0001477932-21-003314.txt : 20210517 0001477932-21-003314.hdr.sgml : 20210517 20210517160539 ACCESSION NUMBER: 0001477932-21-003314 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 50 CONFORMED PERIOD OF REPORT: 20210331 FILED AS OF DATE: 20210517 DATE AS OF CHANGE: 20210517 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: 21930387 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

 

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

 

For the quarterly period ended March 31, 2021

 

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, Zip Code)

 

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

 

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

 

Title of Each Class

Trading Symbol(s)

Name of each exchange on which registered

None

None

None

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒    No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, 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 ☒    No ☐

 

Indicate by check mark whether the Company is a larger accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

 

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

 

The number of shares of outstanding of the Registrant’s Common Stock as of May 13, 2021 was 88,814,587

 

 

 

 

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

 

17

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

22

 

Item 4.

Controls and Procedures

 

22

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

 

23

 

Item 1A.

Risk Factors

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

23

 

Item 3.

Defaults Upon Senior Securities

 

23

 

Item 4.

Mine Safety Disclosures

 

23

 

Item 5.

Other Information

 

23

 

Item 6.

Exhibits

 

24

 

 

SIGNATURES

 

25

 

 

 
2

Table of Contents

 

PART I – FINANCIAL INFORMATION

 

Item 1. Interim Condensed Consolidated Financial Statements 

 

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

 

PART I. Financial Information

 

Item 1. Financial Statements 

 

LEAFBUYER TECHNOLOGIES INC.

 

 

 

 

 

 

UNAUDITED CONDENSED CONSOLDIATED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

2021

 

 

June 30,

2020

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$ 844,860

 

 

$ 1,309,912

 

Accounts receivable (net of allowance for doubtful accounts of $22,985 and $14,037, respectively,)

 

 

33,630

 

 

 

14,037

 

Inventory

 

 

622

 

 

 

622

 

Prepaid expenses and other current assets

 

 

40,377

 

 

 

87,895

 

Total current assets

 

 

919,489

 

 

 

1,412,466

 

Noncurrent assets:

 

 

 

 

 

 

 

 

Fixed assets, net

 

 

2,855,036

 

 

 

3,398,370

 

Right of use assets

 

 

-

 

 

 

165,965

 

Total assets

 

$ 3,774,525

 

 

$ 4,976,801

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$ 189,566

 

 

$ 487,890

 

Accrued liabilities

 

 

866,189

 

 

 

413,314

 

Deferred revenue

 

 

63,987

 

 

 

117,904

 

Lease obligation, current

 

 

-

 

 

 

103,049

 

Debt, current

 

 

1,575,125

 

 

 

2,134,487

 

Total current liabilities

 

 

2,694,867

 

 

 

3,256,644

 

 

 

 

 

 

 

 

 

 

Debt, net of current portion

 

 

1,057,977

 

 

 

1,102,478

 

Lease obligation, net of current portion

 

 

-

 

 

 

65,149

 

Total liabilities

 

 

3,752,844

 

 

 

4,424,271

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 6)

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity (Deficit):

 

 

 

 

 

 

 

 

Preferred stock Series A, $0.001 par value; 5,000,000 shares authorized; 3,000,000 and 3,000,000 shares issued and outstanding for class A convertible preferred stock at March 31, 2021 and June 30, 2020, respectively

 

 

3,000

 

 

 

3,000

 

Preferred stock Series B, $0.001 par value; 5,000,000 shares authorized; 1,120,000 and 1,120,000 shares issued and outstanding for class B convertible preferred stock at March 31, 2021 and June 30, 2020, respectively

 

 

1,120

 

 

 

1,120

 

Common stock, $0.001 par value; 150,000,000 shares authorized; 88,395,553 shares issued and outstanding at March 31, 2021 and 81,772,802 shares issued and outstanding at June 30, 2020

 

 

88,396

 

 

 

81,773

 

Additional paid in capital

 

 

17,236,721

 

 

 

16,467,761

 

Accumulated deficit

 

 

(17,307,556 )

 

 

(16,001,124 )

Total stockholders’ equity

 

 

21,681

 

 

 

552,530

 

Total liabilities and stockholders’ equity (deficit)

 

$ 3,774,525

 

 

$ 4,976,801

 

 

See accompanying notes to condensed consolidated financial statements.

 

 
3

Table of Contents

  

LEAFBUYER TECHNOLOGIES INC.

 

 

 

 

 

 

 

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

March 31,

 

 

Nine Months Ended

March 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$ 672,149

 

 

$ 575,002

 

 

$ 1,927,659

 

 

$ 1,870,518

 

Cost of revenue

 

 

500,818

 

 

 

448,961

 

 

 

1,443,678

 

 

 

1,474,314

 

Gross profit

 

 

171,331

 

 

 

126,041

 

 

 

483,981

 

 

 

396,204

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling expenses

 

 

153,094

 

 

 

424,858

 

 

 

648,790

 

 

 

1,664,370

 

General and administrative

 

 

125,602

 

 

 

185,476

 

 

 

505,305

 

 

 

761,346

 

Personnel expenses

 

 

185,352

 

 

 

339,859

 

 

 

630,755

 

 

 

990,120

 

Stock based compensation expense

 

 

136,685

 

 

 

105,116

 

 

 

321,207

 

 

 

712,326

 

Total operating expenses

 

 

600,732

 

 

 

1,055,309

 

 

 

2,106,056

 

 

 

4,128,162

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(429,401 )

 

 

(929,268 )

 

 

(1,622,075 )

 

 

(3,731,958 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(71,604 )

 

 

(106,783 )

 

 

(286,835 )

 

 

(676,475 )

Forgiveness of PPP loan

 

 

602,478

 

 

 

-

 

 

 

602,478

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net profit (loss)

 

$ 101,473

 

 

$ (1,036,051 )

 

$ (1,306,432 )

 

$ (4,408,433 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$ 0.00

 

 

$ (0.01 )

 

$ (0.02 )

 

$ (0.06 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

83,805,363

 

 

 

81,257,802

 

 

 

83,600,897

 

 

 

75,146,637

 

 

See accompanying notes to condensed consolidated financial statements

 

 
4

Table of Contents

 

LEAFBUYER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

(Unaudited)

 

 

 

Preferred Stock A

 

 

Preferred Stock B

 

 

Common Stock

 

 

 

 

 

 

 

 

 

# of

Shares

 

 

Amount

 

 

# of

Shares

 

 

Amount

 

 

# of

Shares

 

 

Amount

 

 

APIC

 

 

Acc

Deficit

 

 

Total

 

Balance, June 30, 2020

 

 

3,000,000

 

 

$ 3,000

 

 

 

1,120,000

 

 

$ 1,120

 

 

 

81,772,802

 

 

$ 81,773

 

 

$ 16,467,761

 

 

$ (16,001,124 )

 

$ 552,530

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

54,123

 

 

 

-

 

 

 

54,123

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for vendor payments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

433,077

 

 

 

433

 

 

 

30,837

 

 

 

-

 

 

 

31,270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock as employee compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

475,365

 

 

 

475

 

 

 

28,333

 

 

 

-

 

 

 

28,808

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(867,034 )

 

 

(867,034

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2020

 

 

3,000,000

 

 

$ 3,000

 

 

 

1,120,000

 

 

$ 1,120

 

 

 

82,681,244

 

 

$ 82,681

 

 

$ 16,581,054

 

 

$ (16,868,158 )

 

$ (200,303

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

33,437

 

 

 

-

 

 

 

33,437

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for vendor payments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

596,428

 

 

 

597

 

 

 

40,113

 

 

 

-

 

 

 

40,710

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock as employee compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

649,467

 

 

 

649

 

 

 

67,505

 

 

 

-

 

 

 

68,154

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(540,871 )

 

 

(540,871

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2020

 

 

3,000,000

 

 

$ 3,000

 

 

 

1,120,000

 

 

$ 1,120

 

 

 

83,927,139

 

 

$ 83,927

 

 

$ 16,722,109

 

 

$ (17,409,029 )

 

$ (598,873

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

113,910

 

 

 

-

 

 

 

113,910

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for conversion of debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,000,000

 

 

 

4,000

 

 

 

296,000

 

 

 

-

 

 

 

300,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for vendor payments and board members

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

373,413

 

 

 

373

 

 

 

82,022

 

 

 

-

 

 

 

82,395

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock as employee compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

95,001

 

 

 

95

 

 

 

22,680

 

 

 

-

 

 

 

22,775

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

101,473

 

 

 

101,473

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2021

 

 

3,000,000

 

 

$ 3,000

 

 

 

1,120,000

 

 

$ 1,120

 

 

 

88,395,553

 

 

$

88,396

 

 

$

17,236,721

 

 

$ (17,307,556 )

 

$ 21,681

 

 

 
5

Table of Contents

 

 

 

Preferred Stock A

 

 

Preferred Stock B

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

# of

Shares

 

 

Amount

 

 

# of

Shares

 

 

Amount

 

 

# of

Shares

 

 

Amount

 

 

APIC

 

 

Acc

Deficit

 

 

Total

 

Balance, June 30, 2019

 

 

3,000,000

 

 

$ 3,000

 

 

 

1,120,000

 

 

$ 1,120

 

 

 

47,914,967

 

 

$ 47,915

 

 

$ 11,076,165

 

 

$ (10,491,876 )

 

$ 636,324

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

605,709

 

 

 

-

 

 

 

605,709

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for cash

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

30,299,998

 

 

 

30,300

 

 

 

4,007,588

 

 

 

-

 

 

 

4,037,888

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock in settlement of acquisition

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

366,667

 

 

 

367

 

 

 

262,133

 

 

 

-

 

 

 

262,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,102,542 )

 

 

(2,102,542 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2019

 

 

3,000,000

 

 

$ 3,000

 

 

 

1,120,000

 

 

$ 1,120

 

 

 

78,581,632

 

 

$ 78,582

 

 

$ 15,951,595

 

 

$ (12,594,418 )

 

$ 3,439,879

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,502

 

 

 

-

 

 

 

1,502

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,269,840 )

 

 

(1,269,840 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2019

 

 

3,000,000

 

 

$ 3,000

 

 

 

1,120,000

 

 

$ 1,120

 

 

 

78,581,632

 

 

$ 78,582

 

 

$ 15,953,097

 

 

$ (13,864,258 )

 

$ 2,171,541

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,502

 

 

 

-

 

 

 

1,502

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for conversion of debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,815,220

 

 

 

1,815

 

 

 

129,185

 

 

 

-

 

 

 

131,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock as employee compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

860,950

 

 

 

861

 

 

 

102,753

 

 

 

-

 

 

 

103,614

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,036,051 )

 

 

(1,036,051 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2020

 

 

3,000,000

 

 

$ 3,000

 

 

 

1,120,000

 

 

$ 1,120

 

 

 

81,257,802

 

 

$ 81,258

 

 

$ 16,186,537

 

 

$ (14,900,309 )

 

$ 1,371,606

 

 

See accompanying notes to condensed consolidated financial statements.

 

 
6

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LEAFBUYER TECHNOLOGIES INC.

 

 

 

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

March 31,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(1,306,432

)

 

$

(4,408,433

)

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

 

 

 

 

 

 

 

 

Stock based compensation

 

 

321,207

 

 

 

712,327

 

Stock issued for services

 

 

154,376

 

 

 

-

 

Forgiveness of PPP loan

 

 

(602,478

)

 

 

 

 

Amortization of note payable discount

 

 

65,638

 

 

 

206,459

 

Depreciation and amortization

 

 

543,334

 

 

 

514,360

 

Changes in assets and liabilities:

 

 

 

 

 

 

-

 

Accounts receivable

 

 

(19,593

)

 

 

38,879

 

Inventory

 

 

-

 

 

 

608

 

Prepaid expenses and other

 

 

47,518

 

 

 

(8,197

)

Other assets

 

 

(2,233

)

 

 

11,864

 

Accounts payable

 

 

(298,324

)

 

 

174,619

 

Accrued liabilities

 

 

398,958

 

 

 

(39,567

)

Net cash used in operating activities

 

 

(698,029

)

 

 

(2,797,081

)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capitalized software

 

 

-

 

 

 

(492,899

)

Net cash used in investing activities

 

 

-

 

 

 

(492,899

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of stock

 

 

-

 

 

 

4,037,888

 

Repayment of debt

 

 

(325,000

 

 

(286,899

)

Proceeds from issuance of PPP loan

 

 

557,977

 

 

 

-

 

Net cash provided by financing activities

 

 

232,977

 

 

 

3,750,989

 

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

 

(465,052

)

 

 

461,009

 

Cash and cash equivalents, beginning of period

 

 

1,309,912

 

 

 

181,647

 

Cash and cash equivalents, end of period

 

$

844,860

 

 

$

642,656

 

 

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

-

 

 

$

8,619

 

Cash paid for taxes

 

$

-

 

 

$

-

 

Supplemental information for non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Issuance of common stock for vendor payments and board of director services

 

$

154,376

 

 

$

-

 

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

 

$

300,000

 

 

$

131,000

 

 

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

 

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

 

Description of Business

 

The Company has evolved and grown from a listing website (Leafbuyer.com) to a comprehensive marketing technology platform that focuses on new customer acquisition, retention and now online-order ahead services.  By combining years of experience in the consumer marketing space and the increased popularity of Leafbuyer’s texting/loyalty program, Leafbuyer has developed a diverse product offering with a distinct competitive advantage.  Through proprietary technology, dispensary owners can leverage SMS and MMS messaging to connect customers directly to loyalty and rewards programs as well as the ability to confirm online orders for either pickup or delivery.  Leafbuyer has also developed technology designed to attract new dispensary customers to become part of loyalty and rewards programs.  

 

The Company’s website, Leafbuyer.com, and its progressive web application hosts a robust search algorithm similar to popular travel or hotel sites, where consumers can search the database for appealing offers. They can also search through thousands of menu items and products, create a profile, sign up to receive deal alerts and place online orders for pick up or delivery.  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. The company monetizes its platform through a combination of monthly subscription fees, sign up credits and certain transaction fees associated with consumer engagement.

 

Basis of Presentation

 

The accompanying condensed consolidated balance sheet as of June 30, 2020, has been derived from audited financial statements. The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements being audited and in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. In the opinion of management, such unaudited information includes all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of this interim information. All intercompany transactions have been eliminated in consolidation. Operating results and cash flows for interim periods are not necessarily indicative of results that can be expected for the entire year. The Company uses the same accounting policies in preparing quarterly and annual financial statements. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. The information included in this report should be read in conjunction with our audited financial statements and notes thereto.

 

 
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Table of Contents

  

Going Concern

 

As of March 31, 2021 we had $844,860 in cash and cash equivalents and a working capital deficit of $1,775,378. We are dependent on funds raised through equity financing. Our cumulative net loss of $17,307,556 was funded by debt and equity financing and we reported a net loss of $1,306,432 for the nine months ended March 31, 2021. Accordingly, there is substantial doubt about our ability to continue as a going concern within one year after the date the financial statements are issued.

 

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

 

Note 2 — Summary of Significant Accounting Policies

 

Significant Accounting Policies

 

Principles of Consolidation

 

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

 

For a detailed discussion about the Company’s significant accounting policies, refer to Note 2 — “Summary of Significant Accounting Policies,” in the Company’s consolidated financial statements included in the Company’s June 30, 2020 Form 10-K. During the nine months ended March 31, 2021, there were no significant changes made to the Company’s significant accounting policies.

 

Use of Estimates

 

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

 

Reclassifications

 

Certain prior period amounts have been reclassified to conform with the current period presentation. The Cost of sales presented on the unaudited Consolidated Statements of Operations was included in prior presentations as operating expenses such as personnel expenses and general and administration. For the three months ended March 31, 2021 $395,421 of the cost of sales came from personnel expense and $53,541 of cost of sales came from general and administrative expense. For the nine months ended March 31, 2021 $1,250,126 of cost of sales came from personnel expense and $224,188 of cost of sales came from general and administrative expense.

 

 
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Table of Contents

 

Recently Issued Accounting Pronouncements

 

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

 

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

 

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

 

Note 3 — Property and Equipment

 

Property and equipment consist of the following:

 

 

 

March 31,

2021

 

 

June 30,

2020

 

 

 

 

 

 

 

 

Software platform

 

$ 4,482,225

 

 

$ 4,482,225

 

Furniture and fixtures

 

 

1,500

 

 

 

1,500

 

Less accumulated depreciation and amortization

 

 

(1,628,689 )

 

 

(1,085,355 )

Property and equipment, net

 

$ 2,855,036

 

 

$ 3,398,370

 

 

On November 6, 2018, the Company acquired a customer facing software (“Loyalty Software”) through a Stock Purchase Agreement, where the Company acquired all the issued and outstanding capital stock of Greenlight Technologies, Inc. (“GTI”) from its shareholders. At the time of the transaction, there were no employees working for GTI, no systems and no assets, other than the Loyalty Software. GTI’s legal entity was dissolved in the transition and the Loyalty Software was assumed by the Company. Management determined that the purchase of GTI did not constitute a business purchase and recorded the transaction as a purchase of software. The consideration for the Loyalty Software was 2,916,667 shares of common stock, 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. During the year ended June 30, 2020 additional Incentive Shares of 366,667 for a value of $262,500 was issued to shareholders of GTI as final settlement of the 2018 agreement. During the nine months ended March 31, 2021 there was no software capitalized and for the same period ended 2020, the Company capitalized approximately $492,899 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. 

 

 
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Table of Contents

  

Amortization expense, recorded as cost of revenue, related to internal use software totaled $543,334 during the nine months ended March 31, 2021 and for the same period ended 2020 amortization expenses was $514,360. Amortization expense for the next five years is as follows:

  

2021

 

$ 724,445

 

2022

 

 

724,445

 

2023

 

 

724,445

 

2024

 

 

622,359

 

2025

 

 

59,342

 

Total Unamortized Expense

 

$ 2,855,036

 

 

Note 4 — 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, 2021. In addition, the Company has 10,000,000 shares of preferred stock authorized with a par value of $0.001 per share as of March 31, 2021 of which 3,000,000 shares of preferred stock are designated as Series A Preferred Shares, all of which were issued and outstanding as of March 31, 2021 and 1,120,000 shares of preferred stock are designated as Series B Preferred Shares, all of which were issued and outstanding as of March 31, 2021.

 

The Series A Preferred Shares currently outstanding are convertible into the greater of one share of Common Stock or a number of shares of Common Stock so that the Series A holders would hold 55% of the number of outstanding shares of Common Stock. The Series A Shares vote on an “as-converted” basis. 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, 2021, the Series A Convertible Preferred Stock would be convertible into approximately 113,985,000 common shares, based on 140,331,966 fully diluted common shares outstanding as of March 31, 2021.

 

Issuance of Common Stock

 

During the nine months ended March 31, 2021, the Company issued 4,000,000 shares of Common Stock to Note Payable Holders as satisfaction of principal obligations. These shares were valued at fair market value of $300,000.

 

During the nine months ended March 31, 2021 the Company issued 1,219,833 shares of Common Stock to employees. These shares were valued at fair market value of $119,737 and expensed in the accompanying Condensed Consolidated Statement of Operations.

 

During the nine months ended March 31, 2021, the Company issued 1,340,630 and 62,288 shares of Common Stock respectively to vendors and non-management members of the board of directors for services rendered. These shares were valued at fair market value of $154,376 and expensed in the accompanying Condensed Consolidated Statement of Operations.

 

During the nine months ended March 31, 2020, the Company issued 860,950 shares of Common Stock to employees. These shares were valued at fair market value of $105,116 and expensed in the accompanying Condensed Consolidated Statement of Operations.

 

During the nine months ended March 31, 2020, the Company issued 1,815,220 shares of Common Stock to Note Payable Holders as satisfaction of these obligations. These shares were valued at fair market value of $131,000.

 

During the nine months ended March 31, 2020 the Company issued 366,667 shares of Common Stock valued at $262,500 to shareholders of GTI as final settlement of the 2018 agreement. See Footnote 3.

 

During the nine months ended March 31, 2020, the Company issued 30,299,998 shares of common stock pursuant to the Purchase Agreement and received $4,037,888.

 

 
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Table of Contents

 

Note 5 — Debt

 

During February 2018, the Company issued a promissory note in favor of an investor of the Company in the amount of $150,000 in exchange for $132,000 cash. The note has an original issue discount of $18,000 that is being amortized to interest expense over the term of the note. In March 2019, the loan maturity date was extended to August 8, 2019, the discount is fully amortized and total unpaid principal and interest is approximately $206,515, accruing at 12% at March 31, 2021, and is payable upon demand.

 

On September 21, 2018, the Company entered into a promissory note with an investor of the Company with a face value of $440,000 in exchange for a $400,000 cash payment (“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 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 at a price of $0.75 per share. The value assigned to the warrants of $125,723 has been fully amortized. The cash for this Convertible Note was received prior to September 30, 2018. As of March 31, 2021, the Convertible Note is payable upon demand and total unpaid principal and interest outstanding is approximately $568,311.

     

On September 21, 2018, the Company entered into several promissory notes with various investors of the Company with an aggregate face value of $440,000 in exchange for $440,000 cash payment (“the 2018 Notes”), the discount of the Notes will be amortized over the life of the Note and have an interest rate of 10%. The 2018 Notes have a twelve-month term with no payment required for the initial six months; after six months, the Company will repay the investors interest and principal in six equal installments. The principal and interest of the note is convertible into the Company’s common stock at a purchase price of $0.70 per common share after the six months. If the Company defaults on the 2018 Notes, the interest is increased to 12% and at the investors’ option, the principal and interest can be converted into the Company common stock at a 20% discount to the then current market price. 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 the 2018 Notes was received prior to September 30, 2018. The value assigned to the warrants of $62,862 has been fully amortized. In March 2020, $220,000 of the 2018 Notes have been fully extinguished and the remaining $220,000 is in default and payable upon demand. As of March 31, 2021, the total unpaid principal and interest is approximately $284,156.

  

During the year ended June 30, 2019, the Company entered into several promissory notes with various investors of the Company with an aggregate face value of $960,000 in exchange for a total of $900,000 cash payments (“the 2019 Notes”). The 2019 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 2019 Notes and recorded as interest expense. The notes have an interest rate of 7% and have an eighteen-month term with no payment required for the initial six months; after six months, the Company will repay the investors interest and principal in twelve equal installments. The principal and interest of the note is convertible into the Company’s common stock at a purchase price of $0.75 per common share at any time after the Original Issue Date. If the Company defaults on the Notes, the interest is increased to 15% and at the investors’ option, the principal and interest can be converted into the Company common stock at a 20% discount to the then current market price. The beneficial ownership value assigned to the conversion feature of $801,741 has been fully amortized. As of March 31, 2020, $533,000 of the 2019 Notes have been fully extinguished as $402,000 of debt repayment and the issuance of common stock valued at $131,000. On January 25, 2021, $300,000 of the 2019 Notes have been fully extinguished with the issuance of 4,000,000 of common stock at a price of $0.075 per share. The remaining principal of $90,124 is in default and payable upon demand. As of March 31, 2021, the total unpaid principal and interest is approximately $150,407.

  

In March 2020, the Company entered into a promissory note with a related party (see Note 9) with a face value of $600,000 in exchange for a total of $565,000 cash payments. The total discount of the Note will be amortized over the life of the Note and recorded as interest expense which matured on December 1, 2020. In January 2021, the Company repaid $300,000 of the promissory note balance. The note is in default and due upon demand and the interest rate was increased to 12%. As of March 31, 2021, the total unpaid principal and interest is approximately $349,841.

 

In March 2020, the Company entered into a promissory note with a related party (see Note 9) with a face value of $50,000. In January 2021, the Company repaid $25,000 of the promissory note balance. The note is in default and the interest rate increased to 12%. As of March 31, 2021, the total unpaid principal and interest is approximately $29,137.

 

 
12

Table of Contents

 

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

 

On May 29, 2020, the Company was granted a loan from American Express National Bank in the aggregate amount of $602,478, pursuant to the Paycheck Protection Program (“PPP) under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The Loan which was in the form of a Note dated May 29, 2020, matures on May 29, 2022 and bears interest at a rate of 1.00% per annum, payable monthly commencing on December 29, 2020. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties. Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, rent, utilities and interest on other debt obligations incurred before February 15, 2020. The Company intends to use the entire Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. While the Company currently believes that its use of the loan proceeds will meet the conditions for forgiveness of the loan, it cannot be assured that the Company will be ineligible for forgiveness of the loan, in whole or in part. On January 5, 2021 the Company was notified by American Express National Bank that the United States Small Business Administration has approved our Loan Forgiveness Application and the loan has been closed. The Company realized other income from the forgiveness of the PPP loan in the Condensed Consolidated Statement of Operations for the three months ended March 30, 2021.

 

On March 30, 2021, the Company was granted a loan from American Express National Bank in the aggregate amount of $557,977, pursuant to the Paycheck Protection Program (“PPP) under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The Loan which was in the form of a Note dated March 30, 2021, matures on March 30, 2023 and bears interest at a rate of 1.00% per annum, payable monthly commencing on March 30, 2022. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties. Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, rent, utilities and interest on other debt obligations incurred before February 15, 2020. The Company intends to use the entire Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. While the Company currently believes that its use of the loan proceeds will meet the conditions for forgiveness of the loan, it cannot be assured that the Company will be ineligible for forgiveness of the loan, in whole or in part.

 

The Company recognized $71,604 and $286,835 of interest expense for the three and nine months ended March 31, 2021 and $106,400 and $676,092 of interest expense for the three and nine months ended March 31, 2020. As of March 31, 2021 and June 30, 2020, accrued interest on the above notes was $382,645 and $117,816, respectively.

 

Notes payable and long-term debt outstanding as of March 31, 2021 and June 30, 2020 are summarized below:

 

 

 

Maturity

Date

 

March 31,

2021

 

 

June 30,

2020

 

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

 

Due on Demand

 

$ 150,000

 

 

$ 150,000

 

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

 

Due on Demand

 

 

440,000

 

 

 

440,000

 

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

 

Due on Demand

 

 

220,000

 

 

 

220,000

 

7% $426,667 Convertible Note Payable, net of unamortized discount of $0 and $35,866. respectively

 

Due on Demand

 

 

-

 

 

 

182,326

 

7% $213,333 Convertible Note Payable, net of unamortized discount of $0 and $28,492, respectively

 

Due on Demand

 

 

90,125

 

 

 

164,072

 

12% Note Payable, net of unamortized discount of $0 and $21,911, respectively – See Footnote 9

 

Due on Demand

 

 

300,000

 

 

 

578,089

 

12% Note Payable – See Footnote 9

 

Due on Demand

 

 

25,000

 

 

 

50,000

 

5% Note Payable

 

Due on Demand (1)

 

 

350,000

 

 

 

350,000

 

1% PPP Note Payable; Loan forgiveness granted on January 5, 2021

 

May 29, 2022

 

 

-

 

 

 

602,478

 

3.75% SBA EIDL Note Payable

 

April 30, 2050

 

 

500,000

 

 

 

500,000

 

1% PPP Note Payable

 

March 30, 2023

 

 

557,977

 

 

 

-

 

Total notes payable

 

 

 

 

2,633,102

 

 

 

3,236,965

 

Less current portion of notes payable

 

 

 

 

1,575,125

 

 

 

2,134,487

 

Notes payable, Non-current portion

 

 

 

$ 1,057,977

 

 

$ 1,102,478

 

 

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

 

 
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Note 6 — Commitments and Contingencies

 

The Company records tax contingencies when the exposure item becomes probable and reasonably estimable. As of March 31, 2021, the Company had a tax contingency related to stock options granted below the fair market value on date of grant. The Company is in the process of determining the possible exposure and necessary expense accrual for the related tax, penalties and interest. Management has not been able to determine the amount as of the date of this report, however, does not expect the amount to be material to the financial statements.

 

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

 

Note 7 —Risks and Uncertainties

 

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

 

The Company operates in a rapidly evolving and highly regulated industry and will only conduct business in states where cannabis has been legalized.

 

The Company was affected in March by the COVID-19 outbreak and worldwide pandemic. The Company saw some postponements in orders in the first few weeks March 2020 but by the end of March 2020 orders stabilized to a normal level.

 

Note 8 — Stock Based Compensation

 

The equity incentive plan of the Company was established in February of 2017 and was amended and restated on April 14, 2020. The Board of Directors of the Company may from time to time, in its discretion grant to directors, officers, consultants and employees of the Company, non-transferable options to purchase common shares, provided that the number of options issued do not exceed 20,000,000. The options are exercisable for a period of up to 10 years from the date of the grant. The number of shares authorized to be issued under the equity incentive plan was increased from 10,000,000 to 20,000,000 through a consent of stockholders to amend and restate the equity incentive plan.

 

 
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Table of Contents

 

The following table reflects the continuity of stock options for the nine months ended March 31, 2021:

 

A summary of stock option activity is as follows:

 

Number of options outstanding:

 

 

 

July 1, 2020

 

 

12,558,375

 

Granted

 

 

5,754,124

 

Forfeited / exchanged / modification

 

 

(5,952,000 )

 

 

 

 

 

March 31, 2021

 

 

12,360,499

 

Aggregate Intrinsic Value at March 31, 2021

 

$ 222,126

 

 

 

 

 

 

Number of options exercisable at end of period

 

 

3,645,494

 

Number of options available for grant at end of period

 

 

4,957,288

 

 

 

 

 

 

Weighted average option prices per share:

 

 

 

 

Granted during the period

 

$ 0.14

 

Exercised during the period

 

$ 0.00

 

Terminated during the period

 

$ 0.08

 

Outstanding at end of period

 

$ 0.10

 

Exercisable at end of period

 

$ 0.08

 

 

The average fair value of stock options granted was estimated to be $0.14 per share for the period ended March 31, 2021. This estimate was made using the Black-Scholes option pricing model and the following weighted average assumptions:

 

 

 

2020

 

 

 

 

 

Expected option life (years)

 

2 - 4

 

Expected stock price volatility

 

227 to 250

%

Expected dividend yield

 

 

 

Risk-free interest rate

 

0.44 to 0.54

%

 

Stock-based compensation expense attributable to stock options was approximately $201,470 for the nine months ended March 31, 2021. As of March 31, 2021, there was approximately $967,396 of unrecognized compensation expense related to 12,360,499 unvested stock options outstanding, and the weighted average vesting period for those options was 3 years.

 

 
15

Table of Contents

 

Warrants

 

At March 31, 2021, the Company had outstanding warrants to purchase the Company’s common stock which were issued in connection with multiple financing arrangements. Information relating to these warrants is summarized as follows:

 

Warrants

 

Remaining

Number

Outstanding

 

 

Weighted

Average

Remaining Life (Years)

 

 

Weighted

Average

Exercise Price

 

Warrants-Financing

 

 

86,957

 

 

 

2.05

 

 

$ 1.15

 

Warrants-Issued with Convertible Notes

 

 

600,000

 

 

 

2.48

 

 

$ 0.75

 

Warrants - Financing

 

 

360,577

 

 

 

3.27

 

 

$ 0.78

 

Warrants A – Financing

 

 

28,072,364

 

 

 

3.27

 

 

$ 0.16

 

Total

 

 

29,119,898

 

 

 

3.25

 

 

$ 0.18

 

Aggregate Intrinsic Value at March 31, 2021

 

$ -

 

 

 

 

 

 

 

 

 

  

Note 9 — Related Party Transactions

 

In March 2020, the Company entered into a promissory note with the Chief Executive Officer for $600,000 in exchange for a total of a $565,000 cash payment. The note matured in December 2020 and $300,000 of principal payments have been made to date. The note is in default and due upon demand and the interest rate was increased to 12%. 

 

In March 2020, the Company entered into a promissory note with the Chief Technology Officer for $50,000. The note matured on January 1, 2021 and $25,000 of principal payments have been made to date. The note is in default and due upon demand and the interest rate was increased to 12%.

 

Note 10 — Leases

 

On January 1, 2021 the Company extended its Denver Colorado headquarter lease for 12 months through December 31, 2021. During the past year a majority of the Company’s employee have been working remotely and the Company does not know if they will continue to keep this location or relocate to a small facility. Therefore, in accordance with ASC 842 the Company will not record an operating right of use asset and operating lease liability because of the short term nature of this amendment. The Company will recognize lease expense on a monthly basis through the life of this lease of approximately $51,786.

 

During the three months ended March 31,2021 the Company ceased to use its Los Angles sales office and vacated the real estate. As a result, the Company wrote off the right of use asset of $91,316. The company had an operating use liability of $94,098 with respect to the lease. During this same period, the Company completed negotiations with the landlord to settle the remaining amounts due of $86,970 for a cash payment of $25,000. The Company recorded a gain of $61,970 in the consolidated statements of operations for the settlement of the operating lease.

 

Note 11 — Subsequent Events

 

The Company has evaluated subsequent events through May 17, 2021 and has not identified any items requiring additional disclosure.

 

 
16

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 nine months ended March 31, 2021 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, 2021. 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, 2020, 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 has evolved and grown from a listing website (Leafbuyer.com) to a comprehensive marketing technology platform that focuses on new customer acquisition, retention and now online-order ahead services.  By combining years of experience in the consumer marketing space and the increased popularity of Leafbuyer’s texting/loyalty program, Leafbuyer has developed a diverse product offering with a distinct competitive advantage.  Through proprietary technology, dispensary owners can leverage SMS and MMS messaging to connect customers directly to loyalty and rewards programs as well as the ability to confirm online orders for either pickup or delivery.  Leafbuyer has also developed technology designed to attract new dispensary customers to become part of loyalty and rewards programs.  

 

The Company’s website, Leafbuyer.com, and its progressive web application hosts a robust search algorithm similar to popular travel or hotel sites, where consumers can search the database for appealing offers. They can also search through thousands of menu items and products, create a profile, sign up to receive deal alerts and place online orders for pick up or delivery.  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. The company monetizes its platform through a combination of monthly subscription fees, sign up credits and certain transaction fees associated with consumer engagement.

 

The Company continues an aggressive push into all states where cannabis has been legalized. 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 grandviewresearch.com, to exceed $73 billion in revenue by the year 2027. The founders and board of directors has been, and will continue to be, aggressive in pursuing long-term opportunities.

 

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

 

 
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Comparison of results of operations for the three months ended March 31, 2021 and 2020

 

 

 

Three months Ended

March 31,

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

Change

 

 

%

 

Revenue

 

$ 672,149

 

 

$ 575,002

 

 

$ 97,147

 

 

 

17 %

Cost of revenue

 

 

500,818

 

 

 

448,961

 

 

 

51,857

 

 

 

12 %

Gross profit

 

 

171,331

 

 

 

126,041

 

 

 

45,290

 

 

 

36 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

600,732

 

 

 

1,055,309

 

 

 

(454,578 )

 

 

(43 )%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income/(expense)

 

 

530,874

 

 

 

(106,783 )

 

 

637,657

 

 

 

(597 )%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net profit/(loss)

 

$ 101,473

 

 

$ (1,036,051 )

 

$ 1,137,525

 

 

 

(110 )%

 

Revenue, Cost of Revenue and Gross Profit

 

During the three months ended March 31, 2021, we generated $672,149 of revenues, compared to revenues of $575,002 during the same period ending in 2020. The increase of $97,147 was primarily because of the increase in MRR (monthly recurring revenue) contribution. Our market penetration is still below 25% in Colorado and less than 1% in other states. Management expects to have continued high quarter over quarter revenue growth as we expand our platform and our geographical service area.

 

Cost of revenue is comprised of software development costs from staff and third-party providers, third-party text provider services and amortization costs related to internal use software. During the three months ended March 31, 2021 compared to the same period in the prior year, third-party text provider services were higher because of the increased number of customers subscribing to this service.

 

Gross profit increased by $45,290 for the three months ended March 31, 2021 primarily because of the increased subscription services for loyalty programs. Gross profit as a percentage of revenue increased from 22% to 25% for the three months ended March 31, 2021 over March 31, 2020.

 

Other income during the period ending March 31, 2021 was the result of the SBA PPP loan forgiveness of $602,478, offset by recurring interest expense.

 

The overall focus of the Company is to continue to grow revenue while expanding the geographic footprint of operations. We will continue to broaden the Leafbuyer technology platform to increase the opportunity for customer value creation and upsell of our product line. Anticipated growth will come from both organic sources and acquisitions. The Company is constantly looking for acquisitions to complement the current platform and expand geographic reach.

 

Operating Expenses

 

 

 

Three months Ended

March 31,

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

Change

 

 

%

 

Selling expenses

 

$ 153,094

 

 

$ 424,858

 

 

$ (271,764 )

 

 

(64 )%

General and administrative

 

 

125,602

 

 

 

185,476

 

 

 

(59,875 )

 

 

(32 )%

Wages, payroll taxes and other employee expenses

 

 

185,352

 

 

 

339,859

 

 

 

(154,507 )

 

 

(45 )%

Stock based compensation expense

 

 

136,685

 

 

 

105,116

 

 

 

31,569

 

 

 

30 %

 

 

$ 600,732

 

 

$ 1,055,309

 

 

$ (454,578 )

 

 

(43 )%

 

 
18

Table of Contents

  

The decrease in operating expenses during the three months ended March 31, 2021 compared to 2020 was driven by a reduction in selling and advertising expense as well as less wages and payroll expense. Management expects the general and administrative expenses to continue to decrease as management focuses on getting current operations to positive cash flow. 

  

Comparison of results of operations for the nine months ended March 31, 2021 and 2020

 

 

 

Nine months Ended

March 31,

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

Change

 

 

%

 

Revenue

 

$ 1,927,659

 

 

$ 1,870,518

 

 

$ 57,141

 

 

 

3 %

Cost of revenue

 

 

1,443,678

 

 

 

1,474,314

 

 

 

(30,636 )

 

 

(2 )%

Gross profit

 

 

483,981

 

 

 

396,204

 

 

 

87,777

 

 

 

22 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

2,106,056

 

 

 

4,128,162

 

 

 

(2,022,106 )

 

 

(49 )%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income/(expense)

 

 

315,643

 

 

 

(676,475 )

 

 

992,118

 

 

 

147 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$ (1,306,432 )

 

$ (4,408,433 )

 

$ 3,102,001

 

 

 

70 %

 

Revenue, Cost of Revenue and Gross Profit

 

During the nine months ended March 31, 2021, we generated $1,927,659 of revenues, compared to revenues of $1,870,518 during the same period ending in 2020. In December 2019, the Company recognized revenue of $182,008 related to the SWCH Tradeshow, excluding this onetime event, revenue increased for this period by $239,149 or 14%. The SWCH Tradeshow produced minimal margin and no monthly recurring revenue contribution. Our market penetration is still below 25% in Colorado and less than 1% in other states. Management expects to have continued high quarter over quarter revenue growth as we expand our platform and our geographical service area.

 

Gross profit increased to $483,981 for the nine months ended March 31, 2021 which was an increase of $87,777 or 22% over the same period in 2020. Gross profit as a percentage of revenue increased from 21% to 25% for the nine months ended March 31, 2021 over March 31, 2020 primarily because the SWCH Tradeshow realized 6% gross profit in 2020.

 

Other income during the nine months ended March 31, 2021 was the result of the SBA PPP loan forgiveness of $602,478, offset by recurring interest expense.

 

Operating Expenses

 

 

 

Nine months Ended

March 31,

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

Change

 

 

%

 

Selling expenses

 

$ 648,790

 

 

$ 1,664,370

 

 

$ (1,015,580 )

 

 

(61 )%

General and administrative

 

 

505,305

 

 

 

761,346

 

 

 

(256,041 )

 

 

(34 )%

Wages, payroll taxes and other employee expenses

 

 

630,755

 

 

 

990,120

 

 

 

(359,365 )

 

 

(36 )%

Stock based compensation expense

 

 

321,207

 

 

 

712,326

 

 

 

(391,120 )

 

 

(55 )%

 

 

$ 2,106,056

 

 

$ 4,128,162

 

 

$ (2,022,106 )

 

 

(49 )%

 

The decrease in operating expenses during the nine months ended March 31, 2021 compared to 2020 was driven by a reduction in selling and advertising expense and less stock compensation expense. Management expects the general and administrative expenses to continue to decrease as management focuses on getting current operations to positive cash flow.

 

 
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Table of Contents

 

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.

 

Cash Flows

 

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

 

 

 

Nine months Ended

March 31,

 

 

 

2021

 

 

2020

 

Net cash used in operating activities

 

$ (698,029 )

 

$ (2,797,081 )

Net cash used in investing activities

 

$ -

 

 

$ (492,899 )

Net cash used provided by financing activities

 

$ 232,977

 

 

$ 3,750,989

 

 

As of March 31, 2021 we had $844,860 in cash and cash equivalents and a working capital deficit of $1,775,378. We are dependent on funds raised through equity financing. Our cumulative net loss of $17,307,556 was funded by equity financing and we reported a net loss of $1,306,432 for the nine months ended March 31, 2021. During the nine months ending March 31, 2021, we did not raise any monies through financing activities, and we did not expend any monies through investing activities.

 

While the Company booked a GAAP loss for the period, the Company realized positive operating cash flow all months during 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, 2021.

 

Off-Balance Sheet Arrangements

 

We had no off-balance sheet arrangements as of March 31, 2021 and June 30, 2020.

 

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, 2020 form 10-K in the Critical Accounting Policies section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

 
20

Table of Contents

 

Critical Accounting Policies

 

Our unaudited condensed consolidated interim financial statements are affected by the accounting policies used and the estimates and assumptions made by management during their preparation. For a detailed discussion about the Company’s significant accounting policies, refer to Note 2 — “Summary of Significant Accounting Policies,” in the Company’s consolidated financial statements included in the Company’s June 30, 2020 Form 10-K. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by our management. Management has carefully considered the recently issued accounting pronouncements that altered generally accepted accounting principles and does not believe that any other new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term.

 

Use of Estimates

 

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

 

Revenue Recognition

 

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

 

The Company considered all of the economic factors that may affect its revenues. Because all of its revenues are from cannabis customers, there are no differences in the nature, timing an uncertainty of the Company’s revenue and cash flows from any of its product lines.

 

We recognize revenue upon completion of our performance obligations or expiration of the contractual time to use services such as bulk texting. The Company receives payments from its customers based on billing schedules established in each contract. Up-front payments and fees are recorded as deferred revenue upon receipt or when due until the Company performs its obligation under these arrangements. There is no significant judgment performed by management and revenue recognized from deferred revenue during the nine months ended March 31, 2021 is $53,917.

 

 
21

Table of Contents

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk 

 

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

 

Item 4. Controls and Procedures 

 

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure that information that would be required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including to our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

As required by Rule 13a-15 under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2021. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

 

Changes in Internal Control Over Financial Reporting

 

There were no changes in our internal control over financial reporting that occurred during the nine months ended March 31, 2021, which have materially affected or would likely materially affect our internal control over financial reporting. The Company continues to invest resources in order to upgrade internal controls.

 

 
22

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 

 

None

 

Item 3. Defaults Upon Senior Securities 

 

None.

 

Item 4. Mine Safety Disclosures 

 

Not applicable.

 

Item 5. Other Information 

 

None

 

 
23

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 8**

 

101.INS

 

Inline XBRL Instance Document*

 

101.SCH

 

Inline XBRL Taxonomy Extension Schema*

 

101.CAL

 

Inline XBRL Taxonomy Extension Calculation Linkbase*

 

101.DEF

 

Inline XBRL Taxonomy Extension Definition Linkbase*

 

101.LAB

 

Inline XBRL Taxonomy Extension Label Linkbase*

 

101.PRE

 

Inline XBRL Taxonomy Extension Presentation Linkbase*

 

* Filed herewith.

 

** Furnished herewith.

 

 
24

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 17, 2021

By:

/s/ Kurt Rossner

 

 

Kurt Rossner

 

 

Chief Executive Officer, Director

(principal executive officer)

 

 

 

 

By:

/s/ Mark Breen

 

 

Mark Breen

 

 

Chief Financial Officer and Director

 

 

 

25

 

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 17, 2021

 

 

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 17, 2021

 

 

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, 2021, 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 17, 2021

 

 

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.

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, 2021, 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 17, 2021

 

 

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.

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82681 16581054 -16868158 -200303 0 0 0 33437 0 33437 596428 0 0 597 40113 0 40710 649467 0 0 649 67505 0 68154 0 0 0 0 -540871 -540871 3000000 1120000 83927139 3000 1120 83927 16722109 -17409029 -598873 0 0 0 113910 0 113910 4000000 0 0 4000 296000 0 300000 373413 0 0 373 82022 0 82395 95001 0 0 95 22680 0 22775 0 0 0 0 101473 3000000 1120000 88395553 3000 1120 88396 17236721 -17307556 321207 712327 154376 0 65638 206459 543334 514360 -19593 38879 0 608 47518 -8197 -2233 11864 -298324 174619 398958 -698029 -2797081 -39567 0 492899 0 -492899 0 4037888 -325000 -286899 557977 0 232977 3750989 -465052 461009 181647 642656 0 8619 0 0 154376 300000 131000 <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">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. </p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;"><strong><em>Description of Business</em></strong></p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">The Company has evolved and grown from a listing website (Leafbuyer.com) to a comprehensive marketing technology platform that focuses on new customer acquisition, retention and now online-order ahead services.&nbsp; By combining years of experience in the consumer marketing space and the increased popularity of Leafbuyer&#8217;s texting/loyalty program, Leafbuyer has developed a diverse product offering with a distinct competitive advantage.&nbsp; Through proprietary technology, dispensary owners can leverage SMS and MMS messaging to connect customers directly to loyalty and rewards programs as well as the ability to confirm online orders for either pickup or delivery.&nbsp; Leafbuyer has also developed technology designed to attract new dispensary customers to become part of loyalty and rewards programs. &nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">The Company&#8217;s website, Leafbuyer.com, and its progressive web application hosts a robust search algorithm similar to popular travel or hotel sites, where consumers can search the database for appealing offers. They can also search through thousands of menu items and products, create a profile, sign up to receive deal alerts and place online orders for pick up or delivery.&nbsp; The site&#8217;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&#8217; return on investment. The company monetizes its platform through a combination of monthly subscription fees, sign up credits and certain transaction fees associated with consumer engagement.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;"><strong><em>Basis of Presentation</em></strong></p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">The accompanying condensed consolidated balance sheet as of June 30, 2020, 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 Company uses the same accounting policies in preparing quarterly and annual financial statements. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (&#8220;U.S. GAAP&#8221;) have been condensed or omitted. The information included in this report should be read in conjunction with our audited financial statements and notes thereto.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;"><strong><em>Going Concern</em></strong></p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">As of March 31, 2021 we had $844,860 in cash and cash equivalents and a working capital deficit of $1,775,378. We are dependent on funds raised through equity financing. Our cumulative net loss of $17,307,556 was funded by debt and equity financing and we reported a net loss of $1,306,432 for the nine months ended March 31, 2021. Accordingly, there is substantial doubt about our ability to continue as a going concern within one year after the date the financial statements are issued.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">Our ability to continue as a going concern is dependent upon our generating profitable operations in the future and / or obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Management believes that actions presently being taken to further implement our business plan of expansion of products, geographical locations we sell our services and deeper market penetration will generate additional revenues and eventually positive cash flow and provide opportunity for the Company to continue as a going concern. While we believe in the viability of our strategy to generate additional revenues and our ability to raise additional funds, there can be no assurances to that effect.</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;"><strong><em>Significant Accounting Policies</em></strong></p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;"><strong><em>Principles of Consolidation</em></strong></p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">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. </p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">For a detailed discussion about the Company&#8217;s significant accounting policies, refer to Note 2 &#8212; &#8220;Summary of Significant Accounting Policies,&#8221; in the Company&#8217;s consolidated financial statements included in the Company&#8217;s June 30, 2020 Form 10-K. During the nine months ended March 31, 2021, there were no significant changes made to the Company&#8217;s significant accounting policies.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;"><strong><em>Use of Estimates</em></strong></p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">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.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;"><strong><em>Reclassifications</em></strong></p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">Certain prior period amounts have been reclassified to conform with the current period presentation. The Cost of sales presented on the unaudited Consolidated Statements of Operations was included in prior presentations as operating expenses such as personnel expenses and general and administration. For the three months ended March 31, 2021 $395,421 of the cost of sales came from personnel expense and $53,541 of cost of sales came from general and administrative expense. For the nine months ended March 31, 2021 $1,250,126 of cost of sales came from personnel expense and $224,188 of cost of sales came from general and administrative expense.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;"><strong>Recently Issued Accounting Pronouncements</strong></p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">In June 2016, the FASB issued ASU 2016-13, <em>Financial Instruments &#8211; Credit Losses (Topic 326), </em>which introduces new guidance for the accounting for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale (AFS) debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The pronouncement will be effective for public business entities that are SEC filers in fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The effect of the adoption of this pronouncement to the Company was immaterial.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and other Options (Subtopic 470-20) and Derivatives and Hedging &#8211; Contracts in Entity&#8217;s own Equity (Subtopic 815-40). ASU 2020-06 requires entities to provide expanded disclosures about the terms and features of convertible instruments and reduces the number of accounting models for convertible instruments and allows more contracts to qualify for equity classification. The pronouncement will be effective for public business entities that are SEC filers in fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted but no earlier than fiscal years beginning December 15, 2020.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">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&#8217;s present or future condensed consolidated financial statements.</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">Property and equipment consist of the following:</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <table style="border-spacing:0;text-align:left;font:10pt times new roman;width:100%" cellpadding="0"> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:center;" colspan="2"> <p style="MARGIN: 0px; text-align:center;"><strong>March 31,</strong></p> <p style="MARGIN: 0px; text-align:center;"><strong>2021</strong></p></td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:center;" colspan="2"> <p style="MARGIN: 0px; text-align:center;"><strong>June 30,</strong></p> <p style="MARGIN: 0px; text-align:center;"><strong>2020</strong></p></td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" colspan="2" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" colspan="2" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Software platform</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">4,482,225</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">4,482,225</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Furniture and fixtures</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">1,500</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">1,500</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Less accumulated depreciation and amortization</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">(1,628,689 </td> <td style="PADDING-BOTTOM: 1px;width:1%;vertical-align:bottom;white-space: nowrap;">)</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;text-align:right;">(1,085,355 </td> <td style="PADDING-BOTTOM: 1px;width:1%;vertical-align:bottom;white-space: nowrap;">)</td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Property and equipment, net</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">2,855,036</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">3,398,370</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr></table> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">On November 6, 2018, the Company acquired a customer facing software (&#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. At the time of the transaction, there were no employees working for GTI, no systems and no assets, other than the Loyalty Software. GTI&#8217;s legal entity was dissolved in the transition and the Loyalty Software was assumed by the Company. Management determined that the purchase of GTI did not constitute a business purchase and recorded the transaction as a purchase of software. The consideration for the Loyalty Software was 2,916,667 shares of common stock, 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. During the year ended June 30, 2020 additional Incentive Shares of 366,667 for a value of $262,500 was issued to shareholders of GTI as final settlement of the 2018 agreement. During the nine months ended March 31, 2021 there was no software capitalized and for the same period ended 2020, the Company capitalized approximately $492,899 of software enhancements.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">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.&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">Amortization expense, recorded as cost of revenue, related to internal use software totaled $543,334 during the nine months ended March 31, 2021 and for the same period ended 2020 amortization expenses was $514,360. Amortization expense for the next five years is as follows:</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <table style="border-spacing:0;text-align:left;font:10pt times new roman;width:100%" cellpadding="0"> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">2021</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">724,445</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">2022</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">724,445</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">2023</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">724,445</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">2024</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">622,359</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">2025</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">59,342</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Total Unamortized Expense</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">2,855,036</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr></table></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">The Company has 150,000,000 shares of common stock authorized with a par value of $0.001 per share as of March 31, 2021. In addition, the Company has 10,000,000 shares of preferred stock authorized with a par value of $0.001 per share as of March 31, 2021 of which 3,000,000 shares of preferred stock are designated as Series A Preferred Shares, all of which were issued and outstanding as of March 31, 2021 and 1,120,000 shares of preferred stock are designated as Series B Preferred Shares, all of which were issued and outstanding as of March 31, 2021.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">The Series A Preferred Shares currently outstanding are convertible into the greater of one share of Common Stock or a number of shares of Common Stock so that the Series A holders would hold 55% of the number of outstanding shares of Common Stock. The Series A Shares vote on an &#8220;as-converted&#8221; basis. 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, 2021, the Series A Convertible Preferred Stock would be convertible into approximately 113,985,000 common shares, based on 140,331,966 fully diluted common shares outstanding as of March 31, 2021. </p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;"><em>Issuance of Common Stock</em> </p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">During the nine months ended March 31, 2021, the Company issued 4,000,000 shares of Common Stock to Note Payable Holders as satisfaction of principal obligations. These shares were valued at fair market value of $300,000.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">During the nine months ended March 31, 2021 the Company issued 1,219,833 shares of Common Stock to employees. These shares were valued at fair market value of $119,737 and expensed in the accompanying Condensed Consolidated Statement of Operations.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">During the nine months ended March 31, 2021, the Company issued 1,340,630 and 62,288 shares of Common Stock respectively to vendors and non-management members of the board of directors for services rendered. These shares were valued at fair market value of $154,376 and expensed in the accompanying Condensed Consolidated Statement of Operations.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">During the nine months ended March 31, 2020, the Company issued 860,950 shares of Common Stock to employees. These shares were valued at fair market value of $105,116 and expensed in the accompanying Condensed Consolidated Statement of Operations.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">During the nine months ended March 31, 2020, the Company issued 1,815,220 shares of Common Stock to Note Payable Holders as satisfaction of these obligations. These shares were valued at fair market value of $131,000.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">During the nine months ended March 31, 2020 the Company issued 366,667 shares of Common Stock valued at $262,500 to shareholders of GTI as final settlement of the 2018 agreement. See Footnote 3.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">During the nine months ended March 31, 2020, the Company issued 30,299,998 shares of common stock pursuant to the Purchase Agreement and received $4,037,888.</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">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. In March 2019, the loan maturity date was extended to August 8, 2019, the discount is fully amortized and total unpaid principal and interest is approximately $206,515, accruing at 12% at March 31, 2021, and is payable upon demand.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">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 a $400,000 cash payment (&#8220;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 principal in six equal installments. The principal 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 principal and interest can be converted into the Company 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 at a price of $0.75 per share.The value assigned to the warrants of $125,723 has been fully amortized. The cash for this Convertible Note was received prior to September 30, 2018. As of March 31, 2021, the Convertible Note is payable upon demand and total unpaid principal and interest outstanding is approximately $568,311.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">On September 21, 2018, the Company entered into several promissory notes with various investors of the Company with an aggregate face value of $440,000 in exchange for $440,000 cash payment (&#8220;the 2018 Notes&#8221;), the discount of the Notes will be amortized over the life of the Note and have an interest rate of 10%. The 2018 Notes have a twelve-month term with no payment required for the initial six months; after six months, the Company will repay the investors interest and principal in six equal installments. The principal and interest of the note is convertible into the Company&#8217;s common stock at a purchase price of $0.70 per common share after the six months. If the Company defaults on the 2018 Notes, the interest is increased to 12% and at the investors&#8217; option, the principal and interest can be converted into the Company common stock at a 20% discount to the then current market price. In addition, the Company issued five-year warrants to purchase up to 200,000 of the Company&#8217;s common shares at a price of $0.75 per share. The cash for the 2018 Notes was received prior to September 30, 2018. The value assigned to the warrants of $62,862 has been fully amortized. In March 2020, $220,000 of the 2018 Notes have been fully extinguished and the remaining $220,000 is in default and payable upon demand. As of March 31, 2021, the total unpaid principal and interest is approximately $284,156.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">During the year ended June 30, 2019, the Company entered into several promissory notes with various investors of the Company with an aggregate face value of $960,000 in exchange for a total of $900,000 cash payments (&#8220;the 2019 Notes&#8221;). The 2019 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 2019 Notes and recorded as interest expense. The notes have an interest rate of 7% and have an eighteen-month term with no payment required for the initial six months; after six months, the Company will repay the investors interest and principal in twelve equal installments. The principal and interest of the note is convertible into the Company&#8217;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&#8217; option, the principal and interest can be converted into the Company common stock at a 20% discount to the then current market price. The beneficial ownership value assigned to the conversion feature of $801,741 has been fully amortized. As of March 31, 2020, $533,000 of the 2019 Notes have been fully extinguished as $402,000 of debt repayment and the issuance of common stock valued at $131,000. On January 25, 2021, $300,000 of the 2019 Notes have been fully extinguished with the issuance of 4,000,000 of common stock at a price of $0.075 per share. The remaining principal of $90,124 is in default and payable upon demand. As of March 31, 2021, the total unpaid principal and interest is approximately $150,407.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">In March 2020, the Company entered into a promissory note with a related party (see Note 9) with a face value of $600,000 in exchange for a total of $565,000 cash payments. The total discount of the Note will be amortized over the life of the Note and recorded as interest expense which matured on December 1, 2020. In January 2021, the Company repaid $300,000 of the promissory note balance. The note is in default and due upon demand and the interest rate was increased to 12%. As of March 31, 2021, the total unpaid principal and interest is approximately $349,841.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">In March 2020, the Company entered into a promissory note with a related party (see Note 9) with a face value of $50,000. In January 2021, the Company repaid $25,000 of the promissory note balance. The note is in default and the interest rate increased to 12%. As of March 31, 2021, the total unpaid principal and interest is approximately $29,137.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">On April 30, 2020 the Company executed the standard loan documents required for securing a loan (the &#8220;EIDL Loan&#8221;) from the United States Small Business Administration (the &#8220;SBA&#8221;) under its Economic Injury Disaster Loan (&#8220;EIDL&#8221;) assistance program in light of the impact of the COVID-19 pandemic on the Company&#8217;s business. The principal amount of the EIDL Loan is $500,000, with proceeds to be used for working capital purposes. Interest on the EIDL Loan accrues at the rate of 3.75% per annum and installment payments, including principal and interest, are due monthly beginning twelve months from the date of the EIDL Loan in the amount of $2,437 The balance of principal and interest is payable thirty years from the date of the promissory note. </p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">On May 29, 2020, the Company was granted a loan from American Express National Bank in the aggregate amount of $602,478, pursuant to the Paycheck Protection Program (&#8220;PPP) under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The Loan which was in the form of a Note dated May 29, 2020, matures on May 29, 2022 and bears interest at a rate of 1.00% per annum, payable monthly commencing on December 29, 2020. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties. Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, rent, utilities and interest on other debt obligations incurred before February 15, 2020. The Company intends to use the entire Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. While the Company currently believes that its use of the loan proceeds will meet the conditions for forgiveness of the loan, it cannot be assured that the Company will be ineligible for forgiveness of the loan, in whole or in part. On January 5, 2021 the Company was notified by American Express National Bank that the United States Small Business Administration has approved our Loan Forgiveness Application and the loan has been closed. The Company realized other income from the forgiveness of the PPP loan in the Condensed Consolidated Statement of Operations for the three months ended March 30, 2021.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">On March 30, 2021, the Company was granted a loan from American Express National Bank in the aggregate amount of $557,977, pursuant to the Paycheck Protection Program (&#8220;PPP) under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The Loan which was in the form of a Note dated March 30, 2021, matures on March 30, 2023 and bears interest at a rate of 1.00% per annum, payable monthly commencing on March 30, 2022. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties. Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, rent, utilities and interest on other debt obligations incurred before February 15, 2020. The Company intends to use the entire Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. While the Company currently believes that its use of the loan proceeds will meet the conditions for forgiveness of the loan, it cannot be assured that the Company will be ineligible for forgiveness of the loan, in whole or in part.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">The Company recognized $71,604 and $286,835 of interest expense for the three and nine months ended March 31, 2021 and $106,400 and $676,092 of interest expense for the three and nine months ended March 31, 2020. As of March 31, 2021 and June 30, 2020, accrued interest on the above notes was $382,645 and $117,816, respectively.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">Notes payable and long-term debt outstanding as of March 31, 2021 and June 30, 2020 are summarized below:</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <table style="border-spacing:0;text-align:left;font:10pt times new roman;width:100%" cellpadding="0"> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" style="BORDER-BOTTOM: 1px solid;vertical-align:bottom;text-align:center;"> <p style="MARGIN: 0px; text-align:center;"><strong>Maturity</strong></p> <p style="MARGIN: 0px; text-align:center;"><strong>Date</strong></p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" style="BORDER-BOTTOM: 1px solid;vertical-align:bottom;text-align:center;" colspan="2"> <p style="MARGIN: 0px; text-align:center;"><strong>March 31,</strong></p> <p style="MARGIN: 0px; text-align:center;"><strong>2021</strong></p></td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="hdcell" style="BORDER-BOTTOM: 1px solid;vertical-align:bottom;text-align:center;" colspan="2"> <p style="MARGIN: 0px; text-align:center;"><strong>June 30,</strong></p> <p style="MARGIN: 0px; text-align:center;"><strong>2020</strong></p></td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">12% $150,000 Convertible Note Payable, net of unamortized discount of $0 and $0, respectively</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:12%;"> <p style="MARGIN: 0px; text-align:right;">Due on Demand</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">150,000</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">150,000</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">12% $440,000 Convertible Note Payable, net of unamortized discount of $0 and $0, respectively</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td> <p style="MARGIN: 0px; text-align:right;">Due on Demand</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="vertical-align:bottom;text-align:right;">440,000</td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="vertical-align:bottom;text-align:right;">440,000</td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">12% $220,000 Convertible Note Payable, net of unamortized discount of $0 and $0, respectively</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td> <p style="MARGIN: 0px; text-align:right;">Due on Demand</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="vertical-align:bottom;text-align:right;">220,000</td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="vertical-align:bottom;text-align:right;">220,000</td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">7% $426,667 Convertible Note Payable, net of unamortized discount of $0 and $35,866. respectively</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td> <p style="MARGIN: 0px; text-align:right;">Due on Demand</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="vertical-align:bottom;text-align:right;">-</td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="vertical-align:bottom;text-align:right;">182,326</td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">7% $213,333 Convertible Note Payable, net of unamortized discount of $0 and $28,492, respectively</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td> <p style="MARGIN: 0px; text-align:right;">Due on Demand</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="vertical-align:bottom;text-align:right;">90,125</td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="vertical-align:bottom;text-align:right;">164,072</td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">12% Note Payable, net of unamortized discount of $0 and $21,911, respectively &#8211; See Footnote 9</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td> <p style="MARGIN: 0px; text-align:right;">Due on Demand</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="vertical-align:bottom;text-align:right;">300,000</td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="vertical-align:bottom;text-align:right;">578,089</td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">12% Note Payable &#8211; See Footnote 9</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td> <p style="MARGIN: 0px; text-align:right;">Due on Demand</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="vertical-align:bottom;text-align:right;">25,000</td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="vertical-align:bottom;text-align:right;">50,000</td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">5% Note Payable</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td> <p style="MARGIN: 0px; text-align:right;">Due on Demand (1)</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="vertical-align:bottom;text-align:right;">350,000</td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="vertical-align:bottom;text-align:right;">350,000</td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">1% PPP Note Payable; Loan forgiveness granted on January 5, 2021</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td> <p style="MARGIN: 0px; text-align:right;">May 29, 2022</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="vertical-align:bottom;text-align:right;">-</td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="vertical-align:bottom;text-align:right;">602,478</td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">3.75% SBA EIDL Note Payable</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td> <p style="MARGIN: 0px; text-align:right;">April 30, 2050</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="vertical-align:bottom;text-align:right;">500,000</td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="vertical-align:bottom;text-align:right;">500,000</td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">1% PPP Note Payable</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td> <p style="MARGIN: 0px; text-align:right;">March 30, 2023</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;vertical-align:bottom;text-align:right;">557,977</td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;vertical-align:bottom;text-align:right;">-</td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Total notes payable</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;vertical-align:bottom;text-align:right;">2,633,102</td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 1px solid;vertical-align:bottom;text-align:right;">3,236,965</td> <td style="PADDING-BOTTOM: 1px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Less current portion of notes payable</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="vertical-align:bottom;text-align:right;">1,575,125</td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="vertical-align:bottom;text-align:right;">2,134,487</td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Notes payable, Non-current portion</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;vertical-align:bottom;text-align:right;">1,057,977</td> <td style="PADDING-BOTTOM: 3px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;vertical-align:bottom;text-align:right;">1,102,478</td> <td style="PADDING-BOTTOM: 3px;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr></table> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;"><sup>(1)</sup> The Company entered two promissory notes with an investor of the Company in the amount of $350,000. The investor had agreed to convert the loan into 437,500 shares of common stock in 2018. The Company has not issued these shares to the investor and booked the notes as a short-term loan. This loan is considered payable upon demand. </p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">The Company records tax contingencies when the exposure item becomes probable and reasonably estimable. As of March 31, 2021, the Company had a tax contingency related to stock options granted below the fair market value on date of grant. The Company is in the process of determining the possible exposure and necessary expense accrual for the related tax, penalties and interest. Management has not been able to determine the amount as of the date of this report, however, does not expect the amount to be material to the financial statements. </p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">To the best of the Company&#8217;s knowledge and belief, no legal proceedings of merit are currently pending or threatened against the Company.</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="font-size:10pt;font-family:times new roman;text-align:justify;margin:0px">The Company does not have a concentration of revenues from any individual customer (less than 10%).</p> <p style="font-size:10pt;font-family:times new roman;text-align:justify;margin:0px">&nbsp;</p> <p style="font-size:10pt;font-family:times new roman;text-align:justify;margin:0px">The Company operates in a rapidly evolving and highly regulated industry and will only conduct business in states where cannabis has been legalized. </p> <p style="font-size:10pt;font-family:times new roman;text-align:justify;margin:0px">&nbsp;</p> <p style="font-size:10pt;font-family:times new roman;text-align:justify;margin:0px">The Company was affected in March by the COVID-19 outbreak and worldwide pandemic. The Company saw some postponements in orders in the first few weeks March 2020 but by the end of March 2020 orders stabilized to a normal level. </p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">The equity incentive plan of the Company was established in February of 2017 and was amended and restated on April 14, 2020. The Board of Directors of the Company may from time to time, in its discretion grant to directors, officers, consultants and employees of the Company, non-transferable options to purchase common shares, provided that the number of options issued do not exceed 20,000,000. The options are exercisable for a period of up to 10 years from the date of the grant. The number of shares authorized to be issued under the equity incentive plan was increased from 10,000,000 to 20,000,000 through a consent of stockholders to amend and restate the equity incentive plan. </p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="font-size:10pt;font-family:times new roman;margin:0px">The following table reflects the continuity of stock options for the nine months ended March 31, 2021: </p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">A summary of stock option activity is as follows:</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <table style="border-spacing:0;text-align:left;font:10pt times new roman;width:100%" cellpadding="0"> <tr style="height:15px"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;"><strong>Number of options outstanding:</strong></p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" colspan="2" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">July 1, 2020</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">12,558,375</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Granted</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">5,754,124</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Forfeited / exchanged / modification</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">(5,952,000 </td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">)</td></tr> <tr style="height:15px;background-color:#ffffff"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">March 31, 2021</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">12,360,499</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Aggregate Intrinsic Value at March 31, 2021</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">222,126</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Number of options exercisable at end of period</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">3,645,494</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Number of options available for grant at end of period</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">4,957,288</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;"><strong>Weighted average option prices per share:</strong></p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Granted during the period</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">0.14</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Exercised during the period</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">0.00</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Terminated during the period</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">0.08</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Outstanding at end of period</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">0.10</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Exercisable at end of period</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">0.08</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr></table> <p style="font-size:10pt;font-family:times new roman;margin:0px">&nbsp; </p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">The average fair value of stock options granted was estimated to be $0.14 per share for the period ended March 31, 2021. This estimate was made using the Black-Scholes option pricing model and the following weighted average assumptions:</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <table style="border-spacing:0;font-size:10pt;width:100%" cellpadding="0"> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;" colspan="2"> <p style="MARGIN: 0px; text-align:center;"><strong>2020</strong></p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td colspan="2" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:bottom;"> <p style="margin:0px">Expected option life (years)</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">2 - 4</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:bottom;"> <p style="margin:0px">Expected stock price volatility</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">227 to 250</p></td> <td style="vertical-align:bottom;"> <p style="margin:0px">%</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Expected dividend yield</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">&#8212;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Risk-free interest rate</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td></td> <td> <p style="MARGIN: 0px; text-align:right;">0.44 to 0.54</p></td> <td style="width:1%;vertical-align:bottom;"> <p style="margin:0px">%</p></td></tr></table> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">Stock-based compensation expense attributable to stock options was approximately $201,470 for the nine months ended March 31, 2021. As of March 31, 2021, there was approximately $967,396 of unrecognized compensation expense related to 12,360,499 unvested stock options outstanding, and the weighted average vesting period for those options was 3 years.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="font-size:10pt;font-family:times new roman;margin:0px"><strong>Warrants</strong></p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">At March 31, 2021, the Company had outstanding warrants to purchase the Company&#8217;s common stock which were issued in connection with multiple financing arrangements. Information relating to these warrants is summarized as follows:</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <table style="border-spacing:0;font-size:10pt;width:100%" cellpadding="0"> <tr style="height:15px"> <td style="BORDER-BOTTOM: 1px solid;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:justify;"><strong>Warrants</strong></p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:11%;vertical-align:bottom;" colspan="2"> <p style="MARGIN: 0px; text-align:center;"><strong>Remaining </strong></p> <p style="MARGIN: 0px; text-align:center;"><strong>Number </strong></p> <p style="MARGIN: 0px; text-align:center;"><strong>Outstanding</strong></p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;" colspan="2"> <p style="MARGIN: 0px; text-align:center;"><strong>Weighted</strong></p> <p style="MARGIN: 0px; text-align:center;"><strong>Average </strong></p> <p style="MARGIN: 0px; text-align:center;"><strong>Remaining Life (Years)</strong></p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;" colspan="2"> <p style="MARGIN: 0px; text-align:center;"><strong>Weighted </strong></p> <p style="MARGIN: 0px; text-align:center;"><strong>Average</strong></p> <p style="MARGIN: 0px; text-align:center;"><strong>Exercise Price</strong></p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Warrants-Financing</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">86,957</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:8%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">2.05</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;"> <p style="margin:0px">$</p></td> <td style="width:8%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">1.15</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Warrants-Issued with Convertible Notes</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">600,000</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:8%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">2.48</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;"> <p style="margin:0px">$</p></td> <td style="width:8%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">0.75</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Warrants - Financing</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">360,577</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:8%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">3.27</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;"> <p style="margin:0px">$</p></td> <td style="width:8%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">0.78</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Warrants A &#8211; Financing </p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">28,072,364</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:8%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">3.27</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;"> <p style="margin:0px">$</p></td> <td style="width:8%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">0.16</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Total</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">29,119,898</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:8%;"> <p style="MARGIN: 0px; text-align:right;">3.25</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">$</p></td> <td style="width:8%;"> <p style="MARGIN: 0px; text-align:right;">0.18</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Aggregate Intrinsic Value at March 31, 2021</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;vertical-align:bottom;"> <p style="margin:0px">$</p></td> <td style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">-</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:8%;"> <p style="MARGIN: 0px; text-align:right;">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:8%;"> <p style="MARGIN: 0px; text-align:right;">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr></table></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">In March 2020, the Company entered into a promissory note with the Chief Executive Officer for $600,000 in exchange for a total of a $565,000 cash payment. The note matured in December 2020 and $300,000 of principal payments have been made to date. The note is in default and due upon demand and the interest rate was increased to 12%.&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">In March 2020, the Company entered into a promissory note with the Chief Technology Officer for $50,000. The note matured on January 1, 2021 and $25,000 of principal payments have been made to date. The note is in default and due upon demand and the interest rate was increased to 12%.</p></div> <div style="TEXT-ALIGN:justify; FONT: 10pt TIMES NEW ROMAN"><p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">On January 1, 2021 the Company extended its Denver Colorado headquarter lease for 12 months through December 31, 2021. During the past year a majority of the Company&#8217;s employee have been working remotely and the Company does not know if they will continue to keep this location or relocate to a small facility. Therefore, in accordance with ASC 842 the Company will not record an operating right of use asset and operating lease liability because of the short term nature of this amendment. The Company will recognize lease expense on a monthly basis through the life of this lease of approximately $51,786.</p><p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p><p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">During the three months ended March 31,2021 the Company ceased to use its Los Angles sales office and vacated the real estate. As a result, the Company wrote off the right of use asset of $91,316. The company had an operating use liability of $94,098 with respect to the lease. During this same period, the Company completed negotiations with the landlord to settle the remaining amounts due of $86,970 for a cash payment of $25,000. The Company recorded a gain of $61,970 in the consolidated statements of operations for the settlement of the operating lease.</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-ALIGN: justify; MARGIN: 0px; text-align:justify;">The Company has evaluated subsequent events through May 17, 2021 and has not identified any items requiring additional disclosure.</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">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. </p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">For a detailed discussion about the Company&#8217;s significant accounting policies, refer to Note 2 &#8212; &#8220;Summary of Significant Accounting Policies,&#8221; in the Company&#8217;s consolidated financial statements included in the Company&#8217;s June 30, 2020 Form 10-K. During the nine months ended March 31, 2021, there were no significant changes made to the Company&#8217;s significant accounting policies.</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">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.</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">Certain prior period amounts have been reclassified to conform with the current period presentation. The Cost of sales presented on the unaudited Consolidated Statements of Operations was included in prior presentations as operating expenses such as personnel expenses and general and administration. For the three months ended March 31, 2021 $395,421 of the cost of sales came from personnel expense and $53,541 of cost of sales came from general and administrative expense. For the nine months ended March 31, 2021 $1,250,126 of cost of sales came from personnel expense and $224,188 of cost of sales came from general and administrative expense.</p> <p style="font-size:10pt;font-family:times new roman;margin:0px">&nbsp;</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">In June 2016, the FASB issued ASU 2016-13, <em>Financial Instruments &#8211; Credit Losses (Topic 326), </em>which introduces new guidance for the accounting for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale (AFS) debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The pronouncement will be effective for public business entities that are SEC filers in fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The effect of the adoption of this pronouncement to the Company was immaterial.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and other Options (Subtopic 470-20) and Derivatives and Hedging &#8211; Contracts in Entity&#8217;s own Equity (Subtopic 815-40). ASU 2020-06 requires entities to provide expanded disclosures about the terms and features of convertible instruments and reduces the number of accounting models for convertible instruments and allows more contracts to qualify for equity classification. The pronouncement will be effective for public business entities that are SEC filers in fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted but no earlier than fiscal years beginning December 15, 2020.</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">&nbsp;</p> <p style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; MARGIN: 0px; text-align:justify;">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&#8217;s present or future condensed consolidated financial statements.</p></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><table style="border-spacing:0;font-size:10pt;width:100%" cellpadding="0"> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;" colspan="2"> <p style="MARGIN: 0px; text-align:center;"><strong>March 31,</strong></p> <p style="MARGIN: 0px; text-align:center;"><strong>2021</strong></p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;" colspan="2"> <p style="MARGIN: 0px; text-align:center;"><strong>June 30,</strong></p> <p style="MARGIN: 0px; text-align:center;"><strong>2020</strong></p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td colspan="2" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td colspan="2" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Software platform</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;"> <p style="margin:0px 0px 0px 0cm">$</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">4,482,225</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;"> <p style="margin:0px 0px 0px 0cm">$</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">4,482,225</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Furniture and fixtures</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">1,500</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">1,500</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Less accumulated depreciation and amortization</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">(1,628,689 </p></td> <td style="width:1%;vertical-align:bottom;"> <p style="margin:0px 0px 0px 0cm">)</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">(1,085,355 </p></td> <td style="width:1%;vertical-align:bottom;"> <p style="margin:0px 0px 0px 0cm">)</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Property and equipment, net</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;"> <p style="margin:0px 0px 0px 0cm">$</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">2,855,036</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;"> <p style="margin:0px 0px 0px 0cm">$</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">3,398,370</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td></tr></table></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><table style="border-spacing:0;font-size:10pt;width:100%" cellpadding="0"> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">2021</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;"> <p style="margin:0px 0px 0px 0cm">$</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">724,445</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">2022</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">724,445</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">2023</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">724,445</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">2024</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">622,359</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">2025</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">59,342</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Total Unamortized Expense</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;"> <p style="margin:0px 0px 0px 0cm">$</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">2,855,036</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td></tr></table></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><table style="border-spacing:0;font-size:10pt;width:100%" cellpadding="0"> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:center;"><strong>Maturity</strong></p> <p style="MARGIN: 0px; text-align:center;"><strong>Date</strong></p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;vertical-align:bottom;" colspan="2"> <p style="MARGIN: 0px; text-align:center;"><strong>March 31,</strong></p> <p style="MARGIN: 0px; text-align:center;"><strong>2021</strong></p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;vertical-align:bottom;" colspan="2"> <p style="MARGIN: 0px; text-align:center;"><strong>June 30,</strong></p> <p style="MARGIN: 0px; text-align:center;"><strong>2020</strong></p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">12% $150,000 Convertible Note Payable, net of unamortized discount of $0 and $0, respectively</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:12%;"> <p style="MARGIN: 0px; text-align:right;">Due on Demand</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;"> <p style="margin:0px 0px 0px 0cm">$</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">150,000</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;"> <p style="margin:0px 0px 0px 0cm">$</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">150,000</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">12% $440,000 Convertible Note Payable, net of unamortized discount of $0 and $0, respectively</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="MARGIN: 0px; text-align:right;">Due on Demand</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">440,000</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">440,000</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">12% $220,000 Convertible Note Payable, net of unamortized discount of $0 and $0, respectively</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="MARGIN: 0px; text-align:right;">Due on Demand</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">220,000</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">220,000</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">7% $426,667 Convertible Note Payable, net of unamortized discount of $0 and $35,866. respectively</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="MARGIN: 0px; text-align:right;">Due on Demand</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">-</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">182,326</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">7% $213,333 Convertible Note Payable, net of unamortized discount of $0 and $28,492, respectively</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="MARGIN: 0px; text-align:right;">Due on Demand</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">90,125</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">164,072</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">12% Note Payable, net of unamortized discount of $0 and $21,911, respectively &#8211; See Footnote 9</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="MARGIN: 0px; text-align:right;">Due on Demand</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">300,000</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">578,089</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">12% Note Payable &#8211; See Footnote 9</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="MARGIN: 0px; text-align:right;">Due on Demand</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">25,000</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">50,000</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">5% Note Payable</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="MARGIN: 0px; text-align:right;">Due on Demand (1)</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">350,000</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">350,000</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">1% PPP Note Payable; Loan forgiveness granted on January 5, 2021</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="MARGIN: 0px; text-align:right;">May 29, 2022</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">-</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">602,478</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">3.75% SBA EIDL Note Payable</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="MARGIN: 0px; text-align:right;">April 30, 2050</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">500,000</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">500,000</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">1% PPP Note Payable</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="MARGIN: 0px; text-align:right;">March 30, 2023</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">557,977</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">-</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Total notes payable</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">2,633,102</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">3,236,965</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Less current portion of notes payable</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">1,575,125</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">2,134,487</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Notes payable, Non-current portion</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;vertical-align:bottom;"> <p style="margin:0px 0px 0px 0cm">$</p></td> <td style="BORDER-BOTTOM: 3px double;vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">1,057,977</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;vertical-align:bottom;"> <p style="margin:0px 0px 0px 0cm">$</p></td> <td style="BORDER-BOTTOM: 3px double;vertical-align:bottom;"> <p style="MARGIN: 0px 0px 0px 0cm; text-align:right;">1,102,478</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr></table></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><table style="border-spacing:0;text-align:left;font:10pt times new roman;width:100%" cellpadding="0"> <tr style="height:15px"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;"><strong>Number of options outstanding:</strong></p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" colspan="2" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">July 1, 2020</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">12,558,375</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Granted</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">5,754,124</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Forfeited / exchanged / modification</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">(5,952,000 </td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">)</td></tr> <tr style="height:15px;background-color:#ffffff"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">March 31, 2021</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">12,360,499</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Aggregate Intrinsic Value at March 31, 2021</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">222,126</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Number of options exercisable at end of period</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">3,645,494</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Number of options available for grant at end of period</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">4,957,288</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;"><strong>Weighted average option prices per share:</strong></p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td class="ffcell" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Granted during the period</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">0.14</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Exercised during the period</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">0.00</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Terminated during the period</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">0.08</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Outstanding at end of period</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="width:9%;vertical-align:bottom;text-align:right;">0.10</td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Exercisable at end of period</p></td> <td style="width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;vertical-align:bottom;white-space: nowrap;">$</td> <td class="ffcell" style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;text-align:right;">0.08</td> <td style="PADDING-BOTTOM: 3px;width:1%;white-space: nowrap;"> <p style="margin:0px">&nbsp;</p></td></tr></table></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><table style="border-spacing:0;font-size:10pt;width:100%" cellpadding="0"> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;" colspan="2"> <p style="MARGIN: 0px; text-align:center;"><strong>2020</strong></p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px"> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td colspan="2" style="width:9%;"> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:bottom;"> <p style="margin:0px">Expected option life (years)</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">2 - 4</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:bottom;"> <p style="margin:0px">Expected stock price volatility</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">227 to 250</p></td> <td style="vertical-align:bottom;"> <p style="margin:0px">%</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="margin:0px">Expected dividend yield</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">&#8212;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="margin:0px">Risk-free interest rate</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td></td> <td> <p style="MARGIN: 0px; text-align:right;">0.44 to 0.54</p></td> <td style="width:1%;vertical-align:bottom;"> <p style="margin:0px">%</p></td></tr></table></div> <div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><table style="border-spacing:0;font-size:10pt;width:100%" cellpadding="0"> <tr style="height:15px"> <td style="BORDER-BOTTOM: 1px solid;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:justify;"><strong>Warrants</strong></p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:11%;vertical-align:bottom;" colspan="2"> <p style="MARGIN: 0px; text-align:center;"><strong>Remaining </strong></p> <p style="MARGIN: 0px; text-align:center;"><strong>Number </strong></p> <p style="MARGIN: 0px; text-align:center;"><strong>Outstanding</strong></p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;" colspan="2"> <p style="MARGIN: 0px; text-align:center;"><strong>Weighted</strong></p> <p style="MARGIN: 0px; text-align:center;"><strong>Average </strong></p> <p style="MARGIN: 0px; text-align:center;"><strong>Remaining Life (Years)</strong></p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;" colspan="2"> <p style="MARGIN: 0px; text-align:center;"><strong>Weighted </strong></p> <p style="MARGIN: 0px; text-align:center;"><strong>Average</strong></p> <p style="MARGIN: 0px; text-align:center;"><strong>Exercise Price</strong></p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Warrants-Financing</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">86,957</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:8%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">2.05</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;"> <p style="margin:0px">$</p></td> <td style="width:8%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">1.15</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Warrants-Issued with Convertible Notes</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">600,000</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:8%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">2.48</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;"> <p style="margin:0px">$</p></td> <td style="width:8%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">0.75</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Warrants - Financing</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">360,577</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:8%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">3.27</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;"> <p style="margin:0px">$</p></td> <td style="width:8%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">0.78</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Warrants A &#8211; Financing </p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 1px solid;width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">28,072,364</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:8%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">3.27</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;vertical-align:bottom;"> <p style="margin:0px">$</p></td> <td style="width:8%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">0.16</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#cceeff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Total</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">29,119,898</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:8%;"> <p style="MARGIN: 0px; text-align:right;">3.25</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">$</p></td> <td style="width:8%;"> <p style="MARGIN: 0px; text-align:right;">0.18</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr> <tr style="height:15px;background-color:#ffffff"> <td style="vertical-align:top;"> <p style="MARGIN: 0px; text-align:justify;">Aggregate Intrinsic Value at March 31, 2021</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM: 3px double;width:1%;vertical-align:bottom;"> <p style="margin:0px">$</p></td> <td style="BORDER-BOTTOM: 3px double;width:9%;vertical-align:bottom;"> <p style="MARGIN: 0px; text-align:right;">-</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:8%;"> <p style="MARGIN: 0px; text-align:right;">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td> <td style="width:1%;"> <p style="margin:0px">&nbsp;</p></td> <td style="width:8%;"> <p style="MARGIN: 0px; text-align:right;">&nbsp;</p></td> <td> <p style="margin:0px">&nbsp;</p></td></tr></table></div> 395421 1250126 53541 224188 4482225 4482225 1500 1500 -1628689 -1085355 724445 724445 724445 622359 59342 2855036 262500 366667 0.001 2916667 450000 543334 514360 3010000 492899 4000000 300000 1815220 131000 10000000 0.001 1120000 3000000 Series A Convertible Preferred Stock would be convertible into approximately 113,985,000 common shares, based on 140,331,966 fully diluted common shares outstanding as of March 31, 2021. 0.55 62288 1340630 1219833 860950 366667 4037888 30299998 154376 119737 105116 262500 2023-03-30 557977 0 2633102 3236965 1057977 1102478 150000 150000 Due on Demand 440000 440000 Due on Demand 220000 220000 Due on Demand 0 182326 Due on Demand 90125 164072 Due on Demand 300000 578089 Due on 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Cover - shares
9 Months Ended
Mar. 31, 2021
May 13, 2021
Cover [Abstract]    
Entity Registrant Name LEAFBUYER TECHNOLOGIES, INC.  
Entity Central Index Key 0001643721  
Document Type 10-Q  
Amendment Flag false  
Current Fiscal Year End Date --06-30  
Entity Small Business true  
Entity Shell Company false  
Entity Emerging Growth Company true  
Entity Current Reporting Status Yes  
Document Period End Date Mar. 31, 2021  
Entity Filer Category Non-accelerated Filer  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2021  
Entity Ex Transition Period false  
Entity Common Stock Shares Outstanding   88,814,587
Document Quarterly Report true  
Document Transition Report false  
Entity Interactive Data Current Yes  
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CONDENSED CONSOLDIATED BALANCE SHEETS - USD ($)
Mar. 31, 2021
Jun. 30, 2020
Current assets:    
Cash and cash equivalents $ 844,860 $ 1,309,912
Accounts receivable (net of allowance for doubtful accounts of $22,985 and $14,037, respectively,) 33,630 14,037
Inventory 622 622
Prepaid expenses and other current assets 40,377 87,895
Total current assets 919,489 1,412,466
Noncurrent assets:    
Fixed assets, net 2,855,036 3,398,370
Right of use assets 0 165,965
Total assets 3,774,525 4,976,801
Current liabilities:    
Accounts payable 189,566 487,890
Accrued liabilities 866,189 413,314
Deferred revenue 63,987 117,904
Lease obligation, current 0 103,049
Debt, current 1,575,125 2,134,487
Total current liabilities 2,694,867 3,256,644
Debt, net of current portion 1,057,977 1,102,478
Lease obligation, net of current portion 0 65,149
Total liabilities 3,752,844 4,424,271
Commitments and contingencies (Note 6) 0 0
Stockholders' Equity (Deficit):    
Common stock, $0.001 par value; 150,000,000 shares authorized; 88,395,553 shares issued and outstanding at March 31, 2021 and 81,772,802 shares issued and outstanding at June 30, 2020 88,396 81,773
Additional paid in capital 17,236,721 16,467,761
Accumulated deficit (17,307,556) (16,001,124)
Total stockholders' equity 21,681 552,530
Total liabilities and stockholders' equity (deficit) 3,774,525 4,976,801
Preferred Stock Series A [Member]    
Stockholders' Equity (Deficit):    
Preferred stock value 3,000 3,000
Preferred Stock Series B [Member]    
Stockholders' Equity (Deficit):    
Preferred stock value $ 1,120 $ 1,120
XML 14 R3.htm IDEA: XBRL DOCUMENT v3.21.1
CONDENSED CONSOLDIATED BALANCE SHEETS (Parenthetical) - USD ($)
Mar. 31, 2021
Jun. 30, 2020
Current assets:    
Accounts receivable, net of allowance for doubtful accounts $ 22,985 $ 14,037
Stockholders' Equity (Deficit):    
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 150,000,000 150,000,000
Common stock, shares issued 88,395,553 81,772,802
Common stock, shares outstanding 88,395,553 81,772,802
Preferred stock, par value $ 0.001  
Preferred stock, shares authorized 10,000,000  
Preferred Stock Series A [Member]    
Stockholders' Equity (Deficit):    
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 5,000,000 5,000,000
Preferred stock, shares issued 3,000,000 3,000,000
Preferred stock, shares outstanding 3,000,000 3,000,000
Preferred Stock Series B [Member]    
Stockholders' Equity (Deficit):    
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 5,000,000 5,000,000
Preferred stock, shares issued 1,120,000 1,120,000
Preferred stock, shares outstanding 1,120,000 1,120,000
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)
3 Months Ended 9 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Mar. 31, 2021
Mar. 31, 2020
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)        
Revenue $ 672,149 $ 575,002 $ 1,927,659 $ 1,870,518
Cost of revenue 500,818 448,961 1,443,678 1,474,314
Gross profit 171,331 126,041 483,981 396,204
Operating expenses:        
Selling expenses 153,094 424,858 648,790 1,664,370
General and administrative 125,602 185,476 505,305 761,346
Personnel expenses 185,352 339,859 630,755 990,120
Stock based compensation expense 136,685 105,116 321,207 712,326
Total operating expenses 600,732 1,055,309 2,106,056 4,128,162
Loss from operations (429,401) (929,268) (1,622,075) (3,731,958)
Interest expense (71,604) (106,783) (286,835) (676,475)
Forgiveness of PPP loan 602,478 0 (602,478) 0
Net profit (loss) $ 101,473 $ (1,036,051) $ (1,306,432) $ (4,408,433)
Net loss per common share:        
Basic and diluted $ 0.00 $ (0.01) $ (0.02) $ (0.06)
Weighted average common shares outstanding:        
Basic and diluted $ 83,805,363 $ 81,257,802 $ 83,600,897 $ 75,146,637
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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited) - USD ($)
Total
Series A, Preferred Stock
Series B, Preferred Stock
Common Stock [Member]
APIC [Member]
Acc Deficit [Member]
Balance, shares at Jun. 30, 2019   3,000,000 1,120,000 47,914,967    
Balance, amount at Jun. 30, 2019 $ 636,324 $ 3,000 $ 1,120 $ 47,915 $ 11,076,165 $ (10,491,876)
Stock based compensation 605,709 $ 0 $ 0 $ 0 605,709 0
Issuance of common stock for cash, shares   30,299,998    
Issuance of common stock for cash, amount 4,037,888 $ 0 $ 0 $ 30,300 4,007,588 0
Issuance of common stock in settlement of acquisition, shares   366,667    
Issuance of common stock in settlement of acquisition, amount 262,500 $ 0 $ 0 $ 367 262,133 0
Net loss (2,102,542) $ 0 $ 0 $ 0 0 (2,102,542)
Balance, shares at Sep. 30, 2019   3,000,000 1,120,000 78,581,632    
Balance, amount at Sep. 30, 2019 3,439,879 $ 3,000 $ 1,120 $ 78,582 15,951,595 (12,594,418)
Balance, shares at Jun. 30, 2019   3,000,000 1,120,000 47,914,967    
Balance, amount at Jun. 30, 2019 636,324 $ 3,000 $ 1,120 $ 47,915 11,076,165 (10,491,876)
Net loss $ (4,408,433)          
Issuance of common stock for vendor payments, shares          
Balance, shares at Mar. 31, 2020   3,000,000 1,120,000 81,257,802    
Balance, amount at Mar. 31, 2020 $ 1,371,606 $ 3,000 $ 1,120 $ 81,258 16,186,537 (14,900,309)
Balance, shares at Sep. 30, 2019   3,000,000 1,120,000 78,581,632    
Balance, amount at Sep. 30, 2019 3,439,879 $ 3,000 $ 1,120 $ 78,582 15,951,595 (12,594,418)
Stock based compensation 1,502 0 0 0 1,502 0
Net loss (1,269,840) $ 0 $ 0 $ 0 0 (1,269,840)
Balance, shares at Dec. 31, 2019   3,000,000 1,120,000 78,581,632    
Balance, amount at Dec. 31, 2019 2,171,541 $ 3,000 $ 1,120 $ 78,582 15,953,097 (13,864,258)
Stock based compensation 1,502 $ 0 $ 0 $ 0 1,502 0
Issuance of common stock for cash, shares   1,815,220    
Issuance of common stock for cash, amount 131,000 $ 0 $ 0 $ 1,815 129,185 0
Net loss (1,036,051) $ 0 $ 0 $ 0 0 (1,036,051)
Issuance of common stock as employee compensation, shares   860,950    
Issuance of common stock as employee compensation, amount 103,614 $ 0 $ 0 $ 861 102,753 0
Balance, shares at Mar. 31, 2020   3,000,000 1,120,000 81,257,802    
Balance, amount at Mar. 31, 2020 1,371,606 $ 3,000 $ 1,120 $ 81,258 16,186,537 (14,900,309)
Balance, shares at Jun. 30, 2020   3,000,000 1,120,000 81,772,802    
Balance, amount at Jun. 30, 2020 552,530 $ 3,000 $ 1,120 $ 81,773 16,467,761 (16,001,124)
Stock based compensation 54,123 0 0 0 54,123 0
Net loss (867,034) $ 0 $ 0 $ 0 0 (867,034)
Issuance of common stock as employee compensation, shares   475,365    
Issuance of common stock as employee compensation, amount 28,808 $ 0 $ 0 $ 475 28,333 0
Issuance of common stock for vendor payments, shares   433,077    
Issuance of common stock for vendor payments, amount 31,270 $ 0 $ 0 $ 433 30,837 0
Balance, shares at Sep. 30, 2020   3,000,000 1,120,000 82,681,244    
Balance, amount at Sep. 30, 2020 (200,303) $ 3,000 $ 1,120 $ 82,681 16,581,054 (16,868,158)
Balance, shares at Jun. 30, 2020   3,000,000 1,120,000 81,772,802    
Balance, amount at Jun. 30, 2020 552,530 $ 3,000 $ 1,120 $ 81,773 16,467,761 (16,001,124)
Net loss $ (1,306,432)          
Issuance of common stock for vendor payments, shares 154,376          
Balance, shares at Mar. 31, 2021   3,000,000 1,120,000 88,395,553    
Balance, amount at Mar. 31, 2021 $ 21,681 $ 3,000 $ 1,120 $ 88,396 17,236,721 (17,307,556)
Balance, shares at Sep. 30, 2020   3,000,000 1,120,000 82,681,244    
Balance, amount at Sep. 30, 2020 (200,303) $ 3,000 $ 1,120 $ 82,681 16,581,054 (16,868,158)
Stock based compensation 33,437 0 0 0 33,437 0
Net loss (540,871) $ 0 $ 0 $ 0 0 (540,871)
Issuance of common stock as employee compensation, shares   649,467    
Issuance of common stock as employee compensation, amount 68,154 $ 0 $ 0 $ 649 67,505 0
Issuance of common stock for vendor payments, shares   596,428    
Issuance of common stock for vendor payments, amount 40,710 $ 0 $ 0 $ 597 40,113 0
Balance, shares at Dec. 31, 2020   3,000,000 1,120,000 83,927,139    
Balance, amount at Dec. 31, 2020 (598,873) $ 3,000 $ 1,120 $ 83,927 16,722,109 (17,409,029)
Stock based compensation 113,910 $ 0 $ 0 $ 0 113,910 0
Issuance of common stock for cash, shares   4,000,000    
Issuance of common stock for cash, amount 300,000 $ 0 $ 0 $ 4,000 296,000 0
Net loss 101,473 $ 0 $ 0 $ 0 0 101,473
Issuance of common stock as employee compensation, shares   95,001    
Issuance of common stock as employee compensation, amount 22,775 $ 0 $ 0 $ 95 22,680 0
Issuance of common stock for vendor payments, shares   373,413    
Issuance of common stock for vendor payments, amount 82,395 $ 0 $ 0 $ 373 82,022 0
Balance, shares at Mar. 31, 2021   3,000,000 1,120,000 88,395,553    
Balance, amount at Mar. 31, 2021 $ 21,681 $ 3,000 $ 1,120 $ 88,396 $ 17,236,721 $ (17,307,556)
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited) - USD ($)
9 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Cash flows from operating activities:    
Net loss $ (1,306,432) $ (4,408,433)
Adjustments to reconcile net income to net cash used in operating activities:    
Stock based compensation 321,207 712,327
Stock issued for services 154,376 0
Forgiveness of PPP loan (602,478) 0
Amortization of note payable discount 65,638 206,459
Depreciation and amortization 543,334 514,360
Changes in assets and liabilities:    
Accounts receivable (19,593) 38,879
Inventory 0 608
Prepaid expenses and other 47,518 (8,197)
Other assets (2,233) 11,864
Accounts payable (298,324) 174,619
Accrued liabilities 398,958 (39,567)
Net cash used in operating activities (698,029) (2,797,081)
Cash flows from investing activities:    
Capitalized software 0 (492,899)
Net cash used in investing activities 0 (492,899)
Cash flows from financing activities:    
Proceeds from issuance of stock 0 4,037,888
Repayment of debt (325,000) (286,899)
Proceeds from issuance of PPP loan 557,977 0
Net cash provided by financing activities 232,977 3,750,989
Net change in cash and cash equivalents (465,052) 461,009
Cash and cash equivalents, beginning of period 1,309,912 181,647
Cash and cash equivalents, end of period 844,860 642,656
Cash paid for interest 0 8,619
Cash paid for taxes $ 0 $ 0
Supplemental information for non-cash investing and financing activities:    
Issuance of common stock for vendor payments and board of director services 154,376
Issuance of common stock for conversion of notes payable and accrued interest $ 300,000 $ 131,000
XML 18 R7.htm IDEA: XBRL DOCUMENT v3.21.1
Description of Business
3 Months Ended
Mar. 31, 2021
Description of Business  
Note 1 - Description of Business

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

 

Description of Business

 

The Company has evolved and grown from a listing website (Leafbuyer.com) to a comprehensive marketing technology platform that focuses on new customer acquisition, retention and now online-order ahead services.  By combining years of experience in the consumer marketing space and the increased popularity of Leafbuyer’s texting/loyalty program, Leafbuyer has developed a diverse product offering with a distinct competitive advantage.  Through proprietary technology, dispensary owners can leverage SMS and MMS messaging to connect customers directly to loyalty and rewards programs as well as the ability to confirm online orders for either pickup or delivery.  Leafbuyer has also developed technology designed to attract new dispensary customers to become part of loyalty and rewards programs.  

 

The Company’s website, Leafbuyer.com, and its progressive web application hosts a robust search algorithm similar to popular travel or hotel sites, where consumers can search the database for appealing offers. They can also search through thousands of menu items and products, create a profile, sign up to receive deal alerts and place online orders for pick up or delivery.  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. The company monetizes its platform through a combination of monthly subscription fees, sign up credits and certain transaction fees associated with consumer engagement.

 

Basis of Presentation

 

The accompanying condensed consolidated balance sheet as of June 30, 2020, has been derived from audited financial statements. The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements being audited and in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. In the opinion of management, such unaudited information includes all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of this interim information. All intercompany transactions have been eliminated in consolidation. Operating results and cash flows for interim periods are not necessarily indicative of results that can be expected for the entire year. The Company uses the same accounting policies in preparing quarterly and annual financial statements. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. The information included in this report should be read in conjunction with our audited financial statements and notes thereto.

 

Going Concern

 

As of March 31, 2021 we had $844,860 in cash and cash equivalents and a working capital deficit of $1,775,378. We are dependent on funds raised through equity financing. Our cumulative net loss of $17,307,556 was funded by debt and equity financing and we reported a net loss of $1,306,432 for the nine months ended March 31, 2021. Accordingly, there is substantial doubt about our ability to continue as a going concern within one year after the date the financial statements are issued.

 

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

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Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2021
Summary of Significant Accounting Policies  
Note 2 - Summary of Significant Accounting Policies

Significant Accounting Policies

 

Principles of Consolidation

 

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

 

For a detailed discussion about the Company’s significant accounting policies, refer to Note 2 — “Summary of Significant Accounting Policies,” in the Company’s consolidated financial statements included in the Company’s June 30, 2020 Form 10-K. During the nine months ended March 31, 2021, there were no significant changes made to the Company’s significant accounting policies.

 

Use of Estimates

 

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

 

Reclassifications

 

Certain prior period amounts have been reclassified to conform with the current period presentation. The Cost of sales presented on the unaudited Consolidated Statements of Operations was included in prior presentations as operating expenses such as personnel expenses and general and administration. For the three months ended March 31, 2021 $395,421 of the cost of sales came from personnel expense and $53,541 of cost of sales came from general and administrative expense. For the nine months ended March 31, 2021 $1,250,126 of cost of sales came from personnel expense and $224,188 of cost of sales came from general and administrative expense.

 

Recently Issued Accounting Pronouncements

 

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

 

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

 

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

XML 20 R9.htm IDEA: XBRL DOCUMENT v3.21.1
Property and Equipment
3 Months Ended
Mar. 31, 2021
Property and Equipment  
Note 3 - Property and Equipment

Property and equipment consist of the following:

 

 

 

March 31,

2021

 

 

June 30,

2020

 

 

 

 

 

 

 

 

Software platform

 

$ 4,482,225

 

 

$ 4,482,225

 

Furniture and fixtures

 

 

1,500

 

 

 

1,500

 

Less accumulated depreciation and amortization

 

 

(1,628,689 )

 

 

(1,085,355 )

Property and equipment, net

 

$ 2,855,036

 

 

$ 3,398,370

 

 

On November 6, 2018, the Company acquired a customer facing software (“Loyalty Software”) through a Stock Purchase Agreement, where the Company acquired all the issued and outstanding capital stock of Greenlight Technologies, Inc. (“GTI”) from its shareholders. At the time of the transaction, there were no employees working for GTI, no systems and no assets, other than the Loyalty Software. GTI’s legal entity was dissolved in the transition and the Loyalty Software was assumed by the Company. Management determined that the purchase of GTI did not constitute a business purchase and recorded the transaction as a purchase of software. The consideration for the Loyalty Software was 2,916,667 shares of common stock, 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. During the year ended June 30, 2020 additional Incentive Shares of 366,667 for a value of $262,500 was issued to shareholders of GTI as final settlement of the 2018 agreement. During the nine months ended March 31, 2021 there was no software capitalized and for the same period ended 2020, the Company capitalized approximately $492,899 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. 

 

Amortization expense, recorded as cost of revenue, related to internal use software totaled $543,334 during the nine months ended March 31, 2021 and for the same period ended 2020 amortization expenses was $514,360. Amortization expense for the next five years is as follows:

 

2021

 

$ 724,445

 

2022

 

 

724,445

 

2023

 

 

724,445

 

2024

 

 

622,359

 

2025

 

 

59,342

 

Total Unamortized Expense

 

$ 2,855,036

 

XML 21 R10.htm IDEA: XBRL DOCUMENT v3.21.1
Capital Stock and Equity Transactions
3 Months Ended
Mar. 31, 2021
Capital Stock and Equity Transactions  
Note 4 - 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, 2021. In addition, the Company has 10,000,000 shares of preferred stock authorized with a par value of $0.001 per share as of March 31, 2021 of which 3,000,000 shares of preferred stock are designated as Series A Preferred Shares, all of which were issued and outstanding as of March 31, 2021 and 1,120,000 shares of preferred stock are designated as Series B Preferred Shares, all of which were issued and outstanding as of March 31, 2021.

 

The Series A Preferred Shares currently outstanding are convertible into the greater of one share of Common Stock or a number of shares of Common Stock so that the Series A holders would hold 55% of the number of outstanding shares of Common Stock. The Series A Shares vote on an “as-converted” basis. 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, 2021, the Series A Convertible Preferred Stock would be convertible into approximately 113,985,000 common shares, based on 140,331,966 fully diluted common shares outstanding as of March 31, 2021.

 

Issuance of Common Stock

 

During the nine months ended March 31, 2021, the Company issued 4,000,000 shares of Common Stock to Note Payable Holders as satisfaction of principal obligations. These shares were valued at fair market value of $300,000.

 

During the nine months ended March 31, 2021 the Company issued 1,219,833 shares of Common Stock to employees. These shares were valued at fair market value of $119,737 and expensed in the accompanying Condensed Consolidated Statement of Operations.

 

During the nine months ended March 31, 2021, the Company issued 1,340,630 and 62,288 shares of Common Stock respectively to vendors and non-management members of the board of directors for services rendered. These shares were valued at fair market value of $154,376 and expensed in the accompanying Condensed Consolidated Statement of Operations.

 

During the nine months ended March 31, 2020, the Company issued 860,950 shares of Common Stock to employees. These shares were valued at fair market value of $105,116 and expensed in the accompanying Condensed Consolidated Statement of Operations.

 

During the nine months ended March 31, 2020, the Company issued 1,815,220 shares of Common Stock to Note Payable Holders as satisfaction of these obligations. These shares were valued at fair market value of $131,000.

 

During the nine months ended March 31, 2020 the Company issued 366,667 shares of Common Stock valued at $262,500 to shareholders of GTI as final settlement of the 2018 agreement. See Footnote 3.

 

During the nine months ended March 31, 2020, the Company issued 30,299,998 shares of common stock pursuant to the Purchase Agreement and received $4,037,888.

XML 22 R11.htm IDEA: XBRL DOCUMENT v3.21.1
Debt
3 Months Ended
Mar. 31, 2021
Debt  
Note 5 - Debt

During February 2018, the Company issued a promissory note in favor of an investor of the Company in the amount of $150,000 in exchange for $132,000 cash. The note has an original issue discount of $18,000 that is being amortized to interest expense over the term of the note. In March 2019, the loan maturity date was extended to August 8, 2019, the discount is fully amortized and total unpaid principal and interest is approximately $206,515, accruing at 12% at March 31, 2021, and is payable upon demand.

 

On September 21, 2018, the Company entered into a promissory note with an investor of the Company with a face value of $440,000 in exchange for a $400,000 cash payment (“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 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 at a price of $0.75 per share.The value assigned to the warrants of $125,723 has been fully amortized. The cash for this Convertible Note was received prior to September 30, 2018. As of March 31, 2021, the Convertible Note is payable upon demand and total unpaid principal and interest outstanding is approximately $568,311.

 

On September 21, 2018, the Company entered into several promissory notes with various investors of the Company with an aggregate face value of $440,000 in exchange for $440,000 cash payment (“the 2018 Notes”), the discount of the Notes will be amortized over the life of the Note and have an interest rate of 10%. The 2018 Notes have a twelve-month term with no payment required for the initial six months; after six months, the Company will repay the investors interest and principal in six equal installments. The principal and interest of the note is convertible into the Company’s common stock at a purchase price of $0.70 per common share after the six months. If the Company defaults on the 2018 Notes, the interest is increased to 12% and at the investors’ option, the principal and interest can be converted into the Company common stock at a 20% discount to the then current market price. 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 the 2018 Notes was received prior to September 30, 2018. The value assigned to the warrants of $62,862 has been fully amortized. In March 2020, $220,000 of the 2018 Notes have been fully extinguished and the remaining $220,000 is in default and payable upon demand. As of March 31, 2021, the total unpaid principal and interest is approximately $284,156.

 

During the year ended June 30, 2019, the Company entered into several promissory notes with various investors of the Company with an aggregate face value of $960,000 in exchange for a total of $900,000 cash payments (“the 2019 Notes”). The 2019 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 2019 Notes and recorded as interest expense. The notes have an interest rate of 7% and have an eighteen-month term with no payment required for the initial six months; after six months, the Company will repay the investors interest and principal in twelve equal installments. The principal and interest of the note is convertible into the Company’s common stock at a purchase price of $0.75 per common share at any time after the Original Issue Date. If the Company defaults on the Notes, the interest is increased to 15% and at the investors’ option, the principal and interest can be converted into the Company common stock at a 20% discount to the then current market price. The beneficial ownership value assigned to the conversion feature of $801,741 has been fully amortized. As of March 31, 2020, $533,000 of the 2019 Notes have been fully extinguished as $402,000 of debt repayment and the issuance of common stock valued at $131,000. On January 25, 2021, $300,000 of the 2019 Notes have been fully extinguished with the issuance of 4,000,000 of common stock at a price of $0.075 per share. The remaining principal of $90,124 is in default and payable upon demand. As of March 31, 2021, the total unpaid principal and interest is approximately $150,407.

 

In March 2020, the Company entered into a promissory note with a related party (see Note 9) with a face value of $600,000 in exchange for a total of $565,000 cash payments. The total discount of the Note will be amortized over the life of the Note and recorded as interest expense which matured on December 1, 2020. In January 2021, the Company repaid $300,000 of the promissory note balance. The note is in default and due upon demand and the interest rate was increased to 12%. As of March 31, 2021, the total unpaid principal and interest is approximately $349,841.

 

In March 2020, the Company entered into a promissory note with a related party (see Note 9) with a face value of $50,000. In January 2021, the Company repaid $25,000 of the promissory note balance. The note is in default and the interest rate increased to 12%. As of March 31, 2021, the total unpaid principal and interest is approximately $29,137.

            

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

 

On May 29, 2020, the Company was granted a loan from American Express National Bank in the aggregate amount of $602,478, pursuant to the Paycheck Protection Program (“PPP) under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The Loan which was in the form of a Note dated May 29, 2020, matures on May 29, 2022 and bears interest at a rate of 1.00% per annum, payable monthly commencing on December 29, 2020. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties. Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, rent, utilities and interest on other debt obligations incurred before February 15, 2020. The Company intends to use the entire Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. While the Company currently believes that its use of the loan proceeds will meet the conditions for forgiveness of the loan, it cannot be assured that the Company will be ineligible for forgiveness of the loan, in whole or in part. On January 5, 2021 the Company was notified by American Express National Bank that the United States Small Business Administration has approved our Loan Forgiveness Application and the loan has been closed. The Company realized other income from the forgiveness of the PPP loan in the Condensed Consolidated Statement of Operations for the three months ended March 30, 2021.

 

On March 30, 2021, the Company was granted a loan from American Express National Bank in the aggregate amount of $557,977, pursuant to the Paycheck Protection Program (“PPP) under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The Loan which was in the form of a Note dated March 30, 2021, matures on March 30, 2023 and bears interest at a rate of 1.00% per annum, payable monthly commencing on March 30, 2022. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties. Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, rent, utilities and interest on other debt obligations incurred before February 15, 2020. The Company intends to use the entire Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. While the Company currently believes that its use of the loan proceeds will meet the conditions for forgiveness of the loan, it cannot be assured that the Company will be ineligible for forgiveness of the loan, in whole or in part.

 

The Company recognized $71,604 and $286,835 of interest expense for the three and nine months ended March 31, 2021 and $106,400 and $676,092 of interest expense for the three and nine months ended March 31, 2020. As of March 31, 2021 and June 30, 2020, accrued interest on the above notes was $382,645 and $117,816, respectively.

 

Notes payable and long-term debt outstanding as of March 31, 2021 and June 30, 2020 are summarized below:

 

 

 

Maturity

Date

 

March 31,

2021

 

 

June 30,

2020

 

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

 

Due on Demand

 

$ 150,000

 

 

$ 150,000

 

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

 

Due on Demand

 

 

440,000

 

 

 

440,000

 

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

 

Due on Demand

 

 

220,000

 

 

 

220,000

 

7% $426,667 Convertible Note Payable, net of unamortized discount of $0 and $35,866. respectively

 

Due on Demand

 

 

-

 

 

 

182,326

 

7% $213,333 Convertible Note Payable, net of unamortized discount of $0 and $28,492, respectively

 

Due on Demand

 

 

90,125

 

 

 

164,072

 

12% Note Payable, net of unamortized discount of $0 and $21,911, respectively – See Footnote 9

 

Due on Demand

 

 

300,000

 

 

 

578,089

 

12% Note Payable – See Footnote 9

 

Due on Demand

 

 

25,000

 

 

 

50,000

 

5% Note Payable

 

Due on Demand (1)

 

 

350,000

 

 

 

350,000

 

1% PPP Note Payable; Loan forgiveness granted on January 5, 2021

 

May 29, 2022

 

 

-

 

 

 

602,478

 

3.75% SBA EIDL Note Payable

 

April 30, 2050

 

 

500,000

 

 

 

500,000

 

1% PPP Note Payable

 

March 30, 2023

 

 

557,977

 

 

 

-

 

Total notes payable

 

 

 

 

2,633,102

 

 

 

3,236,965

 

Less current portion of notes payable

 

 

 

 

1,575,125

 

 

 

2,134,487

 

Notes payable, Non-current portion

 

 

 

$ 1,057,977

 

 

$ 1,102,478

 

              

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

 

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.21.1
Commitments and Contingencies
3 Months Ended
Mar. 31, 2021
Commitments and Contingencies  
Note 6 - Commitments and Contingencies

The Company records tax contingencies when the exposure item becomes probable and reasonably estimable. As of March 31, 2021, the Company had a tax contingency related to stock options granted below the fair market value on date of grant. The Company is in the process of determining the possible exposure and necessary expense accrual for the related tax, penalties and interest. Management has not been able to determine the amount as of the date of this report, however, does not expect the amount to be material to the financial statements.

 

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

XML 24 R13.htm IDEA: XBRL DOCUMENT v3.21.1
Risks and Uncertainties
3 Months Ended
Mar. 31, 2021
Risks and Uncertainties  
Note 7 - Risks and Uncertainties

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

 

The Company operates in a rapidly evolving and highly regulated industry and will only conduct business in states where cannabis has been legalized.

 

The Company was affected in March by the COVID-19 outbreak and worldwide pandemic. The Company saw some postponements in orders in the first few weeks March 2020 but by the end of March 2020 orders stabilized to a normal level.

XML 25 R14.htm IDEA: XBRL DOCUMENT v3.21.1
Stock Based Compensation
3 Months Ended
Mar. 31, 2021
Stock Based Compensation  
Note 8 - Stock Based Compensation

The equity incentive plan of the Company was established in February of 2017 and was amended and restated on April 14, 2020. The Board of Directors of the Company may from time to time, in its discretion grant to directors, officers, consultants and employees of the Company, non-transferable options to purchase common shares, provided that the number of options issued do not exceed 20,000,000. The options are exercisable for a period of up to 10 years from the date of the grant. The number of shares authorized to be issued under the equity incentive plan was increased from 10,000,000 to 20,000,000 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, 2021:

 

A summary of stock option activity is as follows:

 

Number of options outstanding:

 

 

 

July 1, 2020

 

 

12,558,375

 

Granted

 

 

5,754,124

 

Forfeited / exchanged / modification

 

 

(5,952,000 )

 

 

 

 

 

March 31, 2021

 

 

12,360,499

 

Aggregate Intrinsic Value at March 31, 2021

 

$ 222,126

 

 

 

 

 

 

Number of options exercisable at end of period

 

 

3,645,494

 

Number of options available for grant at end of period

 

 

4,957,288

 

 

 

 

 

 

Weighted average option prices per share:

 

 

 

 

Granted during the period

 

$ 0.14

 

Exercised during the period

 

$ 0.00

 

Terminated during the period

 

$ 0.08

 

Outstanding at end of period

 

$ 0.10

 

Exercisable at end of period

 

$ 0.08

 

 

The average fair value of stock options granted was estimated to be $0.14 per share for the period ended March 31, 2021. This estimate was made using the Black-Scholes option pricing model and the following weighted average assumptions:

 

 

 

2020

 

 

 

 

 

Expected option life (years)

 

2 - 4

 

Expected stock price volatility

 

227 to 250

%

Expected dividend yield

 

 

 

Risk-free interest rate

 

0.44 to 0.54

%

 

Stock-based compensation expense attributable to stock options was approximately $201,470 for the nine months ended March 31, 2021. As of March 31, 2021, there was approximately $967,396 of unrecognized compensation expense related to 12,360,499 unvested stock options outstanding, and the weighted average vesting period for those options was 3 years.

 

Warrants

 

At March 31, 2021, the Company had outstanding warrants to purchase the Company’s common stock which were issued in connection with multiple financing arrangements. Information relating to these warrants is summarized as follows:

 

Warrants

 

Remaining

Number

Outstanding

 

 

Weighted

Average

Remaining Life (Years)

 

 

Weighted

Average

Exercise Price

 

Warrants-Financing

 

 

86,957

 

 

 

2.05

 

 

$

1.15

 

Warrants-Issued with Convertible Notes

 

 

600,000

 

 

 

2.48

 

 

$

0.75

 

Warrants - Financing

 

 

360,577

 

 

 

3.27

 

 

$

0.78

 

Warrants A – Financing

 

 

28,072,364

 

 

 

3.27

 

 

$

0.16

 

Total

 

 

29,119,898

 

 

 

3.25

 

 

$

0.18

 

Aggregate Intrinsic Value at March 31, 2021

 

$

-

 

 

 

 

 

 

 

 

 

XML 26 R15.htm IDEA: XBRL DOCUMENT v3.21.1
Related Party Transactions
3 Months Ended
Mar. 31, 2021
Related Party Transactions  
Note 9 - Related Party Transactions

In March 2020, the Company entered into a promissory note with the Chief Executive Officer for $600,000 in exchange for a total of a $565,000 cash payment. The note matured in December 2020 and $300,000 of principal payments have been made to date. The note is in default and due upon demand and the interest rate was increased to 12%. 

 

In March 2020, the Company entered into a promissory note with the Chief Technology Officer for $50,000. The note matured on January 1, 2021 and $25,000 of principal payments have been made to date. The note is in default and due upon demand and the interest rate was increased to 12%.

XML 27 R16.htm IDEA: XBRL DOCUMENT v3.21.1
Leases
3 Months Ended
Mar. 31, 2021
Leases  
Note 10 - Leases

On January 1, 2021 the Company extended its Denver Colorado headquarter lease for 12 months through December 31, 2021. During the past year a majority of the Company’s employee have been working remotely and the Company does not know if they will continue to keep this location or relocate to a small facility. Therefore, in accordance with ASC 842 the Company will not record an operating right of use asset and operating lease liability because of the short term nature of this amendment. The Company will recognize lease expense on a monthly basis through the life of this lease of approximately $51,786.

 

During the three months ended March 31,2021 the Company ceased to use its Los Angles sales office and vacated the real estate. As a result, the Company wrote off the right of use asset of $91,316. The company had an operating use liability of $94,098 with respect to the lease. During this same period, the Company completed negotiations with the landlord to settle the remaining amounts due of $86,970 for a cash payment of $25,000. The Company recorded a gain of $61,970 in the consolidated statements of operations for the settlement of the operating lease.

XML 28 R17.htm IDEA: XBRL DOCUMENT v3.21.1
Subsequent Events
3 Months Ended
Mar. 31, 2021
Subsequent Events  
Note 11 - Subsequent Events

The Company has evaluated subsequent events through May 17, 2021 and has not identified any items requiring additional disclosure.

XML 29 R18.htm IDEA: XBRL DOCUMENT v3.21.1
Summary of Significant Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2021
Summary of Significant Accounting Policies  
Principles of Consolidation

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

 

For a detailed discussion about the Company’s significant accounting policies, refer to Note 2 — “Summary of Significant Accounting Policies,” in the Company’s consolidated financial statements included in the Company’s June 30, 2020 Form 10-K. During the nine months ended March 31, 2021, there were no significant changes made to the Company’s significant accounting policies.

Use of Estimates

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

Reclassifications

Certain prior period amounts have been reclassified to conform with the current period presentation. The Cost of sales presented on the unaudited Consolidated Statements of Operations was included in prior presentations as operating expenses such as personnel expenses and general and administration. For the three months ended March 31, 2021 $395,421 of the cost of sales came from personnel expense and $53,541 of cost of sales came from general and administrative expense. For the nine months ended March 31, 2021 $1,250,126 of cost of sales came from personnel expense and $224,188 of cost of sales came from general and administrative expense.

 

Recently Issued Accounting Pronouncements

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

 

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

 

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

XML 30 R19.htm IDEA: XBRL DOCUMENT v3.21.1
Property and Equipment (Tables)
3 Months Ended
Mar. 31, 2021
Property and Equipment (Tables)  
Schedule of Property and equipment

 

 

March 31,

2021

 

 

June 30,

2020

 

 

 

 

 

 

 

 

Software platform

 

$

4,482,225

 

 

$

4,482,225

 

Furniture and fixtures

 

 

1,500

 

 

 

1,500

 

Less accumulated depreciation and amortization

 

 

(1,628,689

)

 

 

(1,085,355

)

Property and equipment, net

 

$

2,855,036

 

 

$

3,398,370

 

Schedule of Amortization expense

2021

 

$

724,445

 

2022

 

 

724,445

 

2023

 

 

724,445

 

2024

 

 

622,359

 

2025

 

 

59,342

 

Total Unamortized Expense

 

$

2,855,036

 

XML 31 R20.htm IDEA: XBRL DOCUMENT v3.21.1
Debt (Tables)
3 Months Ended
Mar. 31, 2021
Debt (Tables)  
Schedule of Notes payable and long-term debt outstanding

 

 

Maturity

Date

 

March 31,

2021

 

 

June 30,

2020

 

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

 

Due on Demand

 

$

150,000

 

 

$

150,000

 

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

 

Due on Demand

 

 

440,000

 

 

 

440,000

 

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

 

Due on Demand

 

 

220,000

 

 

 

220,000

 

7% $426,667 Convertible Note Payable, net of unamortized discount of $0 and $35,866. respectively

 

Due on Demand

 

 

-

 

 

 

182,326

 

7% $213,333 Convertible Note Payable, net of unamortized discount of $0 and $28,492, respectively

 

Due on Demand

 

 

90,125

 

 

 

164,072

 

12% Note Payable, net of unamortized discount of $0 and $21,911, respectively – See Footnote 9

 

Due on Demand

 

 

300,000

 

 

 

578,089

 

12% Note Payable – See Footnote 9

 

Due on Demand

 

 

25,000

 

 

 

50,000

 

5% Note Payable

 

Due on Demand (1)

 

 

350,000

 

 

 

350,000

 

1% PPP Note Payable; Loan forgiveness granted on January 5, 2021

 

May 29, 2022

 

 

-

 

 

 

602,478

 

3.75% SBA EIDL Note Payable

 

April 30, 2050

 

 

500,000

 

 

 

500,000

 

1% PPP Note Payable

 

March 30, 2023

 

 

557,977

 

 

 

-

 

Total notes payable

 

 

 

 

2,633,102

 

 

 

3,236,965

 

Less current portion of notes payable

 

 

 

 

1,575,125

 

 

 

2,134,487

 

Notes payable, Non-current portion

 

 

 

$

1,057,977

 

 

$

1,102,478

 

XML 32 R21.htm IDEA: XBRL DOCUMENT v3.21.1
Stock Based Compensation (Tables)
3 Months Ended
Mar. 31, 2021
Stock Based Compensation (Tables)  
Stock option activity

Number of options outstanding:

 

 

 

July 1, 2020

 

 

12,558,375

 

Granted

 

 

5,754,124

 

Forfeited / exchanged / modification

 

 

(5,952,000 )

 

 

 

 

 

March 31, 2021

 

 

12,360,499

 

Aggregate Intrinsic Value at March 31, 2021

 

$ 222,126

 

 

 

 

 

 

Number of options exercisable at end of period

 

 

3,645,494

 

Number of options available for grant at end of period

 

 

4,957,288

 

 

 

 

 

 

Weighted average option prices per share:

 

 

 

 

Granted during the period

 

$ 0.14

 

Exercised during the period

 

$ 0.00

 

Terminated during the period

 

$ 0.08

 

Outstanding at end of period

 

$ 0.10

 

Exercisable at end of period

 

$ 0.08

 

Schedule of fair value of stock options granted

 

 

2020

 

 

 

 

 

Expected option life (years)

 

2 - 4

 

Expected stock price volatility

 

227 to 250

%

Expected dividend yield

 

 

 

Risk-free interest rate

 

0.44 to 0.54

%

Summary of warrant outstanding

Warrants

 

Remaining

Number

Outstanding

 

 

Weighted

Average

Remaining Life (Years)

 

 

Weighted

Average

Exercise Price

 

Warrants-Financing

 

 

86,957

 

 

 

2.05

 

 

$

1.15

 

Warrants-Issued with Convertible Notes

 

 

600,000

 

 

 

2.48

 

 

$

0.75

 

Warrants - Financing

 

 

360,577

 

 

 

3.27

 

 

$

0.78

 

Warrants A – Financing

 

 

28,072,364

 

 

 

3.27

 

 

$

0.16

 

Total

 

 

29,119,898

 

 

 

3.25

 

 

$

0.18

 

Aggregate Intrinsic Value at March 31, 2021

 

$

-

 

 

 

 

 

 

 

 

 

XML 33 R22.htm IDEA: XBRL DOCUMENT v3.21.1
Summary of Significant Accounting Policies (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Mar. 31, 2021
Mar. 31, 2021
Summary of Significant Accounting Policies    
Cost of sales from personnel expenses $ 395,421 $ 1,250,126
Cost of sales from general and administrative expense $ 53,541 $ 224,188
XML 34 R23.htm IDEA: XBRL DOCUMENT v3.21.1
Property and equipment (Details) - USD ($)
Mar. 31, 2021
Jun. 30, 2020
Property and equipment (Details)    
Software platform $ 4,482,225 $ 4,482,225
Furniture and fixtures 1,500 1,500
Less accumulated depreciation and amortization (1,628,689) (1,085,355)
Property and equipment, net $ 2,855,036 $ 3,398,370
XML 35 R24.htm IDEA: XBRL DOCUMENT v3.21.1
Property and equipment (Details 1)
Mar. 31, 2021
USD ($)
Property and equipment (Details)  
2021 $ 724,445
2022 724,445
2023 724,445
2024 622,359
2025 59,342
Total Unamortized expense $ 2,855,036
XML 36 R25.htm IDEA: XBRL DOCUMENT v3.21.1
Property and equipment (Details Narrative) - USD ($)
9 Months Ended 12 Months Ended
Nov. 06, 2018
Mar. 31, 2021
Mar. 31, 2020
Jun. 30, 2020
Common stock shares issued   88,395,553   81,772,802
Common stock par value   $ 0.001   $ 0.001
GTI [Member]        
Fair market value       $ 262,500
Common stock shares issued     366,667 366,667
GTI [Member] | Loyalty Software [Member]        
Common stock par value $ 0.001      
Purchase of software consideration transferred or transferrable, shares issued 2,916,667      
Purchase of software consideration paid in cash $ 450,000      
Amortization expense   $ 543,334 $ 514,360  
Purchase of software total consideration paid or payable $ 3,010,000      
Amount of software enhancement cost capitalized   $ 492,899    
XML 37 R26.htm IDEA: XBRL DOCUMENT v3.21.1
Capital Stock and Equity Transactions (Details Narrative) - USD ($)
9 Months Ended
Mar. 31, 2021
Jun. 30, 2020
Mar. 31, 2020
Common stock, shares authorized (in shares) 150,000,000 150,000,000  
Common stock, par value (in dollars per share) $ 0.001 $ 0.001  
Preferred stock, shares authorized (in shares) 10,000,000    
Preferred stock, par value (in dollars per share) $ 0.001    
Common stock shares issued 88,395,553 81,772,802  
Common stock value $ 88,396 $ 81,773  
GTI [Member]      
Common stock shares issued   366,667 366,667
Common stock value     $ 262,500
Investor [Member] | Purchase Agreement [Member]      
Common stock shares issued     30,299,998
Common stock value     $ 4,037,888
Non-Management [Member]      
Common stock shares issued 62,288    
Vendor [Member]      
Common stock shares issued 1,340,630    
Common stock value $ 154,376    
Preferred Stock Series B [Member]      
Preferred stock, shares authorized (in shares) 5,000,000 5,000,000  
Preferred stock, par value (in dollars per share) $ 0.001 $ 0.001  
Preferred stock, shares designated 1,120,000    
Preferred Stock Series A [Member]      
Preferred stock, shares authorized (in shares) 5,000,000 5,000,000  
Preferred stock, par value (in dollars per share) $ 0.001 $ 0.001  
Preferred stock, shares designated 3,000,000    
Shares conversion description Series A Convertible Preferred Stock would be convertible into approximately 113,985,000 common shares, based on 140,331,966 fully diluted common shares outstanding as of March 31, 2021.    
Outstanding shares of common stock 55.00%    
Holders [Member]      
Common stock shares issued 4,000,000   1,815,220
Common stock value $ 300,000   $ 131,000
Employees [Member]      
Common stock shares issued 1,219,833   860,950
Common stock value $ 119,737   $ 105,116
XML 38 R27.htm IDEA: XBRL DOCUMENT v3.21.1
Debt (Details) - USD ($)
9 Months Ended
Mar. 31, 2021
Jun. 30, 2020
Less current portion of notes payable $ 1,575,125 $ 2,134,487
Total notes payable 2,633,102 3,236,965
Notes payable, Non-current portion 1,057,977 1,102,478
Convertible Notes Payable [Member]    
Total notes payable $ 150,000 150,000
Debt instrument maturity date description Due on Demand  
Convertible Notes Payable One [Member]    
Total notes payable $ 440,000 440,000
Debt instrument maturity date description Due on Demand  
Convertible Notes Payable Three [Member]    
Total notes payable $ 220,000 220,000
Debt instrument maturity date description Due on Demand  
Convertible Notes Payable Four [Member]    
Total notes payable $ 0 182,326
Debt instrument maturity date description Due on Demand  
Convertible Notes Payable Five [Member]    
Total notes payable $ 90,125 164,072
Debt instrument maturity date description Due on Demand  
Convertible Notes Payable Six [Member]    
Total notes payable $ 300,000 578,089
Debt instrument maturity date description Due on Demand  
Convertible Notes Payable Seven[Member]    
Total notes payable $ 25,000 50,000
Debt instrument maturity date description Due on Demand  
Convertible Notes Payable Eight[Member]    
Total notes payable $ 350,000 350,000
Debt instrument maturity date description Due on Demand  
Convertible Notes Payable Nine [Member]    
Total notes payable $ 0 602,478
Debt instrument, maturity date May 29, 2022  
Convertible Notes Payable Ten[Member]    
Debt instrument, maturity date Apr. 30, 2050  
Total Notes payable $ 500,000 500,000
Convertible Notes Payable Eleven [Member]    
Total notes payable $ 557,977 $ 0
Debt instrument, maturity date Mar. 30, 2023  
XML 39 R28.htm IDEA: XBRL DOCUMENT v3.21.1
Debt (Details Narrative)
1 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended
Mar. 30, 2021
USD ($)
Jan. 31, 2021
USD ($)
Apr. 30, 2020
USD ($)
Sep. 21, 2018
USD ($)
integer
$ / shares
shares
Feb. 28, 2018
USD ($)
Mar. 31, 2021
USD ($)
Mar. 31, 2020
USD ($)
Mar. 31, 2021
USD ($)
shares
Mar. 31, 2020
USD ($)
Jun. 30, 2020
USD ($)
Jun. 30, 2019
USD ($)
integer
$ / shares
Sep. 30, 2020
USD ($)
Repayment of promissory note balance   $ 300,000                    
Accrued interest               $ 382,645   $ 117,816    
Repayment of debt             $ 402,000 86,970        
Amount of unpaid principal and interest balance           $ 150,407   150,407        
Debt Extinguishment             533,000          
Remaining principal amount             390,125          
Proceeds from issuance of common stock             131,000 0 $ 4,037,888      
Interest expenses           71,604 $ 106,400 286,835 676,092      
Debt instrument, exchange amount               $ 300,000 $ 131,000      
EIDL [Member]                        
Note issued     $ 500,000                  
Interest Rate     3.75%                  
Loan amount     $ 2,437                  
Chief Executive Officer [Member] | March 2020 [Member]                        
Increased in interest               12.00%        
Maturity date               Dec. 01, 2020        
Convertable promissory note               $ 600,000        
Cash payments in exchange of promissory note               $ 565,000        
Chief Technology Officer [Member] | March 2020 [Member]                        
Maturity date               Jan. 01, 2021        
Interest rate               8.00%        
Promissory Note [Member] | Related Party [Member]                        
Amount of unpaid principal and interest balance           29,137   $ 29,137        
Interest Rate             12.00%   12.00%      
Maturity date             Dec. 01, 2020          
Promissory Note One [Member] | Related Party [Member]                        
Note issued             $ 50,000          
Increased in interest             12.00%          
Maturity date             Jan. 01, 2021          
Investor [Member]                        
Amount of unpaid principal and interest balance           568,311   $ 568,311        
Amortization of warrants       $ 125,723                
Investor [Member] | 2018 [Member]                        
Convert the loan into shares of common stock | shares               437,500        
Investor [Member] | Several Promissory Notes [Member]                        
Amount of unpaid principal and interest balance           284,156   $ 284,156        
Interest Rate       10.00%             7.00%  
Amortization of warrants       $ 62,862                
Amortization of beneficial conversion feature                     $ 801,741  
Beneficial Conversion Feature                     839,378  
Note issued       440,000             960,000  
Exchange for cash payment       $ 440,000             $ 900,000  
Debt Instrument, Term       12 months             18 months  
Increased in interest       12.00%             15.00%  
Number of installments | integer       6             12  
Discount on conversion common stock       20.00%             20.00%  
Warrant to purchase shares of common stock | shares       200,000                
Warrant period       5 years                
Debt default, description               $220,000 of the Notes have been fully extinguished and the remaining $220,000 is in default and payable upon demand.        
Common stock price per share | $ / shares                     $ 0.75  
Convertible debt                       $ 220,000
Common stock purchase price per share | $ / shares       $ 0.70             $ 0.75  
Investor [Member] | Promissory Note [Member]                        
Amount of unpaid principal and interest balance           206,515   $ 206,515        
Interest Rate       10.00%                
Note issued       $ 440,000 $ 150,000              
Exchange for cash payment       $ 400,000                
Debt Instrument, Term       12 months                
Increased in interest       12.00%                
Number of installments | integer       6                
Discount on conversion common stock       20.00%                
Warrant to purchase shares of common stock | shares       200,000                
Warrant period       5 years                
Common stock price per share | $ / shares       $ 0.75                
Common stock purchase price per share | $ / shares       $ 0.70                
Maturity date         Aug. 08, 2019              
Original issue discount         $ 18,000              
Debt instrument, exchange amount         $ 132,000              
Accrued interest rate               12.00%        
Investor [Member] | Promissory Note Two [Member]                        
Note Payable           350,000   $ 350,000        
American Express National Bank [Member]                        
Amount of unpaid principal and interest balance           $ 349,841   $ 349,841        
Loan granted by company $ 557,977                      
Interest Rate 1.00%                      
XML 40 R29.htm IDEA: XBRL DOCUMENT v3.21.1
Stock Based Compensation (Details) - Stock Option [Member]
9 Months Ended
Mar. 31, 2021
USD ($)
$ / shares
shares
Beginning of year 12,558,375
Granted 5,754,124
Forfeited / exchanged / modification (5,952,000)
End of Period 12,360,499
Aggregate Intrinsic Value at March 31, 2021 | $ $ 222,126
Number of options exercisable at end of period 3,645,494
Number of options available for grant at end of period 4,957,288
Granted during the period | $ / shares $ 0.14
Exercised during the period | $ / shares 0.00
Terminated during the period | $ / shares 0.08
Outstanding at end of period | $ / shares 0.10
Exercisable at end of period | $ / shares $ 0.08
XML 41 R30.htm IDEA: XBRL DOCUMENT v3.21.1
Stock Based Compensation (Details 1) - StockOptions [Member]
9 Months Ended
Mar. 31, 2021
Minimum [Member]  
Weighted Average Assumptions  
Expected option life (years) 2 years
Expected stock price volatility 227.00%
Risk-free interest rate 0.44%
Maximum [Member]  
Weighted Average Assumptions  
Expected option life (years) 4 years
Expected stock price volatility 250.00%
Risk-free interest rate 0.54%
XML 42 R31.htm IDEA: XBRL DOCUMENT v3.21.1
Stock Based Compensation (Details 2)
9 Months Ended
Mar. 31, 2021
USD ($)
$ / shares
shares
Remaining Number Outstanding | shares 29,119,898
Weighted Average Remaining Life (Years) 3 years 2 months 30 days
Weighted Average Exercise Price | $ / shares $ 0.18
Aggregate Intrinsic Value | $ $ 0
Warrants- Financing [Member]  
Remaining Number Outstanding | shares 86,957
Weighted Average Remaining Life (Years) 2 years 18 days
Weighted Average Exercise Price | $ / shares $ 1.15
Warrants-Issued with Convertible Notes [Member]  
Remaining Number Outstanding | shares 600,000
Weighted Average Remaining Life (Years) 2 years 5 months 23 days
Weighted Average Exercise Price | $ / shares $ 0.75
Warrants - Financing [Member]  
Remaining Number Outstanding | shares 360,577
Weighted Average Remaining Life (Years) 3 years 3 months 7 days
Weighted Average Exercise Price | $ / shares $ 0.78
Warrants A- Financing (expired July 2020) [Member]  
Remaining Number Outstanding | shares 28,072,364
Weighted Average Remaining Life (Years) 3 years 3 months 7 days
Weighted Average Exercise Price | $ / shares $ 0.16
XML 43 R32.htm IDEA: XBRL DOCUMENT v3.21.1
Stock Based Compensation (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Mar. 31, 2021
Dec. 31, 2020
Sep. 30, 2020
Mar. 31, 2020
Dec. 31, 2019
Sep. 30, 2019
Mar. 31, 2021
Stock based compensation $ 113,910 $ 33,437 $ 54,123 $ 1,502 $ 1,502 $ 605,709  
Stock Options [Member]              
Stock based compensation             $ 201,470
Average fair value of stock options granted             $ 0.14
Unrecognized compensation expense $ 967,396           $ 967,396
Unvested stock options 12,360,499           12,360,499
Weighted average vesting period             3 years
Stock Options [Member] | Equity Incentive Plan 2017 [Member]              
Stock options exercisable period             10 years
Description for shares issuable upon exercise of options             The number of shares authorized to be issued under the equity incentive plan was increased from 10,000,000 to 20,000,000 through a consent of stockholders to amend and restate the equity incentive plan.
Stock Options [Member] | Equity Incentive Plan 2017 [Member] | Maximum [Member]              
Options issued for purchase of common shares             20,000,000
XML 44 R33.htm IDEA: XBRL DOCUMENT v3.21.1
Related Party Transactions (Details Narrative) - March 2020 [Member]
9 Months Ended
Mar. 31, 2021
USD ($)
Chief Executive Officer [Member]  
Interest rate 12.00%
Maturity date Dec. 01, 2020
Convertible promissory note $ 600,000
Principal payment of debt 300,000
Cash payments in exchange of promissory note $ 565,000
Chief Technology Officer [Member]  
Interest rate 12.00%
Maturity date Jan. 01, 2021
Principal payment of debt $ 25,000
Convertible promissory note $ 50,000
XML 45 R34.htm IDEA: XBRL DOCUMENT v3.21.1
Leases (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Mar. 31, 2020
Mar. 31, 2021
Leases    
Total lease liability   $ 51,786
Right of use asset   91,316
Operating lease liability   94,098
Debt settlement, face amount of debt $ 402,000 86,970
Debt settlement, cash payment   25,000
Gain on debt settlement   $ 61,970
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