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, 20182020

or

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

For the transition period from:from [ ] to [ ]:

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

Title of each classTrading Symbol(s)Name of each exchange

        None    Not applicable                                                  Not applicable          

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 [  ]

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 [  ]

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][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 theThe 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.fiscal quarter was $8,591,603.

The market value of the voting and non-voting common stock held by non-affiliates totaled $8,389,277 based upon a valuation of $0.175 per share, that being the closing price on December 29, 2017 the last business day of the Registrant'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 October 8, 2018,7, 2020, the registrantIssuer had 96,621,40822,696,645 common shares of common stockissued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

See Part IV, Item 15.None

PART I

TABLE OF CONTENTS

FORWARD LOOKING STATEMENTS

PART I

In this Annual Report, references to "Grow Condos," the "Company," "we," "us," "our" and words of similar import) refer to Grow Condos, 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. 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 Condos 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.  Forward Looking Statements

In this Annual Report, references to "Grow Capital," the "Company," "we," "us," "our" and words of similar import) refer to Grow 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 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.

These forward-looking statements include, but are not limited to:

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 Capital 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.

COVID 19 PANDEMIC

The recent COVID-19 pandemic could have an adverse impact on our ongoing operations. To date the Company’s primary operating segment, Bombshell Technologies Inc., has not experienced a decline in sales as a result of the impact of COVID 19. The Company’s operations in the FinTech sector are carried out with a limited amount of person to person contact and we do not expect an impact on these operations as a result of COVID 19, however, the full effect of the COVID-19 outbreak continues to evolve as of the date of this report, is highly uncertain and subject to change. Operations of the Company’s Resort at Lake Selmac property were delayed until July 2020 when the government permitted the resort to reopen.  Management does not expect the delay in opening the resort for the 2020-2021 season to substantially impact profitable operations for this business in the long term. Management is actively monitoring the situation but given the daily evolution of the COVID-19 outbreak, the Company is not able to estimate the effects of

the COVID-19 outbreak on its operations or financial condition in the next 12 months. While significant uncertainty remains, the Company does not believe the COVID-19 outbreak will have a negative impact on its  ability to raise additional financing, conclude the acquisition of targeted business operations or reach profitable operations.

Description of Business

HistoryHistorical

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-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.

OnIn 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 and 5,000,000 shares of preferred stock (the “Recapitalization”) and to change the name of the Company to Grow Capital Inc. 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 has submitted application to the Financial Industry Regulatory Authority ("FINRA") for approval of the above noted corporate actions. 

WCS Enterprises

Our wholly-owned subsidiary,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. WCS became a wholly owned subsidiary of the Company.   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 a real 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 propertiesbusiness 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 Water is 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.our former CEO and Chairman. The Company was not directly involved in the growing, distribution or sale of cannabis.

Further we haveWe acquired real estatea second development site in 2016 located just 20 miles from Grants Pass, Oregon and 2.5 miles east 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.

In September 2018, the Company completed the sale of its land held in the Pioneer Business Park near Eugene, OR. TheOR, which we intended to develop, however the 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 the property. In September 2018, the site was sold, and 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.  

Sales & Leasing

We develop, lease, own and provide investment sales opportunities for commercial industrial properties focusedThe Resort at Lake Selmac (Formerly Smoke on the Water, Inc.) (“RLS”), 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. RLS was originally intended 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 fiscalcountry's growing level of recreational marijuana acceptance.  In March 2017, weRLS 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 offers recreational facilities including fishing, swimming, boating, RV parking, tent camping & cabin accommodation.accommodation, as well as a small convenience store for sundry supplies.

On 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.

In 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 FinTech 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 determined 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 build a portfolio of profitable operations.  

Current Operations

In line with our change of operational focus, on June 26, 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 5,533,773 shares (the “Consideration Shares”) of unregistered shares of the Company’s Common Stock on a pro rata basis (the “Exchange”), 1,650,000 of which were issued to the Bombshell Holders (the “Closing Shares”) at the Closing on a pro rata basis.  The remaining 3,883,773 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 1,838,461 shares of Common Stock (the “Earn-out Shares”) earnable in tranches of 612,820 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, (ii) Joel Bonnette, and (iii) Terry Kennedy. At the date of this report it remains uncertain whether the EBIT targets which permit the earn out of the first tranche of the additional shares of common stock will be achieved as at the first valuation date.  The shares issued in the Exchange are subject to certain registration rights with no liquidated damages for failure to complete registration by a specific date.

With the acquisition of Bombshell, Grow Capital has 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.

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 were to be used by Encompass for working capital and general corporate purposes.  The Note had a twelve-month term, an interest rate of 5.0%, and was payable in monthly installments of $2,000, with all remaining principal and interest due on the maturity date, unless paid earlier by Encompass.  The Board of Directors have subsequently determined not to proceed with the acquisition as contemplated under the LOI. On September 25, 2020, effective June 30, 2020, the Company negotiated an addendum to the Loan (the “Addendum”) in respect to an outstanding balance due under the Loan.  Encompass paid a lump sum payment of $ and the Company and Encompass executed a new promissory note in the amount of $72,000 effective July 1, 2020 (the New Loan”). The New Loan requires twelve equal payments of $6,000 per month.  Interest accrued as at June 30, 2020 on the Loan plus interest accrued on the New Loan at 5% per annum is due and payable at maturity, June 30, 2021.   

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 434,694 shares of the Company’s Common Stock, valued at $2.00 per share. The Purchase Agreement also provided that Mr. Zallen transfer to the Company an additional 20,000 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. The Company reversed related payroll taxes of approximately $61,000 and included the amount in the gain on sale.

Further, despite originally listing the Resort at Lake Selmac property for sale during September 2019 upon expiry of the listing agreement March 31, 2020, the Company determined to delay the sale, and to continue to operate the rebranded Resort at Lake Selmac as a family friendly RV resort facility in fiscal 2020.

On February 12, 2020, the Company entered into a compensation agreement with its CFO, Trevor Hall beginning January 1, 2020 through December 31, 2020. Pursuant to the consulting agreement, Mr. Hall’s compensation will consist of a fixed fee of Sixty Thousand (60,000) shares of the Company’s unregistered restricted common stock for his providing chief financial officer services. The shares are to be issued at a rate of Fifteen Thousand (15,000) shares per quarter, and vest immediately upon issuance.

On April 1, 2020, Jonathan Bonnette, who had been the President and Chief Executive Officer of Grow Capital since July 1, 2018, transitioned out of his role as President and Chief Executive Officer and become the Company’s Chief Technology Officer and the Chief Executive Officer of Bombshell Technologies.

Mr. Terry Kennedy was appointed to succeed Mr. Bonnette as the President and Chief Executive Officer of the Company, effective April 1, 2020. Mr. Kennedy will serve as the President and Chief Executive Officer until his successor is appointed by the Board, or until his earlier resignation, removal or death. In connection with Mr. Kennedy’s appointment, the Company and Mr. Kennedy entered into an executive compensation agreement (the “Compensation Agreement”) with an effective date of April 1, 2020. Pursuant to the Compensation Agreement, Mr. Kennedy will have the duties and responsibilities as are commensurate with the positions of President and Chief Executive Officer, as reasonably and lawfully directed by the Board. Mr. Kennedy will continue to provide services to clients of Appreciation Financial, a business Mr. Kennedy founded and owns, as well as to otherwise be individually employed by another entity or entities. Mr. Kennedy will, however, be required to devote his time and apply his attention, skill and best efforts to the faithful performance of his duties as President and Chief Executive Officer of the Company in a professional manner. Mr. Kennedy shall receive a fixed fee of 50,000 shares of unregistered, restricted common stock for his services.  If a permanent executive compensation or employment agreement is not consummated prior to July 1, 2020, the Compensation Agreement will automatically renew for one additional three-month period beginning on July 1, 2020, with Mr. Kennedy entitled to receive up to an additional 50, 000 unregistered, restricted shares of the Company’s common stock, with the actual number of shares being prorated for the portion of the extended period actually served until the more permanent executive compensation/employment agreement is consummated.

On May 13, 2020 the Company’s Board of Directors approved a 1 for 20 reverse split whereby shareholders would receive one (1) post reverse split share of Common Stock for each twenty (20) pre-split shares of Common Stock.   The Company would pay cash to shareholders who were left with only a fractional share and would round up any other partial shares to the nearest whole share.  The corporate action was approved by FINRA and become effective on July 30, 2020 and all share and per share data included in this Annual Report has had increasedbeen retroactively impacted to reflect the share split.

Subsequently on May 15, 2020 the Company entered into new compensation contracts with each of Jonathan Bonnette, CTO and Director and Carl Sanko, Director and Secretary, for a further term of one year whereunder they shall earn $320,000 and $270,000 respectively, such salaries to be settled by the issuance of unregistered, restricted shares of common stock.  .  

On August 19, 2020, the Company acquired PERA LLC, a Nevada limited liability company (“PERA”), pursuant to an exchange agreement (the “Exchange Agreement”), effective as of August 3, 2020 (the “Effective Date”), by and between PERA, the members of PERA (the “PERA Members”), and the Company (the “Closing”), which was

previously disclosed on the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on August 11, 2020. At the Closing, PERA became a wholly-owned subsidiary of the Company. Eric Tarno, the current President of PERA, will continue to serve as the President of PERA.

Pursuant to the Exchange Agreement, at the Closing, the Company acquired 100% of the outstanding membership interests of PERA (the “PERA Ownership Interests”) in exchange for 9,358,185 unregistered restricted shares of the Company’s common stock on a pro rata basis (the “Exchange”). At the Closing, the PERA Members conveyed all of the right, title and interest in and to the PERA Ownership Interests in exchange for the right to receive a number of shares of GC Common Stock equal to an exchange ratio (the “Exchange Ratio”). The Exchange Ratio is calculated by dividing (a) the Exchange Shares (as defined below) by (b) the total number of shares of PERA Ownership Interests outstanding immediately prior to the Effective Date.

“Exchange Shares” means the number of shares of GC Common Stock obtained by dividing (a) $10,000,000 by (b) the 10-day volume weighted average price per share (“VWAP”) calculated immediately before the date that the previously announced reverse stock split of GC Common Stock became effective on OTCQB, July 30, 2020.

In addition, if PERA meets certain yearly targeted gross revenues for each of year one, two, and three following the Closing, the PERA owners may earn a cumulative total of up to $5,000,000 of shares of GC Common Stock (the “Earn-out Shares”) to be determined using the applicable 10-day VWAP stock price of the Company’s common stock preceding each earn-out period calculation date as set forth in the Exchange Agreement in connection with all of the three years, subject to certain catch up provisions if such yearly period targets are not met in the applicable period.

All of the common stock, as well as the Earn-out Shares, if any, have or will be issued in reliance on the exemption from registration set forth in Section 4(a)(2) of the Securities Act of 1933, as amended. At the Closing the Company also entered into a registration rights agreement (the “Registration Rights Agreement”) with the PERA Members to register the GC Common Stock to be issued in connection with the Exchange.  Pursuant to the Registration Rights Agreement, the Company has granted certain demand and piggy-back registration rights whereby the Company will register the resale of the Common Stock issued in the Exchange.

The PERA Members include certain limited liability companies owned by (i) Terry Kennedy, the CEO of the Company, (ii) Jonathan Bonnette, the CTO of the Company and the CEO of Bombshell Technologies, Inc., a subsidiary of the Company, (iii) Joel Bonnette, brother of Jonathan Bonnette, and (iv) Carl Sanko, a director and Secretary of the Company, and (v) Jared Bonnette, brother of Jonathan Bonnette.

Grow Capital expects to identify additional suitable acquisitions during fiscal 2021, complete those acquisitions, and expand our footprint as a Fintech company, achieving profitable operations. Any potential acquisitions or divestitures remain subject to final agreements, due diligence, and typical closing conditions.

Operating Subsidiaries

Resort at Lake Selmac

While the Company entered into a listing agreement for the divestiture of this operating location during fiscal 2020, it was subsequently determined by management to continue to operate the property upon the expiration of the listing agreement on March 31, 2020.  As a result of the current decline in real estate transactions in the United States as a result of the pandemic, the Company will review the sale of this property when appropriate at a future date.  Due to the COVID-19 pandemic, the scheduled opening date for the resort of April 1, 2020 was postponed. The resort was able to be reopened in July 2020 once the local State guidelines permitted a return to operations.  The Company intends to operate the resort year round and does not expect the delayed opening to have a subsequent impact on our operations. The resort is currently operated as a family friendly resort destination.

Bombshell Technologies, Inc.

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 was our first acquisition as part of our strategic shift into the FinTech sector and related sectors.

Bombshell Technologies has operations in both Nevada and Louisiana, providing software to several large financial services organizations and leading the way on innovative industry-specific solutions for sales teams and management.

Bombshell Technologies is 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]

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 software 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.  

The Company has expanded its core business during our most recently completedrecent fiscal year, increasing gross revenues from $814,928 for the partial year ended June 30, 2019 to $2,239,285 in the fiscal year ended June 30, 2020. At the present time, the majority of Bombshell’s revenue generating customers are controlled by affiliates and/or officers of the Company.  

Bombshell earns revenue from a combination of activities including monthly user fees for access to customized back end software, website development, and other professional services including maintenance and ongoing customization of its SAAS product offerings.

PERA LLC

PERA LLC, acquired in August 2020, provides public employee retirement assistance and currently works with employees of school districts, colleges, universities, and other public institutions nationwide. Every state licensed representative is appointed with one or more of the institution’s approved vendors.

Headquartered in Nevada, PERA connects retirement professionals and public employees who want help during school and government building closures. PERA has over 5,000 trusted advisors in its network to help public employees and has successfully set near half a million appointments for its’ clients since its inception.

PERA has continued assisting in the public employee sector of financial and retirement planning during COVID 19 as everyone is working from home and only taking online meetings. PERA’s use of technology, with its back office running Bombshell Technologies software, has been helping employees achieve their goals of getting retirement

ready and kept agents in business. Serving major insurance and financial service companies, PERA intends to expand its client base through new ownership by Grow Capital.

PERA provides vetted appointments - not leads - to agents. PERA began as a way to put safety of public employees and students first - minimizing campus “walk-ons” by using an electronic scheduling program to ensure only licensed representatives with scheduled appointments visited your campus.

In our current virtual world, PERA offers fully electronic appointments through their live interactive meeting platform. Their virtual meetings allow employees to receive the expert, honest and reliable financial advice they deserve on their own time.  PERA’s approach to the market is reflected in their significant growth over the last year.  They have established a network of advisors who understand public employee’s professional lives and how to make their income last a lifetime.  

SuppliesMarket and Equipmentcompetition

We intendBombshell Technologies Inc.

Bombshell is a full-service design and software development company that competes primarily in software as a service (“SaaS”) sector. 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 future, to provide operators state-of-the art equipmentSaaS 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 methodology to provide efficient implementation to assist clients to realize stabilized operations faster.Zuora. [https://www.marketresearchfuture.com/reports/software-as-a-service-market-2003]

FinancingPERA LLC

We intend inRecently acquired subsidiary, PERA LLC is a third-party marketing organization that facilitates meetings between state-licensed representatives and public employees who have individual retirement related questions. PERA currently works with employees of school districts, colleges, universities, and other public institutions nationwide. While there are numerous organizations that offer retirement planning related services, such as Morneau Shepell, Allianz, National Life Group, and Fidelity, to name a few, PERA is one of a limited number of organizations that offer targeted services for public employees by using proprietary electronic scheduling programs and software,  In this way, PERA is able to offer fully electronic appointments. Through a live interactive meeting platform, a vendor approved licensed representative can “virtually” meet with staff and employees without ever stepping foot on campus. The virtual meetings allow employees to receive the future, to assist tenants with financing for space build-out as well as acquisitionexpert, honest and reliable financial advice they deserve on their own time.  PERA has a understanding of commercial property.public service employee's professional background allowing a customized experience.

MarketingIntellectual property

Our initial marketing will be aimed at attracting customers through networkingBombshell entered into two Intellectual Property Assignment Agreements with real estate agencies, agents, commercial brokersrelated parties under which we acquired 100% ownership of certain created, developed and/or programmed patentable and/or copyrightable technology, software applications, code, technical information, data, and consulting groups thattrade secrets which are involvedintegral to our suite of SaaS solutions. Presently we operate these solutions as trade secrets.

The Company has not yet filed any patents or copyright applications 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 advertising on the radio or in print or running ads on certain cannabis industry online websites. Further during 2017 we commenced marketingrespect of our Smoke on the Water brand.  With our Lake Selmac resort property we 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.acquired intellectual property.  

Employees

WeOur subsidiary, Bombshell currently have fourhas 4 employees, two of whom are officers of the Company and one of whom is employed part time.an officer.  Grow Capital has 4 employees, all of which are officers and/or directors of the Company.  Pera LLC has 12 employees, one of whom is an officer. The Resort at Lake Selmac has 1 employee. 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 at 2485 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 and www.bombshelltechnologies.com.

Competition

Commercial real estate:

The commercial real estate market is highly competitive.  We believe finding properties that are zonedalso maintain an office for 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 ColoradoBombshell Technologies located at 130 Lakeland Blvd, Denham 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 edibles and extracts from the sunny southwest of Colorado. Tipis 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.   LA 70726.

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.recently acquired subsidiary Pera LLC maintains business offices at 2200 Paseo Verde Dr. Parkway, Henderson NV 89052.

Government RegulationAvailable information

Currently, thereOur 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 approximately twenty states plusavailable at 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. AsSEC's public reference room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the date of this writing,public reference room by calling the policySEC at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains reports, proxy and regulations of the Federal governmentinformation statements 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, Oregon 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.  The Company had previously listed the property for sale on September 4, 2019, however, it was determined not to renew its listing for the sale .  As a result of the COVID-19 pandemic, the scheduled opening date of April 1, 2020 was pushed back to July 2020, however, the resort is now open for regular business operations.  

(5)We have an operating lease for Bombshell located in Louisiana. The commercial lease agreement with option to renew was effective on January 6, 2020. The lease term  is set for a period of one year and includes an option to extend the lease each year.  Management has determined that it is reasonably certain that the option will be exercised based on the facts and circumstances at lease commencement, for a period of at least three (3) years. The monthly lease payment is $2,250.

(6)Pera LLC has an operating lease in Henderson, Nevada.  The commercial lease agreement has a term of 60 months commencing November 2017 and the associated office space occupies approximately 2,317 square feet with escalating base monthly rent per square foot ranging between $2.45 and $2.76 over the term of the lease.  

ITEM 3:  LEGAL PROCEEDINGS

On December 13, 2019, Trendsic Corporation, Inc. (“Trendsic”), a related party entity which is 49% controlled by Joel A. Bonnette (former CEO of our wholly-owned subsidiary Bombshell Technologies, Inc.) filed a lawsuit in the 19th Judicial District Court in East Baton Rouge Parish, Louisiana against Joel A. Bonnette, Jared Bonnette, Bombshell Software, LLC and Bombshell Technologies, Inc.  The plaintiff is disputing the ownership of certain intellectual property of Bombshell Technologies, Inc. and alleging misappropriation of trade secrets of Trendsic. Trendsic is seeking an unspecified amount of damages in excess of $75,000 and treble damages under the Louisiana Uniform Trade Secrets Act, as well as injunctive relief.  The Company believes the claims by Trendsic are without merit and intends to vigorously defend against such claims. Presently the Company and Trendsic are continuing discussions regarding an amicable resolution. Bombshell has not yet answered the lawsuit but has been granted extensions of time to respond. At the time of this report, the Company is unable to determine or quantify potential losses in respect of the aforementioned action.

Other than as set out above, 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 AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Penny Stock

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer’s account.

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.

These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty selling our securities.

Market Information

Our shares of common stock are quoted by the OTC Markets Group Inc. ofon the Financial Industry Regulatory Authority, Inc. ("FINRA")OTCQB Venture Market under the symbol "GRWC".  Only a limited market exists for our common stock. There is no assurance that a regular trading market will develop, or if developed, that it will be sustained. Therefore, a stockholder may be unable to resell his securities in our Company.

On October 9, 2020, the last reported sales price per share of our common stock on the OTCQB was $1.31.

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, 20182020 and 2017.2019.  These bid prices were obtained from OTC Markets Group Inc. All prices listed herein reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not represent actual transactions.

(1)All share data reflects the impact of a one (1) for twenty (20) reverse split which became effective on July 30, 2020 

Record Holders

The number of record holders of the Company's common stock as of September 18, 2018October 7, 2020 is approximately 187224, not including an indeterminate number who may hold shares in "street name."

Common Stock DividendsDividend Policy

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-8Transfer Agent 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.Registrar

The 2015 Equity Incentive Plantransfer agent and registrar for our common stock 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 IncentiveColonial Stock Options or Non-Qualified Stock Options, as determined by the AdministratorTransfer Inc., with an address 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 date of which 1,500,000 have been exercised.66 Exchange Place, Suite 100, Salt Lake City, UT 84111.

Common and Preferred StockAuthorized Capital

The Company's authorized common stockcapital consists of 100,000,000 common550,000,000 shares, withconsisting of 500,000,000 shares of Common Stock par value of $0.001 and 5,000,00050,000,000 shares of preferred stock withPreferred Stock, par value of $0.001 per share.

$0.001.

Recent Sales of Unregistered Securities

Common Stock

Share issuances subsequent toExcept as set forth below, there were no sales of equity securities during the year ended June 30, 2018.

In Julyperiod covered by this Report that were not registered under the Securities Act and August 2018,were not previously reported in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K filed by the Company. 

On May 15, 2020 the Company commenced a private offeringissued 245,834 fully vested unregistered shares of its common stockCommon Stock to officers and directors of the Company as compensation under the terms their respective consulting contracts for services as CTO and Secretary, for the period May 15, 2020 through August 15, 2020.  The Company valued those issuances at the closing price of the Company’s Common Stock as traded on the OTCMarkets as of the date of this report raisedthe board resolution approving the issuances.

On June 2, 2020 the Company issued 23,678 fully vested unregistered shares of Common Stock to a company controlled by the spouse of one of its officers for services rendered with a value of $20,363.  The Company valued those issuances at the closing price of the Company’s Common Stock as traded on the OTCMarkets as of the date of the board resolution approving the issuance.

On June 24, 2020 the Company issued 155,000 unregistered shares of Common Stock to two companies controlled by officers and directors in respect to private placements for total gross proceeds of $1,165,000.  Approximately $900,000 of these proceeds were used to retire two mortgages on the WCS condo rental property.$155,000.

On August 2, 2018July 1, 2020 the Company issued a total of 4,000,00080,495 unregistered, restricted common shares of common stock to certain officers and directors as part of their respective employmentexecutive and/or board compensation package.

Share issuances during the fiscal year ended June 30, 2018:

The Company issued 44,010,791 shares of common stock in full satisfaction of principal and accrued interest of convertible notes issued in the fiscal year ended June 30, 2017.

During the fiscal year ended June 30, 2018, the Company issued 7,199,376 shares to employees, board members and consultants for services rendered and in settlement of certain liabilities. The Company valued thosethe issuances at the closing price of the Company’s stock as traded on the OTCMarket on the date of grant and recorded $ stock-basedthe board resolution approving the issuance of the shares.

On July 9, 2020 the Company issued 15,000 unregistered, restricted common shares to our CFO, Trevor Hall under the terms of a consulting agreement under which Mr. Hall provides services as our Chief Financial Officer. The Company valued the issuance at the closing price of the Company’s stock as traded on the OTCMarket on the date of the board resolution approving the issuance of the shares.

On July 13, 2020 the Company issued 50,000 unregistered, restricted shares of the Company’s common stock to the Company’s CEO, Terry Kennedy, as compensation of $281,981, of this amount 4,565,259for the three-month period commencing July 1, 2020. The shares were valued at $175,326werethe closing price of the Company’s Common Stock as traded on the OTCMarkets on the date of the board resolution approving the issuance of the shares.

On September 4, 2020 the Company issued 17,104 shares of unregistered, restricted common stock as compensation for services for the three month period ended August 31, 2020. The shares were valued at the closing price of the Company’s Common Stock as traded on the OTCMarkets on the date of the board resolution approving the issuance of the shares.

On October 1, 2020 the Company issued 50,000 unregistered, restricted shares of the Company’s common stock to the Company’s CEO, Terry Kennedy, concurrent with approving a three month extension to his executive compensation contract, as compensation for the three-month period commencing October 1, 2020. The shares were valued at the closing price of the Company’s Common Stock as traded on the OTCMarkets on the date of the board resolution approving the issuance of the shares.

On October 1, 2020 the Company issued a total of 106,870 unregistered, restricted common shares to officers and directors as part of their respective executive and/or board compensation package.

During the fiscal year ended June 30, 2018, the Company issued a total of 6,400,000 shares in respect to private placements at $0.03 and $0.04 per share and received cash proceeds of $232,000.

During the fiscal year ended June 30, 2018, the Company issued 4,466,667 shares to certain officers to settle accrued payroll in the amount of $134,000. The Company valued thosethe issuances at the closing price of the Company’s stock as traded on the OTCMarket on the date of issue. The difference in price resulted in the Company recording stock-based compensation inboard resolution approving the amount of $852,334.

During the fiscal year ended June 30, 2018, the Company agreed to issue 1,333,333 shares to a board member to settle advances made to the Company during the fiscal year ended June 30, 2018, in the amount of $40,000. As of June 30, 2018, those shares remain issuable. The Company treated the additionissuance of the conversion provision to the advances made by the board member as an extinguishment and new issuance in the form of a convertible note.  The Company recorded additional interest expense from the amortization in full of the discount recorded as the Company determined that a beneficial conversion feature was present in the conversion feature.  Upon conversion in December 2017, the Company recorded additional interest expense from the amortization of the beneficial conversion feature in the amount of $253,333.  These shares remain issuable as at June 30, 2018.

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 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.shares.

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, 2017.

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 and acquired 1,000,000 shares of common stock of the Company (250,000 shares remain issuable as of June 30, 2018) and remitted cash in the amount of $400,000 to the Company.

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.

All stock issuances 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 StatementsOPERATIONS

Statements made in this Form 10-K which are not purely historical are forward-looking statements with respect toThis discussion summarizes the goals, plan objectives, intentions, expectations, financial condition,significant factors affecting the results of operations future performance and businessfinancial condition of Grow Condos.   Such forward-lookingthe Company during the fiscal years ended June 30, 2020 and 2019 and should be read in conjunction with our consolidated financial statements include thoseand accompanying notes thereto included elsewhere herein. Certain information contained in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are “forward-looking statements.”  Statements that are precedednot historical in nature and which may be identified by followed by or that include the use of words "may", "would", "could", "should", "expects", "projects", "anticipates", "believes", "estimates", "plans", "intends", "targets" orlike “expects,” “assumes,” “projects,” “anticipates,” “estimates,” “we believe,” “could be” and other words of similar expressions.

Forward-lookingmeaning, are forward-looking statements.  These statements involve inherentare based on management’s expectations and assumptions and are subject to risks and uncertainties and important factors (many of which are beyond our control) that couldmay 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,expressed. Our actual results actually achieved may differ materially from expectedthe results discussed in these statements. Forward- looking statements speak only asthis section because of the date they are made. Grow Condos 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.various factors, including those set forth elsewhere herein. See “Forward-Looking Statements” included in this report.

Financial Statements

The audited consolidated financial statements which areform a part of this Report are as ofinclude results for our fiscal years ended June 30, 20182020 and 2017.2019. The consolidated financial statements include the accounts of Grow Condos,Capital, Inc., and its wholly-owned subsidiaries, WCS Enterprises, LLCResort at Lake Selmac, Inc. and Smoke on the Water,Bombshell Technologies, Inc. as of June 30, 2018.2020. 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, 20182020 and 2017.2019.

PlanRESULTS OF OPERATIONS

Results of Operations from Continuing Operations

The Company believes thatshifted its existing capital resources may not be adequatefocus to satisfy its cash requirementsthe FinTech sector during the current fiscal year and acquired an operating, revenue generating subsidiary, Bombshell Technologies, Inc.  Further, the Company divested WCS effective September 30, 2019.  While the Resort at Lake Selmac site location was classified as “held 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 financingsale” in the formfirst two quarters of mortgages, convertible notes with third parties, sales of common stock, and advances from related partiesfiscal 2020, management determined to continue to fund shortfallsoperate the property until further notice, and its operations have been returned to continuing operations in our operations. The Company estimates that it will require additional cash resources duringthe these fiscal year end financials.  During the fiscal year ended, 2020, the Resort at Lake Selmac generated reduced revenues as compared to fiscal 2019,   as we took several months to re-brand the site as a resort destination location and beyond based on its current operating planattend to minor repairs and condition.  The Company expects cash flows from operating activities to improve, primarilysite upgrades during January and February 2020. Subsequently in March 2020 the Resort remained closed as a result of increased revenues from our current and proposed operating activities, however we do not presently have enough revenuelocal state orders preventing its re-opening due to meet our 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 beCOVID 19.  The resort was able to continuereopen as of July 2020. Financial results for the  fiscal year ended June 30, 2020 are “combined” with respect to meet our obligations in the normal course. If we failoperations of Bombshell Technologies, Inc. under the requirements of ASC 850-50-45, which results impact the statements of profit and loss and statements of cash flows to generate positive cash flow or obtain additional financing, when required, we may have to modify, delay, or abandon some or allinclude operations of our business and expansion plans.Bombshell Technologies Inc. as though it had been acquired on inception.

Results of OperationsFiscal Year ended June 30, 2020 compared to Fiscal Year ended June 30, 2019

RevenuesRevenue and costs of revenue

During the fiscal year ended June 30, 2020 we generated gross revenues of $2,368,504, of which $2,051,355 was derived from related party customers, compared to $1,065,213 in the comparative fiscal year ended June 30, 2019, of which $787,919 was derived from related party customers. Costs of sales in the fiscal year ended June 30, 2020 totaled $1,267,704 of which $186,354 were costs of related party services, compared to $561,793   for the fiscal year ended June 30, 2019 of which $294,613 were costs of related party services. Gross profit for the comparative fiscal years ended June 30, 20172020 and 2016,2019, respectively wetotaled $1,100,800 and $503,420, respectively. We do not yet have recorded netsufficient revenues of $330,850to meet our ongoing operational overhead. Reported revenues in the comparative periods were generated by our wholly owned subsidiary in the FinTech sector, Bombshell which did not form and $143,441 respectively.  Our revenues increased substantially as a resultbegin operations until November 2018, and the Resort at Lake Selmac site location which provides RV and campsite services.   During the fiscal year ended June 30, 2020 and 2019, operations of the increase in operationsResort at our Lake Selmac location.contributed gross profit of

$87,578 and $145,170, while operations of Bombshell contributed gross profit of $1,013,222 and $353,231, respectively.

Operating Expensesexpenses

Our consolidated operating expenses for the fiscal years ended June 30, 20182020 and 20172019 were as follows:

Fiscal Years ended June 30, 2020 and 2019

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

During the comparative fiscal years ended June 30, 2018 and 2017, The Company experienced a substantial increase in stock-based compensation expense recorded into operating expenses from $2,782,456 during the fiscal 2017 of $($5,936) asyear ended June 30, 2019 compared to $1,134,315$3,970,746  during the current fiscal year.year ended June 30, 2020.  The increase in operating expenses is predominantly attributable to an increase in professional fees and stock-based compensation. During fiscal 2017, stock-based compensation includes shares2020 and 2019, the Company issued common stock to certain board members, employees and consultants for non-employee services and certain shares issued to directors valuedrendered at $26,081 offset byrates below market, the revaluation at timetotal combined value of vesting of an option issued to a consultant recorded inwhich was $2,058,341 for the prior fiscal year totaling $32,017, resulting in a gainended June 30, 2020 compared to $1,484,059 during the fiscal year ended June 30, 2019, which amounts are included as part of $5,936.  During fiscal 2018, stock-based compensation includes shares issued for non-employee services totaling $103,599, shares issued to officers, directorsgeneral and employees valued at $178,381 and shares issued from the conversionadministrative expenses on our statements of accrued payroll into stock to related parties of $852,334.operations. Professional fees decreasedalso increased substantially period over period from $137,214 during fiscal 2017$749,998 (2019) to $86,506 in fiscal 2018$1,233,071 (2020) as the Company was requiredundertook various corporate actions and acquisitions in the period.   General and administrative fees incurred from related parties also increased period over period from $82,470 in the fiscal year ended June 30, 2019 to re-audit prior$223,957 in the fiscal results increasingyear ended June 30, 2020 as the Company increased its 2017 professional costs, with no similar expense during the current fiscal year. During fiscal 2018 depreciation,continuing operation to include operations of Bombshell.  Depreciation, amortization and impairment declineddecreased from $125,991$121,345 (2019) to $14,624 (2020), as the Company divested certain of its owned properties in fiscal 2017 to only $61,535 in fiscal 2018 predominantly as a result of the one-time impairment recorded for Grow Condos for construction deposits and other costs related to the land purchased in March 2017 in the amount of approximately $97,800.

Total operating expenses during fiscal 2018 totaled $1,832,884 as compared to $996,203 in fiscal 2017.2020.

We expect operating expenses to increase in future periods as we continue to expand our holdings andseeking additional areas of operation to further enhance our existing revenue base, and if we continue to issue shares to settle certain accrued fees and expenses.base.

Other Expenses

Other Expenses

Other income/expenses recorded in the fiscal 2018 and 2017 totaled $980,605 and $762,093 respectively.  The substantial increase toended June 30, 2020 reflect other expenses in fiscal 2018 is directly related to amortizationincome of debt discount of $930,715$6,304 in the current fiscal year as compareda result of interest income related to only $639,107a short term loan provided by the Company to a third party, with no similar transaction in the prior comparative fiscal year. Fiscal 2018year ended June 30, 2019. Interest expenses were reduced by a gain of $25,900 with respect to a note payable on the cancelation of a property purchase option, with no comparative amount recorded in fiscal 2017.

Net lossesResort at Lake Selmac totaled $35,963 and $47,265 respectively in the fiscal years ended June 30, 20182020 and 20172019.

Net losses from continuing operations in the fiscal years ended June 30, 2020 totaled $2,482,639$2,899,605 and $1,614,855$2,326,301, respectively.

Discontinued operations

The Company sold its’ wholly owned subsidiary WCS effective September 30, 2019. The effect of the sale and operations prior to the sale are included in discontinued operations. During the fiscal years ended June 30, 2020 and June 30, 2019, the Company reported income discontinued operations of $552,852 as compared to a loss from discontinued operations of $2,395.  The income from discounted operations reported in fiscal 2020 relates primarily to the forgiveness of certain payroll liabilities and salaries by former management concurrent with the divestiture of approximately $428,000.

Net losses from continuing and discontinued operations for the fiscal years ended June 30, 2020 and 2019 totaled $2,346,753 and $2,328,696, respectively.

Liquidity and Financial Condition

Liquidity and Capital Resources

As of June 30, 2018,2020, the Company had total current assets of $388,909$774,537 and a working capital deficit of $1,494,646$269,576, compared to total current assets of $46,946$2,950,256 (including stock based compensation recorded as prepaid expenses of $1,380,459) and a working capital deficit of $2,044,044$1,766,261 as of June 30, 2017.2019. The decrease in our working capital deficit was due toprimarily a result of the eliminationdisposition of certain amounts payable with respect to convertible loan agreements during fiscal 2017, by way of issuance of common shares. Thisassets held for sale, the reduction in liabilitiesprepaid expenses, collection of a subscription receivable and a reduction in fiscal 2018 wascash,  offset by $250,868an increase in liabilities held for sale.related party receivables and promissory note receivables.

During the fiscal year ended June 30, 2018,2020, cash used byin operating activities totaled $210,449,$633,482, primarily as a result of a net loss from continuing operations of $2,482,639,$2,899,605 and a gain from discontinued operations of $552,852.  The net loss from continuing operations was offset by certain non-cash adjustments includingstock-based compensation of $2,164,782, depreciation, amortization and impairment expenses of $14,624, changes in allowance for bad debt of $35,350 and amortization of right to use assets of $3,976.  Further during the fiscal year ended June 30, 2020 we increased our accounts receivable by $60,565, our related party accounts receivable decreased by $25,199, our related party accounts payable increased by $21,551, and accounts payable increased by $70,984, while reducing our accrued expenses.  Unearned revenue also decreased in the current period.  In the fiscal year ended June 30, 2019, cash used in operating activities totaled $485,378 with a net loss from continuing operations of $2,326,301, and a loss from discontinued operations of $2,395, offset by stock-based compensation of $1,484,059, non-cash interest of $930,715,$6,612, and depreciation, amortization and impairment expenses of $61,535 as well as stock-based compensation$121,345.  During the fiscal year ended June 30, 2019 we increased our accounts receivable by $44,579, our prepaid expenses of $1,134,315.  Inby $54,567, and increased our accrued expenses by $122,468. Our related party accounts receivable increased by $270,805, while our accounts payable increased by $306,432 and our related party accounts payable increased by $118,912.  Unearned revenue also increased in the fiscal 2017 cash usedyear ended June 30, 2019 by operating activities totaled $533,550, primarily as a result of a net loss from operations of $1,614,855, offset$16,570, and deferred income tax assets increased by certain non-cash adjustments including non-cash interest of $655,898, and depreciation, amortization and impairment expenses of $125,991. $31,800.

Net cash used inprovided by investing activities in the fiscal year ended June 30, 2019 was $25,761 in fiscal 2018$9,983, as compared to $268,107net cash used of $27,681 in the fiscal year ended June 30, 2020.  Increase to cash due from related party in the fiscal year ended June 30, 2020 totaled $16,854 as compared to $23,415 in the prior comparative fiscal year ended June 30, 2019.  During the most recent fiscal year ended June 30, 2020 the Company loaned a third party $100,000 on a one-year promissory note and received cash from the acquisition of Bombshell of $43,975, with no similar transactions in the prior fiscal year ended June 30, 2019. The loan receivable was offset in fiscal 2017, primarily as a result2020 by repayments from the borrower of $11,490.  Results for the fiscal year ended June 30, 2019 also include the purchase of certain propertyequipment of $13,232 and the acquisition of intangible assets of $200 with no similar transactions in the fiscal 2017 totaling $300,107 as compared to only $37,993 in fiscal 2018.year ended June 30, 2020.

Net cash provided by financing activities was $236,295$1,822,705 in the fiscal 2018year ended June 30, 2019 as compared to $787,576$429,754 in fiscal 2017.2020.  During the current fiscal year ended June 30, 2020, the Company closed private placements for total proceeds of $355,000, compared to total proceeds of $1,765,000 during the comparable fiscal year ended June 30, 2019.  Cash from financing activities in the fiscal year ended June 30, 2020 was offset by a repayment to a related party of $66,195 in the current year, as compared to proceeds from a related party of $66,195 in the prior comparative fiscal year ended June 30, 2019. The Company reduced its promissory note on the Resort at Lake Selmac property by $9,051 and $8,490 respectively during the fiscal years ended June 30, 2020 and 2019. During fiscal 20182020 the Company received proceeds from private placements of $232,000, proceeds from related party advances of $45,000 which amounts were offset by mortgage repayments. Duringrecorded a subscription receivable, with no similar transactions in fiscal 2017 the Company received proceeds from convertible notes of $440,000 and proceeds from the exercise of options totaling $400,000, offset by certain mortgage repayments and repayments to related parties.2019.  

Going ConcernNet cash used by discontinued activities totaled $833,796 in the fiscal year ended June 30,2019, as compared to cash used by discontinued activities of $5,260 in the fiscal year ended June 30, 2020.

AtGoing Concern 

During the fiscal year ended June 30, 20182020 and June 30, 2017,2019, the Company reported a net loss of $2,482,639$2,346,753 and $1,614,855,$2,328,696, respectively. AsWorking capital deficit totaled approximately $269,576 with approximately $246,761 of cash on hand.  Cash used in operations was in excess of this amount for the year ended June 30, 2020. The Company believes that as of June 30, 2018, we had a net working capital deficit of approximately $1,494,646 and cash available of only approximately $14,000. The Company believes that2020 its existing capital resources are not adequate to enable it to fully execute its business plan. These conditions raise substantial doubt asWhile the Company successfully acquired a second operating business subsequent to the Company's abilityfiscal year end, including additional operations complementary to continue as a going concern. The Company estimates that itits recently acquired subsidiary, Bombshell Technologies, management believes we will require additional cashcapital resources duringto fully implement our business plan, which includes the acquisition of additional operations.  While the Company`s subsidiary provided approximately $1,100,000 in gross profit to offset operational overhead in the period, revenues are presently not sufficient to meet the Company’s ongoing expenditures. The Company is actively working to increase the customer base and gross profit in Bombshell Technologies in order to achieve net profitability by the close of fiscal year 20192021. The addition of another operating entity subsequent to June 30, 2020, is expected to contribute additional gross profits to offset operational overheads. The additional growth plans include the acquisition of several new customers, an increase to the users currently subscribed to our software, as well as increased sales of customization services to new and beyond basedexisting customers. The Company intends to rely on its current operating plansales of our unregistered common stock, loans and condition. In July and August 2018,advances from related parties to meet operational shortfalls until such time as we achieve profitable operations.   If the Company began a private placement of its common shares and raised gross proceeds of approximately $1,165,000.  The Company used approximately $900,000 of these proceeds from the private placements to retire the two mortgages held on the WCS condo property (see Note 7 to the audited financial statements contained herein).  In addition, in September 2018, the Company completed the sale of its land held in the Pioneer Business Park (see Note 4 to the audited financial statements contained herein).  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.  These actions have reduced the working capital deficit below $500,000.  The Company expects cash flows from operating activities to improve marginally in 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 failfails to generate positive cash flow or obtain additional financing, when required weand on acceptable terms, the Company may have to modify, delay, or abandon some or all of ourits business and expansion plans, and potentially cease operations altogether. Consequently, the aforementioned items raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The accompanying consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern.

Covid-19 Pandemic

The recent COVID-19 pandemic could have an adverse impact on our ongoing operations. To date the Company’s primary operating segment, Bombshell, has not experienced a decline in sales as a result of the impact of COVID 19. The Company’s operations in the FinTech sector are carried out with a limited amount of person to person contact and we do not expect an impact on these operations as a result of COVID 19, however, the full effect of the COVID-19 outbreak continues to evolve as of the date of this report, is highly uncertain and subject to change. Operations of the Company’s Resort at Lake Selmac property were delayed until July 2020 when the government permitted the resort to reopen.  Management does not expect the delay in opening the resort for the 2020-2021 season to substantially impact profitable operations for this business in the long term. Management is actively monitoring the

situation but given the daily evolution of the COVID-19 outbreak, the Company is not able to estimate the effects of the COVID-19 outbreak on its operations or financial condition in the next 12 months. While significant uncertainty remains, the Company does not believe the COVID-19 outbreak will have a negative impact on its  ability to raise additional financing, conclude the acquisition of targeted business operations or reach profitable operations.

Off-Balance Sheet Arrangements

We hadhave no off-balance sheet arrangementsarrangements.

Critical Accounting Policies and Estimates

The preparation of any kindour financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments which are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of their evaluation form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions and circumstances. Our significant accounting policies are more fully discussed in the Notes to our Financial Statements; however, we have identified below certain policies that have substantial impact on our financial reporting:

Accounts Receivable and Allowance for Doubtful Accounts

The Company determines the allowance for doubtful accounts by considering a number of factors, including the length of time the accounts receivable are beyond the contractual payment terms, previous loss history, and the customer’s current ability to pay its obligation. When the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, the Company records a charge to the allowance to reduce the customer’s related accounts. At June 30, 2020, the allowance for doubtful accounts totaled approximately $35,350.

Leases

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02 – Topic 842 Leases. ASU 2016-02 requires that most leases be recognized on the financial statements, specifically the recognition of right-to-use assets and related lease liabilities, and enhanced disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The standard requires using the modified retrospective transition method and apply ASU 2016-02 either at (i) latter of the earliest comparative period presented in the financial statements or commencement date of the lease, or (ii) the beginning of the period of adoption. The Company has elected to apply the standard at the beginning period of adoption, July 1, 2019 which resulted in no cumulative adjustment to retained earnings. On July 30, 2018, the FASB issued ASU 2018-11 to provide entities with relief from the costs of implementing certain aspects of the new leasing standard, ASU 2016-02 (codified as ASC 842). Specifically, under the amendments in ASU 2018-11: (i) Entities may elect not to recast the comparative periods presented when transitioning to ASC 842 (Issue 1), and (ii) Lessors may elect not to separate lease and nonlease components when certain conditions are met (Issue 2).  

The Company has elected to apply the short-term scope exception for leases with terms of 12 months or less at the inception of the lease and will continue to recognize rent expense on a straight-line basis. As a result of the adoption, on July 1, 2019, the Company recognized a lease liability of approximately $291,753, which represented the present value of the remaining minimum lease payments using an estimated incremental borrowing rate of 6.75%. As of July 1, 2019, the Company recognized a right-to-use asset of approximately $289,089 million. Lease expense did not change materially as a result of the adoption of ASU 2016-02.

Share-based compensation

The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. Unregistered stock awards are measured based on the fair market values of the underlying stock on the dates of grant. For service type awards, share-based compensation expense is recognized

on a straight-line basis over the period during which the employee is required to provide service in exchange for the entire award. For awards that vest or begin vesting upon achievement of a performance condition, the Company estimates the likelihood of satisfaction of the performance condition and recognizes compensation expense when achievement of the performance condition is deemed probable using an accelerated attribution model.

The Company capitalizes the cost of issuance grants that cover a period of employment or consulting agreement under contract or performance obligation related to future performance and amortizes the compensation related to these contracts ratably over the period of employment or at percentage of completion or other appropriate method for future performance grants. There were no issuance grants outstanding with a performance term longer than one year at June 30, 2020 and June 30, 2019.  Prepaid expenses for the fiscal year ended June 30, 20172020 and 2016.fiscal year ended June 30, 2019 include unamortized costs of issuance grants under employment and consulting contracts totaling $0 and $1,380,459, respectively.  

Revenue Recognition under ASC 606

The Company has adopted accounting standard, ASC 606 “Revenue from Contracts withCustomers” and all related amendments to the new accounting standard to contracts.

Revenues from contracts with customers are recognized when control of promised goods and services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

The Company recognizes revenue using the five-step model as prescribed by ASC 606:

When a contract with a customer is signed, the Company assesses whether collection of the fees under the arrangement is probable. The Company estimates the amount to reserve for uncollectible amounts at the end of each reporting period based on the aging of the contract balance, current and historical customer trends, and communications with its customers. These reserves are recorded against the related accounts receivable.

The transaction price is the consideration that the Company expects to receive from its customers in exchange for its products or services. In determining the allocation of the transaction price, the Company identifies performance obligations in contracts with customers, which may include subscriptions to software and services, support, professional services and customization.  In the case of the Company’s software contracts and support services prices are predetermined based on the specific terms of the contract either in flat fee customization/license fee charges or as hourly support and/or software customization charges. Charges relative to license fees are amortized over the term of the license. Charges relative to customization of the software are charged over the term of the scope of work on a percentage of completion basis. Charges relative to support and ongoing services and professional fees are charged when incurred and control has been transferred or the work has been completed.

License fees and customization of software

License and implementation fees are charged as flat fees which are amortized over the term of the contract.  For contracts with elements related to customized software solutions and certain build-outs or software systems that require significant modification or customization, the Company will recognize revenue using the percentage-of-completion method. In using the percentage-of-completion method, revenues are generally recorded based on completion of milestones under a scope of work or based on total estimated cost of work and percentage completion as at the balance sheet date.

Software Revenue

The Company generates software revenue monthly on a single fee per subscribed user basis.  The Company recognizes software revenue monthly on a per user for each user that is able to deploy software and provided all revenue recognition criteria have been met. If the revenue recognition criteria has not been met, the revenue is deferred or not recognized.

Customization, support and maintenance

Revenue from the Company’s customization of software to meet a particular client’s needs is recognized on a percentage of completion basis over the term of the customization work and until control of the goods or services is transferred to the customer or such date the customer agrees the scope of work has been completed and the intended functionality of the software is complete and able to perform the desired service.  Support and maintenance revenue is generated from recurring monthly support and is invoiced monthly based on hourly fees at predetermined rates based on each customer contract. 

The Customer is credited a certain number of services hours monthly based on the numbers of users actively subscribed to the software which amounts offset any monthly user fees.

Support and maintenance services include e-mail and telephone support, unspecified rights to software fixes and product updates and upgrades and enhancements available on a when-and-if available basis.

Professional services and other

Professional services and other revenue is generated through services including onsite training, product implementation and other similar services.  Professional services are generally flat fee services based on a number of hours or scope of work for each specific service. Depending on the services to be provided, revenue from professional services and other is generally recognized at the time of delivery when the services have been completed and control has been transferred.

Unearned Revenue

Unearned revenue represents billings or payments received in advance of revenue recognition and is recognized upon transfer of control. Balances consist primarily of license fees being amortized over the term of the customer contract and customization services which have not yet been concluded and are being deferred using the percentage-of-completion method.

Campground space rentals and concession sales

Revenues from our campsite operations from the sales of concession items, equipment rentals or campsite locations are recoded on the cash basis due to the nature of collection of campsite fees and concession items, which occur daily as the site is rented and sundry items are purchased.   

Recent Accounting Pronouncements

There were various accounting standards and interpretations issued recently, none of which are expected to have a material effect on the Company’s operations, financial position or cash flows. Refer to Note 2 – Summary of Significant Accounting Policies in the Audited yearend financial statements included herein.

ITEM 7A:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

NotAs a "smaller reporting company", the Company is not required for smaller reporting companies.to provide the information required by this Item.

ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 TABLE OF CONTENTS FOR FINANCIAL STATEMENTS 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors

and
Stockholders of Grow Condos,Capital, Inc.

Opinion on theConsolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Grow Condos, Inc.Capital and its subsidiaries (the “Company”) as of June 30, 20182020 and 2017,2019, and the related consolidated statements of operations, stockholders’ deficitequity (deficit), and cash flows for each of the two years ended June 30, 2018 and 2017,2020, and the related notes (collectively referred to as the “financial statements”)consolidated financial statements). In our opinion, the consolidated financial statements referred to above, present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 20182020 and 2017,2019, and the results of its operations and its cash flows for each of the two years then ended June 30, 2020, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph –on Going Concern

The accompanyingaccompany consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  As more fully describeddiscussed in Note 2,1 to the Company has incurredconsolidated financial statements, the Company’s significant operating losses and has an accumulated deficit of $45,336,236 as of June 30, 2018 and needs to raise substantial amounts of additional funds to meet its obligations. These conditions raise substantial doubt about the Company'sits ability to continue as a going concern.  Management'sManagement’s plans in regardregards to these mattersthis uncertainty are also describedincluded in Note 2.1 to the consolidated financial statements.  The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the  Company changed the manner in which it accounts for revenue recognition in accordance with the adoption of accounting standards Codification (“ASC”) 606 Revenue from Contracts with Customers and how it accounts for operating leases with the adoption of ASC 842 Leases.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on the Company'sCompany’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")(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 consolidated 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'sCompany’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 consolidated 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 consolidated 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 consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ LJL J Soldinger Associates, LLC

Deer Park, IL

October 12, 2018

We have served as the Company’s auditor since 2017.2017

Deer Park, Illinois United States of America

October 13, 2020

The accompanying notes are an integral part of these audited consolidated financial statements.

GROW CAPITAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

The accompanying notes are an integral part of these audited consolidated financial statements.

GROW CAPITAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders Equity (Deficit)

The accompanying notes are an integral part of these audited consolidated financial statements.

GROW CAPITAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Cash Flows

The accompanying notes are an integral part of these audited consolidated financial statements.