LBUY Leafbuyer Technologies Inc (PK)

Note 1 — Description of Business

Description of Business

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

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

Basis of Presentation

The accompanying condensed balance sheet as of March 31, 2024, has been derived from audited financial statements. The accompanying unaudited interim condensed 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 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, 2024, we had $155,942 in cash and cash equivalents and a working capital deficit of $2,011,802. We are dependent on funds raised through equity financing. Our accumulated deficit through March 31, 2024 of $25,225,958 was funded by debt and equity financing and we reported a net loss from operations of $697,253 for the nine months ended March 31, 2024. 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

Principles of Consolidation

Use of Estimates

Earnings (Loss) per Share

Note 3 — Fixed Assets and Intangible Assets

Fixed Assets and intangible assets consist of the following 

Amortization expense for the three and nine months ended March 31, 2024 was $181,111 and $543,333, respectively. Amortization expense for the three and nine months ended March 31, 2023 was $181,111 and $543,333, respectively.

Amortization expense for the next year is as follows:

Note 4 — Capital Stock and Equity Transactions

The Company has 700,000,000 shares of common stock authorized with a par value of $0.001 per share as of March 31, 2024. On August 13, 2021 the Company filed Articles of Amendment to Amended and Restated Articles of Incorporation with the State of Nevada increasing the number of common shares from 150,000,000 to 700,000,000.

In addition, the Company has 10,000,000 preferred stock authorized with a par value of $0.001 per share as of March 31, 2024.

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

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

Issuance of Common Stock

During the nine months period ended March 31, 2023 the Company issued 1,472,287 shares of Common Stock to employees. These shares were valued at fair market value of $72,362 and expensed in the accompanying Condensed Statement of Operations.

During the nine months ended March 31, 2023, the Company issued 640,000 shares of Common Stock to vendors for services rendered. These shares were valued at fair market value of $30,420 and expensed in the accompanying Condensed Statement of Operations.

During the nine months period ended March 31, 2024 the Company issued 562,500 shares of Common Stock to employees. These shares were valued at fair market value of $23,062 and expensed in the accompanying Condensed Statement of Operations.

During the nine months ended March 31, 2024, the Company issued 80,000 shares of Common Stock to vendors for services rendered. These shares were valued at fair market value of $3,040 and expensed in the accompanying Condensed Statement of Operations.

Note 5 — Debt

During the year ended June 30, 2018, the Company entered two promissory notes with an investor of the Company in the amount of $350,000 with an interest rate of zero. This loan is considered payable upon demand. During the quarter ending March 31, 2024 the Company paid $71,000 and intends to make monthly payments of $25,000 until the note is paid in full.

During the year ended June 30, 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 loan maturity date was extended to August 8, 2019, the discount is fully amortized, total unpaid principal and interest is approximately $260,416, accruing at 12% at March 31, 2024, and is payable upon demand.

During the year ended June 30, 2019, the Company entered into a promissory note with an investor of the Company with a face value of $440,000 in exchange for $400,000 cash payment (“the Convertible Note”), the discount of the Convertible Note was amortized over the life of the Convertible Note and has an interest rate of 10%. As of March 31, 2024, the Convertible Note is payable upon demand and included as current debt on the balance sheet. As of March 31, 2024, and the total unpaid principal and interest outstanding is approximately $246,834.

During the year ended June 30, 2019, the Company entered a promissory note with an investor of the Company with a face value of $220,000 in exchange for $200,000 cash payment the discount of the Notes was amortized over the life of the Note and has an interest rate of 10%. The promissory note is in default and payable upon demand and included as current debt on the balance sheet. As of March 31, 2024, the total unpaid principal and interest is approximately $363,247.

During the year ended June 30, 2019, the Company entered into two promissory notes with an investor of the Company with a face value of $640,000 in exchange for a total of $600,000 cash payment. The discount of the Notes was amortized over the life of the Note and has an interest rate of 7%. The remaining principal is in default and payable upon demand and included as current debt on the balance sheet. As of March 31, 2024, the total unpaid principal and interest is approximately $408,980.

During the year ended June 30, 2020, the Company entered into a promissory note with a related party (see Note 10) with a face value of $600,000 in exchange for a total of $565,000 cash payments. The total discount of the Note will be amortized over the life of the Note and recorded as interest expense which matured on December 1, 2020. In January 2021, the Company repaid $300,000 and in July 2022 the Company repaid $100,000 of the promissory note balance. The note is in default and due upon demand and the interest rate was increased to 12%. As of March 31, 2024, the total unpaid principal and interest is approximately $163,344. This is classified as current debt, related party on the balance sheet.

During the year ended June 30, 2020, the Company entered into a promissory note with a related party (see Note 10) with a face value of $50,000. In January 2021, the Company repaid $25,000 and in July 2022 repaid $8,333 of the promissory note balance. The note is in default and the interest rate increased to 12%. As of March 31, 2024, the total unpaid principal and interest is approximately $13,985. This is classified as current debt, related party on the balance sheet.

During the quarter ended March 31, 2024, the Company entered into two promissory notes with related parties (see Note 10) with a total value of $65,000. The notes mature in 120 days and accrue interest at 12%. As of March 31, 2024, the total unpaid principal and interest is approximately $66,261. This is classified as current debt, related party on the balance sheet.

During the year ended June 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 and included as long term debt on the balance sheet.

Note 6: Income Taxes

The Company accounts for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”), which requires the use of the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets are also recognized for net operating losses (NOLs) and tax credit carryforwards.

Provision for Income Taxes

The components of the provision for income taxes are as follows:

Deferred Tax Assets and Liabilities

Significant components of the Company’s deferred tax assets and liabilities as of March 31, 2024, and June 30, 2023 are as follows:

Valuation Allowance

The Company has established a full valuation allowance against its net deferred tax assets as of March 31, 2024, and June 30, 2023. The valuation allowance was recorded because it is more likely than not that the Company will not realize its deferred tax assets, primarily due to cumulative losses incurred in recent years.

Unrecognized Tax Benefits

The Company has no unrecognized tax benefits as of March 31, 2024, and June 30, 2023.

The Company files income tax returns in the U.S. federal jurisdiction and is subject to income tax examinations by federal tax authorities for tax years ended 2019 and later. The Company currently is not under examination by any tax authority. The Company’s policy is to record interest and penalties on uncertain tax positions as income tax expense.

As of March 31, 2024 and June 30, 2023, the Company has no accrued interest or penalties related to uncertain tax positions.

Note 7 — Commitments and Contingencies

The Company records tax contingencies when the exposure item becomes probable and reasonably estimable. As of March 31, 2024, 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 8 — Risks and Uncertainties

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

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

Note 9 — Stock Based Compensation

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