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Leafbuyer Technologies, Inc. – ‘10-Q’ for 9/30/22

On:  Monday, 11/14/22, at 4:01pm ET   ·   For:  9/30/22   ·   Accession #:  1477932-22-8503   ·   File #:  0-55855

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

11/14/22  Leafbuyer Technologies, Inc.      10-Q        9/30/22   51:3.1M                                   Discount Edgar/FA

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM  i 10-Q

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

For the quarterly period ended  i September 30, 2022

or

 i ☐     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:  i 333-206745

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

(Address of principal executive offices, including zip code)

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

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

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.  i 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.

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.  i ☒

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

The number of shares of outstanding of the Registrant’s Common Stock as of November 14, 2022 was  i 94,853,115

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 

See accompanying notes to condensed consolidated financial statements.

See accompanying notes to condensed consolidated financial statements

See accompanying notes to condensed consolidated financial statements.

See accompanying notes to condensed consolidated financial statements.

LEAFBUYER TECHNOLOGIES INC.

Notes to Unaudited Condensed Consolidated Financial Statements

In addition, the Company has  i 10,000,000 preferred stock authorized with a par value of $ i 0.001 per share as of September 30, 2021.

The  i 324,325 shares of Series A Convertible Preferred Stock are convertible into  i 125,014,495 shares of Common Stock so that the Series A Convertible Stock holders would hold  i 55% of the number of outstanding shares of Common Stock on a fully diluted basis after giving effect to such conversion as of September 30, 2021 compared to  i 111,942,356 as of September 30, 2020. The Series A Convertible Preferred Stock vote on an “as-converted” basis. The Company has recorded a derivative liability in accordance with FASB ASC 815 because of the conversion feature embedded in the Series A Convertible Preferred Stock. The value as of September 30, 2021 for the derivative liability was $ i 3,671,051 which was a decrease from June 30, 2020 of $ i 2,930,289. The difference was recorded as an unrealized gain on the consolidated statement of operations as of September 30, 2021 compared to a gain for this same period in 2020 of $ i 922,314.

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

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 $ i 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.

Issuance of Common Stock

During the three months period ended September 30, 2022 the Company issued  i 698,735 shares of Common Stock to employees. These shares were valued at fair market value of $ i 40,135 and expensed in the accompanying Condensed Consolidated Statement of Operations.

During the three months ended September 30, 2022, the Company issued  i 600,000 shares of Common Stock to vendors for services rendered. These shares were valued at fair market value of $ i 29,500 and expensed in the accompanying Condensed Consolidated Statement of Operations.

During the three months period ended September 30, 2021 the Company issued  i 733,938 shares of Common Stock to employees. These shares were valued at fair market value of $ i 65,514 and expensed in the accompanying Condensed Consolidated Statement of Operations.

During the three months ended September 30, 2021, the Company issued  i 290,000 shares of Common Stock to vendors for services rendered. These shares were valued at fair market value of $ i 22,300 and expensed in the accompanying Condensed Consolidated Statement of Operations.

On September 21, 2018, the Company entered several promissory notes with various investors of the Company with a face value of $ i 440,000 in exchange for $ i 400,000 cash payment (“the Notes”), the discount of the Notes will be amortized over the life of the Note and have an interest rate of  i 10%. The Notes have a twelve-month term with no payment required for the initial six months; after six months, the Company will repay the investors interest and principal in six equal installments. The principal and interest of the note is convertible into the Company’s common stock at a purchase price of $ i 0.70 per common share after the six months. If the Company defaults on the Notes, the interest is increased to  i 12% and at the investors’ option, the principal and interest can be converted into the Company’s common stock at a  i 20% discount to the then current market price. In addition, the Company issued five-year warrants to purchase up to  i 200,000 of the Company’s common shares at a price of $ i 0.75 per share. The cash for these Notes was received prior to September 30, 2018. The value assigned to the warrants of $ i 62,862 has been fully amortized. In March 2020, $2 i 20,000 of the 2018 Notes have been fully extinguished and the remaining $220,000 is in default and payable upon demand. As of September 30, 2022, the total unpaid principal and interest is approximately $ i 323,671.

During the year ended June 30, 2019, the Company entered into several promissory notes with various investors of the Company with a face value of $ i 960,000 in exchange for a total of $ i 900,000 cash payments. The Notes have a beneficial conversion feature valued at $ i 839,378, which is recorded as a discount. The total discount on the Notes will be amortized over the life of the Notes and recorded as interest expense. The notes have an interest rate of  i 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  i twelve equal installments. The principal and interest of the note is convertible into the Company’s common stock at a purchase price of $0.75 per common share at any time after the Original Issue Date. In March 2020, the Company did not make its required principal and interest payment which put the Notes in default. The interest rate increased to  i 15% and at the investors’ option, the principal and interest can be converted into the Company common stock at a  i 20% discount to the then current market price. The beneficial ownership value assigned to the conversion feature of $ i 801,741 has been fully amortized. As of March 31, 2020, $ i 533,000 of the 2019 Notes have been fully extinguished as $ i 402,000 of debt repayment and the issuance of common stock valued at $ i 131,000. On January 25, 2021, $ i 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 $ i 244,802 is in default and payable upon demand. As of September 30, 2022, the total unpaid principal and interest is approximately $ i 359,568.

During the year ended June 30, 2020, the Company entered into a promissory note with a related party (see Note 9) with a face value of $ i 600,000 in exchange for a total of $ i 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 $ i 300,000 and in July 2022 the Company repaid $ i 100,000 of the promissory note balance. The remaining principal of $200,000 is in default and due upon demand and the interest rate was increased to  i 12%. As of September 30, 2022, the total unpaid principal and interest is approximately $ i 247,366.

During the year ended June 30, 2020, the Company entered into a promissory note with a related party (see Note 9) with a face value of $ i 50,000. In January 2021, the Company repaid $ i 25,000 and in July 2022 repaid $ i 8,333 of the promissory note balance. The remaining principal of $16,667 note is in default and the interest rate increased to  i 12%. As of September 30, 2022, the total unpaid principal and interest is approximately $ i 21,648.

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 $ i 500,000, with proceeds to be used for working capital purposes. Interest on the EIDL Loan accrues at the rate of  i 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 $ i 2,437. The balance of principal and interest is payable thirty years from the date of the promissory note.

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  i 1.00% per annum, payable monthly commencing on March 30, 2022. The Note may be prepaid by the Company 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 September 30, 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 Consolidated Statement of Operations for the quarter ended September 30, 2021.

The Company recognized $ i 51,188 and $ i 57,286 of interest expense for the three months ended September 30, 2022 and 2021, respectively. As of September 30, 2022 and 2021, accrued interest on the above notes was $ i 603,639 and $ i 428,929, respectively. The weighted average interest rates as of September 30, 2022 and 2021 was  i 6.47% and  i 5.13%. 

Notes payable and long-term debt outstanding as of September 30, 2022 and June 30, 2022 are summarized below:

⁽¹⁾ The Company entered two promissory notes with an investor of the Company in the amount of $ i 350,000. The investor had agreed to convert the loan into  i 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.

A summary of option activity under the employee share option pan as of September 30, 2022 and changes during the year then ended is presented below.

A summary of the status of the Company’s nonvested shares as of September 30, 2022, and changes during the year quarter September 30, 2022, is presented below:

Stock-based compensation expense attributable to stock options was approximately $ i 88,211 for the quarter ended September 30, 2022. As of September 30, 2022, there was approximately $ i 514,416 of unrecognized compensation expense related to  i 13,450,170 nonvested stock options outstanding, and the weighted average vesting period for those options was  i 2 years.

Warrants

At September 30, 2022, 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: