TABLE OF CONTENTS

PART I

OptiLeaf was incorporated under the laws of the State of Florida on August 11, 2014. OptiLeaf, Inc. was formed to provide a world-class fully integrated turn-key growth management system for the cannabis industry to help dispensary owners, grow operations and caregivers increase their sales and reduce costs, increase their company’s productivity and profitability and reduce or eliminate the need for manual labor while maximizing yield. OptiLeaf’s target market includes dispensaries and grow operations.

OptiLeaf is planning to offer two-way land line texting for existing customers and new customers in 2018. We believe this innovative approach will provide OptiLeaf an additional stream of revenue. We are certain that customers are probably already texting existing businesses, and those messages are disappearing. OptiLeaf will allow existing dispensaries and growers as well as other businesses to access those texts and engage in conversation via email, native mobile app, browsers, and desktop app.

Our Product

OptiLeaf has completed the development of its growth management “GrowPro” and point-of- sale “POS” software. These software offerings are the next generation POS and growth management systems that provide a complete solution for cultivation operations, processing and manufacturing, and dispensaries in the legal medical and recreational cannabis industry. Moreover, OptiLeaf has completed its “Store Manager” software and it’s currently in beta test. This back-end software allows store owners and managers to take command and streamline their business in real-time. The main features are: Customized dashboard, sales trends, best-selling brands and products, top selling budtenders, sales trend, analytic and detail mission critical reporting.

Our POS software works with almost all POS hardware and uses devices that dispensary owners already have. Our powerful custom reports enable dispensary owners and managers to make informed decisions on how to increase profit and reduce operational costs while keeping them in compliant with the state. Our system prevents any sale from exceeding state regulations, automatically verify the customers’ age and their purchase limits, print compliant labels and receipts, and digitally file all patient records and reports.

Our GrowPro growth management software allows cultivators to track with real-time data of their plant’ history including genealogy, events, growth stages, watering and nutrient cycles, yields, harvesting, and every aspect of the grow operations.

Both products have complete integration with Metrc™ (state traceability system) for the State of Colorado, Oregon, and Oregon.Michigan. This will allow growers and dispensary owners from having to do double entry and manually reporting sales and cultivation data to the state. Sales and cultivation data are automatically downloaded and synced accurately with state traceability systems.

Marketing

OptiLeaf focus its sales and marketing efforts in the states of Colorado, Oregon and Washington at this point. We are planning on expanding our marketing into California and Michigan. We have decided to focus our efforts with the most developed and broadest customer base at this point.

OptiLeaf has opened a sales office in Denver, CO. We believe that having a local presence will help accelerate sales and provide better customer service and support. In addition, having a local market presence helps us gain a better understanding of the needs of our customers as well as challenges and opportunities in the market.

Operations

OptiLeaf’s operational strategies behind the development of our products and services are based on design, innovation, and added value. When developing a new product, we want to be the leader by introducing innovative features that will allow cannabis cultivators to lower their costs, boost yields, and maximize production capacity. Furthermore, when OptiLeaf develops new goods or services, we will package them with support services as well as immediate observable and psychological benefits. Our focus is on how our products and services stand against the competition and how our technical measures relate to the customers’ needs.

Our primary operation strategy is to focus on quality and service. Our products must meet our eight dimensions of quality: performance, conformance, features, durability, reliability, serviceability, aesthetics, and perceived quality. Based on our operational strategies, we believe OptiLeaf’s products and services will be superior to the competition. We recognize that there are some limitations imposed by trade-offs that must be made due to the nature of the product. For example, reliability may be sacrificed in order to achieve maximum speed.

Fundraising

Optileaf is inOptiLeaf has continued the process of preparing for anraising additional capital, raise. This capitalwhich will be used to build out a sales and marketing force, for further development of its products and technologies, for hiring of additional personnel and for general working capital. The Company has not received any commitments for additional capital at this point, and there can be no assurance that the Company will be able to raise the capital it seeks or can do so on terms satisfactory to the Company.

Staffing

As of December 31, 2017,2019, we have 53 full time employees. The number of employees will be determined by the projected number of customers and that will need to be attended to.

Suppliers

OptiLeaf relies on overseas manufacturers to supply various components of its product line. The most important benefit of using this type of supplier is that we are able to remain cost competitive in our local market. We believe that this will give us a competitive advantage that can be used to increase the sales and profits of our business.

We plan on buying most of our inventory directly from the manufacturer. Because we generally will be placing large orders, dealing directly with the manufacturer will yield the lowest cost per unit. The down side of working with these large manufacturers is that we are not able to order in smaller quantities, resulting in having a considerable sum of money tied up in each order. When a smaller quantity of product is necessary, we will use a smaller business-to-business manufacturer.

These manufacturers will require 30 days advance notice for each order. Shipments from China typically take 7-10 days for delivery by air or 20-30 days by ocean freighter.

Customer Service and Support

Timely order fulfillment is crucial to customer satisfaction. OptiLeaf will hire additional assistants as needed to monitor and manage the delivery, billing, warranty service and repair of its products. This helps to ensure customer satisfaction and repeat sales.

To improve operating efficiency, we plan to use Amazon.com as our order fulfillment company. Their facilities are “state-of-the-art” and their customer satisfaction record is unsurpassed. By outsourcing this function, we can keep internal staffing needs at a minimum and avoid having to expand our telephone network and computer systems. We will also save on shipping costs due to the high volumehigh-volume discounts Amazon.com earns by serving multiple businesses from one location.

Our customers emphasize that good service and after-sales support are among their major concerns. A hot-line service is available to all registered customers enrolled in OptiLeaf’s maintenance / support program.

Customer satisfaction will be a high priority for OptiLeaf. Our main goal is to ensure that our products are made using the highest quality components so that there are few, if any, returns due to product defects. Still, we recognize the fact that however good our product is, there will be times when it simply does not meet the needs of some customers. To ensure a positive experience and image in the minds of these and all customers, we will offer a money-back guarantee. Our objective is to make our customer service so satisfying that even if a customer decides to return a particular product, we will retain that person as a loyal customer, who won’t hesitate to refer friends and associates, and perhaps make other purchases from OptiLeaf in the future.

Subcontractors

Subcontractors

In order to control our expenses, OptiLeaf is currently subcontracting a portion of our advertising and marketing to third parties. This will potentially allow us to bring in professionals with expertise that we have not yet acquired.

Government Regulation

OptiLeaf does not directly distribute, sell, grow, harvest cannabis or any substances that violate United States law or the Controlled Substances Act, nor does it intend to do so in the future. We are a technology provider to the cannabis industry. As such, we are operating within an industry that is very complex in terms of legal requirements and compliance. Cannabis is an illegal drug under Federal Law and is illegal in many states as well. Certain states have made cannabis legal for medicinal use only, but in very few circumstances is it legal to possess or sell cannabis. Although we plan on being a technology provider only, and do not plan of growing, selling or possessing any cannabis, we nevertheless must comply with, and our business must comply with, a myriad of state and local laws and regulations regarding our operations, and our operations, as well as our profitability, can be significantly affected by all of these laws and how they affect the businesses or our customers.

In addition, we are subject to a number of laws and regulations that affect companies generally and specifically those conducting business on the internet, many of which are still evolving and could be interpreted in ways that could harm our business. Existing and future laws and regulations may impede our growth. These regulations and laws may cover online marketing, e-mail marketing, telemarketing, taxation, privacy, data protection, pricing, content, copyrights, distribution, mobile communications, electronic contracts and other communications, consumer protection, web services, the provision of online payment services, unencumbered internet access to our services, the design and operation of websites, and the characteristics and quality of products and services. It is not clear how existing laws governing issues such as property ownership, libel, and personal privacy apply to the internet, e-commerce, and digital content and web services. Unfavorable regulations and laws could diminish the demand for our products and services and increase our cost of doing business.

Litigation

From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

The Company has consolidated its operations and has eliminated its two previous leases its offices underin favor of one lease, in a monthproperty owned by two related persons that was supposed to month lease. Thecommence on August 10, 2018, at a monthly rent payment is $1,144cost of $2,000 plus it’sthe Company’s pro rata share of operating expenses. Our Colorado office is under a two-year lease. The monthly rental and operating cost payments have not been made and the parties agreed to rescind the lease effective January 1, 2019. The Company continues to occupy the space on a month to month tenancy and will pay rent payment is $620 plus it’s pro rata share of operating expenses.when economically feasible.

From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

Not applicable.

PART II

Market Information

Our common stock has been approved for trading on the Over-the-CounterOver the Counter (OTC) Markets under the symbol OPLF since March 15, 2016. The OTC Markets is a quotation service that displays real-time quotes, last-sale prices, and volume information in over-the-counter,over the counter, or the OTC, equity securities.

Price range of common stock

The following table shows, for the periods indicated, the high and low bid prices per share of our common stock as reported by the OTC Markets quotation service. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions, and may not represent actual transactions.

N/A – Our stock has not been actively quoted with a bid/askor traded as of this filing.

Holders

As of December 31, 2017,2019, we had 2831 shareholders of our common stock.

Transfer Agent and Registrar

ClearTrust, LLC is currently the transfer agent and registrar for our common stock. Its address is 16540 Pointe Village Dr., Suite 206, Lutz, FL 33558. Its phone number is (813) 235-4490.

Authorized Capital Stock

Our authorized stock consists of 100,000,000 shares of common stock, with no par value. There are currently 20,443,75220,943,753 shares of common stock issued and outstanding, as of December 31, 2017.2019.

Common Stock

Each share of our common stock entitles its holder to one vote in the election of each director and on all other matters voted on generally by our stockholders, other than any matter that (1) solely relates to the terms of any outstanding series of common stock or the number of shares of that series and (2) does not affect the number of authorized shares of common stock or the powers, privileges and rights pertaining to the common stock. No share of our common stock affords any cumulative voting rights. This means that the holders of a majority of the voting power of the shares voting for the election of directors can elect all directors to be elected if they choose to do so.

Holders of our common stock will be entitled to dividends in such amounts and at such times as our Board of Directors in its discretion may declare out of funds legally available for the payment of dividends. We currently intend to retain our entire available discretionary cash flow to finance the growth, development and expansion of our business and do not anticipate paying any cash dividends on the common stock in the foreseeable future. Any future dividends will be paid at the discretion of our Board of Directors after taking into account various factors, including:

If we liquidate or dissolve our business, the holders of our common stock will share ratably in all our assets that are available for distribution to our stockholders after our creditors are paid in full and the holders of all series of our outstanding common stock, if any, receive their liquidation preferences in full.

Our common stock has no preemptive rights and is not convertible or redeemable or entitled to the benefits of any sinking or repurchase fund.

Dividends

Since inception we have not paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock, when issued pursuant to this offering. Although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our Board of Directors will have the discretion to declare and pay dividends in the future. Payment of dividends in the future will depend upon our earnings, capital requirements, and other factors, which our Board of Directors may deem relevant.

Securities Authorized for Issuance under Equity Compensation Plans

We presently do not have any equity based or other long-term incentive programs. In the future, we may adopt and establish an equity-based or other long-term incentive plan if it is in the best interest of the Company and our shareholders to do so.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

The information and financial data discussed below is derived from our audited financial statements for the years ended December 31, 20162019 and 2017.2018. The audited financial statements were prepared and presented in accordance with generally accepted accounting principles in the United States. The information and financial data discussed below is only a summary and should be read in conjunction with the related notes contained elsewhere in this prospectus. The financial statements contained elsewhere in this prospectus fully represent our financial condition and operations; however, they are not indicative of our future performance.

Overview

We were incorporated under the laws of the State of Florida on August 11, 2014. OptiLeaf, Inc. was formed to provide a world-class fully integrated turn-key growth management system for the cannabis industry to help dispensary owners, grow operations and caregivers increase their sales and reduce costs, increase their company’s productivity and profitability and reduce or eliminate the need for manual labor while maximizing yield. OptiLeaf’s target market includes dispensaries and grow operations.

In the period from inception (August 11, 2014) throughThrough December 31, 20172019 our cumulative net lossdeficit was $699,759. As$873,867 compared to a cumulative deficit as of December 31, 20172018 of $856,438. On December 31, 2019 we had total current assets of $27,744$32,129 and total current liabilities of $24,902.$39,996 compared to total current assets of $13,590 and total current liabilities of $29,028 on December 31, 2018.

Recent Developments

OptiLeaf has completed the development of its growth management “GrowPro” and point-of- sale “POS” software. These software are the next generation POS and growth management systems that provide a complete solution for cultivation operations, processing and manufacturing, and dispensaries in the legal medical and recreational cannabis industry. Moreover, OptiLeaf has completed its “Store Manager” software and it’s currently in beta test. This back-end software allows store owners and managers to take command and streamline their business in real-time. The main features are: Customized dashboard, sales trends, best-selling brands and products, top selling bartenders, sales trend, analytic and detail mission critical reporting.

Our POS software works with almost all POS hardware and uses devices that dispensary owners already have. Our powerful custom reports enable dispensary owners and managers to make informed decisions on how to increase profit and reduce operational costs while keeping them in compliant with the state. Our system prevents any sale from exceeding state regulations, automatically verify the customers’ age and their purchase limits print compliant labels and receipts, and digitally file all patient records and reports.

Our GrowPro growth management software allows cultivators to track with real-time data of their plant’ history including genealogy, events, growth stages, watering and nutrient cycles, yields, harvesting, and every aspect of the grow operations.

Both products have complete integration with Metrc™ (state traceability system) for the State of Colorado and Oregon. This will allow growers and dispensary owners from having to do double entry and manually reporting sales and cultivation data to the state. Sales and cultivation data are automatically downloaded and synced accurately with state traceability systems.

Plan of Operation

OptiLeaf is planningplans to partner with popular online live menu providers, CRM, and credit card payment systems to offer two-way land line texting for existing customerscredit card and new customers in 2018. We believe this innovative approach willdebit card acceptant and to provide OptiLeaf an additional stream of revenue. We are certain that customers are probably already texting existing businesses,real time online inventory and those messages are disappearing. OptiLeaf will allow existing dispensaries and growers as well as other businesses to access those texts and engage in conversation via email, native mobile app, browsers, and desktop app.pricing data.

DuringFor the next 12 months,immediate succeeding years, the Company plans to do the followinghire more staff and rely on organinc growth to continue to build brand awareness and increase revenue.sales.

Results of Operations

WeBecause we continue to be developmental stage and have conductedbeen conducting development operations our revenue has been minimal. We generated revenue of $109,372 during the period from inception (August 11, 2014) toyear ended December 31, 2017. We have not generated significant revenues2019 compared to $47,697 during this period. We experiencedthe year ended December 31, 2018. Cost of sales increased to $16,314 for the year ended December 31, 2019, compared to $10,810 for the year ended December 31, 2018. During those same periods, we had gross margins of $93,058 or 85.1% compared to $36,887 or 90.6% of sales for the year ended December 31, 2018. During those same time periods operating expenses decreased to $114,517 from $192,468 resulting in a net loss during the fiscal year ending December 31, 2017 of $206,433 compared to a net loss of $284,753 for the fiscal year ending December 31, 2016.We had2019 of $17,429 compared to a net lossesloss of $699,759$156,679 for the period from inception (August 11, 2014) tofiscal year ending December 31, 2017.2018.

Liquidity and Capital Resources

As of December 31, 2017,2019, we had cash of $17,197,$20,495, compared to $194,778$11,290 as of December 31, 2016.2018. Our primary uses of cash were for employee compensation and working capital. The main sources of cash were from our founders, investors, and from licensing of our software suite. The following trends are reasonably likely to result in a material decrease in our liquidity over the near to long term:

As the Company has experienced a decrease in its available capital during each of the past 3 fiscal years, and we expect this trend to continue in the current year, the Company will likely need to raise additional capital in the current fiscal year to continue to finance its business plans and activities. There can be no assurance that the Company will be able to raise such capital, or on such terms as our acceptable to management. If the Company fails to raise additional capital, the Company could be unable to execute on its business plans.plans.

We are not required to provide the information required by this Item because we are a smaller reporting company.

TABLE OF CONTENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
Shareholders’ of OptiLeaf, Inc.Optileaf, Incorporated.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of OptiLeaf, Inc.Optileaf, Incorporated. (the Company) as of December 31, 20172019 and 2016,2018 and the related statementsstatement of operations, changes in stockholders’ equity,deficit and cash flows for each of the two years in the two- year period ended December 31, 2017,2019, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016,2019 and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2017,2019, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph- Going Concern

The accompanying financialsfinancial statements have been prepared assuming that the Company will continue as a going concern. As ofdiscussed in Note 2 to the financial statements, the Company has suffered recurring losses and for the year ended December 31, 2017,2019 the Company had a net loss of $17,429 and accumulated losses since inception of approximately $700,000, has approximately $3,000$873,867. The Company also had net cash used in operating activities of $15,796, and had negative working capital and has generated limited revenues, and may experiences losses in the near term.of $7,867. These factors and the need for additional financing in order for the Company to meet its business plan, raise substantial doubt about its ability to continue as a going concern. Management's planManagement’s plans in regard to continue as a going concern isthese matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 2015.

Soles, Heyn & Company, LLP

West Palm Beach, Florida

April 27, 2018

OptiLeaf Incorporated

Balance Sheets

December 31, 2017 and 2016

(See accompanying notes to condensed financial statements)

OptiLeaf Incorporated
Statements of Operations

(See accompanying notes to financial statements.statements)

OptiLeaf, IncorporatedInc.

StatementsStatement of OperationsStockholders’ Deficit

For the Years Ended December 31, 20172019 and 20162018

(See accompanying notes to financial statements.statements)

OptiLeaf, IncorporatedInc.

Statements of Cash Flows

(See accompanying notes to financial statements)

OptiLeaf, Inc.
Notes to Financial Statements
For the Years Ended December 31, 20172019 and 20162018

See accompanying notes to financial statements.

OptiLeaf Incorporated

Statement of Changes in Stockholders’ Equity

December 31, 2017 and 2016

See accompanying notes to financial statements.

Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

OptiLeaf Incorporated (“OptiLeaf” or the “Company”) was incorporated in Florida in August 2014. The Company has been in the developmentinfancy stage since inception and has not generated anyminimal sales to date. The Company plans to develop, market and sell integrated software and hardware to the agriculture industry for the seamless tracking and management of growth, task automation and sale of their clients’ products.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash equivalents consisted of money market funds. At December 31, 2017,2019, the Company had no cash equivalents.

Accounts Receivable 

The Company has $7,590 and $2,300 of trade accounts receivable at December 31, 2019 and 2018. The Company reviews the accounts receivable, at least quarterly, and, if appropriate, records an allowance for doubtful accounts. No allowance was required as of December 31, 2019 and 2018.

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 amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Property and Equipment

Property and equipment are stated at cost. Depreciation is provided over the estimated useful lives (3 years) of the related assets using the straight-line depreciation method.

Maintenance and repairs are charged to operations when incurred. Betterments and improvements are capitalized. When property and equipment are sold or otherwise disposed of, the asset account and related accumulated depreciation account are reduced, and any gain or loss is included in operations.

Capitalized Software Development Costs

Software development costs are expensed as incurred until technological feasibility of the product is established. Development costs incurred subsequent to technological feasibility will be capitalized and amortized on a straight-line basis over the estimated economic life of the product. Capitalization of computer software costs will be discontinued when the computer software product is available to be sold, leased, or otherwise marketed. Amortization will begin when the product is available for release to customers. Management has determined as of December 31, 20172019 that the software has not yet reached the stage of technological feasibility. The Company has not maintained specific cost records, but estimates that $46,000 and $107,000 has been expensed for software development, and has been included in payroll costs, during the years ended December 31, 2019 and 2018 respectively.

OptiLeaf, Inc.
Notes to Financial Statements
For the Years Ended December 31, 2019 and 2018

Revenue Recognition

The Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, effective January 1, 2018 using the cumulative effect transition method. Two core principles of this new guidance, which was codified into Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, are that an entity should (a) measure revenue in connection with its sale of goods and services to a customer based on the consideration to which the entity expects to be entitled in exchange for each of those goods and services and (b) recognize revenue upon satisfaction of its performance obligations under the contract. An entity’s performance obligation is considered satisfied when (or as) control of the promised goods and services are transferred to the customer.

In general, the Company will record revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenues streams of the Company:

Revenue will be recognized at the time the product is delivered or services are performed. Provision for sales returns will be estimated based on the Company’s historical return experience. Revenue will be presented net of returns.

Research and Development

The cost of research and development is charged to expense when incurred.

Net Loss Perper Common Share

Basic net (loss) income per common share is calculated using the weighted average common shares outstanding during each reporting period. Diluted net (loss) income per common share adjusts the weighted average common shares for the potential dilution that could occur if common stock equivalents (convertible debt and preferred stock, warrants, stock options and restricted stock shares and units) were exercised or converted into common stock. There were no common stock equivalents at December 31, 20172019 and 2016.2018.

Income Taxes

Deferred income taxes are recognized for the tax consequences related to temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for tax purposes at each year end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recognized when, based on the weight of all available evidence, it is considered more likely than not that all, or some portion, of the deferred tax assets will not be realized. Income tax expense is the sum of current income tax plus the change in deferred tax assets and liabilities.

ASC 740, Income Taxes, requires a company to first determine whether it is more likely than not (which is defined as a likelihood of more than fifty percent) that a tax position will be sustained based on its technical merits as of the reporting date, assuming that taxing authorities will examine the position and have full knowledge of all relevant information. A tax position that meets this more likely than not threshold is then measured and recognized at the largest amount of benefit that is greater than fifty percent likely to be realized upon effective settlement with a taxing authority.

The Federal and state income tax returns of the Company for 2016, 20152019, 2018, and 20142017 are subject to examination by the internal Revenue Service and state taxing authorities for three (3) years from the date filed.

Equity instruments granted to non-employees are accounted for in accordance with ASC 505, Equity. The final measurement date for the fair value of equity instruments with performance criteria is the date that each performance commitment for such equity instrument is satisfied or there is a significant disincentive for non-performance.

OptiLeaf, Inc.
Notes to Financial Statements
For the Years Ended December 31, 2019 and 2018

Stock-Based Compensation

The Company accounts for equity instruments issued to employees in accordance with ASC 718, Compensation - Stock Compensation. ASC 718 requires all share-based compensation payments to be recognized in the financial statements based on the fair value using an option pricing model. ASC 718 requires forfeitures to be estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from initial estimates.

Equity instruments granted to non-employees are accounted for in accordance with ASC 505, Equity. The final measurement date for the fair value of equity instruments with performance criteria is the date that each performance commitment for such equity instrument is satisfied or there is a significant disincentive for non-performance.

Fair Value of Financial Instruments

Pursuant to ASC No. 820, “Fair Value Measurement and Disclosures”, the Company is required to estimate the fair value of all financial instruments included on its balance sheet as of December 31, 20172019 and December 31, 2016.2018. The Company’s financial instruments consist of accounts payable and accrued expenses. The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to the short-term nature of these financial instruments.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. We do not expect that the adoption of ASU 2014-09 will have any significant impact on our operating cash flows.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which requires lessees to recognize most lease liabilities on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. The update states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The update is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. The impact of this guidance will result in the recognition of assets and liabilities for leases that the Company enters into in the future.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

OptiLeaf, Inc.
Notes to Financial Statements
For the Years Ended December 31, 2019 and 2018

Note 2. GOING CONCERN

The Company’s financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

The Company has experienced a loss from operations during its development stage as a result of its investment necessary to achieve its operating plan, which is long-range in nature. Fornature. During the period from August 11, 2014 (inception) toyear ended December 31, 2017,2019, the Company incurred a net loss of approximately $700,000.$17,429 and at December 31, 2019 has accumulated losses, since inception of $873,867. In addition, the Company has minimal revenue generating operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

The ability of the Company to continue as a going concern is in doubt and dependent upon achieving a profitable level of operations or on the ability of the Company to obtain necessary financing to fund ongoing operations. Management believes that its current and future plans enable it to continue as a going concern for the next twelve months.

To meet these objectives, the Company continues to seek other sources of financing in order to support existing operations and expand the range and scope of its business. However, there are no assurances that any such financing can be obtained on acceptable terms and timely manner, if at all. The failure to obtain the necessary working capital would have a material adverse effect on the business prospects and, depending upon the shortfall, the Company may have to curtail or cease its operations.

The Company has experienced losses, from operations, during its development stage, as a result of the investment necessary to achieve its operating plan, which is long-range in nature. For the period from inception through December 31, 2019, the Company incurred accumulated losses of $873,867 compared to a cumulative loss through December 31, 2018, of $856,438. For the year ended December 31, 2019, primarily as the result of increased revenue and decreased intellectual property cost of $61,675 and $66,368 respectively, the Company reduced its net loss to $17,429 compared to $156,679 and had negative working capital of $7,867 compared to $15,438 for the year ended December 31, 2018. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

During the year ended December 31, 2019 the Company used $24,545 for operating expenses compared to $140,907 during the year ended December 31, 2018. The Company generated $25,000 from the sale of common stock, and $8,750 from a related party loan compared to $50,000 from the sale of common stock, $40,000 from the sale of notes payable and $45,000 from related parties, during the year ended December 31, 2018.

The ability of the Company to continue as a going concern is in doubt and dependent upon achieving a profitable level of operations or on the ability of the Company to obtain necessary financing to fund ongoing operations. Management believes that its current and future plans enable it to continue as a going concern for the next twelve months.

OptiLeaf, Inc.
Notes to Financial Statements
For the Years Ended December 31, 2019 and 2018

To meet these objectives, the Company continues to seek other sources of financing in order to support existing operations and expand the range and scope of its business. However, there are no assurances that any such financing can be obtained on acceptable terms and timely manner, if at all. The failure to obtain the necessary working capital would have a material adverse effect on the business prospects and, depending upon the shortfall, the Company may have to curtail or cease its operations.

The accompanying consolidated financial statements do not include any adjustment to the recorded assets or liabilities that might be necessary should the Company have to curtail operations or be unable to continue in existence.

Note 3. COMPUTER EQUIPMENT (NET)RELATED PARTY TRANSACTIONS

Equipment is recorded at cost and consisted ofDuring the following at December 31, 2017 and 2016:

Depreciation expense was $2,660 and $3,505 for the yearsyear ended December 31, 2017 and 2016, respectively.2018, two Company officers loaned the Company $45,000, unsecured, maturing on April 1, 2020, bearing interest of 3%. On December 31, 2019, the Company repaid $40,000 of the outstanding debt by issuing 1,000,000 common shares, previously designated as treasury stock, to the two individuals.

Note 4. STOCKHOLDERS’ EQUITY

Common stock

The Company has authorized 100,000,000 shares of no par value common stock. At December 31, 2017,2019, the number of shares of common stock issued was 21,443,752.20,943,753.

On July 25, 2018, the Company issued, for cash, to two investors, 333,334 restricted common shares for a total of $50,000, recorded at a cost of $0.15 per share.

On March 4, 2019 the Company issued, for cash, to one investor, 166,667 restricted common shares for $25,000, recorded at a cost of $0.15 per share.

Treasury stock

On September 20, 2016, the Board of Directors authorized the Company to repurchase one million shares of common stock for $40,000. These treasury stock shares may, at anytimeany time, be canceled upon the Board of Directors approval. The Board has not made such election. On December 31, 2019 the 1,000,000 treasury shares were issued to two related parties to repay $40,000 of a loan that they had made to the Company.

Note 5. CONCENTRATION CREDIT RISK

At December 31, 2019 the Company had two non – related customers that owed 26% and 20% of total accounts receivable and three unrelated customers that owed 12% each of total accounts receivable. At December 31, 2018 the Company had two non – related customers that owed 58.5% and 41.5% of total accounts receivable.

The Company maintains its cash balances in a local financial institution which at times may exceed the $250,000 amount insured by the Federal Deposit Insurance Corporation (FDIC). On December 31, 2019 and 2018 the Company did not have any cash balances which exceeded the limeit.

OptiLeaf, Inc.
Notes to Financial Statements
For the Years Ended December 31, 2019 and 2018

Note 6. COMMITMENTS AND CONTINGENCIES

TheOn August 10, 2018 the Company leasesleased its offices in afor six years, payable at the rate of $2,000 per month, to month arrangement. The monthly minimum lease payments are $1,144 plus itsthe Company’s pro rata share of operating expenses. No payments were made and the lease was terminated without any liability effective January 1, 2019. The Company has continued to occupy the space, on a month to month, tenancy, with the understanding that some or all of the unpaid portion will be paid as economics permits.

Note 7. INCOME TAXES

The provisionCompany accounts for income taxes differs fromunder the amount computed by applyingFinancial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 740, Income Taxes(“ASC 740”). Under ASC 740, deferred tax assets and liabilities are recognized for the statutoryfuture tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The new tax bill reduced the federal income tax rate for corporations from 35% to income before provision for income taxes. The sources and tax effects of the differences are as follows:21%.

At December 31, 2017,2019, the Company has a net operating loss carryforward of approximately $690,000$861,010 for Federal and stateState purposes. This loss will be available to offset future taxable income. If not used, this carryforward will begin to expire in 2034.2035. The deferred tax asset relating to the operating loss carryforward has been fully reserved at December 31, 20172019 and 2016.2018. The change in the valuation allowance was approximately $82,000$0 and $95,000$54,424 for the years ended December 31, 20172019 and 2016,2018, respectively. The principal difference between the operating loss for income tax purposes and reporting purposes is disallowed meals and entertainment and a temporary difference in depreciation expense. 

Utilization of the Company’s net operating losses may be subject to substantial annual limitation if the Company experiences a 50% change in ownership, as provided by the Internal Revenue Code and similar state provisions. Such an ownership change would substantially increase the possibility of net operating losses expiring before complete utilization.

OptiLeaf, Inc.
Notes to Financial Statements
For the Years Ended December 31, 2019 and 2018