Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Sep. 30, 2020 | Jan. 27, 2021 | |
Document and Entity Information | ||
Registrant Name | GROW CAPITAL, INC. | |
Registrant CIK | 0001448558 | |
SEC Form | 10-Q/A | |
Period End date | Sep. 30, 2020 | |
Fiscal Year End | --06-30 | |
Tax Identification Number (TIN) | 86-0970023 | |
Filer Category | Non-accelerated Filer | |
Current with reporting | Yes | |
Shell Company | false | |
Small Business | true | |
Emerging Growth Company | true | |
Amendment Flag | true | |
Amendment description | This Amendment No. 1 on Form 10-Q/A (this "Amendment") of Grow Capital Inc. for the three months ended September 30, 2020 is being submitted solely to file Exhibits 101 to the Form 10-Q in accordance with Rule 405 of Regulation S–T. This Amendment speaks as of the filing date of the Form 10-Q (the "Filing Date"), does not reflect events that may have occurred subsequent to the Filing Date, and does not modify or update in any way disclosures made in the Form 10-Q filed as of February 1, 2021. | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Entity File Number | 000-53548 | |
Entity Incorporation, State or Country Code | NV | |
Number of common stock shares outstanding | 24,691,530 | |
Entity Ex Transition Period | false | |
Entity Interactive Data Current | Yes | |
Entity Address, Address Line One | 2485 Village View Drive | |
Entity Address, Address Line Two | Suite 180 | |
Entity Address, City or Town | Henderson | |
Entity Address, State or Province | NV | |
Entity Address, Postal Zip Code | 89074 | |
City Area Code | 702 | |
Local Phone Number | 830-7919 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2020 | Jun. 30, 2020 |
CURRENT ASSETS: | ||
Cash | $ 1,495,517 | $ 246,761 |
Accounts receivable, net of allowance | 204,300 | 67,197 |
Accounts receivable, related parties | 58,305 | 249,057 |
Interest receivable | 2,701 | 1,794 |
Prepaid expenses | 80,775 | 68,725 |
Promissory note receivable | 72,000 | 88,510 |
Other current assets | 147,357 | 4,277 |
Total current assets | 2,060,955 | 726,321 |
Property, plant and equipment, net | 944,531 | 842,975 |
Intangible assets | 200 | 200 |
Right to use assets | 2,023,678 | 335,645 |
Deposits | 32,306 | 8,117 |
Total Assets | 5,061,670 | 1,913,258 |
CURRENT LIABILITIES: | ||
Accounts payable | 786,834 | 498,625 |
Accounts payable, related parties | 300,349 | 140,463 |
Accrued liabilities | 1,178,572 | 172,678 |
Advances from related parties | 105,000 | 105,000 |
Unearned revenue | 35,774 | 25,240 |
Deferred income tax liability | 31,800 | 31,800 |
Lease liability, current portion | 388,178 | 45,957 |
Current portion of debt | 624,746 | 12,782 |
Other current liabilities | 222,368 | 11,568 |
Total current liabilities | 3,673,621 | 1,044,113 |
Lease liability | 1,663,302 | 293,664 |
Debt, net of current portion | 5,219,947 | 583,526 |
Unearned revenue, net of current portion | 3,326,726 | 0 |
Other liability | 370,000 | 0 |
Total Liabilities | 14,253,596 | 1,921,303 |
STOCKHOLDERS' AND MEMBERS' DEFICIT | ||
Preferred stock, $0.001 par value, 50,000,000 and 5,000,000 shares authorized as at June 30, 2020 and June 30, 2019, none issued and outstanding | 0 | 0 |
Common stock, $0.001 par value, 500,000,000 shares and 175,000,000 shares authorized, 22,693,094 and 13,097,310 issued, issuable and outstanding at June 30, 2020 and June 30, 2019 respectively. | 22,693 | 13,097 |
Treasury stock | (235,600) | 0 |
Additional paid-in capital | 50,120,466 | 50,066,944 |
Accumulated deficit | (51,163,417) | (50,088,086) |
Total Grow Capital Inc. stockholders' deficit | (1,255,858) | (8,045) |
Members' deficit | (7,936,068) | 0 |
Total stockholders' and members' deficit | (9,191,926) | (8,045) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ 5,061,670 | $ 1,913,258 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2020 | Jun. 30, 2020 |
Statement of Financial Position [Abstract] | ||
Preferred Stock, par or stated value | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 50,000,000 | 5,000,000 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Common Stock, par or stated value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 500,000,000 | 175,000,000 |
Common Stock, shares issued | 22,693,094 | 13,097,310 |
Common Stock, shares outstanding | 22,693,094 | 13,097,310 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||
Revenue | $ 4,331,740 | $ 143,538 |
Revenue, related parties | 331,258 | 455,124 |
Total revenues | 4,662,998 | 598,662 |
Cost of sales, nonrelated parties | 3,231,367 | 192,451 |
Cost of sales, related parties | 485,323 | 152,955 |
Total cost of sales | 3,716,690 | 345,406 |
Gross profit | 946,308 | 253,256 |
Operating expenses | ||
General and administrative | 615,473 | 579,881 |
General and administrative, related parties | 297,080 | 47,499 |
Professional fees | 461,584 | 352,492 |
Settlement | 494,458 | 0 |
Depreciation, amortization and impairment | 5,235 | 6,404 |
Total operating expenses | 1,873,830 | 986,276 |
Loss from operations | (927,522) | (733,020) |
Other income (expense): | ||
Interest income | 1,625 | 1,342 |
Interest expense | (75,439) | (9,100) |
Total other income (expense), net | (73,814) | (7,758) |
Income (loss) from continuing operations | (1,001,336) | (740,778) |
Income (loss) from discontinued operations | 0 | (491,885) |
Net income (loss) | (1,001,336) | (248,893) |
Net Income (loss) attributable to Members of Appreciation Financial | 73,995 | 0 |
Net loss attributable to Grow Capital Inc. | $ (1,075,331) | $ (248,893) |
Basic and diluted net loss per share from continuing operations | $ (0.06) | $ (0.08) |
Basic and diluted income (loss) per share from discontinued operations | 0 | 0.05 |
Basic and diluted net loss | $ (0.06) | $ (0.03) |
Weighted average shares used in completing basic and diluted net loss per common share | 17,512,961 | 9,477,870 |
Condensed Consolidated and Comb
Condensed Consolidated and Combined Statements of Changes in Stockholders and Members Equity (Deficit) (Unaudited) - USD ($) | Preferred Stock | Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Deficit | Total Grow Capital Inc.Shareholders Deficit | Appreciation Financial Members Deficit | Total |
Equity Balance, beginning of period, Value at Jun. 30, 2019 | $ 7,037 | $ 49,766,676 | $ (47,741,333) | $ 2,032,380 | ||||
Equity Balance, beginning of period, Shares at Jun. 30, 2019 | 7,037,241 | |||||||
Private placements, Value | $ 14 | 49,986 | 50,000 | |||||
Private placements, Shares | 13,889 | |||||||
Conversion of accounts payable into stock, Value | $ 7 | 20,277 | 20,284 | |||||
Conversion of accounts payable into stock, Shares | 7,350 | |||||||
Shares issued under business combination, Value | $ 5,534 | 75,633 | 81,167 | |||||
Shares issued under business combination, ,Shares | 5,533,773 | |||||||
Shares issued to Officers, Directors and employees, Value | $ 23 | 90,251 | 90,274 | |||||
Shares issued to Officers, Directors and employees, Shares | 22,548 | |||||||
Shares retired under sale of subsidiary, Value | $ (455) | (908,934) | (909,389) | |||||
Shares retired under sale of subsidiary, Shares | (454,694) | |||||||
Loss for the period | (248,893) | (248,893) | ||||||
Equity Balance, end of period, Value at Sep. 30, 2019 | $ 12,160 | 49,093,889 | (47,990,226) | 1,115,823 | ||||
Equity Balance, end of period, Shares at Sep. 30, 2019 | 12,160,107 | |||||||
Equity Balance, beginning of period, Value at Jun. 30, 2020 | $ 13,097 | 50,066,944 | (50,088,086) | $ (8,045) | (8,045) | |||
Equity Balance, beginning of period, Shares at Jun. 30, 2020 | 13,097,310 | |||||||
Shares issued to acquire related party business, Value | $ 9,358 | $ (200,600) | (209,413) | (400,655) | (8,010,063) | (8,410,718) | ||
Shares issued to acquire related party business, Shares | 9,358,185 | |||||||
Private placements, Value | $ 75 | (35,000) | 74,925 | 40,000 | 40,000 | |||
Private placements, Shares | 75,000 | |||||||
Shares issued to Officers, Directors and employees for compensation, Value | $ 146 | 164,919 | 165,065 | 165,065 | ||||
Shares issued to Officers, Directors and employees for compensation, Shares | 145,495 | |||||||
Conversion of accounts payable into stock, Value | $ 17 | 23,091 | 23,108 | $ 23,108 | ||||
Conversion of accounts payable into stock, Shares | 17,104 | |||||||
Shares issued to Officers, Directors and employees, Shares | 17,104 | |||||||
Loss for the period | (1,075,331) | (1,075,331) | 73,995 | $ (1,001,336) | ||||
Equity Balance, end of period, Value at Sep. 30, 2020 | $ 22,693 | $ (235,600) | $ 50,120,466 | $ (51,163,417) | $ (1,255,858) | $ (7,936,068) | $ (9,191,926) | |
Equity Balance, end of period, Shares at Sep. 30, 2020 | 22,693,094 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (1,001,336) | $ (248,893) |
(Gain) loss from discontinued operations | 0 | (491,885) |
Net loss from continuing operations: | (1,001,336) | (740,778) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation, amortization and impairment expense | 5,235 | 6,404 |
Stock based compensation | 173,173 | 501,638 |
Loss on debt settlement | 494,458 | 0 |
Impair of other current asset | 6,900 | 0 |
Amortization on ROU | 5,286 | 0 |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other assets | 31,651 | 1,128 |
Accounts receivable | (66,158) | (49,935) |
Accounts receivable, related parties | 59,658 | (142,793) |
Interest receivable | (907) | (1,342) |
Accounts payable | 228,200 | (118,783) |
Account payable, related parties | (41,366) | 132,740 |
Accrued expenses | 376,855 | (99,731) |
Unearned revenue | 4,867 | (2,080) |
Other current liabilities | 24,392 | 0 |
Net cash (used in) in operating activities | 300,908 | (513,532) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Cash received from business combination | 884,273 | 43,975 |
Promissory note receivable | 16,510 | (100,000) |
Due from related party | 0 | (39,548) |
Net cash (used in) provided by investing activities | 900,783 | (95,573) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repayment debt | (27,935) | (2,141) |
Proceeds (repayment) from related party | 0 | (13,121) |
Proceeds from private placement | 75,000 | 200,000 |
Net cash provided by financing activities | 47,065 | 184,738 |
CASH FLOWS FROM DISCONTINUED OPERATIONS: | ||
Operating activities | 0 | 0 |
Investing activities | 0 | (2,030) |
Financing activities | 0 | 0 |
Net cash (used) provided by discontinued activities | 0 | (2,030) |
Net increase (decrease) in cash | 1,248,756 | (426,397) |
Cash at beginning of period | 246,761 | 483,430 |
Cash at the end of the period | 1,495,517 | 57,033 |
Supplemental Disclosure of Cash Flows Information: | ||
Cash paid for interest | 9,012 | 9,100 |
Cash paid for income taxes | 0 | 0 |
Cash paid for operating lease | 42,536 | 8,028 |
Non-cash Investing and Financing Activities: | ||
Stock issued for settlement of accounts payable | 15,000 | 15,000 |
Stock returned from sale of WCS | 0 | 909,389 |
Assets acquire, net of liabilities, Bombshell | 0 | 81,167 |
Assets acquire, net of liabilities, Pera combined with Appreciation | 8,210,118 | 0 |
Accounts payable reclassify to other current liability due to litigation | $ 61,948 | $ 0 |
Note 1 - Organization and Descr
Note 1 - Organization and Description of Business | 3 Months Ended |
Sep. 30, 2020 | |
Disclosure Text Block [Abstract] | |
Note 1 - Organization and Description of Business | Note 1 – Organization and Description of Business Grow Capital, Inc. (the "Company," “we,” or “us”) (f/k/a Grown Condos, Inc.) was incorporated on October 22, 1999, in the State of Nevada. Our former wholly owned subsidiary, WCS Enterprises, LLC (“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 aeroponics grow facilities to support cannabis farmers. WCS owns, leases, sells and manages multi- tenant properties so as to reduce the risk of ownership and reduce costs to tenants and owners. WCS owned a condominium property in Eagle Point, Oregon (the “Eagle Point Property”). On September 30, 2019, we sold WCS to the Wayne A. Zallen Trust u/a/d/ 10/24/2014 (the “Zallen Trust”), of which Wayne Zallen, our former CEO and Chairman, is the trustee and a beneficiary. See Note 5 for further information. Our wholly owned subsidiary, Resort at Lake Selmac, Inc. (formerly Smoke on the Water, Inc.) was incorporated on October 21, 2016, in the State of Nevada. The name change was effected February 3, 2020. Resort at Lake Selmac is focused on operating properties in the RV and campground rental industry and currently owns the Lake Selmac Resort located at 2700 Lakeshore Drive, Selma, Oregon (the “Lake Selmac Property”). Our wholly owned subsidiary Bombshell Technologies, Inc. (“Bombshell”), was formed as Bombshell Technologies, LLC on November 5, 2018 and converted into a C corporation on June 24, 2019. We acquired Bombshell on July 23, 2019 (See Note 4). Bombshell is a full-service design and software development company focused on developing and selling software to financial services firms and advisors and is the first acquisition as part of our strategic shift into the financial technology (“FinTech”) sector and related sectors. On June 22, 2018, the Board of Directors of the Company approved an amendment to our articles of incorporation to increase our authorized capital to 180,000,000 shares, consisting of 175,000,000 shares of common stock (“Common Stock”), par value $0.001, and 5,000,000 shares of preferred stock (“Preferred Stock”), par value $0.001 (the “Recapitalization”) and to change the name of the Company to “Grow Capital, Inc.” The Company filed articles of amendment with the State of Nevada to effect the aforementioned changes on July 10, 2018 and August 28, 2018, respectively. The Company received approval from the Financial Industry Regulatory Authority ("FINRA") for the above noted corporate actions on August 8, 2019. On July 23, 2019, and effective July 25, 2019, the Board of Directors of the Company and the holders of our outstanding capital stock having a majority of the voting power, respectively, adopted resolutions to amend and restate our articles of incorporation to increase our authorized capital to 550,000,000 shares, consisting of 500,000,000 shares of Common Stock and 50,000,000 shares of Preferred Stock. The effective date of the aforementioned actions was August 29, 2019. In connection with its name change, the Company adopted a business plan focused on shifting the Company’s strategy away from rental activities focused in the cannabis industry and into the FinTech sector and related sectors. In connection with this strategy, the Company hired a new Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) and appointed a new chairman of the Company’s board of directors (the “Board”), all of whom have significant experience in the FinTech sector. The Company intends to acquire FinTech companies, such as Bombshell (see Note 4), with a clear niche and strong leadership and use its experience and understanding of the FinTech sector and access to the public markets to help its acquisitions grow. The Company is currently in the process of identifying and pursuing suitable acquisitions. In connection with the shift in the Company’s strategy away from rental activities focused in the cannabis industry, the Company sold WCS on September 30, 2019 and its operations up to the date of sale were included as Assets and Liabilities’ Held for Sale. (Note 5). While the Company actively marketed the Resort at Lake Selmac during the first and second quarters of fiscal 2020, given the current market conditions, the Company let the listing agreement expire on March 31, 2020 and we decided to continue operating the business until such time as a viable exit strategy for the resort is identified. On May 13, 2020, the Company’s board of directors and stockholders approved an amended and restated certificate of incorporation to, among other things, effect a reverse split on the outstanding shares of the Company’s common stock on a one-for-20 basis (the “Reverse Stock Split”). The Reverse Stock Split became effective on July 30, 2020 and has been shown on a retroactive basis within all periods presented. The par values of the common were not adjusted as a result of the reverse stock split. Keeping with management’s determination to acquire complementary revenue generating operations, on August 19, 2020, the Company acquired PERA LLC, a Nevada limited liability company (“PERA”), pursuant to an exchange agreement (the “Exchange Agreement”), effective as of August 3, 2020 (the “Effective Date”), by and between PERA, the members of PERA (the “PERA Members”), and the Company. As a result, PERA became a wholly-owned subsidiary of the Company. At the time of the acquisition of PERA LLC, the Company determined that Appreciation Financial was under common control with PERA LLC, as they are both controlled by our Chief Operating Officer, Terry Kennedy (see Note 4). Additionally, Appreciation was considered to be a primary beneficiary of PERA LLC. The Company has had discussions with the members of Appreciation Financial about potential combinations, which as of the date of these financial statements are not yet probable. However, because of the nature of the relationship, the Company determined that while Appreciation Financial is not a variable interest entity to the Company, the nature of the common control relationship coupled with the inter-relationship with PERA LLC meant that in order for the results of operations and financial position to not be misleading, the Company had to combine its results with those of Appreciation Financial upon the acquisition of PERA, LLC. With the acquisition of PERA LLC, and concurrent combination of the operations of Appreciation Financial, the Company expanded its operations into lead generation services and insurance brokerage. PERA LLC provides public employee retirement serving as an appointment portal for agents to schedule qualified appointments with public employee seeking financial planning for retirement and other associated insurance coverage. Appreciation Financial LLC has a network of member agents offering full-service retirement planning servicing public employees and their families providing policies from a series of insurance carriers that meet their retirement planning requirements. As the Company looks to continue to expand in the financial technology and related sectors, Grow Capital expects to identify additional acquisition targets, complete those acquisitions, and grow its complementary operating companies. Any potential acquisitions or divestitures remain subject to final agreements, due diligence, and typical closing conditions. Going Concern During the three month periods ended September 30, 2020 and 2019, the Company reported a net loss of $1,001,336 and $248,893 respectively. The Company had a working capital deficit of $1,612,666 with approximately $1,495,517 of cash on hand as of September 30, 2020. Cash provided by operations totaled $300,908 during the three months ended September 30, 2020. The Company continues to work actively to increase its customer/client base and increase gross profit in Bombshell Technologies and PERA LLC, in order to achieve net profitability by the close of fiscal 2021. For any operational shortfalls, the Company intends to rely on sales of our unregistered common stock, loans and advances until such time as we achieve profitable operations. In addition, the current presentation is based on the fact that the Company is currently in negotiations to acquire Appreciation Financial LLC and its related entities. Should that not occur, its possible that the Company will no longer combine its results with those of Appreciation Financial LLC and its related entities. If the Company fails to generate positive cash flow or obtain additional financing, when required and on acceptable terms, the Company may have to modify, delay, or abandon some or all of its business and expansion plans, and potentially cease operations altogether. Consequently, the aforementioned items raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The accompanying consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. Covid-19 Pandemic The recent COVID-19 pandemic could have an adverse impact on our ongoing operations. To date the Company’s primary operating segments, Bombshell and Pera LLC have not experienced a decline in sales as a result of the impact of COVID-19, and in fact, have increased sales due to the increase in demand for virtual appointments which can be serviced by PERA LCC as a part of their core operational mandate. In addition, the Company’s operations in the FinTech sector are carried out with a limited amount of person to person contact and we do not expect an impact on these operations as a result of COVID 19, however, the full effect of the COVID-19 outbreak continues to evolve as of the date of this report, is highly uncertain and subject to change. Operations of the Company’s Resort at Lake Selmac property were delayed until July 2020 when the government permitted the resort to reopen, however since that time the resort has continued to receive regular bookings and has returned to normal operating parameters. As a result, Management does not expect the delay in opening the resort for the 2020-2021 season to substantially impact profitable operations for this business in the long term. Management is actively monitoring the situation but given the daily evolution of the COVID-19 outbreak, the Company is not able to estimate the effects of the COVID-19 outbreak on its operations or financial condition in the next 12 months. While significant uncertainty remains, the Company does not believe the COVID-19 outbreak will have a negative impact on its ability to raise additional financing, conclude the acquisition of targeted business operations or reach profitable operations. |
Note 2 - Summary of Significant
Note 2 - Summary of Significant Accounting Policies | 3 Months Ended |
Sep. 30, 2020 | |
Disclosure Text Block [Abstract] | |
Note 2 - Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated and combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The unaudited condensed financial statements included herein are unaudited. Such financial statements, in the opinion of management, contain all adjustments necessary to present fairly the financial position and results of operations as of and for the periods indicated. All such adjustments are of a normal recurring nature outside of the combination of Appreciation Financial. These interim results are not necessarily indicative of the results to be expected for the year ending June 30, 2021 or for any other period. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, and because of this, for further information, readers should refer to the financial statements and footnotes included in its Form 10-K for the fiscal year ended June 30, 2020 filed on October 13, 2020. The Company believes that the disclosures are adequate to make the interim information presented not misleading. Consolidation and Combination The Company’s policy is to consolidate all entities that it controls by ownership of a majority of the outstanding voting stock. In addition, upon the acquisition of PERA LLC, the Company combined entities that met the criteria of having common control with Grow Capital and its controlled subsidiaries. Upon the acquisition of PERA LLC (see below), the Company identified certain common control entities, the operations of which are included in our consolidated and combined financial statements. The accompanying unaudited condensed consolidated and combined financial statements include the accounts of Grow Capital Inc. and its wholly-owned subsidiaries, Bombshell Technologies Inc., The Resort at Lake Selmac and PERA LLC, as well as PERA Administrators LLC, the operations of which are for the sole benefit of PERA LLC. In addition, the Company has combined the results of Appreciation Financial LLC and Appreciation Rewards LLC. At the time of the acquisition of PERA LLC, the Company determined that Appreciation Financial was the primary beneficiary of PERA LLC. In addition, the Company determined that it has common ownership with Appreciation Financial and the Company has had discussions with the members of Appreciation Financial about potential combinations, which as of the date of these financial statements are not yet probable. However, because of the nature of the relationship, the Company determined that while Appreciation Financial is not a variable interest entity to the Company, the nature of the common control relationship coupled with the inter-relationship with PERA LLC meant that in order for the results of operations and financial position to not be misleading, the Company had to combine its results with those of Appreciation Financial upon the acquisition of PERA, LLC. 7 Reported operations in the three months ended September 30, 2020 include operations of our wholly owned subsidiaries Bombshell and The Resort at Lake Selmac, as as well as the results of operations by PERA LLC and its common control entities for the period from acquisition (August 19, 2020 through September 30, 2020). In addition, September 30, 2020 operating results also include the combined results of both Appreciation Financial LLC Appreciations Rewards LLC for the period from August 19, 2020 to September 30, 2020. Results for the comparative three month period ended September 30, 2019 include Grow Capital, Bombshell and the Resort at Lake Selmac. All material intercompany accounts, transactions, and profits have been eliminated in consolidation and with and between the combined entities. 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. Significant items subject to estimates and assumptions include timing of recognition of commission revenue on insurance policy renewals and expenses related thereto, along with costs associated with policy acquisition and our allowance for doubtful accounts and useful lives of our fixed assets related to Lake Selmac. Actual results could differ from those estimates. Cash and Cash Equivalents For financial accounting purposes, cash and cash equivalents are considered to be all highly liquid investments with a maturity of three (3) months or less at the time of purchase. Concentrations Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At September 30, 2020 and 2019, the Company had $272,767 and $0 in excess of the FDIC insured limit, respectively. Concentration Risk - Revenues For the three months ended September 30, 2020, one customer accounted for 53% of combined and consolidated gross revenue, 57% of combined and consolidated revenue from non-related parties and 70% of revenue recorded by Appreciation Financial LLC. The contribution of revenue to the three month operating period ended September 30, 2020 was derived from operations of Appreciation Financial LLC for the period between August 19, 2020 and September 30, 2020. Concentration of Financing Risk Appreciation Financial is dependent upon on its largest customer for financing of its operations. That customer has provided commission advances of approximately $3.3 million and loans of approximately $4.8 million as of September 30, 2020. Accounts Receivable and Allowance for Doubtful Accounts The Company determines the allowance for doubtful accounts by considering a number of factors, including the length of time the accounts receivable are beyond the contractual payment terms, previous loss history, and the customer’s current ability to pay its obligation. When the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, the Company records a charge to the allowance to reduce the customer’s related accounts. At September 30, 2020, the allowance for doubtful accounts totaled approximately $41,400. Lease Receivables and deferred rent Lease receivables are recognized when rents are due, and for the straight-line adjustment to rents over the term of the lease less an allowance for expected uncollectible amounts. Inherent in the assessment of the allowance for doubtful accounts are certain judgments and estimates including, among others, the customer's willingness or ability to pay, the Company's compliance with lease terms, the effect of general economic conditions and the ongoing relationship with the customer. Accounts with outstanding balances longer than the payment terms are considered past due. We do not charge interest on past due balances. The Company writes off lease receivables when it determines that they have become uncollectible after all reasonable collection efforts have been made. If we record bad debt expense, the amount is reflected as a component of operating expenses in the statements of operations. Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02 – Topic 842 Leases. The Company has elected to apply the short-term scope exception for leases with terms of 12 months or less at the inception of the lease and will continue to recognize rent expense on a straight-line basis. As a result of the adoption, on July 1, 2019, the Company recognized a lease liability of approximately $291,753, which represented the present value of the remaining minimum lease payments using an estimated incremental borrowing rate of 6.75%. As of July 1, 2019, the Company recognized a right-to-use asset of approximately $289,089. Lease expense did not change materially as a result of the adoption of ASU 2016-02. As a result of the acquisition of PERA LLC and combined entity Appreciation Financial LLC, as of August 19, 2020 the Company recognized a right to use asset of $157,795 and a lease liability of $153,413 with respect to PERA LLC and a right to use asset of $1,575,145 and a lease liability of $1,598,068 with respect to combined entity Appreciation Financial LLC. Intangible Assets The Company’s intangible assets consist of intellectual property with minimal value. Investment In and Valuation of Real Estate Assets Real estate assets are stated at cost, less accumulated depreciation and amortization. Amounts capitalized to real estate assets consist of the cost of acquisition (excluding acquisition related expenses), construction costs, and mortgage interest during the period the facilities are under construction and prior to readiness for occupancy, and any tenant improvements, major improvements and betterments that extend the useful life of the real estate assets and leasing costs. All repairs and maintenance are expensed as incurred. The Company is required to make subjective assessments as to the useful lives of its depreciable assets. The Company considers the period of future benefit of each respective asset to determine the appropriate useful life of the assets. Real estate assets, other than land, are depreciated on a straight-line basis over the estimated useful life of the asset. The estimated useful lives of the Company's real estate assets by class are generally as follows: Land Indefinite Buildings 40 years Tenant improvements Lesser of useful life or lease term Intangible lease assets Lease term Impairment of long-lived assets The Company monitors its long-lived assets and finite-lived intangibles for indicators of impairment. If such indicators are present, the Company assesses the recoverability of affected assets by determining whether the carrying value of such assets is less than the sum of the undiscounted future cash flows of the assets. If such assets are found not to be recoverable, the Company measures the amount of such impairment by comparing the carrying value of the assets to the fair value of the assets, with the fair value generally determined based on the present value of the expected future cash flows associated with the assets (See Note 6). Share-based compensation The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. Unregistered stock awards are measured based on the fair market values of the underlying stock on the dates of grant. For service type awards, share-based compensation expense is recognized on a straight-line basis over the period during which the employee is required to provide service in exchange for the entire award. For awards that vest or begin vesting upon achievement of a performance condition, the Company estimates the likelihood of satisfaction of the performance condition and recognizes compensation expense when achievement of the performance condition is deemed probable using an accelerated attribution model. Revenue Recognition under ASC 606 ASC 606 “Revenue from Contracts with Customers” Revenues from contracts with customers are recognized when control of promised goods and services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company recognizes revenue using the five-step model as prescribed by ASC 606: 1) Identification of the contract, or contracts, with a customer; 2) Identification of the performance obligations in the contract; 3) Determination of the transaction price; 4) Allocation of the transaction price to the performance obligations in the contract; and 5) Recognition of revenue when or as, the Company satisfies a performance obligation. When a contract with a customer or an agent is signed, the Company assesses whether collection of the fees under the arrangement is probable. The Company estimates the amount to reserve for uncollectible amounts at the end of each reporting period based on the aging of the contract balance, current and historical customer trends, and communications with its customers. These reserves are recorded against the related accounts receivable. The transaction price is the consideration that the Company expects to receive from its customers and agents in exchange for its products or services. In determining the allocation of the transaction price, the Company identifies performance obligations in contracts with customers, which may include subscriptions to software and services, support, professional services and customization. In the case of the Company’s software contracts and support services prices are predetermined based on the specific terms of the contract either in flat fee customization/license fee charges or as hourly support and/or software customization charges. Charges relative to license fees are amortized over the term of the license. Charges relative to customization of the software are charged over the term of the scope of work on a percentage of completion basis. Charges relative to support and ongoing services and professional fees are charged when incurred and control has been transferred or the work has been completed. Income earned through the sale of appointments to agents by PERA LLC are recognized on the date of the service appointment. License fees and customization of software License and implementation fees are charged as flat fees which are amortized over the term of the contract. For contracts with elements related to customized software solutions and certain build-outs or software systems that require significant modification or customization, the Company will recognize revenue using the percentage-of-completion method. In using the percentage-of-completion method, revenues are generally recorded based on completion of milestones under a scope of work or based on total estimated cost of work and percentage completion as at the balance sheet date. Software Revenue The Company generates software revenue monthly on a single fee per subscribed user basis. The Company recognizes software revenue monthly on a per user for each user that is able to deploy software and provided all revenue recognition criteria have been met. If the revenue recognition criteria has not been met, the revenue is deferred or not recognized. Customization, support and maintenance Revenue from the Company’s customization of software to meet a particular client’s needs is recognized on a percentage of completion basis over the term of the customization work and until control of the goods or services is transferred to the customer or such date the customer agrees the scope of work has been completed and the intended functionality of the software is complete and able to perform the desired service. Support and maintenance revenue is generated from recurring monthly support and is invoiced monthly based on hourly fees at predetermined rates based on each customer contract. The Customer is credited a certain number of services hours monthly based on the numbers of users actively subscribed to the software which amounts offset any monthly user fees. Support and maintenance services include e-mail and telephone support, unspecified rights to software fixes and product updates and upgrades and enhancements available on a when-and-if available basis. Professional services and other Professional services and other revenue is generated through services including onsite training, product implementation and other similar services. Professional services are generally flat fee services based on a number of hours or scope of work for each specific service. Depending on the services to be provided, revenue from professional services and other is generally recognized at the time of delivery when the services have been completed and control has been transferred. Income from agent appointments Income generated by booking appointments for insurance agents is earned on the date on which the appointment takes place. Appointment fees which are collected in advance of appointments are recorded as unearned revenue. Unearned Revenue Unearned revenue represents billings or payments received in advance of revenue recognition and is recognized upon transfer of control. Balances consist primarily of appointment fees collected from member agents where the client appointment has not yet occurred, license fees being amortized over the term of the customer contract and customization services which have not yet been concluded and are being deferred using the percentage-of-completion method. Campground space rentals and concession sales Revenues from our campsite operations from the sales of concession items, equipment rentals or campsite locations are recoded on the cash basis due to the nature of collection of campsite fees and concession items, which occur daily as the site is rented and sundry items are purchased. Commissions earned on insurance coverage (Appreciation Financial LLC) Appreciation Financial LLC earns commissions paid by insurance carriers for the binding of insurance coverage. Commissions are earned at a point in time upon the effective date of bound insurance coverage, as no performance obligation exists after coverage is bound. If there are other services within the contract, Appreciation estimates the stand-alone selling price for each separate performance obligation, and the corresponding apportioned revenue is recognized over a period of time as the performance obligations are fulfilled. Incentive commissions represent a form of variable consideration which includes additional commissions over base commissions received from insurance carriers based on predetermined production levels mutually agreed upon by both parties. Incentive commissions are estimated with a constraint applied and accrued relative to the recognition of the corresponding core commissions based on the amount of consideration that will be received in the coming year such that a significant reversal of revenue is not probable. Advance Commissions are paid by insurance carriers under agreed terms of certain individual customer policies. Advance Commissions are recorded as deferred revenue and amortized over the term of the contract. Appreciation Management determines the policy cancellation reserve based upon historical cancellation experience adjusted for any known circumstance. Commission revenues – Prior to the adoption of Topic 606, commission revenues, including those billed on an installment basis, were recognized on the latter of the policy effective date or the date that the premium was billed to the customer. As a result of the adoption of Topic 606, commission revenues associated with the issuance of policies are now recognized upon the effective date of the associated policy. The overall impact of these changes is expected to be significant.. These commission revenues, including those billed on an installment basis, will now be recognized earlier than they had been previously. Revenue is accrued based upon the completion of the performance obligation, thereby creating a current asset for the unbilled revenue, until such time as an invoice is generated. Incentive and contingent commissions – Prior to the adoption of Topic 606, revenue that was not fixed and determinable because a contingency existed was not recognized until the contingency was resolved. Under Topic 606, Appreciation must estimate the amount of consideration that will be received in the coming year such that a significant reversal of revenue is not probable. Incentive and contingent commissions represent a form of variable consideration associated with the placement of coverage, for which we earn commissions and fees. In connection with Topic 606, these commissions are estimated with a constraint applied and accrued relative to the recognition of the corresponding core commissions. The resulting effect on the timing of recognizing of these contingent commissions will now more closely follow a similar pattern as our commissions and fees with any true-ups recognized when payments are received or as additional information that affects the estimate becomes available. Fee Revenues: Appreciation earns fee revenue related to the onboarding of its agents which is recorded at the time of the transaction. Additionally, Appreciation is required to evaluate the impact of ASC Topic 340 – Other Assets and Deferred Cost (“ASC 340”) which requires companies to defer certain incremental cost to obtain customer contracts, and certain costs to fulfill customer contracts. Incremental cost to obtain – The adoption of ASC 340 is expected to result in Appreciation deferring certain costs to obtain customer contracts primarily as they relate to commission-based compensation for which the Company pays an incremental amount of compensation on new business. These incremental costs are expected to be deferred and amortized based on the term of customer polices and expected renewals. Cost to fulfill – The adoption of ASC 340 may result in Appreciation deferring certain costs to fulfill contracts and recognizing costs as the associated performance obligations are fulfilled. In order for contract fulfillment costs to be deferred under ASC 340, the costs must (1) relate directly to a specific contract or anticipated contract, (2) generate or enhance resources that Appreciation will use in satisfying its obligations under the contract, and (3) be expected to be recovered through sufficient net cash flows from the contract. As of the filing date, Appreciation Financial is unable to estimate with certainty its historical renewal rates for the insurance policies previously sold and therefore has not included commission revenue to be earned upon renewal based on this estimate. This also means that Appreciation is unable to estimate the costs to be deferred under ASC 340, or the costs to be expensed upon recognition of renewal revenue under ASC 606. Appreciation Financial prior to the combination of its financial statements herein did not previously report the results of its operations and financial position under US GAAP and is currently in the process of developing the systems and processes in which to estimate these amounts. The Company currently expects that the processes and systems will be in place for the reporting for the Company’s year ended June 30, 2021 financial statements. Fair Value of Financial Instruments The Company follows the fair value measurement rules, which provides guidance on the use of fair value in accounting and disclosure for assets and liabilities when such accounting and disclosure is called for by other accounting literature. These rules establish a fair value hierarchy for inputs to be used to measure fair value of financial assets and liabilities. This hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels: Level 1 (highest priority), Level 2, and Level 3 (lowest priority). Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the balance sheet date. Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). Level 3—Inputs are unobservable and reflect the Company’s assumptions as to what market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available. The carrying amount of receivables and accounts payable and accrued expenses approximates fair value due to the short-term nature of those 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 lease receivables, accounts payable, and accrued liabilities approximate fair value given their short-term nature or effective interest rates, which constitutes level three inputs. Income taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss and credit carryforwards. Deferred tax assets and liabilities are measured at rates expected to apply to taxable income in the years in which those temporary differences and carryforwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statement of operations in the period that includes the enactment date. A valuation allowance is recorded when it is not more likely than not that all or a portion of the net deferred tax assets will be realized. In the quarters ended September 30, 2020 and 2019, the Company issued a significant number of new shares in its acquisition of PERA LLC and Bombshell Technologies, Inc. (see Note 4) and the cancellation of then outstanding shares upon the sale of WCS Enterprises, LLC (see Note 5). The effect of these issuances and cancellations is that most likely, the Company experienced the requisite change of control as promulgated under the US Internal Revenue Code section 382. The effect of this will be that going forward, the ability of the Company to utilize the US Federal net operating loss carryforwards of Grow Capital, Inc. from prior to these transactions will be limited in its usage. In order to determine the specific effect, the Company must perform the computations required under the Internal Revenue Code, which have not yet been performed. The Company expects it will perform the required computations once its evident that profits are likely. Net (loss) income per share Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of shares of Common Stock 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 three months ended September 30, 2020 and 2019, 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. There were no potential shares outstanding as of September 30, 2020 and 2019. Reclassification Certain prior period balances have been reclassified to conform to the current period presentation in the Company’s consolidated financial statements and the accompanying notes. These reclassifications had no effect on net income for the prior periods. In addition, we previously included the results of operations and financial position of the Resort on Lake Selmac for the period ended September 30, 2019 in discontinued operations and assets and liabilities held for sale, respectively. Subsequent to the original Form 10-Q filing for the period ended September 30, 2019, we no longer had a plan of sale and therefore the results of Lake Selmac and its financial position are now included in our results from continuing operations and cash flows for the period ended September 30, 2019. Recent Accounting Pronouncements Fair Value Measurements (“ASU 2018-03”). The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of ASU 2018-13. An entity is permitted to early adopt any removed or modified disclosures upon issuance of ASU 2018-13 and delay adoption of the additional disclosures until their effective date. The Company is currently assessing the impact that ASU 2018-13 will have on its financial statements. Financial Instruments – Credit Losses (“ASU 2016-13”). The standard was originally effective for interim and annual reporting periods beginning after December 15, 2019 and early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018. However, in November 2019, the Financial Accounting Standard Board (FASB) issued ASU 2019-10, Financial Instruments—Credit Losses, (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) — Effective Dates ASU 2019-10 |
Note 3 - Prepaid expenses
Note 3 - Prepaid expenses | 3 Months Ended |
Sep. 30, 2020 | |
Notes to Financial Statements | |
Note 3 - Prepaid expenses | Note 3 – Prepaid expenses Prepaid expenses at September 30, 2020 and June 30, 2020 consist of the following: September 30, 2020 June 30, 2020 Professional fees $ 59,675 $ 50,000 Insurance 1,732 2,771 Other expenses 19,368 15,954 Total $ 80,775 $ 68,725 |
Note 4 - Merger with PERA LLC
Note 4 - Merger with PERA LLC | 3 Months Ended |
Sep. 30, 2020 | |
Notes to Financial Statements | |
Note 4 - Merger with PERA LLC | Note 4 – Merger with PERA LLC On August 19, 2020, the Company acquired PERA LLC, a Nevada limited liability company (“PERA”), pursuant to an exchange agreement (the “Exchange Agreement”), effective as of August 3, 2020 (the “Effective Date”), by and between PERA, the members of PERA (the “PERA Members”), and the Company (the “Closing”), concurrently, PERA became a wholly-owned subsidiary of the Company. Eric Tarno, the current President of PERA, will continue to serve as the President of PERA. Pursuant to the Exchange Agreement, at the Closing, the Company acquired 100% of the outstanding membership interests of PERA (the “PERA Ownership Interests”) in exchange for 9,358,185 unregistered restricted shares of the Company’s common stock (the “GC Common Stock”) on a pro rata basis (the “Exchange”). At the Closing, the PERA Members conveyed all of the right, title and interest in and to the PERA Ownership Interests in exchange for the right to receive a number of shares of GC Common Stock equal to an exchange ratio (the “Exchange Ratio”). The Exchange Ratio is calculated by dividing (a) the Exchange Shares (as defined below) by (b) the total number of shares of PERA Ownership Interests outstanding immediately prior to the Effective Date. “Exchange Shares” means the number of shares of GC Common Stock obtained by dividing (a) $10,000,000 by (b) the 10-day volume weighted average price per share (“VWAP”) calculated immediately before the date that a reverse stock split of GC Common Stock became effective on OTCQB, July 30, 2020. In addition, if PERA meets certain yearly targeted gross revenues for each of year one, two, and three following the Closing, the PERA owners may earn a cumulative total of up to $5,000,000 of shares of GC Common Stock (the “Earn-out Shares”) to be determined using the applicable 10-day VWAP stock price of the Company’s common stock preceding each earn-out period calculation date as set forth in the Exchange Agreement in connection with all of the three years, subject to certain catch up provisions if such yearly period targets are not met in the applicable period. At the Closing the Company also entered into a registration rights agreement (the “Registration Rights Agreement”) with the PERA Members to register the GC Common Stock to be issued in connection with the Exchange. Pursuant to the Registration Rights Agreement, the Company has granted certain demand and piggy-back registration rights whereby the Company will register the resale of the GC Common Stock issued in the Exchange. The PERA Members include certain limited liability companies owned by (i) Terry Kennedy, the CEO of the Company, (ii) Jonathan Bonnette, the CTO of the Company and the CEO of Bombshell (iii) Joel Bonnette, the President of Bombshell and brother of Jonathan Bonnette, and (iv) Carl Sanko, a director and Secretary of the Company, and (v) Jared Bonnette, brother of Jonathan Bonnette. The acquisition of PERA was not accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. Due to the related party and common control relationships held between Bombshell and Grow Capital, Inc., the assets and liabilities of Bombshell transferred over to the Company at their historical carrying values. The following table provides information as of August 19, 2020 of the assets acquired and the liabilities assumed in the merger: Pera Appreciation Combined Assets Cash $ 27,693 $ 856,580 $ 884,273 Accounts receivable 67,779 28,534 96,313 Due to/from related parties (356,096 ) 388,596 32,500 Prepaid and other assets 32,440 187,283 219,723 Property and equipment - 106,791 106,791 Right to use assets 157,795 1,575,145 1,732,940 Grow Capital stock held* 140,600 60,000 200,600 Total Assets $ 70,211 $ 3,202,929 $ 3,273,140 Liabilities Accounts payable and accrued liabilities $ 36,186 $ 885,625 $ 921,811 Accounts payable and accrued liabilities, related parties - 201,252 201,252 Unearned revenue 5,667 3,326,726 3,332,393 Debt 75,000 5,201,321 5,276,321 Lease liabilities 153,413 1,598,068 1,751,481 Total liabilities $ 270,266 $ 11,212,992 11,483,258 Net Assets $ (200,055 ) $ (8,010,063 ) $ (8,210,118 ) Consideration: 9,358,185 shares $ 9,358 Additional paid in capital (209,413 ) Members’ equity (8,010,063 ) Total $ (8,210,118 ) *The Grow Capital, Inc. common stock held by PERA LLC and Appreciation Financial at the time of the closing was included as treasury stock. |
Note 5 - Assets Held for Sale
Note 5 - Assets Held for Sale | 3 Months Ended |
Sep. 30, 2020 | |
Disclosure Text Block [Abstract] | |
Note 5 - Assets Held for Sale | Note 5 – Assets Held for Sale In the quarter ended March 31, 2019, the Company began to actively market WCS for sale and has begun negotiations with certain parties for the sale of WCS, subject to diligence, negotiation of a purchase agreement and fulfillment of typical closing conditions. In connection with these efforts, management determined that it was appropriate to classify WCS as Assets Held for Sale. On September 30, 2019, the Company entered into a membership interest purchase agreement with the Zallen Trust pursuant to which the Company sold all of the Company’s membership interests in WCS for an aggregate purchase price of $782,450. The Zallen Trust paid the purchase price by transferring to the Company 434,694 shares of the Company’s Common Stock, valued at $2.00 per share. The Purchase Agreement also provided that Mr. Zallen transfer to the Company an additional 20,000 shares of Common Stock to settle $36,000 in back rent owed at the time of the sale. The Company retired all of the shares received as a result of the transaction. In connection with the sale of WCS, the Company and Mr. Zallen entered into a separation and release of claims agreement pursuant to which the Company and Mr. Zallen provided a mutual release of claims against the other party and such party’s affiliates, including all claims related to Mr. Zallen’s service as an officer, employee, and director of the Company. The release of claims by Mr. Zallen resulted in the forgiveness of salary accruals of approximately $367,000 for services provided up to June 30, 2018. The Company reversed related payroll taxes of approximately $61,000 and included the amount in the gain on sale. The shares issued in the Exchange are subject to certain registration rights with no liquidated damages for failure to complete registration by a specific date. After payment of all closing costs, the Company recorded a gain on sale of approximately $553,000. (See detail below) Discontinued Operation: (a) The Results of the Discounted Operations are as follows: Three Months Ended September 30, 2020 2019 Net revenues $ - $ 14,400 Operating expenses General and administrative - 7,964 Depreciation, amortization and impairment - 6,990 Total operating expenses - (14,954 ) Income (Loss) from operations - (554 ) Gain (loss) on sale - 492,439 Income (loss) from discontinued operations $ - $ 491,885 (b) Assets and liabilities disposed of are as follows September 30, 2019 Assets: Lease receivable $ 40,804 Prepaid expenses 5,152 Property, plant and equipment, net 809,281 Other assets 6,150 Total Assets $ 861,387 Liabilities: Accrued liabilities 367,367 Other liabilities 79,100 Total Liabilities 446,467 Net Assets $ 414,920 Consideration: Purchaser return 9,093,888 shares of common stock, FMV at $0.10 $ 909,389 Payment on certain items during closing (2,030 ) Total consideration $ 907,359 Gain on sale of WCS $ 492,439 |
Note 6 - Property and Equipment
Note 6 - Property and Equipment, Net | 3 Months Ended |
Sep. 30, 2020 | |
Disclosure Text Block [Abstract] | |
Note 6 - Property and Equipment, Net | Note 6 – Property and Equipment, Net Property and improvements consisted of the following as of September 30, 2020 and June 30, 2020: September 30, 2020 June 30, 2020 Lake Selmac Property $ 768,782 $ 768,782 Automobiles 264,343 - Leaseholder improvement 156,653 67,644 Furniture, Fixtures and Equipment 133,493 32,964 1,323,271 869,390 Less: accumulated depreciation (378,740 ) (26,415 ) $ 944,531 $ 842,975 Depreciation expense amounted to $5,235 and $6,404, for the three months ended September 30, 2020 and 2019, respectively. |
Note 7 - Promissory Note Receiv
Note 7 - Promissory Note Receivable | 3 Months Ended |
Sep. 30, 2020 | |
Notes to Financial Statements | |
Note 7 - Promissory Note Receivable | Note 7 – Promissory Note Receivable On July 8, 2019, the Company entered into a non-binding letter of intent (the “LOI”) to acquire Encompass More Group, Inc. (“Encompass”), a Nevada corporation. In connection with the LOI, Encompass issued a promissory note (the “Note”) to the Company pursuant to a loan agreement (the “Loan Agreement”), dated July 22, 2019, by and between Encompass and the Company, in exchange for a loan of $100,000 (the “Loan”). Pursuant to the Loan Agreement, the proceeds of the Loan will be used by Encompass for working capital and general corporate purposes. The Note has a twelve-month term, an interest rate of 5.0%, and is payable in monthly installments of $2,000, with all remaining principal and interest due on the maturity date, unless paid earlier by Encompass. The Board of Directors of the Company have determined not to proceed with the acquisition as contemplated under the LOI. During the fiscal year ended June 30, 2020, the Company received $16,000 towards monthly installments. We recorded interest income of $6,304 during the period ended June 30, 2020. The Note receivable balance at June 30, 2020 was $88,510. On September 25, 2020 the Company and Encompass More Group Inc. (the “Borrower”) entered into an addendum to the July 22, 2019 Commercial Loan Agreement (the “Addendum”) in order to modify certain of the terms and conditions. Under the Addendum, the Borrower shall enter into a new promissory note in the principal amount of $72,000, with any unpaid interest due and payable at June 30, 2020 to accrue and become due and payable on October 1, 2021. Further under the terms of the promissory note the Borrower shall make twelve (12) installment payments of $6,000 commencing November 1, 2020, until the principal balance of the loan is repaid in full, at which time all accrued and unpaid interest shall come due and payable. Interest on the promissory note shall continue to accrue at a rate of Five (5%) per annum. Concurrent with the execution of the Addendum, the Borrower made a lump sum payment of $16,510 to reduce the principal of the original $100,000 loan to $72,000. Payments through January 31, 2021 have been received as of the date of this report. The Company believes the note to be fully collectible as of September 30, 2020. |
Note 8 - Accrued Liabilities
Note 8 - Accrued Liabilities | 3 Months Ended |
Sep. 30, 2020 | |
Payables and Accruals [Abstract] | |
Note 8 - Accrued Liabilities | Note 8 – Accrued Liabilities Accrued liabilities at September 30, 2020 and June 30, 2020 consist of the following: September 30, 2020 June 30, 2020 Accrued salaries and wages $ 11,448 $ 23,749 Accrued commission fees 1,003,892 - Accrued interest on mortgage 21,431 21,431 Accrued expenses 141,801 127,498 $ 1,178,572 $ 172,678 |
Note 9 - Debts and Other Noncur
Note 9 - Debts and Other Noncurrent Liabilities | 3 Months Ended |
Sep. 30, 2020 | |
Notes to Financial Statements | |
Note 9 - Debts and Other Noncurrent Liabilities | Note 9 - Debts and Other Noncurrent Liabilities (1) Mortgage on Lake Selmac Property September 30, 2020 June 30, 2020 Note payable, Resort at Lake Selmac $ 594,079 $ 596,308 In March 2017, the Company acquired the Lake Selmac Property. Upon closing, the Company entered into a promissory note payable with the seller in the amount of $625,000 with a maturity date of March 6, 2022. The promissory note 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. The Company has irrevocably granted to First American Trust Company, as the Trustee the power to sell the property with the sellers as the beneficiaries. The purpose of grant is to secure performance on the promissory note. As of September 30, 2020, the approximate future aggregate principal payments in respect of our current obligations were as follows: 2021 10,553 2022 583,526 $ 594,079 (2) Paycheck Protection Program Paycheck Protection Program (“PPP loan”) $ 250,772 SBA 224,900 Total $ 475,672 On May 1, 2020, the Company entered into a promissory note with the US Small Business Administration (SBA) for funding in the amount of $250,772 with an interest rate of 1% per annum under the payroll protection program (PPP). Principal and interest payments are deferred during the first six (6) months of the term of this Note (the “Deferral Period”). Interest will continue to accrue on the outstanding principal balance during the Deferral Period. After proceeds of this Note have been expended by Borrower, but not sooner than eight weeks after the date of initial disbursement on this Note, Borrower may submit to Lender a request for forgiveness of the Loan. Borrower must submit all documentation required by Lender to verify number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations, certifying that the documents are true and that Borrower used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. Lender will notify Borrower within 60 days whether all or part of the requested forgiveness of the Loan has been approved. If the entire principal balance of this Note and accrued interest is not forgiven before the end of the Deferral Period, then the principal balance together with and all accrued and unpaid interest outstanding on the Amortization Commencement Date shall be paid in eighteen (18) monthly payments, commencing in the month immediately following the amortization commencement date. In addition, the Company received an Economic Injury and Disaster Loan “EIDL” in the amount of $224,900 from the SBA for working capital purposes, pursuant to the terms and conditions set forth in a Loan Authorization and Agreement, Note, and Security Agreement between the Company and the SBA. The EIDL accrues interest at the rate of 3.75% per annum and matures on August 11, 2050 (30 years from the date of the note). Pursuant to the terms of the loan agreement, the Company granted the SBA a security interest in all of its tangible and intangible personal property to secure payment and performance of the Company’s obligations. The loan agreement contains certain affirmative and restrictive covenants, including a covenant prohibiting the Company from selling or transferring any collateral (other than the sale of inventory in the ordinary course of business) without the SBA’s prior written consent, as well as a covenant prohibiting the Company from making any distribution of assets or any direct or indirect advance, by way of a loan, gift, bonus or otherwise, to any owner or employee of the Company or its affiliates without the SBA’s prior written consent. An event of default will occur under the note if, among other things, the Company reorganizes, merges, consolidates or otherwise undergoes a change in ownership or business structure without the SBA’s prior written consent. The Company may prepay the note at any time without notice or penalty. (3) Loans from National Life Group Appreciation had certain loan agreements with National Life Distribution, LLC as below: September 30, 2020 Revolving line of credit loan upto $5M dated December 21, 2018 with maturity date on December 20, 2023 Interest rate 6% $ 4,235,748 Promissory note dated November 2, 2018 Interest rate 5%, weekly payment $5,000, paid in full on December 1, 2020 539,194 Total $ 4,774,942 Future maturities over the remaining term of the debt are as follows: 2021 $ 624,746 2022 984,199 2023 4,235,748 5,844,693 Less: current portion (624,746 ) Long-term portion of debt $ 5,219,947 |
Note 10 - Operating Leases
Note 10 - Operating Leases | 3 Months Ended |
Sep. 30, 2020 | |
Disclosure Text Block [Abstract] | |
Note 10 - Operating Leases | Note 10 – Operating Leases We have entered into various non-cancelable operating lease agreements for certain of our offices. Our leases have original lease periods expiring between 2021 and 2028. Future minimum lease payments in respect of the above under non-cancellable leases as of September 30, 2020 as presented in accordance with ASC 842 were as follows: 2020 $ 123,911 2021 487,140 2022 379,059 2023 280,923 2024 238,769 Remaining periods 1,008,294 Total future minimum lease payments 2,518,096 Less: imputed interest (466,616 ) Total 2,051,480 Current portion of operating lease 388,178 Long term of operating lease $ 1,663,302 |
Note 11 - Capital Stock
Note 11 - Capital Stock | 3 Months Ended |
Sep. 30, 2020 | |
Disclosure Text Block [Abstract] | |
Note 11 - Capital Stock | Note 11 – Capital Stock On June 22, 2018, the Board of Directors of the Company approved the Recapitalization, which increased the Company’s authorized Common Stock from 100,000,000 to 175,000,000 shares, effective July 10, 2018. As of June 30, 2019, the Company's authorized stock consisted of 175,000,000 shares and 5,000,000 shares of Preferred Stock. As of August 29, 2019, the Company increased its authorized shares to 500,000,000 shares of Common Stock and 50,000,000 shares of Preferred Stock, respectively. Reverse Stock Split On May 13, 2020, the Company’s board of directors and stockholders approved an amended and restated certificate of incorporation to, among other things, effect a reverse split on the outstanding shares of the Company’s common stock on a one-for-20 basis (the “Reverse Stock Split”). The Reverse Stock Split became effective on July 30, 2020 and has been shown on a retroactive basis within all periods presented. The par values of the common were not adjusted as a result of the reverse stock split. Common Stock On August 19, 2020, the Company issued a total of 9,358,185 unregistered, restricted shares of Common Stock to acquire Pera LLC. (See Note 4). During the three months ended September 30, 2020, the Company issued a total of 145,495 unregistered, restricted Common Shares to officers and directors as part of their respective executive and/or board compensation package. The Company valued those issuances at the closing price of the Company’s stock as traded on the OTCMarket on the date of grant and recorded stock-based compensation of $165,065. During the three months ended September 30, 2020, the Company issued 17,104 fully vested shares of unregistered, restricted Common Shares to settle certain liabilities. The Company valued those issuances at the closing price of the Company’s Common Stock as traded on the OTCMarkets on the date of grant and recorded a $15,000 liability settlement and stock-based compensation of $8,108 on the statement of operations. During the three months ended September 30, 2020, the Company issued a total of 75,000 unregistered, restricted shares of Common Stock in respect to private placements at $1.00 per share and received cash proceeds of $75,000, in which $35,000 subscripted from Appreciation. Preferred Stock In 2015, the Company designated all 5,000,000 shares of its Preferred Stock as Series A Convertible Preferred Stock (the "Series A Preferred"), par value $0.001. The Series A Preferred shareholders voted together with the Common Stock as a single class and were entitled to receive all notices relating to voting that are required to be given to the holders of the Common Stock. The holders of shares of Series A Preferred were entitled to five votes per share and each share was convertible by the holder into five shares of Common Stock. All of the Series A Preferred shares were issued and converted into Common Stock in November 2015. Equity Incentive Plan In December 2015, the Company adopted the 2015 Equity Incentive Plan (the “Incentive Plan”) with a term of 10 years. The Incentive Plan allows for the issuance up to a maximum of 100,000 shares of Common Stock, options exercisable into Common Stock of the Company or stock purchase rights exercisable into shares of Common Stock of the Company. The Incentive Plan is administered by the Board unless a separate delegation to an administrator is made by the Board. Options granted under the Incentive Plan carry a maximum term of 10 years, except to a grantee who is also a 10% beneficial owner at the time of grant, in which case the maximum term is 5 years. In addition, exercise prices of options granted must be within a certain percentage of the closing price on date of grant depending on the level of beneficial ownership of Common Stock of the Company by the grantee. All vesting conditions are set by the Board or a designated administrator. In December 2015, the Company filed a registration statement on Form S-8 covering all shares issued or issuable under the Incentive Plan. The Company has granted options to purchase 100,000 shares under the Incentive Plan during April 2016, 75,000 of which have been exercised and 25,000 of which have vested and were canceled, unexercised, during the current fiscal year. There are no remaining shares available under the Incentive Plan. Stock Plan In December 2015, the Company adopted the 2015 Stock Plan (the “Stock Plan”). As a condition of adoption of the Stock Plan, the Company filed a registration statement on Form S-8 in December 2015 to register the shares issued under the Stock Plan. The Stock Plan allows for the issuance of up to a maximum of 100,000 shares of Common Stock of the Company. The Stock Plan is administered by the Board unless a separate delegation to an administrator is made by the Board. The Stock Plan shall continue in effect until it is terminated by the Board or all shares are issued pursuant to the Stock Plan. The Company has not granted any shares under the Stock Plan. Options There were no unvested options outstanding during the years ended June 30, 2020 and 2019. Options outstanding had intrinsic value as of June 30, 2020 and 2019 of $nil. In the year ended June 30, 2016 the Company issued an option with no term attached, and effective June 30, 2020, in accordance with the terms of the 2015 Equity Incentive Plan, the Company terminated 25,000 unexercised, vested options. |
Note 12 - Related Party Transac
Note 12 - Related Party Transactions | 3 Months Ended |
Sep. 30, 2020 | |
Disclosure Text Block [Abstract] | |
Note 12 - Related Party Transactions | Note 12 – Related Party Transactions (1) Bombshell Technologies, Inc. Revenue The following table summarizes the revenue from the Company’s related parties. Revenues below reflect the transactions between Bombshell, PERA and Appreciation to to the time of acquisition, consolidation and combination effective August 20, 2020, thereafter intercorporate sales are eliminated: Three Months Ended September 30, 2020 2019 Appreciation Financial LLC (1) $ 101,217 $ 167,336 Public Employee Retirement Assistance (PERA) (1) 74,856 74,790 Superior Performers Inc. (1) 139,572 212,998 Others 15,613 - Grand Total $ 331,258 $ 455,124 (1) The Company had a significant concentration of revenue from these four customers totaling 95% and 100% of gross related party revenues during the three months ended September 30, 2020 and 2019, respectively. Related entities are controlled by over 5% shareholders of the Company and/or officer/directors of the Company. The following table summarizes the accounts receivable from the Company’s related parties: September 30, 2020 June 30, 2020 Appreciation Financial LLC (1) $ - $ 140,289 Public Employee Retirement Assistance (PERA) (1) - 49,737 Superior Performers Inc. (1) 47,757 58,061 Others 10,548 970 Grand Total $ 58,305 $ 249,057 (1) The Company had a significant concentration of accounts receivable from these three customers totaling 99% as at June 30, 2020. Related entities are controlled by over 5% shareholders of the Company and/or officer/directors of the Company Appreciation and PERA balances are eliminated as of September 30, 2020. Costs of Goods and Commissions Fees The following table summarizes the Costs of Sales – related parties: Three Months ended September 30, 2020 2019 Trendsic Corporation Inc. (1)(2) $ - $ 150,540 Ambiguous Holdings LLC (1)(2) - 2,415 Total $ - $ 152,955 (1) The Company had a significant concentration of total costs of goods sold from these two related party vendors totaling 100% of related party costs of goods sold in the three months ended September 30, 2019, respectively. (2) Related entities are controlled by over 5% shareholders of the Company and/or officer/directors of the Company. The following table summarizes expense related to commission fees included as General and administrative – related parties: Three Months ended September 30, 2020 2019 Zeake, LLC (1) $ 53,082 $ 47,499 (1) Related entities are controlled by over 5% shareholders of the Company and/or officer/directors of the Company. The following table summarizes accounts payable to the Company’s related parties: September 30, 2020 June 30, 2020 Trendsic Corporation Inc. (1) $ - $ 61,948 Zeake, LLC (1) 99,097 78,515 Grand Total $ 99,097 $ 140,463 (1) Related entities are controlled by over 5% shareholders of the Company and/or officer/directors of the Company. (2) Pera LLC The following table summarizes the Costs of Sales – related parties: For the period August 20, 2020 to September 30, 2020 Pera Wizards, LLC (1) $ 253,596 Wingbrook Partners, LLC (1) 177,352 Total $ 430,948 (1) Related entities are controlled by over 5% shareholders of the Company and/or officer/directors of the Company. The following table summarizes expense related to commission fees paid to related parties and included as General and administrative – related parties: For the period August 20, 2020 to September 30, 2020 Management fee $ 28,962 Commission fee 18,563 Total $ 47,525 (3) Appreciation Financial LLC The following table summarizes the Costs of Sales – related parties: For the period August 20, 2020 to September 30, 2020 Member of Appreciation $ 54,374 The following table summarizes expense related to compensation included as General and administrative – related parties: For the period August 20, 2020 to September 30, 2020 Member of Appreciation $ 196,473 Upon combination of Appreciation, the Company assumed accounts payable as below: September 30, 2020 Member of Appreciation $ 201,252 (4) Grow Capital On February 12, 2020, the Company entered into a consulting agreement with Trevor Hall and appointed Mr. Hall to serve as an interim CFO of the Company beginning January 1, 2020 through December 31, 2020. Pursuant to the consulting agreement, a fixed fee of Sixty Thousand (60,000) shares of the Company’s unregistered restricted common stock for his providing chief financial officer services. The shares are to be issued at a rate of Fifteen Thousand (15,000) shares per quarter. The first and second installments, covering the period January 1 to June 30, 2020, were issued on March 3, 2020 and vested immediately upon issuance. On April 1, 2020, Jonathan Bonnette, who had been the President and Chief Executive Officer of Grow Capital since July 1, 2018, transitioned out of his role as President and Chief Executive Officer and became the Company’s Chief Technology Officer and the Chief Executive Officer of the Company’s subsidiary, Bombshell Technologies. Mr. Terry Kennedy was appointed to succeed Mr. Bonnette as the President and Chief Executive Officer of the Company, effective April 1, 2020. In connection with Mr. Kennedy’s appointment, the Company and Mr. Kennedy entered into an executive compensation agreement (the “Compensation Agreement”) with an effective date of April 1, 2020. The Compensation Agreement governs the terms and conditions regarding Mr. Kennedy’s compensation for the three-month period beginning on April 1, 2020, and ending on June 30, 2020, and may be terminated “for cause” only. Pursuant to the Compensation Agreement, following his appointment as President and Chief Executive Officer, Mr. Kennedy was issued 50,000 unregistered, restricted shares of the Company’s Common Stock on April 20, 2020 as compensation for the three-month period ending June 30, 2020. The 50,000 shares were valued at $44,040 at the closing price of the Company’s Common Stock as traded on the OTCMarkets on the date of grant. The shares of common stock issued are immediately and fully vested, and deemed to be fully earned, upon their issuance. If such a permanent executive compensation or employment agreement is not consummated prior to July 1, 2020, the Compensation Agreement will automatically renew for one additional three-month period beginning on July 1, 2020, with Mr. Kennedy entitled to receive up to an additional 50, 000 unregistered, restricted shares of the Company’s common stock, with the actual number of shares being prorated for the portion of the extended period actually served until the more permanent executive compensation/employment agreement is consummated. On May 15, 2020, the Company entered into Fee Agreements (collectively, the “Fee Agreements”) with each of (i) Jonathan Bonnette, and (ii) Carl Sanko, a director and the Secretary of the Company. Under the Fee Agreements, on May 15, 2020, each of Mr. Bonnette, and Mr. Sanko were issued unregistered, restricted shares of Common Stock for services provided to the Company. Pursuant to the Fee Agreements: (i)Mr. Bonnette received a fixed fee of $320,000 for his service as Chief Executive Officer of the Company and for outside business management and consulting services of which 1/3, or $106,667 was immediately payable. by way of an upfront payment of 133,333 unregistered, restricted shares of Common Stock valued at $113,017 and deemed to cover the three-month period from May 15, 2020 to August 15, 2020. The balance of Mr. Bonnette’s compensation of $213,333 will vest monthly but be paid in shares of Common Stock quarterly in installments of $71,111 within 10 days following each of the three-month periods ending of November 15, 2020, February 15, 2021, and May 15, 2021. (ii)Mr. Sanko received a fixed fee of $270,000 for his services as Secretary of the Company and for outside business management and consulting services, of which 1/3 or $90,000 was immediately payable by way of an upfront payment of 112,500 unregistered, restricted shares of Common Stock valued at $95,400 and deemed to cover the three-month period from May 15, 2020 to August 15, 2020; The balance of Mr. Sanko’s compensation of $180,000 will vest monthly but be paid in shares of Common Stock in quarterly in installments of $60,000 within 10 days following each of the three-month periods ending of November 15, 2020, February 15, 2021, and May 15, 2021. 145,495 unregistered, restricted Common Shares to officers and directors as part of their respective executive and/or board compensation package. The Company valued those issuances at the closing price of the Company’s stock as traded on the OTCMarket on the date of grant and recorded stock-based compensation of $165,065. During the three months ended September 30, 2020, the Company issued a total of 75,000 unregistered, restricted shares of Common Stock to related parties for cash proceeds of $75,000. |
Note 13 - Segment Reporting
Note 13 - Segment Reporting | 3 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Note 13 - Segment Reporting | Note 13 – Segment Reporting The Company's operations are classified into four reportable segments that provide different products or services. Separate management of each segment is required because each business unit is subject to different marketing, operational, and growth and technology development strategies. Resort at Lake Selmac The recreational vacation site rentals segment operated by Resort at Lake Selmac, Inc. derives its revenue from rental of RV sites and campsites at its owned location on Lake Selmac in Oregon. Bombshell Technologies and Corporate US. The Fintech segment operated by Bombshell Technologies based in Nevada and Louisiana derives its income from proprietary software which delivers customized back office compliance, sophisticated multi-pay commission processing, and a unique new client application submission system, along with digital engagement marketing services centric to financial services. Pera Our electronic appointment scheduling operations provides leads for insurance agents to connect retirement professionals and public employees to trusted insurance advisors. Appreciation The operations of combined entity Appreciation Financial LLC include full-service retirement planning by member agents which service public employees and their families providing policies from a series of insurance carriers that meet their retirement planning requirements. We derive revenue from all operating segments. There are inter-segment sales between each of our operating divisions other than Resort at Lake Selmac. The costs associated with management overhead for Grow Capital are dedicated to our key operating segment in the FinTech industry, Bombshell Technologies and all corporate overhead has been included in this segment disclosure as a result. As of September 30, As of June 30, 2020 2020 Assets by segment Bombshell Technologies and corporate $ 1,121,066 $ 1,129,266 Pera 501,440 - Appreciation 2,654,052 - Resort at Lake Selmac 785,112 783,992 Total assets $ 5,061,670 $ 1,913,258 Three months ended September 30, 2020 and 2019: Three Months Ended September 30, 2020 2019 Revenues by segment: Bombshell Technologies and corporate $ 382,671 $ 506,363 Pera 709,679 - Appreciation 3,501,502 - Resort at Lake Selmac 69,146 86,299 Revenues $ 4,662,998 $ 592,662 Segment profit (loss) Bombshell Technologies and corporate $ (1,057,859 ) $ (257,113 ) Pera (43,487 ) - Appreciation 73,996 - Resort at Lake Selmac 26,014 8,220 Total segment profit $ (1,001,336 ) $ (248,893 ) |
Note 14 - Commitments and Conti
Note 14 - Commitments and Contingencies | 3 Months Ended |
Sep. 30, 2020 | |
Disclosure Text Block [Abstract] | |
Note 14 - Commitments and Contingencies | Note 14 – Commitments and Contingencies On December 13, 2019, Trendsic Corporation, Inc. (“Trendsic”), a related party entity which is 49% controlled by Joel A. Bonnette (former CEO of our wholly-owned subsidiary Bombshell Technologies, Inc.) filed a lawsuit in the 19th Judicial District Court in East Baton Rouge Parish, Louisiana against Joel A. Bonnette, Jared Bonnette, Bombshell Software, LLC and Bombshell Technologies, Inc. The plaintiff is disputing the ownership of certain intellectual property of Bombshell Technologies, Inc. and alleging misappropriation of trade secrets of Trendsic. Trendsic is seeking an unspecified amount of damages in excess of $75,000 and treble damages under the Louisiana Uniform Trade Secrets Act, as well as injunctive relief. The Company believes the claims by Trendsic are without merit and is vigorously defending against such claims. At the time of this report, the Company and the plaintiff have entered into confidential settlement negotiations. The Company has accrued $494,458 in accrued liabilities in respect of the estimated monetary settlement. On September 4, 2020, Colorado Public Employees’ Retirement Association filed a lawsuit against our wholly owned subsidiary PERA, LLC in United States District Court for the District of Colorado. Plaintiff asserts claims against the Company for violation of the Colorado Consumer Protection Act, C.R.S. Sec. 6-1-113 and for common law unfair competition. Plaintiff alleges that the Company has created confusion amongst Colorado public employees as to the affiliation of the Company with Plaintiff. The Company denies the claims asserted against it and is vigorously defending the lawsuit. At this point, Plaintiff has not identified any monetary damages alleged to be sustained as a result of the Company’s conduct. On May 25, 2017, Asurea Insurance Services, Inc. filed a lawsuit against Appreciation, LLC and three of our top agents in the Superior Court of California, Sacramento. Plaintiff asserts claims of Breach of Settlement Agreement, Breach of Implied Covenant of Good Faith and Fair Dealing, Specific Performance, Declaratory Relief, Intentional Interference with Prospective Economic Relations, Negligent Interference with Prospective Economic Relations, and Aiding and Abetting. Plaintiff alleges that the Parties breached the Settlement Agreement reached between the parties on September 1, 2014. The Company denies the claims asserted against it and is vigorously defending the lawsuit. The parties have attended mediation in an attempt to settle this case to no avail. At this point, Plaintiff has not proven any monetary damages alleged to be sustained as a result of the Company’s alleged conduct. On September 15, 2017, Nathan Burks filed a lawsuit against Appreciation, LLC and three of our top agents in the Superior Court of California, Sacramento. Plaintiff asserts claims of Breach of Settlement Agreement, Breach of Associate Agreement, Common Count- Services Rendered, Intentional Interference with Contractual Relations, Negligent Interference with Prospective Economic Relations, Declaratory Relief, Money Had and Received, and Unfair Competition. Plaintiff alleges that when he left Appreciation and returned to Asurea (his original place of employment in 2014, and a corporate entity with which we are in litigation) (see above) that despite violating the associate agreement, he is owed money. The Company denies the claims asserted against it and is vigorously defending the lawsuit. The parties have an arbitration set in May of 2021 in an attempt to settle this case. At this point, Plaintiff has not proven any monetary damages alleged to be sustained as a result of the Company’s alleged conduct. On the basis of current information, the availability of legal advice, and in management’s opinion, the Company is not currently involved in any legal proceedings which, individually or in the aggregate, would have a material adverse effect on its financial condition, operations and/or cash flows. |
Note 15 - Subsequent Events
Note 15 - Subsequent Events | 3 Months Ended |
Sep. 30, 2020 | |
Disclosure Text Block [Abstract] | |
Note 15 - Subsequent Events | Note 15- Subsequent Events On September 30, 2020 Terry Kennedy, CEO, and Eric Tarno, CEO of acquired subsidiary, PERA LLC, were appointed to the Company’s Board of Directors effective October 1, 2020. On October 1, 2020 the Company issued 50,000 unregistered, restricted shares of the Company’s common stock to the Company’s CEO, Terry Kennedy, concurrent with approving an extension to his executive compensation contract, as compensation for the three-month period commencing October 1, 2020. The shares were valued at the closing price of the Company’s Common Stock as traded on the OTCMarkets on the date of the board resolution approving the issuance of the shares. On October 1, 2020 the Company issued a total of 106,869 unregistered, restricted common shares to officers and directors as part of their respective executive and/or board compensation package. The Company valued the issuances at the closing price of the Company’s stock as traded on the OTCMarket on the date of the board resolution approving the issuance of the shares. On October 16, 2020, the Company issued a total of 15,000 unregistered restricted common shares as the quarterly payment to an officer as part of his respective executive and/or board compensation package. The shares vest immediately upon issuance. The Company valued the issuances at the closing price of the Company’s stock as traded on the OTCMarket on the date of the board resolution approving the issuance of the shares. On November 16, 2020 the Company issued a total of 199,370 shares of common stock to two officers and directors as part of their respective executive and/or board compensation package. The Company valued the issuances at the closing price of the Company’s stock as traded on the OTCMarket on the date of the board resolution approving the issuance of the shares. On November 23, 2020, the Company issued a total of 75,000 shares of common stock to three related companies for total consideration of $75,000. On December 4, 2020, the Company issued a total of 20,797 shares to AF1 Public Relations LLC for consideration of serviced valued at $15,000. The Company valued the issuances at the closing price of the Company’s stock as traded on the OTCMarket on the date of the board resolution approving the issuance of the shares. On January 11, 2021, the Company issued a total of 119,718 unregistered, restricted common shares to officers and directors as part of their respective executive and/or board compensation package. The Company valued the issuances at the closing price of the Company’s stock as traded on the OTCMarket on the date of the board resolution approving the issuance of the shares. On January 11, 2021, the Company issued a total of 1,500,000 unregistered, restricted common shares to certain third parties and related entities for cash consideration of $375,000. On January 11, 2020 the Company issued 50,000 unregistered, restricted shares of the Company’s common stock to the Company’s CEO, Terry Kennedy, concurrent with approving an extension to his executive compensation contract, as compensation for the three-month period commencing October 1, 2020. The shares were valued at the closing price of the Company’s Common Stock as traded on the OTCMarkets on the date of the board resolution approving the issuance of the shares. On January 22, 2021, the Company issued a total of 15,000 unregistered restricted common shares as the quarterly payment to an officer as part of his respective executive and/or board compensation package. The shares vest immediately upon issuance. The Company valued the issuances at the closing price of the Company’s stock as traded on the OTCMarket on the date of the board resolution approving the issuance of the shares. |
Note 2 - Summary of Significa_2
Note 2 - Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Sep. 30, 2020 | |
Policy Text Block [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated and combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The unaudited condensed financial statements included herein are unaudited. Such financial statements, in the opinion of management, contain all adjustments necessary to present fairly the financial position and results of operations as of and for the periods indicated. All such adjustments are of a normal recurring nature outside of the combination of Appreciation Financial. These interim results are not necessarily indicative of the results to be expected for the year ending June 30, 2021 or for any other period. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, and because of this, for further information, readers should refer to the financial statements and footnotes included in its Form 10-K for the fiscal year ended June 30, 2020 filed on October 13, 2020. The Company believes that the disclosures are adequate to make the interim information presented not misleading. |
Consolidation | Consolidation and Combination The Company’s policy is to consolidate all entities that it controls by ownership of a majority of the outstanding voting stock. In addition, upon the acquisition of PERA LLC, the Company combined entities that met the criteria of having common control with Grow Capital and its controlled subsidiaries. Upon the acquisition of PERA LLC (see below), the Company identified certain common control entities, the operations of which are included in our consolidated and combined financial statements. The accompanying unaudited condensed consolidated and combined financial statements include the accounts of Grow Capital Inc. and its wholly-owned subsidiaries, Bombshell Technologies Inc., The Resort at Lake Selmac and PERA LLC, as well as PERA Administrators LLC, the operations of which are for the sole benefit of PERA LLC. In addition, the Company has combined the results of Appreciation Financial LLC and Appreciation Rewards LLC. At the time of the acquisition of PERA LLC, the Company determined that Appreciation Financial was the primary beneficiary of PERA LLC. In addition, the Company determined that it has common ownership with Appreciation Financial and the Company has had discussions with the members of Appreciation Financial about potential combinations, which as of the date of these financial statements are not yet probable. However, because of the nature of the relationship, the Company determined that while Appreciation Financial is not a variable interest entity to the Company, the nature of the common control relationship coupled with the inter-relationship with PERA LLC meant that in order for the results of operations and financial position to not be misleading, the Company had to combine its results with those of Appreciation Financial upon the acquisition of PERA, LLC. 7 Reported operations in the three months ended September 30, 2020 include operations of our wholly owned subsidiaries Bombshell and The Resort at Lake Selmac, as as well as the results of operations by PERA LLC and its common control entities for the period from acquisition (August 19, 2020 through September 30, 2020). In addition, September 30, 2020 operating results also include the combined results of both Appreciation Financial LLC Appreciations Rewards LLC for the period from August 19, 2020 to September 30, 2020. Results for the comparative three month period ended September 30, 2019 include Grow Capital, Bombshell and the Resort at Lake Selmac. All material intercompany accounts, transactions, and profits have been eliminated in consolidation and with and between the combined entities. |
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. Significant items subject to estimates and assumptions include timing of recognition of commission revenue on insurance policy renewals and expenses related thereto, along with costs associated with policy acquisition and our allowance for doubtful accounts and useful lives of our fixed assets related to Lake Selmac. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents For financial accounting purposes, cash and cash equivalents are considered to be all highly liquid investments with a maturity of three (3) months or less at the time of purchase. |
Concentration of Credit Risk | Concentrations Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At September 30, 2020 and 2019, the Company had $272,767 and $0 in excess of the FDIC insured limit, respectively. Concentration Risk - Revenues For the three months ended September 30, 2020, one customer accounted for 53% of combined and consolidated gross revenue, 57% of combined and consolidated revenue from non-related parties and 70% of revenue recorded by Appreciation Financial LLC. The contribution of revenue to the three month operating period ended September 30, 2020 was derived from operations of Appreciation Financial LLC for the period between August 19, 2020 and September 30, 2020. Concentration of Financing Risk Appreciation Financial is dependent upon on its largest customer for financing of its operations. That customer has provided commission advances of approximately $3.3 million and loans of approximately $4.8 million as of September 30, 2020. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts The Company determines the allowance for doubtful accounts by considering a number of factors, including the length of time the accounts receivable are beyond the contractual payment terms, previous loss history, and the customer’s current ability to pay its obligation. When the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, the Company records a charge to the allowance to reduce the customer’s related accounts. At September 30, 2020, the allowance for doubtful accounts totaled approximately $41,400. |
Lease Receivables and deferred rent | Lease Receivables and deferred rent Lease receivables are recognized when rents are due, and for the straight-line adjustment to rents over the term of the lease less an allowance for expected uncollectible amounts. Inherent in the assessment of the allowance for doubtful accounts are certain judgments and estimates including, among others, the customer's willingness or ability to pay, the Company's compliance with lease terms, the effect of general economic conditions and the ongoing relationship with the customer. Accounts with outstanding balances longer than the payment terms are considered past due. We do not charge interest on past due balances. The Company writes off lease receivables when it determines that they have become uncollectible after all reasonable collection efforts have been made. If we record bad debt expense, the amount is reflected as a component of operating expenses in the statements of operations. |
Leases | Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02 – Topic 842 Leases. The Company has elected to apply the short-term scope exception for leases with terms of 12 months or less at the inception of the lease and will continue to recognize rent expense on a straight-line basis. As a result of the adoption, on July 1, 2019, the Company recognized a lease liability of approximately $291,753, which represented the present value of the remaining minimum lease payments using an estimated incremental borrowing rate of 6.75%. As of July 1, 2019, the Company recognized a right-to-use asset of approximately $289,089. Lease expense did not change materially as a result of the adoption of ASU 2016-02. As a result of the acquisition of PERA LLC and combined entity Appreciation Financial LLC, as of August 19, 2020 the Company recognized a right to use asset of $157,795 and a lease liability of $153,413 with respect to PERA LLC and a right to use asset of $1,575,145 and a lease liability of $1,598,068 with respect to combined entity Appreciation Financial LLC. |
Intangible Assets | Intangible Assets The Company’s intangible assets consist of intellectual property with minimal value. |
Investment In and Valuation of Real Estate Assets | Investment In and Valuation of Real Estate Assets Real estate assets are stated at cost, less accumulated depreciation and amortization. Amounts capitalized to real estate assets consist of the cost of acquisition (excluding acquisition related expenses), construction costs, and mortgage interest during the period the facilities are under construction and prior to readiness for occupancy, and any tenant improvements, major improvements and betterments that extend the useful life of the real estate assets and leasing costs. All repairs and maintenance are expensed as incurred. The Company is required to make subjective assessments as to the useful lives of its depreciable assets. The Company considers the period of future benefit of each respective asset to determine the appropriate useful life of the assets. Real estate assets, other than land, are depreciated on a straight-line basis over the estimated useful life of the asset. The estimated useful lives of the Company's real estate assets by class are generally as follows: Land Indefinite Buildings 40 years Tenant improvements Lesser of useful life or lease term Intangible lease assets Lease term |
Impairment of long-lived assets | Impairment of long-lived assets The Company monitors its long-lived assets and finite-lived intangibles for indicators of impairment. If such indicators are present, the Company assesses the recoverability of affected assets by determining whether the carrying value of such assets is less than the sum of the undiscounted future cash flows of the assets. If such assets are found not to be recoverable, the Company measures the amount of such impairment by comparing the carrying value of the assets to the fair value of the assets, with the fair value generally determined based on the present value of the expected future cash flows associated with the assets (See Note 6). |
Share-based compensation | Share-based compensation The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. Unregistered stock awards are measured based on the fair market values of the underlying stock on the dates of grant. For service type awards, share-based compensation expense is recognized on a straight-line basis over the period during which the employee is required to provide service in exchange for the entire award. For awards that vest or begin vesting upon achievement of a performance condition, the Company estimates the likelihood of satisfaction of the performance condition and recognizes compensation expense when achievement of the performance condition is deemed probable using an accelerated attribution model. |
Revenue Recognition | Revenue Recognition under ASC 606 ASC 606 “Revenue from Contracts with Customers” Revenues from contracts with customers are recognized when control of promised goods and services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company recognizes revenue using the five-step model as prescribed by ASC 606:performance obligation. 1) Identification of the contract, or contracts, with a customer; 2) Identification of the performance obligations in the contract; 3) Determination of the transaction price; 4) Allocation of the transaction price to the performance obligations in the contract; and 5) Recognition of revenue when or as, the Company satisfies a performance obligation. When a contract with a customer or an agent is signed, the Company assesses whether collection of the fees under the arrangement is probable. The Company estimates the amount to reserve for uncollectible amounts at the end of each reporting period based on the aging of the contract balance, current and historical customer trends, and communications with its customers. These reserves are recorded against the related accounts receivable. The transaction price is the consideration that the Company expects to receive from its customers and agents in exchange for its products or services. In determining the allocation of the transaction price, the Company identifies performance obligations in contracts with customers, which may include subscriptions to software and services, support, professional services and customization. In the case of the Company’s software contracts and support services prices are predetermined based on the specific terms of the contract either in flat fee customization/license fee charges or as hourly support and/or software customization charges. Charges relative to license fees are amortized over the term of the license. Charges relative to customization of the software are charged over the term of the scope of work on a percentage of completion basis. Charges relative to support and ongoing services and professional fees are charged when incurred and control has been transferred or the work has been completed. Income earned through the sale of appointments to agents by PERA LLC are recognized on the date of the service appointment. License fees and customization of software License and implementation fees are charged as flat fees which are amortized over the term of the contract. For contracts with elements related to customized software solutions and certain build-outs or software systems that require significant modification or customization, the Company will recognize revenue using the percentage-of-completion method. In using the percentage-of-completion method, revenues are generally recorded based on completion of milestones under a scope of work or based on total estimated cost of work and percentage completion as at the balance sheet date. Software Revenue The Company generates software revenue monthly on a single fee per subscribed user basis. The Company recognizes software revenue monthly on a per user for each user that is able to deploy software and provided all revenue recognition criteria have been met. If the revenue recognition criteria has not been met, the revenue is deferred or not recognized. Customization, support and maintenance Revenue from the Company’s customization of software to meet a particular client’s needs is recognized on a percentage of completion basis over the term of the customization work and until control of the goods or services is transferred to the customer or such date the customer agrees the scope of work has been completed and the intended functionality of the software is complete and able to perform the desired service. Support and maintenance revenue is generated from recurring monthly support and is invoiced monthly based on hourly fees at predetermined rates based on each customer contract. The Customer is credited a certain number of services hours monthly based on the numbers of users actively subscribed to the software which amounts offset any monthly user fees. Support and maintenance services include e-mail and telephone support, unspecified rights to software fixes and product updates and upgrades and enhancements available on a when-and-if available basis. Professional services and other Professional services and other revenue is generated through services including onsite training, product implementation and other similar services. Professional services are generally flat fee services based on a number of hours or scope of work for each specific service. Depending on the services to be provided, revenue from professional services and other is generally recognized at the time of delivery when the services have been completed and control has been transferred. Income from agent appointments Income generated by booking appointments for insurance agents is earned on the date on which the appointment takes place. Appointment fees which are collected in advance of appointments are recorded as unearned revenue. Unearned Revenue Unearned revenue represents billings or payments received in advance of revenue recognition and is recognized upon transfer of control. Balances consist primarily of appointment fees collected from member agents where the client appointment has not yet occurred, license fees being amortized over the term of the customer contract and customization services which have not yet been concluded and are being deferred using the percentage-of-completion method. Campground space rentals and concession sales Revenues from our campsite operations from the sales of concession items, equipment rentals or campsite locations are recoded on the cash basis due to the nature of collection of campsite fees and concession items, which occur daily as the site is rented and sundry items are purchased. Commissions earned on insurance coverage (Appreciation Financial LLC) Appreciation Financial LLC earns commissions paid by insurance carriers for the binding of insurance coverage. Commissions are earned at a point in time upon the effective date of bound insurance coverage, as no performance obligation exists after coverage is bound. If there are other services within the contract, Appreciation estimates the stand-alone selling price for each separate performance obligation, and the corresponding apportioned revenue is recognized over a period of time as the performance obligations are fulfilled. Incentive commissions represent a form of variable consideration which includes additional commissions over base commissions received from insurance carriers based on predetermined production levels mutually agreed upon by both parties. Incentive commissions are estimated with a constraint applied and accrued relative to the recognition of the corresponding core commissions based on the amount of consideration that will be received in the coming year such that a significant reversal of revenue is not probable. Advance Commissions are paid by insurance carriers under agreed terms of certain individual customer policies. Advance Commissions are recorded as deferred revenue and amortized over the term of the contract. Appreciation Management determines the policy cancellation reserve based upon historical cancellation experience adjusted for any known circumstance. Commission revenues – Prior to the adoption of Topic 606, commission revenues, including those billed on an installment basis, were recognized on the latter of the policy effective date or the date that the premium was billed to the customer. As a result of the adoption of Topic 606, commission revenues associated with the issuance of policies are now recognized upon the effective date of the associated policy. The overall impact of these changes is expected to be significant.. These commission revenues, including those billed on an installment basis, will now be recognized earlier than they had been previously. Revenue is accrued based upon the completion of the performance obligation, thereby creating a current asset for the unbilled revenue, until such time as an invoice is generated. Incentive and contingent commissions – Prior to the adoption of Topic 606, revenue that was not fixed and determinable because a contingency existed was not recognized until the contingency was resolved. Under Topic 606, Appreciation must estimate the amount of consideration that will be received in the coming year such that a significant reversal of revenue is not probable. Incentive and contingent commissions represent a form of variable consideration associated with the placement of coverage, for which we earn commissions and fees. In connection with Topic 606, these commissions are estimated with a constraint applied and accrued relative to the recognition of the corresponding core commissions. The resulting effect on the timing of recognizing of these contingent commissions will now more closely follow a similar pattern as our commissions and fees with any true-ups recognized when payments are received or as additional information that affects the estimate becomes available. Fee Revenues: Appreciation earns fee revenue related to the onboarding of its agents which is recorded at the time of the transaction. Additionally, Appreciation is required to evaluate the impact of ASC Topic 340 – Other Assets and Deferred Cost (“ASC 340”) which requires companies to defer certain incremental cost to obtain customer contracts, and certain costs to fulfill customer contracts. Incremental cost to obtain – The adoption of ASC 340 is expected to result in Appreciation deferring certain costs to obtain customer contracts primarily as they relate to commission-based compensation for which the Company pays an incremental amount of compensation on new business. These incremental costs are expected to be deferred and amortized based on the term of customer polices and expected renewals. Cost to fulfill – The adoption of ASC 340 may result in Appreciation deferring certain costs to fulfill contracts and recognizing costs as the associated performance obligations are fulfilled. In order for contract fulfillment costs to be deferred under ASC 340, the costs must (1) relate directly to a specific contract or anticipated contract, (2) generate or enhance resources that Appreciation will use in satisfying its obligations under the contract, and (3) be expected to be recovered through sufficient net cash flows from the contract. As of the filing date, Appreciation Financial is unable to estimate with certainty its historical renewal rates for the insurance policies previously sold and therefore has not included commission revenue to be earned upon renewal based on this estimate. This also means that Appreciation is unable to estimate the costs to be deferred under ASC 340, or the costs to be expensed upon recognition of renewal revenue under ASC 606. Appreciation Financial prior to the combination of its financial statements herein did not previously report the results of its operations and financial position under US GAAP and is currently in the process of developing the systems and processes in which to estimate these amounts. The Company currently expects that the processes and systems will be in place for the reporting for the Company’s year ended June 30, 2021 financial statements. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company follows the fair value measurement rules, which provides guidance on the use of fair value in accounting and disclosure for assets and liabilities when such accounting and disclosure is called for by other accounting literature. These rules establish a fair value hierarchy for inputs to be used to measure fair value of financial assets and liabilities. This hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels: Level 1 (highest priority), Level 2, and Level 3 (lowest priority). Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the balance sheet date. Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). Level 3—Inputs are unobservable and reflect the Company’s assumptions as to what market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available. The carrying amount of receivables and accounts payable and accrued expenses approximates fair value due to the short-term nature of those 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 lease receivables, accounts payable, and accrued liabilities approximate fair value given their short-term nature or effective interest rates, which constitutes level three inputs. |
Income Taxes | Income taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss and credit carryforwards. Deferred tax assets and liabilities are measured at rates expected to apply to taxable income in the years in which those temporary differences and carryforwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statement of operations in the period that includes the enactment date. A valuation allowance is recorded when it is not more likely than not that all or a portion of the net deferred tax assets will be realized. In the quarters ended September 30, 2020 and 2019, the Company issued a significant number of new shares in its acquisition of PERA LLC and Bombshell Technologies, Inc. (see Note 4) and the cancellation of then outstanding shares upon the sale of WCS Enterprises, LLC (see Note 5). The effect of these issuances and cancellations is that most likely, the Company experienced the requisite change of control as promulgated under the US Internal Revenue Code section 382. The effect of this will be that going forward, the ability of the Company to utilize the US Federal net operating loss carryforwards of Grow Capital, Inc. from prior to these transactions will be limited in its usage. In order to determine the specific effect, the Company must perform the computations required under the Internal Revenue Code, which have not yet been performed. The Company expects it will perform the required computations once its evident that profits are likely. |
Net (loss) income per share | Net (loss) income per share Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of shares of Common Stock 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 three months ended September 30, 2020 and 2019, 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. There were no potential shares outstanding as of September 30, 2020 and 2019. |
Reclassification | Reclassification Certain prior period balances have been reclassified to conform to the current period presentation in the Company’s consolidated financial statements and the accompanying notes. These reclassifications had no effect on net income for the prior periods. In addition, we previously included the results of operations and financial position of the Resort on Lake Selmac for the period ended September 30, 2019 in discontinued operations and assets and liabilities held for sale, respectively. Subsequent to the original Form 10-Q filing for the period ended September 30, 2019, we no longer had a plan of sale and therefore the results of Lake Selmac and its financial position are now included in our results from continuing operations and cash flows for the period ended September 30, 2019. |
Recent accounting pronouncements | Recent Accounting Pronouncements Fair Value Measurements (“ASU 2018-03”). The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of ASU 2018-13. An entity is permitted to early adopt any removed or modified disclosures upon issuance of ASU 2018-13 and delay adoption of the additional disclosures until their effective date. The Company is currently assessing the impact that ASU 2018-13 will have on its financial statements. Financial Instruments – Credit Losses (“ASU 2016-13”). The standard was originally effective for interim and annual reporting periods beginning after December 15, 2019 and early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018. However, in November 2019, the Financial Accounting Standard Board (FASB) issued ASU 2019-10, Financial Instruments—Credit Losses, (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) — Effective Dates ASU 2019-10 |
Note 2 - Summary of Significa_3
Note 2 - Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Table Text Block Supplement [Abstract] | |
Schedule of Estimated useful lives assets | The estimated useful lives of the Company's real estate assets by class are generally as follows: Land Indefinite Buildings 40 years Tenant improvements Lesser of useful life or lease term Intangible lease assets Lease term |
Note 3 - Prepaid expenses (Tabl
Note 3 - Prepaid expenses (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Notes to Financial Statements | |
Schesule of Prepaid expenses | Prepaid expenses at September 30, 2020 and June 30, 2020 consist of the following: September 30, 2020 June 30, 2020 Professional fees $ 59,675 $ 50,000 Insurance 1,732 2,771 Other expenses 19,368 15,954 Total $ 80,775 $ 68,725 |
Note 4 - Merger with PERA LLC (
Note 4 - Merger with PERA LLC (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Schedule of assets acquired and liabilities assumed | The following table provides information as of August 19, 2020 of the assets acquired and the liabilities assumed in the merger: Pera Appreciation Combined Assets Cash $ 27,693 $ 856,580 $ 884,273 Accounts receivable 67,779 28,534 96,313 Due to/from related parties (356,096 ) 388,596 32,500 Prepaid and other assets 32,440 187,283 219,723 Property and equipment - 106,791 106,791 Right to use assets 157,795 1,575,145 1,732,940 Grow Capital stock held* 140,600 60,000 200,600 Total Assets $ 70,211 $ 3,202,929 $ 3,273,140 Liabilities Accounts payable and accrued liabilities $ 36,186 $ 885,625 $ 921,811 Accounts payable and accrued liabilities, related parties - 201,252 201,252 Unearned revenue 5,667 3,326,726 3,332,393 Debt 75,000 5,201,321 5,276,321 Lease liabilities 153,413 1,598,068 1,751,481 Total liabilities $ 270,266 $ 11,212,992 11,483,258 Net Assets $ (200,055 ) $ (8,010,063 ) $ (8,210,118 ) Consideration: 9,358,185 shares $ 9,358 Additional paid in capital (209,413 ) Members’ equity (8,010,063 ) Total $ (8,210,118 ) *The Grow Capital, Inc. common stock held by PERA LLC and Appreciation Financial at the time of the closing was included as treasury stock. |
Note 5 - Assets Held for Sale (
Note 5 - Assets Held for Sale (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Disclosure Text Block [Abstract] | |
Schedule of Discounted Operations | (a) The Results of the Discounted Operations are as follows: Three Months Ended September 30, 2020 2019 Net revenues $ - $ 14,400 Operating expenses General and administrative - 7,964 Depreciation, amortization and impairment - 6,990 Total operating expenses - (14,954 ) Income (Loss) from operations - (554 ) Gain (loss) on sale - 492,439 Income (loss) from discontinued operations $ - $ 491,885 |
Assets and liabilities disposed | (b) Assets and liabilities disposed of are as follows September 30, 2019 Assets: Lease receivable $ 40,804 Prepaid expenses 5,152 Property, plant and equipment, net 809,281 Other assets 6,150 Total Assets $ 861,387 Liabilities: Accrued liabilities 367,367 Other liabilities 79,100 Total Liabilities 446,467 Net Assets $ 414,920 Consideration: Purchaser return 9,093,888 shares of common stock, FMV at $0.10 $ 909,389 Payment on certain items during closing (2,030 ) Total consideration $ 907,359 Gain on sale of WCS $ 492,439 |
Note 6 - Property and Equipme_2
Note 6 - Property and Equipment, Net (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Table Text Block Supplement [Abstract] | |
Schedule of Property and Improvements | Property and improvements consisted of the following as of September 30, 2020 and June 30, 2020: September 30, 2020 June 30, 2020 Lake Selmac Property $ 768,782 $ 768,782 Automobiles 264,343 - Leaseholder improvement 156,653 67,644 Furniture, Fixtures and Equipment 133,493 32,964 1,323,271 869,390 Less: accumulated depreciation (378,740 ) (26,415 ) $ 944,531 $ 842,975 |
Note 8 - Accrued Liabilities (T
Note 8 - Accrued Liabilities (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Liabilities | Accrued liabilities at September 30, 2020 and June 30, 2020 consist of the following: September 30, 2020 June 30, 2020 Accrued salaries and wages $ 11,448 $ 23,749 Accrued commission fees 1,003,892 - Accrued interest on mortgage 21,431 21,431 Accrued expenses 141,801 127,498 $ 1,178,572 $ 172,678 |
Note 9 - Debts and Other Nonc_2
Note 9 - Debts and Other Noncurrent Liabilities (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Notes to Financial Statements | |
Schedule of Mortgage on Lake Selmac Property | (1) Mortgage on Lake Selmac Property September 30, 2020 June 30, 2020 Note payable, Resort at Lake Selmac $ 594,079 $ 596,308 |
Schedule of future aggregate principal payments | As of September 30, 2020, the approximate future aggregate principal payments in respect of our current obligations were as follows: 2021 10,553 2022 583,526 $ 594,079 |
Schedule of Paycheck Protection Program and SBA | Paycheck Protection Program Paycheck Protection Program (“PPP loan”) $ 250,772 SBA 224,900 Total $ 475,672 |
Note 10 - Operating Leases (Tab
Note 10 - Operating Leases (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Disclosure Text Block [Abstract] | |
Schedule of future aggregate minimum lease payments | Future minimum lease payments in respect of the above under non-cancellable leases as of September 30, 2020 as presented in accordance with ASC 842 were as follows: 2020 $ 123,911 2021 487,140 2022 379,059 2023 280,923 2024 238,769 Remaining periods 1,008,294 Total future minimum lease payments 2,518,096 Less: imputed interest (466,616 ) Total 2,051,480 Current portion of operating lease 388,178 Long term of operating lease $ 1,663,302 |
Note 12 - Related Party Trans_2
Note 12 - Related Party Transactions (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Bombshell Technologies | |
Summary of revenue from related parties | The following table summarizes the revenue from the Company’s related parties. Revenues below reflect the transactions between Bombshell, PERA and Appreciation to to the time of acquisition, consolidation and combination effective August 20, 2020, thereafter intercorporate sales are eliminated: Three Months Ended September 30, 2020 2019 Appreciation Financial LLC (1) $ 101,217 $ 167,336 Public Employee Retirement Assistance (PERA) (1) 74,856 74,790 Superior Performers Inc. (1) 139,572 212,998 Others 15,613 - Grand Total $ 331,258 $ 455,124 (1) The Company had a significant concentration of revenue from these four customers totaling 95% and 100% of gross related party revenues during the three months ended September 30, 2020 and 2019, respectively. Related entities are controlled by over 5% shareholders of the Company and/or officer/directors of the Company. |
Summary of accounts receivable from related parties | The following table summarizes the accounts receivable from the Company’s related parties: September 30, 2020 June 30, 2020 Appreciation Financial LLC (1) $ - $ 140,289 Public Employee Retirement Assistance (PERA) (1) - 49,737 Superior Performers Inc. (1) 47,757 58,061 Others 10,548 970 Grand Total $ 58,305 $ 249,057 (1) The Company had a significant concentration of accounts receivable from these three customers totaling 99% as at June 30, 2020. Related entities are controlled by over 5% shareholders of the Company and/or officer/directors of the Company. |
Summary of costs of sales from related parties | The following table summarizes the Costs of Sales – related parties: Three Months ended September 30, 2020 2019 Trendsic Corporation Inc. (1)(2) $ - $ 150,540 Ambiguous Holdings LLC (1)(2) - 2,415 Total $ - $ 152,955 (1) The Company had a significant concentration of total costs of goods sold from these two related party vendors totaling 100% of related party costs of goods sold in the three months ended September 30, 2019, respectively. (2) Related entities are controlled by over 5% shareholders of the Company and/or officer/directors of the Company. |
Summary General and administrative related parties | The following table summarizes expense related to commission fees included as General and administrative – related parties: Three Months ended September 30, 2020 2019 Zeake, LLC (1) $ 53,082 $ 47,499 (1) Related entities are controlled by over 5% shareholders of the Company and/or officer/directors of the Company. |
Summary of accounts payable to related parties | The following table summarizes accounts payable to the Company’s related parties: September 30, 2020 June 30, 2020 Trendsic Corporation Inc. (1) $ - $ 61,948 Zeake, LLC (1) 99,097 78,515 Grand Total $ 99,097 $ 140,463 (1) Related entities are controlled by over 5% shareholders of the Company and/or officer/directors of the Company. |
Pera | |
Summary of costs of sales from related parties | The following table summarizes the Costs of Sales – related parties: For the period August 20, 2020 to September 30, 2020 Pera Wizards, LLC (1) $ 253,596 Wingbrook Partners, LLC (1) 177,352 Total $ 430,948 (1) Related entities are controlled by over 5% shareholders of the Company and/or officer/directors of the Company. |
Summary General and administrative related parties | The following table summarizes expense related to commission fees paid to related parties and included as General and administrative – related parties: For the period August 20, 2020 to September 30, 2020 Management fee $ 28,962 Commission fee 18,563 Total $ 47,525 |
Appreciation Financial | |
Summary of costs of sales from related parties | The following table summarizes the Costs of Sales – related parties: For the period August 20, 2020 to September 30, 2020 Member of Appreciation $ 54,374 |
Summary General and administrative related parties | The following table summarizes expense related to compensation included as General and administrative – related parties: For the period August 20, 2020 to September 30, 2020 Member of Appreciation $ 196,473 |
Summary of accounts payable to related parties | Upon combination of Appreciation, the Company assumed accounts payable as below: September 30, 2020 Member of Appreciation $ 201,252 |
Note 13 - Segment Reporting (Ta
Note 13 - Segment Reporting (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The costs associated with management overhead for Grow Capital are dedicated to our key operating segment in the FinTech industry, Bombshell Technologies and all corporate overhead has been included in this segment disclosure as a result. As of September 30, As of June 30, 2020 2020 Assets by segment Bombshell Technologies and corporate $ 1,121,066 $ 1,129,266 Pera 501,440 - Appreciation 2,654,052 - Resort at Lake Selmac 785,112 783,992 Total assets $ 5,061,670 $ 1,913,258 Three months ended September 30, 2020 and 2019: Three Months Ended September 30, 2020 2019 Revenues by segment: Bombshell Technologies and corporate $ 382,671 $ 506,363 Pera 709,679 - Appreciation 3,501,502 - Resort at Lake Selmac 69,146 86,299 Revenues $ 4,662,998 $ 592,662 Segment profit (loss) Bombshell Technologies and corporate $ (1,057,859 ) $ (257,113 ) Pera (43,487 ) - Appreciation 73,996 - Resort at Lake Selmac 26,014 8,220 Total segment profit $ (1,001,336 ) $ (248,893 ) |
Note 1 - Organization and Des_2
Note 1 - Organization and Description of Business (Details) - USD ($) | May 13, 2020 | Aug. 19, 2020 | Jul. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2020 | Aug. 29, 2019 | Jun. 30, 2019 | Jun. 22, 2018 |
Date of Incorporation | Oct. 22, 1999 | ||||||||
Increase in authorised capital | 550,000,000 | 180,000,000 | |||||||
Common Stock, shares authorized | 500,000,000 | 175,000,000 | 500,000,000 | 175,000,000 | 175,000,000 | ||||
Common Stock, par or stated value | $ 0.001 | $ 0.001 | $ 0.001 | ||||||
Preferred Stock, shares authorized | 50,000,000 | 5,000,000 | 50,000,000 | 5,000,000 | 5,000,000 | ||||
Preferred Stock, par or stated value | $ 0.001 | $ 0.001 | $ 0.001 | ||||||
Reverse stock split | Reverse split on the outstanding shares of the Company’s common stock on a one-for-20 basis | Reverse split on the outstanding shares of the Company’s common stock on a one-for-20 basis | |||||||
Net income (loss) | $ (1,001,336) | $ (248,893) | |||||||
Working capital defcit | (1,612,666) | ||||||||
Cash on hand | 1,495,517 | 57,033 | $ 246,761 | $ 483,430 | |||||
Cash provided by operations | $ 300,908 | $ (513,532) | |||||||
WCS Enterprises, LLC | |||||||||
Date of Incorporation | Sep. 9, 2013 | ||||||||
Smoke on the Water [Member] | |||||||||
Date of Incorporation | Oct. 21, 2016 | ||||||||
Bombshell Technologies | |||||||||
Date of Incorporation | Jun. 24, 2019 | ||||||||
Date of Acquisition | Jul. 23, 2019 | ||||||||
PERA LLC | |||||||||
Date of Acquisition | Aug. 3, 2020 |
Note 2 - Summary of Significa_4
Note 2 - Summary of Significant Accounting Policies : Concentration of Credit Risk (Details) - USD ($) | Sep. 30, 2020 | Sep. 30, 2019 |
Disclosure Text Block [Abstract] | ||
FDIC insured limit | $ 272,767 | $ 0 |
Note 2 - Summary of Significa_5
Note 2 - Summary of Significant Accounting Policies : Concentration Risk - Revenues (Details) - Revenue | 3 Months Ended |
Sep. 30, 2020 | |
One Customer | |
Concentration of risk | 53.00% |
Non Related Parties | |
Concentration of risk | 57.00% |
Appreciation Financial LLC | |
Concentration of risk | 70.00% |
Note 2 - Summary of Significa_6
Note 2 - Summary of Significant Accounting Policies : Concentration of Financing Risk (Details) | 3 Months Ended |
Sep. 30, 2020USD ($) | |
Disclosure Text Block [Abstract] | |
Proceeds from customer advances | $ 3,300,000 |
Proceeds from loan | $ 4,800,000 |
Note 2 - Summary of Significa_7
Note 2 - Summary of Significant Accounting Policies: Accounts Receivable and Allowance for Doubtful Accounts (Details) | Sep. 30, 2020USD ($) |
Text Block [Abstract] | |
Allowance For Doubtful Accounts | $ 41,400 |
Note 2 - Summary of Significa_8
Note 2 - Summary of Significant Accounting Policies : Leases (Details) - USD ($) | Sep. 30, 2020 | Aug. 19, 2020 | Jun. 30, 2020 | Jul. 02, 2019 |
Operating Lease, Liability | $ 2,051,480 | $ 291,753 | ||
Estimated incremental borrowing rate | 6.75% | |||
Operating Lease, Right-of-Use Asset | $ 2,023,678 | $ 335,645 | $ 289,089 | |
PERA LLC | ||||
Operating Lease, Liability | $ 153,413 | |||
Operating Lease, Right-of-Use Asset | 157,795 | |||
Appreciation Financial LLC | ||||
Operating Lease, Liability | 1,598,068 | |||
Operating Lease, Right-of-Use Asset | $ 1,575,145 |
Note 2 - Summary of Significa_9
Note 2 - Summary of Significant Accounting Policies: Investment (Details) | 3 Months Ended |
Sep. 30, 2020 | |
Land {1} | |
Property, Plant and Equipment, Estimated Useful Lives | Indefinite |
Building | |
Property, Plant and Equipment, Estimated Useful Lives | 40 years |
Tenant Improvements | |
Property, Plant and Equipment, Estimated Useful Lives | Lesser of useful life or lease term |
Intangible Lease Assets | |
Property, Plant and Equipment, Estimated Useful Lives | Lease term |
Note 2 - Summary of Signific_10
Note 2 - Summary of Significant Accounting Policies: Net (loss) income per share (Details) - shares | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Text Block [Abstract] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 0 |
Note 3 - Prepaid expenses _ Sch
Note 3 - Prepaid expenses : Schesule of Prepaid expenses (Details) - USD ($) | Sep. 30, 2020 | Jun. 30, 2020 |
Total Prepaid expenses | $ 80,775 | $ 68,725 |
Professional fees [Member] | ||
Total Prepaid expenses | 59,675 | 50,000 |
Insurance [Member] | ||
Total Prepaid expenses | 1,732 | 2,771 |
Other Expense [Member] | ||
Total Prepaid expenses | $ 19,368 | $ 15,954 |
Note 4 - Merger (Details)
Note 4 - Merger (Details) - USD ($) | 1 Months Ended | 3 Months Ended |
Aug. 19, 2020 | Sep. 30, 2020 | |
Number of common stock aquisition, value | $ 8,410,718 | |
PERA LLC | ||
Ownership, percentage | 100.00% | |
PERA LLC | Consideration Shares | ||
Number of common stock aquisition | 9,358,185 | |
PERA LLC | Exchange Shares | ||
Number of common stock aquisition, value | $ 10,000,000 | |
PERA LLC | Earn-out Shares | ||
Number of common stock aquisition, value | $ 5,000,000 |
Note 4 - Merger _ Assets acquir
Note 4 - Merger : Assets acquired and liabilities assumed (Details) | 1 Months Ended | |
Aug. 19, 2020USD ($) | ||
Assets | ||
Cash | $ 884,273 | |
Accounts receivable | 96,313 | |
Due to/from related parties | 32,500 | |
Prepaid and other assets | 219,723 | |
Property and equipment | 106,791 | |
Right to use assets | 1,732,940 | |
Grow Capital stock held* | 200,600 | [1] |
Total Assets | 3,273,140 | |
Liabilities | ||
Accounts payable and accrued liabilities | 921,811 | |
Accounts payable and accrued liabilities, related parties | 201,252 | |
Unearned revenue | 3,332,393 | |
Debt | 5,276,321 | |
Lease liabilities | 1,751,481 | |
Total liabilities | 11,483,258 | |
Net Assets | (8,210,118) | |
Consideration: 5,533,773 shares | 9,358 | |
Additional paid in capital | (209,413) | |
Members’ equity | (8,010,063) | |
Total | (8,210,118) | |
PERA LLC | ||
Assets | ||
Cash | 27,693 | |
Accounts receivable | 67,779 | |
Due to/from related parties | (356,096) | |
Prepaid and other assets | 32,440 | |
Property and equipment | 0 | |
Right to use assets | 157,795 | |
Grow Capital stock held* | 140,600 | [1] |
Total Assets | 70,211 | |
Liabilities | ||
Accounts payable and accrued liabilities | 36,186 | |
Accounts payable and accrued liabilities, related parties | 0 | |
Unearned revenue | 5,667 | |
Debt | 75,000 | |
Lease liabilities | 153,413 | |
Total liabilities | 270,266 | |
Net Assets | (200,055) | |
Appreciation Financial LLC | ||
Assets | ||
Cash | 856,580 | |
Accounts receivable | 28,534 | |
Due to/from related parties | 388,596 | |
Prepaid and other assets | 187,283 | |
Property and equipment | 106,791 | |
Right to use assets | 1,575,145 | |
Grow Capital stock held* | 60,000 | [1] |
Total Assets | 3,202,929 | |
Liabilities | ||
Accounts payable and accrued liabilities | 885,625 | |
Accounts payable and accrued liabilities, related parties | 201,252 | |
Unearned revenue | 3,326,726 | |
Debt | 5,201,321 | |
Lease liabilities | 1,598,068 | |
Total liabilities | 11,212,992 | |
Net Assets | $ (8,010,063) | |
[1] | The Grow Capital, Inc. common stock held by PERA LLC and Appreciation Financial at the time of the closing was included as treasury stock. |
Note 5 - Assets Held for Sale_2
Note 5 - Assets Held for Sale (Details) - Membership Interest Purchase Agreement [Member] - Zallen Trust [Member] | 1 Months Ended |
Sep. 30, 2019USD ($) | |
Purchase price | $ 782,450 |
Puechase price description | The Zallen Trust paid the purchase price by transferring to the Company 434,694 shares of the Company’s Common Stock, valued at $2.00 per share. The Purchase Agreement also provided that Mr. Zallen transfer to the Company an additional 20,000 shares of Common Stock to settle $36,000 in back rent owed at the time of the sale. |
Forgiveness of salary accruals for services | $ 367,000 |
Payroll taxes | 61,000 |
Gain on sale | $ 553,000 |
Note 5 - Assets Held for Sale _
Note 5 - Assets Held for Sale : Discounted Operations of Smoke on the water and WCS (Details) - USD ($) | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Net revenues | $ 4,662,998 | $ 598,662 |
Operating expenses | ||
General and administrative | 615,473 | 579,881 |
Depreciation, amortization and impairment | 5,235 | 6,404 |
Total operating expenses | 1,873,830 | 986,276 |
Income (Loss) from operations | (927,522) | (733,020) |
Income (loss) from discontinued operations | 0 | (491,885) |
Discontinued Operations [Member] | ||
Net revenues | 0 | 14,400 |
Operating expenses | ||
General and administrative | 0 | 7,964 |
Depreciation, amortization and impairment | 0 | 6,990 |
Total operating expenses | 0 | (14,954) |
Income (Loss) from operations | 0 | (554) |
Gain (loss) on sale | 0 | 492,439 |
Income (loss) from discontinued operations | $ 0 | $ 491,885 |
Note 5 - Assets Held for Sale_3
Note 5 - Assets Held for Sale : Groups of assets and liabilities held for sale of Smoke on the water and WCS (Details) - USD ($) | 3 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2020 | Aug. 19, 2020 | Jun. 30, 2020 | |
Assets: | ||||
Prepaid expenses | $ 80,775 | $ 68,725 | ||
Property, plant and equipment, net | 944,531 | 842,975 | ||
Total Assets | 5,061,670 | 1,913,258 | ||
Liabilities: | ||||
Total Liabilities | $ 14,253,596 | $ 1,921,303 | ||
Net Assets | $ (8,210,118) | |||
Smoke on the water and WCS [Member] | ||||
Assets: | ||||
Lease receivable | $ 40,804 | |||
Prepaid expenses | 5,152 | |||
Property, plant and equipment, net | 809,281 | |||
Other assets | 6,150 | |||
Total Assets | 861,387 | |||
Liabilities: | ||||
Accounts payable and accrued liabilities | 367,367 | |||
Other liabilities | 79,100 | |||
Total Liabilities | 446,467 | |||
Net Assets | 414,920 | |||
Consideration: | ||||
Purchaser return 9,093,888 shares of common stock, FMV at $0.10 | 909,389 | |||
Payment on certain items during closing | (2,030) | |||
Total consideration | 907,359 | |||
Gain on sale of WCS | $ 492,439 |
Note 6 - Property and Equipme_3
Note 6 - Property and Equipment, Net (Details) - USD ($) | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Text Block [Abstract] | ||
Depreciation expense | $ 5,235 | $ 6,404 |
Note 6 - Property and Equipme_4
Note 6 - Property and Equipment, Net: Property and Improvements (Details) - USD ($) | Sep. 30, 2020 | Jun. 30, 2020 |
Text Block [Abstract] | ||
Lake Selmac Property | $ 768,782 | $ 768,782 |
Automobiles | 264,343 | 0 |
Leaseholder improvement | 156,653 | 67,644 |
Furniture, Fixtures and Equipment | 133,493 | 32,964 |
Property, Plant and Equipment, Gross | 1,323,271 | 869,390 |
Less: accumulated depreciation and impairment | (378,740) | (26,415) |
Property, Plant and Equipment, Net | $ 944,531 | $ 842,975 |
Note 7 - Promissory Note Rece_2
Note 7 - Promissory Note Receivable (Details) - USD ($) | Jul. 08, 2019 | Sep. 25, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2020 |
Loan | $ 475,672 | ||||
Proceeds from periodic payment | $ 16,000 | ||||
Interest income | 6,304 | ||||
Note receivable | 72,000 | $ 88,510 | |||
Repayment of related party debt | $ 0 | $ 39,548 | |||
Loan Agreement | Promissory note | |||||
Loan | $ 100,000 | ||||
Rate of interest | 5.00% | ||||
Periodic payment | $ 2,000 | ||||
Frequency of periodic payment | Monthly | ||||
Addendum | Promissory note | Borrower | |||||
Rate of interest | 5.00% | ||||
Periodic payment | $ 6,000 | ||||
Frequency of periodic payment | Monthly | ||||
Principal amount | $ 72,000 | ||||
Maturity date | Oct. 1, 2021 | ||||
Repayment of related party debt | $ 16,510 | ||||
Original amount | $ 100,000 |
Note 8 - Accrued Liabilities (D
Note 8 - Accrued Liabilities (Details) - USD ($) | Sep. 30, 2020 | Jun. 30, 2020 |
Payables and Accruals [Abstract] | ||
Accrued salaries and wages | $ 11,448 | $ 23,749 |
Accrued commission fees | 1,003,892 | 0 |
Accrued interest on mortgage | 21,431 | 21,431 |
Accrued expenses | 141,801 | 127,498 |
Accrued Liabilities | $ 1,178,572 | $ 172,678 |
Note 9 - Debts and Other Nonc_3
Note 9 - Debts and Other Noncurrent Liabilities (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |
May 02, 2020 | Mar. 31, 2017 | Sep. 30, 2020 | |
Proceeds from loan | $ 4,800,000 | ||
SBA | |||
Proceeds from loan | $ 250,772 | ||
Rate of interest | 1.00% | ||
EIDL | |||
Maturity date | Aug. 11, 2050 | ||
Proceeds from loan | $ 224,900 | ||
Rate of interest | 3.75% | ||
Lake Selmac | Promissory note | |||
Principal amount | $ 625,000 | ||
Maturity date | Mar. 6, 2022 | ||
Frequency of payment, description | The promissory note 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 $3,747 for the following 48 months |
Note 9 - Debts and Other Nonc_4
Note 9 - Debts and Other Noncurrent Liabilities : Lake Selmac Property (Details) - USD ($) | Sep. 30, 2020 | Jun. 30, 2020 |
Lake Selmac | ||
Note payable | $ 594,079 | $ 596,308 |
Note 9 - Debts and Other Nonc_5
Note 9 - Debts and Other Noncurrent Liabilities : Principal Payments (Details) | Sep. 30, 2020USD ($) |
Payables and Accruals [Abstract] | |
2021 | $ 10,553 |
2022 | 583,526 |
Total | $ 594,079 |
Note 9 - Debts and Other Nonc_6
Note 9 - Debts and Other Noncurrent Liabilities : Paycheck Protection Program and SBA (Details) | Sep. 30, 2020USD ($) |
Loan payable | $ 475,672 |
PPP loan | |
Loan payable | 250,772 |
SBA | |
Loan payable | $ 224,900 |
Note 9 - Debts and Other Nonc_7
Note 9 - Debts and Other Noncurrent Liabilities : Loans from National Life Group (Details) | 3 Months Ended |
Sep. 30, 2020USD ($) | |
Loan payable | $ 475,672 |
National Life Distribution, LLC | |
Loan payable | 4,774,942 |
National Life Distribution, LLC | Revolving Line of Credit | |
Loan payable | 4,235,748 |
Line of credit, maximum borrowing capacity | $ 5,000,000 |
Maturity date | Dec. 20, 2023 |
Interest rate | 6.00% |
National Life Distribution, LLC | Promissory note | |
Loan payable | $ 539,194 |
Maturity date | Dec. 1, 2020 |
Interest rate | 5.00% |
Periodic payment | $ 5,000 |
Frequency of payment | Weekly |
Note 9 - Debts and Other Nonc_8
Note 9 - Debts and Other Noncurrent Liabilities : Future Maturities (Details) - USD ($) | Sep. 30, 2020 | Jun. 30, 2020 |
Payables and Accruals [Abstract] | ||
2021 | $ 624,746 | |
2022 | 984,199 | |
2023 | 4,235,748 | |
Total | 5,844,693 | |
Less: current portion | (624,746) | |
Long-term portion of debt | $ 5,219,947 | $ 583,526 |
Note 10 - Operating Leases _ Sc
Note 10 - Operating Leases : Schedule of future aggregate minimum lease payments (Details) - USD ($) | Sep. 30, 2020 | Jun. 30, 2020 | Jul. 02, 2019 |
Disclosure Text Block [Abstract] | |||
2020 | $ 123,911 | ||
2021 | 487,140 | ||
2022 | 379,059 | ||
2023 | 280,923 | ||
2024 | 238,769 | ||
Remaining periods | 1,008,294 | ||
Total future minimum lease payments | 2,518,096 | ||
Less: imputed interest | (466,616) | ||
Total | 2,051,480 | $ 291,753 | |
Current portion of operating lease | 388,178 | $ 45,957 | |
Long term of operating lease | $ 1,663,302 | $ 293,664 |
Note 11 - Capital Stock (Detail
Note 11 - Capital Stock (Details) - USD ($) | May 15, 2020 | May 13, 2020 | Aug. 19, 2020 | Jul. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2020 | Aug. 29, 2019 | Jun. 30, 2019 | Jun. 22, 2018 | Jun. 30, 2015 |
Common Stock, Shares Authorized | 500,000,000 | 175,000,000 | 500,000,000 | 175,000,000 | 175,000,000 | ||||||
Preferred Stock, Shares Authorized | 50,000,000 | 5,000,000 | 50,000,000 | 5,000,000 | 5,000,000 | ||||||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||
Reverse stock split | Reverse split on the outstanding shares of the Company’s common stock on a one-for-20 basis | Reverse split on the outstanding shares of the Company’s common stock on a one-for-20 basis | |||||||||
Proceeds from private placements | $ 75,000 | $ 200,000 | |||||||||
Stock issued upon settlement of certain liabilities | 17,104 | ||||||||||
Liability settlement | $ 15,000 | ||||||||||
Stock based compensation | $ 8,108 | ||||||||||
Share price | $ 1 | ||||||||||
Options unvested | 0 | 0 | |||||||||
Options outstanding intrinsic value | $ 0 | $ 0 | |||||||||
Options terminated | 25,000 | ||||||||||
2015 Equity Incentive Plan | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Terms of Award | The Incentive Plan is administered by the Board unless a separate delegation to an administrator is made by the Board. Options granted under the Incentive Plan carry a maximum term of 10 years, except to a grantee who is also a 10% beneficial owner at the time of grant, in which case the maximum term is 5 years. | ||||||||||
Shares authorized under plan | 100,000 | ||||||||||
Granted options to purchase | 100,000 | ||||||||||
Term | 10 years | ||||||||||
Option exercised | 75,000 | ||||||||||
Option Vested | 25,000 | ||||||||||
2015 Stock Plan | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Terms of Award | The Stock Plan allows for the issuance of up to a maximum of 100,000 shares of Common Stock of the Company. The Stock Plan is administered by the Board unless a separate delegation to an administrator is made by the Board. | ||||||||||
Series A Convertible Preferred Stock | |||||||||||
Preferred Stock, Shares Authorized | 5,000,000 | ||||||||||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | ||||||||||
Officers And Directors | |||||||||||
Stock issued for share based compensation | 145,495 | 145,495 | |||||||||
Stock based compensation | $ 165,065 | ||||||||||
Unregistered Restricted Stock [Member] | |||||||||||
Shares issued for acquisition | 9,358,185 | ||||||||||
Stock issued for private placement, shares | 75,000 | ||||||||||
Proceeds from private placements | $ 75,000 | ||||||||||
Proceeds from subscription receivable | $ 35,000 |
Note 12 - Related Party Trans_3
Note 12 - Related Party Transactions (Details) - USD ($) | May 15, 2020 | Feb. 12, 2020 | Sep. 30, 2020 | Jun. 30, 2020 |
Unregistered Restricted Stock [Member] | ||||
Stock Issued During Period, Shares, Restricted Stock | 75,000 | |||
Proceeds from issuance of stock | $ 75,000 | |||
Officers And Directors | ||||
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures | 145,495 | 145,495 | ||
Stock based compensation | $ 165,065 | |||
Consulting Agreement | Trevor Hall [Member] | ||||
Restricted common stock issued for consulting fees | 60,000 | |||
Compensation Agreement | Terry Kennedy [Member] | ||||
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures | 50,000 | |||
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures | $ 44,040 | |||
Additional unregistered restricted shares issued | 50,000 | |||
Fee Agreements | Jonathan Bonnette | ||||
Fixed fees description | Mr. Bonnette received a fixed fee of $320,000 for his service as Chief Executive Officer of the Company and for outside business management and consulting services of which 1/3, or $106,667 was immediately payable. by way of anupfront payment of $133,333 unregistered, restricted shares of Common Stock valued at $113,017 and deemed to cover the three-month period from May 15, 2020 to August 15, 2020.The balance of Mr. Bonnette’s compensation of $213,333 will vest monthly but be paid in shares of Common Stock quarterly in installments of $71,111 within 10 days following each of thethree-month periods ending of November 15, 2020, February 15, 2021, and May 15, 2021. | |||
Fee Agreements | Carl Sanko | ||||
Fixed fees description | Mr. Sanko received a fixed fee of $270,000 for his services as Secretary of the Company and foroutside business management and consulting services, of which 1/3 or $90,000 was immediately payable by way of an upfront payment of 112,500 unregistered, restricted shares of Common Stock valued at $95,400and deemed to cover the three-month period fromMay 15, 2020 to August 15, 2020; The balance of Mr. Sanko’s compensation of $180,000 will vest monthly but be paid in shares of Common Stock in quarterly in installments of $60,000 within 10 days following each of the three-month periods ending of November 15, 2020, February 15, 2021, and May 15, 2021. |
Note 12 - Related Party Trans_4
Note 12 - Related Party Transactions: Revenue from related parties (Details) - USD ($) | 3 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | ||
Revenues from related party | $ 331,258 | $ 455,124 | |
Appreciation Financial | |||
Revenues from related party | [1] | 101,217 | 167,336 |
Public Employee Retirement Assistance | |||
Revenues from related party | [1] | 74,856 | 74,790 |
Superior Performers | |||
Revenues from related party | [1] | 139,572 | 212,998 |
Others | |||
Revenues from related party | $ 15,613 | $ 0 | |
[1] | The Company had a significant concentration of revenue from these four customers totaling 95% and 100% of gross related party revenues during the three months ended September 30, 2020 and 2019, respectively. Related entities are controlled by over 5% shareholders of the Company and/or officer/directors of the Company. |
Note 12 - Related Party Trans_5
Note 12 - Related Party Transactions: Accounts receivable from related parties (Details) - USD ($) | Sep. 30, 2020 | Jun. 30, 2020 | |
Accounts receivable from related parties | $ 58,305 | $ 249,057 | |
Appreciation Financial | |||
Accounts receivable from related parties | [1] | 0 | 140,289 |
Public Employee Retirement Assistance | |||
Accounts receivable from related parties | [1] | 0 | 49,737 |
Superior Performers | |||
Accounts receivable from related parties | [1] | 47,757 | 58,061 |
Other | |||
Accounts receivable from related parties | $ 10,548 | $ 970 | |
[1] | The Company had a significant concentration of accounts receivable from these three customers totaling 99% as at June 30, 2020. Related entities are controlled by over 5% shareholders of the Company and/or officer/directors of the Company. |
Note 12 - Related Party Trans_6
Note 12 - Related Party Transactions: Costs of sales from related parties (Details) - USD ($) | 3 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | ||
Cost of sale, related parties | $ 0 | $ 152,955 | |
Trendsic Corporation | |||
Cost of sale, related parties | [1],[2] | 0 | 150,540 |
Ambiguous Holdings | |||
Cost of sale, related parties | [1],[2] | $ 0 | $ 2,415 |
[1] | Related entities are controlled by over 5% shareholders of the Company and/or officer/directors of the Company. | ||
[2] | The Company had a significant concentration of total costs of goods sold from these two related party vendors totaling 100% of related party costs of goods sold in the three months ended September 30, 2019, respectively. |
Note 12 - Related Party Trans_7
Note 12 - Related Party Transactions: General and administrative related parties (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | ||
General and administrative - related parties | $ 47,525 | $ 297,080 | $ 47,499 | |
Zeake | ||||
General and administrative - related parties | [1] | $ 53,082 | $ 47,499 | |
[1] | Related entities are controlled by over 5% shareholders of the Company and/or officer/directors of the Company. |
Note 12 - Related Party Trans_8
Note 12 - Related Party Transactions: Accounts payable to related parties (Details) - USD ($) | Sep. 30, 2020 | Jun. 30, 2020 | |
Accounts payable to related parties | $ 99,097 | $ 140,463 | |
Trendsic Corporation | |||
Accounts payable to related parties | [1] | 0 | 61,948 |
Zeake | |||
Accounts payable to related parties | [1] | $ 99,097 | $ 78,515 |
[1] | Related entities are controlled by over 5% shareholders of the Company and/or officer/directors of the Company. |
Note 12 - Related Party Trans_9
Note 12 - Related Party Transactions: Costs of sales - related parties (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | ||
Cost of sale, related parties | $ 430,948 | $ 485,323 | $ 152,955 | |
Pera Wizards, LLC | ||||
Cost of sale, related parties | [1] | 253,596 | ||
Wingbrook Partners, LLC | ||||
Cost of sale, related parties | [1] | $ 177,352 | ||
[1] | Related entities are controlled by over 5% shareholders of the Company and/or officer/directors of the Company. |
Note 12 - Related Party Tran_10
Note 12 - Related Party Transactions: General and administratives related parties (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | |
General and administrative - related parties | $ 47,525 | $ 297,080 | $ 47,499 |
Management fee | |||
General and administrative - related parties | 28,962 | ||
Commission fee | |||
General and administrative - related parties | $ 18,563 |
Note 12 - Related Party Tran_11
Note 12 - Related Party Transactions : Appreciation Financial LLC (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2020 | |
Cost of sale, related parties | $ 430,948 | $ 485,323 | $ 152,955 | |
General and administrative - related parties | 47,525 | 297,080 | $ 47,499 | |
Accounts payable to related parties | 99,097 | 99,097 | $ 140,463 | |
Appreciation Financial LLC | ||||
Cost of sale, related parties | 54,374 | |||
General and administrative - related parties | 196,473 | |||
Accounts payable to related parties | $ 201,252 | $ 201,252 |
Note 13 - Segment Reporting_ Sc
Note 13 - Segment Reporting: Schedule of Segment Reporting Information, by Segment (Details) - USD ($) | 3 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2020 | |
Total Assets | $ 5,061,670 | $ 1,913,258 | |
Revenue | 4,662,998 | $ 598,662 | |
Total segment profit | (1,001,336) | (248,893) | |
Bombshell | |||
Total Assets | 1,121,066 | 1,129,266 | |
Revenue | 382,671 | 506,363 | |
Total segment profit | (1,057,859) | (257,113) | |
PERA LLC | |||
Total Assets | 501,440 | 0 | |
Revenue | 709,679 | 0 | |
Total segment profit | (43,487) | 0 | |
Appreciation Financial LLC | |||
Total Assets | 2,654,052 | 0 | |
Revenue | 3,501,502 | 0 | |
Total segment profit | 73,996 | 0 | |
Resort at Lake Selmac | |||
Total Assets | 785,112 | $ 783,992 | |
Revenue | 69,146 | 86,299 | |
Total segment profit | $ 26,014 | $ 8,220 |
Note 14 - Commitments and Con_2
Note 14 - Commitments and Contingencies (Details) | Dec. 13, 2019USD ($) |
Disclosure Text Block [Abstract] | |
Unspecified damages | $ 75,000 |
Accrued settlement liabilities | $ 494,458 |
Note 15 - Subsequent Events (De
Note 15 - Subsequent Events (Details) - Subsequent Event [Member] - USD ($) | Jan. 11, 2021 | Dec. 04, 2020 | Jan. 22, 2021 | Nov. 23, 2020 | Nov. 16, 2020 | Oct. 16, 2020 | Oct. 02, 2020 |
Terry Kennedy [Member] | |||||||
Restricted common shares issued | 50,000 | 50,000 | |||||
Officers And Directors | |||||||
Restricted common shares issued | 119,718 | 106,869 | |||||
Officers | |||||||
Restricted common shares issued | 15,000 | 15,000 | |||||
Two Officers And Directors | |||||||
Restricted common shares issued | 199,370 | ||||||
Three Related Companies | |||||||
Common stock shares issued, shares | 75,000 | ||||||
Proceeds from issuance of common stock | $ 75,000 | ||||||
AF1 Public Relations LLC | |||||||
Common stock shares issued for services, shares | 20,797 | ||||||
Common stock shares issued for services, value | $ 15,000 | ||||||
Third Parties and Related Entities | |||||||
Restricted common shares issued | 1,500,000 | ||||||
Proceeds from issuance of common stock | $ 375,000 |