Leafbuyer.com, hosts a robust search algorithm similar to Trivago, where consumers can search the database for appealing offers or specific items. In addition to these digital acquisition tools, Leafbuyer provides a loyalty platform, online ordering, and SEO services ultimately aiming to be the “one-stop shop” for businesses in the challenging cannabis industry. Leafbuyer reaches millions of consumers every month and is the official cannabis deals platform LA Weekly, Grasscity, Voice Media Group, and The Stranger.

 

The site’s sophisticated vendor dashboard pairs vendor data with consumer needs and presents a robust, 24/7 real-time dashboard where vendors can update menus, specials, available jobs, and more. The system helps to track the vendors’ return on investment.

 
 
19
 
Table of Contents

 

The Company continues an aggressive push into all legal cannabis markets, including initiating a presence in the Canadian market. Increasing the company’s marketing and sales presence in new markets is a primary objective. Along with this expansion, the Company continues to develop new 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 some, will exceed $30 billion in revenue by the year 2020. The founders and board of directors has been, and will continue to be, aggressive in pursuing long-term opportunities.

 

Leafbuyer’s condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.

 

Comparison of results of operations for the three months ended March 31, 2019 and 2018

 

 

 

Three Months Ended March 31,

 

 

 

 

 

 

 

 

 

2019

 

 

2018

 

 

Change

 

 

%

 

Sales revenue

 

$489,320

 

 

$287,224

 

 

$202,096

 

 

 

70%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

2,017,820

 

 

 

1,114,795

 

 

 

903,025

 

 

 

81%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(181,643)

 

 

(12,919)

 

 

(168,724)

 

 

1,306%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$(1,710,143)

 

$(840,490)

 

$(869,653)

 

 

103%

 

Sales Revenue, Cost of Revenue and Gross Profit

 

Revenues increased for the three months ended March 31, 2019 compared to the same period in 2018 as we expanded our customer base and continued to implement our growth plan.  Through our national network of cannabis deals and information, we are able to reach millions of consumers monthly and are looking to continue to expand our presence in the marketplace.

 

Operating Expenses

 

 

 

Three Months Ended March 31,

 

 

 

 

 

 

 

 

 

2019

 

 

2018

 

 

Change

 

 

%

 

Selling expenses

 

$70,025

 

 

$53,966

 

 

$16,059

 

 

 

30%

General and administrative

 

 

1,947,795

 

 

 

1,060,829

 

 

 

886,966

 

 

 

84%

 

 

$2,017,820

 

 

$1,114,795

 

 

$903,025

 

 

 

81%

 

The increase in operating expenses during the three months ended March 31, 2019 compared to 2018 was driven by our growth and expansion, particularly on the personnel side as we added new staff.

 

 
20
 
Table of Contents

 

Comparison of results of operations for the nine months ended March 31, 2019 and 2018

 

 

 

Nine Months Ended March 31,

 

 

 

 

 

 

 

 

 

2019

 

 

2018

 

 

Change

 

 

%

 

Sales revenue

 

$1,296,550

 

 

$785,969

 

 

$510,581

 

 

 

65%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

5,757,201

 

 

 

2,083,962

 

 

 

3,673,239

 

 

 

176%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(356,265)

 

 

(12,948)

 

 

(343,317)

 

 

2,652%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$(4,816,916)

 

$(1,310,941)

 

$(3,505,975)

 

 

267%

 

Sales Revenue, Cost of Revenue and Gross Profit

 

Revenues increased for the nine months ended March 31, 2019 compared to the same period in 2018 as we expanded our customer base and continued to implement our growth plan.  Through our national network of cannabis deals and information, we are able to reach millions of consumers monthly and are looking to continue to expand our presence in the marketplace. 

 

Operating Expenses

 

 

 

Nine Months Ended March 31,

 

 

 

 

 

 

 

 

 

2019

 

 

2018

 

 

Change

 

 

%

 

Selling expenses

 

$200,300

 

 

$138,821

 

 

$61,479

 

 

 

44%

General and administrative

 

 

5,556,901

 

 

 

1,945,141

 

 

 

3,611,760

 

 

 

186%

 

 

$5,757,201

 

 

$2,083,962

 

 

$3,673,239

 

 

 

176%

 

The increase in operating expenses during the nine months ended March 31, 2019 compared to 2018 was driven by our growth and expansion, particularly on the personnel side as we added new staff.  In addition, we had approximately $261,000 of uncapitalizable software development during the period for software.

 

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 March 31, 2019 we had $563,383 in cash and cash equivalents. Our cash flows from operating, investing and financing activities were as follows:

 

Cash Flows

 

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

 

 

 

Nine Months Ended March 31,

 

 

 

2019

 

 

2018

 

Net cash used in operating activities

 

$(2,355,276)

 

$(881,690)

Net cash used in investing activities

 

$(449,241)

 

$-

 

Net cash provided by financing activities

 

$2,991,962

 

 

$912,603

 

 
 
21
 
Table of Contents

 

Working Capital

 

Working capital is the amount by which current assets exceed current liabilities.  We had negative working capital of $1,742,544 and $758,771, respectively, as of March 31, 2019 and June 30, 2018.  The decrease in working capital is due to the net loss for the period.

 

Inflation

 

Although our operations are influenced by general economic conditions, we do not believe that inflation had a material effect on our results of operations during the nine month period ended March 31, 2019.

 

Off-Balance Sheet Arrangements

 

We had no off-balance sheet arrangements as of March 31, 2019 and June 30, 2018.

 

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, 2018 form 10-K in the Critical Accounting Policies section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

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. A complete summary of these policies is included in Note 2 of the notes to our unaudited interim condensed consolidated financial statements. 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.

 
 
22
 
Table of Contents

 

Revenue Recognition

 

Topic ASC 606 is effective as of the annual reporting period beginning after December 15, 2017 using either of two methods: (1) retrospective application of Topic ASC 606 to each prior reporting period presented with the option to elect certain practical expedients as defined within Topic ASC 606 or (2) retrospective application of Topic ASC 606 with the cumulative effect of initially applying Topic ASC 606 recognized at the date of initial application and providing certain additional disclosures as defined per Topic ASC 606. We adopted Topic ASC 606 pursuant to the method (2) and we determined that any cumulative effect for the initial application did not require an adjustment to retained earnings at July 1, 2018.

 

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.

 

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 

 

Disclosure Controls

 

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) designed to provide reasonable assurance the information required to be reported in our Exchange Act filings is recorded, processed, summarized and reported within the time periods specified and pursuant to Securities and Exchange Commission (“SEC”) rules and forms, including controls and procedures designed to ensure that this information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

As of the end of the period covered by this report, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures. Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were not effective to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

 

Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining effective internal control over financial reporting. Under the supervision of our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2019 using the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 
 
23
 
Table of Contents

 

We maintain “disclosure controls and procedures”, as that term is defined in Rule 13a-15(e), promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

 

As required by paragraph (b) of Rules 13a-15 under the Securities Exchange Act of 1934, our management, with the participation of our principal executive officer and our principal financial officer, evaluated our company’s disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, our management concluded that as of the end of the period covered by this quarterly report on Form 10-Q, our disclosure controls and procedures were not effective.

 

Management Report on Internal Control Over Financial Reporting

 

Management is responsible for establishing and maintaining adequate internal control over the Company’s financial reporting. In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002. Our management, with the participation of our principal executive officer and principal financial officer have conducted an assessment, including testing, using the criteria in Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) (2013). Our system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. This assessment included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of March 31, 2019. The ineffectiveness of the Company’s internal control over financial reporting was due to the following material weaknesses, which are indicative of many small companies with small staff:

 

(i)

inadequate segregation of duties consistent with control objectives; and

 

(ii)

lack of multiple levels of supervision and review.

 

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. In our assessment of the effectiveness of internal control over financial reporting as of March 31, 2019, we determined that our disclosure controls and procedures are 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 provided in the SEC rules and forms.

 

We believe that the weaknesses identified above have not had any material effect on our financial results. We are currently reviewing our disclosure controls and procedures related to these material weaknesses and expect to implement changes in the current fiscal year, including identifying specific areas within our governance, accounting and financial reporting processes to add adequate resources to potentially mitigate these material weaknesses.

 

Our management will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

 

Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

 
 
24
 
Table of Contents

 

Management’s Remediation Plan

 

The weaknesses and their related risks are not uncommon in a company of our size because of the limitations in the size and number of staff. Due to our size and nature, segregation of all conflicting duties has not always been possible and may not be economically feasible.

 

However, we plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes in the current fiscal year as resources allow:

 

(i) appoint additional qualified personnel to address inadequate segregation of duties and implement modifications to our financial controls to address such inadequacies.

 

We will attempt to implement the remediation efforts set out herein by the end of the 2019 fiscal year. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.

 

Management believes that despite our material weaknesses set forth above, our financial statements for the three and nine-month periods ended March 31, 2019 are fairly stated, in all material respects, in accordance with U.S. GAAP.

 

Changes in Internal Control

 

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) during the nine months ended March 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. However, as a result of the Company’s recent change of control, we have added several additional employees in accounting which we hope will improve the Company’s internal control over financial reporting.

 

 
25
 
Table of Contents

  

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 and use of Proceeds

 

On September 24, 2018, the Company issued 123,324 shares of Common Stock in full satisfaction of two promissory notes in the amount of $28,000 and $84,000 in exchange for $25,000 and $75,000, respectively.

 

During the nine months ended March 31, 2019, the Company issued 267,847 shares of Common Stock to employees and consultants related to the exercise of stock options. The company received $66,962 for the issuance of these shares.

 

During the nine months ended March 31, 2019, the Company accepted subscriptions for the issuance of 1,116,738 shares of Common Stock for total subscriptions of $1,045,000 in cash.

 

During the nine months ended March 31, 2019, the Company issued 62,000 shares of Common Stock to vendors for services rendered. These shares were valued at fair market value of $40,560 and expensed in the accompanying Condensed Consolidated Statements of Operations.

 

The Company relied on the exemptions from registration under Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 promulgated thereunder. The subscription agreements with the investors contained representations to support the Company’s reasonable belief that the investors had access to information concerning the Company’s operations and financial condition, the investors acquired the securities for their own account and not with a view to the distribution thereof in the absence of an effective registration statement or an applicable exemption from registration, and that the investors are sophisticated within the meaning of Section 4(2) of the Securities Act and are “accredited investors” (as defined by Rule 501 under the Securities Act). In addition, the sale of securities did not involve a public offering; the Company made no solicitation in connection with the sale other than communications with the investors; the Company obtained representations from the investors regarding their investment intent, experience and sophistication; and the investors either received or had access to adequate information about the Company in order to make an informed investment decision.

 

Item 3. Defaults Upon Senior Securities 

 

None.

 

Item 4. Mine Safety Disclosures 

 

Not applicable.

 

Item 5. Other Information 

 

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 of the Company’s common shares at a price of $0.75 per share. The cash for this Convertible Note was received prior to September 2018.

 

On September 21, 2018, the Company entered several promissory notes with various investors of the Company with a face value of $880,000 in exchange for $800,000 cash payment (“the Notes”) with 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 principal and interest 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. In addition, the Company issued five-year warrants to purchase up to 400,000 of the Company’s common shares at a price of $0.75 per share. The cash for these Notes was received prior to September 2018.

 

During the three months ended March 31, 2019, the Company entered 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”). 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 Note and recorded as interest expense.  The notes and have an interest rate of 7% and have a eighteen-month term with no payment required for the initial six months; after six months, the Company will repay the investors interest and principle in twelve equal installments. The principle 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.  If the Company defaults on the Notes, the interest is increased to 15% and at the investors’ option, the principle and interest can be converted into the Company's common stock at a 20% discount to the then current market price.

 
 
26
 
Table of Contents

 

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

 

Interactive data files pursuant to Rule 405 of Regulation S-T

___________

* Filed herewith.

** Furnished herewith.

 

 
27
 
Table of Contents

 

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: May 15, 2019

By: 

/s/ Kurt Rossner

 

 

Kurt Rossner

 

 

Chief Executive Officer, Director (principal executive officer)

 

 

 

By: 

/s/ Mark Breen

 

 

Mark Breen

 

 

Chief Financial Officer and Director

 

  
 

28

 

EX-31.1 2 lbuy_ex311.htm CERTIFICATION lbuy_ex311.htm

EXHIBIT 31.1

 

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

 

I, Kurt Rossner, certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of Leafbuyer Technologies, Inc.

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the interim financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

 

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Interim Financial Statements for external purposes in accordance with generally accepted accounting principles;

 

c.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 15, 2019

 

By: 

/s/ Kurt Rossner

 

Kurt Rossner

 

Chief Executive Officer and Chairman

(Principal Executive Officer)

 

EX-31.2 3 lbuy_ex312.htm CERTIFICATION lbuy_ex312.htm

EXHIBIT 31.2 

 

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

 

I, Mark Breen, certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of Leafbuyer Technologies, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the interim financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

 

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Interim Financial Statements for external purposes in accordance with generally accepted accounting principles;

 

c.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 15, 2019

 

By: 

/s/ Mark Breen

 

Mark Breen

 

Chief Financial Officer and Director

(Principal Financial and Accounting Officer)

 

EX-32.1 4 lbuy_ex321.htm CERTIFICATION lbuy_ex321.htm

EXHIBIT 32.1

 

Certification of the Chief Executive Officer pursuant to

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

 

In connection with the quarterly report of Leafbuyer Technologies, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2019, as filed with the Securities and Exchange Commission (the “Report”), I, Kurt Rossner, certify pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

 

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: May 15, 2019

 

By: 

/s/ Kurt Rossner

 

Kurt Rossner

 

Chief Executive Officer and Chairman (Principal Executive Officer)

 

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and is not being “filed” as part of the Form 10-Q or as a separate disclosure document for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act except to the extent that this Exhibit 32.1 is expressly and specifically incorporated by reference in any such filing.

 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

EX-32.2 5 lbuy_ex322.htm CERTIFICATION lbuy_ex322.htm

EXHIBIT 32.2

 

Certification of the Chief Financial Officer pursuant to

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

 

In connection with the quarterly report of Leafbuyer Technologies, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2019, as filed with the Securities and Exchange Commission (the “Report”), I, Mark Breen, certify pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

 

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: May 15, 2019

 

By: 

/s/ Mark Breen

 

Mark Breen

 

Chief Financial Officer and Director

 

(Principal Financial and Accounting Officer)

 

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and is not being “filed” as part of the Form 10-Q or as a separate disclosure document for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act except to the extent that this Exhibit 32.2 is expressly and specifically incorporated by reference in any such filing.

 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-101.INS 6 lbuy-20190331.xml XBRL INSTANCE DOCUMENT 0001643721 2018-07-01 2019-03-31 0001643721 2019-05-09 0001643721 2019-03-31 0001643721 2017-09-30 0001643721 lbuy:LoansPayableThreeMember 2018-02-01 2018-02-28 0001643721 lbuy:LoansPayableFourMember 2018-02-01 2018-02-28 0001643721 lbuy:LoansPayableFiveMember 2018-02-01 2018-02-28 0001643721 us-gaap:PreferredStockMember 2017-09-30 0001643721 us-gaap:CommonStockMember 2017-09-30 0001643721 us-gaap:PreferredStockMember 2018-03-31 0001643721 us-gaap:CommonStockMember 2018-03-31 0001643721 lbuy:LoansPayableFiveMember 2018-07-01 2019-03-31 0001643721 lbuy:LoansPayableFiveMember 2019-03-31 0001643721 lbuy:LoansPayableTwoMember 2017-12-20 0001643721 lbuy:LoansPayableFiveMember 2018-02-28 0001643721 lbuy:LoansPayableOneMember 2017-09-28 0001643721 lbuy:LoansPayableFourMember 2018-02-28 0001643721 lbuy:LoansPayableThreeMember 2018-02-28 0001643721 us-gaap:PreferredClassAMember 2018-06-30 0001643721 us-gaap:PreferredClassBMember 2018-06-30 0001643721 us-gaap:RetainedEarningsMember 2017-09-30 0001643721 us-gaap:AdditionalPaidInCapitalMember 2017-09-30 0001643721 us-gaap:AdditionalPaidInCapitalMember 2018-03-31 0001643721 us-gaap:RetainedEarningsMember 2018-03-31 0001643721 us-gaap:SeriesAPreferredStockMember 2017-03-01 2017-03-23 0001643721 us-gaap:SeriesBPreferredStockMember 2017-03-01 2017-03-23 0001643721 2018-02-01 2018-02-28 0001643721 2017-12-31 0001643721 us-gaap:PreferredStockMember 2019-03-31 0001643721 us-gaap:CommonStockMember 2019-03-31 0001643721 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0001643721 us-gaap:RetainedEarningsMember 2019-03-31 0001643721 us-gaap:PreferredClassAMember 2019-03-31 0001643721 us-gaap:PreferredClassBMember 2019-03-31 0001643721 us-gaap:EmployeeStockOptionMember 2018-07-01 2019-03-31 0001643721 us-gaap:EmployeeStockOptionMember 2019-03-31 0001643721 us-gaap:EmployeeStockOptionMember srt:MinimumMember 2018-07-01 2019-03-31 0001643721 us-gaap:EmployeeStockOptionMember srt:MaximumMember 2018-07-01 2019-03-31 0001643721 us-gaap:EmployeeStockOptionMember lbuy:EquityIncentivePlanMember 2018-07-01 2019-03-31 0001643721 us-gaap:SeriesAPreferredStockMember 2017-03-01 2017-03-31 0001643721 us-gaap:SeriesBPreferredStockMember 2017-03-24 0001643721 us-gaap:SeriesAPreferredStockMember 2017-03-24 0001643721 2017-03-24 0001643721 2017-03-01 2017-03-23 0001643721 2017-03-01 2017-03-24 0001643721 lbuy:GardenStateSecuritiesIncGSSMember 2018-04-01 2018-04-19 0001643721 lbuy:GardenStateSecuritiesIncGSSMember 2018-04-19 0001643721 us-gaap:CommonStockMember lbuy:YorkvilleAdvisorsGlobalLLCMember 2018-04-19 0001643721 us-gaap:CommonStockMember lbuy:YorkvilleAdvisorsGlobalLLCMember 2018-04-01 2018-04-19 0001643721 us-gaap:CommonStockMember lbuy:YorkvilleAdvisorsGlobalLLCMember lbuy:InitialSharesMember 2018-04-01 2018-04-19 0001643721 2018-01-31 0001643721 2018-01-01 2018-01-31 0001643721 2018-06-30 0001643721 2017-07-01 2018-03-31 0001643721 2017-06-30 0001643721 lbuy:StandbyEquityDistributionAgreementMember 2018-10-01 2018-10-09 0001643721 lbuy:StandbyEquityDistributionAgreementMember 2018-10-09 0001643721 lbuy:StandbyEquityDistributionAgreementMember 2018-10-22 0001643721 lbuy:StandbyEquityDistributionAgreementMember 2018-10-01 2018-10-22 0001643721 2017-07-01 2018-06-30 0001643721 us-gaap:CommonStockMember 2017-07-01 2018-06-30 0001643721 us-gaap:SeriesBPreferredStockMember us-gaap:PreferredStockMember 2017-07-01 2018-06-30 0001643721 lbuy:PromissoryNoteMember 2018-09-21 0001643721 lbuy:PromissoryNoteMember 2018-09-01 2018-09-21 0001643721 lbuy:SeveralPromissoryNotesMember 2018-09-21 0001643721 lbuy:SeveralPromissoryNotesMember 2018-09-01 2018-09-21 0001643721 us-gaap:EmployeeStockOptionMember 2018-06-30 0001643721 lbuy:PromissoryNoteMember us-gaap:WarrantMember 2018-09-01 2018-09-21 0001643721 lbuy:PromissoryNoteMember us-gaap:WarrantMember 2018-09-21 0001643721 lbuy:SeveralPromissoryNotesMember us-gaap:WarrantMember 2018-09-21 0001643721 lbuy:SeveralPromissoryNotesMember us-gaap:WarrantMember 2018-09-01 2018-09-21 0001643721 lbuy:LoansPayableFourMember 2018-09-24 0001643721 us-gaap:EmployeeStockOptionMember lbuy:EquityIncentivePlanMember srt:MaximumMember 2018-07-01 2019-03-31 0001643721 us-gaap:SoftwareDevelopmentMember 2018-07-01 2019-03-31 0001643721 2019-01-01 2019-03-31 0001643721 2018-01-01 2018-03-31 0001643721 lbuy:LoyaltySoftwareMember 2018-11-06 0001643721 lbuy:LoyaltySoftwareMember 2018-11-01 2018-11-06 0001643721 lbuy:LoyaltySoftwareMember 2018-07-01 2019-03-31 0001643721 lbuy:LoyaltySoftwareMember 2019-03-31 0001643721 2018-03-31 0001643721 us-gaap:PreferredStockMember 2017-07-01 2017-09-30 0001643721 us-gaap:PreferredStockMember 2017-10-01 2017-12-31 0001643721 us-gaap:PreferredStockMember 2018-01-01 2018-03-31 0001643721 us-gaap:PreferredStockMember 2018-07-01 2018-09-30 0001643721 us-gaap:PreferredStockMember 2018-10-01 2018-12-31 0001643721 us-gaap:PreferredStockMember 2019-01-01 2019-03-31 0001643721 us-gaap:PreferredStockMember 2017-06-30 0001643721 us-gaap:PreferredStockMember 2017-12-31 0001643721 us-gaap:PreferredStockMember 2018-06-30 0001643721 us-gaap:PreferredStockMember 2018-09-30 0001643721 us-gaap:PreferredStockMember 2018-12-31 0001643721 us-gaap:CommonStockMember 2017-07-01 2017-09-30 0001643721 us-gaap:CommonStockMember 2017-10-01 2017-12-31 0001643721 us-gaap:CommonStockMember 2018-01-01 2018-03-31 0001643721 us-gaap:CommonStockMember 2018-07-01 2018-09-30 0001643721 us-gaap:CommonStockMember 2018-10-01 2018-12-31 0001643721 us-gaap:CommonStockMember 2019-01-01 2019-03-31 0001643721 us-gaap:CommonStockMember 2017-06-30 0001643721 us-gaap:CommonStockMember 2017-12-31 0001643721 us-gaap:CommonStockMember 2018-06-30 0001643721 us-gaap:CommonStockMember 2018-09-30 0001643721 us-gaap:CommonStockMember 2018-12-31 0001643721 us-gaap:AdditionalPaidInCapitalMember 2017-07-01 2017-09-30 0001643721 us-gaap:AdditionalPaidInCapitalMember 2017-10-01 2017-12-31 0001643721 us-gaap:AdditionalPaidInCapitalMember 2018-01-01 2018-03-31 0001643721 us-gaap:AdditionalPaidInCapitalMember 2018-07-01 2018-09-30 0001643721 us-gaap:AdditionalPaidInCapitalMember 2018-10-01 2018-12-31 0001643721 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0001643721 us-gaap:AdditionalPaidInCapitalMember 2017-06-30 0001643721 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 0001643721 us-gaap:AdditionalPaidInCapitalMember 2018-06-30 0001643721 us-gaap:AdditionalPaidInCapitalMember 2018-09-30 0001643721 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001643721 us-gaap:RetainedEarningsMember 2017-07-01 2017-09-30 0001643721 us-gaap:RetainedEarningsMember 2017-10-01 2017-12-31 0001643721 us-gaap:RetainedEarningsMember 2018-01-01 2018-03-31 0001643721 us-gaap:RetainedEarningsMember 2018-07-01 2018-09-30 0001643721 us-gaap:RetainedEarningsMember 2018-10-01 2018-12-31 0001643721 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0001643721 us-gaap:RetainedEarningsMember 2017-06-30 0001643721 us-gaap:RetainedEarningsMember 2017-12-31 0001643721 us-gaap:RetainedEarningsMember 2018-06-30 0001643721 us-gaap:RetainedEarningsMember 2018-09-30 0001643721 us-gaap:RetainedEarningsMember 2018-12-31 0001643721 2017-07-01 2017-09-30 0001643721 2017-10-01 2017-12-31 0001643721 2018-07-01 2018-09-30 0001643721 2018-10-01 2018-12-31 0001643721 2018-09-30 0001643721 2018-12-31 0001643721 us-gaap:SeriesBPreferredStockMember 2019-03-31 0001643721 us-gaap:SeriesAPreferredStockMember 2019-03-31 0001643721 us-gaap:SeriesAPreferredStockMember 2017-03-23 0001643721 lbuy:LoyaltySoftwareMember 2018-03-31 0001643721 lbuy:LoansPayableFiveMember us-gaap:SubsequentEventMember 2019-03-31 0001643721 lbuy:SeveralPromissoryNotesMember lbuy:OneInvestorMember 2019-03-31 0001643721 lbuy:SeveralPromissoryNotesMember lbuy:OneInvestorMember 2019-01-01 2019-03-31 0001643721 lbuy:SeveralPromissoryNotesMember lbuy:OtherInvestorsMember 2019-03-31 0001643721 lbuy:SeveralPromissoryNotesMember lbuy:InvestorsMember 2019-03-31 0001643721 lbuy:SeveralPromissoryNotesMember lbuy:InvestorsMember 2019-01-01 2019-03-31 0001643721 us-gaap:SubsequentEventMember 2019-03-31 xbrli:shares iso4217:USD iso4217:USD xbrli:shares xbrli:pure lbuy:Integer false --06-30 2019-03-31 Yes Non-accelerated Filer LEAFBUYER TECHNOLOGIES, INC. 0001643721 47749427 2019 10-Q 150000000 150000000 0.001 0.001 0.001 0.001 1.46 1.00 0.001 47147804 38000663 42661228 47747804 0.001 0.001 0.001 0.001 10000000 10000000 1111962 1000000 122000 400000 300000 267847 267847 54000 62000 137000 2880000 6750000 70000 6750000 70000 6750000 70000 6750000 70000 250000 3000000 Q3 47147804 42661228 274292 300000 123324 true true 1020000 40560 280850 280850 3988697 561186 495 873 772952 560313 147721 172566 3530 3530 58318 8279 2625641 1319084 2515496 1319084 1640197 805684 221715 156530 459086 66087 194498 290783 3988697 561186 1363056 -757898 -8755126 -3938210 10064214 3130831 47148 42661 6820 6820 3215250 3215745 873 1296550 785969 489320 287224 1296550 785969 489320 287224 -4460651 -1297993 -1528500 -827571 5757201 2083962 2017820 1114795 5556901 1945141 1947795 1060829 200300 138821 70025 53966 -4816916 -1310941 -1710143 -840490 -229814 -240636 -840490 -1428903 -1677870 -1710143 -229814 -240636 -1428903 -1677870 -356265 -12948 -181643 -12919 356265 12948 181643 12919 -0.10 -0.03 -0.04 -0.02 48337990 39197367 45418004 40418163 234369 214 281130 1768876 239133 -2355276 -881690 -258184 -109791 96285 -24845 187547 50039 9538 2991962 912603 2100000 790603 -220000 563383 375938 164680 195593 187445 30913 2800000 -449241 <p style="margin: 0pt"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Formation of the Company</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On March 23, 2017, AP Event Inc. (&#8220;AP&#8221; or the &#8220;Registrant&#8221;) consummated an Agreement and Plan of Merger (the &#8220;Merger Agreement&#8221;) with LB Media Group, LLC, a Colorado limited liability Company (&#8220;LB Media&#8221;), August Petrov (the principal stockholder of AP), and LB Acquisition Corp., a Colorado corporation and a wholly-owned subsidiary of AP (&#8220;Acquisition&#8221;) whereby Acquisition was merged with and into LB Media (the &#8220;Merger&#8221;). (See Note 3).</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As a result of the Merger, LB Media became a wholly-owned subsidiary of the Registrant, and immediately following the consummation of the Merger and giving effect to the securities sold in the Offering, the members of LB Media beneficially owned approximately fifty-five percent (55%) of the issued and outstanding Common Stock of the Registrant. The Merger Agreement contains customary representations, warranties, and covenants of the Registrant and LB Media for like transactions.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As a result of the reorganization and name change discussed later, Leafbuyer Technologies, Inc. (&#8220;Leafbuyer&#8221;) became the publicly quoted parent holding company with LB Media becoming a wholly-owned subsidiary of Leafbuyer. Upon consummation of the Agreement, Leafbuyer common stock was deemed to be registered under Section 12(b) of the Securities Exchange Act of 1934, as amended, pursuant to Rule 12g-3(a) promulgated thereunder. For purposes of Rule 12g-3(a), Leafbuyer is the successor issuer to AP.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">AP was established under the corporation laws in the State of Nevada on October 16, 2014. On March 24, 2017, the Registrant changed its name to Leafbuyer Technologies, Inc.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">All references herein to &#8220;us,&#8221; &#8220;we,&#8221; &#8220;our,&#8221; &#8220;Leafbuyer,&#8221; or the &#8220;Company&#8221; refer to Leafbuyer Technologies, Inc. and its subsidiary, LB Media.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Description of Business</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">We are focused on providing valuable information for the savvy cannabis consumer looking to make a purchase via deals and a dispensary database. We connect consumers with dispensaries by working alongside businesses to showcase their unique products and build a network of loyal patrons. Our national network of cannabis deals and information reaches millions of consumers monthly.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">LB Media 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.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Basis of Presentation</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The accompanying condensed consolidated balance sheet as of March 31, 2019, 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 (&#8220;GAAP&#8221;) for interim financial information and the rules and regulations of the Securities and Exchange Commission (&#8220;SEC&#8221;) 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 information included in this report should be read in conjunction with our audited financial statements and notes thereto.&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160; &#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Going Concern</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As shown in the accompanying condensed consolidated financial statements, we had equity of approximately $1,363,056 and a working capital deficit of $1,742,544 as of March 31, 2019. We reported a net loss of $4,816,916 for the nine months ended March 31, 2019, and we anticipate further losses in the development of our business. Accordingly, there is substantial doubt about our ability to continue as a going concern.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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 and generate additional revenues 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.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Reclassifications</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Certain prior period amounts have been reclassified to conform with the current period presentation.</font></p> <p style="margin: 0pt"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Principles of Consolidation</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Use of Estimates</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Fair Value Measurements</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The Company adopted the provisions of FASB Accounting Standards Codification (&#8220;ASC&#8221;) Topic 820, &#8220;Fair Value Measurements and Disclosures&#8221;, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The estimated fair value of certain financial instruments, including cash and cash equivalents are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160; &#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Level 1 &#8212; quoted prices in active markets for identical assets or liabilities</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Level 2 &#8212; quoted prices for similar assets and liabilities in active markets or inputs that are observable</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Level 3 &#8212; inputs that are unobservable (for example cash flow modeling inputs based on assumptions)</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The Company has no assets or liabilities valued at fair value on a recurring basis.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Revenue Recognition</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Topic ASC 606 is effective as of the annual reporting period beginning after December 15, 2017 using either of two methods: (1) retrospective application of Topic ASC 606 to each prior reporting period presented with the option to elect certain practical expedients as defined within Topic ASC 606 or (2) retrospective application of Topic ASC 606 with the cumulative effect of initially applying Topic ASC 606 recognized at the date of initial application and providing certain additional disclosures as defined per Topic ASC 606. We adopted Topic ASC 606 pursuant to the method (2) and we determined that any cumulative effect for the initial application did not require an adjustment to retained earnings at July 1, 2018.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">We recognize revenue upon completion of our performance obligations or expiration of the contractual time to use services such as bulk texting.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Cash and Cash Equivalents</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For purposes of the condensed consolidated statements of cash flows, cash and cash equivalents includes demand deposits, time deposits, certificates of deposit and short-term liquid investments with original maturities of three months or less when purchased. As of March 31, 2019 and June 30, 2018, the Company did not hold any cash equivalents. The Federal Deposit Insurance Corporation provides coverage for all accounts of up to $250,000.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Accounts Receivable, Net</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Accounts receivable are stated at the amount management expects to collect. An allowance for doubtful accounts is recorded, as a charge to bad debt expense, where collection is considered to be doubtful due to credit issues. These allowances together reflect the Company&#8217;s estimate of potential losses inherent in accounts receivable balances, based on historical loss and known factors impacting its customers. Management has determined that an allowance is required at March 31, 2019 and June 30, 2018 of $53,815 and $6,617, respectively. The Company does not accrue interest on past due receivables.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160; &#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Inventory </i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Inventory consists of merchandise and is stated at the lower of cost, determined by last-in, first-out method or market. Market is determined based on the net realizable value, with appropriate consideration given to obsolescence, excessive levels, deterioration and other factors. At March 31, 2019 and June 30, 2018, the Company had $3,530 and $3,530 of inventory, respectively. A write-off is recorded for any inventory deemed excessive or obsolete. No write off was necessary at March 31, 2019 and at June 30, 2018.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Internal Use Software</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Software development costs associated with internal use software are incurred in three stages of development: the preliminary project stage, the application development stage, and the post-implementation stage. Costs incurred during the preliminary project and post-implementation stages are expensed as incurred. Certain internal and external qualifying costs incurred during the application development stage are capitalized as property and equipment. Internal use software is amortized on a straight-line basis over its estimated useful life of seven years, beginning when the software is ready for its intended use.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During the nine months ended March 31, 2019, the Company capitalized approximately $3.4 million of software acquisition costs. Amortization expense related to internal use software totaled $233,991 during the nine months ended March 31, 2019.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Identified Intangible Assets</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The Company reviews identified intangible assets and long-lived assets to be held-and-used for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. If the sum of the undiscounted expected future cash flows over the remaining useful life of a long-lived asset is less than its carrying amount, the asset is considered to be impaired. Impairment losses are measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset. When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risks associated with the recovery of the asset. As of March 31, 2019 and June 30, 2018, there were no impairments of intangible assets.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Stock-Based Compensation</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The Company accounts for stock-based awards to employees in accordance with applicable accounting principles, which requires compensation expense related to share-based transactions, including employee stock options, to be measured and recognized in the financial statements based on a determination of the fair value of the stock options. The grant date fair value is determined using the Black-Scholes-Merton (&#8220;Black-Scholes&#8221;) pricing model. For all employee stock options, we recognize expense over the requisite service period on an accelerated basis over the employee&#8217;s requisite service period (generally the vesting period of the equity grant). The Company&#8217;s option pricing model requires the input of highly subjective assumptions, including the expected stock price volatility and expected term. Any changes in these highly subjective assumptions significantly impact stock-based compensation expense.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Options awarded to purchase shares of common stock issued to non-employees in exchange for services are accounted for as variable awards in accordance with applicable accounting principles. Such options are valued using the Black-Scholes option pricing model.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">See Note 9 for the assumptions used to calculate the fair value of stock-based employee and non-employee compensation.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The Company&#8217;s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of ASC 505-50 Equity-Based <i>Payments to Non-Employees</i>. Stock-based compensation related to non-employees is accounted for based on the fair value of the related stock or options or the fair value of the services, whichever is more readily determinable. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor&#8217;s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160; &#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Income Taxes</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, &#8220;Income Taxes.&#8221; Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity&#8217;s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. As of March 31, 2019, the Company had approximately $7,652,000 of net operating loss carry forward that was unrecognized tax benefits.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Under Internal Revenue Code 382, if a corporation undergoes an &#8220;ownership change,&#8221; the corporation&#8217;s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. We have not completed a study to assess whether an &#8220;ownership change&#8221; has occurred or whether there have been multiple ownership changes since we became a &#8220;loss corporation&#8221; as defined in Section 382. Future changes in our stock ownership, which may be outside of our control, may trigger an &#8220;ownership change&#8221;. In addition, future equity offerings or acquisitions that have equity as a component of the purchase price could result in an &#8220;ownership change.&#8221; If an &#8220;ownership change&#8221; has occurred or does occur in the future, utilization of the NOL carryforwards or other tax attributes may be limited, which could potentially result in increased future tax liability to us.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise&#8217;s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. There are no material uncertain tax positions at March 31, 2019.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On December 22, 2017, the U.S. government enacted the Tax Act, which made significant changes to the Internal Revenue Code of 1986, as amended, including, but not limited to, reducing the U.S. corporate statutory tax rate and the net operating loss incurred after December 31, 2017 can be carried forward indefinitely and the two-year net operating loss carried back was eliminated. We continue to evaluate the impact of the Tax Act.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>New Accounting Pronouncements</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes the existing guidance for lease accounting, Leases (Topic 840). ASU 2016-02 requires lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early application is permitted for all entities. ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after, the date of initial application, with an option to elect to use certain transition relief. In July 2018, the FASB issued ASU No. 2018-10, &#8220;Codification Improvements to Topic 842, Leases.&#8221; The amendments in ASU 2018-10 clarify, correct or remove inconsistencies in the guidance provided under ASU 2016-02 related to sixteen specific issues identified. Also in July 2018, the FASB issued ASU No. 2018-11 &#8220;Leases (Topic 842): Targeted Improvement&#8221; which now allows entities the option of recognizing the cumulative effect of applying the new standard as an adjustment to the opening balance of retained earnings in the year of adoption while continuing to present all prior periods under previous lease accounting guidance. The effective date and transition requirements for these two ASUs are the same as the effective date and transition requirements as ASU 2016-02. The standard will be effective for the Company for the quarter ended September 30, 2019.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160; &#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The standard will be effective for the Company in the first quarter of 2020. The adoption of this standard does not have a material impact on the condensed consolidated financial statements.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In June 2018, the FASB issued ASU 2018-07, which simplifies the accounting for non-employee share-based payment transactions.&#160; The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor's own operations by issuing share-based payment awards.&#160; The standard will be effective in the first quarter of fiscal year 2019, although early adoption is permitted.&#160;The adoption of this standard does not have a material impact on the condensed consolidated financial statements.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p> <p style="margin: 0pt"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The Company has 150,000,000 shares of common stock authorized with a par value of $0.001 per share as of March 31, 2019. In addition, the Company has 10,000,000 preferred stock authorized with a par value of $0.001 per share as of March 31, 2019.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On April 19, 2018, the Company entered into a Standby Equity Distribution Agreement (the &#8220;SEDA&#8221;) with YA II PN Ltd. (&#8220;Investor&#8221;), a Cayman Island exempt limited partnership and an affiliate of Yorkville Advisors Global, LLC, whereby the Company sold and the Investor purchased 869,565 shares (the &#8220;Initial Shares&#8221;) of the Company&#8217;s common stock, par value $0.001 per share (the &#8220;Common Stock&#8221;) for the purchase price of One Million Dollars ($1,000,000), Additionally, under the SEDA the Company may sell to the Investor up to $5 million of shares of Common Stock over a two-year commitment period. Under the terms of the SEDA, the Company may from time to time, in its discretion, sell newly-issued shares of its common stock to the Investor at a discount to market of 8% of the lowest daily volume weighted average price during the relevant pricing period. The Company is obligated to register the Initial Shares, the Commitment Shares (as defined below), and the shares of Common Stock issuable under the SEDA pursuant to a registration statement under the Securities Act of 1933, as amended (the &#8220;Securities Act&#8221;).</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The Company is not obligated to utilize any portion of the SEDA and there are no minimum commitments or minimum use penalties provided the Company does not terminate the SEDA within 18 months wherein the Company would be required to pay a termination fee of $100,000. The Company issued One Hundred Thousand (100,000) shares of Common Stock as a commitment fee (the &#8220;Commitment Shares&#8221;) to an affiliate of the Investor. The total amount of funds that ultimately can be raised under the SEDA over the two-year term will depend on the market price for the Company&#8217;s common stock and the number of shares actually sold.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The SEDA does not impose any restrictions on the Company&#8217;s operating activities. During the term of the SEDA, the Investor is prohibited from engaging in any short selling or hedging transactions related to the Common Stock.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In connection with the SEDA, the Company engaged Garden State Securities, Inc. (&#8220;GSS&#8221;) as its exclusive selling/placement agent. In connection with the transactions set forth in the SEDA, GSS shall receive a fee equal to 10% of the purchase price of the Initial Shares in cash plus warrants to purchase 86,957 shares of Common Stock at an exercise price of $1.15 per share, expiring in five years. GSS will also receive a cash fee equal to 5% of the amount paid by the Investor for each Advance under the SEDA.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On October 9, 2018, the Company used the SEDA to receive $400,000. The Company issued 274,292 common shares for a per share price of the issuance of approximately $1.46 per common share.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On October 22, 2018, the Company used the SEDA to receive $300,000. The Company issued 300,000 common shares for a per share price of the issuance of approximately $1.00 per common share.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;&#160;&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Merger Agreement</i></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">All shares issued in accordance with the Merger Agreement are considered to be outstanding beginning January 1, 2015 as these shares relate to the change in capital structure. Furthermore, 5,000,000 pre-split shares of common stock were retired in accordance with the Merger Agreement. In connection with the Merger Agreement, the Company made distributions totaling $600,000 to officers of the Company. Both Series A Convertible Preferred Stock and Series B Convertible Preferred Stock have rights to dividends when declared; however, there is no stated dividend rate and no such dividends have yet been declared by the Company. We evaluated the convertible preferred stock agreements for derivatives and determined that they do not qualify for derivative treatment for financial reporting purposes. We also determined this does not qualify as a beneficial conversion feature. Accordingly, the balances have been reported at the carrying amounts.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On March 24, 2017, the Company effected a forward split such that 9.25 shares of Common Stock were issued for every 1 share of Common Stock issued and outstanding immediately prior to the forward split. Immediately following the forward split, there were 38,000,663 shares of post-split common stock, 3,000,000 shares of post-split Series A Convertible Preferred Stock, and 250,000 shares of post-split Series B Convertible Preferred Stock outstanding. The par value of all classes of shares remained at $0.001 per share after the forward split. In March of 2017, an additional 3,750,000 shares of post-split Series A Convertible Preferred Stock were purchased from the Company. All references to shares herein refer to post-split shares, unless otherwise noted.&#160;&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Issuance of Common Stock</i>&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During the year ended June 30, 2018, the Company accepted subscriptions for the issuance of 1,589,565 shares of Common Stock for total subscriptions of $1,020,000 in cash.&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During the year ended June 30, 2018, the Company issued 54,000 shares of Common Stock for the exercise of options and $13,500 cash. The Company also received notice from a Preferred Stock Series B stockholder to convert 180,000 shares of preferred stock into 2,880,000 shares of Common Stock.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During the year ended June 30, 2018, the Company issued 137,000 shares of Common Stock to vendors for services rendered. These shares were valued at fair market value of $280,850 and expensed in the accompanying Condensed Consolidated Statements of Operations.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During February 2018, the Company entered into two promissory notes with an investor of the Company in the amount of $28,000 and $84,000 in exchange for $25,000 and $75,000, respectively. Each of the notes have an original issue discount of $3,000 and $9,000, respectively that is being amortized to interest expense over the term of the notes. The principle and interest were converted into common stock during the quarter. The Company issued 123,324 shares of Common Stock in full satisfaction of the note on September 24, 2018.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During the nine months ended March 31, 2019, the Company issued 267,847 shares of Common Stock to employees and consultants related to the exercise of stock options. The Company received $66,962 for the issuance of these shares.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During the nine months ended March 31, 2019, the Company accepted subscriptions for the issuance of 1,116,738 shares of Common Stock for total subscriptions of $1,045,000 in cash.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During the nine months ended March 31, 2019, the Company issued 62,000 shares of Common Stock to vendors for services rendered. These shares were valued at fair market value of $40,560 and expensed in the accompanying Condensed Consolidated Statements of Operations.</font></p> <p style="margin: 0pt"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The Company follows beneficial conversion feature guidance in ASC 470-20, which applies to convertible stock as well as convertible debt. A beneficial conversion feature is defined as a nondetachable conversion feature that is in the money at the commitment date. The beneficial conversion feature guidance requires recognition of the conversion option&#8217;s in-the-money portion, the intrinsic value of the option, in equity, with an offsetting reduction to the carrying amount of the instrument. The resulting discount is amortized as interest over the life of the instrument, if a stated maturity date exists, or to the earliest conversion date, if there is no stated maturity date. If the earliest conversion date is immediately upon issuance, the expense must be recognized at inception. When there is a subsequent change to the conversion ratio based on a future occurrence, the new conversion price may trigger the recognition of an additional beneficial conversion feature on occurrence.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On September 28, 2017, the Company entered into a promissory note with an investor of the Company in the amount of $200,000. The note bears no interest and was payable in full on September 30, 2018. In addition, on December 20, 2017, the Company entered into a promissory note with the same investor of the Company in the amount of $150,000. During January 2018, the Company entered into a note with an investor of the Company in the amount of $224,000 in exchange for $200,000. As of December 31, 2018, the discount was fully amortized. The notes bear interest at 12% and were payable in full in July 2018. As of March 31, 2019, the amounts were fully repaid to the investor.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During February 2018, the Company entered into two promissory notes with an investor of the Company in the amount of $28,000 and $84,000 in exchange for $25,000 and $75,000, respectively. Each of the notes have an original issue discount of $3,000 and $9,000, respectively that was amortized to interest expense over the term of the notes. The principle and interest were converted into common stock during the quarter. The Company issued 123,324 shares of Common Stock in full satisfaction of the notes.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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. As of March 31, 2019, the loan maturity date was extended to August 8, 2019, the discount is fully amortized and total unpaid principal and interest is approximately $170,564, accruing at 12%. &#160;Subsequent to March 31, 2019, the investor agreed to accept 245,207 shares of common stock for accrued interest and principal.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font>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 (&#8220;the Convertible Note&#8221;), 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 principle in six equal installments. The principle and interest of the note is convertible into the Company&#8217;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&#8217; option, the principle 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&#8217;s&#160;common stock&#160;at a price of $0.75 per share. The cash for this Convertible Note was received prior to September 30, 2018.&#160; As of April 15, 2019, the investor has agreed to extend the Convertible Note for six months to September 2019.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font>On September 21, 2018, the Company entered several promissory notes with various investors of the Company with a face value of $880,000 in exchange for $800,000 cash payment (&#8220;the Notes&#8221;), 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 principle in six equal installments. The principle and interest of the note is convertible into the Company&#8217;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&#8217; option, the principle and interest can be converted into the Company's&#160;common stock at a 20% discount to the then current market price. In addition, the Company&#160; issued five-year warrants to purchase up to 400,000 of the Company&#8217;s common shares at a price of $0.75 per share. The cash for these Notes was received prior to September 30, 2018.&#160; One investor has agreed to extend the Convertible Note of $220,000 to September 2019, while the other investors have agreed to convert notes with a face value of $660,000 and accrued interest into 987,641 share of the Company&#8217;s common stock.&#160;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font>During the three month&#8217;s ended March 31, 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 (&#8220;the Notes&#8221;).&#160;The notes have a beneficial conversion feature valued at $839,378, which is recorded as a discount.&#160; The total discount on the Notes will be amortized over the life of the Notes and recorded as interest expense.&#160; The notes and 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 principle in twelve equal installments. The principle and interest of the note is convertible into the Company&#8217;s common stock at a purchase price of $0.75 per common share at any time after the Original Issue Date. &#160;If the Company defaults on the Notes, the interest is increased to 15% and at the investors&#8217; option, the principle and interest can be converted into the Company common stock at a 20% discount to the then current market price. Subsequent to March 31, 2019, the Company entered into an additional note with a face value of $233,334 under similar terms as above.</p> <p style="margin: 0pt"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The Company leases office space. Future minimum lease payments are as follows:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">June 30, 2019, remaining</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td id="ffcell" style="vertical-align: bottom; width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">30,432</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">June 30, 2020</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">171,727</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">June 30, 2021</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">125,419</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">June 30, 2022</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">70,842</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The Company does not have a concentration of revenues from any individual customer (less than 10%).</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">To the best of the Company&#8217;s knowledge and belief, no legal proceedings of merit are currently pending or threatened against the Company.</font></p> <p style="margin: 0pt"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Basic earnings or loss per share is computed by dividing net income 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. We have prepared the calculation of earnings or loss per share using the weighted-average number of common shares of the Company that were outstanding during the three and nine months ended March 31, 2019 and 2018.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Dilutive instruments had no effect on the calculation of earnings or loss per share during the three and nine months ended March 31, 2019 and 2018.</font></p> <p style="margin: 0pt"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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 10,000,000. The options are exercisable for a period of up to 10 years from the date of the grant.&#160; The number of options to purchase common shares was increased from 5,000,000 to 10,000,000 through a consent of stockholders to amend and restate the equity incentive plan.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The following table reflects the continuity of stock options for the nine months ended March 31, 2019:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160; &#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">A summary of stock option activity is as follows:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="vertical-align: bottom"> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" id="hdcell" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>March 31,</b><br /> <b>2019</b></font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" id="ffcell" style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Number of options outstanding:</b></font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Beginning of year</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,145,735</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Granted</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,698,239</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Exercised, converted</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(267,847</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Forfeited / exchanged / modification</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(138,535</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">End of period</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,437,592</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Number of options exercisable at end of period</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">763,453</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Number of options available for grant at end of period</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,562,408</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: white"> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Weighted average option prices per share:</b></font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Granted during the period</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.66</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Exercised during the period</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.25</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Terminated during the period</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.19</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Outstanding at end of period</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.25</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Exercisable at end of period</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.25</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 5.45pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The average fair value of stock options granted was estimated to be $0.61 per share for the period ended March 31, 2019. This estimate was made using the Black-Scholes option pricing model and the following weighted average assumptions:&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="vertical-align: bottom"> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Expected option life (years)</font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3 - 5</font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Expected stock price volatility</font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">147%-170</font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; width: 90%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Expected dividend yield</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; width: 7%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">&#8212;</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Risk-free interest rate</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2.35-3.01</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr> <tr> <td><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Stock-based compensation expense attributable to stock options was approximately $1,768,876 for the nine-month period ended March 31, 2019. As of March 31, 2019, there was approximately $4,050,975 of unrecognized compensation expense related to unvested stock options outstanding, and the weighted average vesting period for those options was 3 years.</font></p> <p style="margin: 0pt"></p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">June 30, 2019, remaining</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td id="ffcell" style="vertical-align: bottom; width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">30,432</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">June 30, 2020</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">171,727</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">June 30, 2021</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">125,419</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">June 30, 2022</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">70,842</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> </table> <p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" id="hdcell" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Expected option life (years)</font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3 - 5</font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Expected stock price volatility</font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">147%-170</font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Expected dividend yield</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td id="ffcell" style="vertical-align: bottom; width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">&#8212;</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Risk-free interest rate</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2.35-3.01</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr> </table> <p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Intangible assets consist of the following:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="vertical-align: bottom"> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" id="hdcell" style="border-bottom-style: solid; border-bottom-width: 1pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>March 31,</b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></p></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>March 31,</b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2018</b></font></p></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" id="ffcell" style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Loyalty software</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,449,241</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Less accumulated amortization</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(233,991</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Intangible assets, net</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,215,250</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160; &#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On November 6, 2018, the Company acquired an identified intangible asset (&#8220;Loyalty Software&#8221;) through a Stock Purchase Agreement, where the Company acquired all the issued and outstanding capital stock of Greenlight Technologies, Inc. (&#8220;GTI&#8221;) from its shareholders.&#160;&#160;At the time of the transaction, there were no employees working for GTI, no systems and no assets, other than the Loyalty Software.&#160;&#160;GTI&#8217;s legal entity will be dissolved in the transition and the Loyalty Software will be assumed by the Company.&#160;&#160;Management determined that the purchase of GTI did not constitute a business purchase and recorded the transaction as a purchase of software.&#160;&#160;The consideration for the Loyalty Software was 2,666,667 shares of common stock, par value $0.001 per share and cash of approximately $450,000.&#160;&#160;Total value of the Loyalty Software was estimated at approximately $3,010,000.&#160;&#160;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.&#160;&#160;The additional Incentive Shares is approximately $1,152,000. During the period ended March 31, 2019 the Company capitalized approximately $360,100 of software&#160;enhancements.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">GTI provides cannabis consumers real-time mobile ordering and loyalty rewards through an internally developed application that integrates with the local dispensary&#8217;s point of sale system. The Company plans to fully integrate this technology into the current platform and create an &#8220;Ultimate Bundle&#8221; 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.</font></p> <p style="margin: 0pt"></p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" id="hdcell" style="border-bottom-style: solid; border-bottom-width: 1pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>March 31,</b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></p></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>March 31,</b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2018</b></font></p></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" id="ffcell" style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Loyalty software</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,449,241</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Less accumulated amortization</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(233,991</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Intangible assets, net</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,215,250</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> </table> <p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The Company has evaluated subsequent events through May 14, 2019 and has not identified any items requiring additional disclosure.&#160;</font></p> <p style="margin: 0pt"></p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" id="hdcell" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>March 31,</b><br /> <b>2019</b></font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" id="ffcell" style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Number of options outstanding:</b></font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Beginning of year</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,145,735</font></td> <td style="vertical-align: bottom; width: 1%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Granted</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,698,239</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Exercised, converted</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(267,847</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Forfeited / exchanged / modification</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(138,535</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">End of period</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,437,592</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Number of options exercisable at end of period</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">763,453</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Number of options available for grant at end of period</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; border-bottom-style: double; border-bottom-width: 2.25pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,562,408</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: white"> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Weighted average option prices per share:</b></font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Granted during the period</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.66</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Exercised during the period</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.25</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Terminated during the period</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.19</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Outstanding at end of period</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.25</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Exercisable at end of period</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.25</font></td> <td style="vertical-align: bottom; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></td></tr> </table> <p style="margin: 0pt"></p> 110145 53815 6617 377094 -3652 449241 <p style="margin: 0pt"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On March 23, 2017, we completed the Merger Agreement with AP. The impact to equity of the Merger Agreement includes a) the issuance of 2,351,355 new pre-split shares of the Company&#8217;s common stock; b) the issuance of 324,327 new pre-split shares of the Company&#8217;s Series A Convertible Preferred Stock; c) the retirement of 5,000,000 shares of the Company&#8217;s pre-split common stock; and d) removing the Company&#8217;s accumulated deficit and adjusting equity for the recapitalization. Simultaneously with the Merger, the Company accepted subscriptions in a private placement offering of 476,092 new pre-split shares of the Company&#8217;s common stock in the amount of $600,000 as well as 27,027 new pre-split shares of the Company&#8217;s Series B Convertible Preferred Stock in the amount of $250,000. These shares are considered to be outstanding beginning January 1, 2015. However, as the cash to purchase these shares was received in 2017, we have recorded the cash received in connection with these shares in additional paid-in capital during 2017.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Series A Convertible Preferred Stock was originally convertible into 3,000,000 common shares based on the total outstanding equity as of March 23, 2017.&#160; As of March 31, 2019, the Series A Convertible Preferred Stock would be convertible into approximately 10,660,000 common shares, based on 47,747,804 common shares outstanding as of March 31, 2019.&#160; The Series B Convertible Preferred Stock is convertible into 1,120,000 common shares.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The Company adopted the provisions of FASB Accounting Standards Codification (&#8220;ASC&#8221;) Topic 820, &#8220;Fair Value Measurements and Disclosures&#8221;, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The estimated fair value of certain financial instruments, including cash and cash equivalents are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160; &#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Level 1 &#8212; quoted prices in active markets for identical assets or liabilities</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Level 2 &#8212; quoted prices for similar assets and liabilities in active markets or inputs that are observable</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Level 3 &#8212; inputs that are unobservable (for example cash flow modeling inputs based on assumptions)</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The Company has no assets or liabilities valued at fair value on a recurring basis.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Topic ASC 606 is effective as of the annual reporting period beginning after December 15, 2017 using either of two methods: (1) retrospective application of Topic ASC 606 to each prior reporting period presented with the option to elect certain practical expedients as defined within Topic ASC 606 or (2) retrospective application of Topic ASC 606 with the cumulative effect of initially applying Topic ASC 606 recognized at the date of initial application and providing certain additional disclosures as defined per Topic ASC 606. We adopted Topic ASC 606 pursuant to the method (2) and we determined that any cumulative effect for the initial application did not require an adjustment to retained earnings at July 1, 2018.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">We recognize revenue upon completion of our performance obligations or expiration of the contractual time to use services such as bulk texting.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For purposes of the condensed consolidated statements of cash flows, cash and cash equivalents includes demand deposits, time deposits, certificates of deposit and short-term liquid investments with original maturities of three months or less when purchased. As of March 31, 2019 and June 30, 2018, the Company did not hold any cash equivalents. The Federal Deposit Insurance Corporation provides coverage for all accounts of up to $250,000.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Accounts receivable are stated at the amount management expects to collect. An allowance for doubtful accounts is recorded, as a charge to bad debt expense, where collection is considered to be doubtful due to credit issues. These allowances together reflect the Company&#8217;s estimate of potential losses inherent in accounts receivable balances, based on historical loss and known factors impacting its customers. Management has determined that an allowance is required at March 31, 2019 and June 30, 2018 of $53,815 and $6,617, respectively. The Company does not accrue interest on past due receivables.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Inventory consists of merchandise and is stated at the lower of cost, determined by last-in, first-out method or market. Market is determined based on the net realizable value, with appropriate consideration given to obsolescence, excessive levels, deterioration and other factors. At March 31, 2019 and June 30, 2018, the Company had $3,530 and $3,530 of inventory, respectively. A write-off is recorded for any inventory deemed excessive or obsolete. No write off was necessary at March 31, 2019 and at June 30, 2018.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Software development costs associated with internal use software are incurred in three stages of development: the preliminary project stage, the application development stage, and the post-implementation stage. Costs incurred during the preliminary project and post-implementation stages are expensed as incurred. Certain internal and external qualifying costs incurred during the application development stage are capitalized as property and equipment. Internal use software is amortized on a straight-line basis over its estimated useful life of seven years, beginning when the software is ready for its intended use.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During the nine months ended March 31, 2019, the Company capitalized approximately $3.4 million of software acquisition costs. Amortization expense related to internal use software totaled $233,991 during the nine months ended March 31, 2019.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The Company reviews identified intangible assets and long-lived assets to be held-and-used for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. If the sum of the undiscounted expected future cash flows over the remaining useful life of a long-lived asset is less than its carrying amount, the asset is considered to be impaired. Impairment losses are measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset. When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risks associated with the recovery of the asset. As of March 31, 2019 and June 30, 2018, there were no impairments of intangible assets.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company accounts for stock-based awards to employees in accordance with applicable accounting principles, which requires compensation expense related to share-based transactions, including employee stock options, to be measured and recognized in the financial statements based on a determination of the fair value of the stock options. The grant date fair value is determined using the Black-Scholes-Merton (&#8220;Black-Scholes&#8221;) pricing model. For all employee stock options, we recognize expense over the requisite service period on an accelerated basis over the employee&#8217;s requisite service period (generally the vesting period of the equity grant). The Company&#8217;s option pricing model requires the input of highly subjective assumptions, including the expected stock price volatility and expected term. Any changes in these highly subjective assumptions significantly impact stock-based compensation expense.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Options awarded to purchase shares of common stock issued to non-employees in exchange for services are accounted for as variable awards in accordance with applicable accounting principles. Such options are valued using the Black-Scholes option pricing model.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">See Note 9 for the assumptions used to calculate the fair value of stock-based employee and non-employee compensation.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company&#8217;s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of ASC 505-50 Equity-Based <i>Payments to Non-Employees</i>. Stock-based compensation related to non-employees is accounted for based on the fair value of the related stock or options or the fair value of the services, whichever is more readily determinable. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor&#8217;s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.&#160;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, &#8220;Income Taxes.&#8221; Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity&#8217;s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. As of March 31, 2019, the Company had approximately $7,652,000 of net operating loss carry forward that was unrecognized tax benefits.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Under Internal Revenue Code 382, if a corporation undergoes an &#8220;ownership change,&#8221; the corporation&#8217;s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. We have not completed a study to assess whether an &#8220;ownership change&#8221; has occurred or whether there have been multiple ownership changes since we became a &#8220;loss corporation&#8221; as defined in Section 382. Future changes in our stock ownership, which may be outside of our control, may trigger an &#8220;ownership change&#8221;. In addition, future equity offerings or acquisitions that have equity as a component of the purchase price could result in an &#8220;ownership change.&#8221; If an &#8220;ownership change&#8221; has occurred or does occur in the future, utilization of the NOL carryforwards or other tax attributes may be limited, which could potentially result in increased future tax liability to us.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise&#8217;s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. There are no material uncertain tax positions at March 31, 2019.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On December 22, 2017, the U.S. government enacted the Tax Act, which made significant changes to the Internal Revenue Code of 1986, as amended, including, but not limited to, reducing the U.S. corporate statutory tax rate and the net operating loss incurred after December 31, 2017 can be carried forward indefinitely and the two-year net operating loss carried back was eliminated. We continue to evaluate the impact of the Tax Act.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes the existing guidance for lease accounting, Leases (Topic 840). ASU 2016-02 requires lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early application is permitted for all entities. ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after, the date of initial application, with an option to elect to use certain transition relief. In July 2018, the FASB issued ASU No. 2018-10, &#8220;Codification Improvements to Topic 842, Leases.&#8221; The amendments in ASU 2018-10 clarify, correct or remove inconsistencies in the guidance provided under ASU 2016-02 related to sixteen specific issues identified. Also in July 2018, the FASB issued ASU No. 2018-11 &#8220;Leases (Topic 842): Targeted Improvement&#8221; which now allows entities the option of recognizing the cumulative effect of applying the new standard as an adjustment to the opening balance of retained earnings in the year of adoption while continuing to present all prior periods under previous lease accounting guidance. The effective date and transition requirements for these two ASUs are the same as the effective date and transition requirements as ASU 2016-02. The standard will be effective for the Company for the quarter ended September 30, 2019.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160; &#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The standard will be effective for the Company in the first quarter of 2020. The adoption of this standard does not have a material impact on the condensed consolidated financial statements.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In June 2018, the FASB issued ASU 2018-07, which simplifies the accounting for non-employee share-based payment transactions.&#160; The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor's own operations by issuing share-based payment awards.&#160; The standard will be effective in the first quarter of fiscal year 2019, although early adoption is permitted.&#160;The adoption of this standard does not have a material impact on the condensed consolidated financial statements.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p> Nevada 2014-10-16 -1742544 250000 53815 6617 7652000 P7Y 3400000 233991 2351355 324327 27027 5000000 476092 600000 250000 1120000 10660000 3000000 3449241 -233991 3215250 2666667 450000 3010000 1152000 360100 600000 9.25 3750000 869565 1589565 66962 13500 180000 5000000 P2Y 0.08 P18M 1000000 100000 P2Y 0.10 86957 200000 400000 1.15 P5Y 0.05 150000 150000 200000 84000 28000 224000 440000 880000 960000 233334 25000 75000 132000 200000 3000 9000 18000 2 2019-08-08 2019-09-30 0.14 0.12 0.12 0.10 0.10 0.07 0 400000 800000 900000 0.12 0.70 0.70 0.75 P12M P12M P18M 6 6 0.12 0.12 0.20 0.20 P5Y P5Y 170564 245207 220000 660000 987641 839378 After six months, the Company will repay the investors interest and principle in twelve equal installments The principle 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 If the Company defaults on the Notes, the interest is increased to 15% and at the investors option, the principle and interest can be converted into the Company common stock at a 20% discount to the then current market price 30432 171727 125419 70842 The Company does not have a concentration of revenues from any individual customer (less than 10%). 5437592 4145735 1698239 138535 763453 4562408 0.66 0.25 1.19 0.25 0.25 P3Y P5Y 1.47 1.70 0.00 0.0235 0.0301 P10Y 10000000 0.61 1768876 4050975 P3Y The number of options to purchase common shares was increased from 5,000,000 to 10,000,000 through a consent of stockholders to amend and restate the equity incentive plan 1363056 -13349 7000 38380 6910 40205 -1188349 1129620 1649868 -2269475 -253985 6820 47148 10064214 -8755126 -757898 96465 -572492 7000 70000 6820 6820 6820 38000 38380 42661 42870 46807 1010000 1129620 3130831 3955845 8388485 -958535 -1428985 -3938210 -5367113 -7044983 -1361578 1397129 7000000 38380663 6910000 40205663 6820000 47147804 7000000 7000000 6820000 6820000 6820000 38000663 38380663 42661228 42870552 46806904 839378 839378 240000 2667 250 2557333 239750 2560000 2666667 250000 85724 171447 85724 171447 123 119800 119923 123324 1116738 380000 240000 1116738 1045000 120000 380 240 1117 -380 119760 1043883 1045000 573507 119133 120000 119133 598076 597293 573507 120000 598076 597293 8000 86000 92947 88900 22225 2000 8 86 93 89 1992 21414 23144 22136 21500 23237 -90000 1440000 -90 1440 -1350 137000 60000 2000 960 280850 137 60 2 280713 39540 958 39600 false EX-101.SCH 7 lbuy-20190331.xsd XBRL TAXONOMY EXTENSION SCHEMA 00000001 - Document - Document and Entity Information link:presentationLink link:calculationLink link:definitionLink 00000002 - Statement - UNAUDITED INTERIM CONDENSED CONSOLDIATED BALANCE SHEETS link:presentationLink link:calculationLink link:definitionLink 00000003 - Statement - UNAUDITED INTERIM CONDENSED CONSOLDIATED BALANCE SHEETS (Parenthetical) link:presentationLink link:calculationLink link:definitionLink 00000004 - Statement - UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS link:presentationLink link:calculationLink link:definitionLink 00000005 - Statement - CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY link:presentationLink link:calculationLink link:definitionLink 00000006 - Statement - UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW link:presentationLink link:calculationLink link:definitionLink 00000007 - Disclosure - Description of Business link:presentationLink link:calculationLink link:definitionLink 00000008 - Disclosure - Summary of Significant Accounting Policies link:presentationLink link:calculationLink link:definitionLink 00000009 - Disclosure - Recapitalization and Preferred Shares link:presentationLink link:calculationLink link:definitionLink 00000010 - Disclosure - Intangible Assets link:presentationLink link:calculationLink link:definitionLink 00000011 - Disclosure - Capital Stock and Equity Transactions link:presentationLink link:calculationLink link:definitionLink 00000012 - Disclosure - Debt link:presentationLink link:calculationLink link:definitionLink 00000013 - Disclosure - Commitments and Contingencies link:presentationLink link:calculationLink link:definitionLink 00000014 - Disclosure - Earnings or Loss per Share link:presentationLink link:calculationLink link:definitionLink 00000015 - Disclosure - Stock Based Compensation link:presentationLink link:calculationLink link:definitionLink 00000016 - Disclosure - Subsequent Events link:presentationLink link:calculationLink link:definitionLink 00000017 - Disclosure - Summary of Significant Accounting Policies (Policies) link:presentationLink link:calculationLink link:definitionLink 00000018 - Disclosure - Intangible Assets (Tables) link:presentationLink link:calculationLink link:definitionLink 00000019 - Disclosure - Commitments and Contingencies (Tables) link:presentationLink link:calculationLink link:definitionLink 00000020 - Disclosure - Stock Based Compensation (Tables) link:presentationLink link:calculationLink link:definitionLink 00000021 - Disclosure - Description of Business (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000022 - Disclosure - Summary of Significant Accounting Policies (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000023 - Disclosure - Recapitalization and Preferred Shares (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000024 - Disclosure - Intangible Assets (Details) link:presentationLink link:calculationLink link:definitionLink 00000025 - Disclosure - Intangible Assets (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000026 - Disclosure - Capital Stock and Equity Transactions (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000027 - Disclosure - Debt (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000028 - Disclosure - Commitments and Contingencies (Details) link:presentationLink link:calculationLink link:definitionLink 00000029 - Disclosure - Commitments and Contingencies (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000030 - Disclosure - Stock Based Compensation (Details) link:presentationLink link:calculationLink link:definitionLink 00000031 - Disclosure - Stock Based Compensation (Details 1) link:presentationLink link:calculationLink link:definitionLink 00000032 - Disclosure - Stock Based Compensation (Details Narrative) link:presentationLink link:calculationLink link:definitionLink EX-101.CAL 8 lbuy-20190331_cal.xml XBRL TAXONOMY EXTENSION CALCULATION LINKBASE EX-101.DEF 9 lbuy-20190331_def.xml XBRL TAXONOMY EXTENSION DEFINITION LINKBASE EX-101.LAB 10 lbuy-20190331_lab.xml XBRL TAXONOMY EXTENSION LABEL LINKBASE Long-term Debt, Type [Axis] Loans Payable Three [Member] Loans Payable Four [Member] Loans Payable Five [Member] Equity Components [Axis] Preferred Stock [Member] Common Stock [Member] Loans Payable Two [Member] Loans Payable One [Member] Class of Stock [Axis] Class A Convertible Preferred Stock [Member] Class B Convertible Preferred Stock [Member] Acc Deficit [Member] APIC [Member] Series A Convertible Preferred Stock [Member] Series B Convertible Preferred Stock [Member] Award Type [Axis] Stock Options [Member] Range [Axis] Minimum [Member] Maximum [Member] Plan Name [Axis] Equity Incentive Plan 2017 [Member] Legal Entity [Axis] Garden State Securities, Inc. ("GSS") [Member] Related Party [Axis] Yorkville Advisors Global, LLC [Member] Sale of Stock [Axis] Initial Shares [Member] Standby Equity Distribution Agreement [Member] Promissory note [Member] Several promissory notes [Member] Warrant [Member] Property, Plant and Equipment, Type [Axis] Software Development [Member] Loyalty Software [Member] Finite-Lived Intangible Assets by Major Class [Axis] Loyalty software [Member] Preferred Stock Common Stock APIC Accumulated Deficit Subsequent Event Type [Axis] Subsequent Event [Member] One investor [Member] Other investors [Member]