UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: June 30, 20172019

or

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from:

Commission File Number:  000-53548

GROW CONDOS,CAPITAL, INC.

 (Exact name of registrant as specified in its charter)

722 W. Dutton Road2485 Village View Drive, Suite 180

Eagle Point, OR  97524Henderson, NV 89074

 (Address of principal executive offices)

541-879-0504702-830-7919

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.001

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [  ] No [X]

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 [  ] No [X]

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 [X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes [  ] No [X][  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [  ] No [X]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second quarter.

The market value of the voting and non-voting common stock held by non-affiliates totaled $60,433,762$4,774,524 based upon a valuation of $1.14 per$0.063per share, that being the closing price onDecember 30, 2016theon December 31, 2018 the last business day of the registrant'sRegistrant's most recently completed second fiscal quarter. 

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Not applicable.

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.

As of April 18, 2018, 2018,October 14, 2019, the registrant had 88,926,057242,901,397 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

SeeSpecified portions of the registrant’s Definitive Information Statement, which will be filed with the Commission pursuant to Regulation 14C, are incorporated by reference into Part IV, Item 15.III of this report. Except with respect to information specifically incorporated by reference in this report, the Information Statement is not deemed to be filed as a part hereof.

TABLE OF CONTENTS

PART I4

ITEM 1.  BUSINESS4

ITEM 1A.  RISK FACTORS7

ITEM 1B.  UNRESOLVED STAFF COMMENTS8

ITEM 2:  PROPERTIES8

ITEM 3:  LEGAL PROCEEDINGS8

ITEM 4:  MINE SAFETY DISCLOSURES8

PART II9

ITEM 5:  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES9

ITEM 6:  SELECTED FINANCIAL DATA11

ITEM 7:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION11

ITEM 7A:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK14

ITEM 8:  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA15

ITEM 9:  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE17

ITEM 9A:  CONTROLS AND PROCEDURES17

ITEM 9B:  OTHER INFORMATION18

PART III.18

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE18

ITEM 11:  EXECUTIVE COMPENSATION18

ITEM 12:  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS18

ITEM 13:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORS INDEPENDENCE19

ITEM 14:  PRINCIPAL ACCOUNTING FEES AND SERVICES19

PART IV20

ITEM 15:  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES20

SIGNATURES22

PART I

FORWARD LOOKING STATEMENTS

In this Annual Report, references to "Grow Condos,Capital," the "Company," "we," "us," "our" and words of similar import) refer to Grow Condos,Capital, Inc., a Nevada corporation, the registrant and, when appropriate, its subsidiary.

Statements made in this Form 10-K which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and business of Grow Condos.Capital. Such forward-looking statements include those that are preceded by, followed by or that include the words "may", "would", "could", "should", "expects", "projects", "anticipates", "believes", "estimates", "plans", "intends", "targets" or similar expressions.

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, in addition to those contained in this Annual Report: general economic or industry conditions nationally and/or in the communities in which we conduct business; legislation or regulatory requirements, including environmental requirements; conditions of the securities markets; competition; our ability to raise capital; changes in accounting principles, policies or guidelines; financial or political instability; acts of war or terrorism; and other economic, competitive, governmental, regulatory and technical factors affecting our operations, products, services and prices.

Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. Grow CondosCapital does not undertake, and specifically disclaims, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.

ITEM 1.  BUSINESS

Item 1.  Description of Business

History

Grow Condos,Capital, Inc. (the "Company") was incorporated on October 22, 1999 as Calibrus, in the State of Nevada. From its inception, the Company was a call center that contracted out as a customer contact center for a variety of business clients throughout the United States. Over time our main business became a third partythird-party verification service.  After making a sale on the telephone, a company would send the call to a Company operator to confirm the order.  This process protected both the customer and the company selling services from telephone sales fraud.

While continuing to operate as a call center, in 2008 we expanded our business plan to include the development of a social networking site called JabberMonkey (Jabbermonkey.com) and the development of a location based social networking application for smart phones called Fanatic Fans.

WCS Enterprises

Our wholly-owned subsidiary,In June 2014 we acquired WCS Enterprises, LLC ("WCS Enterprises") is, an Oregon limited liability company which was formed on September 9, 2013, and was acquired by us in June 2014 in exchange for shares of our common stock.  The acquisition of WCS Enterprises resulted in a change of control of the Company and at, or shortly after the closing of such acquisition, the persons designated by WCS Enterprises became the officers and directors of the Company.  As a result of our acquisition of WCS Enterprises in June 2014, we became engaged in the business of being areal estate purchaser, developer and manager of specific use industrial properties business.

WCS Enterprises Business Operations

Through WCS Enterprises, we are a real estate purchaser, developer and manager of specific use industrial properties business providing "Condo" style turn-key grow facilities to support cannabis growers in the United States cannabis industry. We intend to own, lease, sell and manage multi-tenant properties so as to reduce the risk of ownership and reduce costs to the tenants and owners. We offer tenants the option to lease, lease to purchase or buy their condo warehouse space that is divided into comparable 1,500- 2,500 square foot condominium units.  Each Condo unit will be uniquely designed and have all necessary resources as an optimum stand-alone grow facility. We believe that Cannabis farmers will pay an above market rate to lease or buy our condo grow facility. We will purchase and develop buildings that are divisible into separate units to attract multiple farmers and reduce the risk of single tenant leases. In addition to our "Condo" turn-key growing facilities we intend to provide marijuana grow consulting services and equipment and supplies as part of our turn-key offerings. We are aggressively out looking for our next property in the western area of the United States where medical cannabis has been legalized and where recreational cannabis has been or is in the process of legalization. On April 1, 2016 we closed escrow on our second project located in the Pioneer Business Park in Eugene, Oregon.  The Company is not directly involved in the growing, distribution or sale of cannabis.

Smoke on the Water, Inc.

Smoke on the Water, Inc., was incorporated on October 21, 2016, in the State of Nevada and is a wholly owned subsidiary.

Smoke on the Water Business Operations

Smoke on the Wateris designed to capitalize on the country's growing level of recreational marijuana acceptance. The company plans to engage in a roll up strategy for this highly-fragmented industry and provide turn-key solutions for Marijuana-friendly campgrounds and resorts. The company has strategized to initially develop the property through acquisition, subsequently rebranding the existing RV business to represent the Smoke on The Water brand. Upon project launch, the Company plans to provide fully functional vacationing solutions to campground operators and owners seeking to fill the growing demand for stress free and acceptable vacationing for the pro-personal choice and marijuana smoking community.

On March 7, 2017, Smoke on the Water, Inc. executed a Real Estate Purchase Agreement to acquire the Lake Selmac Resort located at 2700 Lakeshore Drive, Selma, Oregon.

Owned Properties

We have secured2013 WCS acquired real estate in Eagle Point in Jackson County, Oregon representing our sole condominium operating location.  The building isof 15,000 square feet andwas zoned to meet the requirements for specific purpose industrial use and is divided into four 1,5001,500-2,000 square feet condo style grow rooms which, is being leased to four tenants and one 7,500 square feetfoot grow facility. WCS offered tenants the option to lease, lease to purchase or buy their condo warehouse and each condo unit was uniquely designed with all necessary resources as an optimum stand-alone grow facility. We leased the smaller condo units to individual

tenants and the larger 7,500 sq ft grow facility leased to one tenant, a related party.

Further we have acquired real estate located just 20 miles from Grants Pass, Oregonour former CEO and 2.5 miles eastChairman. The Company was not directly involved in the growing, distribution or sale of the Redwood Highway in Selma, Oregon known as the Lake Selmac Resort. The total property occupies approximately 5.85 acres, has 29 RV spaces (13 pull through spots), 2 cabins and a convenience store, boat dock, bath house and coin operated laundry facilities.The Resort facilities also include fishing, swimming, boating, and tent camping. This is our first cannabis friendly tourist destination. We also operate a full service country store.cannabis.

We also ownacquired a parcel of landsecond development site in 2016 located withinin the Pioneer Business Park near Eugene, OR, which is currentlywe intended to develop, howeverthe Company faced hostility from the local county government regarding the intended operations of the site, and the Company abandoned its plans for this site in late calendar 2017 and listed for sale.the property. In September 2018, the site was sold, andthe Company received proceeds of approximately $74,000 after payment of expenses of the sale and full retirement of the attached mortgage of approximately $250,000.  

Sales & Leasing

We develop, lease, own and provide investment sales opportunities for commercial industrial properties focusedSmoke on the Water, Inc. (“SOTW”), was incorporated on October 21, 2016, in the cannabis production arena.  The company has relationships with tenants, brokers and investors acrossState of Nevada as a second wholly owned subsidiary. SOTW was designed to capitalize on the

cannabis industry to leverage successful transactions for both lease-to-own option as well as investors looking to purchase facilities with qualified tenants providing positive cash-flow backed by commercial property.

Tourist Recreation and site rentals

During fiscal country's growing level of recreational marijuana acceptance.  In March 2017, weSOTW acquired our first cannabis friendly tourist destination with the purchase of Lake Selmac Resort where we offerlocated at 2700 Lakeshore Drive, Selma, Oregon.  The Lake Selmac resort offered recreational facilities including fishing, swimming, boating, RV parking, tent camping & cabin accommodation.

Supplies and Equipment

We intend in the future, to provide operators state-of-the art equipment and methodology to provide efficient implementation to assistclients to realize stabilized operations faster.

Financing

We intend in the future, to assist tenants with financing for space build-outaccommodation, as well as acquisition of commercial property.a small convenience store for sundry supplies.

MarketingOn June 22, 2018, the Board of Directors of the Company approved an amendment to our articles of incorporation to increase our authorized capital to 180,000,000 shares, consisting of 175,000,000 shares of common stock (“Common Stock”), par value $0.001, and 5,000,000 shares of preferred stock (“Preferred Stock”), par value $0.001 (the “Recapitalization”) and to change the name of the Company to “Grow Capital, Inc.” as we intended to expand our business focus into the financial technology (“FinTech”) sector. The Company filed articles of amendment with the State of Nevada to effect the aforementioned changes on July 10, 2018 and August 28, 2018, respectively. The Company received approval from the Financial Industry Regulatory Authority ("FINRA") for the above noted corporate actions on August 8, 2019.

Our initial marketingIn connection with its name change, the Company adopted a business plan focused on shifting the Company’s strategy away from rental activities focused in cannabis industry and into the FinTech sector and related sectors.  In connection with this strategy, the Company hired a new Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) and appointed a new chairman of the Company’s board of directors, all of whom have significant experience in the FinTech sector.  The Company intends to acquire FinTech companies with a clear niche and strong leadership and use its experience and understanding of the FinTech sector and access to the public markets to help its acquisitions grow.  

Keeping in line with our change of operational focus as set out above, on June26, 2019 the Company entered into a stock exchange agreement (the “Exchange Agreement”) with Bombshell Technologies, Inc. (“Bombshell”) and the shareholders of Bombshell (the “Bombshell Holders”).  Pursuant to the Exchange Agreement, which closed on July 23, 2019, the Company acquired 100% of the outstanding shares of Bombshell (the “Bombshell Shares”) in exchange for the Bombshell Holders receiving the right to receive 110,675,328 shares (the “Consideration Shares”) of unregistered shares of the Company’s Common Stock on a pro rata basis (the “Exchange”), 33,000,000 of which were issued to the Bombshell Holders (the “Closing Shares”) at the Closing on a pro rata basis.  The remaining 77,675,328 Consideration Shares (the “Secondary Shares”) were issued on September 3, 2019 upon approval of the increase to the Company’s authorized common stock to 550,000,000 shares, consisting of 500,000,000 shares of Common Stock and 50,000,000 shares of Preferred Stock, effective August 29, 2019.  The Bombshell Holders are also eligible to receive earn-out consideration of up to an additional 36,769,215 shares of Common Stock (the “Earn-out Shares”) earnable in tranches of 12,256,405 shares of Common Stock in each of the second, third and fourth years after the Closing, based on whether Bombshell is able to meet certain Earnings Before Interest and Taxes thresholds in each year.  The Bombshell Holders include certain limited liability companies owned by (i) Jonathan Bonnette, the Company’s CEO (ii) Joel Bonnette, the Bombshell CEO and (iii) Terry Kennedy, a majority shareholder of the Company.  

Bombshell was formed as Bombshell Technologies, LLC on November 5, 2018 and converted into a corporation on June 24, 2019.  Bombshell is a full-service design and software development company focused on developing and selling software to financial services firms and advisors and is the first acquisition as part of our strategic shift into the FinTech sector and related sectors.

On July 8, 2019, the Company entered into a non-binding letter of intent (the “LOI”) to acquire Encompass More Group, Inc. (“Encompass”), a Nevada corporation. In connection with the LOI, Encompass issued a promissory note

(the “Note”) to the Company pursuant to a loan agreement (the “Loan Agreement”), dated July 22, 2019, by and between Encompass and the Company, in exchange for a loan of $100,000 (the “Loan”).  Pursuant to the Loan Agreement, the proceeds of the Loan will be aimed at attracting customers through networkingused by Encompass for working capital and general corporate purposes.  The Note has a twelve-month term, an interest rate of 5.0%, and is payable in monthly installments of $2,000, with real estate agencies, agents, commercial brokersall remaining principal and consulting groups that are involved in the cannabis industry.  We will target specific trade shows, conferences and seminars associated with cannabis growers.  As our capital for marketing is very limited we are reviewing the cost of advertisinginterest due on the radio or in print or running ads on certain cannabis industry online websites. Further during 2017 we commenced marketingmaturity date, unless paid earlier by Encompass.  The Board of ourDirectors have subsequently determined not to proceed with the acquisition as contemplated under the LOI.

On September 4, 2019 the Company entered into a listing agreement for the sale of the Smoke on the Water brand.  site location for an offering price of $850,000, with expected 6% sales commission.

Further, in connection with the shift in the Company’s strategy away from rental activities focused in cannabis industry, the Company sold WCS on September 30, 2019 by way of a membership interest purchase agreement (the “Purchase Agreement”) with the Zallen Trust.  Under the terms of the Purchase Agreement, the Company sold all of the Company’s membership interests in WCS for an aggregate purchase price of $782,450. The Zallen Trust paid the purchase price by transferring to the Company 8,693,888 shares of the Company’s Common Stock, valued at $0.09 per share. The Purchase Agreement also provided that Mr. Zallen transfer to the Company an additional 400,000 shares of Common Stock to settle $36,000 in back rent owed at the time of the sale. The Company retired all of the shares received as a result of the transaction.  In connection with the sale of WCS, the Company and Mr. Zallen entered into a separation and release of claims agreement pursuant to which the Company and Mr. Zallen provided a mutual release of claims against the other party and such party’s affiliates, including all claims related to Mr. Zallen’s service as an officer, employee, and director of the Company. The release of claims by Mr. Zallen resulted in the forgiveness of salary accruals of approximately $367,000 for services provided up to June 30, 2018.  Mr. Zallen was the former CEO, Chairman and President of the Company.

Grow Capital expects to identify additional suitable acquisitions, complete those acquisitions, and grow those companies as part of our transition to a Fintech company. Any potential acquisitions or divestitures remain subject to final agreements, due diligence, and typical closing conditions.

Current Operations

With the recent acquisition of Bombshell, Grow Capitalhas shifted its operational mandate to becoming a solution-oriented company focused on software, technology and financial services business (i.e. FinTech).Our current management team consists of consultants and entrepreneurs that have combined decades of experience in this sector.Fintech is a term used to describe financial technology, an industry encompassing any kind of technology in financial services.  This includes businesses and consumers and generally includes companies that provide financial services through software or other technology and ranging from mobile payment apps to cryptocurrency.

Any company using the internet, mobile devices, software technology or cloud services to perform or connect with financial services are involved in FinTech. Key industries making use of this financial technology include insurance, blockchain and crypto currency, mobile payment processing, crowd funding, budgeting, stock trading and robo-advising apps.[ https://www.thestreet.com/technology/what-is-fintech-14885154]

Software as a service or “SaaS” is a key component of the FinTech industry and represents a method of software distribution where a third-party hosts applications and makes them available to customers over the internet. Saas is one of the three main categories of cloud computing.[https://searchcloudcomputing.techtarget.com/definition/software-as-a-Service]

The Company’s recently acquired subsidiary, Bombshell, is a software development service provider with a focus on the financial services sector and SaaS solutions. Bombshell has operations in both Nevada and Louisiana, providing software to several large financial services organizations and with a rapid growth strategy consisting of innovative industry-specific solutions for sales teams and management. At the present time, the majority of Bombshell’s revenue generating customers are controlled by affiliates and/or officers of the Company.  

Bombshell's current software suite delivers customized back office compliance, sophisticated multi-pay commission processing, and a unique new client application submission system, along with digital engagement marketing

services centric to financial services. In addition to our Lake Selmac resortsoftware customization, licensing and subscription service contracts which generate revenue through user subscriptions as well as ongoing customization services and maintenance, we offer ad hoc services including web hosting and website development and other complementary professional services which are invoiced on an “as-provided” basis.  

Market and competition

SaaS removes the organizations need to install and run applications on their own computers or in their own data centers.  This eliminates the expense of hardware acquisition, provisioning and maintenance as well as software licensing, installation and support. Other benefits of the SaaS model include flexible payments, scalable usage, automatic updates and accessibility. [https://seachcloudcomputing.techtarget.com/definition/software-as-a-service]

The global SaaS market is estimated to grow to $117 billion by the end of 2022, with a compound annual growth rate of roughly 21 percent. [https://www.marketresearchfuture.com/reports/software-as-a-service-market-2003]

North America is dominating the SaaS industry due to various factors including, but not limited to the presence of global players, its rich entertainment industry, and its high adoption of on-demand software.  Currently the major players operating in the SaaS industry include the following: Salesforce; Linkedin; Concur Technologies, Workaday, Inc.; IBM Corporation, Oracle Corporation, Netsuite Inc., Medidata Solutions; Service Now, Inc., Microsoft Inc., Google, Inc. and Zuora.[https://www.marketresearchfuture.com/reports/software-as-a-service-market-2003]

Intellectual property

Bombshell entered into two Intellectual Property Assignment Agreements with related parties under which we provide fully functional vacationingacquired 100% ownership of certain created, developed and/or programmed patentable and/or copyrightable technology, software applications, code, technical information, data, and trade secrets which are integral to our suite of SaaS solutions. Presently we operate these solutions to campground operators and owners seeking to fill the growing demand for stress free and acceptable vacationing for the pro-personal choice and marijuana smoking community.as trade secrets.

The Company has not yet filed any patents or copyright applications in respect of our acquired intellectual property.  

Employees

WeOur subsidiary, Bombshell currently havehas four employees, two of whom are officers of the Company and one of whom is employedan officer. Grow Capital has 5 employees, all of which are officers and/or directors of the Company.  Further we have a key consultant that is also a major shareholder of the Company providing services part time. Our employees are not represented by unions and we consider our relationship with our employees to be good.

Facilities

Our office is located at 722 W. Dutton Rd, Eagle Point, Oregon 97524a business center known as Green Valley Corporate Center South at2485 Village View Drive, Suite 180, Henderson, NV 89074 and our telephone number is in the building that we own.702-830-7919, email: info@growcapital.com.  We currently pay no rent.  We believe this facility will be adequate for our needs for the next twelve months.have two corporate websites:www.growcapitalinc.com andwww.bombshelltechnologies.com.  

CompetitionAvailable information

Commercial real estate:

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports that we file with the Securities and Exchange Commission, or SEC, are available at the SEC's public reference room at 100 F Street, N.E., Washington, D.C. 20549. The commercial real estate market is highly competitive.  We believe finding properties that are zoned forpublic may obtain information on the specific use of allowing cannabis growers may be limited as more competitors enter the market.  Initially we will aggressively target states in the western US that legally allow for medical and recreational cannabis to be grown.  We have identified several competitors that appear to have offerings similar to ours.  They are Zoned Properties, Inc. (ZDPY), MJ Holdings, Inc. (MJNE), and Home Treasure Finders, Inc. (HMTF)

Zoned Properties, Inc. - Zoned Properties, Inc., a real estate investment firm, focuses on acquiring free standing buildings, land parcels, and greenhouses in order to have them re-zoned to be able to carry out aeroponics agricultural grow operations. It plans to operate primarily in Arizona, Illinois, Nevada, and Colorado.  

MJ Holdings, Inc. – MJ Holdings, Inc. acquires and leases real estate to licensed marijuana operators, including but not limited to providing complete turnkey growing space and related facilities to licensed marijuana growers and dispensary owners.  Additionally, MJ Holdings plans to explore ancillary opportunities in the regulated marijuana industry.

Home Treasure Finders, Inc. – Home Treasure Finders, Inc. is engaged in a real estate lead referral business in Colorado. It focuses on buying and selling properties; and leasing its real estate properties to cannabis growers for cannabis cultivation. The company also manages 55 rental units. Home Treasure Finders, Inc. was founded in 2008 and is based in Denver, Colorado.  Advanced Cannabis Solutions, Inc. – Advanced Cannabis Solutions, Inc. a development stage company, focuses on providing real estate leasing services to the regulated cannabis industry in the United States. It plans to purchase real estate assets; and lease growing space and related facilities to licensed marijuana growers and dispensary owners for their operations. The company was founded in 2013 and is headquartered in Colorado Springs, Colorado.

Cannabis friendly resort properties:

There are currently 29 states in the U.S. that have legalized medical marijuana and 8 states in the U.S. that permit adult cannabis usage and have adopted laws which govern and permit recreational usage of cannabis on private property and by adults over the age of 21. Oregon, Washington and Colorado are three such states.  

The market for cannabis friendly resort properties in those states with recreational cannabis usage laws is small but growing. Presently we have identified only a handful of locations which we believe are competitive to our business model.  Management believes there is substantial room for expansion in this particular field of operation with roll up of privately held resort and campground locations in this burgeoning leisure property space:

(1)Wilderness Bud and Breakfast San Juan National Forest, Pagosa Springs, CO 
This property offers a wide variety of wilderness 420 friendly camping experiences featuring420 Happy Hour, served daily and featuring a selection of the finest organic flowers, cannabis-infused ediblespublic reference room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains reports, proxy and extracts from the sunny southwest of Colorado.Tipisinformation statements and tent sites are located on the banks of the Rio Blanco. Camp kitchen, stoves, BBQ, outhouse, solar shower and campfire area are located on the campgrounds. 

(2)CanyonSide Campground, Fort Collins, CO
Family owned and operated campground located in the Poudre Canyon, along the Cache La Poudre River. Property has five furnished cabins, ten RV sites with hook-ups and large tenting area. Property is located between Fort Collins and Walden, Colorado.   

Further there are various locations in Washington and Colorado which have been identified by The Travel Joint http://thetraveljoint.com/cannabis-camping/ as being friendly to edibles as opposed to smoking cannabis, which have not been included in our competitive analysis.

Government Regulation

Currently, there are approximately twenty states plus the District of Columbia that have laws and/or regulations that recognize in one form or another legitimate medical uses for cannabis and consumer use of cannabis in connection with medical treatment. Fifteen other states are considering legislation to similar effect. As of the date of this writing, the policy and regulations of the Federal government and its agencies is that cannabis has no medical benefit and a range of activities including cultivation and use of cannabis for personal use is prohibited on the basis of federal law and may or may not be permitted on the basis of state law.

The Department of Justice governs the use of cannabis under the Controlled Substances Act (CSA). Schedule 21 of the U.S. Code includes five established schedules of controlled substances known as schedules I, II, III, IV, and V. The Department of Justice has mandated that schedules established by this section shall be updated and republished on a semi-annual basis during the two-year period beginning one year after October 27, 1970, and shall be updated

and republished on an annual basis thereafter. Schedule I includes cannabis in its listing.  Substances included in Schedule I have the following characteristics:

(A) The drug or other substance has a high potential for abuse;

(B) The drug or other substance has no currently accepted medical use in treatment in the United States;

(C) There is a lack of accepted safety for use of the drug or other substance under medical supervision.

On January 4, 2018 the office of the Attorney General published a memoinformation regarding Marijuana Enforcement that rescinds Obama-era directives easing federal enforcement.  While marijuana has always been illegal under federal law, as noted above, certain states have legalized adult usage under various local laws which govern substance usage and limits. In the January 8, 2018 memo, Jefferson B. Sessions, Attorney General has indicated enforcement decisions will be left up to the U.S. Attorney’s in the respective States clearly indicating that the burden is with“federal prosecutors deciding which cases to prosecute by weighing all relevant considerations, including federal law enforcement priorities set by the Attorney General, the seriousness of the crime, the deterrent effect of federal prosecution, and the cumulative impact of particular crimes on the community.”reporting companies.

The Company does not believe this directive will have a substantive impact on its planned operations.

On April 13, 2018 it was announced that President Donald Trump had promised Senate Republican Cory Gardner that he will support congressional efforts to protect states that have legalized marijuana, defusing a months-long standoff between Sen. Cory Gardner and the administration over Justice Department nominees. Trump told Gardner that despite the DOJ memo of January 4, 2018, the marijuana industry in Colorado will not be targeted. A bill has not been finalized, but discussion has commenced to find legislation that would, in effect, make clear the federal government cannot interfere with states that have voted to legalize marijuana.⁽¹⁾

⁽¹⁾https://www.washingtonpost.com/politics/trump-gardner-strike-deal-on-legalized-marijuana-ending-standoff-over-justice-nominees/2018/04/13/2ac3b35a-3f3a-11e8-912d-16c9e9b37800_story.html

We do not produce, market, or sell cannabis.  We are limiting ourselves to states where the state law allows for the production of cannabis. Beyond the state law allowing for cannabis production our construction must comply with all state and local building requirements as well as zoning requirements.  We work closely with the local authorities regarding zoning and work closely with the local building inspectors to comply in every way with building regulations.

ITEM 1A.  RISK FACTORS

Not required forAs a smaller reporting companies.company, we are not required to provide the information required by this Item. 

ITEM 1B.  UNRESOLVED STAFF COMMENTS

None

ITEM 2:  PROPERTIES

(1)We ownThe Company entered into a sublease agreement to lease approximately 1,338 square feet of office space at a business center known as Green Valley Corporate Center South located in Henderson, Nevada (the “Henderson Property”), effective October 19, 2018, for use as the Company’s new headquarters. The lease has a term of 123 months, an abatement of the first four months of rent during which time the Company would complete certain required leasehold improvements and escalating base monthly rent per square foot ranging between $2.00 to $3.00 per square foot. The Company commenced occupation of the premises in February 2019. Appreciation, LLC, a related party entity, holds the master lease from which the Company derives its sublease for its headquarters.   

(2)Up until its divesture in September 2019, we owned a building at 722 W. Dutton Road, Eagle Point, OR  97524 representing our first operating location for former subsidiary, WCS Enterprises.  The building is 15,000 square feet and zoned to meet the requirements for specific purpose industrial use and is divided into four 1,500 square feet condo style grow rooms which, is being leased to four tenants and one 7,500 square feet grow facility leased, for which the rent has yet begun,facility.  Until relocation to one tenant that is a related party. 

We maintain our new corporate officesheadquarters in the building.  The Company occupiesHenderson, NV we occupied one 1,500 sq. ft. unit to use as an office space.

(2)(3)In April 2016, the Company purchased a parcel of land near Eugene, Oregon within the Pioneer Business Park from a private seller in the amount of $326,629 plus closing costs. The property is on 2.65 acres located in the Pioneer Business Park.  The original plans were for building 33-1500 square foot units or approximately 50,000 square feet of warehouse condominiums on the site. 

In late 2017, the Company engaged a broker and listed the parcel of land for sale.In September 2018, the Company completed the sale of its land held in the Pioneer Business Park. The Company received proceeds of approximately $74,000 after payment of expenses of the sale and full retirement of the attached mortgage of approximately $250,000.  

(3)(4)In March 2017, the Company acquired a RV and campground park in Selma, Oregon.  The property is located just 20 miles of Grants Pass, Oregon and 2.5 miles east of the Redwood Highway in Selma, OregonandOregon and is known as the Lake Selmac Resort.  The Resort facilities include fishing, swimming, boating, and in addition to RV parking, has tent camping & cabin locations established for accommodation.  On September 4, 2019 the Company listed the property for an offering price of $850,000, with expected 6% sales commission. 

ITEM 3:  LEGAL PROCEEDINGS

The Company is not the subject of any pending legal proceedings and, to the knowledge of management, no proceedings are presently contemplated.

ITEM 4:  MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5:  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our shares of common stock are quoted by the OTC Markets Group Inc. of the Financial Industry Regulatory Authority, Inc. ("FINRA") under the symbol "GRWC".  Set forth below are the high and low closing bid prices for our common stock for each quarter of the last two fiscal years ended June 30, 20172019 and 2016.2018.  These bid prices were obtained from OTC MarketsGroupMarkets Group Inc. All prices listed herein reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not represent actual transactions.

Holders

The number of record holders of the Company's common stock as of April 18, 2018October 14, 2019 is approximately 183not211, not including an indeterminate number who may hold shares in "street name."

Common Stock Dividends

The Company has not declared any cash dividends with respect to its common stock and does not intend to declare dividends in the foreseeable future. There are no material restrictions limiting, or that are likely to limit, our ability to pay dividends on our common stock.

Securities Authorized for Issuance Under Equity Compensation Plans

Options

Equity Incentive Plan

In December 2015, the Company adopted the 2015 Equity Incentive Plan (“Incentive Plan”) with a term of 10 years.  The Incentive Plan allows for the issuance up to a maximum of 2 million shares of common stock, options exercisable into common stock of the Company or stock purchase rights exercisable into shares of common stock of the Company.  The plan is administered by the board of directors unless a separate delegation to an administrator is

made by the board of directors.   Options granted under the plan carry a maximum term of 10 years, except to a grantee who is also a 10% beneficial owner at the time of grant, in which case the maximum term is 5 years.  In addition, exercise prices of options granted must be within a certain percentage of the closing price on date of grant depending on the level of beneficial ownership of common stock of the Company by the grantee.  All vesting conditions are set by the board or administrator.  In December 2015, the Company filed a registration statement on Form S-8 covering all shares issued or issuable under the Incentive Plan.

Stock Plan

In December 2015, the Company adopted the 2015 Stock Plan (“Stock Plan”).   As a condition of adoption of the Stock Plan, the Company entered into a registration statement on Form S-8 and covered the shares issued under the plan, which registration statement was filed in December 2015.  The Stock Plan allows for the issuance up to a maximum of 2 million shares of common stock of the Company.  The plan is administered by the board of directors unless a separate delegation to an administrator is made by the board of directors.  The Stock Plan shall continue in effect until such time as is terminated by the Board or all shares are issued pursuant to the Stock Plan.

The 2015 Equity Incentive Plan is designed to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to employees, directors and consultants and to promote the success of the Company's business.  Options granted under the Plan may be Incentive Stock Options or Non-Qualified Stock Options, as determined by the Administrator at the time of grant.  Stock purchase rights may also be granted under the Plan.  The maximum aggregate number of shares which may be issued upon exercise of such Options or Stock Purchase Rights is two million (2,000,000) shares of Common Stock.  The term of the option is five (5) years from the grant date of such shorter term as may be provided in the Option Agreement.  The Plan become effective upon initial Board adoption and continues until terminated but in no case longer than ten (10) years.  The Company had granted an option for the purchase of two million shares to datein April 2016, of which 1,500,000 have been exercised.exercised and 500,000 remain available for exercise until 2021.

Common and Preferred Stock

The Company's authorized common stock consists of 100,000,000 common550,000,000 shares, with par valueconsisting of $0.001 and 5,000,000 shares of preferred stock with par value of $0.001 per share.

Reverse Stock Split:

Our board of directors and the holders of a majority of the500,000,000 shares of Common Stock entitled to vote thereon have adopted a resolution authorizing, but not requiring, a reverse splitpar value $0.001 and 50,000,000 shares of our common stock at a ratio of 1-for-20.  As a result of such reverse stock split, which was affected on November 16, 2015, the stock split has been recognized retroactively in the stockholders’ equity accounts as of October 22, 1999, the date of our inception, and in all shares and per share data in the financial statements included herein.Preferred Stock, par value $0.001.

Recent Sales of Unregistered Securities

Common StockExcept as set forth below, there were no sales of equity securities during the period covered by this Report that were not registered under the Securities Act and were not previously reported in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K filed by the Company. 

Share issuances subsequent to the year ended June 30, 2017.

Subsequent to June 30, 2017On July 1, 2019 the Company issued a total of 44,010,791450,918 shares of common stock upon conversionfully vested unregistered Common Stock to its directors as part of their respective compensation package.  

On July 31, 2019 the principalCompany issued 277,778 shares of unregistered Common Stock in respect to private placements for total gross proceeds of $50,000.

On October 1, 2019 the Company issued 1,074,381 fully vested unregistered shares of Common Stock to officers and unpaid interest accrued on its convertible notes anddirectors as part of their respective board compensation package.  

On October 10, 2019 the Company issueda total of 13,870,692210,000 unregistered shares of common stockCommon Stock to members of the Board, employees and consultants for compensation.

In April 2018, the Company sold 500,000 sharesa company controlled by one of its common stock to a director for cash in the amount of $20,000.  

Share issuances during the fiscal year ended June 30, 2017:

During the year ended June 30, 2017, the Company issued 21,924 shares to employees, board members and consultantsofficers for services rendered.rendered with a value of $16,433.  The Companyissued shares were valued those issuances on the closing price of the Company’s stock as traded in the other-the-counterat fair market value on the date of grant.

issuance.   

The Company issued 902,163 shares of common stock in full satisfaction of principalabove issuances did not involve any underwriters, underwriting discounts or commissions, or any public offering and accrued interest of convertible notes issued in the fiscal year ended June 30, 2016.

The Company issued 50,000 shares of common stock as partial payment of the purchase price for the RV and Campground in Selma, Oregon.

In the year ended June 30, 2017, a holder exercised options (see below) and acquired 1,000,000 shares of common stock of the Company and remitted cash in the amount of $400,000 to the Company.

Share issuances during the fiscal year ended June 30, 2016:

During the year ended June 30, 2016, the Company issued 1,191,364 shares to employees, board members and consultants for services rendered.  The Company valued those issuances on the closing price of the Company’s stock as traded in the other-the-counter market on the date of grant.

In September 2015, the Company and its former attorneys entered into a settlement of outstanding invoices due, in which the attorneys agreed to accept 45,000 shares of the Company’s common stock in full satisfaction of the $71,469 owed as of that date.

Preferred Stock

The Company has designated a Series A Convertible Preferred Stock (the "Series A Preferred").  The number of authorized shares totals 5,000,000 and the par valuewe believe is $.001 per share.  The Series A Preferred shareholders vote together with the common stock as a single class.  The holders of Series A Preferred are entitled to receive all notices relating to voting as are required to be given to the holders of the Common Stock.  The holders of shares of Series A Preferred shall be entitled to 5 votes per share and have a conversion right granted to the holder to allow to convert into 5 common shares of the Company for each Series A Preferred Share held.

In December 2015, the board of directors of the Company granted the CEO and board member 5,000,000 shares of Series A preferred stock, which upon receipt were immediately converted by the holders into 25,000,000 shares of common stock of the Company.  The Company valued this issuance at $25 million, based upon the closing price of the common stock on date of grant of the Series A Preferred Shares.

All stockissuances discussed in this section under the heading Recent Sales of Unregistered Securities, were exempt from the registration requirements of Section 5 of the Securities Act of 1933 pursuant toby virtue of Section 4(2) thereof and/or Regulation D promulgated thereunder. The purchasers represented to us that he/they were accredited investor(s) and were acquiring the shares for investment purposes only and not with a view to, or for sale in connection with, any distribution thereof and that he could bear the risks of the same Act since the issuances of the shares were to persons well known to the Company and did not involve any public offerings. investment.

ITEM 6:  SELECTED FINANCIAL DATA

Not required for smaller reporting companies.

ITEM 7:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Forward-looking Statements

Statements made in this Form 10-K which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and business of Grow Condos.Capital.   Such forward-looking statements include those that are preceded by, followed by or that include the words "may", "would", "could", "should", "expects", "projects", "anticipates", "believes", "estimates", "plans", "intends", "targets" or similar expressions.

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: general economic or industry conditions nationally and/or in the communities in which we conduct business; legislation or regulatory requirements, including environmental requirements; conditions of the securities markets; competition; our ability to raise capital; changes in accounting principles, policies or guidelines; financial or political instability; acts of war or terrorism; and other economic, competitive, governmental, regulatory and technical factors affecting our operations, products, services and prices.

Accordingly, results actually achieved may differ materially from expected results in these statements. Forward- looking statements speak only as of the date they are made. Grow CondosCapital does not undertake, and specifically disclaims, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.

Financial Statements

TheconsolidatedThe consolidated financial statements which are a part of this Report are as of June 30, 20172019 and 2016.Theconsolidated2018. The consolidated financial statements include the accounts of Grow Condos,Capital, Inc., and its wholly-owned subsidiaries, WCS Enterprises, LLC and Smoke on the Water, Inc. as of June 30, 2017.2019. All significant intercompany accounting transactions have been eliminated as a result of consolidation.

Following is management's discussion and analysis of those financial statements. This discussion and analysis should be read in conjunction with our financial statements and notes thereto included elsewhere in Report on Form 10-K for the fiscal years ended June 30, 20172019 and 2016.2018.

Plan of Operations

The Company believes that its existing capital resources may not be adequate to satisfy its cash requirements for the next twelve months and further funding will be required to fully execute our business plans. Through the date of this report we have been able to rely on bank and non-bank financing in the form of mortgages, convertible notes with third parties, sales of common stock, equity issuances with respect to acquisitions, and advances from related parties to continue to fund shortfalls in our operations. The Company estimates that it will require additional cash resources during fiscal 2018 and beyond2019 based on its current operating plan and condition.  The Company expects cash flows from operating activities to improve, primarilyincrease substantially in fiscal 2020 as a result of increased revenues from our current and proposed operating activities,recent acquisition of Bombshell which is generating net income as of June 30, 2019, however we do not presently have enough revenue tomeetto meet our current overhead. We will continue to rely on funding from our officers, directors and third parties to meet our operational shortfalls.  While we expect to continue to have these resources available to us, there is no guarantee we will be able to continue to obtain financing to meet our obligations, in the normal course.or on a timely basis as needed, or on favorable terms. If we fail to generate positive cash flow or obtain additional financing, when required, we may have to modify, delay, or abandon some or all of our business and expansion plans.

Results of Operations

Revenues

During the fiscal years ended June 30, 20172019 and 2016,2018, respectively we have recorded net revenues of $143,441$Nil and $106,533 respectively.  $Nil respectively from ongoing operations.  While the Company continued to operate the Lake Selmac Resort held by subsidiary SOTW and the condominium rental operation held by subsidiary WCS, these operations have been offered for sale, and as a result all operations, including all earned revenue are included as part of discontinued operations in the financial statements included herein for the fiscal years ended June 30, 2019 and 2018.

Operating Expenses

Our consolidated operating expenses from ongoing operations for the fiscal years ended June 30, 20172019 and 20162018 were as follows:

Our general and administrative expenses include rent, telephone, internet services, banking charges, salaries, stock based compensation, consulting fees and miscellaneous office costs.

During the comparative fiscal years ended June 30, 20172019 and 2016, The2018, the Company experienced a substantial decreaserecorded an increase in general and administrative expenses as a result of stock basedstock-based compensation expense recorded in fiscal 2016 of $28,862,140 as comparedfrom $1,134,315 (2018) to ($5,936)$1,484,059 during the current fiscal year.  IncludedThe increase was primarily the result of increased consulting fees and employee compensation paid in stock based compensation in the form of our common stock. Professional fees increased substantially from $81,620 (2018) to $619,204 (2019), as the Company incurred legal fees and professional consulting fees with respect to the acquisition of Bombshell and the divestiture of certain assets, with no similar expenses during fiscal 2018. General and administrative expenses were substantially reduced during the current fiscal year ended June 30, 2016 was $25,000,0002019 from $293,827 (2018) to $114,478 as certain salaries for administrative and management functions incurred in compensation associatedfiscal 2018 were eliminated during fiscal 2019. Sales and marketing expenses totaled $15,974 in the current fiscal year ended June 30, 2019, with the issuance of 5,000,000 preferred shares to directors as compensation, as well as an additional $3,862,140 in expenses recorded relative to shares issued for non-employee services, common shares issued to directors as compensation, and certain stock options granted.  During fiscal 2017, stock based compensation includes shares issued for non-employee services and certain shares issued to directors valued at $26,081 offset by the revaluation at time of vesting of an option issued to a consultant recordedno comparable expense in the prior fiscal year totaling $32,017, resulting in a gain of $5,936.   Professional fees increased from $70,372 duringyear.  During fiscal 2016 to $137,214 in fiscal 2017 as the Company was required to re-audit its fiscal 2016 results, and also reported increased legal fees year over year. Depreciation,2018 depreciation, amortization and impairment declinedincreased from $310,840$268 in fiscal 20162018 to only $125,991 in fiscal 2017 as a result of management’s impairment testing of certain land and condominium tenant building operations of WCS at the close of fiscal 2016, resulting in a one time write down of $282,600, with an impairment recorded for Grow Condos for construction deposits and other costs related to the land purchased in March 2017in the amount of approximately $97,800.$765.

Total operating expenses during fiscal 20172019 totaled $996,203$2,234,480 as compared to $29,806,904$1,510,030 in fiscal 2016.2018.

We expect operating expenses to increase in future periods as we continue to expand our holdingsoperations and our revenue base.base, and if we continue to issue shares to settle salaries, consulting fees and expenses.

Other Expenses

Other expenses recorded in fiscal 20172019 and 20162018 totaled $762,093$11,183 and $97,844$919,156 respectively.  The substantial increasedecrease to other expenses in fiscal 20172019 is directly related to amortization of debt discount and increased interest expense as a result of $639,107the convertible notes and their conversions in the fiscal year ended June 30, 2018 compared to only $5,771 recorded in the current fiscal year.  As of June 30, 2018, all of the convertible notes and accrued interest of those convertible notes had fully converted. Fiscal 2019 results include a loss on disposal of property of $5,412 with no comparative expense in fiscal 2018.

Discontinued operations

During fiscal 2019 certain of the Company’s subsidiary operations were allocated as held for sale. Results reported in respect to these discontinued operations provided for a loss from discontinued operations of $159,434 and $53,453 for the years ended June 30, 2019 and 2018, respectively.  The increase in the loss from discontinued operations in the year ended June 30, 2019 as compared to only $49,937June 30, 2018 was primarily the result of increased cost of revenues, general and administrative expenses and a $112,000 impairment recorded based on the expected sale price less costs of sale of the Smoke on the Water property, offset by reduced interest expense in the current period compared to the prior comparative fiscal year.

Net losses in the fiscal years ended June 30, 20172019 and 20162018 totaled $1,614,855$2,405,097 and $29,798,215$2,482,639, respectively.

Liquidity and Capital Resources

As of June 30, 2017,2019, the Company had total current assets of $46,946$2,082,080 including $1,431,796 in prepaid expenses of which $1,380,459 relates to salaries and consulting fees prepaid by the issue of stock, and working capital of $898,603, compared to total current assets of $385,378 and a working capital deficit of $2,029,044 compared to total current assets of $59,551 and a working capital deficit of $476,158$1,448,177 as of June 30, 2016.2013. The increasedecrease in our working capital deficit was due to a substantial increasedecrease in our accrued liabilities of $291,301 which allowed usheld from sale over the comparative periods from $1,555,240 in fiscal 2018 to continue ongoing operations, as well as a substantive$472,241 in the current fiscal year ended June 30, 2019, and an increase to short term mortgages of $827,322 as we acquired additional property duringnon-cash prepaid expenses in the current year and one of our mortgages is now due within the 12 months following June 30, 2017. The Company also entered in certain convertible loan agreements during the most recent fiscal year, which further increased our current liabilities.as identified above.  

During the fiscal year ended June 30, 2017,2019, cash used by operating activities totaled $533,550,$415,864, primarily as a result of a net loss from operations of $1,614,855,$2,405,097, offset by a loss from discontinued operations of $159,434 and certain non cashnon-cash adjustments including non-cash interest of $655,898,$6,612, a loss from the sale of land and depreciation, amortization and impairment expenses of $125,991.$765, as well as stock-based compensation expenses of $1,484,059.  In fiscal 20162018 cash used by operating activities totaled $316,357 with$400,344, primarily as a result of a net loss from operations of $29,798,215$2,482,639, offset by non casha loss from discontinued operations of $236,036, and certain non-cash adjustments including stock based compensation of $28,862,140, non-cash interest of $49,937 and$930,715, depreciation, amortization and impairment expenses of $310,840.$268 and stock-based compensation expenses of $1,134,315. 

Net cash provided by investing activities was $18,003 in fiscal 2019 as compared to net cash used in investing activities was $268,107of $40,268 in fiscal 20172018. Results for fiscal 2019 include $5,412 expended on equipment, offset by amounts due to a related party of $23,415, as compared to $22,322$40,268 receivable from a related party in fiscal 2016, primarilyas a result of the purchase of certain property in fiscal 2017.2018.

Net cash provided by financing activities was $787,576$1,765,000 in fiscal 20172019 as compared to $340,080$277,000 in fiscal 2016.2018. During fiscal 20172018 the Company received proceeds from convertible notesprivate placements of $440,000$232,000 and proceeds from the exerciserelated party advances of options$45,000, compared to proceeds from private placements totaling $400,000, offset$1,765,000 in fiscal 2019.

Net cash flows used in discontinued operations  were $897,600 in fiscal 2019 as compared to net cash provided by certain mortgage repayments and repayments to related parties.  discontinued activities of $147,436 in fiscal 2018.

During fiscal 2016,2019 the Company received proceeds from convertible notesreported a net increase in cash of $158,750, proceeds from the exercise$469,539 as compared to a decrease in cash of options of $200,000 and $10,575 from advances of related parties, offset by mortgage repayments.$16,176 in fiscal 2018.

Going Concern

AtDuring the fiscal year ended June 30, 20172019 and June 30, 2016,2018, the Company reported a net loss of $1,614,855 $2,405,097 and $29,798,215, respectively.$2,482,639, respectively, combined with a working capital deficit of approximately $481,000 (after removing prepaid stock-based compensation) with approximately $483,000 of cash on hand. The Company believes that as of June 30, 2019 its existing capital resources are not adequate to enable it to fully execute its business plan.  As ofWhile the

Company acquired an operating business is the FinTech sector subsequent to fiscal year end, which is generating net income as at June 30, 2017,2019, we had a net working capital deficitdo not believe the additional cash flows are yet sufficient to meet all of approximately $2,029,000.our anticipated operational overhead for fiscal 2020.    These conditions raise substantial doubt as to the Company's ability to continue as a going concern.  TheDuring fiscal 2019 the Company estimates that it will require additional cash resources during fiscal year 2018raised gross proceeds from private placements of our common shares of $1,765,000which were allocated to working capital and beyond based on its current operating plan and condition. Through October 2018, threeto retire certain debt obligations. These funds were raised for use in the execution of the four mortgagesCompany’s shift away from the cannabis industry and towards its new business plan focused on acquisitions in the FinTech sector and other related sectors.  As part of this plan, the Company has sold WCS as of September 30, 2019 and Smoke on the properties ofWater is currently being offered for sale (See Note 3).  If the Company mature, which will require approximately $1.2 millionfails to satisfy those mortgages.  The Company expects cash flows from operating activities to improve marginally insell Smoke on the short term, primarily as a result of an increase in cash received from tenants and a decrease in certain operating expenses, although there can be no assurance thereof.  In addition, there can be no assurance that new tenants will become available after 2019 when the remaining leases expire for the Eagle Point condominium. If we fail toWater, generate positive cash flow or obtain additional financing, when required, wethe Company may have to modify, delay, or abandon some or all of ourits business and expansion plans, and potentially cease operations altogether.Thealtogether. The accompanying consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern.

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements of any kind for the period ended June 30, 20172019 and 2016.2018.

ITEM 7A:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required for smaller reporting companies.

ITEM 8:  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 TABLE OF CONTENTS FOR FINANCIAL STATEMENTS 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders
Stockholders of Grow Capital, Inc.

Grow Condos, Inc.:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Grow Condos,Capital, Inc. (the Company) as of June 30, 20172019 and 2016,2018, and the related consolidated statements of operations, stockholders’ deficitequity (deficit), and cash flows for each of the years then ended. in the two year period ended June 30, 2019, and the related notes (collectively referred to as the financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the two year period ended June 30, 2019, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph on Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. Management’s plans in regards to this uncertainty are included Note 1 to the financial statements.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on thesethe Company’s consolidated financial statements based on our audit.

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 Public Company Accounting Oversight Board (United States).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.misstatement, whether due to error or fraud. The companyCompany is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included considerationAs part of our audits, we are required to obtain an understanding of internal control over financial reporting, as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’sCompany’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes

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 supportingregarding the amounts and disclosures in the financial statements, assessingstatements. 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 statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the aforementioned financial statements present fairly, in all material respects, the financial position of Stem Holdings, Inc. as of June 30, 2017 and 2016 and the results of its operations and its cash flows for the year ended September 30, 2017 and for the years then ended, in conformity with accounting principles generally accepted in the United States of America.F-1

The accompanying notes are an integral part of these audited consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note statements.

F-2 to the financial statements, the Company has incurred losses from operations since inception and is dependent upon access to additional external financing. These conditions raise substantial doubt concerning its ability to continue as a going concern. Management’s plans in regard 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/ L J Soldinger Associates, LLCGROW CAPITAL, INC.

Deer Park, IllinoisAND SUBSIDIARIES

April 24, 2018(Formerly Grow Condos, Inc.)

F-3

GROW CONDOS,CAPITAL, INC.

AND SUBSIDIARIES

(Formerly Grow Condos, Inc.)

Consolidated Statements of Changes in Stockholders Equity (Deficit)