UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: June 30, 2016
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from:
Commission File Number: 000-53548
GROW CONDOS, INC.
(Exact name of registrant as specified in its charter)
Nevada | 86-0970023 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
722 W. Dutton Road
Eagle Point, OR 97524
(Address of principal executive offices)
541-879-0504
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.001
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange 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. (1) Yes [X] No [ ] (2) YesNo [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website,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.files). Yes [X][ ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to itemItem 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, or a smaller reporting company:
Large accelerated filer | Accelerated | o | |
Non-accelerated filer | o | Smaller reporting company | |
Emerging growth company | x |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes [ ] No [X]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second quarter.
The market value of the voting and non-voting common stock held by non-affiliates totaled $4,870,728$60,433,762 based upon a valuation of $1.40$1.14 per share, that being the closing price on JuneonDecember 30, 2016, the2016the last business day of the registrant's most recently completed fourthsecond 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 August 2, 2016,April 18, 2018, 2018, the registrant had 28,789,92488,926,057 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
See Part IV, Item 15.
PART I
FORWARD LOOKING STATEMENTS
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. Description of Business
History
Grow Condos, 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.
WCS Enterprises
Our wholly-owned subsidiary, WCS Enterprises, LLC ("WCS Enterprises") is an Oregon limited liability company which was formed on September 9, 2013 and was acquired by us in June 2014 in exchange for shares of our common stock. The acquisition of WCS Enterprises resulted in a change of control of the Company and at or shortly after the closing of such acquisition, the persons designated by WCS Enterprises became the officers and directors of the Company. As a result of our acquisition of WCS Enterprises in June 2014, we became engaged in the realbusiness of being areal estate purchaser, developer and manager of specific use industrial properties business.
WCS Enterprises Business Operations
Through WCS Enterprises, we are a real estate purchaser, developer and manager of specific use industrial properties 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.
3Smoke on the Water, Inc.
Smoke on the Water, Inc., was incorporated on October 21, 2016, in the State of Nevada and is a wholly owned subsidiary.
Smoke on the Water Business Operations
Smoke on the Wateris designed to capitalize on the country's growing level of recreational marijuana acceptance. The company plans to engage in a roll up strategy for this highly-fragmented industry and provide turn-key solutions for Marijuana-friendly campgrounds and resorts. The company has strategized to initially develop the property through acquisition, subsequently rebranding the existing RV business to represent the Smoke on The Water brand. Upon project launch, the Company plans to provide fully functional vacationing solutions to campground operators and owners seeking to fill the growing demand for stress free and acceptable vacationing for the pro-personal choice and marijuana smoking community.
On March 7, 2017, Smoke on the Water, Inc. executed a Real Estate Purchase Agreement to acquire the Lake Selmac Resort located at 2700 Lakeshore Drive, Selma, Oregon.
Owned Properties
We have secured real estate in Eagle Point in Jackson County, Oregon representing our sole condominium operating location. 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 to one tenant.
Further we have acquired real estate 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.
We also own a parcel of land located within the Pioneer Business Park near Eugene OR, which is currently listed for sale.
Sales & Leasing
We develop, lease, own and provide investment sales opportunities for commercial industrial properties focused in the cannabis production arena. The company has relationships with tenants, brokers and investors across the
cannabis industry to leverage successful transactions for both lease-to-own option as well as investors looking to purchase facilities with qualified tenants providing positive cash-flow backed by commercial property.
Tourist Recreation and site rentals
During fiscal 2017 we acquired our first cannabis businessesfriendly tourist destination with turnkey cultivation and processing management services,the purchase of Lake Selmac Resort where we offer facilities including facility design, licensing support, and the operational management required to produce premium cannabis and related products in an efficient manner to allow the user quicker access to market and professional-managed facilities.
Supplies and Equipment
We intend in the future, to provide operators state-of-the art equipment and methodology to provide efficient implementation for clientto assistclients to realize stabilized operations faster.
Financing
We intend in the future, to assist tenants with financing for space build-out as well as acquisition of commercial property.
Marketing
Our initial marketing will be aimed at attracting customers through networking with real estate agencies, agents, commercial brokers and consulting groups that are involved in the cannabis industry. We will target specific trade shows, conferences and seminars associated with cannabis growers. As our capital for marketing is very limited we are reviewing the cost of advertising on the radio or in print or running ads on certain cannabis industry online websites.
Employees
We currently have four employees two employees eachof whom are officers of the Company and one of whom is an officer of the company.employed part time. Our employees are not represented by unions and we consider our relationship with our employees to be good.
Facilities
Our office is located at 722 W. Dutton Rd, Eagle Point, Oregon 97524 and is in the building that we own. We currently pay no rent. We believe this facility will be adequate for our needs for the next twelve months.
Competition
Commercial real estate:
The commercial real estate market is highly competitive. We believe finding properties that are zoned 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 aeroponicaeroponics agricultural grow operations. It plans to operate primarily in Arizona, Illinois, Nevada, and Colorado.
MJ Holdings, Inc. – MJ Holdings, Inc. acquires and leases real estate to licensed marijuana operators, including but not limited to providing complete turnkey growing space and related facilities to licensed marijuana growers and dispensary owners. Additionally, MJ Holdings plans to explore ancillary opportunities in the regulated marijuana industry.
Home Treasure Finders, Inc. – Home Treasure Finders, Inc. is engaged in a real estate lead referral business in Colorado. It focuses on buying and selling properties; and leasing its real estate properties to cannabis growers for cannabis cultivation. The company also manages 55 rental units. Home Treasure Finders, Inc. was founded in 2008 and is based in Denver, Colorado. Advanced Cannabis Solutions, Inc. – Advanced Cannabis Solutions, Inc. a development stage company, focuses on providing real estate leasing services to the regulated cannabis industry in the United States. It plans to purchase real estate assets; and lease growing space and related facilities to licensed marijuana growers and dispensary owners for their operations. The company was founded in 2013 and is headquartered in Colorado Springs, Colorado.
Cannabis friendly resort properties:
There are currently 29 states in the U.S. that have legalized medical marijuana and 8 states in the U.S. that permit adult cannabis usage and have adopted laws which govern and permit recreational usage of cannabis on private property and by adults over the age of 21. Oregon, Washington and Colorado are three such states.
The market for cannabis friendly resort properties in those states with recreational cannabis usage laws is small but growing. Presently we have identified only a handful of locations which we believe are competitive to our business model. Management believes there is substantial room for expansion in this particular field of operation with roll up of privately held resort and campground locations in this burgeoning leisure property space:
(1)Wilderness Bud and Breakfast San Juan National Forest, Pagosa Springs, CO
(2)CanyonSide Campground, Fort Collins, CO
Family owned and operated campground located in the Poudre Canyon, along the Cache La Poudre River. Property has five furnished cabins, ten RV sites with hook-ups and large tenting area. Property is located between Fort Collins and Walden, Colorado.
Further there are various locations in Washington and Colorado which have been identified by The Travel Joint http://thetraveljoint.com/cannabis-camping/ as being friendly to edibles as opposed to smoking cannabis, which have not been included in our competitive analysis.
Government Regulation
Currently, there are approximately twenty states plus the District of Columbia that have laws and/or regulations that recognize in one form or another legitimate medical uses for cannabis and consumer use of cannabis in connection with medical treatment. Fifteen other states are considering legislation to similar effect. As of the date of this writing, the policy and regulations of the Federal government and its agencies is that cannabis has no medical benefit and a range of activities including cultivation and use of cannabis for personal use is prohibited on the basis of federal law and may or may not be permitted on the basis of state law.
The Department of Justice governs the use of cannabis under the Controlled Substances Act (CSA). Schedule 21 of the U.S. Code includes five established schedules of controlled substances known as schedules I, II, III, IV, and V. The Department of Justice has mandated that schedules established by this section shall be updated and republished on a semi-annual basis during the two-year period beginning one year after October 27, 1970, and shall be updated
and republished on an annual basis thereafter. Schedule I includes cannabis in its listing. Substances included in Schedule I have the following characteristics:
(A) The drug or other substance has a high potential for abuse;
(B) The drug or other substance has no currently accepted medical use in treatment in the United States;
(C) There is a lack of accepted safety for use of the drug or other substance under medical supervision.
On January 4, 2018 the office of the Attorney General published a memo 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.”
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 for smaller reporting companies.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None
ITEM 2: PROPERTIES
(1)We own a building at 722 W. Dutton Road, Eagle Point, OR 97524 representing our first operating location for 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, to one tenant that is a related party.
We maintain our corporate offices in the building.
(2)In April 2016, the fourth quarter, we closed escrow on our second development project locatedCompany purchased a parcel of land near Eugene, Oregon within the Pioneer Business Park from a private seller in Eugene, Oregon. We have filed development plans with the cityamount of Eugene.$326,629 plus closing costs. The property is on 2.65 acres located in the Pioneer Business Park. The plan isoriginal 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.
(3)In March 2017, the Company acquired a RV and campground park in Selma, Oregon. The sellerproperty is carryinglocated just 20 miles of Grants Pass, Oregon and 2.5 miles east of the note onRedwood Highway in Selma, Oregonand is known as the property.Lake Selmac Resort. The note isResort facilities include fishing, swimming, boating, and in the amount of $267,129.00 at 5% per annum. Interest is being paid at the amount of $1,335.65 on the first of each month until October 1, 2017, or the date on which site workaddition to RV parking, has tent camping & cabin locations established for construction begins, whichever occurs first, at which time the full principal balance and any accrued interest will be due and payable.
ITEM 3: LEGAL PROCEEDINGS
The Company is not the subject of any pending legal proceedings and, to the knowledge of management, no proceedings are presently contemplated.
ITEM 4: MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our shares of common stock are quoted by the OTC Markets Group Inc. of the Financial Industry Regulatory Authority, Inc. ("FINRA") under the symbol "GRWC". Set forth below are the high and low closing bid prices for our common stock for each quarter of 2013 through 2015.the last two fiscal years ended June 30, 2017 and 2016. These bid prices were obtained from OTC MarketsGroup Inc. All prices listed herein reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not represent actual transactions.
| Period | High | Low |
| January 1, 2013 through March 31, 2013 | $ 0.25 | $ 0.15 |
| April 1, 2013 through June 30, 2013 | $ 0.24 | $ 0.15 |
| July 1, 2013 through September 30, 2013 | $ 0.48 | $ 0.11 |
| October 1, 2013 through December 31, 2013 | $ 0.40 | $ 0.10 |
| January 1, 2014 through March 31, 2014 | $ 0.75 | $ 0.29 |
| April 1, 2014 through June 30, 2014 | $ 0.75 | $ 0.40 |
| July 1, 2014 through September 20, 2014 | $ 1.25 | $ 0.68 |
| October 1, 2014 through December 31, 2014 | $ 0.95 | $ 0.52 |
| January 1, 2015 through March 31, 2015 | $ 0.50 | $ 0.30 |
| April 1, 2015 through June 30, 2015 | $ 0.26 | $ 0.09 |
| July 1, 2015 through September 20, 2015 | $ 2.40 | $ 1.00 |
| October 1, 2015 – December 31, 2015 | $ 2.20 | $ 0.62 |
| January 1, 2016 through March 31, 2016 | $ 0.62 | $ 0.22 |
| April 1, 2016 through June 30, 2016 | $ 2.30 | $ 0.55 |
Period | High | Low |
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July 1, 2015 through September 30, 2015 | $ 2.40 | $ 1.00 |
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October 1, 2015– December 31, 2015 | $ 2.20 | $ 0.62 |
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January 1, 2016 through March 31, 2016 | $ 0.62 | $ 0.22 |
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April 1, 2016 through June 30, 2016 | $ 2.30 | $ 0.55 |
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July 1, 2016 through September 30, 2016 | $ 1.55 | $ 0.70 |
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October 1, 2016 through December 31, 2016 | $ 1.92 | $ 0.61 |
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January 1, 2017 through March 31, 2017 | $ 1.35 | $ 0.89 |
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April 1, 2017 through June 30, 2017 | $ 1.12 | $ 0.55 |
Holders
The number of record holders of the Company's common stock as of the date of this ReportApril 18, 2018 is approximately 184 not183not including an indeterminate number who may hold shares in "street name."
Common Stock Dividends
The Company has not declared any cash dividends with respect to its common stock and does not intend to declare dividends in the foreseeable future. There are no material restrictions limiting, or that are likely to limit, our ability to pay dividends on our common stock.
Securities Authorized for Issuance Under Equity Compensation Plans
Options
Equity Incentive Stock Option Plan. During the year endedPlan
In December 31, 20102015, the Company increasedadopted the number2015 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 available forgranted 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 2001 Incentive Plan.
Stock OptionPlan
In December 2015, the Company adopted the 2015 Stock Plan by 550,000 options. Under(“Stock Plan”). As a condition of adoption of the 2001 Non-QualifiedStock Plan, the Company may grant optionsentered into a registration statement on Form S-8 and covered the shares issued under the plan, which registration statement was filed in December 2015. The Stock Plan allows for the issuance up to 2,850,000a maximum of 2 million shares of common stock. The maximum termstock of the options was five years, and they vested at various times accordingCompany. 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 Option Agreements. Under the 2001 Incentive Stock Option Plan, the Company may grant options for up to 2,000,000 shares of common stock. The maximum term of the options is five years and they vested at various times according to the Option Agreements.
The 2015 Equity Incentive Plan is designed to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to employees, directors and consultants and to promote the success of the Company's business. Options granted under the Plan may be Incentive Stock Options or Non-Qualified Stock Options, as determined by the Administrator at the time of grant. Stock purchase rights may also be granted under the Plan. The maximum aggregate number of shares which may be issued upon exercise of such Options or Stock Purchase Rights is two million (2,000,000) shares of Common Stock. The term of the option is five (5) years from the grant date of such shorter term as may be provided in the Option Agreement. The Plan become effective upon initial Board adoption and continues until terminated but in no case longer than ten (10) years. The Company had granted an option for the purchase of two million shares to date of which 1,500,000 have been exercised.
Common and Preferred Stock
The Company's authorized common stock consists of Unregistered Securities
Reverse Stock Split:
Our board of directors and the holders of a majority of the shares of Common Stock entitled to vote thereon have adopted a resolution authorizing, but not requiring, a reverse split of our common stock at a ratio of 1-for-20. As a result of such reverse stock split, which was affected on November 16, 2015, the numberstock split has been recognized retroactively in the stockholders’ equity accounts as of October 22, 1999, the date of our inception, and in all shares and per share data in the financial statements included herein.
Recent Sales of Unregistered Securities
Common Stock
Share issuances subsequent to the year ended June 30, 2017.
Subsequent to June 30, 2017 the Company issued a total of 44,010,791 shares of common stock upon conversion of the principal and outstanding was decreased from 44,780,879unpaid interest accrued on its convertible notes and issueda total of 13,870,692 shares of common stock to 2,309,044 with all fractionalmembers of the Board, employees and consultants for compensation.
In April 2018, the Company sold 500,000 shares rounded up.
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.
The Company issued 902,163 shares of common stock in full satisfaction of principal and accrued interest of convertible notes issued in the fiscal year ended June 30, 2016.
The Company issued 50,000 shares of common stock as partial payment of the purchase price for the RV and Campground in Selma, Oregon.
In the year ended June 30, 2017, a holder exercised options (see below) and acquired 1,000,000 shares of common stock of the Company and remitted cash in the amount of $400,000 to the Company.
Share issuances during the fiscal year ended June 30, 2016:
During the year ended June 30, 2016, the Company issued 1,191,364 shares to employees, board members and consultants for services rendered. The Company valued those issuances on the closing price of the Company’s stock as traded in the other-the-counter market on the date of grant.
In September 2015, the Company and its former attorneys entered into a settlement of outstanding invoices due, in which the attorneys agreed to accept 45,000 shares of the Company’s common stock in full satisfaction of the $71,469 owed as of that date.
Preferred Stock
The Company has been used whollydesignated a Series A Convertible Preferred Stock (the "Series A Preferred"). The number of authorized shares totals 5,000,000 and the par value 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 operations.
In December 2015, the board of directors of the Company granted the CEO and board member 5,000,000 shares of Series A preferred stock, which upon receipt were immediately converted by the holders into 25,000,000 shares of common stock of the Company. The Company valued this issuance at $25 million, based upon the closing price of the common stock on date of grant of the Series A Preferred Shares.
All stockissuances discussed in this section under the heading Recent Sales of Unregistered Securities, were exempt from the registration requirements of Section 5 of the Securities Act of 1933 pursuant to Section 4(2) 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.
ITEM 6: SELECTED FINANCIAL DATA
Not required for smaller reporting companies.
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Forward-looking Statements
Statements made in this Form 10-K which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and business of Grow Condos. Such forward-looking statements include those that are preceded by, followed by or that include the words "may", "would", "could", "should", "expects", "projects", "anticipates", "believes", "estimates", "plans", "intends", "targets" or similar expressions.
Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: general economic or industry conditions nationally and/or in the communities in which we conduct business; legislation or regulatory requirements, including environmental requirements; conditions of the securities markets; competition; our ability to raise capital; changes in accounting principles, policies or guidelines; financial or political instability; acts of war or terrorism; and other economic, competitive, governmental, regulatory and technical factors affecting our operations, products, services and prices.
Accordingly, results actually achieved may differ materially from expected results in these statements. Forward- looking statements speak only as of the date they are made. Grow 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.
Financial Statements
Theconsolidated financial statements which are a part of this Report are as of June 30, 2016,2017 and for2016.Theconsolidated financial statements include the period from July 1, 2015 throughaccounts of Grow Condos, Inc., and its wholly-owned subsidiaries, WCS Enterprises, LLC and Smoke on the Water, Inc. as of June 30, 2016 (the "Relevant Period"). The consolidated financial statements are those2017. All significant intercompany accounting transactions have been eliminated as a result of WCS for the results of operations because of the reverse acquisition. consolidation.
Following is management's discussion and analysis of those financial statements.
Plan of Operations
The consolidated financial statements demonstrate a loss from operationsCompany believes that its existing capital resources may not be adequate to satisfy its cash requirements for the Relevant Period of $1,496,455; and non-cash expense of $28,228 in depreciation expense.
Results of Operations
Revenues
During the fiscal years ended June 30, 2017 and 2016, respectively we have recorded net revenues of $143,441 and $106,533 respectively.
Operating Expenses
Our consolidated operating expenses for the fiscal years ended June 30, 2017 and 2016 were as follows:
Operating expenses |
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Cost of revenues |
|
| 12,755 |
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| - |
General and administrative |
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| 494,156 |
|
| 29,220,657 |
Sales and marketing |
|
| 226,087 |
|
| 205,035 |
Professional fees |
|
| 137,214 |
|
| 70,372 |
Depreciation, amortization and impairment |
|
| 125,991 |
|
| 310,840 |
Total operating expenses |
|
| 996,203 |
|
| 29,806,904 |
|
|
|
|
|
|
|
Our general and administrative expenses include rent, telephone, internet services, banking charges, salaries, stock based compensation, consulting fees and miscellaneous office costs.
During the comparative fiscal years ended June 30, 2017 and 2016, The Company experienced a substantial decrease in general and administrative expenses as a result of stock based compensation expense recorded in fiscal 2016 of $28,862,140 as compared to ($5,936) during the current fiscal year. Included in stock based compensation in the fiscal year ended June 30, 2016 was $25,000,000 in compensation associated with the issuance of 5,000,000 preferred shares to directors as compensation, as well as an additional $3,862,140 in expenses recorded relative to shares issued for non-employee services, common shares issued to directors as compensation, and certain stock options granted. During fiscal 2017, stock based compensation includes shares issued for non-employee services and certain shares issued to directors valued at $26,081 offset by the revaluation at time of vesting of an option issued to a consultant recorded in the prior fiscal year totaling $32,017, resulting in a gain of $5,936. Professional fees increased from $70,372 during fiscal 2016 to $137,214 in fiscal 2017 as the Company operatingwas required to re-audit its fiscal 2016 results, and also reported increased legal fees year over year. Depreciation, amortization and impairment declined from $310,840 in fiscal 2016 to only $125,991 in fiscal 2017 as a result of management’s impairment testing of certain land and condominium tenant building operations of WCS at the close of fiscal 2016, resulting in a one time write down of $282,600, with an industryimpairment recorded for Grow Condos for construction deposits and other costs related to the land purchased in March 2017in the amount of approximately $97,800.
Total operating expenses during fiscal 2017 totaled $996,203 as compared to $29,806,904 in fiscal 2016.
We expect operating expenses to increase in future periods as we continue to expand our holdings and our revenue base.
Other Expenses
Other expenses recorded in fiscal 2017 and 2016 totaled $762,093 and $97,844 respectively. The substantial increase to other expenses in fiscal 2017 is directly related to amortization of debt discount of $639,107 in the current fiscal year as compared to only $49,937 in the prior comparative fiscal year.
Net losses in the fiscal years ended June 30, 2017 and 2016 totaled $1,614,855 and $29,798,215 respectively.
Liquidity and Capital Resources
|
| At June 30, 2017 |
| At June 30, 2016 |
| ||||
|
|
|
|
|
| ||||
Current Assets |
|
| $ | 46,946 |
|
| $ | 59,551 |
|
Current Liabilities |
|
|
| 2,075,990 |
|
|
| 535,709 |
|
Working Capital Deficit |
|
| $ | (2,029,044 | ) |
| $ | (476,158 | ) |
As of June 30, 2017, the Company had total current assets of $46,946 and a working capital deficit of $2,029,044 compared to total current assets of $59,551 and a working capital deficit of $476,158 as of June 30, 2016. The increase in our working capital deficit was due to a substantial increase in our accrued liabilities of $291,301 which allowed us to continue ongoing operations, as well as a substantive increase to short term mortgages of $827,322 as we acquired additional property during the current year and one of our mortgages is now due within the 12 months following June 30, 2017. The Company also entered in certain convertible loan agreements during the most recent fiscal year which further increased our current liabilities.
During the fiscal year ended June 30, 2017, cash used by operating activities totaled $533,550, primarily as a result of a net loss from operations of $1,614,855, offset by certain non cash adjustments including non-cash interest of $655,898, and depreciation, amortization and impairment expenses of $125,991. In fiscal 2016 cash used by operating activities totaled $316,357 with a net loss from operations of $29,798,215 offset by non cash adjustments including stock based compensation of $28,862,140, non-cash interest of $49,937 and depreciation, amortization and impairment expenses of $310,840.
Net cash used in investing activities was $268,107 in fiscal 2017 as compared to $22,322 in fiscal 2016, primarilyas a result of the purchase of certain property in fiscal 2017.
Net cash provided by financing activities was $787,576 in fiscal 2017 as compared to $340,080 in fiscal 2016. During 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. During fiscal 2016, the Company received proceeds from convertible notes of $158,750, proceeds from the exercise of options of $200,000 and $10,575 from advances of related parties, offset by mortgage repayments.
Going Concern
At June 30, 2017 and June 30, 2016, the Company reported a net loss of $1,614,855 and $29,798,215, respectively. The Company believes that is illegal under federal law,its existing capital resources are not adequate to enable it to execute its business plan. As of June 30, 2017, we have yet to achieve profitable operations, we havehad a significant accumulatednet working capital deficit and are dependent on our ability to raise capital from stockholders or other sources to sustain operations and to ultimately achieve viable profitable operations.of approximately $2,029,000. These factorsconditions raise substantial doubt aboutas to the Company's ability to continue as a going concern. Management'sThe Company estimates that it will require additional cash resources during fiscal year 2018 and beyond based on its current operating plan and condition. Through October 2018, three of the four mortgages on the properties of the Company mature, which will require approximately $1.2 million to satisfy those mortgages. 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 fail to generate positive cash flow or obtain additional financing, when required, we may have to modify, delay, or abandon some or all of our business and expansion plans, in regard to these matters are described in Note 1 in theand potentially cease operations altogether.The accompanying consolidated financial statements.
Off-Balance Sheet Arrangements
We had no off-balance sheet arrangements of any kind for the period ended June 30, 2017 and 2016.
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for smaller reporting companies.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
TABLE OF CONTENTS FOR FINANCIAL STATEMENTS
Page | |
Reports of Independent Registered Public Accounting | 12 |
Consolidated Balance | 13 |
Consolidated | 14 |
Statement of Changes in Stockholders' Equity | 15 |
Consolidated | 16 |
Notes to Consolidated Financial Statements | 17 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Grow Condos, Inc. and subsidiary (f/k/a Fanatic Fans Inc. and Calibrus, Inc.)
We have audited the accompanying consolidated balance sheetsheets of Grow Condos, Inc. and subsidiary (f/k/a Fanatic Fans Inc. and Calibrus, Inc.) as of June 30, 20162017 and 2015,2016, and the related consolidated statements of operations, changes in stockholders' equitystockholders’ deficit and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our auditaudits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Companycompany is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company'scompany’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.statement presentation. We believe that our audit providesaudits provide a reasonable basis for our opinion.
In our opinion, the consolidatedaforementioned financial statements referred to above present fairly, in all material respects, the financial position of Grow Condos,Stem Holdings, Inc. and subsidiary (f/k/a Fanatic Fans Inc. and Calibrus, Inc.) atas of June 30, 20162017 and 2015,2016 and the results of its operations changes in stockholders' equity and its cash flows for the year ended September 30, 2017 and for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 12 to the consolidated financial statements, the Company operates with an industry that is illegal under federal law, has yet to achieve profitableincurred losses from operations has a significant accumulated deficitsince inception and is dependent on its abilityupon access to raise capital from stockholders or other sources to sustain operations and to ultimately achieve viable profitable operations.additional external financing. These factorsconditions raise substantial doubt about the Company'sconcerning its ability to continue as a going concern. Management'sManagement’s plans in regard to these matters are also described in Note 1.2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ John Scrudato CPA
Deer Park, Illinois
April 24, 2018
GROW CONDOS, INC. |
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY |
| ASSETS | ||||||||
| June 30, | June 30, | |||||||
| 2016 | 2015 | |||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 44,148 | $ | 42,747 | ||||
| Lease receivables | 79 | 1,161 | ||||||
| Prepaid expenses | 20,896 | 5,450 | ||||||
| Total Current Assets | 65,123 | 49,358 | ||||||
| Property and Equipment, net | 1,523,244 | 1,257,368 | ||||||
| Deposits | 5,381 | 8,618 | ||||||
| Debt Discount, summary | 104,983 | - | ||||||
| Total Assets | $ | 1,698,731 | $ | 1,315,344 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| Current Liabilities | ||||||||
| Accounts payable, trade | 3,000 | 70,036 | ||||||
| Accrued liabilities | 353,788 | 112,058 | ||||||
| Derivatives, net | 792,445 | - | ||||||
| Mortgages payable, current portion | 33,187 | 31,304 | ||||||
| Total Current Liabilities | 1,182,420 | 213,398 | ||||||
| Mortgages payable, less current portion | 1,203,054 | 967,053 | ||||||
| Customer deposits | 4,900 | 4,900 | ||||||
| Deferred option revenue | 15,400 | 21,400 | ||||||
| Total Liabilities | 2,405,774 | 1,206,751 | ||||||
| Shareholder's Equity | ||||||||
| Preferred stock, $.001par value, 5,000,000 shares authorized none issued or outstanding | - | - | ||||||
| Common stock, $.001 par value, 100,000,000 shares authorized 28,284,924 and 2,084,925 shares issued and outstanding | 228,680 | 2,085 | ||||||
| Additional paid-in capital | 12,001,259 | 11,547,035 | ||||||
| Accumulated deficit | (12,936,983 | ) | (11,440,527 | ) | ||||
| Total Shareholder's Equity | (707,044 | ) | 108,593 | |||||
| Total Liabilities and Shockholder's Equity | $ | 1,698,731 | $ | 1,315,344 | ||||
For the Years Ended June 30, |
| 2016 | 2015 | |||||||
| Rental revenues | $ | 118,533 | $ | 54,998 | ||||
| Total revenues | 118,533 | 54,998 | ||||||
| Operating expenses | 1,041,370 | 256,979 | ||||||
| Gain/(Loss) from operations | (922,837 | ) | (201,981 | ) | ||||
| Interest expense | 69,907 | 49,357 | ||||||
| Derivative Liability Expense | 503,711 | |||||||
| Loss before provision for income taxes | (1,496,455 | ) | (251,338 | ) | ||||
| Provision for income taxes | - | - | ||||||
| Net income/(loss) | $ | (1,496,455 | ) | $ | (251,338 | ) | ||
| Net loss per common share: | ||||||||
| Basic and diluted | $ | (0.06 | ) | $ | (0.13 | ) | ||
| Weighted average common shares; basic and diluted | 14,374,487 | 1,946,359 | ||||||
The |
| Shares | Amount | Additional Paid-In Capital | Accumulated Deficit | Total Shareholders’ Equity | ||||||||||||||||
| For the Years Ended June 30, 2016 and 2015 | ||||||||||||||||||||
| Balance at June 30, 2014 | 41,435,709 | $ | 41,436 | $ | 11,422,282 | $ | (11,189,189 | ) | $ | 274,529 | ||||||||||
| Founding contributed capital and debt forgiveness | - | - | ||||||||||||||||||
| Common Stock for cash | - | - | ||||||||||||||||||
| Common Stock for services | - | - | ||||||||||||||||||
| Warrants Exercised for Common Stock | 262,770 | 229 | 85,173 | 85,402 | ||||||||||||||||
| Net loss for the period ended June 30, 2015 | - | (251,338 | ) | (251,338 | ) | |||||||||||||||
| Balance at June 30, 2015 | 41,698,479 | $ | 41,665 | $ | 11,507,455 | $ | (11,440,527 | ) | $ | 108,593 | ||||||||||
| Balance at June 30, 2015 | 41,698,479 | 41,665 | 11,507,455 | (11,440,527 | 108,593 | |||||||||||||||
| Founding contributed capital and debt forgiveness | - | - | ||||||||||||||||||
| Common Stock for cash | 500,000 | 199,490 | 500 | 199,990 | ||||||||||||||||
| Common Stock for services | 5,005,000 | 5,005 | 73,814 | 78,819 | ||||||||||||||||
| Stock Based Compensation Valuation - Stock Options | - | 397,010 | 397,010 | |||||||||||||||||
| Twenty (20) for One (1) Reverse Split | (43,413,555 | ) | (42,480 | ) | 42,480 | - | ||||||||||||||
| Convert 5,000,000 Preferred to 25,000,000 Common | 25,000,000 | 25,000 | (20,000 | ) | 5,000 | |||||||||||||||
| Net loss for the period ended June 30, 2016 | - | (1,496,455 | ) | (1,496,455 | ) | |||||||||||||||
| Balance at June 30, 2016 | 28,789,924 | $ | 228,680 | $ | 12,001,259 | $ | (12,936,983 | ) | $ | (707,044 | ) | |||||||||
| For the Twelve Months Ended | ||||||||
| 2016 | 2015 | |||||||
| Cash flows from operating activities: | (Umaudited) | |||||||
| Net loss | $ | (1,496,455 | ) | $ | (251,338 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 28,226 | 27,872 | ||||||
| Stock issued for services | ||||||||
| Allowance for doubtful accounts | ||||||||
| Changes in assets and liabilities: | ||||||||
| �� Deposits | 3,237 | (7,800 | ) | |||||
| Lease receivable | 1,082 | (211 | ) | |||||
| Prepaids | (15,446 | ) | (5,046 | ) | ||||
| Accounts payable, trade | (67,036 | ) | 34,975 | |||||
| Accrued expenses | 241,730 | (7,238 | ) | |||||
| Security deposit | - | 1,300 | ||||||
| Deferred options revenue | (6,000 | ) | 17,500 | |||||
| Net cash used by operating activities | (1,310,662 | ) | (189,986 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and improvements | (294,102 | ) | (83,390 | ) | ||||
| Net cash used by investing activities | (294,102 | ) | (83,390 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Repayments of mortgage | (29,254 | ) | (29,420 | ) | ||||
| Proceeds of debt | 680,829 | |||||||
| Proceeds from short-term debt | 954,590 | 105,000 | ||||||
| Proceeds from exercise of warrants | 85,390 | |||||||
| Net cash provided by financing activities | 1,606,165 | 160,970 | ||||||
| Net increase (decrease) in cash and cash equivalents | 1,401 | (112,406 | ) | |||||
| Cash and cash equivalents at beginning of period | 42,747 | 155,153 | ||||||
| Cash and cash equivalents at end of period | $ | 44,148 | $ | 42,747 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | 69,907 | $ | 49,357 | ||||
| Taxes | $ | - | $ | 7,551 | ||||
GROW CONDOS, INC. AND SUBSIDIARIES | |||||
Consolidated Statements of Cash Flows | |||||
| |||||
| For the Fiscal Year Ended June 30, | ||||
|
| 2017 |
|
| 2016 |
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
Net loss | $ | (1,614,855) |
| $ | (29,798,215) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
Depreciation, amortization and impairment expense |
| 125,991 |
|
| 310,840 |
Non-cash interest |
| 655,898 |
|
| 49,937 |
Stock based compensation |
| (5,936) |
|
| 28,862,140 |
Gain on cancellation of property purchase option |
| - |
|
| (12,000) |
Changes in operating assets and liabilities: |
|
|
|
|
|
Lease receivable |
| (10) |
|
| 1,082 |
Prepaid expenses |
| (1,466) |
|
| (9,099) |
Other assets |
| (909) |
|
| (16,696) |
Accounts payable, trade |
| 16,236 |
|
| (67,036) |
Accrued expenses |
| 291,301 |
|
| 362,690 |
Other liabilities |
| 200 |
|
| - |
Net cash used (provided) in operating activities |
| (533,550) |
|
| (316,357) |
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
Proceeds from purchase option on property |
| 32,000 |
|
| 6,000 |
Purchase of property, plant, and equipment |
| (300,107) |
|
| (28,322) |
Net cash used in investing activities |
| (268,107) |
|
| (22,322) |
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
| (36,849) |
|
| (29,245) | |
Proceeds from convertible notes |
| 440,000 |
|
| 158,750 |
Proceeds (repayments) related party advances |
| (15,575) |
|
| 10,575 |
Proceeds from exercise of options |
| 400,000 |
|
| 200,000 |
Net cash (used) provided by financing activities |
| 787,576 |
|
| 340,080 |
|
|
|
|
|
|
Net increase (decrease) in cash |
| (14,081) |
|
| 1,401 |
Cash at beginning of period |
| 44,148 |
|
| 42,747 |
Cash at the end of the period | $ | 30,067 |
| $ | 44,148 |
|
|
|
|
|
|
Supplemental Disclosure of Cash Flows Information: |
|
|
|
|
|
Cash paid for interest | $ | 56,735 |
| $ | 52,704 |
Cash paid for income taxes | $ | - |
| $ | - |
Non-cash Investing and Financing Activities: |
|
|
|
|
|
Conversion of debt and accrued interest into common stock | $ | 225,541 |
| $ | - |
Shares issued for acquisition of property | $ | 52,000 |
| $ | - |
Settlement of liability through issuance of stock | $ |
|
| $ | 71,469 |
Beneficial conversion feature discount recorded | $ | 440,000 |
| $ | 124,780 |
Stock settled debt liability | $ | 350,000 |
| $ | - |
Seller financing of real estate | $ | 625,000 |
| $ | 267,129 |
|
|
|
|
|
|
The accompanying notes are an integral part of these audited consolidated financial statements. | |||||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of the Corporation:
Grow Condos, Inc. (the("GCI" or the "Company") (f/k/a Fanatic Fans Inc. and Calibrus, Inc.) 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.
Our wholly owned subsidiary, WCS Enterprises, Inc. (“WCS”) is an Oregon limited liability company which was formed on September 9, 2013 with operations beginning in October 2013. WCS is a real estate purchaser, developer and manager of specific use industrial properties providing "Condo" style turn-key aeroponicaeroponics grow facilities to support cannabis farmers. WCS intends to own, lease, sell and manage multi-tenantmulti- tenant properties so as to reduce the risk of ownership and reduce costs to tenants and owners.
Our wholly owned subsidiary, Smoke on the members of WCS for the acquisition of all of the outstanding membership interests of WCS in exchange for 20,410,000 restricted shares of GCI's common stock. The shares were issued to a total of three persons pursuant to the exemption from registration set forth in Section 4(2) of the Securities Act of 1933. In connection with the Agreement, one member of WCS gained control of GCI by virtue of his stock ownershipWater, Inc. was incorporated on October 21, 2016, in the Company receivedState of Nevada. Smoke on the Water is focused on acquiring properties in the acquisition. This member acquired 18,369,000 shares of GCI common stockRV and campground rental industry.
On March 7, 2017, Smoke on June 30, 2014, in exchange for his ownership share of WCS. The shares received under the Water, Inc. executed a Real Estate Purchase Agreement gave this member effective control of GCI by virtue of holding approximately 44% of GCI's voting stock. In addition, on June 30, 2014,to acquire the GCI CEO, President and CFO resigned and the WCS officers were appointed to fill these position by the board of directors of GCI. In total, the WCS members hold 51.67% of the post-acquisition common stock of GCI and GCI's officers are the former officers of WCS, making the transaction a reverse acquisition.
Basis of Presentation
The accompanying consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States ("GAAP"), and pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC").
Consolidation
These consolidated financial statements include the accounts of Grow Condos, Inc., and its wholly-owned subsidiary, WCS.subsidiaries, WCS, Enterprises, LLC and Smoke on the Water, Inc. as of June 30, 2017. All significant intercompany accounting transactions have been eliminated as a result of consolidation.
Use of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing the performance of the segment.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We believe that it is at least reasonably possible that the effect on the financial statements of a condition, situation, or set of circumstances that existed at the date of the financial statements will change in the near term due to one or more future confirming events and the effect of the change would be material to the financial statements.
Significant estimates include, but are not limited to, assumptions used in the estimatevaluation of the allowance for doubtful accounts, equity compensation, allocation of purchase price for acquired assets and depreciable livesassumptions used in our impairment testing of long livedlong-lived assets.
Cash and Cash Equivalents
For financial accounting purposes, cash and cash equivalents are considered to be all highly liquid investments with a maturity of three (3) months or less at the time of purchase.
GROW CONDOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Organization and Summary of Significant Accounting Policies (cont’d)
Lease Receivables
Lease receivables are recognized when rents are due, and for the straight-line adjustment to rents over the term of the lease less an allowance for expected uncollectible amounts. Inherent in the assessment of the allowance for doubtful accounts are certain judgments and estimates including, among others, the customer's willingness or ability to pay, the Company's compliance with lease terms, the effect of general economic conditions and the ongoing relationship with the customer. Accounts with outstanding balances longer than the payment terms are considered past due. We do not charge interest on past due balances. The Company writes off lease receivables when it determines that they have become uncollectible after all reasonable collection efforts have been made. If we record bad debt expense, the amount is reflected as a component of operating expenses in the statements of operations. As of June 30, 2017, and 2016, an allowance for doubtful accounts was recorded in the amount of $ 2,861.00.
Investment In and Valuation of Real Estate Assets
Real estate assets are stated at cost, less accumulated depreciation and amortization. Amounts capitalized to real estate assets consist of the cost of acquisition (excluding acquisition related expenses), construction costs, and mortgage interest during the period the facilities are under construction and prior to readiness for occupancy, and any tenant improvements, major improvements and betterments that extend the useful life of the real estate assets and leasing costs. All repairs and maintenance are expensed as incurred.
The Company is required to make subjective assessments as to the useful lives of its depreciable assets. The Company considers the period of future benefit of each respective asset to determine the appropriate useful life of the assets. Real estate assets, other than land, are depreciated on a straight-line basis over the estimated useful life of the asset. The estimated useful lives of the Company's real estate assets by class are generally as follows:
Land | Indefinite |
Buildings | 40 years |
Tenant improvements | Lesser of useful life or lease term |
Intangible lease assets | Lease term |
We recognize revenue only when all of the following criteria have been met:
o | persuasive evidence of an arrangement exists; |
o | use of the real property has taken place or services have been rendered; |
o | the fee for the arrangement is fixed or determinable; and |
o | collectability is reasonably assured. |
Persuasive Evidence of an Arrangement
– We document all terms of an arrangement in a real property lease signed by the tenant, for leases with a term greater than 30 days, prior to recognizing revenue.GROW CONDOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Organization and Summary of the Real Property or Services Have Been Performed
Our real property lease agreements, which are governed by the laws of the state of Oregon, usually are non-cancellable and range from six to thirty-six months with a cash security deposit and personal guarantee required. We account for our leases in accordance with Accounting Standard Codification ("ASC") Topic 840, Leases, as operating leases. Leases may include escalating rental rates, an option to extend the term of the lease at a fixed rental rate, and an option to purchase the portion of the building being leased at the end of the lease term. Leases may be assigned with our approval. Common area maintenance and water are paid by the Company with the tenant responsible for maintenance, repairs and liability insurance associated with their specific unit within the building. Cash received for purchase options is recorded as deferred option revenue in the accompanying consolidated financial statements. These amounts are recorded to revenue upon the exercise of the option by the tenant or the expiration of the unused option.
Future minimum lease payments to be received under non-cancelable real property leases are as follows as of June 30, 20162017 for the fiscal year ending in:
2018 | $ | 117,400 |
2019 |
| 16,200 |
|
|
|
| $ | 133,600 |
Advertising Costs
Advertising costs are expensed as incurred. Advertising expense was $205,000$226,087 and $205,035 for the fiscal yearyears ended June 30, 2016.
The Company follows the fair value measurement rules, which provides guidance on the use of fair value in accounting and disclosure for assets and liabilities when such accounting and disclosure is called for by other accounting literature. These rules establish a fair value hierarchy was established that prioritizes thefor inputs to be used to measure fair value. Thevalue of financial assets and liabilities. This hierarchy givesprioritizes the highest priorityinputs to unadjustedvaluation techniques used to measure fair value into three levels: Level 1 (highest priority), Level 2, and Level 3 (lowest priority).
Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurements).
Level 2—Inputs other than quoted prices included within Level 1 that are observable for the conversion featureasset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3—Inputs are unobservable and reflect the Company’s assumptions as to what market participants would use in pricing the asset or liability. The Company develops these notes is not indexedinputs based on the best information available.
Investments are reflected in the accompanying financial statements at fair value. The carrying amount of receivables and accounts payable and accrued expenses approximates fair value due to the Company's stock, and is considered to be a derivative that requires bifurcation. The debt discountshort-term nature of these notes is amortized over the life of the notes. For the year ended June 30, 2016, the Company amortized $51,052 of debt discount. The Company calculated the fair value of this conversion feature using the Black-Scholes model and the following assumptions: Risk-free interest rates ranging from .45% to .61%; Dividend rate of 0%; and, historical volatility rates ranging from 216% to 224%.
| Fair Value Measurements Using | ||||
| Total Fair | Quoted prices in | Significant other | Significant | |
| Value at | active markets | observable inputs | Unobservable inputs | |
| Description | June 30, 2016 | (Level 2) | (Level 2) | (Level 3) |
| Derivative liabilities | $461,162 | $ - | $ 461,162 | $ - |
The estimated fair values for financial instruments are determined at discrete points in time based on relevant market information. These estimates involve uncertainties and cannot be determined with precision. The carrying amounts of lease receivables, accounts payable, accrued liabilities, and mortgages payable approximate fair value given their short term nature or effective interest rates.
GROW CONDOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Organization and Summary of Significant Accounting Policies (cont’d)
Share-based compensation
The Company measures the cost of employee services received in exchange for an acquisitionaward of a business in accordance with ASC Topic 805, Business Combinations. Intangible assets that we acquire are recognized separately if they arise from contractual or other legal rights or if they are separable and are recorded at fair value. Goodwill is recorded asequity instruments based on the excess of (i) the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisitiongrant date fair value of any previous equity interest in the acquired entityaward. Restricted 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 (ii)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 fair value of options is calculated using the net identifiable assets acquired.
| Equity instruments (21,025,709 common shares of the Company) issued | 10,302,597 | |||
| Fair value of total consideration transferred | $ | 10,302,597 | ||
| Recognized amounts of identifiable assets acquired and liabilities assumed: | ||||
| Cash | $ | 76,774 | ||
| Property, plant, and equipment | 350 | |||
| Deposits | 818 | |||
| Accounts payable and accrued liabilities assumed | (41,710 | ) | ||
| Total identifiable net liabilities | 36,232 | |||
| Goodwill | 10,266,365 | |||
| Total purchase price allocated | $ | 10,302,597 |
Convertible debt and beneficial conversion features
The Company evaluates embedded conversion features within convertible debt under ASC 815 "Derivatives and Hedging" to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 "Debt with Conversion and Other Options" for consideration of any beneficial conversion features.
Stock settled debt
In certain instances, the Company will issue convertible notes which contain a provision in which the price of the conversion feature is priced at a fixed discount to the trading price of the Company’s common shares as traded in the over-the-counter market. In these instances, the Company records a liability, in addition to the principal amount of the convertible note, as stock-settled debt for the fixed value transferred to the convertible note holder from the fixed discount conversion feature. As of December 31, 2017 and 2016, the Company had recorded within Convertible Notes, net of discount, the amount of $350,000 and $nil for the value of the stock settled debt for certain convertible notes (see Note 8).
Impairment of long-lived assets
The Company monitors its long-lived assets and finite-lived intangibles for indicators of impairment. If such indicators are present, the Company assesses the recoverability of affected assets by determining whether the carrying value of such assets is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step quantitative goodwill impairment test. The Company measures the carrying amount of the asset against the estimated discounted future cash flows associated with it. Should the sum of the expectedundiscounted future net discounted cash flows be less than the carrying value of the asset being evaluated, an impairment loss wouldassets. If such assets are found not to be recognized. The impairment loss would be calculated asrecoverable, the Company measures the amount of such impairment by whichcomparing the carrying value of the assets exceeds implied fair value. Our test of goodwill impairment includes assessing qualitative factors and the use of judgment in evaluating economic conditions, industry and market conditions, cost factors, and entity-specific events, as well as overall financial performance. Based on our analysis as of June 30, 2014, the Company recorded goodwill impairment in the amount of $10,266,365. Any future increases in fair value would not result in an adjustment to the impairment loss that was recorded in our consolidated financial statements.
Income Taxes
Deferred income taxes are provided using the asset and liability method, whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the future tax consequences attributable to differences between the reportedfinancial statement carrying amounts of existing assets and liabilities and their respective tax basis. Netbases and net operating loss and credit carryforwards. Deferred tax assets and liabilities are measured at rates expected to apply to taxable income in the years in which those temporary differences and carryforwards are expected to be recovered or settled. The effect on deferred tax assets are reduced byand liabilities of a change in tax rates is recognized in the statement of operations in the period that includes the enactment date. A valuation allowance is recorded when in the opinion of management, it is not more likely than not that someall or a portion or all of the net deferred tax assets will not be realized. Deferred tax assets
GROW CONDOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Organization and liabilities are adjusted for the effectsSummary of the changes in tax laws and rates at the date of enactment.
Net (loss) income taxes in the statement of operations. During the period from inception (September 9, 2013) through June 30, 2015, there were no interest or penalties incurred related to income taxes. The Company is no longer subject to U.S. federal, state, or non-U.S. income tax examinations by tax authorities for tax years before 2010, except that earlier years can be examined for the sole purpose of challenging the net operating loss carry-forwards arising in those years.
Basic earnings per share includes no dilution and is computed by dividing income available to common stockholdersshareholders by the weighted average number of common shares outstanding for the period.period and contains no dilutive securities. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity, using the treasury stock method for stock options and warrants and the if-converted method for convertible debt.
| June 30, 2016 | ||||
| Net loss | $ | (1,496.455 | ) | |
| Weighted average number of common shares used in basic earnings per share | 14,374,487 | |||
| Effect of dilutive securities: | ||||
| Stock options | - | |||
| Stock warrants | - | |||
| Weighted average number of common shares and dilutive potential common stock used in diluted loss per share | 14,374,487 | |||
All dilutive common stock equivalents are reflected in our net lossearnings (loss) per share calculations. Anti-dilutive common stock equivalents are not included in our lossearnings (loss) per share calculations. At
The following table sets forth the number of dilutive shares as of June 30, 2015,2017.
Options | 500,000 |
Warrants | 300,000 |
Convertible notes* | 2,567,000 |
Total diluted shares | 3,367,000 |
* the Company had no outstanding options.
Recent accounting pronouncements
In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments”. This standard clarifies the presentation of certain specific cash flow issues in the Statement of cash flows. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The adoption of this guidance is not expected to have a going concern.significant impact on the Company’s consolidated financial statements.
In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash”. This standard requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows and no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. This standard is effective for public companies who are SEC filers for fiscal years beginning after December 15, 2017, including interim periods within those years, with early adoption permitted.The adoption of this guidance is not expected to have a significant impact on the Company’s consolidated financial statements.
In January 2017, the FASB issued ASU No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business". This standard changed the definition of a business to help entities determine whether a set of transferred assets and activities is a business. This standard is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The Company operates elected to early adopt ASU No. 2017-01 and applied the guidance to the Transaction, which was accounted for as an asset acquisition under the revised guidance.
In May 2017, the FASB issued ASU No. 2017-09, "Stock Compensation (Topic 718): Scope of Modification Accounting". This standard clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as a modification, with entities applying the modification accounting guidance if the value, vesting conditions or classification of the award changes. In addition to all disclosures about modifications that are required under the current guidance, entities will be also required to disclose that compensation expense has not changed if applicable. This standard is effective for public companies who are SEC filers for fiscal years, and interim periods
GROW CONDOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Organization and Summary of Significant Accounting Policies (cont’d)
within an industry that is illegal under federal law, has yet to achieve profitable operations, has a significant accumulated deficit and is dependent on our ability to raise capital from stockholders or other sources to sustain operations and ultimately achieve viable profitable operations. As reported in these consolidatedthose fiscal years, beginning after December 15, 2017, with early adoption permitted, including any interim period for which financial statements have not yet been issued or made available for issuance. The guidance will be applied prospectively to awards modified on or after the adoption date. The Company expects to adopt this guidance when effective.
Note 2 – Going Concern
At June 30, 2017 and June 30, 2016, the Company hasreported a net loss of $1,614,855 and $29,798,215, respectively. The Company believes that its existing capital resources are not yet achieved profitable operations and has an accumulatedadequate to enable it to execute its business plan. As of June 30, 2017, we had a net working capital deficit of $12,936,982, which we have determined raisesapproximately $2,029,000. These conditions raise substantial doubt aboutas to the Company's ability to continue as a going concern.
Note 3 – Acquisition of Lake Selmac Resort
On March 7, 2017, the Company, through its wholly-owned subsidiary Smoke on the Water, Inc. executed a Real Estate Purchase Agreement to acquire the Lake Selmac Resort located at 2700 Lakeshore Drive, Selma, Oregon. The Company agreed to acquire the property for a purchase price of $875,000 plus closing costs consisting of a seller financing note in the amount of $625,000 with the seller carrying the note at 5% per annum for the first twelve months and then 6% per annum for the next four years, $200,000 in cash plus closing costs, and 50,000 shares of the Company's common stock valued at $52,000 based on the closing price of the common stock at the close. Because all RV and campground rentals have contracts lengths for a maximum term of 30 days, no amounts were allocated to the small number of rentals acquired at acquisition.
Note 4 – Acquisition of Land in Pioneer Business Park
In April 2016, the Company purchased a parcel of land near Eugene, Oregon within the Pioneer Business Park from a private seller in the outcomeamount of these uncertainties.
GROW CONDOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5 – PROPERTY AND EQUIPMENT, NET
Property and improvements consisted of the following as of June 30, 2017 and 2016:
| Buildings and improvements | $ | 1,117181 | ||
| Land | 482,205 | |||
| 1,599,386 | ||||
| Less: accumulated depreciation | (76,142 | ) | ||
| $ | 1,523,244 |
| June 30, 2017 |
|
| June 30, 2016 |
| |||
Cost |
|
|
|
|
|
| ||
Buildings and improvements |
| $ | 1,360,240 |
|
| $ | 1,114,190 |
|
Land |
|
| 1,103,791 |
|
|
| 482,205 |
|
Furniture and Fixture |
|
| 15,271 |
|
|
| 3,563 |
|
|
|
| 2,479,302 |
|
|
| 1,599,958 |
|
Less: accumulated depreciation and impairment |
|
| (386,982 | ) |
|
| (358,754 | ) |
|
| $ | 2,092,320 |
|
| $ | 1,241,204 |
|
On June 30, 2016, the Company made the determination in its impairment testing that the land and condominium tenant building operation of WCS required an impairment of approximately $282,600.
Depreciation expense for the Eagle Point project(excluding impairment) amounted to $28,228 and furniture and equipment totaled $76,142$28,228 for the year ended June 30, 2016; there has been no depreciation taken on the Pioneer Business Park project as the building is not yet available for its intended use .
Accrued Liabilities at various financial institutions. Deposits not to exceed $250,000 at each financial institution are insured by the Federal Deposit Insurance Corporation. At June 30, 2017 and 2016 consist of the Company had no uninsured cash and cash equivalents
| June 30, 2017 |
|
| June 30, 2016 |
| |||
Accrued salaries and wages |
| $ | 514,372 |
|
|
| 294,800 |
|
Accrued expenses |
|
| 74,531 |
|
|
| 2,802 |
|
|
| $ | 588,903 |
|
|
| 297,602 |
|
Note 7 – MORTGAGES PAYABLE
In 2013, upon the acquisition of the condominium property in Eagle Point, Oregon, WCS assumed the mortgage payable of the Seller to Peoples Bank of Commerce, NA. The original principal amount of the mortgage was $930,220, bears interest at the rate of the bank’s prime rate plus 1.75%, and required 58 monthly payments of $5,946 and matures on June 28, 2018 with a balloon payment due at that time of $802,294. The mortgage is secured by liens against certain properties owned by the Seller. As of June 30, 2017 and 2016, we had three mortgages payable, two to the People'sbalance on the mortgage was $827,322 and $859,209, respectively.
In 2013, after acquisition, WCS entered into a second mortgage with Peoples Bank of Commerce, NA in Medford, Oregon, securedthe amount of $120,000. The mortgage bears interest at the rate of the bank’s prime rate plus 3%, requires 56 monthly payments of $883 and matures on October 15, 2018 with a balloon payment due at maturity of $104,329. The mortgage is collateralized by oura deed of trust and assignment of rents with the Seller and WCS in the amount of $120,000. As of June 30, 2017 and 2016, the balance on the mortgage was $107,139 and $109,903, respectively.
In April 2016, as more fully described in Note 4, the Company acquired a parcel of land buildings and improvements located in Eagle Point, Oregon.
GROW CONDOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 7 – Mortgages Payable(cont’d)
interest only monthly payments of $1,261 from November 2017 through June 2018 with the remaining amount due on the note in the form of a final balloon payment will be due in July 2018. The note is unsecured.
In March 2017, as more fully described in Note 3, the Company acquired a RV and campground park in Selma, Oregon. Upon closing, the Company entered into mortgage payable with the Seller in the amount of $625,000 with a maturity date of March 6, 2022. The mortgage bears interest at the rate of 5% per annum covering the monthly payments of $3,355 for the following 12 months, then increases to 6% per annum for the monthly payments of $3,747 for the following 48 months. Upon maturity, the remaining balance due on the note is required to be paid through a balloon payment. As of June 30, 2017, the balance on the mortgage was $622,802. The note is unsecured.
The future principal payments for loans with maturity dates greater than one year required under our mortgages payable were comprised of the following:
| Bank term loan, prime rate plus 1.75%, currently 5%, P&I payments of $5,946 due monthly, balloon payment of $802,294 due June 28, 2018, secured by property | $ | 859,210 | ||
| Bank term loan, prime rate plus 1.75%, currently 5%, P&I payments of $5,946 due monthly, balloon payment of $802,294 due June 28, 2018, secured by property | 109,903 | |||
| Private loan, 5% interest, interest only payments of $1,335.65 due monthly, balloon payment of $267,129.00 due October 1, 2017. | 267,129 | |||
| Less: current portion | (33,187 | ) | ||
| $ | 1,203,054 |
2018 | $ | 26,265 |
2019 |
| 365,403 |
2020 |
| 8,882 |
2021 |
| 9,430 |
2022 |
| 587,090 |
Thereafter |
| - |
| $ | 997,070 |
Because the Company successfully refinanced the Seller mortgage for the Pioneer Business Park parcel, the Company has treated that mortgage as long-term in these financials statements, and the payments required over the term of the mortgage are included in the table above.
Note 8 – Convertible Notes Payable
At June 30, 2017 and June 30, 2016, convertible notes payable consisted of the following:
|
| June 30, 2017 |
|
| June 30, 2016 |
| ||
Principal amount |
| $ | 515,000 |
|
| $ | 208,750 |
|
Liability on stock settled debt |
|
| 350,000 |
|
|
| - |
|
Less: unamortized debt discount |
|
| (350,736 | ) |
|
| (124,843 | ) |
Convertible notes payable, net |
| $ | 514,264 |
|
| $ | 83,907 |
|
Auctus Fund, LLC Agreement:
On March 21, 2016 the Company entered into a transaction with Auctus Fund, LLC (“Auctus”). In exchange for $75,000 cash net of fees, the Company issued a convertible promissory note in the amount of $83,750. The Note had a maturity date of nine (9) months from date of issue and interest at 10% per annum. The note is convertible at any time at the option of the holder into the common stock of the Company at the rate of the lower of (a) $0.25 or (b) 50% of the lowest trading price of the Company’s common stock during the 10 preceding trading days prior to the notice of conversion per $1 of principal. Total beneficial conversion feature discount recognized was $56,780 which is being amortized over the terms of the convertible notes payable. During the fiscal year ending in:
| 2017 | $ | 33,187 | ||
| 2018 | 1,169,867 | |||
| Total | $ | 1,203,054 |
GROW CONDOS, INC. AND SUBSIDIARIES
NOTES
Note 8 – All derivatives held by us are recognizedConvertible Notes Payable(cont’d)
common stock in full satisfaction of the consolidatedentire principal and accrued interest balance sheets at fair value with changes in fair value reflected in other income (expense) inof $88,041 of the consolidated statements of operations and comprehensive loss. We issued convertible promissory notes in conjunction withnote.
OnJanuary 23, 2017 the term loans discussed in above of our consolidated financial statements. These convertible promissory notes meet the definition of a derivative and are reflected as a derivative liability at fair value in the consolidated balance sheets. Likewise, embedded conversion options in our convertible notes which qualify for derivative accounting are bifurcated and their corresponding fair values are recorded as derivative liabilities.
On March 28, 2016 the IA (prior five trading days). Any funds realized through the IA will be used by the Company as working capital for its operations.
On April 4, 2016 the Company entered into convertible promissory note in the amount of $25,000 and received zero proceeds. The Note had a maturity date of April 4, 2017 and an investment agreement (IA) asinterest at 10% per annum.The note is convertible at any time at the option of March 31,the holder into the common stock of the Company at the rate of the lower of (a) $0.25 or (b) 60% of the lowest trading price of the Company’s common stock during the 20 preceding trading days prior to the notice of conversion per $1 of principal.Total beneficial conversion feature discount recognized was zero. During the fiscal year ended June 30, 2017 and 2016, with Auctus Fund, LLC. The instrument isthe Company recognized interest expense of $19,041 and $5,959 related to the amortization of issuance cost, respectively. As of June 30, 2017, and 2016, the unamortized balance ofissuance cost was $nil and $19,041, respectively.In February 2017, Tangiers gave notice to the Company and converted the entire principal and accrued interest under the note of $27,500 into 110,000 shares of common stock of the Company.
GROW CONDOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 8 – Convertible Notes Payable(cont’d)
On January 20, 2017 the Company entered into a convertible promissory note with principalnotein the amount of $83,750.$165,000. The maturity dateNote is nine (9) month following the issuancedue July 20, 2017 and bears an interest rate of the note at a 10% per annum interest rate. At any time prior to complete satisfaction of the Note, the Noteand is convertible into shares of the Company's common stock.
| Current portion: | ||||
| Net operating loss carryforward | $ | 61,363 | ||
| Less: valuation allowance | -61,363 | |||
| Deferred tax asset-current portion | $ | - | ||
the opinion of management, uncertainties exist that some portion or all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. As of June 30, 2016, the Company has net federal operating loss carry forwards of approximately $61 thousand and state net operating loss carry forwards of approximately $61 thousand.
EMA Financing Agreement:
On January 9, 2017 the Company entered into a convertible promissory note with EMA Financial LLC and received net proceeds of $150,000 in the gross amount of $175,000. The Company paid original issuance cost of $25,000 in connection with this note which will be amortized over the term of the note. The Note has a maturity date of January 9, 2018 and interest at 10% per annum with fixed conversion price of 50% of the lowest closing price for the 10 trading days prior to a totalthe conversion date. The Company recorded $175,000 as liability on stock settled debt associated with this convertible note.Total beneficial conversion feature discount recognized was $325,000 which being amortized over the terms of 15 persons.
The following table sets forth interest expense for amortization of $71,469the beneficial conversion feature and 1,000,000 shares of common stock for consulting services.
|
| Year ended June 30, | ||||||
|
| 2017 |
| 2016 | ||||
Amortization of debt issuance costs | $ | 86,091 |
| $ | 12,397 |
| ||
Amortization of beneficial conversion feature discount |
| 553,016 |
|
| 37,540 |
| ||
Total | $ |
| 639,107 |
| $ |
| 49,937 |
|
Note 9 – Capital Stock Split:
Our board of directors and the holders of a majority of the shares of Common Stock entitled to vote thereon have adopted a resolution authorizing, but not requiring, a reverse split of our common stock at a ratio of 1-for-20. As a result of such reverse stock split, which was affected on November 16, 2015, the numberstock split has been recognized
GROW CONDOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 9 – Capital Stock(cont’d)
retroactively in the stockholders’ equity accounts as of October 22, 1999, the date of our inception, and in all shares and per share data in the financial statements
The Company's authorized common stock consists of 100,000,000 common shares with par value of $0.001 and 5,000,000 shares of preferred stock with par value of $0.001 per share.
Equity Incentive Plan
In December 2015, the Company adopted the 2015 Equity Incentive Plan (“Incentive Plan”) with a term of 10 years. The Incentive Plan allows for the issuance up to a maximum of 2 million shares of common stock, options exercisable into common stock of the Company or stock purchase rights exercisable into shares of common stock of the Company. The plan is administered by the board of directors unless a separate delegation to an administrator is made by the board of directors. Options granted under the plan carry a maximum term of 10 years, except to a grantee who is also a 10% beneficial owner at the time of grant, in which case the maximum term is 5 years. In addition, exercise prices of options granted must be within a certain percentage of the closing price on date of grant depending on the level of beneficial ownership of common stock of the Company by the grantee. All vesting conditions are set by the board or administrator. In December 2015, the Company filed a registration statement on Form S-8 covering all shares issued or issuable under the Incentive Plan.
Stock Plan
In December 2015, the Company adopted the 2015 Stock Plan (“Stock Plan”). As a condition of adoption of the Stock Plan, the Company entered into a registration statement on Form S-8 and outstandingcovered the shares issued under the plan, which registration statement was decreased from 44,780,879filed in December 2015. The Stock Plan allows for the issuance up to 2,309,044 witha 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 fractional shares rounded up.
Common Stock
Share issuances during the 2001 Non-Qualified Stock Option Plan and the 2001 Incentive Stock Option Plan. fiscal year ended June 30, 2017:
During the year ended December 31, 2010June 30, 2017, the Company increasedissued 21,924 shares to employees, board members and consultants for services rendered. The Company valued those issuances on the numberclosing price of options available for grant under the 2001 Incentive Stock Option Plan by 550,000 options. UnderCompany’s stock as traded in the 2001 Non-Qualified Plan,other-the-counter market on the date of grant.
As described more fully above in Note 8, the Company may grant options for up to 2,850,000issued 902,163 shares of common stock. The maximum termstock in full satisfaction of principal and accrued interest of convertible notes issued in the options was five years, and they vested at various times according to the Option Agreements. Under the 2001 Incentive Stock Option Plan,fiscal year ended June 30, 2016.
As more fully described in Note 4, the Company may grant options for up to 2,000,000issued 50,000 shares of common stock. The maximum termstock 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 is five years(see below) and they vested at various times accordingacquired 1,000,000 shares of common stock of the Company and remitted cash in the amount of $400,000 to the Option Agreements.
Share issuances during the Board of Directors adoptedfiscal year ended June 30, 2016:
During the 2012 Stock Option and Restricted Stock Plan and the shareholders approved it in August 2012. Under such Plan,year ended June 30, 2016, the Company has 3,000,000issued 1,191,364 shares availableto employees, board members and consultants for future grants. 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.
GROW CONDOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 9 – Capital Stock(cont’d)
In September 2015, the Company and its former attorneys entered into a settlement of outstanding invoices due, in which the attorneys agreed to accept 45,000 shares of the Company’s common stock in full satisfaction of the $71,469 owed as of that date.
Preferred Stock
The Company has made no grantsdesignated a Series A Convertible Preferred Stock (the "Series A Preferred"). The number of authorized shares totals 5,000,000 and the par value is $.001 per share. The Series A Preferred shareholders vote together with the common stock as a single class. The holders of Series A Preferred are entitled to receive all notices relating to voting as are required to be given to the holders of the Common Stock. The holders of shares of Series A Preferred shall be entitled to 5 votes per share and have a conversion right granted to the holder to allow to convert into 5 common shares of the Company for each Series A Preferred Share held.
In December 2015, the board of directors of the Company granted the CEO and board member 5,000,000 shares of Series A preferred stock, which upon receipt were immediately converted by the holders into 25,000,000 shares of common stock of the Company. The Company valued this issuance at $25 million, based upon the closing price of the common stock on date of grant of the Series A Preferred Shares.
Warrants
On January 20, 2017, as more fully described in Note 8, the Company issued twowarrants for 300,000 shares, exercisable at $0.85 in connection with the issuance of a convertible notes.
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|
|
|
|
| ||
Granted |
|
| 300,000 |
|
|
| 0.85 |
|
|
|
|
|
|
| ||
Exercised |
|
| - |
|
|
| - |
|
|
|
|
|
|
| ||
Forfeited |
|
| - |
|
|
| - |
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Outstanding at June 30, 2017 |
|
| 300,000 |
|
| $ | 0.85 |
|
|
| 0.58 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at June 30, 2017 |
|
| 300,000 |
|
| $ | 0.85 |
|
|
| 0.58 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROW CONDOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 9 – Capital Stock(cont’d)
The table below includes the significant ranges of the assumptions used to value the warrants under the Plan. BothBlack Scholes Merton valuation model:
Fair value of underlying common |
| $ | 1.06 to 1.12 |
|
Exercise price |
| $ | 0.85 |
|
Term |
|
| 12 to 21 months |
|
Historical volatility |
|
| 161.4% to 163.7% |
|
Risk free interest rate |
|
| 0.82% to 1.16% |
|
Dividend rate |
|
| 0 | % |
Options
In April 2016, the Company issued to a consultant an option to acquire 2 million shares of the above mentioned plans have expiredCompany’s common stock. The option had an exercise price of $0.40 per share with no stated expiration and no furthervesting as follows: 1 million shares 30 days after issuance and the remaining 1 million shares 90 days after issuance. The Company estimated the exercise date as 3.5 years after issuance.
The Company used a black scholesmerton pricing model with the following assumptions to value the option grant at issuance and to revalue upon vesting:
Fair value of underlying common |
| $ | 0.58 to 1.55 |
|
Exercise price |
| $ | 0.40 |
|
Term |
|
| 3.5 years |
|
Historical volatility |
|
| 161.8% to 217.2% |
|
Risk free interest rate |
|
| 0.58% to 1.22% |
|
Dividend rate |
|
| 0.00% |
|
A summary of the change in stock purchase options areoutstanding for the period ended June 30, 2017 and 2016 is as follows:
|
|
|
|
|
|
|
| Weighted |
|
| Remaining |
| ||||
|
|
|
|
|
|
|
| Average |
|
| Contractual |
| ||||
|
| Options |
|
| Exercise |
|
| Grant Date |
|
| Life |
| ||||
|
| Outstanding |
|
| Price |
|
| Fair Value |
|
| (Years) |
| ||||
Balance – June 30, 2015 |
| - |
|
| - |
|
| - |
|
| - |
| ||||
Options issued |
| 2,000,000 |
|
| $0.40 |
|
| $0.52 |
|
| See note above |
| ||||
Options expired |
| - |
|
| - |
|
| - |
|
| - |
| ||||
Options exercised |
| (500,000) |
|
| $0.40 |
|
| - |
|
| - |
| ||||
Balance – June 30, 2016 |
| 1,500,000 |
|
| $0.40 |
|
| $0.52 |
|
| See note above |
| ||||
Options issued |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Options expired |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Options exercised |
|
| (1,000,000) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance – June 30, 2017 |
|
| 500,000 |
|
|
| $0.40 |
|
|
| $0.52 |
|
|
| See note above |
|
GROW CONDOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 9 – Capital Stock(cont’d)
The following table shows information on our vested and unvested options outstanding during the year ended June 30, 2017 and 2016:
|
|
|
|
|
|
|
| Average |
|
| Contractual |
| ||||
|
| Options |
|
| Exercise |
|
| Grant Date |
|
| Life |
| ||||
|
| Outstanding |
|
| Price |
|
| Fair Value |
|
| (Years) |
| ||||
Balance – June 30, 2015, unvested |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Options issued |
|
| 2.000.000 |
|
|
| $0.40 |
|
|
| $0.52 |
|
|
| See note above |
|
Options vested |
|
| 1,000,000 |
|
|
| $0.40 |
|
|
| $0.52 |
|
|
| - |
|
Options expired |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Options exercised |
|
| (500,000) |
|
|
| $0.40 |
|
|
| $0.52 |
|
|
| - |
|
Balance – June 30, 2016, unvested |
|
| 1,000,000 |
|
|
| $0.40 |
|
|
| $0.52 |
|
|
| See note above |
|
Options issued |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Options vested |
|
| 1,000,000 |
|
|
| $0.40 |
|
|
| $0.52 |
|
|
| - |
|
Options expired |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Options exercised |
|
| (1,000,000) |
|
|
| $0.40 |
|
|
| $0.52 |
|
|
| - |
|
Balance – June 30, 2017, unvested |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Options outstanding had intrinsic value as of June 30, 2017 of $95,000.
Note 10 – Related Party Transactions
The Company is currently leasing units located in Eagle Point Oregon. The building is an approximately 15,000square footbuilding which has 10 units of approximately 1,500 square feet each available for grant.
The CEO had loaned the Company a net amount of $15,575 the entire amount was re-paid on December 7, 2016. As of June 30, 2017, a related party had advanced the Company, on an unsecured basis, $100,000.
In November 2015, the Company entered into employment agreements with its CEO and CFO. Those employment agreements granted the employees gross annual wages in the amount of $250,000 and $150,000, respectively.
Note 11 – Income Taxes
The income tax expense (benefit) consisted of the grant. following for the fiscal year ended June 30, 2017 and 2016:
June 30, 2017 | June 30, 2016 | |||||||
Total current | $ | - | $ | - | ||||
Total deferred | - | - | ||||||
$ | - | $ | - |
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
GROW CONDOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 11 – Income Taxes (cont’d)
The termfollowing is a reconciliation of the Plans becomes effective initial adoptionexpected statutory federal income tax provision to the actual income tax benefit for the fiscal year ended June 30, 2017 and 2016:
|
| June 30, 2017 |
|
| June 30, 2016 |
| ||
Expected benefit at federal statutory rate |
| $ | 549,000 |
|
|
| 10,131,000 |
|
Non-deductible expenses |
|
| (156,000 | ) |
|
| (9,826,000 | ) |
Change in valuation allowance |
|
| (393,000 | ) |
|
| (305,000) |
|
|
| $ | - |
|
| $ | - |
|
In the table above, the expected tax benefit is in effectcalculated at statutory rate of 34% for 10 years. Duringamounts for the fiscal year ended June 30, 2017 and 2016.
Significant components of the Company’s deferred tax assets and liabilities were as follows for the fiscal year ended June 30, 2017 and 2016:
|
| June 30, 2017 |
|
| June 30, 2016 |
| ||
Deferred tax assets: |
|
|
|
|
|
|
|
|
Net operating loss carryforwards |
| $ | 2,930,000 |
|
| $ | 3,298,000 |
|
Deferred payroll |
|
| 139,000 |
|
|
| 100,000 |
|
Impairments |
|
| 103,000 |
|
|
| 96,000 |
|
Total deferred tax assets |
|
| 3,172,000 |
|
|
| 3,494,000 |
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities |
|
|
|
|
|
|
|
|
Deferred revenue |
|
| (7,000 | ) |
|
| (7,000 | ) |
Total deferred tax liabilities |
|
| (7,000 | ) |
|
| (7,000 | ) |
|
|
|
|
|
|
|
|
|
Change in effective tax rates |
|
| 715,000 |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets |
|
| 3,165,000 |
|
|
| 3,487,000 |
|
Less valuation allowance |
|
| (3,165,000 | ) |
|
| (3,487,000 | ) |
Net deferred tax assets (liabilities) |
| $ | - |
|
| $ | - |
|
For the fiscal year ended June 30, 2016, the amounts in the table above were calculated using a 34% statutory rate. For the fiscal year ended June 30, 2017, the amounts in the table above were calculated using a 27% statutory rate, which reflects the change in rates based on passage of tax reform by the United States Congress in January 2018. At June 30, 2017, the Company made availablehad net operating loss carryforwards for grant upfederal and state income tax purposes of approximately $10.2 million and $2.7 million, respectively. The federal and state net operating loss carryforwards will expire beginning in 2021 for federal purposes. In the fiscal year ended June 30, 2017, due to 2,000,000the issuance of and then conversion of the Series A Preferred Shares into common shares of common stock. The maximum termthe Company, the use of the optionnet operating loss carryforwards incurred prior to December 2015 became subject to the limitations of a change in control of the Company in accordance with Internal Revenue Code section 382. As of the time of these financial statements, the Company has not performed the valuation required to determine the extent of the limitation on the net operating loss carryforwards for its US Federal income taxes.
During the fiscal year ended June 30, 2017 and 2016 the, the Company recognized no amounts related to tax interest or penalties related to uncertain tax positions. The Company is five years.
| Weighted | ||||||||||||||||||||
| Average | ||||||||||||||||||||
| Weighted | Remaining | Aggregate | ||||||||||||||||||
| Number of | Average | Contractual | Intrinsic | |||||||||||||||||
| Options | Exercise Price | Term (in years) | Value | |||||||||||||||||
| Options outstanding at January 25, 2016 | 4,000,000 | 0.40 | ||||||||||||||||||
| Granted | 2,000,000 | - | ||||||||||||||||||
| Exercised | 1,500,000 | - | ||||||||||||||||||
| Forfeited | - | - | ||||||||||||||||||
| Options outstanding at June 30, 2016 | 500,000 | $ | 0.40 | 1 | $ | - | ||||||||||||||
| Options exercisable at June 30, 2016 | 500,000 | $ | 0.40 | 1 | $ | - | ||||||||||||||
GROW CONDOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 12 – RELATED PARTY TRANSACTIONS
In 2013, WCS entered into multi-year option contracts with certain tenants of the Eagle Point condominium units. The Chief Executive Officer ("CEO") and Chief Financial Officer, who are siblings, provided services andoption contracts gave the usetenants the right to enter into a contract for the sale of their facilitiesthe unit being rented by the tenant. As part of the option, the tenant is required to make a monthly or quarterly payment to the Company at no costsover the term of the agreement and in exchange, the tenant has the right to purchase the unit for a price as determined in the contract. Contract unit pricing ranges from a fixed $100,000 per unit to $150,000 multiplied by the usable space divided by the surveyed total condominium land area. The amounts paid on a monthly or quarterly basis are applied as downpayments for the purchase of the unit if elected by the contract holder. In the event of non-payment or expiration of the contract without the option being exercised, any and all payments held by the Company are forfeit by the optionee. As of June 30, 2017 and 2016, the Company held payments of $47,400 and $15,400 respectively. During the fiscal years ended June 30, 2017 and 2016, the Company received payments under option contracts of $26,000 and $nil from related parties. In the fiscal year ended June 30, 2016, one optionee defaulted on his contract and the Company recorded a gain on cancellation of $12,000 in its statement of operations.
Note 13- Subsequent Event
Subsequent to June 30, 2017, a member of the board of directors of the Company has made unsecured advances to the Company since our inception.
Subsequent to June 30, 2017 the Company issued a lease for 7,500 square feettotal of space in our facility. The lease term begins once tenant improvements are completed and the premises are occupied, and continues for a period44,010,791 shares of 36 months. The lease agreement requires no rental payments for the first 12 monthscommon stock upon conversion of the leaseprincipal and rental paymentsunpaid interest accrued on its convertible notes (see Note 8) and issueda total of $54,000 per year for the second and third year13,870,692 shares of common stock to members of the lease.Board, employees and consultants for compensation.
In the fourth quarter of 2017, the Company engaged a broker and listed the parcel of land purchased in March 2017 (see Note 4) for sale. The lease termCompany has not begun aslisted the property for $399,000.
In April 2018, the Company sold 500,000 shares of June 30, 2016 and no revenue associated with this lease has been recordedits common stock to a director for cash in the accompanying financial statements.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
On October17, 2016, the Company dismissed its existing auditor, John Scrudato, CPA, Certified Public Accountants ("Scrudato") from its position as the Company's independent registered public accounting firm. The Company's Board of Directors approved the dismissal.
The Company originally engaged Scrudato to serve as its independent registered public accounting firm in or about September 2015. The audit report of Scrudato on the Company's financial statements for the year ended June 30, 2016 did not contain an adverse opinion or disclaimer of opinion, however it did contain a qualification describing a going concern uncertainty. Scrudato did not, during the applicable periods, advise the Company of any of the enumerated items described in Item 304(a)(1)(iv) of Regulation S-K.
Concurrently, the Company engaged Anthony Imbimbo, CPA and Associates ("Imbimbo") as its new independent accountants on October 17, 2016. Prior to October 17, 2016, the Company had not consulted with Imbimbo regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's consolidated financial statements, and no written report or oral advice was provided to the Company by Imbimbo concluding there was an important factor to be considered by the Company in reaching a decision as to an accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K, or a reportable event, as that term is defined in Item 304(a)(1)(v) of Regulation S-K.
On December 22, 2016, the Company was advised by the staff of the Securities and Exchange Commission that on December 20, 2016 the Public Company Accounting Oversight Board issued Release No. 105-2016-054 wherein it barred Scrudato from acting as independent auditor for public companies. This event required our June 30, 2016 year-end financial statements to be re-audited. During the first quarter of fiscal 2017 the Company dismissed Imbimbo. Imbimbo had not issued any reports for the Company and the Company's Board of Directors approved the dismissal.
On March 9, 2017, the Company engaged L J Soldinger Associates LLC ("Soldinger") as the Company's new independent registered public accounting firm. The engagement was approved by the Audit Committee. During the fiscal years ended June 30, 2016 and 2015 and through the date of the appointment, neither the Company nor anyone acting on its behalf consulted Soldinger with respect to (i) the application of accounting principles to a specified transaction, either completed or proposed, nor the type of audit opinion that might be rendered on the Company's financial statements, and neither a written report was provided to the Company nor oral advice provided that Soldinger concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of a disagreement or a "reportable event" as described in Items 304(a)(1)(iv) and (v), respectively, of Regulation S-K.
ITEM 9A: CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We intend to maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the specified time periods and accumulated and communicated to our management, including our Chief Executive Officer ("Principal Executive Officer") and our Chief Financial Officer ("Principal Financial Officer"), as appropriate, to allow timely decisions regarding required disclosure. Our management, with the participation of our Principal Executive and Financial Officers, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a- 15(e) and 15d- 15(e) under the Exchange Act). Based on this evaluation, our Principal Executive and Financial Officer concluded that, as of June 30, 2016,2017, our disclosure controls and procedures were not effective, for the
reasons discussed below, to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and (ii) is accumulated and communicated to our management, including our Principal Executive and Financial Officers, as appropriate to allow timely decisions regarding required disclosure.
Management's Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.
Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of our management, including our Principal Executive and Financial Officers, we conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission inInternal Control—Integrated Framework(2013). In connection with our evaluation, we identified a material weakness in our internal control over financial reporting as of June 30, 2015.
A material weakness is a deficiency, or combination of deficiencies, that creates a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected in a timely manner. The material weakness related to our company was due to not having the adequate personnel to address the reporting requirements of a public company and to fully analyze and account for our transactions. We do not believe that this material weakness has resulted in deficient financial reporting because we have worked through the year end close process performing additional review and analysis to assure compliance with accounting principles generally accepted in the United States ("GAAP") and SEC reporting requirements.
Accordingly, while we identified a material weakness in our system of internal control over financial reporting as of June 30, 2015,2017, we believe that we have taken reasonable steps to ascertain that the financial information contained in this report is in accordance with GAAP. We are committed to remediating the control deficiencies that constitute the material weaknesses by implementing changes to our internal control over financial reporting. Management is responsible for implementing changes and improvements in the internal control over financial reporting and for remediating the control deficiencies that gave rise to the material weaknesses.
We plan to implement measures to remediate the underlying causes of the control deficiencies that gave rise to the material weaknesses through additional training efforts as well as ensuring appropriate review of the related significant accounting policies by the members of management with the requisite level of knowledge, experience and training to appropriately apply GAAP. We plan to undertake additional review processes to ensure the related significant accounting policies are implemented and applied properly on a consistent basis throughout the Company. We believe these measures will remediate the control deficiencies. However, we have not completed all of the corrective processes, procedures and related evaluation or remediation that we believe are necessary. As we continue to evaluate and work to remediate the control deficiencies that gave rise to the material weaknesses, we may determine to take additional measures to address the control deficiencies.
This Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Our management's report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC that permit us to provide only management's report in this Report on Form 10-K.
Changes in Internal Control Over Financial Reporting
None.
ITEM 9B: OTHER INFORMATION
None
PART III
ITEM 10: DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Identification of Directors and Executive Officers
The following table sets forth the names of all current directors and executive officers of the Company.Company as at our fiscal year ended June 30, 2017. These persons will serve until the next annual meeting of the stockholders or until their successors are elected or appointed and qualified, or their prior resignation or termination.
Name | Positions Held | Date of Election or Designation | Date of Termination or Resignation |
Wayne A. Zallen | President, CEO and Director | July 22, 2014 | (2) |
Joann Z. Cleckner | Secretary, Treasurer | July 22, 2014 | (1)(2) |
Charles B. Mathews | CFO | March 1, 2017 | (2)(3) |
Carl S. Sanko | Director | July 22, 2014 | (2) |
David Tobias | Director | September 25, 2015 | (2) |
(1)On March 1, 2017 Ms. Cleckner resigned as our CFO
(2)These persons presently serve in the capacities indicated.
(3)On August 31, 2017 Mr. Mathews resigned as our CFO.
Background and Business Experience
Wayne A. Zallen – FromAge 64.From 10/2013 - present Mr. Zallen bought an unfinished industrial warehouse Condominium project from the bank and developed it into a safe haven for medical marijuana growers. Mr. Zallen developed a workable lease option model that benefits the grower as well as the investor. From 4/2009 to present Mr. Zallen
33
Charles B. Matthews - Age 53.Mr. Mathews has over 30 years of executive financial management experience with both public and private companies. Since 2000, Mr. Mathews has been a sole practitioner as Charles B. Mathews,
CPA, an accounting and business consulting firm in Phoenix, Arizona. Mr. Mathews is currently the Chief Financial Officer of Enssolutions Group Inc. (TSXV: ENV.H), a Toronto exchange traded company providing manufacturing and distribution of environmentally responsible dust control emulsion products. From April 2015 to April 2016, Mr. Mathews served as Chief Financial Officer for mCig, Inc. and Vitacig, Inc., publicly traded companies in the ecig and cannabis related sector. Mr. Mathews, a Certified Public Accountant, earned his B.A. in Business Administration from Alaska Pacific University and an M.B.A. from Arizona State University.
Carl S. Sanko – Age 63. Carl has been self-employed as Carl S. Sanko CPA for last 5 years, providing tax, accounting, and consulting services, including the past 1 1/2 years as contract CFO, Secretary, and Director of Kush (a Nevada corporation). Also, during the past 5 years Carl has been a real estate Broker, working under his name, Carl Sanko.
David Tobias Mr.–Age66.Mr. Tobias has served as President of Wild Earth Naturals since May, 2013. Prior to that, from October 2009 until May 2011, Mr. Tobias held the position of Vice President at Medical Marijuana Inc. where he was instrumental in bringing forward and culminating the merger between CannaBank and Medical Marijuana, Inc. He was earlier Sales Manager for Tulsa custom builder Xcite Homes, from October 2008 to August 2009. Among other qualifications, Mr. Tobias brings to the Board executive leader ship experience, including his service as a president of a public company, along with extensive entrepreneurial experience. Mr. Tobias also has a keen sense of the social, political, and economic environment in which the company operates. Mr. Tobias is also currently serving on the board of directors of Cannabis Sativa, Inc., a company subject to the reporting requirements of Section 13 of the Securities Act of 1933.
The Company considers each of our board members to be uniquely qualified for the position, based on years of prior experience in management, finance and corporate operations, which has allowed each of them to develop appropriate skill sets to the Board of Grow Condos. Mr. Zallen not only brings key financial expertise, having owned and operated various entities in the financial services industry, but also, substantive operational and administrative experience having previously worked with startup companies to bring them to profitable operations. Mr. Sanko, has extensive experience in finance and corporate governance being a CPA and having worked with various companies as CFO, Secretary and Director. Mr. Tobias has held various positions in the natural and medical marijuana space including President and Vice President. His prior experience with public companies adds to his other specific qualifications which include management, administration, operations and corporate governance.
Significant Employees
Grow Condos has no employees who areoneemployee that is not an executive officers,officer, but who areis expected to make a significant contribution to its business.
1.The day-to-day operations of the campground;
2.Booking guests;
3.Greeting, checking in and checking out guests;
4.Running the convenience store;
5.Ordering inventory for the convenience store;
6.Ordering misc. supplies as needed;
7.Rentals of equipment;
8.Participating in marketing events;
9.Keeping the grounds orderly and clean.
The Company believes loss of this key employee could impact our operations in the short term as presently we do have another employee in place to fill this role.
Family Relationships
Our Chief Executive Officer and our Chief Financial OfficerSecretary/Treasurer are siblings.
Involvement in Other Public Companies Registered Under the Exchange Act
See resume of David Tobias.
Section 16(a) Beneficial Ownership Reporting Compliance
Our shares of common stock are registered under the Exchange Act, and therefore our officers, directors and holders of more than 10% of our outstanding shares are subject to the provisions of Section 16(a) which requires them to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and our other equity securities. Officers, directors and greater than 10% beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based solely upon review of the copies of such forms furnished to us during the fiscal year ended June 30, 2015,2017 and 2016, there were no latenolate filings, no failures to make filings and no unreported transactions during the period.
Code of Ethics
We have adopted a Code of Conduct for our Principal Executive and Financial Officers. See Part IV, Item 15 of this Report.
Corporate Governance
Nominating Committee
We have not established a Nominating Committee because we believe that our Board of Directors is able to effectively manage the issues normally considered by a Nominating Committee. During the fiscal year period ended June 30, 2016,2017, there were no changes to the procedures by which security holders may recommend nominees to the Company's Board of Directors.
Audit Committee
The Company is a smaller reporting company and presently our audit committee separate fromconsists of the three members of our Boardboard of Directors consisting of Carl Sanko, CPA.
ITEM 11: EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation paid by the Company for services rendered during the periods indicated:
SUMMARY COMPENSATION TABLE
| Name and Position | Year | Salary($) | All other Compensation($)(3)(4) | Total($) |
| 2016 | $12,500 | 0 | $12,500 | |
| Wayne A. Zallen, CEO (1) | 2015 | $30,000 | 0 | $30,000 |
| Transition Period | 0 | 0 | 0 | |
| 2013 | 0 | 0 | 0 | |
| 2016 | $7,500 | 0 | $7,500 | |
| Joann Z. Cleckner, CFO (1) | 2015 | $9,000 | 0 | $9,000 |
| Transition Period | 0 | 0 | 0 | |
| 2013 | 0 | 0 | 0 | |
| 2016 | 0 | 0 | 0 | |
| Jeff W. Holmes, CEO (2) (3) (4) | 2015 | 0 | 0 | 0 |
| Transition Period | 78,722 | 188,786 | 267,508 | |
| 2013 | 153,722 | 2,406 | 156,128 |
The following table provides certain information regarding compensation awarded to, earned by or paid to persons serving as our Named Executive Officerand persons who earned more than $100,000 in July, 2014,fiscal 2017 and 2016. Other than as set out below, no other officer had compensation exceeding $100,000.
Name and Principal Position | Fiscal Year June 30, | Salary | Bonus | Stock Awards | Option Awards | All Other | Total |
Wayne A. Zallen | 2017 | 250,000(1) | - | - | - | - | 250,000 |
Chief Executive Officer, President and Director | 2016 | 166,667(1) | - | - | - | 23,000,000(4) | 23,166,667 |
Joann Z. Cleckner, | 2017 | 100,000(2) | - |
| - | - | 100,000(2) |
Chief Financial Officer, Secretary/Treasurer(3) | 2016 | 100,000(2) | - | 210,000 | - | - | 310,000(2) |
David Tobias, | 2017 | - | - | - | - | - | - |
Director | 2016 | - | - | - | - | 2,000,000(5) | 2,000,000 |
(1)During fiscal 2017 and 2016 subject to the terms of an employment agreement, the Company accrued wages totaling $250,000 and $166,667 respectively for Mr. Zallen, has been salariedour CEO, President and Director, of which $96,000 was paid in fiscal 2017 2016 leaving $320,667 on the balance as at June 30, 2017.
(2)During fiscal 2017 and 2016subject to the rateterms of $2,500 per month. Beginning January 2015,an employment agreement, the Company accrued wages totaling $100,000 and $150,000 respectively for Ms. Cleckner has been salariedof which $57,600was paid in fiscal 2017 leaving 142,400on the balance as at the rate of $1,500 per month. Payment of salaries was suspended effective November 2015 and salaries have not been paid since that date.
(3) Company paid portion of health insurance coverage for Jeff W. Holmes - $4,170.
(4) Restricted stock awards
(5)Mr. Tobias was issued 400,000 Series A Preferred Shares on November 17, 2015 which shares were converted to 2,000,000 common shares valued at $2,000,000
Outstanding Equity Awards at Fiscal Year End
The table below reflects all outstanding equity awards made to any named executive officer that were outstanding at December 31, 2017.
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2017
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option ExercisePrice ($) | Option Expiration Date |
Compensation of Directors
During the most recently completed fiscal years ended 2017 and 2016 members of our board of directors are not compensatedreceived the following stock based compensation for their serviceservices as directors as follows:
(a)Wayne Zallen was issued a total of 12,677 shares in fiscal 2016 valued at $25,354 and a further 4,808 shares in fiscal 2017 valued at $6,250. Shares were valued at the market price on the boarddate compensation was approved for issuance.
(b)David Tobias was issued a total of directors.
(c)Carl Sanko was issued a total of 12,677 shares in fiscal 2016 valued at $25,354 and a further 4,808 shares in fiscal 2017 valued at $6,250. Shares were valued at the market price on the date compensation was approved for issuance.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Security Ownership of Certain Beneficial Owners
The following tables set forth the share holdings of those persons who were the beneficial owners of more than five percent (5%) shareholders of the Company's common stock as of August 2, 2016:
Ownership of Principal Shareholders
Title Of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Owner | Percent of Class (1) |
Common Stock | Wayne A. Zallen 722 W. Dutton Road Eagle Point, OR 97524 | 28,167,170Direct | 31.85% |
(1) Based on a total of 28,789,92488,426,057 shares outstanding.
Security Ownership of Management
The following table sets forth the share holdings of the Company's directors and executive officers as of August 2, 2016:
Ownership of Officers and Directors
Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Owner | Percent of Class |
Common Stock | Wayne A. Zallen 2944 Delta Waters Road Medford, OR 97504 | 28,167,170 Direct | 31.85% |
Common Stock | Joann Z. Cleckner 722 W. Dutton Road Eagle Point, OR 97524 | 800,000 Direct | 0.90% |
Common Stock | Carl S. Sanko, 4824 Denaro Drive Las Vegas, NV 89135 | 3,363,744 Direct | 3.80% |
Common Stock | David Tobias | 2,663,512 Direct | 3.01% |
Common Stock | Total Officers and Directors as a group | 34,194,426 Direct | 39.57% |
(1) Based on a total of 28,789,92488,426,057 shares outstanding.
Securities Authorized for Issuance under Equity Compensation Plans
There are currently no securities authorized for issuance under Equity Compensation Plans.
Options
Equity Incentive Plan
In December 2015, the Company adopted the 2015 Equity Incentive Plan (“Incentive Plan”) with a term of 10 years. The Incentive Plan allows for the issuance up to a maximum of 2 million shares of common stock, options exercisable into common stock of the Company or stock purchase rights exercisable into shares of common stock of the Company. The plan is administered by the board of directors unless a separate delegation to an administrator is made by the board of directors. Options granted under the plan carry a maximum term of 10 years, except to a grantee who is also a 10% beneficial owner at the time of grant, in which case the maximum term is 5 years. In addition, exercise prices of options granted must be within a certain percentage of the closing price on date of grant depending on the level of beneficial ownership of common stock of the Company by the grantee. All vesting conditions are set by the board or administrator. In December 2015, the Company filed a registration statement on Form S-8 covering all shares issued or issuable under the Incentive Plan.
Stock Plan
In December 2015, the Company adopted the 2015 Stock Plan (“Stock Plan”). As a condition of adoption of the Stock Plan, the Company entered into a registration statement on Form S-8 and covered the shares issued under the plan, which registration statement was filed in December 2015. The Stock Plan allows for the issuance up to a maximum of 2 million shares of common stock of the Company. The plan is administered by the board of directors unless a separate delegation to an administrator is made by the board of directors. The Stock Plan shall continue in effect until such time as is terminated by the Board or all shares are issued pursuant to the Stock Plan.
The 2015 Equity Incentive Plan is designed to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to employees, directors and consultants and to promote the success of the Company's business. Options granted under the Plan may be Incentive Stock Options or Non-Qualified Stock Options, as determined by the Administrator at the time of grant. Stock purchase rights may also be granted under the Plan. The maximum aggregate number of shares which may be issued upon exercise of such Options or Stock Purchase Rights is two million (2,000,000) shares of Common Stock. The term of the option is five (5) years from the grant date of such shorter term as may be provided in the Option Agreement. The Plan become effective upon initial Board adoption and continues until terminated but in no case longer than ten (10) years. The Company had granted an option for the purchase of two million shares to date of which 1,500,000 have been exercised.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORS INDEPENDENCE
Transactions with Related Persons
The Company is currently leasing units located in Eagle Point Oregon. The building is an approximately 15,000square footbuilding which has 10 units of approximately 1,500 square feet each available for use. Four units are currently under lease to three different unrelated companies. One unit is being used as the Grow Condos, Inc. offices, and five units are under lease to a company that the CEO of Grow Condos, Inc. controls. The agreement to the lease the 4 condo units with the company controlled by the CEO was entered into the owner prior to its purchase by WCS in 2013. The lease term begins once the tenant improvements are completed and the premises are occupied and continues for a period of 36 months. Four unit lease terms began in the fiscal year ended June 30, 2014, Wayne A. Zallen, our President2016, with cash payments commencing on all four unit leases in the fiscal year ended June 30, 2017.
The CEO had loaned the Company a net of $15,575 the entire amount was re-paid on December 7, 2016.
In November 2015, the Company entered into employment agreements with its CEO and CEO, exchanged his 90% ownership interestCFO. Those employment agreements granted the employees gross annual wages in WCS Enterprises, LLC, an Oregon limited liability company ("WCS"), for 18,369,000 common sharesthe amount of the Registrant. On the same day Carl S. Sanko, a member of our board of directors, exchanged his 2% ownership interest in WCS for 408,200 common shares of the Registrant.
Director Independence
We do not have any independent directors serving on our Board of Directors. The definition the Company uses to determine whether a director is independent is NASDAQ Rule 4200(a)(15). The text of this rule is attached to this Transition Report as Exhibit 99.
ITEM 14: PRINCIPAL ACCOUNTING FEES AND SERVICES
The following is a summary of the fees billed to us by our principal accountants during the fiscal years ended December 31, 2012,2017 and 2013 and2016:
Fee Category |
|
|
| 2017(1) |
|
| 2016(1) |
| ||
Audit Fees |
|
|
| $ | 34,863 |
|
| $ | 30,000 |
|
Audit-related Fees |
|
|
|
| - |
|
|
| - |
|
Tax Fees |
|
|
|
| - |
|
| $ | 2,000 |
|
All Other Fees |
|
|
|
| - |
|
|
| - |
|
Total Fees |
|
|
| $ | 34,863 |
|
| $ | 32,000 |
|
(1)Fees included during the Transition Period:
| Fee Category | Transition Period | 2015 | 2016 | |||||||||
| Audit Fees | $ | 3,850 | $ | 78,923 | $ | 99,945 | ||||||
| Audit-related Fees | - | - | - | |||||||||
| Tax Fees | - | - | $ | 2,000 | ||||||||
| All Other Fees | - | - | - | |||||||||
| Total Fees | $ | 59,900 | $ | 3,850 | $ | 119,945 | ||||||
Audit Fees -
Consists of fees for professional services rendered by our principal accountants for the audit of our annual financial statements and review of the financial statements included in our Forms 10-Q or services that are normally provided by our principal accountants in connection with statutory and regulatory filings or engagements.Audit-related Fees -
Consists of fees for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported under "Audit fees."Tax Fees -
Consists of fees for professional services rendered by our principal accountants for tax compliance, tax advice and tax planning.All Other Fees -
Consists of fees for products and services provided by our principal accountants, other than the services reported under "Audit fees," "Audit-related fees," and "Tax fees" above.Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
We have not adopted an Audit Committee; therefore, there is no Audit Committee policy in this regard. However, we do require approval in advance of the performance of professional services to be provided to us by our principal accountant. Additionally, all services rendered by our principal accountant are performed pursuant to a written engagement letter between us and the principal accountant.
PART IV
ITEM 15: EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1)(2) Financial Statements. See the audited financial statements for the Fiscal Year ended June 30, 20152017 and 2016 contained in Item 8 above which are incorporated herein by this reference.
(b) Exhibits. The following exhibits are filed as part of this Transition Report:
Exhibits
Exhibit Number | Description |
3.1 | Articles of Incorporation |
3.2 | By-laws |
Code of Conduct | |
31 | Rule 13a-14(a)/15d-14(a) Certifications of |
32 | Section 1350 Certifications of |
32 | 906 Certification |
99 | NASDAQ Rule 4200(a)(15) |
101 INS | XBRL Instance Document* |
101 PRE | XBRL Taxonomy Extension Presentation Linkbase Document* |
101 LAB | XBRL Taxonomy Extension Label Linkbase Document* |
101 DEF | XBRL Taxonomy Extension Definition Linkbase Document* |
101 CAL | XBRL Taxonomy Extension Calculation Linkbase Document* |
101 SCH | XBRL Taxonomy Extension Schema Document* |
38SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Grow Condos Inc. | |||
Date: April 24, 2018 | By: | /s/ Wayne A. Zallen | |
Wayne A. Zallen Chief Executive Officer, Acting Chief Financial Officer and President (Principal Executive Officer and Principal Financial and Accounting Officer) | |||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature | Title | Date | ||||
/s/ Wayne A. Zallen | Chief Executive Officer, Acting Chief Financial Officer, Presidentand a Director (Principal Executive Officer and Principal Financial and Accounting Officer) | April 24, 2018 | ||||
Wayne A. Zallen | ||||||
/s/ Carl S. Sanko | Director | April 24, 2018 | ||||
Carl S. Sanko | ||||||
/s/ David Tobias | Director | April 24, 2018 | ||||
David Tobias | ||||||
/s/ Joann Z. Cleckner | Secretary and Treasurer | April 24, 2018 | ||||
Jonan Z. Cleckner |