The following discussion and analysis of financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this report. This discussion contains forward-looking statements that involve risks, uncertainties, and assumptions. See "Note Regarding Forward-Looking Statements." Our actual results could differ materially from those anticipated in the forward-looking statements as a result of certain factors discussed elsewhere in this report.

The following discussion and analysis of the Company's financial condition and results of operations is based on the preparation of our financial statements in accordance with U.S. generally accepted accounting principles. You should read this discussion and analysis together with such financial statements and the related notes thereto.

COVID-19 Considerations

The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on the Company's business is highly uncertain and difficult to predict, as the responses that the Company, other businesses and governments are taking continue to evolve. Furthermore, capital markets and economies worldwide have also been negatively impacted by the COVID-19 pandemic, and it is possible that the COVID-19 pandemic could cause a local, national and/or global economic recession. Policymakers around the globe have responded with fiscal policy actions to support the economy as a whole, but it is presently unknown whether and to what extent further fiscal actions will continue. The magnitude and overall effectiveness of these actions remain uncertain.

The Company believes that its Mobile Banking revenues have been negatively affected due to the reduction in customer spending, which negatively impacts the amount of fees earned by the Company from its customers. The Company is also currently experiencing a decline in revenues earned under the management services agreement with The Matthews Group, as The Matthews Group's customer orders have been negatively impacted by the effects of COVID-19. The severity of the impact of the COVID-19 pandemic on the Company's business will continue to depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Company's customers, service providers and suppliers, all of which are uncertain and cannot be predicted. As of the date of issuance of the Company's financial statements, the extent to which the COVID-19 pandemic may in the future materially impact the Company's financial condition, liquidity or results of operations is uncertain.

Inflation

Global inflation increased during 2021 and in 2022. The Russia Ukraine conflict and other geopolitical conflicts, as well as related international response, have exacerbated inflationary pressures, including causing increases in the price for goods and services and global supply chain disruptions, which have resulted and may continue to result in shortages in food products, materials and services. Such shortages have resulted and may continue to result in inflationary cost increases for labor, fuel, food products, materials and services, and could continue to cause costs to increase as well as result in the scarcity of certain materials. We cannot predict any future trends in the rate of inflation or other negative economic factors or associated increases in our operating costs and how that may impact our business. To the extent we are unable to recover higher operating costs resulting from inflation or otherwise mitigate the impact of such costs on our and their business, our revenues and operating results could decrease, and our financial condition and results of operations could be adversely affected.



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Results of Operations - June 30, 2022 compared to June 30, 2021

Revenues

Details of revenues are as follows:



                                        Year Ended June 30,              Increase (Decrease)
                                        2022            2021              $               %
Mobile banking technology           $   90,000      $   93,000      $    (3,000 )          (3.2 )
Other revenue, management fee -
related party                          263,000         296,000          (33,000 )         (11.1 )
Total Revenues                      $  353,000      $  389,000      $   (36,000 )          (9.3 )

• Mobile banking technology

Mobile Banking Technology revenues include products such as the Company's Blinx On-Off™ prepaid toggle Card and its Open Loop/Close 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 years ended June 30, 2022, and 2021 were $90,000 and $93,000, respectively. The decrease in Mobile Banking Technology revenues was due to both the conclusion of certain long term contracts during the prior year and the Company not having a bank to sponsor its mobile banking solutions since fiscal year 2016.

• Other revenue, management fee - related party

On December 31, 2015, the Company sold all of its assets of its Barcode Technology, which was comprised solely of its intellectual property, to The Matthews Group, a related party. The Company subsequently entered into a management services agreement with The Matthews Group to manage all facets of the barcode technology operations through June 30, 2022. The Company earns a fee of 35% of all revenues billed up to June 30, 2022, and recognizes management fee revenue as services are performed. For the years ended June 30, 2022 and 2021, revenue earned from the management services agreement was $263,000 and $296,000, respectively.

Cost of Revenue

Cost of revenue for the years ended June 30, 2022 and 2021 totaled $199,000 and $222,000, respectively.

Operating Expenses

General and administrative expenses for the years ended June 30, 2022 and 2021 totaled $728,000 and $861,000, respectively. The decrease in general and administrative expenses was primarily due to increased legal and professional fees as compared to the same period of the prior year.

Other Income (Expenses)

During the year ended June 30, 2022, the Company identified certain long outstanding vendor related accounts payable of $397,000 that were determined to be no longer payable. No similar activity occurred in the prior year period.



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

Interest expense for the twelve months ended June 30, 2022 and 2021, was $447,000 and $397,000, respectively. The increase was due to the increase in our notes payable balance.

Net Loss

We had a net loss of $506,000 for the year ended June 30, 2022, compared to a net loss of $1,091,000 for the year ended June 30, 2021.

Liquidity and Capital Resources

Our cash balance on June 30, 2022 decreased to $66,000 as compared to $238,000 on June 30, 2021. The decrease was the result of the $503,000 cash provided by financing activities offset by $675,000 cash used in operating activities. Net cash used in operations during the period ended June 30, 2022, was $675,000, compared with $672,000 of net cash used in operations during the same period of the prior year. Cash used in operations during the period ended June 30, 2022, was primarily from our net loss of $506,000, gain on extinguishment of accounts payable of $397,000, a gain on forgiveness of our SBA PPP loans of $118,000, and general net decreases to our working capital accounts of $101,000, and offset by interest accrued on notes payable of $447,000. Net cash provided by financing activities of $503,000 was from proceeds received from notes payable during the period ended June 30, 2022. During the same period of the prior year, net cash provided by financing activities of $682,000 was from proceeds received of $118,000 from SBA PPP loans payable, and proceeds received of $564,000 from notes payable.

The accompanying 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 year ended June 30, 2022, the Company incurred a loss of $506,000 and used cash in operating activities of $675,000, and at June 30, 2022, the Company had a stockholders' deficiency of $7,436,000. In addition, as of June 30, 2022, the Company is in default on $739,000 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, 2022 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 result from the outcome of this uncertainty be necessary should we be 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.



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Convertible notes and notes payable

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



                                                      June 30,             June 30,
                                                        2022                 2021
(a) Unsecured convertible notes ($20,000 and
$19,000 in default)                                 $    64,000          $    62,000
(b) Notes payable (in default)                          458,000              440,000
(c) Notes payable (in default)                           28,000               27,000
Total notes-third parties                           $   550,000          $   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, 2020, convertible notes totaled $59,000. During the year ended June 30, 2021, interest of $3,000 was added to the principal resulting in a balance owed of $62,000 at June 30, 2021. During the year ended June 30, 2022, interest of $2,000 was added to the principal resulting in a balance owed of $64,000 at June 30, 2022. On June 30, 2022, $20,000 of the convertible notes were in default and convertible at a conversion price of $0.30 per share into 66,619 shares of the Company's common stock. The balance of $44,000 is due on demand and convertible at a conversion price of $0.08 per share into 548,919 shares of the Company's common stock.

(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, 2020, the notes totaled $423,000. During the year ended June 30, 2021, interest of $17,000 was added to principal resulting in a balance owed of $440,000 at June 30, 2021. During the year ended June 30, 2022, interest of $18,000 was added to principal resulting in a balance owed of $458,000 at June 30, 2022. At June 30, 2022, $412,000 of notes are secured by the Company's intellectual property and $46,000 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, 2020, the notes totaled $26,000. During the year ended June 30, 2021, interest of $1,000 was added to principal, resulting in a balance owed of $27,000 at June 30, 2021. During the year ended June 30, 2022, interest of $1,000 was added to principal, resulting in a balance owed of $28,000 at June 30, 2022.

Convertible notes and notes payable-related parties

Convertible and notes payable-related parties include principal and accrued interest and consist of the following at June 30, 2022 and June 30, 2021:



                                                      June 30,             June 30,
                                                        2022                 2021
(a) Convertible notes-The Matthews Group            $ 1,855,000          $ 1,741,000
(b) Notes payable-The Matthews Group                  4,177,000            3,375,000
(c)Convertible notes-other related parties
($233,000 and $224,000 in default)                      321,000              308,000
Total notes-related parties                         $ 6,353,000          $ 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 and is owned 50% by Ms. Van Tran, the Company's CEO, and 50% by Larry Johanns, a significant shareholder of the Company. At June 30, 2020, convertible notes due to The Matthews Group totaled $1,560,000. During the year ended June 30, 2021, $67,000 of notes payable were issued and interest of $114,000 was added to principal, resulting in a balance payable of $1,741,000 at June 30, 2021. During the year ended June 30, 2022, $114,000 of interest was added to principal, resulting in a balance payable of $1,855,000 at June 30, 2022. At June 30, 2022, the notes are convertible at a conversion price of $0.08 per share into 23,189,899 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 dated September 30, 2015. At June 30, 2020, notes due to The Matthews Group totaled $2,630,000. During the year ended June 30, 2021, $497,000 of notes payable were issued and interest of $248,000 was added to principal, resulting in a balance owed of $3,375,000 at June 30, 2021. During the year ended June 30, 2022, $503,000 of notes payable were issued and interest of $299,000 was added to principal, resulting in a balance owed of $4,177,000 at June 30, 2022.



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(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, 2020, convertible notes due to other related parties totaled $294,000. During the year ended June 30, 2021, interest of $14,000 was added to principal resulting in a balance owed of $308,000 at June 30, 2021. During the year ended June 30, 2022, interest of $13,000 was added to principal resulting in a balance owed of $321,000 at June 30, 2022. At June 30, 2022, $233,000 of the notes were due in 2010 and are in default, and the balance of $88,000 is due on demand. At June 30, 2022, $233,000 of the notes are convertible at a conversion price of $0.30 per share into 777,081 shares of the Company's common stock, and $88,000 of the notes are convertible at a conversion price of $0.08 per share into 1,095,050 shares of the Company's common stock.

PPP Loans Payable

On March 23, 2021, the Company was granted its first loan for $59,000 (the "PPP loan") from Community Federal Savings Bank, pursuant to the Paycheck Protection Program (the "PPP") under the CARES Act. On June 1, 2021, the Company was granted a second PPP loan for $59,000 from Community Federal Savings Bank with similar loan terms. On October 22, 2021, the Company was notified that its PPP loan forgiveness applications totaling $118,000 were approved, and the Company recorded a gain on PPP loan forgiveness on the accompanying consolidated statements of operations for the twelve months ended June 30, 2022.

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.

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.



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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 September 30, 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, 2023. The Company earned a fee of 35% of all revenues billed up to June 30, 2022.

Recently Issued Accounting Standards

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

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