Results of Operations - Three months ended March 31, 2022, compared to March 31, 2021

We had a net loss of $234,000 in the three months ended March 31, 2022, compared to a net loss of $268,000 for the three months ended March 31, 2021.

Revenues

Details of revenues are as follows:



                                       Three Months Ended March 31,

Increase (Decrease)


                                          2022               2021                $                %
Mobile banking technology           $      23,000       $      24,000      $    (1,000 )           (4.2 )
Other revenue, management fee -
related party                              67,000              52,000           15,000             28.8
Total Revenues                      $      90,000       $      76,000      $    14,000             18.4

• Mobile banking technology




Mobile Banking Technology revenues include products such as the Company's Blinx
On-Off™ prepaid toggle Card and its Open Loop/Closed Loop System and Bio ID Card
Platform. Mobile Banking Technology uses web-based mobile technology to offer
financial cardholders the very best technology in conducting secure financial
transactions in real-time, protecting personal identity, and financial account
security. Mobile Banking Technology revenues for the three months ended March
31, 2022, and 2021 were $23,000 and $24,000, respectively.

• Other revenue, management fee - related party




Effective October 1, 2015, the Company entered into a management services
agreement with The Matthews Group for which the Company agreed to manage its
previous barcode technology business, on behalf of The Matthews Group, from
October 1, 2015 to June 30, 2022. Per the terms of the management services
agreement, the Company earned a fee of 20% of barcode technology operations
revenues through May 31, 2017. Subsequent to May 31, 2017 and up to June 30,
2022, The Matthews Group earns a fee of 35% from the barcode technology
operations. For the three months ended March 31, 2022 and 2021, revenue earned
from the management services agreement was $67,000 and $52,000, respectively.

Cost of Sales

Cost of sales for the three months ended March 31, 2022 and 2021 totaled $52,000 and $60,000, respectively.



Operating Expenses

Selling, general and administrative expenses for the three months ended March
31, 2022 and 2021 totaled $158,000 and $184,000, respectively. The decrease in
selling, general and administrative expenses was primarily due to decreased
professional fees as compared to the same period of the prior year.

Other Income (Expenses)

Interest expense for the three months ended March 31, 2022 and 2021, was $114,000 and $100,000, respectively. The increase was due to the increase in our notes payable balance.



  18

Results of Operations - Nine months ended March 31, 2022, compared to March 31, 2021

We had a net loss of $589,000 for the nine months ended March 31, 2022, compared to a net loss of $806,000 for the nine months ended March 31, 2021.

Revenues

Details of revenues are as follows:



                                        Nine Months Ended March 31,             Increase (Decrease)
                                          2022               2021                $                %
Mobile banking technology           $      70,000       $      70,000      $        -                -
Other revenue, management fee -
related party                             217,000             219,000           (2,000 )           (0.9 )
Total Revenues                      $     287,000       $     289,000      $    (2,000 )           (0.7 )

• Mobile banking technology




Mobile Banking Technology revenues include products such as the Company's Blinx
On-Off™ prepaid toggle Card and its Open Loop/Closed Loop System and Bio ID Card
Platform. Mobile Banking Technology uses web-based mobile technology to offer
financial cardholders the very best technology in conducting secure financial
transactions in real-time, protecting personal identity, and financial account
security. Mobile Banking Technology revenues for the nine month period ended
March 31, 2022, and 2021 were $70,000 and $70,000, respectively.

• Other revenue, management fee - related party




Effective October 1, 2015, the Company entered into a management services
agreement with The Matthews Group for which the Company agreed to manage its
previous barcode technology business, on behalf of The Matthews Group, from
October 1, 2015 to June 30, 2022. Per the terms of the management services
agreement, the Company earned a fee of 20% of barcode technology operations
revenues through May 31, 2017. Subsequent to May 31, 2017 and up to June 30,
2022, The Matthews Group earns a fee of 35% from the barcode technology
operations. For the nine month period ended March 31, 2022 and 2021, revenue
earned from the management services agreement was $217,000 and $219,000,
respectively.

Cost of Sales

Cost of sales for the nine month period ended March 31, 2022 and 2021 totaled $150,000 and $171,000, respectively.

Operating Expenses



Selling, general and administrative expenses for the nine month period ended
March 31, 2022 and 2021 totaled $513,000 and $632,000, respectively. The
decrease in selling, general and administrative expenses was primarily due to a
one time settlement of property taxes related to our office lease of $67,000
paid in the prior year period, which did not occur in the current year period,
and decreased professional fees as compared to the same period of the prior
year.

Other Income (Expenses)

On October 22, 2021, the Company was notified that its PPP loan forgiveness applications totaling $118,000 were approved. No similar activity occurred in the prior year period.



Interest expense for the nine month period ended March 31, 2022 and 2021, was
$331,000 and $292,000, respectively. The increase was due to the increase in our
notes payable balance.

  19

Liquidity and Capital Resources



Our cash balance on March 31, 2022 decreased to $189,000 as compared to $238,000
on June 30, 2021. The decrease was the result of $473,000 in cash used in
operating activities offset by $424,000 in cash provided by financing
activities. Net cash used in operations during the period ended March 31, 2022,
was $473,000, compared with $496,000 of net cash used in operations during the
same period of the prior year. Cash used in operations during the period ended
March 31, 2022, was primarily from our net loss of $589,000 and a gain on
forgiveness of our SBA PPP loans of $118,000, offset by an increase in interest
accrued on notes payable of $38,000, and general changes to our working capital
accounts of $96,000. Net cash provided by financing activities of $424,000
during the period ended March 31, 2022, was due to proceeds received from notes
payable. During the same period of the prior year, net cash provided by
financing activities of $484,000 was from proceeds received from convertible and
notes payable.

The accompanying Condensed Consolidated Financial Statements have been prepared
assuming the Company will continue as a going concern, which contemplates the
realization of assets and satisfaction of liabilities in the normal course of
business. During the period ended March 31, 2022, the Company incurred a net
loss of $589,000 and cash used in operating activities of $473,000, and on March
31, 2022, the Company had a working capital deficit of $7,364,000. In addition,
as of March 31, 2022, the Company is delinquent in payment of $732,000 of its
notes payable. These factors, among others, raise substantial doubt about our
ability to continue as a going concern within one year of the date that the
financial statements are issued. In addition, the Company's independent
registered public accounting firm, in its report on our June 30, 2021 financial
statements, has raised substantial doubt about the Company's ability to continue
as a going concern. The Company's financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern.

The Company believes its cash and forecasted cash flow from operations will not
be sufficient to continue operations through fiscal 2022 without continued
external investment. The Company believes it will require additional funds to
continue its operations through fiscal 2022 and to continue to develop its
existing projects and plans to raise such funds by finding additional investors
to purchase the Company's securities, generating sufficient sales revenue,
implementing dramatic cost reductions or any combination thereof. There is no
assurance that the Company can be successful in raising such funds, generating
the necessary sales or reducing major costs. Further, if the Company is
successful in raising such funds from sales of equity securities, the terms of
these sales may cause significant dilution to existing holders of common stock.

The Company has traditionally been dependent on The Matthews Group, LLC, a
related party, for its financial support. The Matthews Group is owned 50% by Van
Tran, the Company's CEO/Executive Chair and a director, and 50% by Lawrence J.
Johanns, a significant Company stockholder.

Convertible notes and notes payable

Convertible notes and notes payable includes principal and accrued interest and consists of the following at March 31, 2022 and June 30, 2021:

March 31,

June 30,


                                                        2022

2021


(a) Unsecured convertible notes ($20,000 and
$19,000 in default)                                 $    63,000          $

62,000


(b) Notes payable (in default)                          453,000

440,000


(c) Notes payable (in default)                           28,000

27,000


Total convertible notes and notes payable           $   544,000          $

529,000




(a) The notes are unsecured, convertible into common stock at amounts ranging
from $0.08 to $0.30 per share, bear interest at rates ranging from 5% to 8% per
annum, were due through 2011 and are in default or due on demand.

At June 30, 2021, convertible notes totaled $62,000. During the period ended
March 31, 2022, a nominal amount of interest was added to principal, resulting
in a balance owed of $63,000 at March 31, 2022. On March 31, 2022, $20,000 of
the convertible notes were in default and convertible at a conversion price of
$0.30 per share into 65,952 shares of the Company's common stock. The balance of
$43,000 is due on demand and convertible at a conversion price of $0.08 per
share into 544,354 shares of the Company's common stock.

  20

(b) The notes are either secured by the Company's intellectual property or unsecured and bear interest ranging from 6.5% to 10% per annum, were due in 2012, and are in default.


At June 30, 2021, the notes totaled $440,000. During the period ended March 31,
2022, interest of $13,000 was added to principal resulting in a balance owed of
$443,000 at March 31, 2022. At March 31, 2022, $408,000 of notes are secured by
the Company's intellectual property and $45,000 of notes are unsecured.

(c) The notes are unsecured and bear interest of 4% per annum and were due on March 17, 2020, and are in default.

At June 30, 2021, the notes totaled $27,000. During the period ended March 31, 2022, a nominal amount of interest was added to principal, resulting in a balance owed of $28,000 at March 31, 2022.

Convertible notes and notes payable-related parties



Convertible notes and notes payable-related parties includes principal and
accrued interest and consists of the following at March 31, 2022 and June 30,
2021:

                                                      March 31,            June 30,
                                                        2022                 2021

(a) Convertible notes-The Matthews Group            $ 1,827,000          $

1,741,000


(b) Notes payable-The Matthews Group                  4,019,000

3,375,000


(c) Convertible notes-other related parties
($231,000 and $224,000 in default)                      317,000

308,000


Total convertible notes and notes
payable-related parties                             $ 6,163,000          $

5,424,000

(a) The notes are unsecured, convertible into common stock at $0.08 per share, bear interest at rates ranging from 8% to 10% per annum, and are due on demand.

The Matthews Group is a related party (see Note 7) and is owned 50% by Ms. Van
Tran, the Company's CEO/Executive Chair and a director, and 50% by Larry
Johanns, a significant shareholder of the Company. At June 30, 2021, convertible
notes due to The Matthews Group totaled $1,741,000. During the period ended
March 31, 2022, interest of $86,000 was added to principal, resulting in a
balance owed of $1,827,000 at March 31, 2022. At March 31, 2022, the notes are
convertible at a conversion price of $0.08 per share into 22,473,937 shares of
the Company's common stock.

(b) The notes are unsecured, accrue interest at 10% per annum, and are due on
demand. The notes were issued relating to a management services agreement with
The Matthews Group (see Note 7) dated December 31, 2015. At June 30, 2021, notes
due to The Matthews Group totaled $3,375,000. During the period ended March 31,
2022, $424,000 of notes payable were issued and interest of $220,000 was added
to principal, resulting in a balance owed of $4,019,000 at March 31, 2022.

(c) The notes are due to a current and a former director, are unsecured, convertible into common stock at per share amounts ranging from $0.08 to $0.30, and bear interest at rates ranging from 8% to 10% per annum.



At June 30, 2021, convertible notes due to other related parties totaled
$308,000. During the period ended March 31, 2022, interest of $9,000 was added
to principal resulting in a balance owed of $317,000 at March 31, 2022. At March
31, 2022, $231,000 of the notes were due in 2010 and are in default, and the
balance of $86,000 is due on demand. At March 31, 2022, $231,000 of the notes
are convertible at a conversion price of $0.30 per share into 769,581 shares of
the Company's common stock, and $86,000 of the notes are convertible at a
conversion price of $0.08 per share into 1,082,550 shares of the Company's
common stock.

Commitments and Contractual Obligations

The Company leases its corporate office building from Ms. Tran, our chief executive officer, on a month-to-month basis, for $4,000 per month. The corporate office is located at 2445 Winnetka Avenue North, Golden Valley, Minnesota.



  21

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Critical Accounting Policies and Estimates


Management's discussion and analysis of our financial condition and results of
operations are based on our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of these financial statements requires management to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. On an ongoing basis, management evaluates its estimates, including
those related to impairment of long-lived assets, including finite lived
intangible assets, accrued liabilities, fair value of warrant derivatives and
certain expenses. We base our estimates on historical experience and on various
other assumptions that we believe to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources.
Actual results may differ materially from these estimates under different
assumptions or conditions.

Our significant accounting policies are more fully described in Note 1 to our
financial statements. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, revenues, and expenses, and the related
disclosures of contingent assets and liabilities. Actual results could differ
from those estimates under different assumptions or conditions.

Stock-Based Compensation

The Company periodically issues stock-based compensation to officers, directors, contractors and consultants for services rendered. Such issuances vest and expire according to terms established at the issuance date.



Stock-based payments to officers, directors, employees, and for acquiring goods
and services from nonemployees, which include grants of employee stock options,
are recognized in the financial statements based on their fair values in
accordance with Topic 718. Stock option grants, which are generally time vested,
will be measured at the grant date fair value and charged to operations on a
straight-line basis over the vesting period. The fair value of stock options is
determined utilizing the Black-Scholes option-pricing model, which is affected
by several variables, including the risk-free interest rate, the expected
dividend yield, the expected life of the equity award, the exercise price of the
stock option as compared to the fair market value of the common stock on the
grant date and the estimated volatility of the common stock over the term of the
equity award.

Revenue Recognition

Revenues for the Company are classified into mobile banking technology and management fee revenue.

a. Mobile Banking Revenue


The Company, as a merchant payment processor and a distributor, recognizes
revenue from transaction fees charged to cardholders for the use of its issued
mobile debit cards. The fees are recognized on a monthly basis after all
cardholder transactions have been summarized and reconciled with third party
processors.

b. Other revenue, management fee - related party



On December 31, 2015, the Company sold all of its assets of its Barcode
Technology comprised solely of its intellectual property to The Matthews Group
and entered into a management services agreement with The Matthews Group to
manage all facets of the barcode technology operations, on behalf of The
Matthews Group, through June 30, 2022. The Company earned a fee of 35% of all
revenues billed up to March 31, 2022.

Recently Issued Accounting Standards

See Footnote 1 of consolidated financial statements for a discussion of recently issued accounting standards.

22

© Edgar Online, source Glimpses