0001445866-16-002862.txt : 20161114 0001445866-16-002862.hdr.sgml : 20161111 20161110200455 ACCESSION NUMBER: 0001445866-16-002862 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 31 CONFORMED PERIOD OF REPORT: 20160930 FILED AS OF DATE: 20161114 DATE AS OF CHANGE: 20161110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GROW CONDOS, INC. CENTRAL INDEX KEY: 0001448558 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATIONS EQUIPMENT, NEC [3669] IRS NUMBER: 860970023 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-53548 FILM NUMBER: 161989755 BUSINESS ADDRESS: STREET 1: 722 W. DUTTON ROAD CITY: EAGLE POINT STATE: OR ZIP: 97524 BUSINESS PHONE: 541-879-0504 MAIL ADDRESS: STREET 1: 722 W. DUTTON ROAD CITY: EAGLE POINT STATE: OR ZIP: 97524 FORMER COMPANY: FORMER CONFORMED NAME: CALIBRUS, INC. DATE OF NAME CHANGE: 20081023 10-Q 1 growcondos10q09302016.htm 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
X
   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2016
or
 
 
 
   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from: _____________ to _____________
 
GROW CONDOS, INC.
(Exact name of registrant as specified in its charter)
 
NEVADA
000-53548
86-0970023
(State or other jurisdiction
(Commission
(I.R.S. Employer
of incorporation)
File Number)
Identification No.)

722 W. Dutton Road
Eagle Point, OR  97524
 (Address of principal executive offices) (Zip Code)

541-879-0504
 (Registrant's telephone number, including area code)

     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.
 
[X]
  Yes
[  ]
  No
    Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such reports.
 
[X]
  Yes
[  ]
  No
     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
[   ]
 
 
Accelerated filer
[   ]
 
Non-accelerated filer
[   ]
 
 
Smaller reporting company
[X]
 
 
 
     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
[  ]
  Yes
[X]
  No
 
 
     The number of shares of the issuer's Common Stock outstanding as of September 30, 2016 is 29,392,087.
Page 1


 
 
   
PART I – FINANCIAL INFORMATION
 
Item 1.
Financial Statements
3
 
Condensed  Consolidated Balance Sheets – As of September 30, 2016 (Unaudited)  and June 30, 2015
3
 
Condensed Consolidated Statements of Operations (Unaudited) – Three Months Ended September 30, 2016 and 2015
4
 
Condensed Consolidated Statement of Cash Flows (Unaudited) – Three Months Ended September 30, 2016 and 2015
5
 
Notes to Condensed Consolidated Financial Statements (Unaudited)
6
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
10
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
12
Item 4.
Controls and Procedures
12
 
 
 
PART II – OTHER INFORMATION
 
 
 
Item 1.
Legal Proceedings
13
Item 1A
Risk Factors
13
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
13
Item 3.
Defaults Upon Senior Securities
13
Item 4.
Mine Safety Disclosures
13
Item 5.
Other Information
13
Item 6.
Exhibits
13
 
 
 
SIGNATURE PAGE
13

 
Page 2


PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
GROW CONDOS, INC. and Subsidiary
 
CONSOLIDATED BALANCE SHEET
 
as of September 30, 2016 and June 30, 2016
 
             
ASSETS
 
   
September 30
   
June 30,
 
   
2016
   
2016
 
   
(Unaudited)
       
Current Assets
           
    Cash and cash equivalents
 
$
24,268
   
$
44,148
 
    Lease receivables
   
691
     
79
 
    Prepaid expenses
   
11,454
     
20,895
 
                 
        Total Current Assets
   
36,413
     
65,122
 
                 
Property and Equipment, net
   
1,562,579
     
1,523,244
 
Deposits
   
6,879
     
5,381
 
Debt Discount, Summary
   
51,123
     
104,983
 
                 
      Total Assets
 
$
1,656,994
   
$
1,698,730
 
                 
LIABILITIES AND EQUITY
 
                 
Current Liabilities
               
    Accounts payable, trade
   
-
     
3,000
 
    Accrued liabilities
   
463,789
     
353,788
 
    Derivatives, net
   
764,727
     
792,445
 
    Mortgages payable, current portion
   
289,443
     
33,187
 
                 
        Total Current Liabilities
   
1,517,959
     
1,182,420
 
                 
Mortgages payable, less current portion
   
940,325
     
1,203,054
 
Customer deposits
   
4,900
     
4,900
 
Deferred option revenue
   
22,900
     
15,400
 
                 
        Total Liabilities
   
2,486,084
     
2,405,774
 
                 
Shareholder's Equity
               
    Preferred stock, $.001par value, 10,000,000 shares
   
-
     
-
 
      authorized none issued or outstanding
               
    Common stock, $.001 par value, 100,000,000 shares
   
29,392
     
2,085
 
      authorized 29,392,087 and 2,084,561 shares issued
               
      and outstanding
               
    Additional paid-in capital
   
12,584,559
     
12,227,854
 
    Accumulated deficit
   
(13,443,041
)
   
(12,936,983
)
                 
        Total Shareholder's Equity
   
(829,090
)
   
(707,044
)
                 
        Total Liabilities and Shockholder's Equity
 
$
1,656,994
   
$
1,698,730
 
 
Page 3

 
 
GROW CONDOS, INC. AND SUBSIDIARY
 
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
 
For the Three Months Ended September 30, 2016 and 2015
 
             
             
   
2016
   
2015
 
   
(Unaudited)
 
             
Rental revenues
 
$
29,383
   
$
36,783
 
Total revenues
   
29,383
     
36,783
 
                 
Operating expenses
   
289,530
     
39,844
 
                 
Gain/(Loss) from operations
   
(260,147
)
   
(3,061
)
                 
Interest expense
   
19,303
     
16,697
 
Derivative Liability Expense
   
226,610
     
-
 
Loss before provision for income taxes
   
(506,060
)
   
(19,758
)
                 
Provision for income taxes
   
-
     
-
 
Net income/(loss)
 
$
(506,060
)
 
$
(19,758
)
                 
Net loss per common share:
               
   Basic and diluted
 
$
(0.02
)
 
$
(0.01
)
                 
Weighted average common shares; basic and diluted
   
28,790,374
     
2,084,561
 
                 
                 
The Accompanying Notes are an integral part
 
of these Condensed Consolidated Financial Statements
 
 
 

 
Page 4


GROW CONDOS, INC. and Subsidiary
 
CONSOLIDATED STATEMENT OF CASH FLOWS
 
For the Three Months Ended September 30, 2016 and 2015
 
   
   
For the Three Months Ended
 
   
2016
   
2015
 
Cash flows from operating activities:
 
(Unaudited)
 
    Net loss
 
$
(506,060
)
 
$
(19,758
)
                 
Adjustments to reconcile net loss to net cash provided by operating activities:
         
    Depreciation and amortization
   
7,057
     
7,057
 
    Stock issued for services
           
3,108
 
    Allowance for doubtful accounts
               
Changes in assets and liabilities:
               
    Deposits
   
(1,498
)
   
-
 
    Lease receivable
   
(612
)
   
129
 
    Prepaids
   
9,442
     
2,524
 
    Accounts payable, trade
   
(3,000
)
   
(43
)
    Accrued expenses
   
157,124
     
(2,583
)
    Security deposit
               
    Deferred options revenue
   
(39,622
)
   
(10,500
)
             
.
 
                 
    Net cash used by operating activities
   
(377,170
)
   
(20,066
)
                 
Cash flows from investing activities:
               
    Purchase of property and improvements
   
(46,392
)
       
                 
    Net cash used by investing activities
   
(46,392
)
   
-
 
                 
Cash flows from financing activities:
               
    Repayments of mortgage
   
(6,474
)
   
(9,744
)
    Repayment of debt
               
    Proceeds from short-term debt
   
26,143
         
    Proceeds from exercise of warrants
   
384,012
         
                 
    Net cash provided by financing activities
   
403,681
     
(9,744
)
                 
Net increase (decrease) in cash and cash equivalents
   
(19,880
)
   
(29,810
)
                 
Cash and cash equivalents at beginning of period
   
44,148
     
42,747
 
                 
Cash and cash equivalents at end of period
 
$
24,268
   
$
12,937
 
                 
Supplemental disclosure of cash flow information:
               
                 
Cash paid during the period for:
               
    Interest
 
$
19,303
   
$
13,137
 
    Taxes
 
$
-
   
$
-
 
                 
The Accompanying Notes are an integral part
 
of these Condensed Consolidated Financial Statements
 

 
Page 5

 
GROW CONDOS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 
 
       
 
1. Summary of Significant Accounting Policies and Use of Estimates:
 
Presentation of Interim Information:
 
The condensed consolidated financial statements included herein have been prepared by Grow Condos, Inc. ("we", "us", "our" or "Company") without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC") and should be read in conjunction with the audited consolidated financial statements as of June 30, 2016.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, as permitted by the SEC, although we believe the disclosures, which are made, are adequate to make the information presented not misleading. Further, the condensed consolidated financial statements reflect, in the opinion of management, all normal recurring adjustments necessary to present fairly our financial position at September 30, 2016, and the results of our operations and cash flows for the periods presented. The June 30, 2016 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.
 
Interim results are subject to significant seasonal variations and the results of operations for the three months ended September 30, 2016 are not necessarily indicative of the results to be expected for the full year.
 
Nature of Corporation:
 
Grow Condos, Inc. ("GCI" or the "Company") (f/k/a Fanatic Fans Inc. and Calibrus, Inc.) was incorporated on October 22, 1999, in the State of Nevada.  
 
Our subsidiary, 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 aeroponic grow facilities to support cannabis farmers. WCS intends to own, lease, sell and manage multi- tenant properties so as to reduce the risk of ownership and reduce costs to tenants and owners.  
 
As of the consummation of the transaction on June 30, 2014, the financial statements of WCS are consolidated with the financial statements of GCI under the name of GCI but the financial statements are the continuation of WCS with the adjustment to reflect the legal capital of GCI.  The assets and liabilities of WCS are measured at their pre-combination carrying amounts and the assets and liabilities of GCI are accounted for at fair value as required under the purchase method of accounting under a reverse acquisition. The results of operations of GCI (as it was f/k/a Fanatic Fans, Inc. f/k/a Calibrus, Inc.) are included in the consolidated financial statements from the closing date of the acquisition.
 
Basis of Presentation:
 
The accompanying condensed 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 condensed consolidated financial statements include the accounts of Grow Condos, Inc., and its wholly-owned subsidiary, WCS. All significant intercompany accounting transactions have been eliminated as a result of consolidation.
 
Use of Estimates:
 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  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, the estimate of the allowance for doubtful accounts, equity compensation, allocation of purchase price for acquired assets, and depreciable lives of long lived assets.
 
Page 6

 GROW CONDOS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 
Fair Value of Financial Instruments:
 
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 accounts payable, accrued liabilities, mortgages payable and short term advances approximate fair value given their short term nature or effective interest rates, which represent level 3 inputs.
 
Earnings per Share:

Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the 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. For the period ended September 30, 2016, all potentially dilutive securities are anti-dilutive due to the Company's losses from operations. 
 
All dilutive common stock equivalents are reflected in our earnings (loss) per share calculations. Anti-dilutive common stock equivalents are not included in our earnings (loss) per share calculations.  As of September 30, 2016 the Company had no outstanding options and no outstanding warrants.
 
Income Taxes:
 
The Company files income tax returns in the U.S. federal jurisdiction and the State of Oregon.  The Company is subject to federal, state and local income tax examinations by tax authorities for approximately the past three years, or in some instances longer periods.  

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes".  SFAS No. 109 requires the Company to provide a net deferred tax asset/liability equal to the expected future tax benefit/expense of temporary reporting differences between book and tax accounting methods and any available operating loss or tax credit carryforwards.  At  June30,2015, the Company has available unused operating loss carryforwards of approximately $63,419, which may be applied against future taxable income and which expire in various years through 2025.

The amount of and ultimate realization of the benefits from the operating loss carryforwards for income tax purposes is dependent, in part, upon the tax laws in effect, the future earnings of the Company, and other future events, the effects of which cannot be determined.  Because of the uncertainty surrounding the realization of the loss carryforwards, the Company has established a valuation allowance equal to the tax effect of the loss carryforwards and, therefore, no deferred tax asset has been recognized for the loss carryforwards.  The net deferred tax assets are approximately $63,042 and $377 as of June 30, 2015 and 2014,  respectively, with an offsetting valuation allowance of the same.

Going Concern:
 
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. In their report dated September 6, 2016, our independent registered public accounting firm included an emphasis-of-matter paragraph with respect to our financial statements for the period from July 1, 2015 to June 30, 2016 concerning the Company's assumption that we will continue as a going concern. The Company operates 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 condensed
consolidated financial statements, the Company has not yet achieved profitable operations and has an accumulated deficit of $13,443,041, which we have determined raises substantial doubt about the Company's ability to continue as a going concern.

Further, marijuana remains illegal under federal law as a schedule-I controlled substance, even in those jurisdictions in which the use of medical or recreational marijuana has been legalized at the state level.  A change in the federal attitude towards enforcement could cripple the industry.  The medical and recreational marijuana industry is our primary target market, and if this industry was unable to operate, we would be subject to all potential remedies under federal law and lose the majority of our potential clients, which would have a negative impact on our business, operations and financial condition.
 
Page 7


GROW CONDOS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 
The ability of the Company to continue as a going concern is dependent on our ability to raise adequate capital to fund operating losses until we are able to engage in profitable business operations and the continuation of the current regulatory and enforcement environment. To the extent financing is not available, the Company may not be able to, or may be delayed in, developing our services and meeting our obligations. 
 
Management's plans to address these matters include maintaining an awareness of the current regulatory and enforcement environment, controlling costs, evaluating our projected expenditures relative to our available cash and evaluating additional means of financing in order to satisfy our working capital and other cash requirements. The accompanying condensed consolidated financial statements do not reflect any adjustments that might result from the outcome of these uncertainties.

2.   Warrants
 
On March 21, 2016 the Company entered into a transaction with Auctus Fund, LLC.   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.  At any time prior to the complete satisfaction of the Note, it was convertible into shares of the Company's common stock.  On September 27, 2016 the Company received a Notice of Conversion.  A total of 352,163 shares were issued to Auctus Fund, LLC in payment of the debt.

On March 28, 2016 the Company entered into a transaction with Tangiers Global, LLC.  In exchange  for $90,000 cash net of fees, the Company issued a convertible promissory note in the amount of $100,000.  The Note had a maturity date of six (6) months from the date of issue and interest at 10% per annum.   On October 11, 2016 the Company received a Notice of Conversion for $50,000.   A total of 200,000 shares were Issued to Tangiers Global, LLC in payment of one half on the debt owed.

The Company has entered into an Equity Incentive Plan with a grant date of April 15, 2016.  The plan allows for immediate vesting.  The total number of shares granted is two (2) million shares at an exercise price of $.40/share.  The shares under this plan are to be utilized for non-related party compensation.  On September 9, 2016 250,000 shares were issued in exchange for $100,000 under the Plan.

3. Related Party Transactions

The Chief Financial Officer, who is a sibling of the Chief Executive Officer, provides the use of her facilities to the Company at no costs to the Company since our inception.

The Company is currently leasing units located in Eagle Point Oregon.  The building is an approximately 15,000 square foot building which has 10 units of approximately 1,500 square feet each available for use.  Four units are currently under lease to three different companies.  One unit is being used as the Grow Condos, Inc. offices, and five units are under lease to a company that the CEO controls.  The agreement with the company controlled by the CEO was entered into prior to the incorporation of Grown Condos, Inc.  The lease term begins once the tenant improvements are completed and the premises are occupies, and continues for a period of 36 months.  The lease agreement requires no rental payments for the first 12 months of the lease and rental payments of $54,000 per year for the second and third year of the lease.  As of July 1, 2016, the lease term has begun on two of the five units.  The lease term has not begun as of September 30, 2016 on the remaining three units and no revenue associated with these three units has been recorded in the accompanying financial statements.

The CEO has loaned the Company a net of $15,575 as of September 30, 2016.  At this time there is no note in place with terms for re-payment.

The two employees of the Company, the CEO and the CFO have not been compensated since November 2015.  The salaries owed them plus employer taxes, based on their employee agreements entered into in November 2015 have been accrued monthly.

In consideration for the contributions to the Company that have been made by the Board of Directors, the following compensation was approved and issued on October 18, 2016.  For the fiscal year 2015-2016 members of the Board were issued a total of 13,334 shares at an average price of $1.42 per share.   For the first quarter of the 2016-2017 fiscal year current board members were issues a total of 18,030 shares at an average price of $1.04 per share.
 
Page 8



GROW CONDOS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 
4.  Subsequent Events

On March 28, 2016 the Company entered into a transaction with Tangiers Global, LLC.  In exchange  for $90,000 cash net of fees, the Company issued a convertible promissory note in the amount of $100,000.  The Note had a maturity date of six (6) months from the date of issue and interest at 10% per annum.   On October 11, 2016 the Company received a Notice of Conversion for $50,000.   A total of 200,000 shares were Issued to Tangiers Global, LLC in payment of one half on the debt owed.

Page 9


 
Item 2.                      Management's Discussion and Analysis of Financial Condition and Results of Operations.
 
The following is management's discussion and analysis of certain significant factors affecting the Company's financial position and operating results during the periods included in the accompanying condensed consolidated financial statements. Except for the historical information contained herein, the matters set forth in this discussion are forward-looking statements.
 
Overview
 
On June 30, 2015, GCI entered into a definitive agreement (the "Agreement") with 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 ownership in the Company received in the acquisition. This member acquired 18,369,000 shares of GCI common stock on June 30, 2015, in exchange for his ownership share of WCS. The shares received under the Agreement gave this member effective control of GCI by virtue of holding approximately 44% of GCI's voting stock.  In addition, on June 30, 2015, 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.
 
Our wholly-owned subsidiary, WCS Enterprises, LLC ("WCS") is an Oregon limited liability company which was formed on September 9, 2013, began operations in October 2014, and was acquired by us in June 2014 in exchange for shares of our common stock.  The acquisition of WCS resulted in a change of control of the Company and at or shortly after the closing of
such acquisition; the persons designated by WCS became the officers and directors of the Company.  As a result of our acquisition of WCS in June 2014, we became engaged in the real estate purchaser, developer and manager of specific use industrial properties business and continue to develop and operate our social networking projects. 
 
Through WCS, 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 will 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 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. The Company is not directly involved in the growing, distribution or sale of Cannabis.
 
At the present time the Company, which includes WCS, has fixed monthly operating costs of approximately $14,460.  The monthly fixed operating expenses are comprised of $6,829 in monthly mortgage payments on our building, $665 for building security, $4,443 per month for the salaries of our CEO and CFO (though it should be noted that for the calendar year 2016 to date, neither the CEO or the CFO have been paid any salary), approximately $565 in utilities, approximately $1,550 in property taxes and $408 for insurance.  Accordingly, expenses associated with maintaining the building are approximately $10,000 per month. The Company also has variable expenses relating to the development of its business plan and the payment of professional fees.  The amount and extent of the variable expenses over the next 12 months are unknown at this time.
 
The Company has fixed monthly income from rents and option payments of approximately $11,600 per month which are paid to the Company by the tenants in our building.  It is projected that when the building is fully leased and all tenants are paying monthly lease payments assuming current market rates, monthly revenue will total $19,250 which will make the building self-sustaining since current expenses total $10,000 per month. 
 
The Company is in the process of seeking additional properties to purchase, in addition to the Pioneer project which closed escrow in April 2016, after the model of our current building.  However, it is the desire of management to purchase new properties outright with funds obtained by selling equity in the Company.  If the Company is successful in raising working capital in this manner, it follows that new properties will eventually present the Company with positive cash flow.
 

Page 10

 
Results of Operations
 
The following table sets forth certain items derived from our Condensed Statements of Operations for the three months indicated:
 
  
 
September 30,
   
September 30,
 
 
 
2016
   
2015
 
  
 
(Unaudited)
 
 Revenue
 
$
29,383
   
$
36,783
 
 Operating Expenses
   
289,530
     
39,844
 
 Loss from operations
   
(260,147
)
   
(3,061
)
 Interest Expense
   
(19,303
)
   
(16,697
)
 Derivative Liability
   
(226,610
)
   
-
 
                 
 Net Loss
 
$
(506,060
)
 
$
(19,758
)
                 

Revenue – The Company generated $29,383 in revenue for the three months ended September 30, 2016.  All revenue was derived through our subsidiary and was comprised of monthly rental income from tenants and $400 in late fees collected. 
 
Operating Expenses – Operating expenses for the three months ended September 30, 2016 totaled $289,530.   The majority of our operating expenses were comprised of accrued, but not paid wages, professional fees, and amortization of the Auctus and Tangiers convertible notes.
 
Interest Expense – Interest expense for the three months ended September 30, 2016 totaled $19,303.  All interest expense for the quarter was related to the either mortgages on the Company's rental property or interest on the Pioneer promissory note.

Liquidity and Capital Resource; Going Concern
 
At September 30, 2016, the Company had cash on hand of $24,268.  This is sufficient to sustain the day to day operations of the Company for approximately 60 days.  It is not likely that operating revenues will increase in the near future to a sufficient extent to cover the operating expenses of the Company.   Therefore, it will be necessary to obtain additional capital from the sale of equity or debt securities to continue operations beyond 60 days.

Management believes in the future of the Company and in its ability to grow its business and to raise capital as needed until such time as the business operations of the Company become self-sustaining.

In their report dated September 6, 2016, our independent registered public accounting firm included an emphasis-of-matter paragraph with respect to our financial statements for the period from July 1, 2015 to June 30, 2016 concerning the Company's assumption that we will continue as a going concern.  Our ability to continue as a going concern is an issue raised as a result of the Company operating with an industry that is illegal under federal law, we have yet to achieve profitable operations, we have a significant accumulated 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. These factors raise substantial doubt about the Company's ability to continue as a going concern.
 
Forward-Looking Statements
 
We have made forward-looking statements in this quarterly report on Form 10-Q, including the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" that are based on our beliefs and assumptions and on information currently available to us.  Forward-looking statements include the information concerning our possible or assumed search for new business opportunities and future costs of operations.  Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words "believe," "expect," "anticipate," "intend," "plan," "estimate" or  similar expressions.
 
Forward-looking statements involve risks, uncertainties and assumptions.  Actual results may differ materially from those expressed in the forward-looking statements.  You should understand that many important factors could cause our results to differ materially from those expressed in the forward-looking statements.  These factors include, without limitation, the difficulty in locating new business opportunities, our regulatory environment, our limited operating history, our ability to implement our growth strategy, our obligations to pay professional fees, and other economic conditions and increases in corporate maintenance and reporting costs.  Unless legally required, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
 
Page 11

 
Off Balance Sheet Arrangements
 
None.
 
Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
 
Not required.
 
Item 4.
Controls and Procedures.
 
Evaluation of Disclosure Controls and Procedures
 
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, 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 Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2016, 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 Chief Executive Officer, as appropriate to allow timely decisions regarding required disclosure.
 
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.
 
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.

The CFO performs all accounting functions. Therefore, there is no segregation of duties. For any transactions that are not considered regular day to day transactions or are expense reimbursement transactions, approval is requested from the CEO.

We do not believe that this material weakness has resulted in deficient financial reporting because we have worked through the reporting process to review our transactions to assure compliance with professional standards.
 
Accordingly, while we identified a material weakness in our system of internal control over financial reporting as of September 30, 2016, we believe that we have taken reasonable steps to ascertain that the financial information contained in this report is in accordance with accounting principles generally accepted in the United States.
 
Changes in Internal Control Over Financial Reporting
 
 In addition, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
It should be noted that any system of controls, however well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
 
Page 12

 
PART II – OTHER INFORMATION
 
Item 1.
Legal Proceedings.
 
None.
 
Item 1A.
Risk Factors.
 
Not required for smaller reporting companies.
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
 
Subsequent to September 30, 2016, the Company has not issued shares of its common stock.
 
Item 3.
Defaults Upon Senior Securities.
 
None.
 
Item 4.
Mine Safety Disclosures.
 
       Not Applicable
 
Item 5.
Other Information.
 
None 
 
Item 6.
Exhibits.
 

Exhibit
 
Description
31
 
Certificate of Wayne A. Zallen and Joann Z. Cleckner pursuant to Rule 13a-14(a) under the Securities and Exchange Act of 1934, as amended.
32
 
Certificate of Wayne A. Zallen and Joann Z. Cleckner pursuant to Rule 13a-14(b) under the Securities and Exchange Act of 1934, as amended.
101
 
Interactive Data Files.


 

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
 
Grow Condos, Inc.


By: /s/ Wayne A. Zallen
Date:  November 7, 2016
     Wayne A. Zallen, CEO
 
   
By: /s/ Joann Z. Cleckner
Date:  November 7, 2016
     Joann Z. Cleckner, CFO
 

Page 13



 
EX-31 2 ex31.htm EXHIBIT 31
 
Exhibit 31
Certification of Principal Executive Officer and Principal Accounting Officer
 
Pursuant to 18 U.S.C. 1350
 
(Section 302 of the Sarbanes-Oxley Act of 2002)
 
I, Wayne A. Zallen and Joann Z. Cleckner, certify that:
 
1.
I have reviewed this quarterly report on Form 10-Q of Grow Condos, Inc.
 
2.
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
 
3.
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
 
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have;
 
 
(a)
Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
 
 
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
 
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date") and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an quarterly report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
 
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
 
 
(a)
All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors, any material weaknesses in internal controls; and
 
 
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls.
  
Date: November 7, 2016           
                                           
/s/ Wayne A. Zallen                                                                
Wayne A. Zallen, Chief Executive Officer

/s/ Joann Z. Cleckner                                                                
Joann Z. Cleckner, Chief Financial Officer
 


EX-32 3 ex32.htm EXHIBIT 32
 
Exhibit 32
Certification of Principal Executive Officer and Principal Accounting Officer
Pursuant to 18 U.S.C. 1350
(Section 906 of the Sarbanes-Oxley Act of 2002)


Wayne A. Zallen, Chief Executive Officer, and Joann Z. Cleckner, Principal Accounting Officer and Chief Financial Officer, of Grow Condos, Inc. (the "Registrant") do hereby certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of our knowledge, based upon a review of the Quarterly Report on Form 10-Q for the period ended September 30, 2016 Registrant, as filed with the Securities and Exchange Commission on the date hereof (the "Report"):

 
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
 
 
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 
Dated:  November 7, 2016

/s/ Wayne A. Zallen                                                                
Wayne A. Zallen, Chief Executive Officer


/s/ Joann Z. Cleckner                                                                
Joann Z. Cleckner, Chief Financial Officer

* A signed original of this written statement required by Section 906 has been provided to Grow Condos, Inc. and will be retained by Grow Condos, Inc. and furnished to the Securities Exchange Commission or its staff upon request.
 


EX-101.INS 4 grwc-20160930.xml XBRL INSTANCE DOCUMENT 0.001 0.001 100000000 100000000 29392087 2084561 29392087 2084561 0.001 0.001 10000000 10000000 29383 36783 29383 36783 289530 39844 -260147 -3061 19303 16697 226610 -506060 -19758 -0.02 -0.01 28790374 2084561 691 79 11454 20895 36413 65122 1562579 1523244 6879 5381 51123 104983 1656994 1698730 3000 463789 353788 764727 792445 289443 33187 1517959 1182420 940325 1203054 4900 4900 22900 15400 2486084 2405774 29392 2085 12584559 12227854 -12936983 -829090 -707044 1656994 1698730 -506060 -19758 7057 7057 3108 1498 612 -129 -9442 -2524 -3000 -43 157124 -2583 -39622 -10500 -377170 -20066 46392 -46392 6474 9744 26143 384012 403681 -9744 -19880 -29810 44148 42747 24268 12937 19303 13137 10-Q 2016-09-30 false GROW CONDOS, INC. 0001448558 grwc --06-30 29392087 Smaller Reporting Company Yes No No 2017 Q1 <!--egx--><p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'><b>1. Summary of Significant Accounting Policies and Use of Estimates:</b></p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'><i><u>Presentation of Interim Information:</u></i></p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>The condensed consolidated financial statements included herein have been prepared by Grow Condos, Inc. (&quot;we&quot;, &quot;us&quot;, &quot;our&quot; or &quot;Company&quot;) without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission (&quot;SEC&quot;) and should be read in conjunction with the audited consolidated financial statements as of June 30, 2016.&nbsp;&nbsp;Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, as permitted by the SEC, although we believe the disclosures, which are made, are adequate to make the information presented not misleading. Further, the condensed consolidated financial statements reflect, in the opinion of management, all normal recurring adjustments necessary to present fairly our financial position at September 30, 2016, and the results of our operations and cash flows for the periods presented. The June 30, 2016 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>Interim results are subject to significant seasonal variations and the results of operations for the three months ended September 30, 2016 are not necessarily indicative of the results to be expected for the full year.</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'><i><u>Nature of Corporation:</u></i></p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>Grow Condos, Inc. (&quot;GCI&quot; or the &quot;Company&quot;) (f/k/a Fanatic Fans Inc. and Calibrus, Inc.) was incorporated on October 22, 1999, in the State of Nevada.&nbsp;&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>Our subsidiary, WCS is an Oregon limited liability company which was formed on September 9, 2013 with operations beginning in October 2013.&nbsp;&nbsp;WCS is a real estate purchaser, developer and manager of specific use industrial properties providing &quot;Condo&quot; style turn-key aeroponic grow facilities to support cannabis farmers. WCS intends to own, lease, sell and manage multi- tenant properties so as to reduce the risk of ownership and reduce costs to tenants and owners.&nbsp;&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>As of the consummation of the transaction on June 30, 2014, the financial statements of WCS are consolidated with the financial statements of GCI under the name of GCI but the financial statements are the continuation of WCS with the adjustment to reflect the legal capital of GCI.&nbsp;&nbsp;The assets and liabilities of WCS are measured at their pre-combination carrying amounts and the assets and liabilities of GCI are accounted for at fair value as required under the purchase method of accounting under a reverse acquisition. The results of operations of GCI (as it was f/k/a Fanatic Fans, Inc. f/k/a Calibrus, Inc.) are included in the consolidated financial statements from the closing date of the acquisition.</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'><i><u>Basis of Presentation:</u></i></p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>The accompanying condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States (&quot;GAAP&quot;), and pursuant to the rules and regulations of the Securities and Exchange Commission (the &quot;SEC&quot;).</p> <p style='margin-right:0in;margin-left:0in;margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'><i><u>Consolidation:&nbsp;</u></i></p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>These condensed consolidated financial statements include the accounts of Grow Condos, Inc., and its wholly-owned subsidiary, WCS. All significant intercompany accounting transactions have been eliminated as a result of consolidation.</p> <p style='margin-right:0in;margin-left:0in;margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'><i><u>Use of Estimates:</u></i></p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>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.&nbsp;&nbsp;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, the estimate of the allowance for doubtful accounts, equity compensation, allocation of purchase price for acquired assets, and depreciable lives of long lived assets.</p> <p style='margin-right:0in;margin-left:0in;margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'><i><u>Fair Value of Financial Instruments:</u></i></p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>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 accounts payable, accrued liabilities, mortgages payable and short term advances approximate fair value given their short term nature or effective interest rates, which represent level 3 inputs.</p> <p style='margin-right:0in;margin-left:0in;margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'><i><u>Earnings per Share:</u></i></p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the 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.&nbsp;For the period ended September 30, 2016, all potentially dilutive securities are anti-dilutive due to the Company's losses from operations.&nbsp;</p> <p align="center" style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in;text-align:center'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>All dilutive common stock equivalents are reflected in our earnings (loss) per share calculations. Anti-dilutive common stock equivalents are not included in our earnings (loss) per share calculations.&nbsp;&nbsp;As of September 30, 2016 the Company had no outstanding options and no outstanding warrants.</p> <p style='margin-right:0in;margin-left:0in;margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'><i><u>Income Taxes:</u></i></p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>The Company files income tax returns in the U.S. federal jurisdiction and the State of Oregon.&nbsp; The Company is subject to federal, state and local income tax examinations by tax authorities for approximately the past three years, or in some instances longer periods.&nbsp; </p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, &quot;Accounting for Income Taxes&quot;.&nbsp; SFAS No. 109 requires the Company to provide a net deferred tax asset/liability equal to the expected future tax benefit/expense of temporary reporting differences between book and tax accounting methods and any available operating loss or tax credit carryforwards.&nbsp; At&nbsp; June30,2015, the Company has available unused operating loss carryforwards of approximately $63,419, which may be applied against future taxable income and which expire in various years through 2025.</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>The amount of and ultimate realization of the benefits from the operating loss carryforwards for income tax purposes is dependent, in part, upon the tax laws in effect, the future earnings of the Company, and other future events, the effects of which cannot be determined.&nbsp; Because of the uncertainty surrounding the realization of the loss carryforwards, the Company has established a valuation allowance equal to the tax effect of the loss carryforwards and, therefore, no deferred tax asset has been recognized for the loss carryforwards.&nbsp; The net deferred tax assets are approximately $63,042 and $377 as of June 30, 2015 and 2014,&nbsp; respectively, with an offsetting valuation allowance of the same.</p> <p style='margin-right:0in;margin-left:0in;margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'><i><u>Going Concern:</u></i></p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. In their report dated September 6, 2016, our independent registered public accounting firm included an emphasis-of-matter paragraph with respect to our financial statements for the period from July 1, 2015 to June 30, 2016 concerning the Company's assumption that we will continue as a going concern.&nbsp;The Company operates within an industry that is illegal under federal law,&nbsp;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 condensed</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>consolidated financial statements, the Company has not yet achieved profitable operations and has an accumulated deficit of $13,443,041, which we have determined raises substantial doubt about the Company's ability to continue as a going concern.</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>Further, marijuana remains illegal under federal law as a schedule-I controlled substance, even in those jurisdictions in which the use of medical or recreational marijuana has been legalized at the state level.&nbsp;&nbsp;A change in the federal attitude towards enforcement could cripple the industry.&nbsp;&nbsp;The medical and recreational marijuana industry is our primary target market, and if this industry was unable to operate, we would be subject to all potential remedies under federal law and lose the majority of our potential clients, which would have a negative impact on our business, operations and financial condition.</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>The ability of the Company to continue as a going concern is dependent on our ability to raise adequate capital to fund operating losses until we are able to engage in profitable business operations and the continuation of the current regulatory and enforcement environment. To the extent financing is not available, the Company may not be able to, or may be delayed in, developing our services and meeting our obligations.&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>Management's plans to address these matters include maintaining an awareness of the current regulatory and enforcement environment, controlling costs, evaluating our projected expenditures relative to our available cash and evaluating additional means of financing in order to satisfy our working capital and other cash requirements. The accompanying condensed consolidated financial statements do not reflect any adjustments that might result from the outcome of these uncertainties.</p> <!--egx--><p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'><b>2.&nbsp;&nbsp;&nbsp;Warrants</b></p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>On March 21, 2016 the Company entered into a transaction with Auctus Fund, LLC.&nbsp;&nbsp; In exchange for $75,000 cash net of fees, the Company issued a convertible promissory note in the amount of $83,750.&nbsp; The Note had a maturity date of nine (9) months from date of issue and interest at 10% per annum.&nbsp; At any time prior to the complete satisfaction of the Note, it was convertible into shares of the Company's common stock.&nbsp; On September 27, 2016 the Company received a Notice of Conversion.&nbsp; A total of 352,163 shares were issued to Auctus Fund, LLC in payment of the debt.</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>On March 28, 2016 the Company entered into a transaction with Tangiers Global, LLC.&nbsp; In exchange&nbsp; for $90,000 cash net of fees, the Company issued a convertible promissory note in the amount of $100,000.&nbsp; The Note had a maturity date of six (6) months from the date of issue and interest at 10% per annum.&nbsp;&nbsp; On October 11, 2016 the Company received a Notice of Conversion for $50,000.&nbsp;&nbsp; A total of 200,000 shares were Issued to Tangiers Global, LLC in payment of one half on the debt owed.</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>The Company has entered into an Equity Incentive Plan with a grant date of April 15, 2016.&nbsp; The plan allows for immediate vesting.&nbsp; The total number of shares granted is two (2) million shares at an exercise price of $.40/share.&nbsp; The shares under this plan are to be utilized for non-related party compensation.&nbsp; On September 9, 2016 250,000 shares were issued in exchange for $100,000 under the Plan.</p> <!--egx--><p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'><b>3. Related Party Transactions</b></p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>The Chief Financial Officer, who is a sibling of the Chief Executive Officer, provides the use of her facilities to the Company at no costs to the Company since our inception.</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>The Company is currently leasing units located in Eagle Point Oregon.&nbsp; The building is an approximately 15,000 square foot building which has 10 units of approximately 1,500 square feet each available for use.&nbsp; Four units are currently under lease to three different companies.&nbsp; One unit is being used as the Grow Condos, Inc. offices, and five units are under lease to a company that the CEO controls.&nbsp; The agreement with the company controlled by the CEO was entered into prior to the incorporation of Grown Condos, Inc.&nbsp; The lease term begins once the tenant improvements are completed and the premises are occupies, and continues for a period of 36 months.&nbsp; The lease agreement requires no rental payments for the first 12 months of the lease and rental payments of $54,000 per year for the second and third year of the lease.&nbsp;&nbsp;As of July 1, 2016, the lease term has begun on two of the five units.&nbsp;&nbsp;The lease term has not begun as of September 30, 2016 on the remaining three units and no revenue associated with these three units has been recorded in the accompanying financial statements.</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>The CEO has loaned the Company a net of $15,575 as of September 30, 2016.&nbsp; At this time there is no note in place with terms for re-payment.</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>The two employees of the Company, the CEO and the CFO have not been compensated since November 2015.&nbsp; The salaries owed them plus employer taxes, based on their employee agreements entered into in November 2015 have been accrued monthly.</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>In consideration for the contributions to the Company that have been made by the Board of Directors, the following compensation was approved and issued on October 18, 2016.&nbsp; For the fiscal year 2015-2016 members of the Board were issued a total of 13,334 shares at an average price of $1.42 per share.&nbsp;&nbsp; For the first quarter of the 2016-2017 fiscal year current board members were issues a total of 18,030 shares at an average price of $1.04 per share.</p> <!--egx--><p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'><b>4.&nbsp;&nbsp;Subsequent Events</b></p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>On March 28, 2016 the Company entered into a transaction with Tangiers Global, LLC.&nbsp; In exchange&nbsp; for $90,000 cash net of fees, the Company issued a convertible promissory note in the amount of $100,000.&nbsp; The Note had a maturity date of six (6) months from the date of issue and interest at 10% per annum.&nbsp;&nbsp; On October 11, 2016 the Company received a Notice of Conversion for $50,000.&nbsp;&nbsp; A total of 200,000 shares were Issued to Tangiers Global, LLC in payment of one half on the debt owed.</p> <!--egx--><p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'><i><u>Basis of Presentation:</u></i></p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>The accompanying condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States (&quot;GAAP&quot;), and pursuant to the rules and regulations of the Securities and Exchange Commission (the &quot;SEC&quot;).</p> <!--egx--><p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'><i><u>Consolidation:&nbsp;</u></i></p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>These condensed consolidated financial statements include the accounts of Grow Condos, Inc., and its wholly-owned subsidiary, WCS. All significant intercompany accounting transactions have been eliminated as a result of consolidation.</p> <!--egx--><p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'><i><u>Use of Estimates:</u></i></p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>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.&nbsp;&nbsp;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, the estimate of the allowance for doubtful accounts, equity compensation, allocation of purchase price for acquired assets, and depreciable lives of long lived assets.</p> <!--egx--><p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'><i><u>Fair Value of Financial Instruments:</u></i></p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>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 accounts payable, accrued liabilities, mortgages payable and short term advances approximate fair value given their short term nature or effective interest rates, which represent level 3 inputs.</p> <!--egx--><p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'><i><u>Earnings per Share:</u></i></p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the 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.&nbsp;For the period ended September 30, 2016, all potentially dilutive securities are anti-dilutive due to the Company's losses from operations.&nbsp;</p> <p align="center" style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in;text-align:center'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>All dilutive common stock equivalents are reflected in our earnings (loss) per share calculations. Anti-dilutive common stock equivalents are not included in our earnings (loss) per share calculations.&nbsp;&nbsp;As of September 30, 2016 the Company had no outstanding options and no outstanding warrants.</p> <!--egx--><p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'><i><u>Income Taxes:</u></i></p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>The Company files income tax returns in the U.S. federal jurisdiction and the State of Oregon.&nbsp; The Company is subject to federal, state and local income tax examinations by tax authorities for approximately the past three years, or in some instances longer periods.&nbsp; </p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, &quot;Accounting for Income Taxes&quot;.&nbsp; SFAS No. 109 requires the Company to provide a net deferred tax asset/liability equal to the expected future tax benefit/expense of temporary reporting differences between book and tax accounting methods and any available operating loss or tax credit carryforwards.&nbsp; At&nbsp; June30,2015, the Company has available unused operating loss carryforwards of approximately $63,419, which may be applied against future taxable income and which expire in various years through 2025.</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>The amount of and ultimate realization of the benefits from the operating loss carryforwards for income tax purposes is dependent, in part, upon the tax laws in effect, the future earnings of the Company, and other future events, the effects of which cannot be determined.&nbsp; Because of the uncertainty surrounding the realization of the loss carryforwards, the Company has established a valuation allowance equal to the tax effect of the loss carryforwards and, therefore, no deferred tax asset has been recognized for the loss carryforwards.&nbsp; The net deferred tax assets are approximately $63,042 and $377 as of June 30, 2015 and 2014,&nbsp; respectively, with an offsetting valuation allowance of the same.</p> <!--egx--><p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'><i><u>Going Concern:</u></i></p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. In their report dated September 6, 2016, our independent registered public accounting firm included an emphasis-of-matter paragraph with respect to our financial statements for the period from July 1, 2015 to June 30, 2016 concerning the Company's assumption that we will continue as a going concern.&nbsp;The Company operates within an industry that is illegal under federal law,&nbsp;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 condensed</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>consolidated financial statements, the Company has not yet achieved profitable operations and has an accumulated deficit of $13,443,041, which we have determined raises substantial doubt about the Company's ability to continue as a going concern.</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>Further, marijuana remains illegal under federal law as a schedule-I controlled substance, even in those jurisdictions in which the use of medical or recreational marijuana has been legalized at the state level.&nbsp;&nbsp;A change in the federal attitude towards enforcement could cripple the industry.&nbsp;&nbsp;The medical and recreational marijuana industry is our primary target market, and if this industry was unable to operate, we would be subject to all potential remedies under federal law and lose the majority of our potential clients, which would have a negative impact on our business, operations and financial condition.</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>The ability of the Company to continue as a going concern is dependent on our ability to raise adequate capital to fund operating losses until we are able to engage in profitable business operations and the continuation of the current regulatory and enforcement environment. To the extent financing is not available, the Company may not be able to, or may be delayed in, developing our services and meeting our obligations.&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>&nbsp;</p> <p style='margin-right:0in;margin-left:0in;margin-top:3.0pt;margin-right:0in;margin-bottom:3.0pt;margin-left:0in'>Management's plans to address these matters include maintaining an awareness of the current regulatory and enforcement environment, controlling costs, evaluating our projected expenditures relative to our available cash and evaluating additional means of financing in order to satisfy our working capital and other cash requirements. The accompanying condensed consolidated financial statements do not reflect any adjustments that might result from the outcome of these uncertainties.</p> 1999-10-22 0 0 63419 0 63042 377 -13443041 75000 83750 0.1000 352163 90000 100000 0.1000 50000 200000 2000000 0.4 250000 100000 15000 building which has 10 units of approximately 1,500 square feet each available for use. Four units are currently under lease to three different companies. One unit is being used as the Grow Condos, Inc. offices, and five units are under lease to a company that the CEO controls. The lease term begins once the tenant improvements are completed and the premises are occupies, and continues for a period of 36 months. The lease agreement requires no rental payments for the first 12 months of the lease and rental payments of $54,000 per year for the second and third year of the lease. 15575 13334 1.42 18030 1.04 90000 100000 0.1000 50000 200000 0001448558 2016-07-01 2016-09-30 0001448558 2016-09-30 0001448558 2016-06-30 0001448558 2015-07-01 2015-09-30 0001448558 2015-06-30 0001448558 2015-09-30 0001448558 us-gaap:StockOptionMember 2016-07-01 2016-09-30 0001448558 us-gaap:WarrantMember 2016-07-01 2016-09-30 0001448558 2014-06-30 0001448558 fil:ConvertiblePromissoryNote1Member 2016-07-01 2016-09-30 0001448558 fil:ConvertiblePromissoryNote1Member 2016-09-30 0001448558 fil:ConvertiblePromissoryNote1Memberus-gaap:CommonStockMember 2016-07-01 2016-09-30 0001448558 fil:ConvertiblePromissoryNote2Member 2016-07-01 2016-09-30 0001448558 fil:ConvertiblePromissoryNote2Member 2016-09-30 0001448558 fil:ConvertiblePromissoryNote2Memberus-gaap:CommonStockMember 2016-07-01 2016-09-30 0001448558 fil:N2015EquityIncentivePlanMember 2016-07-01 2016-09-30 0001448558 us-gaap:BuildingMember 2016-09-30 0001448558 us-gaap:BuildingMember 2016-07-01 2016-09-30 0001448558 us-gaap:ChiefExecutiveOfficerMember 2016-07-01 2016-09-30 0001448558 us-gaap:ChiefExecutiveOfficerMember 2016-09-30 0001448558 fil:BoardOfDirectorsMember 2015-07-01 2016-06-30 0001448558 fil:BoardOfDirectorsMember 2016-06-30 0001448558 fil:BoardOfDirectorsMember 2016-07-01 2016-09-30 0001448558 fil:BoardOfDirectorsMember 2016-09-30 0001448558 fil:ConvertiblePromissoryNote2Memberus-gaap:SubsequentEventMember 2016-10-11 2016-10-11 0001448558 fil:ConvertiblePromissoryNote2Memberus-gaap:SubsequentEventMember 2016-10-11 0001448558 fil:ConvertiblePromissoryNote2Memberus-gaap:CommonStockMemberus-gaap:SubsequentEventMember 2016-10-11 2016-10-11 pure iso4217:USD shares iso4217:USD shares utr:sqft EX-101.SCH 5 grwc-20160930.xsd XBRL TAXONOMY EXTENSION SCHEMA 000160 - Disclosure - 3. 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Related Party Transactions Notes Proceeds from exercise of warrants Total Current Liabilities Total Current Liabilities Accrued liabilities Subsequent Event Type Related Party Debt Instrument, Interest Rate, Stated Percentage Plan Name Equity Components [Axis] Net loss Net income/(loss) Preferred Stock, shares outstanding Preferred Stock, par or stated value Debt Discount, Summary Debt Discount, summary Trading Symbol Equity Component Net cash used by operating activities Net cash used by operating activities Preferred Stock, shares authorized LIABILITIES AND EQUITY Statement of Financial Position Shares issued for compensation Value of stock issued Value of stock issued 4. 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Summary of Significant Accounting Policies Prepaids Prepaids Depreciation and amortization Gain/(Loss) from operations Gain/(Loss) from operations Total Assets Total Assets Document Fiscal Period Focus Amendment Flag Document and Entity Information Subsequent Event Chief Executive Officer Convertible Promissory Note 1 Net operating loss carryforwards Purchase of property and improvements Purchase of property and improvements Adjustments to reconcile net loss to net cash provided by operating activities: Weighted average common shares; basic and diluted Common Stock, par or stated value Building Granted, Weighted Average Exercise Price Proceeds from Convertible Debt Proceeds from short-term debt Preferred Stock, shares issued Common Stock, shares outstanding Common Stock, shares authorized Mortgages payable, less current portion Cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Document Fiscal Year Focus Entity Current Reporting Status Entity Public Float Antidilutive common stock equivalents Stock issued for services Loss before provision for income taxes Loss before provision for income taxes Interest expense Rental revenues Current Assets Long-term Debt, Type [Axis] Cash flows from financing activities: Accrued expenses Deposits {2} Deposits Property and Equipment, net Entity Well-known Seasoned Issuer Average exercise price 2015 Equity Incentive Plan Operating expenses Shareholder's Equity Deferred option revenue Deposits {1} Deposits Lease receivables ASSETS Related Party [Axis] Net cash used by investing activities Net cash used by investing activities Basic and diluted Additional paid-in capital Common stock, $.001 par value, 100,000,000 shares authorized 29,392,087 and 2,084,561 shares issued and outstanding Preferred stock, $.001par value, 10,000,000 shares authorized none issued or outstanding Entity Common Stock, Shares Outstanding Document Type Board of Directors Number of shares granted Fair Value of Financial Instruments Security deposit Total Liabilities and Shockholder's Equity Total Liabilities and Shockholder's Equity Current Fiscal Year End Date Entity Central Index Key EX-101.PRE 9 grwc-20160930_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE XML 10 R1.htm IDEA: XBRL DOCUMENT v3.5.0.2
Document and Entity Information
3 Months Ended
Sep. 30, 2016
shares
Document and Entity Information  
Entity Registrant Name GROW CONDOS, INC.
Document Type 10-Q
Document Period End Date Sep. 30, 2016
Amendment Flag false
Entity Central Index Key 0001448558
Current Fiscal Year End Date --06-30
Entity Common Stock, Shares Outstanding 29,392,087
Entity Filer Category Smaller Reporting Company
Entity Current Reporting Status Yes
Entity Voluntary Filers No
Entity Well-known Seasoned Issuer No
Document Fiscal Year Focus 2017
Document Fiscal Period Focus Q1
Entity Incorporation, Date of Incorporation Oct. 22, 1999
Trading Symbol grwc
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CONSOLIDATED BALANCE SHEET - USD ($)
Sep. 30, 2016
Jun. 30, 2016
Current Assets    
Cash and cash equivalents $ 24,268 $ 44,148
Lease receivables 691 79
Prepaid expenses 11,454 20,895
Total Current Assets 36,413 65,122
Property and Equipment, net 1,562,579 1,523,244
Deposits 6,879 5,381
Debt Discount, Summary 51,123 104,983
Total Assets 1,656,994 1,698,730
Current Liabilities    
Accounts payable, trade   3,000
Accrued liabilities 463,789 353,788
Derivatives, net 764,727 792,445
Mortgages payable, current portion 289,443 33,187
Total Current Liabilities 1,517,959 1,182,420
Mortgages payable, less current portion 940,325 1,203,054
Customer deposits 4,900 4,900
Deferred option revenue 22,900 15,400
Total Liabilities 2,486,084 2,405,774
Shareholder's Equity    
Preferred stock, $.001par value, 10,000,000 shares authorized none issued or outstanding
Common stock, $.001 par value, 100,000,000 shares authorized 29,392,087 and 2,084,561 shares issued and outstanding 29,392 2,085
Additional paid-in capital 12,584,559 12,227,854
Accumulated deficit (13,443,041) (12,936,983)
Total Shareholder's Equity (829,090) (707,044)
Total Liabilities and Shockholder's Equity $ 1,656,994 $ 1,698,730
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CONSOLIDATED BALANCE SHEET (PARENTHETICAL) - $ / shares
Sep. 30, 2016
Jun. 30, 2016
Statement of Financial Position    
Common Stock, par or stated value $ 0.001 $ 0.001
Common Stock, shares authorized 100,000,000 100,000,000
Common Stock, shares issued 29,392,087 2,084,561
Common Stock, shares outstanding 29,392,087 2,084,561
Preferred Stock, par or stated value $ 0.001 $ 0.001
Preferred Stock, shares authorized 10,000,000 10,000,000
Preferred Stock, shares issued
Preferred Stock, shares outstanding
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CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - USD ($)
3 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Income Statement    
Rental revenues $ 29,383 $ 36,783
Total revenues 29,383 36,783
Operating expenses 289,530 39,844
Gain/(Loss) from operations (260,147) (3,061)
Interest expense 19,303 16,697
Derivative Liability Expense 226,610  
Loss before provision for income taxes (506,060) (19,758)
Provision for income taxes
Net income/(loss) $ (506,060) $ (19,758)
Net loss per common share:    
Basic and diluted $ (0.02) $ (0.01)
Weighted average common shares; basic and diluted 28,790,374 2,084,561
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CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($)
3 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Cash flows from operating activities:    
Net loss $ (506,060) $ (19,758)
Adjustments to reconcile net loss to net cash provided by operating activities:    
Depreciation and amortization 7,057 7,057
Stock issued for services   3,108
Allowance for doubtful accounts
Changes in assets and liabilities:    
Deposits (1,498)  
Lease receivable (612) 129
Prepaids 9,442 2,524
Accounts payable, trade (3,000) (43)
Accrued expenses 157,124 (2,583)
Security deposit
Deferred options revenue (39,622) (10,500)
Net cash used by operating activities (377,170) (20,066)
Cash flows from investing activities:    
Purchase of property and improvements (46,392)  
Net cash used by investing activities (46,392)  
Cash flows from financing activities:    
Repayments of mortgage (6,474) (9,744)
Repayment of debt
Proceeds from short-term debt 26,143  
Proceeds from exercise of warrants 384,012  
Net cash provided by financing activities 403,681 (9,744)
Net increase (decrease) in cash and cash equivalents (19,880) (29,810)
Cash and cash equivalents at beginning of period 44,148 42,747
Cash and cash equivalents at end of period 24,268 12,937
Supplemental disclosure of cash flow information:    
Cash paid during the period for: Interest 19,303 13,137
Cash paid during the period for: Taxes
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1. Summary of Significant Accounting Policies
3 Months Ended
Sep. 30, 2016
Notes  
1. Summary of Significant Accounting Policies

1. Summary of Significant Accounting Policies and Use of Estimates:

 

Presentation of Interim Information:

 

The condensed consolidated financial statements included herein have been prepared by Grow Condos, Inc. ("we", "us", "our" or "Company") without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC") and should be read in conjunction with the audited consolidated financial statements as of June 30, 2016.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, as permitted by the SEC, although we believe the disclosures, which are made, are adequate to make the information presented not misleading. Further, the condensed consolidated financial statements reflect, in the opinion of management, all normal recurring adjustments necessary to present fairly our financial position at September 30, 2016, and the results of our operations and cash flows for the periods presented. The June 30, 2016 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

 

Interim results are subject to significant seasonal variations and the results of operations for the three months ended September 30, 2016 are not necessarily indicative of the results to be expected for the full year.

 

Nature of Corporation:

 

Grow Condos, Inc. ("GCI" or the "Company") (f/k/a Fanatic Fans Inc. and Calibrus, Inc.) was incorporated on October 22, 1999, in the State of Nevada.  

 

Our subsidiary, 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 aeroponic grow facilities to support cannabis farmers. WCS intends to own, lease, sell and manage multi- tenant properties so as to reduce the risk of ownership and reduce costs to tenants and owners.  

 

As of the consummation of the transaction on June 30, 2014, the financial statements of WCS are consolidated with the financial statements of GCI under the name of GCI but the financial statements are the continuation of WCS with the adjustment to reflect the legal capital of GCI.  The assets and liabilities of WCS are measured at their pre-combination carrying amounts and the assets and liabilities of GCI are accounted for at fair value as required under the purchase method of accounting under a reverse acquisition. The results of operations of GCI (as it was f/k/a Fanatic Fans, Inc. f/k/a Calibrus, Inc.) are included in the consolidated financial statements from the closing date of the acquisition.

 

Basis of Presentation:

 

The accompanying condensed 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 condensed consolidated financial statements include the accounts of Grow Condos, Inc., and its wholly-owned subsidiary, WCS. All significant intercompany accounting transactions have been eliminated as a result of consolidation.

 

Use of Estimates:

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  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, the estimate of the allowance for doubtful accounts, equity compensation, allocation of purchase price for acquired assets, and depreciable lives of long lived assets.

 

Fair Value of Financial Instruments:

 

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 accounts payable, accrued liabilities, mortgages payable and short term advances approximate fair value given their short term nature or effective interest rates, which represent level 3 inputs.

 

Earnings per Share:

 

Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the 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. For the period ended September 30, 2016, all potentially dilutive securities are anti-dilutive due to the Company's losses from operations. 

 

All dilutive common stock equivalents are reflected in our earnings (loss) per share calculations. Anti-dilutive common stock equivalents are not included in our earnings (loss) per share calculations.  As of September 30, 2016 the Company had no outstanding options and no outstanding warrants.

 

Income Taxes:

 

The Company files income tax returns in the U.S. federal jurisdiction and the State of Oregon.  The Company is subject to federal, state and local income tax examinations by tax authorities for approximately the past three years, or in some instances longer periods. 

 

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes".  SFAS No. 109 requires the Company to provide a net deferred tax asset/liability equal to the expected future tax benefit/expense of temporary reporting differences between book and tax accounting methods and any available operating loss or tax credit carryforwards.  At  June30,2015, the Company has available unused operating loss carryforwards of approximately $63,419, which may be applied against future taxable income and which expire in various years through 2025.

 

The amount of and ultimate realization of the benefits from the operating loss carryforwards for income tax purposes is dependent, in part, upon the tax laws in effect, the future earnings of the Company, and other future events, the effects of which cannot be determined.  Because of the uncertainty surrounding the realization of the loss carryforwards, the Company has established a valuation allowance equal to the tax effect of the loss carryforwards and, therefore, no deferred tax asset has been recognized for the loss carryforwards.  The net deferred tax assets are approximately $63,042 and $377 as of June 30, 2015 and 2014,  respectively, with an offsetting valuation allowance of the same.

 

Going Concern:

 

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. In their report dated September 6, 2016, our independent registered public accounting firm included an emphasis-of-matter paragraph with respect to our financial statements for the period from July 1, 2015 to June 30, 2016 concerning the Company's assumption that we will continue as a going concern. The Company operates 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 condensed

consolidated financial statements, the Company has not yet achieved profitable operations and has an accumulated deficit of $13,443,041, which we have determined raises substantial doubt about the Company's ability to continue as a going concern.

 

Further, marijuana remains illegal under federal law as a schedule-I controlled substance, even in those jurisdictions in which the use of medical or recreational marijuana has been legalized at the state level.  A change in the federal attitude towards enforcement could cripple the industry.  The medical and recreational marijuana industry is our primary target market, and if this industry was unable to operate, we would be subject to all potential remedies under federal law and lose the majority of our potential clients, which would have a negative impact on our business, operations and financial condition.

 

The ability of the Company to continue as a going concern is dependent on our ability to raise adequate capital to fund operating losses until we are able to engage in profitable business operations and the continuation of the current regulatory and enforcement environment. To the extent financing is not available, the Company may not be able to, or may be delayed in, developing our services and meeting our obligations. 

 

Management's plans to address these matters include maintaining an awareness of the current regulatory and enforcement environment, controlling costs, evaluating our projected expenditures relative to our available cash and evaluating additional means of financing in order to satisfy our working capital and other cash requirements. The accompanying condensed consolidated financial statements do not reflect any adjustments that might result from the outcome of these uncertainties.

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2. Warrants
3 Months Ended
Sep. 30, 2016
Notes  
2. Warrants

2.   Warrants

 

On March 21, 2016 the Company entered into a transaction with Auctus Fund, LLC.   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.  At any time prior to the complete satisfaction of the Note, it was convertible into shares of the Company's common stock.  On September 27, 2016 the Company received a Notice of Conversion.  A total of 352,163 shares were issued to Auctus Fund, LLC in payment of the debt.

 

On March 28, 2016 the Company entered into a transaction with Tangiers Global, LLC.  In exchange  for $90,000 cash net of fees, the Company issued a convertible promissory note in the amount of $100,000.  The Note had a maturity date of six (6) months from the date of issue and interest at 10% per annum.   On October 11, 2016 the Company received a Notice of Conversion for $50,000.   A total of 200,000 shares were Issued to Tangiers Global, LLC in payment of one half on the debt owed.

 

The Company has entered into an Equity Incentive Plan with a grant date of April 15, 2016.  The plan allows for immediate vesting.  The total number of shares granted is two (2) million shares at an exercise price of $.40/share.  The shares under this plan are to be utilized for non-related party compensation.  On September 9, 2016 250,000 shares were issued in exchange for $100,000 under the Plan.

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3. Related Party Transactions
3 Months Ended
Sep. 30, 2016
Notes  
3. Related Party Transactions

3. Related Party Transactions

 

The Chief Financial Officer, who is a sibling of the Chief Executive Officer, provides the use of her facilities to the Company at no costs to the Company since our inception.

 

The Company is currently leasing units located in Eagle Point Oregon.  The building is an approximately 15,000 square foot building which has 10 units of approximately 1,500 square feet each available for use.  Four units are currently under lease to three different companies.  One unit is being used as the Grow Condos, Inc. offices, and five units are under lease to a company that the CEO controls.  The agreement with the company controlled by the CEO was entered into prior to the incorporation of Grown Condos, Inc.  The lease term begins once the tenant improvements are completed and the premises are occupies, and continues for a period of 36 months.  The lease agreement requires no rental payments for the first 12 months of the lease and rental payments of $54,000 per year for the second and third year of the lease.  As of July 1, 2016, the lease term has begun on two of the five units.  The lease term has not begun as of September 30, 2016 on the remaining three units and no revenue associated with these three units has been recorded in the accompanying financial statements.

 

The CEO has loaned the Company a net of $15,575 as of September 30, 2016.  At this time there is no note in place with terms for re-payment.

 

The two employees of the Company, the CEO and the CFO have not been compensated since November 2015.  The salaries owed them plus employer taxes, based on their employee agreements entered into in November 2015 have been accrued monthly.

 

In consideration for the contributions to the Company that have been made by the Board of Directors, the following compensation was approved and issued on October 18, 2016.  For the fiscal year 2015-2016 members of the Board were issued a total of 13,334 shares at an average price of $1.42 per share.   For the first quarter of the 2016-2017 fiscal year current board members were issues a total of 18,030 shares at an average price of $1.04 per share.

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4. Subsequent Events
3 Months Ended
Sep. 30, 2016
Notes  
4. Subsequent Events

4.  Subsequent Events

 

On March 28, 2016 the Company entered into a transaction with Tangiers Global, LLC.  In exchange  for $90,000 cash net of fees, the Company issued a convertible promissory note in the amount of $100,000.  The Note had a maturity date of six (6) months from the date of issue and interest at 10% per annum.   On October 11, 2016 the Company received a Notice of Conversion for $50,000.   A total of 200,000 shares were Issued to Tangiers Global, LLC in payment of one half on the debt owed.

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1. Summary of Significant Accounting Policies (Policies)
3 Months Ended
Sep. 30, 2016
Policies  
Basis of Presentation:

Basis of Presentation:

 

The accompanying condensed 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:

Consolidation: 

 

These condensed consolidated financial statements include the accounts of Grow Condos, Inc., and its wholly-owned subsidiary, WCS. All significant intercompany accounting transactions have been eliminated as a result of consolidation.

Use of Estimates:

Use of Estimates:

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  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, the estimate of the allowance for doubtful accounts, equity compensation, allocation of purchase price for acquired assets, and depreciable lives of long lived assets.

Fair Value of Financial Instruments

Fair Value of Financial Instruments:

 

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 accounts payable, accrued liabilities, mortgages payable and short term advances approximate fair value given their short term nature or effective interest rates, which represent level 3 inputs.

Earnings Per Share:

Earnings per Share:

 

Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the 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. For the period ended September 30, 2016, all potentially dilutive securities are anti-dilutive due to the Company's losses from operations. 

 

All dilutive common stock equivalents are reflected in our earnings (loss) per share calculations. Anti-dilutive common stock equivalents are not included in our earnings (loss) per share calculations.  As of September 30, 2016 the Company had no outstanding options and no outstanding warrants.

Income Taxes:

Income Taxes:

 

The Company files income tax returns in the U.S. federal jurisdiction and the State of Oregon.  The Company is subject to federal, state and local income tax examinations by tax authorities for approximately the past three years, or in some instances longer periods. 

 

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes".  SFAS No. 109 requires the Company to provide a net deferred tax asset/liability equal to the expected future tax benefit/expense of temporary reporting differences between book and tax accounting methods and any available operating loss or tax credit carryforwards.  At  June30,2015, the Company has available unused operating loss carryforwards of approximately $63,419, which may be applied against future taxable income and which expire in various years through 2025.

 

The amount of and ultimate realization of the benefits from the operating loss carryforwards for income tax purposes is dependent, in part, upon the tax laws in effect, the future earnings of the Company, and other future events, the effects of which cannot be determined.  Because of the uncertainty surrounding the realization of the loss carryforwards, the Company has established a valuation allowance equal to the tax effect of the loss carryforwards and, therefore, no deferred tax asset has been recognized for the loss carryforwards.  The net deferred tax assets are approximately $63,042 and $377 as of June 30, 2015 and 2014,  respectively, with an offsetting valuation allowance of the same.

Going Concern

Going Concern:

 

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. In their report dated September 6, 2016, our independent registered public accounting firm included an emphasis-of-matter paragraph with respect to our financial statements for the period from July 1, 2015 to June 30, 2016 concerning the Company's assumption that we will continue as a going concern. The Company operates 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 condensed

consolidated financial statements, the Company has not yet achieved profitable operations and has an accumulated deficit of $13,443,041, which we have determined raises substantial doubt about the Company's ability to continue as a going concern.

 

Further, marijuana remains illegal under federal law as a schedule-I controlled substance, even in those jurisdictions in which the use of medical or recreational marijuana has been legalized at the state level.  A change in the federal attitude towards enforcement could cripple the industry.  The medical and recreational marijuana industry is our primary target market, and if this industry was unable to operate, we would be subject to all potential remedies under federal law and lose the majority of our potential clients, which would have a negative impact on our business, operations and financial condition.

 

The ability of the Company to continue as a going concern is dependent on our ability to raise adequate capital to fund operating losses until we are able to engage in profitable business operations and the continuation of the current regulatory and enforcement environment. To the extent financing is not available, the Company may not be able to, or may be delayed in, developing our services and meeting our obligations. 

 

Management's plans to address these matters include maintaining an awareness of the current regulatory and enforcement environment, controlling costs, evaluating our projected expenditures relative to our available cash and evaluating additional means of financing in order to satisfy our working capital and other cash requirements. The accompanying condensed consolidated financial statements do not reflect any adjustments that might result from the outcome of these uncertainties.

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1. Summary of Significant Accounting Policies (Details)
3 Months Ended
Sep. 30, 2016
Details  
Date of Incorporation Oct. 22, 1999
XML 21 R12.htm IDEA: XBRL DOCUMENT v3.5.0.2
1. Summary of Significant Accounting Policies: Earnings Per Share (Details)
3 Months Ended
Sep. 30, 2016
shares
Equity Option  
Antidilutive common stock equivalents 0
Warrant  
Antidilutive common stock equivalents 0
XML 22 R13.htm IDEA: XBRL DOCUMENT v3.5.0.2
1. Summary of Significant Accounting Policies: Income Taxes (Details) - USD ($)
Jun. 30, 2015
Jun. 30, 2014
Details    
Net operating loss carryforwards $ 63,419  
Deferred tax asset-current portion 0  
Deferred Tax Assets, Gross $ 63,042 $ 377
XML 23 R14.htm IDEA: XBRL DOCUMENT v3.5.0.2
1. Summary of Significant Accounting Policies: Going Concern (Details) - USD ($)
Sep. 30, 2016
Jun. 30, 2016
Details    
Accumulated deficit $ (13,443,041) $ (12,936,983)
XML 24 R15.htm IDEA: XBRL DOCUMENT v3.5.0.2
2. Warrants (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
$ / shares
shares
Number of shares granted | shares 2,000,000
Granted, Weighted Average Exercise Price | $ / shares $ 0.4
2015 Equity Incentive Plan  
Shares issued | shares 250,000
Value of stock issued $ 100,000
Convertible Promissory Note 1  
Proceeds from Convertible Debt 75,000
Debt Instrument, Face Amount $ 83,750
Debt Instrument, Interest Rate, Stated Percentage 10.00%
Convertible Promissory Note 1 | Common Stock  
Debt Conversion, Converted Instrument, Shares Issued | shares 352,163
Convertible Promissory Note 2  
Proceeds from Convertible Debt $ 90,000
Debt Instrument, Face Amount $ 100,000
Debt Instrument, Interest Rate, Stated Percentage 10.00%
Debt Conversion, Converted Instrument, Amount $ 50,000
Convertible Promissory Note 2 | Common Stock  
Debt Conversion, Converted Instrument, Shares Issued | shares 200,000
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3. Related Party Transactions (Details)
3 Months Ended 12 Months Ended
Sep. 30, 2016
USD ($)
ft²
$ / shares
shares
Jun. 30, 2016
$ / shares
shares
Chief Executive Officer    
Description Leasing Arrangements, Operating Lease The lease term begins once the tenant improvements are completed and the premises are occupies, and continues for a period of 36 months. The lease agreement requires no rental payments for the first 12 months of the lease and rental payments of $54,000 per year for the second and third year of the lease.  
Related Party Deposit Liabilities | $ $ 15,575  
Board of Directors    
Shares issued for compensation | shares 18,030 13,334
Average exercise price | $ / shares $ 1.04 $ 1.42
Building    
Area of Real Estate Property | ft² 15,000  
Related Party Transaction, Description of Transaction building which has 10 units of approximately 1,500 square feet each available for use. Four units are currently under lease to three different companies. One unit is being used as the Grow Condos, Inc. offices, and five units are under lease to a company that the CEO controls.  
XML 26 R17.htm IDEA: XBRL DOCUMENT v3.5.0.2
4. Subsequent Events (Details) - Convertible Promissory Note 2 - USD ($)
3 Months Ended
Oct. 11, 2016
Sep. 30, 2016
Proceeds from Convertible Debt   $ 90,000
Debt Instrument, Face Amount   $ 100,000
Debt Instrument, Interest Rate, Stated Percentage   10.00%
Debt Conversion, Converted Instrument, Amount   $ 50,000
Common Stock    
Debt Conversion, Converted Instrument, Shares Issued   200,000
Subsequent Event    
Proceeds from Convertible Debt $ 90,000  
Debt Instrument, Face Amount $ 100,000  
Debt Instrument, Interest Rate, Stated Percentage 10.00%  
Debt Conversion, Converted Instrument, Amount $ 50,000  
Subsequent Event | Common Stock    
Debt Conversion, Converted Instrument, Shares Issued 200,000  
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