GROW CAPITAL, INC. files 10-Q

GROW CAPITAL, INC. filed 10-Q with SEC. Read ‘s full filing at 000144586619000579.

In 2013, upon the acquisition of the Eagle Point Property, WCS assumed the sellers’ mortgage from People’s Bank of Commerce, NA (‘People’s Bank’).  The original principal amount of the mortgage was $930,220, had an interest rate equal to People’s Bank’s prime rate plus 1.75%, required 58 monthly payments of $5,946 and required a balloon payment of $802,294 on June 28, 2018, the maturity date. The mortgage was secured by liens against certain properties owned by the seller.  In August 2018, the Company paid the mortgage in full. As of March 31, 2019, and June 30, 2018, the balance on the mortgage was $0 and $797,476, respectively.

In 2013, after the acquisition of the Eagle Point Property, WCS entered into a second mortgage with People’s Bank for the amount of $120,000.  The mortgage had an interest rate equal to People’s Bank’s prime rate plus 3%, required 56 monthly payments of $883, and required a balloon payment of $104,329 on October 15, 2018, the maturity date. The mortgage was collateralized by a deed of trust and assignment of rents with the seller and WCS in the amount of $120,000.  In August 2018, the Company paid the mortgage in full. As of March 31, 2019, and June 30, 2018, balance on the mortgage was $0 and $105,235, respectively.

In April 2016, as more fully described in Note 3, the Company acquired the Pioneer Property and entered into a mortgage with the seller for the amount of $267,129.  The mortgage originally had an interest rate of 6% per annum and a maturity date of the earlier of (a) October 1, 2017 or the date construction begins on the condominium building proposed to be built.  In October 2017, the Company entered into an amended mortgage by making a principal payment of $15,000 and financing the remaining balance of $252,129.  The amended mortgage bears interest at the rate of 6% per annum and required interest only monthly payments of $1,261 from November 2017 through June 2018 with the remaining amount due in the form of a final balloon payment in July 2018. As noted above in Note 3, in September 2018, the Company closed on the sale of the parcel of land acquired with financing provided by the mortgage.  As a condition of the sale, the mortgage was fully repaid at closing. As of March 31, 2019, and June 30, 2018, the balance on the mortgage was $0 and $250,868, respectively.

In March 2017, as more fully described in Note 3, the Company acquired the Lake Selmac Property.  Upon closing, the Company entered into mortgage payable with the seller in the amount of $625,000 with a maturity date of March 6, 2022.  The mortgage had an interest rate of 5% per annum covering the monthly payments of $3,355 for the initial 12 months, which increased to 6% per annum for the monthly payments of $3,747 for the following 48 months. Upon maturity, the remaining balance due on the note is required to be paid through a balloon payment.  As of March 31, 2019, and June 30, 2018, the balance on the mortgage was $607,553 and $613,848, respectively.  The note is unsecured.

During the nine months ended March 31, 2019, the Company issued a total of 2,120,023 unregistered common shares to officers and directors as part of their respective employment and/or board compensation package.  The Company valued the issuances made as employment compensation at the closing price of the Company’s stock as traded on the OTCMarkets on the date of grant and the issuances to directors at a discount of 35% to market on the first day of each calendar quarter, and consequently recorded stock-based compensation of $204,100.

During the three months ended September 30, 2018, the Company negotiated a sublease agreement to lease approximately 1,338 square feet of office space at a business center known as Green Valley Corporate Center South located in Henderson, Nevada (the ‘Henderson Property’), effective October 19, 2018, for use as the Company’s new headquarters. The sublease included a four-month abatement of monthly base rent during which time the Company would complete certain required leasehold improvements. The Company commenced occupation of the premises in February 2019. Appreciation, LLC holds the master lease from which the Company derives its sublease for its headquarters.  Terry Kennedy, the President of Appreciation, provides consulting services to the Company and is also a beneficial owner of more than 10% of the Company’s common stock (See Note 9).

On April 1, 2019 the Company issued a total of 692,307 shares of unregistered common stock to certain officers and directors as part of their respective employment and/or board compensation package. The common shares issued as employment compensation were valued at the closing price of the Company’s common stock on the date of issuance as posted on OTCMarkets. The common shares issued as board compensation were valued at a discount of 35% to market on April 1, 2019, the first day of the calendar quarter. Collectively, the shares were valued at $57,462, or $0.083 per share.

On April 29, 2019, Mr. Wayne Zallen resigned as a member of the Board of Directors and Chairman. Concurrently the board appointed James Olson to fill the Board vacancy and as Chairman of the Board. Mr. Olson will also be entitled to compensation for his service on the Board of Directors in the amount of $10,000 per quarter paid in the form of unregistered shares of the Company’s common stock at a discount of 35% to market on the first day of each calendar quarter. On April 29, 2019 Mr. Olson was issued a total of 108,853 shares in connection with his appointment at the discount to market described above.

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

In July 2018, the Company entered into a consulting arrangement with Terry Kennedy (the ‘Kennedy Consulting Agreement’), a beneficial owner of more than 10% of the Company’s outstanding common stock. The Kennedy Consulting Agreement has a one year term. Pursuant to the Kennedy Consulting Agreement, Mr. Kennedy received $100,000 payable in unregistered Common Stock valued at $0.10 per share for the first $50,000 and at $0.034 per share for the second $50,000, all of which was payable on January 1, 2019. Mr. Kennedy received an aggregate of 1,970,805 shares of Common Stock, all of which have been issued, with a cumulative value of $152,220, based on the fair market value of the shares at the time of issuance.

On April 1, 2019 the Company issued a total of 692,307 shares of unregistered common stock to certain officers and directors as part of their respective employment and/or board compensation package. The common shares issued as employment compensation were valued at the closing price of the Company’s common stock on the date of issuance as posted on OTCMarkets. The common shares issued as board compensation were valued at a discount of 35% to market on April 1, 2019, the first day of the calendar quarter. Collectively, the shares were valued at $57,462, or $0.083 per share.

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