UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Amendment No. 1 to

FORM 10-Q/A

 

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

 

For the quarterly period ended December 31, 2014

 

o 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: 333-190067  

 

FREEDOM LEAF INC.

(Exact name of Registrant as specified in its charter)

 

Nevada   46-2093679
(State of incorporation)   (IRS Employer ID Number)

 

3571 E. Sunset Road, Suite 420

Las Vegas, Nevada 89120

 

(702) 499-6022

(Registrant’s telephone number)

 

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. Yes x No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer o Accelerated filer o
Non-accelerated filer o Smaller reporting company x
(Do not check if a smaller reporting company)      

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

 

As of September 1, 2015 there were 174,181,200 shares of common stock, par value $0.001 per share outstanding.

 

 

 

 
 

   

Explanatory Note

 

The purpose of this Amendment No. 1 to Freedom Leaf, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2014, filed with the Securities and Exchange Commission on February 17, 2015 (the "Form 10- Q"), is to amend the Form 10-Q to properly reflect the reverse merger with Freedom Leaf, Inc. and Arkadia International, Inc. and the effect on the financials and other applicable disclosures.

 

 

 

FREEDOM LEAF INC.

FORM 10-Q/A

DECEMBER 31, 2014

INDEX

 

  Page No.
PART I – FINANCIAL INFORMATION 3
Item 1.   Financial Statements 3
Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations 14
Item 3.   Quantitative and Qualitative Disclosures About Market Risk 16
Item 4.   Controls and Procedures 16
PART II – OTHER INFORMATION 17
Item 1.   Legal Proceedings 17
Item 1A.   Risk Factors 17
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds 17
Item 3.   Defaults Upon Senior Securities 17
Item 4.   Mine Safety Disclosures 17
Item 5.   Other Information 17
Item 6.   Exhibits 29
       
SIGNATURES 30

 

 

 

2  

 

 

PART I – FINANCIAL INFORMATION

TABLE OF CONTENTS

Index to Financial Statements   Page
Balance Sheets as of December 31, 2014 (unaudited) and June 30, 2014   4
Statements of Operations for the Three and Six Months ended December 31, 2014 and 2013 (unaudited)   5
Statements of Cash Flows for the Six Months ended December 31, 2014 and 2013 (unaudited)   6
Statements of Changes in Stockholders’ Equity   7
Notes to Financial Statements.   8

 

 

 

 

 

 

3  

 

   

Item 1. Financial Statements.

 

FREEDOM LEAF, INC.

(f/k/a Arkadia International, Inc.)

Balance Sheets

(unaudited)

 

    December 31,     June 30,  
    2014     2014  
           
             
ASSETS            
             
Current assets                
Cash   $ 12,918     $  
Accounts receivable     2,105        
Other receivable     4,727        
Prepaid expense     19,685        
Total current assets     39,435        
                 
Intangible assets     3,223        
Other assets     3,584        
                 
Total assets   $ 46,242     $  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
Current liabilities                
Accounts payable   $ 1,391     $  
Accounts payable to related parties     39,000        
Accrued expenses     494        
Deferred revenue     800        
                 
Total current liabilities     41,685        
                 
Commitments and contingencies            
                 
Total liabilities     41,685        
                 
Stockholders' equity                
Common stock, $0.001 par value, 500,000,000 and 0 shares authorized, respectively, 174,181,200 and 90,000,000 shares issued, issuable, and outstanding at December 31, 2014 and June 30, 2014, respectively     174,181        
Additional paid-in capital     (152,467 )      
Accumulated deficit     (17,157 )    
Total stockholders' equity     4,557        
                 
Total liabilities and stockholders' equity   $ 46,242     $  

 

See accompanying notes to unaudited financial statements.

 

4  

 

FREEDOM LEAF, INC.

(f/k/a Arkadia International, Inc.)

Statements of Operations

(unaudited)

                       

 

    For the three months ended
December 31,
    For the six months ended
December 31,
 
    2014     2013     2014     2013  
                         
Revenue, net   $ 127,207     $     $ 529,804     $  
                                 
Operating expenses                                
Direct costs of revenue     73,310             92,909        
General and administrative     185,736             408,361        
Marketing and selling     38,267             45,691        
                                 
Net loss   $ (170,106 )   $     $ (17,157 )   $  
                                 
Net loss per share - basic and diluted   $ (0.00 )   $     $ (0.00 )   $  
                                 
Weighted average number of shares outstanding - basic and diluted     52,048,016             52,048,016        

 

 

 

 

See accompanying notes to unaudited financial statements.

 

 

5  

 

 

FREEDOM LEAF, INC.

(f/k/a Arkadia International, Inc.)

Statements of Cash Flows

For the Six Months Ended December 31,

(unaudited)

             

 

  2014     2013  
Cash flows from operating activities:                
Net loss   $ (17,157 )   $  
Adjustments to reconcile net loss to net cash provided by operations:                
Issuance of common stock for services     12,500        
Changes in operating assets and liabilities:                
Accounts receivable     (2,105 )      
Other receivable     (4,727 )      
Prepaid expense     (19,685 )      
Other assets     (3,584 )      
Accounts payable     1,391      
Accounts payable     39,000        
Accrued expenses     494        
Deferred revenue     800        
Net cash provided by operating activities     6,927        
                 
Cash flows used in investing activities                
Acquisition of intangible assets     (3,223 )      
Net cash used in investing activities     (3,223 )      
                 
Net increase in cash     3,704        
                 
Cash at beginning of period     9,214        
                 
Cash at end of period   $ 12,918     $  

 

See accompanying notes to unaudited financial statements.

 

 

6  

 

 

FREEDOM LEAF, INC.

Statement of Shareholders' Deficit

December 31, 2014

(unaudited)

 

    Common Stock                 Additional              
    Issuable     Common Stock     Paid In     Accumulated        
    Shares     Amount     Shares     Amount     Capital     Deficit     Total  
                                           
Balance at June 30, 2014         $           $     $     $   $  
                                                       
Reverse merger     83,401,200       83,401       90,000,000        90,000       (164,187 )      –       9,214  
Issuance of common stock for services     780,000       780                       11,720             12,500  
Net loss for the period ended December 31, 2014                                             (17,157 )     (17,157 )
                                                         
Balance at December 31, 2014     84,181,200     $ 84,181       90,000,000     $ 90,000     $ (152,467 )   $ (104,939 )   $ 4,557  

 

 

See accompanying notes to unaudited financial statements.

 

7  

 

 

FREEDOM LEAF, INC.

(f/k/a ARKADIA INTERNATIONAL, INC.)

Notes to Financial Statements

December 31, 2014

(unaudited)

 

Note 1 – Nature of Business, Presentation and Going Concern

 

Organization

 

Freedom Leaf, Inc. (the “Company”) was incorporated in the State of Nevada on February 21, 2013, under the name of Arkadia International, Inc. The Company was originally engaged in the business of the acquisition of in demand equipment, cars, and goods with the intent to resale these in the U.S. territory or export to overseas countries.

 

On October 3, 2014, the Company experienced a change in control. Richard Cowan acquired a majority of the issued and outstanding common stock of the Company in accordance with stock purchase agreements by and between Mr. Cowan and Vladimir and Galina Shekhtman (“Sellers”). On the closing date, October 3, 2014, pursuant to the terms of the Stock Purchase Agreement, Cowan purchased from the Sellers 6,950,100 shares of the Company’s outstanding restricted common stock for $100,000, representing 93%.

 

On November 6, 2014, the Company merged with Freedom Leaf, Inc., a private Nevada corporation. The Company changed its name from Arkadia International, Inc., to Freedom Leaf, Inc. As a result of the merger, the private company was dissolved. See Note 3 for related discussion.

 

For financial reporting purposes, the Share Exchange represents a "reverse merger" rather than a business combination and Private Company is deemed to be the accounting acquirer in the transaction. The Share Exchange is being accounted for as a reverse-merger and recapitalization. Private Company is the acquirer for financial reporting purposes and the Public Company (Freedom Leaf, Inc., f/k/a Arkadia International, Inc.) is the acquired company. Consequently, the assets and liabilities and the operations that will be reflected in the historical financial statements prior to the Share Exchange will be those of the Private Company and will be recorded at the historical cost basis of the Private Company, and the financial statements after completion of the Share Exchange will include the assets and liabilities of the Public Company and the Private Company, and the historical operations of Private Company and operations of both companies from the closing date of the Share Exchange.

 

Basis of Presentation

 

The accompanying unaudited financial statements of Freedom Leaf, Inc. have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. The results of operations for the interim period ended December 31, 2014 shown in this report are not necessarily indicative of results to be expected for the full fiscal year ending June 30, 2015. In the opinion of the Company’s management, the information contained herein reflects all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the Company’s results of operations, financial position and cash flows. The unaudited interim financial statements should be read in conjunction with the audited financial statements in the Company’s Form 10-K for the year ended June 30, 2014 filed on August 8, 2014 and Management’s Discussion and Analysis of Financial Condition and Results of Operations.

  

Going Concern

 

The accompanying unaudited financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company sustained net loss of $17,157 and cash provided by operating activities of $6,927 for the nine months ended December 31, 2014. The Company had negative working capital, stockholders’ equity and accumulated deficit of $2,250, $4,557 and $17,157, respectively, at December 31, 2014. These factors raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The Company’s continuation as a going concern is dependent upon its ability to generate revenues and its ability to continue receiving investment capital and loans from third parties to sustain its current level of operations. The Company is in the process of securing working capital from investors for common stock, convertible notes payable, and/or strategic partnerships. No assurance can be given that the Company will be successful in these efforts.

 

Use of Estimates

 

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 and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying financial statements include the amortization period for intangible assets, valuation and impairment valuation of intangible assets, depreciable lives of the web site and property and equipment, valuation of warrants and beneficial conversion feature debt discounts, valuation of derivatives, valuation of share-based payments and the valuation allowance on deferred tax assets.

 

Reclassifications

 

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported losses, total assets, or stockholders’ equity as previously reported.

 

 

8  

 

FREEDOM LEAF INC.

(f/k/a ARKADIA INTERNATIONAL, INC.)

Notes to Financial Statements

December 31, 2014

(unaudited)

 

Note 1 – Nature of Business, Presentation and Going Concern (Continued)

 

Development Stage Company

 

Since inception, the Company became a “development stage company” as defined in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 915 “Development Stage Entities”. On June 10, 2014 the FASB issued authoritative guidance which eliminates the concept of a development stage entity. The incremental reporting requirements for presenting the development stage operations and cash flows since inception will no longer apply to development stage entities. The amendments of Topic 915 are to be applied retrospectively and are effective for fiscal years beginning after December 15, 2014. The Company has elected early adoption of this guidance effective with the filing of its previous quarterly report.

 

Revenue Recognition

 

The Company recognizes revenue for our services in accordance with ASC 605-10, "Revenue Recognition in Financial Statements." Under these guidelines, revenue is recognized on transactions when all of the following exist: persuasive evidence of an arrangement did exist, delivery of service has occurred, the sales price to the buyer is fixed or determinable and collectability is reasonably assured. The Company has two primary revenue streams as follows:

 

  ·   Consulting services.
  ·   Advertising services.
  ·   Branding, marketing and selling products for companies.
  ·   Educational seminars.
  ·   Selling branded products.

 

Net Earnings (Loss) Per Share

 

In accordance with ASC 260-10, “Earnings Per Share,” basic net earnings (loss) per common share is computed by dividing the net earnings (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period.

 

Segment Information

 

In accordance with the provisions of ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information,” the Company is required to report financial and descriptive information about its reportable operating segments. The Company does not have any operating segments as of December 31, 2014 and June 30, 2014.

 

Effect of Recent Accounting Pronouncements

 

The Company reviews new accounting pronouncements as issued. No new pronouncements had any material effect on these unaudited financial statements. The accounting pronouncements issued subsequent to the date of these unaudited financial statements that were considered significant by management were evaluated for the potential effect on these unaudited financial statements. Management does not believe any of the subsequent pronouncements will have a material effect on these unaudited financial statements as presented and does not anticipate the need for any future restatement of these unaudited financial statements because of the retro-active application of any accounting pronouncements issued subsequent to September 30, 2014 through the date these unaudited financial statements were issued.

 

Note 2 – Intangible Assets

 

The Company has $3,223 recorded for various trademarks (Hemp Inspired®, Cannabizu®, and Cannabiz®) as of December 31, 2014.

 

Note 3 – Stockholders’ Equity (Deficit)

 

The Company is authorized to issue up to 75,000,000 shares of common stock, par value $0.001 per share. On November 3, 2014, the Company increased it’s authorized to 500,000,000 shares of common stock. Each outstanding share of common stock entitles the holder to one vote per share on all matters submitted to a stockholder vote. All shares of common stock are non-assessable and non-cumulative, with no pre-emptive rights.

 

On November 6, 2014, the Company merged with Freedom Leaf, Inc., a private Nevada corporation (see Note 1). After the completion of the merger, there were 173,401,200 shares of common stock issued, issuable and outstanding.

 

9  

 

  

FREEDOM LEAF INC.

(f/k/a ARKADIA INTERNATIONAL, INC.)

Notes to Financial Statements

December 31, 2014

(unaudited)

 

Note 4 – Commitments and Contingencies

 

From time to time, the Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of its business. The Company is not currently a party to any material legal proceedings, nor is the Company aware of any other pending or threatened litigation that would have a material adverse effect on the Company’s business, operating results, cash flows or financial condition should such litigation be resolved unfavorably.

 

Note 5 – Restatement of Prior Period Financial Statements

 

Balance Sheet, Statement of Operations and Statement of Cash Flows

 

The Company restated its previously issued financial statements included in the original Quarterly Report on Form 10-Q for the six months ended December 31, 2014 to reflect the effects of accounting and reporting errors resulting from a deficiency in its accounting and financial statement preparation process. This error and the related adjustments resulted in an understatement of net loss of $17,157 for the six months ended December 31, 2014 and the understatements of $46,242 and $7,943 total assets and accumulated deficits, respectively, as of December 31, 2014. The revisions applied to the affected individual line items in the consolidated financial statements are as stated below.

 

In connection with the subsequent review of the Company’s financial statements for the period ended December 31, 2014, certain errors associated with the Company’s recognition of the merger of Arkadia International, Inc. with Freedom Leaf, Inc., effective November 6, 2014, resulted in the Company’s financial statements to be restated. The error related to the exclusion of the financials of Freedom Leaf, Inc., the private company, into the presented financial statements as filed.

 

The following tables present the impact of the financial statement omission for the financials of Freedom Leaf, Inc., the private company, on the Company’s previously reported financial statements for the period ended December 31, 2014.

 

10  

 

 

FREEDOM LEAF INC.

(f/k/a ARKADIA INTERNATIONAL, INC.)

Notes to Financial Statements

December 31, 2014

(unaudited)

  

Note 5 – Restatement of Prior Period Financial Statements (Continued)

 

Balance Sheet  

 

    December 31, 2014  
    As previously reported     Adjustments     As restated  
ASSETS                  
Current assets                        
Cash   $     $ 12,918     $ 12,918  
Accounts receivable           2,105       2,105  
Other receivable           4,727       4,727  
Prepaid expense           19,685       19,685  
Total current assets           39,435       39,435  
                         
Intangible assets, net           3,223       3,223  
Other assets           3,584       3,584  
                         
Total assets   $     $ 46,242     $ 46,242  
                         
LIABILITIES AND STOCKHOLDERS' EQUITY                        
                         
Current liabilities                        
Accounts payable   $     $ 1,391     $ 1,391  
Accounts payable to related parties           39,000       39,000  
Accrued expenses           494       494  
Deferred revenue           800       800  
                         
Total current liabilities           41,685       41,685  
                         
Commitments and contingencies (Note 4)                        
                         
Total liabilities           41,685       41,685  
                         
Stockholders' equity                        
Common stock     90,000       84,181       174,181  
Additional paid-in capital     6,996       (159,463 )     (152,467 )
Accumulated deficit     (96,996 )     (79,839 )     (17,157 )
Total stockholders' equity           4,557       4,557  
                         
Total liabilities and stockholders' equity   $     $ 46,242     $ 46,242  

 

 

 

11  

 

FREEDOM LEAF INC.

(f/k/a ARKADIA INTERNATIONAL, INC.)

Notes to Financial Statements

December 31, 2014

(unaudited)

 

Note 5 – Restatement of Prior Period Financial Statements (Continued)

 

Statements of Operations      

 

    For the three months ended
December 31, 2014
    For the six months ended
December 31, 2014
 
    As previously reported     Adjustments     As restated     As previously reported     Adjustments     As restated  
                                     
Revenue, net   $     $ 127,207     $ 127,207     $     $ 529,804     $ 529,804  
                                                 
Operating expenses                                                
Direct costs of revenue           73,310       73,310             92,909       92,909  
General and administrative           185,736       185,736       (9,214 )     399,147       408,361  
Marketing and selling           38,267       38,267             45,691       45,691  
                                                 
Net income (loss)   $     $ (170,106 )   $ (170,106 )   $ (9,214 )   $ (7,943 )   $ (17,157 )
                                                 
Net income (loss) per share -
basic and diluted
 
 
 
$
 
(0.00
 
)
 
 
 
$
 
 
 
 
 
 
$
 
(0.00
 
)
 
 
 
$
 
0.00
 
 
 
 
 
$
 
 
 
 
 
 
$
 
(0.00
 
)
                                                 
Weighted average number of shares outstanding - basic and diluted  
 
 
 
 
 
90,000,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
173,401,200
 
 
 
 
 
 
 
90,000,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
115,145,842
 
 

 

Statements of Cash Flows

 

    For the Six Months Ended December 31, 2014  
    As previously reported     Adjustments     As restated  
Cash flows from operating activities:                        
Net loss   $ (9,214 )   $ (7,943 )   $ (17,157 )
Adjustments to reconcile net loss to net cash provided by (used in) operations:                        
Issuance of common stock for services           12,500       12,500  
                   
Changes in operating assets and liabilities:                
Accounts receivable           (2,105 )     (2,105 )
Other receivable           (4,727 )     (4,727 )
Prepaid expense           (19,685 )     (19,685 )
Other assets           (3,584 )     (3,584 )
Accounts payable           1,391       1,391  
Accounts payable to related parties           39,000       39,000  
Accrued expenses           494       494  
Deferred revenue           800       800  
Net cash provided by (used in) operating activities     (9,214 )     16,141       6,927  
                         
Cash flows used in investing activities                        
Acquisition of intangible assets           (3,223 )     (3,223 )
Net cash used in investing activities           (3,223 )     (3,223 )
                         
Net increase (decrease) in cash     (9,214 )     12,918       3,704  
                         
Cash at beginning of period     9,214             9,214  
                         
Cash at end of period   $     $ 12,918     $ 12,918  

 

12  

 

 

FREEDOM LEAF INC.

(f/k/a ARKADIA INTERNATIONAL, INC.)

Notes to Financial Statements

December 31, 2014

(unaudited)

 

Note 6 – Income Taxes

 

A reconciliation of U.S. statutory federal income tax rate to the effective rate follows:

 

    December 31,  
    2014     2013  
U.S. statutory federal rate, graduated     34.0%       0.0%  
State income tax rate, net of Federal     3.6%       0.0%  
Permanent book-tax differences     0.0%       0.0%  
Net operating loss (NOL) for which no tax benefit was available     -37.6%       0.0%  
Net tax rate     0.0%       0.0%  

 

At December 31, 2014, deferred tax assets consisted of a net tax asset of approximately $17,000, which was fully allowed for, in the valuation allowance of $17,000.  The valuation allowance offsets the net deferred tax asset for which it was more likely than not that the deferred tax assets will not be realized.  The net operating loss carry forwards expire through the year 2034.

 

The valuation allowance will be evaluated at the end of each year, considering positive and negative evidence about whether the deferred tax asset will be realized.  At that time, the allowance will either be increased or reduced; reduction could result in the complete elimination of the allowance if positive evidence indicates that the value of the deferred tax assets was no longer impaired and the allowance was no longer required.

 

Should the Company undergo an ownership change as defined in Section 382 of the Internal Revenue Code, the Company’s tax net operating loss carry forwards generated prior to the ownership change will be subject to an annual limitation, which could reduce or defer the utilization of these losses. The tax years for 2013 through 2014 are still open for inspection by the individual taxing authorities.

 

Note 7 – Subsequent Events

 

On November 10, 2014, the Company entered into a consulting services agreement with Vincent Moreno, for services from November 10, 2014 through April 10, 2015, for the 780,000 shares of common stock. The shares were issued on April 10, 2015.

 

On January 21, 2015, the Company filed a certificate of amendment to the Company’s Articles of Incorporation with the Secretary of State of Nevada to increase the Company’s authorized common stock to 500,000,000 shares, par value $0.001 per share.

 

The Company has evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission. The Company has determined that there are no other such events that warrant disclosure or recognition in the financial statements.

 

 

 

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

 

We believe that it is important to communicate our future expectations to our security holders and to the public.  This report, therefore, contains statements about future events and expectations which are “forward-looking statements” within the meaning of Sections 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934, including the statements about our plans, objectives, expectations and prospects under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  You can expect to identify these statements by forward-looking words such as “may,” “might,” “could,” “would,” ”will,” “anticipate,” “believe,” “plan,” “estimate,” “project,” “expect,” “intend,” “seek” and other similar expressions.  Any statement contained in this report that is not a statement of historical fact may be deemed to be a forward-looking statement.  Although we believe that the plans, objectives, expectations and prospects reflected in or suggested by our forward-looking statements are reasonable, those statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements, and we can give no assurance that our plans, objectives, expectations and prospects will be achieved.

 

Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in the “Risk Factors” section of and elsewhere in our Annual Report on Form 10-K for the fiscal year ended June 30, 2014 and in our subsequent filings with the Securities and Exchange Commission.  The following discussion of our results of operations should be read together with our financial statements and related notes included elsewhere in this report.

 

Company Overview

 

On October 3, 2014, the Company experienced a change in control. Richard Cowan acquired a majority of the issued and outstanding common stock of the Company in accordance with stock purchase agreements by and between Mr. Cowan and Vladimir and Galina Shekhtman (“Sellers”). On the closing date, October 3, 2014, pursuant to the terms of the Stock Purchase Agreement, Cowan purchased from the Sellers 6,950,100 shares of the Company’s outstanding restricted common stock for $100,000, representing 93%.

 

Prior to October 3, 2014, the Company was originally engaged in the business of the acquisition of in demand equipment, cars, and goods with the intent to resale these in the U.S. territory or export to overseas countries. On November 6, 2014, the Company changed its name, via merger in the state of Nevada, to Freedom Leaf Inc.

 

On November 4, 2014, the Company's Board of Directors declared a twelve for one forward stock split of all outstanding shares of the Company’s common stock. As the Company is awaiting approval of the stock split from FINRA, the common share and per common share data in these financial statements and related notes hereto have not been retroactively adjusted to account for the effect of the stock split. The total number of authorized common shares and the par value thereof was not changed by the split.

 

On November 6, 2014, Freedom Leaf, Inc., a private company, completed a reverser merger with Freedom Leaf, Inc. (f/k/a Arkadia International, Inc.).

 

On January 21, 2015, the Company filed a certificate of amendment to the Company’s Articles of Incorporation with the Secretary of State of Nevada to increase the Company’s authorized common stock to 500,000,000 shares, par value $0.001 per share.

 

Plan of Operation

 

We are currently devoting substantially all of our efforts in migrating to the news, arts and entertainment niche, with both in print and online publications. Principal business activities are still in the development stage and have not yet commenced. The Company will generate revenue through paid advertising in publications, both print and online, in the cannabis/hemp marketplace. The Company will also earn revenue from consulting companies who are in our industry, contracting with companies to brand, market, and sell their products and/or services, provide seminars in this space, and sell branded products for the Company and others the Company represents. 

 

Results of Operations

 

For the Three Months Ended December 31, 2014 and 2013

 

Revenues

 

Our revenue was $127,207 for the three months ended December 31, 2014, compared to $0 for the three months ended December 31, 2013. Costs of revenues were $73,310 and $0 for the three months ended December 31, 2014 and 2013, respectively. The increase in revenues and the decrease in direct costs of revenues are attributable to the change in control of the Company and the related change in business direction.

 

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Operating Expenses

 

For the three months ended December 31, 2014, our general and administrative expenses were $185,736 compared to $0 for the three months ended December 31, 2013, resulting in an increase of $185,736. For the three months ended December 31, 2014, our marketing and selling expenses were $38,267, compared to $0 for the three months ended December 31, 2013. The increases were both attributable to the change in control of the Company and the related change in business direction. As a result, net loss was $170,106 for the three months ended December 31, 2014 compared to net income of $0 for the three months ended December 31, 2013.

   

For the Six Months Ended December 31, 2014 and 2013

 

Revenues

 

Our revenue was $529,804 for the six months ended December 31, 2014, compared to $0 for the six months ended December 31, 2013. Direct costs of revenues were $92,909 and $0 for the six months ended December 31, 2014 and 2013. The increase in revenues and direct costs of revenues are attributable to the change in control of the Company and the related change in business direction.

 

Operating Expenses

 

For the six months ended December 31, 2014, our general and administrative expenses were $408,361, compared to $0 for the six months ended December 31, 2013, resulting in an increase of $408,361. For the six months ended December 31, 2014, our marketing and selling expenses were $45,691, compared to $0 for the six months ended December 31, 2013. The increases were both attributable to the change in control of the Company and the related change in business direction. As a result, net loss was $17,157 for the six months ended December 31, 2014, compared to net income of $0 for the six months ended December 31, 2013.

 

Liquidity and Capital Resources

 

Overview

 

As of December 31, 2014, the Company had $12,918 in cash and no working capital. We do not have sufficient resources to effectuate our business. We expect to incur a minimum of $50,000 in expenses during the next twelve months of operations. We estimate that these expenses will be comprised primarily of general expenses including overhead, legal and accounting fees.

 

Liquidity and Capital Resources during the Six Months Ended December 31, 2014 compared to the Six Months Ended December 31, 2013

 

We had cash provided by operations of $6,927 for the six months ended December 31, 2014 compared to cash provided by operations of $0 for the six months ended December 31, 2013. The positive cash flow from operating activities for the six months ended December 31, 2014 is attributable to a related party of the Company providing $39,000 in working capital. Cash provided by operations for the six months ended December 31, 2013 is attributable to the Company's net income of $0.

 

We will have to raise funds to pay for our expenses. We may have to borrow money from shareholders or issue debt or equity or enter into a strategic arrangement with a third party. There can be no assurance that additional capital will be available to us. We currently have no arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources. Since we have no such arrangements or plans currently in effect, our inability to raise funds for our operations will have a severe negative impact on our ability to remain a viable company.

 

Going Concern

 

Our unaudited financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that we will be able to continue as a going concern. Our unaudited financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.

 

There is no assurance that our operations will be profitable. Our continued existence and plans for future growth depend on our ability to obtain the additional capital necessary to operate either through the generation of revenue or the issuance of additional debt or equity.

 

 

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Off Balance Sheet Arrangements

 

We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

Critical Accounting Policies

   

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experiences and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions and conditions. We continue to monitor significant estimates made during the preparation of our financial statements. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.

 

See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 2, “Summary of Significant Accounting Policies” in our audited financial statements for the year ended June 30, 2014, included in our Annual Report on Form 10-K as filed on August 8, 2014, for a discussion of our critical accounting policies and estimates.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

As of the end of the period covered by this Report, we conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the 1934 Act). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are not effective to ensure that information required to be disclosed by us in reports that we file or submit under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.

 

Changes in Internal Control Over Financial Reporting

 

There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

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PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

There are no pending legal proceedings in which we are a party or in which any of our directors, officers or affiliates, any owner of record or beneficiary of more than 5% of any class of our voting securities is a party adverse to us or has a material interest adverse to us. Our property is not the subject of any pending legal proceedings.

 

Item 1A. Risk Factors

 

Because we are classified as a Smaller Reporting Company under the federal securities laws, we are not required to include risk factors in this Form 10-Q/A; however, please note risk factors included in our S-1 Registration Statement.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

On November 10, 2014, the Company granted 780,000 shares of common stock to Vincent Moreno in exchange for consulting services to be performed from November 10, 2014 through April 10, 2015.

 

Item 3. Defaults Upon Senior Securities

 

We have no senior securities outstanding.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

Item 1.01 Entry into a Material Definitive Agreement.

 

Freedom Leaf, Inc., (f/k/a Arkadia International, Inc., the “Public Company,” “we,” “us,” “our”) entered into a share exchange agreement (the “Exchange Agreement”) with Freedom Leaf, Inc. (the “Public Company”), a Nevada corporation. Prior to the reverse merger, Richard Cowan, an officer and director of the Company, post-merger, acquired 89,808,000, or 99.8% of the outstanding shares of Freedom Leaf, Inc., the public company. Clifford J. Perry, an individual, and the Private Company’s sole officer and director (“Perry”), was the owner of record of all of the outstanding common shares of the Private Company (the “Private Company Stock ”). Pursuant to the Exchange Agreement, upon surrender by the Shareholders and the cancellation by the Private Company of the certificates evidencing the Private Company Stock as registered in the name of the Shareholder, and pursuant to the registration of the Public Company in the register of Shareholders maintained by Private Company as the new holder of the Public Company Stock and the issuance of the certificates evidencing the aforementioned registration of the Private Company Stock in the name of the Public Company, the Public Company will issue 83,401,200 shares (the “ New Shares ”) (subject to adjustment for fractionalized shares as set forth below) of the Company’s common stock to the Shareholders (or their designees), and Perry will cause 100% of the shares of the Private Company’s common stock that he owns (the “Perry Stock ,” together with the New Shares, the “ Acquisition Stock ”) to be transferred to the Shareholders (or their designees), which collectively shall represent 48.1% of the issued and outstanding common stock of the Public Company immediately after the Closing, in exchange for the Private Company Stock, representing 100% of the issued share capital of the Private Company.  As a result of the exchange of the Private Company Stock for the Acquisition Stock (the “ Share Exchange ”), the Private Company will be dissolved.

 

The closing of the Exchange Agreement was conditioned upon certain, limited customary representations and warranties, as well as the satisfaction or waiver of specified conditions to closing. As the parties satisfied all of the closing conditions, on November 6, 2014, we consummate the Share Exchange contemplated by the Exchange Agreement. As a result, the shareholders of Private Company own approximately 48.1% of our issued and outstanding common stock.

 

Prior to the execution and delivery of the Exchange Agreement, our board of directors approved the Share Exchange and the transactions contemplated thereby. Similarly, the board of directors of Private Company approved the Share Exchange. Reference is hereby made regarding the completion of the Share Exchange.

 

Following the Share Exchange, we have abandoned our prior business plan and we are now pursuing Private Company’s historical businesses and proposed businesses. Private Company is in the business of advertising in industry publications related to marijuana.

 

The foregoing description of the Exchange Agreement does not purport to be complete and is qualified in its entirety by the Share Exchange Agreement, a copy of which is attached to this Form 10-Q as Exhibit 10.1 which is incorporated herein by reference.

 

 

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Accounting Treatment of the Merger

 

For financial reporting purposes, the Share Exchange represents a “reverse merger” rather than a business combination and Private Company is deemed to be the accounting acquirer in the transaction. The Share Exchange is being accounted for as a reverse-merger and recapitalization. Private Company is the acquirer for financial reporting purposes and the Public Company (Freedom Leaf, Inc., f/k/a Arkadia International, Inc.) is the acquired company. Consequently, the assets and liabilities and the operations that will be reflected in the historical financial statements prior to the Share Exchange will be those of the Private Company and will be recorded at the historical cost basis of the Private Company, and the financial statements after completion of the Share Exchange will include the assets and liabilities of the Public Company and the Private Company, and the historical operations of Private Company and operations of both companies from the closing date of the Share Exchange.

 

Item 2.01 Completion of Acquisition or Disposition of Assets.

 

The Merger and Related Transactions

 

As described in Item 1.01 above, on November 6, 2014, the Public Company and the Private Company closed the Share Exchange. The Private Company is in the business of advertising in publications, both print and online, in the cannabis marketplace.

 

Tax Treatment and Small Business

 

The Share Exchange is intended to constitute a tax free reorganization within the meaning of the Internal Revenue Code of 1986. Following the Share Exchange, the Combined Company continues to be a “smaller reporting company,” as defined in Item 10(f)(1) of Regulation S-K, as promulgated by the SEC.

 

FORM 10 INFORMATION

 

Prior to the Share Exchange, we were a public reporting company with nominal operations. While we did not deem ourselves a “shell company,” as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended and the rules and regulations promulgated thereunder (“Exchange Act”), in light of the lack of operations prior to the Share Exchange and the resulting change in our business, we are voluntarily providing the information as is required pursuant to Item 2.01(f) of Form 8-K, as if we were filing a general form for registration of securities on Form 10 under the Exchange Act for our common stock, which is the only class of our securities subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act upon consummation of the Share Exchange.

 

BUSINESS

 

Freedom Leaf, Inc. was incorporated in 2014 to enter into advertising publications, in both print and online, in the cannabis marketplace.

 

The Company report its business under the following SIC Codes:

 

 

  SIC Code Description
     
  2741 Miscellaneous Publishing
  5960 Retail – Nonstore Retailers
  5961 Retail – Catalog & Mail-Order Houses
  7310 Services – Advertising
  7380 Services – Miscellaneous Business Services
  8742 Services – Management Consulting Services

  

Revenue Generation

 

The Company will generate revenue through paid advertising in publications, both print and online, in the cannabis/hemp marketplace. The Company will also earn revenue from consulting companies who are in our industry, contracting with companies to brand, market, and sell their products and/or services, provide seminars in this space, and sell branded products for the Company and others the Company represents. 

 

Employees . As of July 24, 2015, we had six employees and various consultants. None of our employees are represented by a labor organization and we consider our relationship with our employees to be good.

 

Legal Proceedings. We are currently not a party to any material legal or administrative proceedings and are not aware of any pending legal or administrative proceedings against us. We may from time to time become a party to various legal or administrative proceedings arising in the ordinary course of our business.

 

Risk Factors. As a small reporting company, we are not obligated to include.

 

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Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion and analysis of the results of operations and financial condition of Freedom Leaf, Inc., the private company, for the period from inception (June 2014) through November 6, 2014 (date of reverse merger) and should be read in conjunction with the financial statements of Freedom Leaf, Inc., the private company, and the notes to those financial statements that are included elsewhere in this Form 10-Q. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as Freedom Leaf, Inc.’s plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Cautionary Notice Regarding Forward-Looking Statements and Business sections in this Current Report on Form 10-Q. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

 

For a discussion and analysis of the Company’s financial condition and results of operations prior to the Share Exchange, please refer to the information set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which information and financial statements are incorporated herein by reference.

 

Overview

 

Prior to the Share Exchange, we were a startup company that originally intended to engage in the business of the acquisition of in demand equipment, cars, and goods with the intent to resale these in the in the U.S. territory or export to overseas countries.

 

We have had limited operations and have been issued a “going concern” opinion by our auditor, based upon our reliance on the sale of our common stock as the sole source of funds for our future operations.

 

On November 6, 2014, we entered into a share exchange agreement (the “Exchange Agreement”) with Freedom Leaf, Inc. , a Nevada corporation (“Private Company”), and the Company’s sole officer and director Clifford J. Perry (“Perry”), being the owners of record of all of the issued share capital of Freedom Leaf, Inc. (the “FL Stock”). Pursuant to the Exchange Agreement, the Shareholders received an aggregate of 83,401,200 shares (48.1%) our common stock (consisting of a new issuance of shares and Mr. Perry’s transfer of all of his shares) and we received the FL Stock. As a result of the exchange of the FL Stock for the Acquisition Stock (the “Share Exchange”), Freedom Leaf, Inc. became our Company whereas the operations of Arkadia International, Inc. ceased, and there was a change of control of the Company.

 

Plan of Operations

 

We are currently devoting substantially all of our efforts in migrating to the news, arts and entertainment niche, with both in print and online publications. Principal business activities are still in the development stage and have not yet commenced.

 

Results of Operations

 

The following summary of our results of operations for the period July 1, 2014 through November 6, 2014, the date of the reverse merger.

 

Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We expect we will require additional capital to meet our long-term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities, but we cannot guarantee that we will be able to achieve same.

 

The following table provides selected financial data about our company as of November 6, 2014.

 

Balance Sheet Data

 

    November 6, 2014  
         
Cash   $ 32,141  
Total Assets   $ 47,361  
Total Liabilities   $ 55,134  
Stockholders’ Deficit   $ (7,773 )

 

 

 

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For the Period July 1, 2014 Through November 6, 2014

 

During the period July 1, 2014 through November 6, 2014, the Company began its operation in the long-term business of advertising. We recorded revenue relating to consulting of $369,357.

 

Our operating expenses for operations for the period July 1, 2014 through November 6, 2014, was $377,130.

 

Liquidity and Capital Resources

 

Working Capital      
    November 6, 2014  
         
Current Assets   $ 42,384  
Current Liabilities   $ 55,134  
Working Capital (Deficit)   $ (12,750 )
         
Cash Flows        
      For the Period  
      July 1, 2014  
      Through  
      November 6, 2014  
         
Cash Flows Provided by Operating Activities   $ 33,534  
Cash Flows Used in Investing Activities   $ (1,393 )
Cash Flows Provided by Financing Activities   $  
Net Increase in Cash During Period   $ 32,141  

 

Cash Flow from Operating Activities

 

During the period July 1, 2014 through November 6, 2014, cash provided by operations was $32,141. The Company had a net loss of $7,773, but this loss was offset by an increase in other assets of $10,243, an increase in accounts payable of $16,134 and an increase in accounts payable to related parties of $39,000.  

 

Cash Flow from Investing Activities

 

During the period July 1, 2014 through November 6, 2014, cash used in investing activities was $1,393 for the acquisition of intangible assets.

 

Cash Flow from Financing Activities

 

During the period July 1, 2014 through November 6, 2014, there was no cash flow from financing activities.

 

Critical Accounting Policy and Estimates

 

We prepare our financial statements in conformity with GAAP, which requires management to make certain estimates and assumptions and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the financial statements are prepared and actual results could differ from our estimates and such differences could be material. Due to the need to make estimates about the effect of matters that are inherently uncertain, materially different amounts could be reported under different conditions or using different assumptions.  On a regular basis, we review our critical accounting policies and how they are applied in the preparation our financial statements. 

 

Use of Estimates

 

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 and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

 

 

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Security Ownership of Certain Beneficial Owners and Management

 

The following table sets forth certain information regarding beneficial ownership of our common stock as of November 6, 2015 by (i) each person (or group of affiliated persons) who is known by us to own more than five percent (5%) of the outstanding shares of our common stock, (ii) each director, executive officer and director nominee, and (iii) all of our directors, executive officers and director nominees as a group.

 

Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock that such person has the right to acquire within 60 days of the date of the respective table. For purposes of computing the percentage of outstanding shares of our common stock held by each person or group of persons named above, any shares that such person or persons has the right to acquire within 60 days of the date of the respective table is deemed to be outstanding for such person, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership.

 

The business address of each beneficial owner listed is 3571 E. Sunset Road, Suite 420, Las Vegas, Nevada 89120, unless otherwise noted. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent that power may be shared with a spouse.

 

As of November 6, 2014, we had 173,401,200 shares of common stock issued and outstanding.

 

Pursuant to the Exchange Agreement, our sole officer and director, Clifford J. Perry agreed to transfer an aggregate of all of his shares of our common stock that he owned. Accordingly, after the Share Exchange, Mr. Perry owns 83,401,200 of common stock shares, or approximately 48.1%, of our issued and outstanding common stock.

 

Name of Beneficial Owner   Amount and Nature of
Beneficial Ownership
    Percent of Class  
Clifford J. Perry     1,355,312       5%  
All officers and directors as a group (1 person)     1,355,312       5%  

 

Changes in Control

 

As a result of the Share Exchange, Freedom Leaf, Inc. was merged into Freedom Leaf, Inc. (f/k/a Arkadia International, Inc.) and then was dissolved. The former shareholder of Freedom Leaf, Inc., the private company, owns approximately 48.1% of the shares of the Company outstanding post-exchange common stock. As a result, such person now controls the board.

 

Directors and Executive Officers

 

The following table and text set forth the names and ages of all directors and executive officers as of November 6, 2014 for our Company.

 

The officers of our company are appointed by the board of directors and hold office until their death, resignation or removal from office. The directors and executive officers, their ages, positions held, and duration as such, are as set forth below.

 

Name Position Held Age Date First Elected or Appointed
Clifford J. Perry Chief Executive Officer, Chief Financial Officer, Treasurer, Director (1) 62 November 6, 2014
Richard C. Cowan Director (1) 74 November 6, 2014
Raymond P. Medeiros Director 66 January 22, 2015

 

(1) On November 6, 2014, Richard C. Cowan was appointed as Chief Executive Officer and Chief Financial Officer. On February 28, 2015, Mr. Cowan resigned from both positions. On March 1, 2015, Clifford J. Perry was appointed as Chief Executive Officer and Chief Financial Officer

 

 

 

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Business Experience

 

The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee of our company, indicating the person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.

 

Clifford J. Perry – Chief Executive Officer, Chief Financial Officer, Treasurer and Director

 

Mr. Perry, co-founder, chief executive officer, chief financial officer, and director, has an extensive entrepreneurial background owning a number of Master Franchise operations with major franchisors, such as The Crab House and Cinnabon. He also took a real estate seminar company from $0 in revenue to over $3 million in gross revenues within one year. In 2009, for that year only, he was Executive Vice President of Business Development for the first U.S. public company in the Marijuana Industry, Medical Marijuana, Inc. (MJNA). He created the first revenue source for Medical Marijuana, Inc., utilizing his expertise in educational training seminars, branding, licensing and event planning to develop and produce the “National Medical Marijuana Educational Expo.” Mr. Perry has been consulting to companies in this space since 2009.  Mr. Perry has, over his business career, been either a consultant or a principle, involved in Franchising, Licensing, Network Marketing, Trademark, Copyright & Patents, Print, Indoor/Outdoor/Digital Advertising, Telephony, Hotel, Resort, Restaurant, Hospitality, Nightclub, Event Production, Concert Promotion, Video & Film Production, Business Aviation, Luxury and High Performance Auto Restoration, Oil & Gas, Mining, Shipping, Counter Trade, Traditional, Alternative & Complimentary Healthcare, Non-Profit Fundraising.

 

Richard C. Cowan - Director

 

Mr. Cowan is a renowned activist, published writer and former National Director of the National Organization for the Reform of Marijuana Laws (NORML); is a current Board Member of The Marijuana News; and Co-Founder of Freedom Leaf, Inc. He worked with Cannabis Science, Inc. (CBIS) from 2009 until he retired in 2014. In 2015, Mr. Cowan was recently reappointed to the Board of NORML and is internationally active in the cannabis legalization movement. Mr. Cowan holds a B.A. in Economics from Yale University.

 

Raymond P. Mederios - Director

 

Raymond P. Mederios, 66, director, is an experienced entrepreneur and marketing executive, has focused on successfully investing in the turnaround of financially troubled companies and has founded several start-up companies. Mr. Medeiros has managed many facets of operating a successful business including: operations, finance, human relations, sales and marketing in retail, import, manufacturing, hospitality, financial services and computer technology. Mr. Mederios was involved with Runco International (www.runco.com), a high technology consumer manufacturer, as a Senior Executive for nearly eight years. Mr. Medeiros reported to, and worked with, the CEO, to develop company strategy and manage IT. Additionally, he advised the Vice President of Marketing, and had oversight over the finance and legal operations.  The company was sold to a public company, Planar Systems, Inc. In 1992, Medeiros founded NewGate Internet, a pioneer Internet company, which was one of the first companies to market on the Internet and effectively assisted companies, such as the Gap and LEGO, to use the Internet to brand themselves. NewGate was recognized as an industry leader in paid search for online retailers. In 2006, it was sold to iCrossing (www.icrossing.com), a Hearst Corporation. Over the past 40 years, Mr. Medeiros has worked with a number of non-profit organizations as a volunteer and/or board member. In 2012, he founded a new non-profit called Business Cares to match non-profits with businesses developing creative projects that benefit both organizations: raising funds for the non-profit and goodwill for the business. He holds a BS in Business Administration with an emphasis in Marketing from Kent State University.

 

Involvement in Certain Legal Proceedings

 

To the best of the Company’s knowledge, none of the following events occurred during the past ten years that are material to an evaluation of the ability or integrity of any of our executive officers, directors or promoters :

 

(1) A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;

 

(2) Convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);

 

(3) Subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:

 

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(i) Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;

 

(ii) Engaging in any type of business practice; or

 

(iii) Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;

 

(4) Subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (3)(i) above, or to be associated with persons engaged in any such activity;

 

(5) Found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;

 

(6) Found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;

 

(7) Subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:

 

(i) Any Federal or State securities or commodities law or regulation; or

 

(ii) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or

 

(iii) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

 

(8) Subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization, any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

Corporate Governance & Board Independence

 

Our Board of Directors consists of one director and has not established a Nominating or Governance Committees as standing committees. The Board does not have an executive committee or any committees performing a similar function. We are not currently listed on a national securities exchange or in an inter-dealer quotation system that has requirements that a majority of the board of directors be independent.

 

Due to our lack of operations and size, and since we are not currently listed on a national securities exchange, we are not subject to any listing requirements mandating the establishment of any particular committees; all functions of a nominating/governance committee  were performed by our whole board of directors.  Our board of directors intends to appoint such persons and form such committees as are required to meet the corporate governance requirements imposed by the national securities exchanges as necessary. Our board of directors does not believe that it is necessary to have such committees at the early stage of the company’s development, and our board of directors believes that the functions of such committees can be adequately performed by the members of our board of directors.

 

We believe that members of our board of directors are capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. We believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any material revenues to date.

 

 

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Board Leadership Structure and the Board’s Role in Risk Oversight.

 

The Board of Directors is led by the Chairman who is also the Chief Executive Officer. Although our sole officer is also our sole director, the Board believes that the most effective leadership structure at this time is not to separate the roles of Chairman and Chief Executive Officer. A combined structure provides the Company with a single leader who represents the company to our stockholders, regulators, business partners and other stakeholders, among other reasons set forth below.

 

This structure creates efficiency in the preparation of the meeting agendas and related Board materials as the Company’s Chief Executive Officer works directly with those individuals preparing the necessary Board materials and is more connected to the overall daily operations of the Company. Agendas are also prepared with the permitted input of the full Board of Directors allowing for any concerns or risks of any individual director to be discussed as deemed appropriate. The Board believes that the Company has benefited from this structure, and Mr. Perry's continuation in the combined role of the Chairman and Chief Executive Officer is in the best interest of the stockholders.

 

The Company believes that the combined structure is necessary and allows for efficient and effective oversight, given the Company’s relatively small size, its corporate strategy and focus.

 

The Board of Directors does not have a specific role in risk oversight of the Company. The Chairman, President and Chief Executive Officer and other executive officers and employees of the Company provide the Board of Directors with information regarding the Company’s risks.

 

EXECUTIVE COMPENSATION

 

The following tables set forth, for the period of July 1, 2014 through November 6, 2014 of the Company, the total compensation awarded to, earned by or paid to any person who was a principal executive officer during the preceding fiscal year and every other highest compensated executive officers earning more than $100,000 during the last fiscal year (together, the “Named Executive Officers”). The tables set forth below reflect the compensation of the Named Executive Officers.

 

SUMMARY COMPENSATION TABLE
Name and Principal Position Year Salary
($)
Bonus
($)
Stock Awards
($)
Option Awards
($)
Non-Equity Incentive Plan Compensation
($)
Change in Pension Value and Nonqualified Deferred Compensation Earnings
($)
All Other Compensation ($) Total
($)
Richard C. Cowan (1) 2014 Nil Nil Nil Nil Nil Nil Nil Nil
President, Chief Executive Officer, Chief Financial Officer, Treasurer and Director                  

 

(1) Mr. Perry was appointed as President, Chief Executive Officer, Chief Financial Officer, Treasurer, and a Director of the company on November 6, 2014.

 

Narrative Disclosure to Summary Compensation Table

 

Other than set out below, there are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive share options at the discretion of our board of directors in the future. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that share options may be granted at the discretion of our board of directors.

 

 

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Stock Option Plan

 

Currently, we do not have a stock option plan in favor of any director, officer, consultant or employee of our company.

 

Grants of Plan-Based Awards

 

There were no grants of plan based awards during the period July 1, 2014 through November 6, 2014.

 

Outstanding Equity Awards at End of Period

 

There were no outstanding equity awards as of November 6, 2014.

 

Option Exercises and Stock Vested

 

During the period ended November 6, 2014 there were no options exercised by our named officer.

 

Compensation of Directors

 

We do not have any agreements for compensating our directors for their services in their capacity as directors.

 

Pension, Retirement or Similar Benefit Plans

 

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the board of directors or a committee thereof.

 

Certain Relationships and Related Transactions

 

None.

 

Market For Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities

 

Our company's common stock is quoted on the OTC Pink under the symbol “FRLF.” Our stock did not begin trading until February 10, 2014.

 

The following table sets forth the quarterly high and low bid prices for fiscal 2014 and the first three quarters of fiscal 2015. The prices set forth below represent inter-dealer quotations, without retail markup, markdown or commission and may not be reflective of actual transactions 

 

          High       Low  
  Fiscal 2014                  
  Quarter ended March 31, 2014     $ 0.25     $ 0.25  
  Quarter ended June 30, 2014     $ 0.25     $ 0.25  
  Fiscal 2015                  
  Quarter ended September 30, 2014     $ 1.05     $ 0.25  

 

Holders . As of November 6, 2014, there were 13 stockholders of record and an aggregate of 173,401,200 shares of our common stock were issued and outstanding. Our common shares are issued in registered form. The transfer agent of our company's common stock is Globex Transfer, LLC at 780 Deltona Blvd., Suite 202, Deltona, FL 32725.

 

Dividend Policy . We have not paid any cash dividends on our common stock and have no present intention of paying any dividends on the shares of our common stock. Our current policy is to retain earnings, if any, for use in our operations and in the development of our business. Our future dividend policy will be determined from time to time by our board of directors.

 

Securities Authorized for Issuance under Equity Compensation Plans . We do not have in effect any compensation plans under which our equity securities are authorized for issuance and we do not have any outstanding stock options.

 

 

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RECENT SALES OF UNREGISTERED SECURITIES

 

Information on any and all equity securities we have sold during the past fiscal year that were not registered under the Securities Act of 1933, as amended is set forth below. All of the transactions listed below were made pursuant to the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(a)(2) of the Securities Act or Rule 506(b) of Regulation D promulgated thereunder, for sales not involving a public offering, unless otherwise noted. The securities issued have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

 

As more fully described in Item 2.01 above, in connection with the Exchange Agreement, the Company issued a total of 83,401,200 shares of our common stock to Clifford Perry. In addition, our chief executive officer transferred 10,096,229 shares of common stock that he owns to Freedom Leaf, Inc.’s shareholders. Reference is made to the disclosures set forth under Item 2.01 of this Form 8-K, which disclosures are incorporated herein by reference. The issuance of the common stock to the Freedom Leaf, Inc.’s shareholders pursuant to the Exchange Agreement was exempt from registration in reliance upon Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”) and Regulation S of the 1933 Act.

 

DESCRIPTION OF REGISTRANT’S SECURITIES

 

The following description is only a summary of certain significant provisions of the rights, preferences, qualifications and restrictions of the Company’s capital stock.

 

Authorized Capital Stock

 

The Company’s authorized capital stock consists of 500,000,000 shares of common stock, $0.0001 par value per share.

 

Immediately prior to the Share Exchange, 90,000,000 shares of the Company’s Common Stock were outstanding and were held of record by minimal holders. Immediately following the Share Exchange, there were 173,401,200 shares of Common Stock outstanding held by 4 holders.

 

Common Stock

 

The holders of the Company’s common stock:

 

1. Have equal ratable rights to dividends from funds legally available, when, as and if declared by the Board of Directors;

 

2. Are entitled to share ratably in all of assets available for distribution to holders of common stock upon liquidation, dissolution, or winding up of corporate affairs;

 

3. Do not have preemptive, subscription or conversion rights; and there are no redemption or sinking fund provisions or rights; and

 

4. Are entitled to one vote per share on all matters on which stockholders may vote.

 

Holders of the Company’s common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares voting for the election of directors can elect all of the directors to be elected, if they so choose, and, in such event, the holders of the remaining shares will not be able to elect any directors.

 

The declaration of any cash dividend will be at the discretion of the Company’s Board of Directors and will depend upon earnings, if any, capital requirements and our financial position, general economic conditions, and other pertinent conditions.

 

Transfer Agent

 

The transfer agent and registrar for our common stock is: Globex Transfer, LLC, 780 Deltona Blvd., Suite 202, Deltona, FL 32725; Phone: (813) 344-4490; Fax: (386) 267-3124; website: www.globextransfer.com.

 

Acquisition of Controlling Interest

 

The Nevada Revised Statutes contain provisions governing acquisition of a controlling interest of a Nevada corporation. These provisions provide generally that any person or entity that acquires a certain percentage of the outstanding voting shares of a Nevada corporation may be denied voting rights with respect to the acquired shares, unless certain criteria are satisfied. Our bylaws are silent on this, but we will not impose such provisions on any existing stockholders.

 

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INDEMNIFICATION OF OFFICERS AND DIRECTORS

 

Our Articles of Incorporation and Bylaws provide for the indemnification of a present or former director or officer. We indemnify any director, officer, employee or agent who is successful on the merits or otherwise in defense on any action or suit. Such indemnification shall include, but not necessarily be limited to, expenses, including attorney’s fees actually or reasonably incurred by him. Nevada law also provides for discretionary indemnification for each person who serves as or at our request as an officer or director. We may (and in the case of an officer or director, shall) indemnify such individual against all costs, expenses and liabilities incurred in a threatened, pending or completed action, suit or proceeding brought because such individual is a director or officer. Such individual must have conducted himself in good faith and reasonably believed that his conduct was in, or not opposed to, our best interests. In a criminal action, he must not have had a reasonable cause to believe his conduct was unlawful.

 

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

Reference is made to the financial statements and pro forma financial information relating to the Company contained in Item 9.01 of this Current Report on Form 10-Q, which is incorporated herein by reference.

 

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

For a discussion of the Company’s changes in and disagreements with accountants on accounting and financial disclosure, please refer to the information set forth under Item 4.04 in the Company’s Current Report on Form 8-K filed with the SEC on August 8, 2014, which information is incorporated herein by reference.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

Reference is made to the disclosures set forth in Items 1.01 and 2.01 of this Current Report on Form 10-Q, which disclosures are incorporated by reference into this Item 3.02.

 

The information contained in this Current Report on Form 10-Q is not an offer to sell or the solicitation of an offer to buy the Company’s common stock or any other securities of the company, but merely included to disclose the terms of the transaction mentioned herein.

 

Item 5.01 Changes in Control of Registrant.

 

Reference is made to the disclosures set forth in Items 1.01 and 2.01 of this Current Report on Form 10-Q, which disclosures are incorporated by reference into this Item 5.01. Other than the transactions and agreements described in such Items, our officers and directors know of no arrangements that may result in a change in control of the Company at a subsequent date.

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Reference is made to the disclosures set forth in Item 2.01 of this Current Report on Form 10-Q, which disclosures are incorporated by reference into this Item 5.02.

 

Item 5.06 Change in Shell Company Status.

 

As stated elsewhere in this Report, while we have not deemed ourselves a shell company, as that term is defined in Rule 12b-2 promulgated under the Exchange Act, given our lack of operations immediately prior to the Share Exchange, we think it is worthwhile to definitively state that following the closing of the Share Exchange as described above under Item 2.01 of this Current Report on Form 8-K, we shall not be a shell company as that term is defined in Rule 12b-2 promulgated under the Exchange Act. Reference is made to the disclosures set forth in Item 2.01 of this Current Report on Form 8-K, which disclosures are incorporated by reference into this Item 5.06.

 

 

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Item 9.01 Financial Statements and Exhibits

 

Reference is made to the shares of Freedom Leaf, Inc. acquired under the Share Exchange Agreement, as described in Item 2.01, which is incorporated herein by reference. As a result of the closing of the Share Exchange, our primary operations consist of the business and operations of Freedom Leaf, Inc., the private company. Accordingly, we are presenting the financial statements of Freedom Leaf, Inc., the private company, for the period July 1, 2015 (inception) through November 6, 2014.

 

(a) Financial statements of business acquired.

 

The audited financial statements of Freedom Leaf, Inc. as of and for the period ended November 6, 2014 from July 1, 2014 (inception), including the notes to such financial statements, are incorporated herein by reference to Exhibit 99.1 of this Current Report on Form 10-Q.

 

(b) Pro forma financial information.

 

The unaudited pro forma financial information of the Company is incorporated herein by reference to Exhibit 99.3 of this Current Report on Form 10-Q.

 

(c) Shell company transactions.

 

Reference is made to the disclosure set forth in Items 9.01(a) and 9.01(b), which disclosure is incorporated herein by reference.

 

(d) Exhibits

 

Exhibit   Description
4.1   Articles of Incorporation (Incorporated by reference to Registration Statement on Form S-1, filed on July 22, 2013)
4.2   Bylaws (Incorporated by reference to Registration Statement on Form S-1, filed on July 22, 2013)
10.1   Share Exchange Agreement dated November 6, 2014 (Incorporated by reference to Form 10-Q/A for the period ended December 31, 2014, filed on September 10, 2015).
10.2   Audit for the Period Ended November 6, 2014 of Freedom Leaf, Inc., the private Company (Incorporated by reference to Form 10-Q/A for the period ended December 31, 2014, filed on September 10, 2015).
99.1   Financial Statements for Freedom Leaf, Inc. for the period July 1, 2014 through November 6, 2014
99.2   Pro Forma Financial Statements+

 

 

+ Filed Herewith.

 

 

 

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

  (a) Documents filed as part of this report are as follows:
     
    (1) Financial Statements and Report of Independent Registered Public Accounting Firm
       
    (2) Financial Statement Schedules
       
      None required.
       
    (3) Exhibits:
       
      The exhibit list required by this item is incorporated by reference to the Exhibit Index included in this Current Report on Form 10-Q.

 

Item 6. Exhibits

 

Exhibit No.   Description
10.1   Share Exchange Agreement dated November 6, 2014.
10.2   Audit for the Period Ended November 6, 2014 of Freedom Leaf, Inc., the private company
31.1   Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).
31.2   Certification by the Principal Financial Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).
32.1   Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2   Certification by the Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS   XBRL Instance Document
101.SCH   XBRL Taxonomy Extension Schema Document
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
101.LAB   XBRL Taxonomy Extension Label Linkbase Document
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document

 

 

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  Freedom Leaf Inc.
   
Dated: September 11, 2015 By: /s/ Clifford J. Perry
  Clifford J. Perry
  President and Chief Executive Officer 
   

 

 

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Exhibit 10.1

 

MERGER AGREEMENT

 

THIS merger AGREEMENT (this " Agreement "), entered into this 6th day of November 2014, by, between and among Arkadia International, Inc., a Nevada corporation (" Purchaser "), Freedom Leaf, Inc., a Nevada corporation (" Seller "), and Clifford Perry, an individual and controlling stockholder of Seller (" Stockholder ");

 

W I T N E S S E T H T H A T:

 

WHEREAS, Purchaser and Seller desire to merge with the Purchaser being the surviving corporation; and

 

WHEREAS, Purchaser desires to change its name after the consummation of this Agreement to “Freedom Leaf, Inc.;”

 

NOW, THEREFORE, in consideration of the agreements of the parties hereto, and intending to be legally bound hereby, the parties hereto agree as follows:

 

1.             MERGER OF THE PURCHASER AND SELLER .

 

1.1             Plan of Merger . On the Closing Date (as hereinafter defined) the parties hereto shall enter into the Plan of Merger attached as Exhibit A hereto and made a part hereof.

 

1.2             Closing; Transaction Date . (a) This Agreement and the other documents, agreements, securities, and all other instruments required to be executed or delivered or cash amounts required to be paid in connection herewith shall be executed and delivered (the execution and delivery of those instruments being referred to as the " Closing ") simultaneously herewith on November 6, 2014 (the " Closing Date "), at the offices of the Seller.

 

Upon the occurrence of the Closing hereunder in accordance with the terms and conditions hereof, the execution and delivery of this Agreement by the parties hereto and the consummation of the transactions contemplated herein shall be deemed to have been completed as of November 6, 2014.

 

1.3             Cooperation After Closing . The Stockholder will cooperate with Buyer, at its request, on and after the Closing Date, in furnishing information, evidence, testimony, and other reasonable assistance in connection with any actions, proceedings, arrangements, or disputes relating to adjustment of federal income and other taxes of the Company for all periods prior to the Closing Date and in connection with any such other actions, proceedings, arrangements, or disputes involving the Company or based upon any of the Company's contracts, agreements, acts, or omissions that were in effect or occurred on or prior to the Closing Date.

 

The Stockholder agrees that he or she will, at any time and from time to time after the Closing Date, upon request of Purchaser, take or cause to be taken such further actions and execute and deliver or cause to be executed and delivered all such further documents as may be reasonably required to consummate the transactions contemplated hereby.

 

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4.             REPRESENTATIONS AND WARRANTIES OF SELLER AND STOCKHOLDER .

 

Seller and Stockholder jointly and severally represent and warrant, covenant and agree that:

 

4.1             Organization and Corporate Power . Seller is a corporation duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation and is duly qualified and in good standing as a foreign corporation in each other jurisdiction in which it owns or leases properties, conducts operations, or maintains a stock of goods, with full power and authority (corporate and other) to carry on the business in which it is engaged and to execute and deliver and carry out the transactions contemplated by this Agreement.

 

4.2             Due Authorization; Effect of Transaction . No provisions of the Certificate of Incorporation or By-Laws of Seller, or of any agreement, instrument, or understanding, or any judgment, decree, rule, or regulation, to which Seller is a party or by which Seller is bound, has been or will be violated by the execution and delivery by Seller of this Agreement or the performance or satisfaction of any agreement or condition herein contained upon its part to be performed or satisfied, and all requisite corporate and other authorizations for such execution, delivery, performance, and satisfaction have been duly obtained. Upon execution and delivery, this Agreement will be a legal, valid, and binding obligation of Seller and Stockholder, enforceable in accordance with its terms. Seller is not in default in the performance, observance, or fulfillment of any of the terms or conditions of its Articles of Incorporation or By-Laws.

 

4.3             Financial Statements . Except as set forth on the Disclosure Schedule, Seller has delivered to Purchaser a balance sheet and statement of operations of the Seller at the close of its fiscal year for the year ending June 30, 2014 and (b) its consolidated trial balance for the month of October 2014.

 

The financial statements specified above, including in each case the notes to such financial statements, are hereinafter sometimes collectively referred to as the " Financial Statements ." All of the Financial Statements are true, correct, and complete, have been prepared in accordance with generally accepted accounting principles consistently followed throughout the periods (except as set forth in such notes or statements) and fairly present the financial condition of Seller and the results of its operations as at the dates thereof and throughout the periods covered thereby. The Financial Statements reflect or provide for all claims against, and all debts and liabilities of, Seller, fixed or contingent, as at the dates thereof, and there has not been any change between the date of the most recent Financial Statements and the date of this Agreement that has materially or adversely affected the business or properties or condition or prospects, financial or other, or results of operations of Seller, and no fact or condition exists or is contemplated or threatened, which might cause any such change at any time in the future.

 

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4.4             Accounts Receivable . Subject to the bad debt reserve shown in the Financial Statements, all customer and trade notes and accounts receivable owned by Seller on the date of the most recent balance sheet included in the Financial Statements are fully collectible in the aggregate, to the extent of the aggregate face value thereof as indicated on such balance sheet.

 

4.5             Liabilities . Seller has no liabilities of any nature, whether absolute, contingent, or otherwise, except as set forth in the most recent balance sheet included in the Financial Statements, other than liabilities subsequently incurred in the ordinary course of business. Seller is not in breach or default or in arrears in respect of the terms or conditions of any such liabilities and no waiver or forbearance has been granted by any holder of any such liability with respect to any such liability. All liabilities of Seller, other than the Assumed Liabilities, will be paid in full on or before the Closing Date.

 

4.6             Capitalization . All of the authorized common stock of the Seller is issued to Clifford Perry and is duly authorized and validly issued, fully paid, and nonassessable.

 

4.7             Dividends and Distributions . From the end of its most recent fiscal year to the date hereof Seller has not declared or paid any dividend or declared or made any distribution whatsoever to its stockholders, either in cash, stock, or other property, through purchases or redemptions of stock or otherwise.

 

4.8             Subsidiaries . Seller does not own, directly or indirectly, any of the capital stock of any corporation, association, trust or similar entity, any interest in the equity of any partnership or similar entity, any share in any joint venture, or any other equity or proprietary interest in any entity or enterprise, however organized and however such interest may be denominated or evidenced.

 

4.9             Leases . Seller has provided all leases to the Purchaser for review and are listed in Schedule 4.9 of the Disclosure Schedule . Each lease is valid, binding, subsisting, and enforceable in accordance with its terms, and neither Seller nor any landlord or lessor is in default or in arrears in the performance or satisfaction of any agreement or condition on its part to be performed or satisfied thereunder, and no waiver or indulgence has been granted by any of the landlords or lessors under those leases. Seller is not the landlord or lessor under any leases of real or personal property.

 

4.10             Personal Properties . Seller owns and has good and marketable title to all the tangible and intangible personal property and assets, as reflected in the Financial Statements or used by Seller in its business if not so reflected, free and clear of all mortgages, liens, encumbrances, equities, claims, and obligations to other persons, of whatever kind and character. Seller has provided a list of certain major items of fixed assets and machinery and equipment. None of the fixed assets and machinery and equipment is subject to contracts of sale, and none is held by Seller as lessee or as conditional sales vendee under any lease or conditional sales contract and none is subject to any title retention agreement. The fixed assets and machinery and equipment, taken as a whole, are in a state of good repair and maintenance and are in good operating condition; inventory is up to normal commercial standards and no inventory that is obsolete or unmarketable is reflected in the most recent balance sheets included in the Financial Statement. All items included in such inventory are covered on the books of Seller, and are valued on the Financial Statement at the lower of cost or market and, in any event, at not greater than their net realizable value, on an item by item basis.

 

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4.11             Employment Arrangements . Except as set forth on the Section 4.11 of the Disclosure Schedule , Seller has no obligation, contingent or otherwise, under any employment agreement, collective bargaining or other labor agreement, any agreement containing severance or termination pay arrangements, deferred compensation agreement, retainer or consulting arrangements, pension or retirement plan, bonus or profit-sharing plan, stock option or purchase plan, or other employee contract or non-terminable arrangement (whether or not that arrangement imposes a penalty for termination), group life, health, medical or hospitalization insurance plan or program, or other employee or fringe benefit plan, including vacation plans or programs and sick leave plans or programs. Section 4.11 of the Disclosure Schedule sets forth the basis of funding, and the current status of, any past service liability with respect to any such plan or agreement. Except as set forth on Section 4.11 of the Disclosure Schedule , Seller or its employees are not now and for the past five years have not been subject to or involved in or, to the best of Seller's knowledge, threatened with any union elections, petitions therefor or other organizational activities. Seller has performed all obligations required to be performed under all such agreements, plans, and arrangements and is not in breach of or in default or arrears under the terms thereof.

 

4.12             Material Contracts and Arrangements . Except as set forth in Section 4.12 of the Disclosure Schedule , Seller has no contract or arrangement, including, without limitation, any commitments or obligations, contingent or otherwise, under any contract or arrangement (i) for the purchase or sale of inventory in excess of $5,000 in any one instance, (ii) for the purchase or sale of supplies, services or other items in excess of $5,000 in any one instance, (iii) for the purchase, sale or lease of any equipment or machinery, (iv) for the performance of service for others in excess of $10,000 in any one instance, or (v) extending beyond December 2016. All contracts of less than $$5,000 do not in the aggregate exceed $50,000. Each of such contracts and arrangements is valid, binding, subsisting, and enforceable in accordance with its terms and Seller has performed all obligations required to be performed under any such contract or arrangement and is not in breach or default or in arrears in any material respect or in any other respect that would permit the other party to cancel such contract or arrangement under the terms thereof. To the best knowledge of Stockholder after due inquiry, each of the contracts, if any, set forth in Section 4.12 of the Disclosure Schedule calling for the performance of services or the sale of inventory can be satisfied or performed by Seller without any loss to it.

 

4.13             Ordinary Course of Business . Seller, from the date of the balance sheet contained in the most recent Financial Statements to the date hereof,

 

(a)            has operated its business in the normal, usual, and customary manner in the ordinary and regular course of business;

 

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(b)            has not sold or otherwise disposed of any of its properties or assets, other than inventory sold in the ordinary course of business;

 

(c)            except in each case in the ordinary course of business,

 

(i)            has not amended or terminated any outstanding lease, contract, or agreement,

 

(ii)           has not incurred any obligations or liabilities (fixed, contingent, or other), and

 

(iii)          has not entered any commitments;

 

(d)            has not made any transactions outside the ordinary course of business in its inventory or any additions to its property or any purchases of machinery or equipment, except for normal maintenance and replacements;

 

(e)            has not discharged or satisfied any lien or encumbrance or paid any obligation or liability (absolute or contingent) other than current liabilities or obligations under contracts then existing or thereafter entered into in the ordinary course of business, and commitments under leases existing on that date or incurred since that date in the ordinary course of business;

 

(f)            has not mortgaged, pledged, or subjected to lien or any other encumbrances, any of its assets, tangible or intangible;

 

(g)            has not sold or transferred any tangible asset or cancelled any debts or claims except in each case in the ordinary course of business;

 

(h)            has not sold, assigned, or transferred any patents, trademarks, trade names, trade secrets, copyrights, or other intangible assets;

 

(i)            has not increased the compensation payable or to become payable to any of its officers, employees, or agents;

 

(j)            has not suffered any material damage, destruction, or loss (whether or not covered by insurance) or any acquisition or taking of property by any governmental authority;

 

(k)            has not waived any rights that individually or in the aggregate exceed $10,000;

 

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(l)            has not experienced any organized work stoppage or industrial action; or

 

(m)            has not entered into any other transaction or transactions that individually or in the aggregate are material to Seller, other than in the ordinary course of business.

 

4.14             Litigation and Compliance with Laws . Section 4.14 of the Disclosure Schedule contains a brief description of all litigation or legal or other actions, suits, proceedings, or investigations, at law or in equity or admiralty, or before any federal, state, municipal, or other governmental department (including, without limitation, the National Labor Relations Board), commission, board, agency, or instrumentality, domestic or foreign, in which Seller or any of its officers or directors, in such capacity, is engaged, or, to the knowledge and belief of Seller and Stockholder, with which Seller or any of its officers or directors is threatened in connection with the business or affairs or properties or assets of Seller. Seller is and at all times since its inception has been in compliance with all laws and governmental rules and regulations, domestic and foreign, and all requirements of insurance carriers, applicable to its business or affairs or properties or assets, including, without limitation, those relating to environmental protection, water or air pollution, and similar matters.

 

4.15             Tax Returns . Seller has filed, in accordance with applicable law, all federal, state, county, and local income and franchise tax returns and all real and personal property tax returns that are required to be filed, and the provision for taxes shown on the most recent balance sheet included in the Financial Statements is sufficient to satisfy all taxes of any kind of Seller, including interest and penalties in respect thereof, whether disputed or not, and whether accrued, due, absolute, deferred, contingent, or other for all periods ended on or prior to the date of such balance sheet. As of the date hereof no tax liabilities have been assessed or proposed that remain unpaid, and Seller has not signed any extension agreement with the Internal Revenue Service or any state or local taxing authority. Seller has paid all taxes that have become due pursuant to such returns and has paid all installments of estimated taxes due. All taxes and other assessments and levies that Seller is required by law to withhold or to collect have been duly withheld and collected, and have been paid over to the proper governmental authorities to the extent due and payable. From the end of its most recent fiscal year to the date hereof Seller has not made any payment of or on account of any federal, state, or local income, franchise, or any real or personal property taxes, except as set forth in Section 4.15 of the Disclosure Schedule . Neither Seller nor Stockholder is aware of any basis upon which any assessment for a material amount of additional federal income taxes could be made. The information shown on the federal income tax returns of Seller heretofore delivered to Purchaser is true, accurate, and complete and fairly presents the information purported to be shown.

 

4.16             Reserved.

 

4.17             Trademarks, Licenses, Etc . Section 4.17 of the Disclosure Schedule sets forth all of the trademarks, trade names, service marks, patents, copyrights, registrations, or applications with respect thereto, and licenses or rights under them owned, used, or intended to be acquired or used by Seller, and, to the extent indicated in Section 4.17 of the Disclosure Schedule , they have been duly registered in such offices as are indicated therein. Seller is the sole and exclusive owner of the trademarks, trade names, service marks, and copyrights, the holder of the full record title to the trademark registrations and the sole owner of the inventions covered by the patents and patent applications, all as set forth in Section 4.17 of the Disclosure Schedule ; Seller has the sole and exclusive right, to the extent listed in Section 4.17 of the Disclosure Schedule , to use such trademarks, trade names, service marks, patents and copyrights, and, except to the extent set forth in Section 4.17 of the Disclosure Schedule , all of them are free and clear of any mortgages, liens, encumbrances, equities, licenses, claims, and obligations to other persons of whatever kind and character.

 

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4.18             Insurance Policies . The insurance policies listed and described briefly in Section 4.18 of the Disclosure Schedule constitute all of the policies in force and effect in respect of the business, properties and assets, including, without limitation, insurance on personnel, of Seller. Seller is not in default under any such policy. The insurance policies so listed and identified are sufficient in nature, scope, and amounts to insure adequately (and, in any event, in amounts sufficient to prevent Seller from becoming a co-insurer within the terms of such policies) the business, properties, and assets of Seller. Seller has not been refused insurance by any insurance carrier to which it has applied for insurance.

 

4.19             Extraordinary Events . From the end of its most recent fiscal year to the date hereof, neither the business nor properties nor condition, financial or other, nor results of operations of Seller have been materially and adversely affected in any way as the result of any fire, explosion, accident, casualty, labor disturbance, requisition, or taking of property by any governmental body or agency, flood, embargo, or Act of God or the public enemy, or cessation, interruption, or diminution of operations, whether or not covered by insurance.

 

4.20             Adverse Restrictions . The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby are not events that of themselves or with the giving of notice or the passage of time or both, could constitute, on the part of Seller, a violation of or conflict with or result in any breach of, or default under the terms, conditions, or provisions of, any judgment, law, or regulation, or of the Certificate of Incorporation or By-Laws of Seller, any agreement or instrument to which Seller is a party or by which it is bound, or result in the creation or imposition of any lien, charge, or encumbrance of any nature whatsoever on the property or assets of Seller and no such event of itself or with the giving of notice or the passage of time or both will result in the acceleration of the due date of any obligation of Seller.

 

4.21             Material Information . Neither the Financial Statements nor this Agreement (including the Schedules and Exhibits hereto) nor any certificate or other information or document furnished or to be furnished by either Seller or Stockholder to Purchaser contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact required to be stated herein or therein or necessary to make the statements herein or therein not misleading.

 

4.22             Products in Warranty . Attached as part of Section 4.22 of the Disclosure Schedule are true and correct copies of Seller's standard warranty agreements used in connection with its business operations. Seller's standard warranty agreements apply to each product in warranty except as otherwise indicated on Section 4.22 of the Disclosure Schedule . Seller is not in violation in any material respect of any such warranty agreement.

 

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4.23             Certain Transactions . None of the officers, directors, or employees of Seller is presently a party to any transaction with Seller (other than for services as officers, directors, and employees), including, without limitation, any contract, agreement, or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from, any officer, director, any such employee, any member of a family of any officer, director, or such employee or any corporation, partnership, trust, or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, or partner.

 

4.24             No Governmental Authorizations or Approvals Required . No authorization or approval of, or filing with, any governmental agency, authority, or other body will be required in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

 

4.25             Employee Benefit Plans .

 

Section 4.25 of the Disclosure Schedule contains a true, correct, and complete list of all pension, profit sharing, retirement, deferred compensation, welfare, insurance disability, bonus, vacation pay, severance pay, and other similar plans, programs, or agreements, and every material personnel policy, whether reduced to writing or not, relating to any persons employed by Seller and maintained at any time by Seller or by any other member (hereinafter, " Affiliate ") of a controlled group of corporations, group of trades, or businesses under common control or affiliated service group that includes Seller (as defined for purposes of Section 414(b), (c), and (m) of the Code) (collectively, the " Plans "). Seller has made available to Buyer true, correct, and complete copies of all Plans that have been reduced to writing, together with all documents establishing or constituting any related trust, annuity contract, insurance contract, or other funding instrument, and true, correct, and complete written summaries of those that have not been reduced to writing. For each "defined benefit plan," Seller has made available a copy of the latest annual actuarial report, and for all Plans the latest Forms 5500. Except as set forth on Section 4.25 of the Disclosure Schedule , neither Seller nor any Affiliate has any obligation or other employee benefit plan liability under applicable law; nor has Seller or any Affiliate ever been obligated to contribute to any "multi-employer plan," as defined in Section 3(37) of the Employee Retirement Income Security Act of 1974, as amended (" ERISA "). Neither Seller nor any Affiliate has incurred any "withdrawal liability" calculated under Section 4211 of ERISA and there has been no event or circumstance that would cause them to incur any such liability. Neither Seller nor any Affiliate has ever maintained a Plan providing health or life insurance benefits to former employees. No plan previously maintained by Seller or its Affiliates that was subject to ERISA has been terminated; no proceedings to terminate any such plan have been instituted within the meaning of Subtitle C of Title IV of ERISA; and no reportable event within the meaning of Section 4043 of Subtitle C has occurred with respect to any such Plan, and no liability to the Pension Benefit Guaranty Corporation has been incurred. For each Plan, Seller and every Affiliate are in compliance with all requirements prescribed by all statutes, regulations, orders, or rules currently in effect, and they have in all respects performed all obligations required to be performed by them. Neither Seller nor any Affiliate, nor any of their directors, officers, employees, or agents, nor any trustee or administrator of any trust created under the Plans, have engaged in or been a party to any "prohibited transaction" as defined in Section 4975 of the Code and Section 406 of ERISA that could subject Seller or Buyer or their affiliates, directors, or employees or the Plans or the trusts relating thereto or any party dealing with any of the Plans or trusts to any tax or penalty on "prohibited transactions" imposed by Section 4975 of the Code. Except as set forth on Section 4.25 of the Disclosure Schedule , neither the Plans nor the trusts created thereunder have incurred any "accumulated funding deficiency," as such term is defined in Section 412 of the Code and regulations issued thereunder, whether or not waived.

 

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Each Plan intended to qualify under Section 401(a) of the Code has been determined by the Internal Revenue Service to so qualify, and the trusts created thereunder have been determined to be exempt from tax under Section 501(a) of the Code; copies of all determination letters have been delivered to Buyer; and nothing has occurred since the date of such determination letters that might cause the loss of such qualification or exemption. For each funded Defined Benefit Plan, the present value of the actuarial accrued liability, determined on a plan termination basis, does not exceed the fair market value of the assets held under such Plan, and there is no unpaid contribution for any Plan year ended prior to the Closing Date as required under Section 412 of the Code. For each Plan that is a qualified profit sharing or stock bonus plan, all employer contributions accrued for plan years ending prior to the Closing Date under the Plan terms and applicable law have been made.

 

Except as set forth on Section 4.25 of the Disclosure Schedule , all of the liabilities with respect to all of the Plans are accurately reflected in Seller's Financial Statements and Seller's Balance Sheet.

 

4.26             Continuing Representations . The representations and warranties of Seller and Stockholder herein contained (a) relating to non-tax matters shall survive the Closing for a period of one (1) year and (b) relating to tax matters shall survive the Closing for the applicable statute of limitations.

 

5.             REPRESENTATIONS, WARRANTIES, AND AGREEMENTS OF PURCHASER .

 

5.1             Due Authorization; Effect of Transaction . No provision of Purchaser's Certificate of Incorporation or By-Laws, or of any agreement, instrument, or understanding, or any judgment, decree, rule, or regulation, to which Purchaser is a party or by which it is bound, has been, or will be violated by the execution by Purchaser of this Agreement or the performance or satisfaction of any agreement or condition herein contained upon its part to be performed or satisfied, and all requisite corporate and other authorizations for such execution, delivery, performance, and satisfaction have been duly obtained. Upon execution and delivery, this Agreement will be a legal, valid, and binding obligation of Purchaser, enforceable in accordance with its terms. Purchaser is not in default in the performance, observance, or fulfillment of any of the terms or conditions of its Certificate of Incorporation or By-Laws.

 

5.2             Continuing Representations . The representations and warranties of Purchaser herein contained (a) relating to non-tax matters shall survive the Closing for a period of one (1) year and (b) relating to tax matters shall survive the Closing for the applicable statute of limitations.

 

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6.             BROKERAGE FEE .

 

Seller and Purchaser each represent that no broker has been involved in this transaction and each party agrees to indemnify and hold the others harmless from payment of any brokerage fee, finder's fee, or commission claimed by any party who claims to have been involved because of association with such party; provided that Seller shall (pursuant to an agreement between Seller and Broker) pay all fees owed to the Broker in connection with this transaction.

 

7.             AMENDMENTS; WAIVERS .

 

This Agreement constitutes the entire agreement of the parties related to the subject matter of this Agreement, supersedes all prior or contemporary agreements, representations, warranties, covenants, and understandings of the parties. This Agreement may not be amended, nor shall any waiver, change, modification, consent, or discharge be effected, except by an instrument in writing executed by or on behalf of the party against whom enforcement of any amendment, waiver, change, modification, consent, or discharge is sought.

 

Any waiver of any term or condition of this Agreement, or of the breach of any covenant, representation, or warranty contained herein, in any one instance, shall not operate as or be deemed to be or construed as a further or continuing waiver of such term, condition, or breach of covenant, representation, or warranty, nor shall any failure at any time or times to enforce or require performance of any provision hereof operate as a waiver of or affect in any manner such party's right at a later time to enforce or require performance of such provision or of any other provision hereof; and no such written waiver, unless it, by its own terms, explicitly provides to the contrary, shall be construed to effect a continuing waiver of the provision being waived and no such waiver in any instance shall constitute a waiver in any other instance or for any other purpose or impair the right of the party against whom such waiver is claimed in all other instances or for all other purposes to require full compliance with such provision.

 

8.             ASSIGNMENT; SUCCESSORS AND ASSIGNS .

 

This Agreement shall not be assignable by any party without the written consent of the others. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.

 

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9.             SEVERABILITY .

 

If any provision or provisions of this Agreement shall be, or shall be found to be, invalid, inoperative, or unenforceable as applied to any particular case in any jurisdiction or jurisdictions, or in all jurisdictions or in all cases, because of the conflict of any provision with any constitution or statute or rule of public policy or for any other reason, such circumstance shall not have the effect of rendering the provision or provisions in question invalid, inoperative, or unenforceable in any other jurisdiction or in any other case or circumstance or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to the extent that such other provisions are not themselves actually in conflict with such constitution, statute, or rule of public policy, but this Agreement shall be reformed and construed in any such jurisdiction or case as if such invalid, inoperative, or unenforceable provision had never been contained herein and such provision reformed so that it would be valid, operative, and enforceable to the maximum extent permitted in such jurisdiction or in such case.

 

10.             COUNTERPARTS .

 

This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and in pleading or proving any provision of this Agreement it shall not be necessary to produce more than one such counterpart.

 

11.             SECTION AND OTHER HEADINGS .

 

The headings contained in this Agreement are for reference purposes only and shall not in any way effect the meaning or interpretation of this Agreement.

 

12.             NOTICES .

 

All notices, requests, demands, and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered or mailed, postage prepaid, certified mail, return receipt requested:

 

 

(a)             TO SELLER : If to Seller, to:

 

Clifford J.. Perry

3571 E Sunset Road, Suite 420

Las Vegas. NV 89120

 

(b)             TO PURCHASER : If to Purchaser, to:

 

Richard C. Cowan

848 N Rainbow Blvd, Suite 3352

Las Vegas, NV 89107-1103

 

and/or to such other person(s) and address(es) as either party shall have specified in writing to the other.

 

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13.             GENDER .

 

Whenever used herein, the singular number shall include the plural, the plural shall include the singular, and the use of any gender shall include all genders.

 

14.             LAW TO GOVERN .

 

This Agreement shall be governed by and construed and enforced in accordance with the law (other than the law governing conflict of law questions) of Nevada.

 

15.             COURTS .

 

Any action to enforce, arising out of, or relating in any way to, any of the provisions of this Agreement may be brought and prosecuted in such court or courts located in Clark County, Nevada as is provided by law; and the parties consent to the jurisdiction of the court or courts located in Clark County, Nevada and to service of process by registered mail, return receipt requested, or in any other manner provided by law.

 

16.             ARBITRATION .

 

If the parties hereto are unable to resolve any dispute with respect to claims arising hereunder within 30 days of written notice of such dispute by one party to the others, such dispute shall be settled by compulsory and binding arbitration by a panel of three arbitrators in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction. The parties agree that such arbitration shall be held in Clark County, Nevada.

 

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IN WITNESS WHEREOF, Seller, Stockholder, and Purchaser have caused this Agreement to be executed as of the date first above written.

 

Arkadia International, Inc.

 

By: /s/ Richard C. Cowan

Name: Richard C. Cowan

Title: President

 

Freedom Leaf, Inc.

 

By: /s/ Clifford J. Perry

Name: Clifford J. Perry

Title: President

 

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Schedule 4.9

 

Leases

 

Seller entered into a Commercial Office Lease with Global Links Corp (“lessor”), a Nevada Corporation, on October 1, 2014 to rent for approximately 2,800 square feet of usable office space located at 3571 E. Sunset Road, Las Vegas, Nevada. Said lease covers a period of five (5) years starting on October 1, 2014; seller pays approximately $1.28 per usable square foot of office space.

 

 

 

 

 

 

 

 

 

 

 

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Schedule 4.11

Employment Arrangements

 

 

Employee Name Full time or part time State in which they reside 1099 or W-2
Clifford J. Perry Full time Nevada W-2
Felipe F. Menezes Part time Nevada W-2
Patrick J. Rhea Full time Nevada W-2
Carolann Bass Full time Nevada W-2
Davood Azimi Full time California W-2
Ron J. Dennis Full time California W-2
Zenovia D. Countee Full time California W-2
Christopher Goldstein Part time New Jersey W-2
Russell Keith Stroup Part time Virginia 1099

 

 

 

 

 

 

 

 

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Schedule 4.12

Material Contracts and Arrangements

 

 

None.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Schedule 4.14

Litigation and Compliance with Laws

 

 

Seller currently has no pending litigation or legal actions, suits, proceedings or investigations, at law or in equity before any federal, state, municipal or other governmental department, commission, board, agency or instrumentality, domestic or foreign.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Schedule 4.15

Tax Returns

 

Seller’s tax year ends June 30, 2015, therefore, no return is available at the time of this Merger.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Schedule 4.16

Reserved

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Schedule 4.17

Trademarks, Licenses, Etc.

 

Seller’s intellectual property is limited to five (5) domestic trademarks, as listed below.

 

Trademarks (Domestic)

 

Freedom Leaf

Hemp Inspired

The Marijuana Legalization Company

CannabizU

Cannabiz

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Schedule 4.18

Insurance Policies

 

 

 

Seller does not have a business liability insurance policy.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Schedule 4.22

Products in Warranty

 

Not applicable to Seller.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Schedule 4.26

Employee Benefit Plans

 

 

Seller does not have an employee benefit plan in place at the time of this Merger.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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PLAN OF MERGER

 

This PLAN OF MERGER, dated this 6th of November 2014 (the " Plan of Merger ") by and between Arkadia International, Inc., a Nevada corporation (" Purchaser "), and Freedom Leaf, Inc., a Nevada corporation (the " Company ") (Purchaser and the Company are collectively referred to as the " Parties ");

 

W I T N E S S E T H T H A T:

 

WHEREAS, the Parties hereto desire to enter into an agreement providing for the merger of Company into Purchaser; and

 

WHEREAS, the authorized capital stock of the Company consists of: one thousand shares of common stock, no par value per share.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties do hereby covenant and agree as follows:

 

A.             The Merger . At the Effective Time of the Merger (as such term is hereinafter defined), in accordance with the provisions of applicable law and the terms of this Plan of Merger, the Company will be merged with and into Purchaser with Purchaser surviving the Merger as the Surviving Corporation.

 

B.             Effective Time of the Merger . The Merger shall not become effective until, subject to the terms and conditions of this Plan of Merger, 5:00 PM PST on the day on which this Plan of Merger is filed with the Secretary of State of the State of Nevada and when the following actions shall have in all respects been completed:

 

1.            This Plan of Merger shall have been approved by the directors and stockholders of each of the Parties in accordance with the requirements of the laws of the states under which each Party is organized; and

 

2.            Articles or Certificates of Merger (which shall be satisfactory in form to counsel for the Parties) or certified copies of this Plan of Merger shall have been executed and verified and filed in the office of the Secretary of State of the State of Nevada.

 

The date and time when the Merger shall become effective as aforesaid is herein referred to as " Effective Time of the Merger ."

 

C.             Certificates of Incorporation, By-Laws, Directors, and Officers .

 

1.            The Certificate of Incorporation of Purchaser as in effect immediately prior to the Effective Time of the Merger shall be the Certificate of Incorporation of Purchaser from and after the Effective Time of the Merger until further amended in accordance with the laws of the State of Nevada.

 

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2.            The By-Laws of Purchaser as in effect immediately prior to the Effective Time of the Merger shall be the By-Laws of Purchaser from and after the Effective Time of the Merger until further amended in accordance with the laws of the State of Nevada, the Certificate of Incorporation and the By-Laws of Purchaser.

 

3.            The directors and officers of Purchaser from and after the Effective Time of the Merger shall be as set forth below, and each shall hold his respective office or offices from and after the Effective Time of the Merger until his successor shall have been elected and qualified or as otherwise provided in the By-Laws of Purchaser.

 

Directors

 

Clifford J Perry

Richard Cowan

 

 

Officers

 

Richard C. Cowan     President & CFO

Clifford J. Perry         Secretary

 

D.             Manner and Basis of Converting Securities .

 

1.            At the Effective Time of the Merger of Company with and into Purchaser:

 

a.            all shares of common stock of the Company that shall be outstanding immediately prior to the Effective Time of the Merger shall, by virtue of the Merger, be canceled and converted to the right for each Shareholder of the Company to receive 83,401.2 shares of the common stock, $0.001 par value per share, of Purchaser.

 

b.            Any shares of common stock of the Company held in the treasury of the Company prior to the Effective Time of the Merger shall be canceled.

 

2.            From and after the Effective Time of the Merger, the holders of certificates representing shares of common stock of the Company shall cease to have any rights with respect to such certificates.

 

3.            Each share of the common stock, $0.001 par value per share, of Purchaser issued and outstanding before the Effective Time of the Merger shall remain issued and outstanding and shall not be affected by the Merger.

 

25
 

 

E.             Surrender and Exchange of Certificates Representing the Common Stock of the Company . As soon as practicable after the Effective Time of the Merger and after the surrender to Purchaser, at the principal place of business of Purchaser, or such other place as Purchaser may designate, of all certificates that immediately prior to the Effective Time of the Merger represented outstanding shares of the common stock of the Company (the "Closing"), Purchaser shall issue to the person or entity in whose name such certificates shall have been registered the appropriate number of shares of the common stock, $0.001 par value per share, of Purchaser.

 

F.             Certain Effects of the Merger . The separate existence and the corporate organization of the Company shall cease at the Effective Time of the Merger except insofar as it may be continued by law, and thereupon the Company and Purchaser shall be a single corporation, sometimes hereinafter referred to as the " Surviving Corporation ." At the Effective Time of the Merger, the Surviving Corporation shall thereupon and thereafter possess all rights, privileges, powers and franchises, both public and private in nature, and all the property, real, personal and mixed, and all debts due on whatever account, including, subscriptions for shares, and all other things in action or belonging to the Company shall be vested in the Surviving Corporation, and all property, rights, privileges, powers and franchises, and every other interest shall be thereafter the property of the Surviving Corporation. All rights of creditors and all liens upon any property of the Company shall be preserved unimpaired, and all debts, liabilities, and duties of the Company shall attach to the Surviving Corporation and may be enforced against it to the same extent as if those debts, liabilities, and duties had been incurred or contracted by it.

 

IN WITNESS WHEREOF, each of the Parties have caused this Plan of Merger to be executed as of the date first written above.

 

Arkadia International, Inc.

 

 

By: /s/ Richard C. Cowan

Richard C. Cowan, President

 

 

Freedom Leaf, Inc.

 

 

By: /s/ Clifford J. Perry

Clifford J. Perry, President

 

 

 

26

 

Exhibit 10.2

 

 

Freedom Leaf, Inc.

 

Table of Contents

 

    Page
Report of Independent Registered Public Accounting Firm   2
     
Balance Sheet   3
     
Statement of Operations   4
     
Statement of Cash Flows   5
     
Statement of Shareholder’s Deficit   6
     
Notes to Financial Statements   7
     

 

 

1
 

 

Green & Company, CPAs
A PCAOB Registered Accounting Firm

 

 

Report of Independent Registered Public Accounting Firm

 

To the Board of Directors and Shareholders of:

Freedom Leaf, Inc.

 

We have audited the accompanying balance sheet of Freedom Leaf, Inc. as of November 6, 2014 and the related statements of operations and cash flows for the period then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Freedom Leaf, Inc. as of November 6, 2014 and the results of its operations and its cash flows for the period ended November 6, 2014 in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company reported a net loss of $7,773 for the period of July 1, 2014 through November 6, 2014, and operating activities provided cash of $33,534. At November 6, 2014, the Company had a working capital deficit, shareholders’ deficit and accumulated deficit of $12,750, $7,773 and $7,773, respectively. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans as to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

/s/ Green & Company CPAs, Inc.

 

Green & Company CPAs, Inc.

Temple Terrace, Florida

September 9, 2015

 

2
 

 

FREEDOM LEAF, INC.

Balance Sheet

November 6, 2015

 

ASSETS  
   
Current assets        
Cash   $ 32,141  
Other receivable     10,243  
Total current assets     42,384  
Intangible assets, net     1,393  
Other assets     3,584  
Total assets   $ 47,361  
         
LIABILITIES AND STOCKHOLDERS' DEFICIT    
     
Current liabilities        
Accounts payable   $ 16,134  
Accounts payable to related parties     39,000  
Total current liabilities     55,134  
Total liabilities     55,134  
Commitments and contingencies        
Stockholders' deficit        
Accumulated deficit     (7,773 )
Total stockholders' deficit     (7,773 )
Total liabilities and stockholders' deficit   $ 47,361  

 

See accompanying notes to financial statements.

 

3
 

 

FREEDOM LEAF, INC.

Statement of Operations

For the Period July 1, 2014 through November 6, 2014

 

Revenue, net   $ 369,357  
         
Operating expenses        
Direct costs of revenue     61,429  
General and administrative     315,701  
Net loss   $ (7,773 )

 

See accompanying notes to financial statements.

 

4
 

 

FREEDOM LEAF, INC.

Statement of Cash Flows

For the Period July 1, 2014 Through November 6, 2014

 

Cash flows from operating activities:        
Net loss   $ (7,773 )
Changes in operating assets and liabilities:        
Other receivable     (10,243 )
Other assets     (3,584 )
Accounts payable     16,134  
Accounts payable to related parties     39,000  
Net cash provided by operating activities     33,534  
         
Cash flows used in investing activities        
Intangibles acquired     (1,393 )
Net cash used in investing activities     (1,393 )
         
Net increase in cash     32,141  
Cash at beginning of period      
Cash at end of period   $ 32,141  

 

See accompanying notes to financial statements.

 

5
 

 

FREEDOM LEAF, INC.

Statement of Shareholder's Deficit

November 6, 2014

 

  Common Stock     Accumulated        
  Shares     Amount     Deficit     Total  
Balance at June 30, 2014     1,000     $     $     $  
Net loss for the period ended November 6, 2014     (7,773 )     (7,773 )                
Balance at November 6, 2014     1,000     $     $ (7,773 )   $ (7,773 )

 

See accompanying notes to financial statements.

 

6
 

 

FREEDOM LEAF, INC.

Notes to Financial Statements

November 6, 2014

 

 

Note 1 – Nature of Business, Presentation and Going Concern

 

Organization

 

Freedom Leaf, Inc. (the “Company”) was incorporated in the State of Nevada on June 19, 2014. The Company is engaged in the business of print and online publications. The Company was founded and is solely owned by Clifford Perry.

 

On November 6, 2014, the Company merged with Freedom Leaf, Inc. (f/k/a Arkadia International, Inc.), a publicly-registered Nevada corporation. The Company, due to the merger, was dissolved effective November 6, 2014. The public company changed its name from Arkadia International, Inc., to Freedom Leaf, Inc.

 

Basis of Presentation

 

The accompanying financial statements of Freedom Leaf, Inc. have been prepared in accordance with generally accepted accounting principles for financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. In the opinion of the Company’s management, the information contained herein reflects all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the Company’s results of operations, financial position and cash flows.

  

Going Concern

 

The accompanying unaudited financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company sustained net loss of $7,773 and cash provided by operating activities of $33,534 for the period July 1, 2014 through November 6, 2014. The Company had negative working capital, stockholders’ deficit and accumulated deficit of $12,750, $7,773 and $7,773, respectively, at November 6, 2014. These factors raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The Company’s continuation as a going concern is dependent upon its ability to generate revenues and its ability to continue receiving investment capital and loans from third parties to sustain its current level of operations. The Company is in the process of securing working capital from investors for common stock, convertible notes payable, and/or strategic partnerships. No assurance can be given that the Company will be successful in these efforts.

 

Use of Estimates

 

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 and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying financial statements include the amortization period for intangible assets, valuation and impairment valuation of intangible assets, depreciable lives of the web site and property and equipment, valuation of warrants and beneficial conversion feature debt discounts, valuation of derivatives, valuation of share-based payments and the valuation allowance on deferred tax assets.

 

Reclassifications

 

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported losses, total assets, or stockholders’ equity as previously reported.

 

7
 

 

FREEDOM LEAF INC.

Notes to Financial Statements

November 6, 2014

 

 

Note 1 – Nature of Business, Presentation and Going Concern (Continued)

 

Development Stage Company

 

Since inception, the Company became a “development stage company” as defined in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 915 “Development Stage Entities”. On June 10, 2014 the FASB issued authoritative guidance which eliminates the concept of a development stage entity. The incremental reporting requirements for presenting the development stage operations and cash flows since inception will no longer apply to development stage entities. The amendments of Topic 915 are to be applied retrospectively and are effective for fiscal years beginning after December 15, 2014. The Company has elected early adoption of this guidance effective with the filing of its previous quarterly report.

 

Revenue Recognition

 

The Company recognizes revenue for its services in accordance with ASC 605-10, “Revenue Recognition in Financial Statements.” Under these guidelines, revenue is recognized on transactions when all of the following exist: persuasive evidence of an arrangement did exist, delivery of service has occurred, the sales price to the buyer is fixed or determinable and collectability is reasonably assured. The Company has two primary revenue streams as follows:

 

· Consulting services.
· Advertising services.

 

Net Earnings (Loss) Per Share

 

In accordance with ASC 260-10, “Earnings Per Share,” basic net earnings (loss) per common share is computed by dividing the net earnings (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period.

 

Segment Information

 

In accordance with the provisions of ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information,” the Company is required to report financial and descriptive information about its reportable operating segments.

 

Effect of Recent Accounting Pronouncements

 

The Company reviews new accounting pronouncements as issued. No new pronouncements had any material effect on these financial statements. The accounting pronouncements issued subsequent to the date of these financial statements that were considered significant by management were evaluated for the potential effect on these financial statements. Management does not believe any of the subsequent pronouncements will have a material effect on these financial statements as presented and does not anticipate the need for any future restatement of these financial statements because of the retro-active application of any accounting pronouncements issued through the date these financial statements were issued.

 

Note 2 – Intangible Assets

 

The Company has $1,393 recorded for various trademarks (Hemp Inspired®, Cannabizu®, and Cannabiz®) as of November 6, 2014.

8
 

 

FREEDOM LEAF INC.

Notes to Financial Statements

November 6, 2014

 

Note 3 – Stockholders’ Equity (Deficit)

 

The Company is authorized to issue up to 1,000 shares of common stock, with no par value per share. Each outstanding share of common stock entitles the holder to one vote per share on all matters submitted to a stockholder vote. All shares of common stock are non-assessable and non-cumulative, with no pre-emptive rights.

 

On November 6, 2014, the Company merged with Freedom Leaf, Inc. (f/k/a Arkadia International, Inc.), a publicly-registered Nevada corporation (see Note 1). After the completion of the merger, there were 173,401,200 shares of common stock issued, issuable and outstanding.

 

Note 4 – Commitments and Contingencies

 

From time to time, the Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of its business. The Company is not currently a party to any material legal proceedings, nor is the Company aware of any other pending or threatened litigation that would have a material adverse effect on the Company’s business, operating results, cash flows or financial condition should such litigation be resolved unfavorably.

 

 

 

9

Exhibit 31.1

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

 

I, Clifford J. Perry, certify that:

 

  1. I have reviewed this quarterly report on Form 10-Q/A of Freedom Leaf Inc.;
     
  2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
     
  3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Small Business Issuer as of, and for, the periods presented in this quarterly report;
     
  4. The Small Business Issuer's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Small Business Issuer and have:
     
  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  (b) [Omitted pursuant to SEC Release No. 33-8238];
     
  (c) Evaluated the effectiveness of the Small Business Issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  (d) Disclosed in this report any change in the Small Business Issuer’s internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
     
  5. The Small Business Issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors of the small business issuer's board of directors (or persons performing the equivalent functions):
     
  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
     
  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
     
   
   
Date: September 11, 2015   /s/ Clifford J. Perry
  By: Clifford J. Perry
  Chief Executive Officer

 

 

 

Exhibit 31.2

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

 

I, Clifford J. Perry, certify that:

 

  1. I have reviewed this quarterly report on Form 10-Q/A of Freedom Leaf Inc.;
     
  2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
     
  3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Small Business Issuer as of, and for, the periods presented in this quarterly report;
     
  4. The Small Business Issuer's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Small Business Issuer and have:
     
  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  (b) [Omitted pursuant to SEC Release No. 33-8238];
     
  (c) Evaluated the effectiveness of the Small Business Issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  (d) Disclosed in this report any change in the Small Business Issuer’s internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
     
  5. The Small Business Issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors of the small business issuer's board of directors (or persons performing the equivalent functions):
     
  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
     
  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
   
Date: September 11, 2015   /s/ Clifford J. Perry
  By: Clifford J. Perry
  Chief Financial Officer

Exhibit 32.1

 

CERTIFICATION OF

PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Freedom Leaf Inc., (the "Company") on Form 10-Q/A for the quarterly period ended December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Clifford J. Perry, the Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
   
   
Date: September 11, 2015   /s/ Clifford J. Perry
  By: Clifford J. Perry
  Chief Executive Officer

Exhibit 32.2

 

CERTIFICATION OF

PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Freedom Leaf Inc., (the "Company") on Form 10-Q/A for the quarterly period ended December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Clifford J. Perry, the Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
   
   
Date: September 11, 2015   /s/ Clifford J. Perry
  By: Clifford J. Perry
  Chief Financial Officer