Leafbuyer Technologies, Inc. 2024 10-K Review

Introduction

Leafbuyer Technologies, Inc. has released its 10-K report for the fiscal year ending June 30, 2024. This document provides a comprehensive overview of the company's operations, financial performance, and strategic direction. As a company operating in the cannabis industry, Leafbuyer faces unique challenges and opportunities. This review will delve into the key aspects of the 10-K filing, including the business model, financial performance, risk factors, and future outlook.

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Business Overview

Leafbuyer Technologies, Inc. operates as a marketing technology platform for the cannabis industry. The company provides tools for customer acquisition and retention, including texting, loyalty programs, and application software. The platform allows dispensaries to target customers based on spending habits, product preferences, and more. Leafbuyer has expanded its operations to 26 legal cannabis states, with a focus on markets with high growth potential.

The company has developed several innovative features, such as a customizable white-label application for dispensaries and a data segmentation feature for targeted marketing. These tools aim to enhance customer engagement and increase return on investment for dispensaries.

Financial Performance

For the fiscal year ending June 30, 2024, Leafbuyer reported revenues of $5.6 million, a 10% increase from the previous year. However, the company also reported a net loss of $709,430, compared to a net loss of $585,211 in the prior year. The increase in revenue was primarily driven by the growth in text services, while the net loss was attributed to higher operating expenses and cost of revenue.

The company's gross profit decreased by 9% to $2.05 million, with a gross margin of 37%, down from 44% in the previous year. This decline was due to increased third-party text service expenses. Operating expenses totaled $2.64 million, with general and administrative expenses accounting for the majority.

Cash Flow and Liquidity

Leafbuyer ended the fiscal year with $165,332 in cash and cash equivalents, down from $445,712 in the previous year. The company used $131,136 in cash for operating activities, primarily due to the net loss and changes in working capital. Financing activities used $149,244 in cash, mainly for debt repayments.

The company faces a working capital deficit of $1.84 million and has a cumulative net loss of $25.25 million. Management plans to finance operations through existing cash and potential equity or debt financing, though there is no assurance of success.

Risk Factors

Leafbuyer operates in a highly regulated and evolving industry, with significant risks related to its financial resources, regulatory compliance, and market competition. The company has minimal financial resources and a substantial accumulated deficit, raising doubts about its ability to continue as a going concern.

The cannabis industry is subject to complex regulations, and any changes could adversely affect Leafbuyer's operations. Additionally, the company faces intense competition from larger, well-established firms with greater resources.

Future Outlook

Leafbuyer aims to expand its presence in legal cannabis states and develop new technologies to attract and retain customers. The company plans to grow organically and through potential acquisitions, though there are no guarantees of success.

The company's business model is designed to benefit from the expanding legal cannabis market, with a focus on providing value-added services to dispensaries. However, the company's financial challenges and regulatory risks remain significant hurdles.

Conclusion

Leafbuyer Technologies, Inc. presents a mixed investment opportunity. While the company has shown revenue growth and innovation in its product offerings, its financial performance and risk factors pose challenges. Investors should carefully consider these aspects before making investment decisions.

Overall, Leafbuyer receives an investment score of 3.5 out of 10, reflecting moderate potential with significant risks. The company's ability to navigate regulatory challenges and achieve financial stability will be crucial for its long-term success.