0001098009-16-000021.txt : 20161003 0001098009-16-000021.hdr.sgml : 20161003 20161003155517 ACCESSION NUMBER: 0001098009-16-000021 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 23 CONFORMED PERIOD OF REPORT: 20160331 FILED AS OF DATE: 20161003 DATE AS OF CHANGE: 20161003 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CROWN MARKETING CENTRAL INDEX KEY: 0001098009 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 980178621 STATE OF INCORPORATION: CA FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-27873 FILM NUMBER: 161915749 BUSINESS ADDRESS: STREET 1: 4350 TEMPLE CITY BOULEVARD CITY: EL MONTE STATE: CA ZIP: 91731 BUSINESS PHONE: 6262836600 MAIL ADDRESS: STREET 1: 4350 TEMPLE CITY BOULEVARD CITY: EL MONTE STATE: CA ZIP: 91731 FORMER COMPANY: FORMER CONFORMED NAME: SPACE LAUNCHES FINANCING INC DATE OF NAME CHANGE: 19991028 10-Q 1 cwnm.htm CROWN MARKETING 10-Q (3/31/16) Crown Marketing 10-Q (3/31/16)


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


[ X ]

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended March 31, 2016


[ ]

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


For the transition period from ___ to ___


Commission File No. 000-27873


CROWN MARKETING

(Exact name of registrant as specified in its charter)











Wyoming

(State or other jurisdiction of incorporation or organization)

98-0178621

(I.R.S. Employer Identification No.)

4350 Temple City Boulevard

El Monte, CA

(Address of principal executive offices)

91731

(Zip Code)


(626) 283-6600

(Registrants telephone number, including area code)



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No x


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.

Large accelerated filer o


Accelerated filer o




Non-accelerated filer o


Smaller reporting company x


(Do not check if a smaller reporting company)


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes o Nox


Indicate the number of shares outstanding of each of the registrants classes of common stock, as of the latest practicable date.  The number of shares outstanding of the registrants common stock as of October 3, 2016 was 20,056,021,800.








CROWN MARKETING



TABLE OF CONTENTS


PART I FINANCIAL INFORMATION

3




ITEM 1

Condensed Consolidated Financial Statements (Unaudited)

3




ITEM 2

Managements Discussion and Analysis of Financial Condition and Results of Operations

15




ITEM 3

Quantitative and Qualitative Disclosures About Market Risk

18




ITEM 4

Controls and Procedures

19







PART II OTHER INFORMATION

19




ITEM 1

Legal Proceedings

19


ITEM 1A

Risk Factors

19




ITEM 2

Unregistered Sales of Equity Securities and Use of Proceeds

19




ITEM 3

Defaults Upon Senior Securities

19




ITEM 4

Mine Safety Disclosures

19




ITEM 5

Other Information

19




ITEM 6

Exhibits

20



2



PART I FINANCIAL INFORMATION


This Quarterly Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934 (the Exchange Act). These statements are based on managements beliefs and assumptions, and on information currently available to management. Forward-looking statements include the information concerning our possible or assumed future results of operations set forth under the heading Managements Discussion and Analysis of Financial Condition and Results of Operations. Forward-looking statements also include statements in which words such as expect, anticipate, intend, plan, believe, estimate, consider or similar expressions are used.


Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions. Our future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements.










3


Crown Marketing and Subsidiaries

Condensed Consolidated Balance Sheets








 

March 31,


 

June 30,


 

2016


 

2015

ASSETS


(Unaudited)




CURRENT ASSETS






Cash

$

15,346



24,276

Inventories

 

184,779


 

--

TOTAL CURRENT ASSETS

$

200,125


$

24,276













LIABILITIES AND SHAREHOLDERS' DEFICIT






CURRENT LIABILITIES






Accounts payable and accrued expenses

$

5,000


$

--

Accrued rent - related party


40,000



400,000

Advances - related party


34,977



71,262

Notes payable - related parties

 

10,000


 

10,000

TOTAL CURRENT LIABILITIES


89,977



481,262







Deferred lease obligations - related party


618,462



535,384

Note payable and accrued interest - related party

 

516,916


 

--

TOTAL LIABILITIES

 

1,225,355


 

1,016,646







SHAREHOLDERS' DEFICIT






Redeemable, convertible preferred stock, 1,000,000 shares authorized;






  Series A voting preferred stock, 500,000 shares issued and outstanding


500,000



--

Common stock, no par value, unlimited shares authorized;






  20,056,021,800 and 19,981,021,800 shares issued and outstanding, respectively


--



---

Additional paid-in capital


550,000



--

Accumulated deficit

 

(2,070,730)


 

(997,812)

Total Shareholders' Deficit of Crown Marketing


(1,020,730)



(997,812)







Non-controlling interest

 

(4,500)


 

5,442

TOTAL SHAREHOLDERS' DEFICIT

 

(1,025,230)


 

(992,370)

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT

$

200,125


$

24,276













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






4




Crown Marketing and Subsidiaries

Condensed Consolidated Statements of Operations















Three Months Ended



Nine Months Ended



March 31



March 31



2016

 

 

2015



2016

 

 

2015



(Unaudited)



(Unaudited)













Sales

$

1,062,916


$

--


$

2,597,752


$

--













Cost of goods sold

 

1,159,242


 

--


 

2,628,033


 

--













Gross loss

 

(96,326)


 

--


 

(30,281)


 

--













Selling, general and administrative expenses:












Rent expense - related party


147,692



147,692



443,077



443,077

Selling, general and administrative expenses

 

30,773


 

11,088


 

614,886


 

34,117

Total selling, general and administrative expenses

 

178,465


 

158,780


 

1,057,963


 

477,194













Loss from operations


(274,791)



(158,780)



(1,088,244)



(477,194)













Other income (expense)












Interest expense, related party


(15,058)



--



(39,916)



--

Rental income

 

15,000


 

--


 

45,300


 

--


 

(58)


 

--


 

5,384


 

--













NET LOSS


(274,849)



(158,780)



(1,082,860)



(477,194)













Net loss attributable to non-controlling interest

(1,854)



--



(9,942)



--













NET LOSS ATTRIBUTABLE TO CROWN

 






 





   MARKETING COMMON SHAREHOLDERS

$

(272,995)


$

(158,780)


$

(1,072,918)


$

(477,194)













BASIC AND DILUTED LOSS PER SHARE

$

                  (0.00)


 $

                  (0.00)


$

                  (0.00)


 $

                  (0.00)













WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING










      BASIC AND DILUTED

 

  20,056,021,800


 

  19,981,021,800


 

  20,047,021,800


 

  19,981,021,800

























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








5


Crown Marketing and Subsidiaries

Condensed Consolidated Statement of Shareholders' Deficit

Nine months ended March 31, 2016 (Unaudited)




























Preferred Stock


 

Common Stock



Additional



Accumulated



Total Crown



Non-Controlling





Shares

 

 

Amount


 

Shares

 

 

Amount


 

Paid-in Capital


 

Deficit


 

Marketing Deficit


 

Interest


 

Total



























Balance, June 30, 2015

--


$

--



19,981,021,800


$

--


$

--


$

(997,812)


$

(997,812)


$

5,442


$

(992,370)



























Issuance of redeemable, convertible


























  Series A preferred stock

500,000



500,000



--



--



--



--



500,000



--



500,000



























Fair value of shares issued for services

--



--



75,000,000



--



525,000



--



525,000



--



525,000



























Sale of Crown Mobile shares

--



--



--



--



25,000



--



25,000



--



25,000



























Net loss for the nine months


























  ended March 31, 2016

--



--



--



--



--



(1,072,918)



(1,072,918)



(9,942)



(1,082,860)


























 

Balance, March 31, 2016 (unaudited)

500,000

 

$

500,000


 

20,056,021,800

 

$

--


$

550,000


$

(2,070,730)


$

(1,020,730)


$

(4,500)


$

(1,025,230)































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







6


Crown Marketing and Subsidiaries

Condensed Consolidated Statements of Cash Flows









Nine Months Ended



March 31



2016

 

 

2015



(Unaudited)

Cash Flows from Operating Activities






Net loss

$

(1,082,860)


$

(477,194)

Adjustments to reconcile net loss to net cash used in operating activities






  Fair value of shares issued for services


525,000



--

  Accrued interest due to related party


39,916



--

Changes in operating Assets and Liabilities:






  Inventories


(184,779)



--

  Deposits


--



(16,000)

  Accounts payable and accrued expenses


5,000



--

  Accrued rent payable - related party


140,000



270,000

  Deferred lease obligations - related party


83,078



173,077

Net cash used in operating activities

 

(474,645)


 

(50,117)







Cash Flows from Investing Activities






Sale of Crown Mobile common stock


25,000



--

Net cash provided by investing activities

 

25,000


 

--







Cash Flows from Financing Activities






Proceeds from note payable - related party


500,000



--

Repayment of accrued interest - related party


(23,000)



--

Advances from related party


34,977



72,601

Repayment of advances from related party

 

(71,262)



--

Net cash provided by financing activities

 

440,715


 

72,601







Net increase (decrease) in cash


(8,930)



22,484







Cash beginning of period

 

24,276


 

--

Cash end of period

$

15,346


$

22,484







Interest paid

$

--


$

--

Taxes paid

$

--


$

--







Non-cash transactions






Issuance of preferred stock to pay






  accrued rent payable - related party

$

500,000


$

--

Increase in deposits and non-controlling interests

$

 --


$

 $        24,500













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





7



CROWN MARKETING AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED MARCH 31, 2016 AND 2015

(UNAUDITED)



NOTE 1 BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Crown Marketing and Subsidiaries (the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included.  Operating results for the nine months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending June 30, 2016.  


Going Concern

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying condensed consolidated financial statements, the Company has incurred recurring net losses. For the nine months ended March 31, 2016, the Company incurred a net loss of $1,082,860 and used cash to fund operating activities of $474,645, and at March 31, 2016, had a shareholders deficit of $1,025,230.  These factors create substantial doubt about the Company's ability to continue as a going concern.  The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.  

The Company's management plans to continue as a going concern revolve around its ability to achieve profitable operations, as well as raise necessary capital to pay ongoing general and administrative expenses of the Company.  The ability of the Company to continue as a going concern is dependent on securing additional sources of capital and the success of the Company's plan.  There is no assurance that the Company will be successful in raising the additional capital or in achieving profitable operations.

Our cash needs for the nine months ended March 31, 2016 were primarily met by a note payable of $500,000 from a company owned by our majority shareholder.   As of March 31, 2016, we had a cash balance of $15,346.  Our majority shareholder is providing all of our working capital and will continue to do so until at least June 30, 2016.  We will require approximately $1 million and up to 12 months to complete remediation and building refit prior to being able to re-lease our warehouse space to customers.  


NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Basis of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Okra Energy, Crown Laboratory and Crown Mobile, Inc., a joint venture that is 50% owned by the Company (See Note 6). Intercompany transactions and accounts have been eliminated in consolidation.

Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates include accounting for potential liabilities and the assumptions made in valuing stock instruments issued for services. Actual results could differ from those estimates.


8


CROWN MARKETING AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED MARCH 31, 2016 AND 2015

(UNAUDITED)



NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


Revenues

In the nine months ended March 31, 2016, we derived our revenue primarily from the sale of hover boards and vaping equipment, as well as minimal sales of cellular phones through September 30, 2015.  The Company also markets Chinese herbal and other remedies in the Peoples Republic of China, but has not sold any of these products in China as of March 31, 2016.  The Company recognizes revenue when the following fundamental criteria are met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) the price is fixed or determinable; and (iv) collectability is reasonably assured. Revenue is recognized for hardware product sales upon transfer of title and risk of loss to the customer. We record reductions to revenue for estimated product returns and pricing adjustments in the same period that the related revenue is recorded. These estimates are based on contractual return rights, historical sales returns, analysis of credit memo data and other factors known at the time. If actual future returns and pricing adjustments differ from past experience and our estimates, adjustments to revenue reserves may be required.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market value. At March 31, 2016, inventories consisted of recent purchases of vaping devices and related supplies, which the Company began selling during the three months ended December 31, 2015.

Fair Value Measurements


Fair value measurements are determined using authoritative guidance issued by the FASB, with the exception of the application of the guidance to non-recurring, non-financial assets and liabilities as permitted. Fair value is defined in the authoritative guidance as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels as follows:


Level 1Quoted prices in active markets for identical assets or liabilities.

Level 2Inputs, other than the quoted prices in active markets, are observable either directly or indirectly.

Level 3Unobservable inputs based on the Company's assumptions.


The Company is required to use observable market data if available without undue cost and effort.


The Companys financial instruments include cash and accounts payable. Management has estimated that the carrying amounts approximate their fair value due to the short-term nature.

Loss per Share

Basic earnings (loss) per share are computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The Companys diluted loss per share is the same as the basic loss per share for the three and nine months ended March 31, 2016 and 2015, as there are no potential shares outstanding that would have a dilutive effect.


9


CROWN MARKETING AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED MARCH 31, 2016 AND 2015

(UNAUDITED)



NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Stock-Based Compensation

The Company periodically grants stock options and warrants to employees and non-employees in non-capital raising transactions as compensation for services rendered. The Company accounts for stock option and stock warrant grants to employees based on the authoritative guidance provided by the Financial Accounting Standards Board where the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and stock warrant grants to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board where the value of the stock compensation is determined based upon the measurement date at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option or warrant grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.

Segment Information

At September 30, 2015, the Company had three reportable operating segments. During the quarter ended December 31, 2015, the Company disposed of its interest in one of its segments, the Mobile segment, which distributed prepaid SIM cards and wireless phones (see Note 6). On December 15, 2015, the Board of Directors of the Company approved the sale of the Companys interest in Crown Mobile for $25,000, which approximated the Companys basis in Crown Mobile on that date. The Marketing segment leases an 180,000 square foot facility which it plans to sublease. The Laboratory segment develops and markets Chinese herbal and other remedies in the Peoples Republic of China and also sells vaping equipment and balanced scooters, along with other products.

The chief operating decision-maker evaluates performance, makes operating decisions and allocates resources based on the operating income of each segment. The reporting segments follow the same accounting polices used in the preparation of the Companys condensed consolidated financial statements.  

Summarized financial information by segment for the nine months ended March 31, 2016, based on the Companys internal financial reporting system utilized by the Companys chief operating decision maker, follows:



 

Marketing   


 

Mobile  


 

Laboratory


 

Consolidated

Sales

$

--


$

4,876


$

2,592,876


$

2,592,876

Cost of sales

 

--


 

5,543


 

2,622,490


 

2,628,033

Gross profit (loss)


--



(667)



-29,614



(30,281)













Rent expense-related


223,077



--



220,000



443,077

Stock issued for services


525,000



--



--



525,000

Selling, general and administrative

32,458



19,218



38,210



89,886

Loss from operations

$

(780,535)


$

(19,885)


$

(287,824)


$

(1,088,244)



For the three and nine months ended March 31, 2016, no single customer accounted for 10% or more of sales. During the nine months ended March 31, 2016, the Company had foreign sales of $2,605 to one person located in the Peoples Republic of China. All other sales were domestic sales in the United States. For the nine months ended March 31, 2015, there was only one segment, the Marketing segment, which recorded no revenues, $443,077 of rent expense (related party), $34,117 of selling, general, and administrative expenses, and a net loss of $477,194.


10


CROWN MARKETING AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED MARCH 31, 2016 AND 2015

(UNAUDITED)


NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


Recent Accounting Pronouncements


In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers.  ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition.  ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract.  The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract.  ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017.   Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein.  Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption.  The Company is in the process of evaluating the impact of ASU 2014-09 on the Companys financial statements and disclosures.


In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements.  ASU 2014-15 requires management to perform interim and annual assessments of an entitys ability to continue as a going concern within one year of the date the financial statements are issued.  An entity must provide certain disclosures if conditions or events raise substantial doubt about the entitys ability to continue as a going concern.  ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted.  The Company is currently evaluating the impact the adoption of ASU 2014-15 on the Companys financial statements and disclosures.


In February, 2015, the FASB issued Accounting Standards Update No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis.  ASU 2015-02 provides guidance on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions).  ASU 2015-02 is effective for periods beginning after December 15, 2015.  Early adoption is permitted.  The adoption of ASU 2015-02 is not expected to have a material effect on the Companys consolidated financial statements.  


Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or is not believed by management to have a material impact on the Company's present or future consolidated financial statements. 







11


CROWN MARKETING AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED MARCH 31, 2016 AND 2015

(UNAUDITED)


NOTE 3 RELATED PARTY TRANSACTIONS

 

NOTES PAYABLE


Notes payable to related parties were as follows at March 31, 2016 and June 30, 2015:


 

 

March 31, 2016

 

 

June 30, 2015

 

 


 

 

 

Note payable, interest at 12% per annum, secured by essentially all assets of the   Company, due July 31, 2017. The lender is Temple CB LLC (Temple), a limited liability company controlled by Jay Hooper, the Companys President and majority shareholder

 

$

516,916

 

 

$

                  -

   Note payable to Jay Hooper, due on demand, interest at 4% per annum

 

 

10,000

 

 

 

10,000




526,916




10,000

   Less: current portion

 

 

(10,000) 

 

 

 

 (10,000)

   Notes payable, non-current portion

 

$

516,916

 

 

$

                 -

 

 

 

 

 

 

 

 

ADVANCES


As of March 31, 2016 and June 30, 2015, $34,977 and $71,262, respectively, was due to the Companys President and majority shareholder, Mr. Jay Hooper, for advances made to the Company to pay for operating expenses. The advances are non-interest bearing and are due on demand.


LEASE OBLIGATION

 

Through its subsidiary, Crown Laboratory Inc., the Company leases a warehouse in El Monte, California. The warehouse is owned by Temple CB LLC, (Temple CB), a single member limited liability company owned by the Companys President and majority shareholder. The Company plans to sublease the warehouse but will require approximately $1 million and up to 12 months to complete remediation and a building refit prior to being able to re-lease the warehouse building to customers.

 

The lease commenced December 2, 2013, terminates May 31, 2020, and requires monthly lease payments of $30,000 beginning June 1, 2014. The monthly lease payment increases to $40,000 on June 1, 2015, $50,000 on June 1, 2016, $60,000 on June 1, 2017, and $70,000 on June 1, 2019. The lease includes a period of free rent from December 2, 2013 to May 31, 2014. The lease is an operating lease. The Company recognizes rent expense on a straight-line basis over the entire lease period. During the three months ended March 31, 2016 and 2015, the Company recorded $147,692 of rent expense for each period, respectively. During the nine months ended March 31, 2016 and 2015, the Company recorded $443,077 of rent expense for each period, respectively. As of March 31, 2016 and June 30, 2015, the Company recorded a deferred lease obligation of $618,462 and $535,384, respectively. In August, 2015, the lease was assigned to and assumed by Crown Laboratory, Inc. As of March 31, 2016 and June 30, 2015, the Company owed $40,000 and $400,000, respectively, under this lease obligation. During the nine months ended March 31, 2016, the Company issued 500,000 shares of its Series A Preferred Stock to Temple CB in satisfaction of $500,000 of accrued rent (see Note 4).


At March 31, 2016, the Companys minimum operating lease commitments for the next five fiscal years are summarized below.








Years Ending June 30,

 

Amount

Remainder of 2016

     $

130,000

2017

 

610,000

2018

 

730,000

2019

 

840,000

2020 and beyond

 

770,000

Total

     $

3,080,000



12


CROWN MARKETING AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED MARCH 31, 2016 AND 2015

(UNAUDITED)

NOTE 4 CONVERTIBLE, REDEEMABLE PREFERRED STOCK

During the nine months ended March 31, 2016, the Companys Board of Directors authorized the creation of a series of preferred stock consisting of 1,000,000 shares designated as Series A Preferred Stock (the Series A). The Series A is entitled to a dividend of 4%, when and as declared, and is entitled to a liquidation preference of $1 per share plus unpaid dividends. The Series A is redeemable at the option of the Company at any time, in whole or in part, at a price of $1.00 per share, plus 4% per annum thereupon from the date of issuance (the Stated Value). In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the Series A shall be entitled to a preferential amount equal to the Stated Value, prior to the holders of common stock receiving any distribution. Each share of Series A is automatically converted on the Conversion Date into a number of shares of common stock of the Company at the initial conversion rate (the Conversion Rate), which shall be the Stated Value as of the date of conversion divided by the Market Price. The Market Price for purposes of this Section 5 shall be equal to the average closing sales price of the Common Stock over the 5 previous trading days.

The Series A is also subject to adjustments to the Conversion Rate. If the common stock issuable on conversion of the Series A is changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares provided for above), the holders of the Series A shall, upon its conversion, be entitled to receive, in lieu of the common stock which the holders would have become entitled to receive but for such change, a number of shares of such other class or classes of stock that would have been subject to receipt by the holders if they had exercised their rights of conversion of the Series A immediately before that change.

During the nine months ended March 31, 2016, the Company issued 500,000 shares of its Series A to Temple CB, a single member LLC owned by the Companys majority shareholder, in satisfaction of $500,000 of accrued rent (see Note 3). The Company plans to issue the remaining 500,000 authorized shares of its Series A preferred stock to Temple CB during the second half of 2016 in satisfaction of additional accrued rent.

NOTE 5 SHAREHOLDERS DEFICIT

During the nine months ended March 31, 2016, the Company issued 75,000,000 shares of common stock to a consultant, which was valued at $525,000 based on the closing price of the Companys common stock on the date of the grant, and included in selling, general, and administrative expenses. In July 2016, the Company entered into a settlement agreement under which the consultant agreed to return the shares to the Company in exchange for a cash payment (see Note 7).

During the nine months ended March 31, 2016, the Board of Directors of the Company approved the sale of the Companys interest in Crown Mobile for $25,000, which approximated the Companys basis in Crown Mobile on that date.






13


CROWN MARKETING AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED MARCH 31, 2016 AND 2015

(UNAUDITED)



NOTE 6 NON-CONTROLLING INTEREST

During 2015, the Company entered into a joint venture to create Crown Mobile. During the quarter ended December 31, 2015, the Company disposed of its interest in Crown Mobile. Crown Mobile was in the business of selling mobile phones and sim cards and generated revenues of $4,876 during the nine months ended March 31, 2016, respectively. The Company owned 50% of the joint venture while two other owners owned 35% and 15%, respectively. Based on the authoritative guidance of the FASB on consolidation, the Company determined it should include Crown Mobile in its consolidated financial statements as a subsidiary since the Company has a controlling financial interest and directed the operating activities of Crown Mobile. The non-controlling interest represents the minority stockholders share of 50% of the equity of Crown Mobile. On December 15, 2015, the Board of Directors of the Company approved the sale of the Companys interest in Crown Mobile for $25,000, which approximated the Companys basis in Crown Mobile on that date.

The table below reflects a reconciliation of the equity attributable to non-controlling interest:










For the Nine Months Ended March 31, 2016

Beginning balance, June 30, 2015

     $

  5,442

 

Net loss attributable to non-controlling interest

 

(9,942)

 


 


 

Ending balance, March 31, 2016

     $

(4,500)

 

NOTE 7 SUBSEQUENT EVENT

On July 7, 2016, the Company entered into a settlement agreement with a party who had received 75,000,000 shares under the Companys Form S-8. The agreement provides for the return of these shares upon payment of $17,500 to the consultant. The payment has not yet been made and the share certificate is in escrow pending payment.














14


Item 2.  Managements Discussion and Analysis of Financial Condition and Results of Operations.


Forward Looking Statement Notice


Certain statements made in this Quarterly Report on Form 10-Q are forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations.  Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Crown Marketing,(we, us, our or the Company) to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company's plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company.  Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this Quarterly Report will prove to be accurate.  In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.

History and Organization

Crown Marketing is a Wyoming corporation (the "Company"). Pursuant to an Agreement and Plan of Reorganization dated December 2, 2013, the Company acquired all of the common stock of Okra Energy, Inc., a California corporation that was subscribed for on December 2, 2013 and then incorporated on December 18, 2013, in exchange for 16,155,746,000 shares of Common Stock of the Company (the "Common Stock") at the closing of the Agreement on December 3, 2013. Immediately prior to the closing, there were approximately 3,825,275,800 shares of Common Stock outstanding. After the closing, the beneficial owner of Okra Energy, Inc. shareholder, Jay Hooper, owned approximately 98.8% of the outstanding shares of common stock of the Company. The transaction was accounted for as a reverse merger (recapitalization) with Okra Energy, Inc. deemed to be the accounting acquirer and the Company deemed to be the legal acquirer. The financial statements presented herein are those of the accounting acquirer. The Company subsequently changed its name from Crown Marketing to Okra, Inc., but later changed the name of the Company back to Crown Marketing.

Concurrently with the merger, Jay Hooper was appointed as the sole director and President of the Company.

Overview of Business

Through its subsidiary, Crown Laboratory Inc., the Company leases a warehouse in El Monte, California. The warehouse is owned by Temple CB LLC, (Temple CB), a single member limited liability company owned by the Companys President and majority shareholder. The Company plans to sublease the warehouse but will require approximately $1 million and up to 12 months to complete remediation and a building refit prior to being able to re-lease the warehouse building to customers.

The Company continues to expand its business activities. A new subsidiary, Crown Laboratory Inc., has been formed to develop and market consumer products, including the Companys brand of household good and home electronics under the trademark Crown Laboratory as well as Chinese and other herbal remedies. Initial capitalization of $10,000 was provided by a loan from an entity controlled by the Companys President. The loan is due on demand and bears interest at 4%. We expect to require additional funding for this business segment and have already commenced obtaining FDA approval for our products. In August, 2015, the lessor of the Companys premises, which is also a related party, loaned $500,000 to Crown Laboratory.

In March 2015, the Company also began a joint venture, Crown Mobile, in which the Company owns a 50% interest. Crown Mobile is a MVNO (mobile virtual network operator) and markets Crown Mobile prepaid mobile telephone service using T-Mobiles wireless network. Crown Mobile intends to offer ancillary services such as a proprietary debit card. The Company disposed of its interest in Crown Mobile during the quarter ended December 31, 2015.








15


Going Concern

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplate continuation of the Company as a going concern.  However, the Company is still in the development stage and has not yet been successful in establishing profitable operations.  The Company incurred a net loss of $1,082,860 for the nine months ended March 31, 2016 and the Company's shareholders deficit was $1,025,230 as of March 31, 2016.  These factors create substantial doubt about the Company's ability to continue as a going concern.  The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.  

Primarily as a result of our recurring losses and our lack of liquidity, we received a report from our independent registered public accounting firm for our financial statements for the year ended June 30, 2015 that includes an explanatory paragraph describing the uncertainty as to our ability to continue as a going concern.

The Company's management plans to continue as a going concern revolve around its ability to achieve profitable operations, as well as raise necessary capital to pay ongoing general and administrative expenses of the Company.  The ability of the Company to continue as a going concern is dependent on securing additional sources of capital and the success of the Company's plan.  There is no assurance that the Company will be successful in raising the additional capital or in achieving profitable operations.

Our cash needs for the nine months ended March 31, 2016 were primarily met by a note payable of $500,000 from a company owned by our majority shareholder.   As of March 31, 2016, we had a cash balance of $15,346.  Our majority shareholder is providing all of our working capital and will continue to do so until at least June 30, 2016.  We will require approximately $1 million and up to 12 months to complete remediation and building refit prior to being able to re-lease our warehouse space to customers.  Due to our limited operating history, we believe that we will need to sell common equity to raise the required funds. We have no arrangement or understanding pursuant to which we might obtain such funding.


Critical Accounting Policies and Estimates


Revenues


In the nine months ended March 31, 2016, we derived our revenue primarily from the sale of hover boards and vaping equipment, as well as minimal sales of cellular phones through September 30, 2015.  The Company also markets Chinese herbal and other remedies in the Peoples Republic of China, but has not sold any of these products in China as of March 31, 2016. The Company recognizes revenue when the following fundamental criteria are met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) the price is fixed or determinable; and (iv) collectability is reasonably assured. Revenue is recognized for hardware product sales upon transfer of title and risk of loss to the customer. We record reductions to revenue for estimated product returns and pricing adjustments in the same period that the related revenue is recorded. These estimates are based on contractual return rights, historical sales returns, analysis of credit memo data and other factors known at the time. If actual future returns and pricing adjustments differ from past experience and our estimates, adjustments to revenue reserves may be required.


Estimates


The preparation of these consolidated financial statements in accordance 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 disclosures of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of net sales and expenses during the reported periods.  Actual results may differ from those estimates and such differences may be material to the financial statements.  The more significant estimates and assumptions by management include among others, the fair value of shares of common stock issued for services. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions.


Recent Accounting Pronouncements


See Footnote 2 of the financial statements for a discussion of recently issued accounting standards.










16


Results of Operations

Results of Operations for the three months ended March 31, 2016 compared to the three months ended March 31, 2015

The Company is engaged in various business activities, including operating a warehouse building in El Monte, California and in acquiring commercial properties, with a focus on properties in Los Angeles County in need of environmental remediation.  The Company also distributes a variety of consumer products, including vaping equipment and supplies, and balance scooters. As of March 31, 2016, inventory was comprised almost entirely of vaping products.  After March 31, 2016, the Company began marketing 4K LED flat screen televisions and other consumer products under the Crown Laboratory trademark.  We also develop and market Chinese herbal and other remedies in the Peoples Republic of China, but have not enjoyed sales from this activity. During the three months ended March 31, 2016, we had revenues of $1,062,916, which primarily related to the sale of vaping equipment and balance scooters, and incurred a gross loss of $96,326, as the Company liquidated some scooters at a loss following adverse publicity regarding alleged safety issues with the scooter industry. No complaints or problems were received with respect to the Companys products. Sales returns after March 31, 2016 were minimal.  No one customer accounted for more than 10% of gross sales for the 2016 period. We had no revenues or gross profit during the three months ended March 31, 2015. During the three months ended March 31, 2016 and 2015, we had rent expenses from a related party of $147,692 for both periods. During the three months ended March 31, 2016 and 2015, selling, general and administrative (SG&A) expenses were $30,773 and $11,088, respectively. During the three months ended March 31, 2016, other income and expense consisted of interest expense of $15,058 and rental income of $15,000. During the three months ended March 31, 2016 and 2015, we had a net loss of $274,849 and $158,780, respectively.

Results of Operations for the nine months ended March 31, 2016 compared to the nine months ended March 31, 2015


During the nine months ended March 31, 2016, we had revenues of $2,597,752, which primarily related to the sale of vaping equipment and balance scooters, and incurred a gross loss of $30,281, as the Company liquidated some scooters at a loss following adverse publicity regarding alleged safety issues with the scooter industry. No complaints or problems were received with respect to the Companys products. Sales returns after March 31, 2016 were minimal.  No one customer accounted for more than 10% of gross sales for the 2016 period. We had no revenues or gross profit during the nine months ended March 31, 2015. During the nine months ended March 31, 2016 and 2015, we had rent expenses from a related party of $443,077 for both periods. During the nine months ended March 31, 2016 and 2015, selling, general and administrative expenses were $614,886 and $34,117, respectively. SG&A expenses during the nine months ended March 31, 2016 were significantly higher than during the same period in 2015 due to the fair value of common stock issued for services in fiscal 2016 in the amount of $525,000. During the nine months ended March 31, 2016, other income and expense consisted of interest expense of $39,916 and rental income of $45,300. During the nine months ended March 31, 2016 and 2015, we had a net loss of $1,082,860 and $477,194, respectively.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.

For the nine months ended March 31, 2016

Cash flows used in operating activities

During the nine months ended March 31, 2016, the Company had cash flows used in operating activities of $474,645 compared to $50,117 of cash used in operating activities during the nine months ended March 31, 2015. The reasons for the increase in cash used in operating activities in the amount of $424,528 was due mainly to our net loss of $1,082,860 during the nine months ended March 31, 2016, compared to a net loss of $477,194 during the same period in 2015, and the increase in inventories of $184,779, offset by the issuance of stock issued for services of $525,000.

Cash flows provided by financing activities

During the nine months ended March 31, 2016, we had proceeds from a note payable from a related party of $500,000. We also received advances from a related party in the amount of $34,977 and repaid advances from that related party of $71,262.






17


Financial Position

As of March 31, 2016, we had $15,346 in cash, working capital of $110,148 and an accumulated deficit of $2,070,730.

As of June 30, 2015, we had $24,276 in cash, negative working capital of $456,986 and an accumulated deficit of $997,812.

As of March 31, 2016 and June 30, 2015, $34,977 and $71,262, respectively, was due to the Companys President and majority shareholder, Mr. Jay Hooper, for advances made to the Company to pay for operating expenses.  The advances are non-interest bearing and are due on demand.  


As of March 31, 2016 and June 30, 2015, a loan of $10,000 due to Mr. Hooper is due on demand and bears interest at 4%.  


In August 2015, the lessor of the Companys premises, which is also a related party, loaned $500,000 to the Company. The loan accrues interest at 12% per annum and is secured by essentially all assets of the Company.  The unpaid principal and all accrued but unpaid interest is due and payable on or before July 31, 2017. As of March 31, 2016, $500,000 of principal and $16,916 of accrued interest was owed on the note.


Forward Looking Statements

Information included in this report includes forward looking statements, which can be identified by the use of forward-looking terminology such as may, expect, anticipate, believe, estimate, or continue, or the negative thereof or other variations thereon or comparable terminology. The statements in "Risk Factors" and other statements and disclaimers in this report constitute cautionary statements identifying important factors, including risks and uncertainties, relating to the forward-looking statements that could cause actual results to differ materially from those reflected in the forward-looking statements.

 Our activities have mostly been devoted to seeking capital; seeking supply contracts and development of a business plan.  We do not believe that conventional financing, such as bank loans, is available to us due to these factors.  We have no bank line of credit available to us.  Management believes that it will be able to raise the required funds for operations from one or more future offerings, in order to affect our business plan.

Our future operating results are subject to our attaining certain milestones, including:


-     our success in subleasing the warehouse property;

-     our ability to obtain additional financing; and

-     other risks which we identify in future filings with the SEC.


Any or all of our forward looking statements in this filing and in any other public statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Consequently, no forward looking statement can be guaranteed. In addition, we undertake no responsibility to update any forward-looking statement to reflect events or circumstances which occur after the date of this report.


Contractual Obligations and Off-Balance Sheet Arrangements


We do not have any contractual obligations or off balance sheet arrangements.


Item 3.  Quantitative and Qualitative Disclosures About Market Risk.


As a smaller reporting company as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.












18


Item 4.  Controls and Procedures.


Evaluation of Disclosure Controls and Procedures

The Companys principal executive officer and its principal financial officer, performed an evaluation of the Companys disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d -14 (c) as of March 31, 2016. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective to enable us to accurately record, process, summarize and report certain information required to be included in the Companys periodic SEC filings within the required time periods, and to accumulate and communicate to our management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Our management, including our chief executive officer and chief financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

Changes in Internal Controls


There have been no changes in our internal controls over financial reporting during the period ended March 31, 2016 that have materially affected or are reasonably likely to materially affect our internal controls.
















19


PART II  OTHER INFORMATION


Item 1.  Legal Proceedings.


We are not a party to or otherwise involved in any legal proceedings.


In the ordinary course of business, we are from time to time involved in various pending or threatened legal actions.  The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations.  However, in the opinion of our management, other than as set forth herein, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.


Item 1A.  Risk Factors.


As a smaller reporting company as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.


Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.


None.


Item 3.  Defaults Upon Senior Securities.


There have been no events which are required to be reported under this Item.


Item 4.  Mine Safety Disclosures.


Not applicable.


Item 5.  Other Information.


None.


Item 6.  Exhibits and Financial Statement Schedules

31.

Certification of CEO and CFO. Filed herewith.

32.

Certification pursuant to 18 U.S.C. Section 1350 of CEO and CFO. Filed herewith.

 101.INS*

XBRL Instance Document

 

101.SCH*

XBRL Taxonomy Extension Schema Document

 

101.CAL*

XBRL Taxonomy Extension Calculation Linkbase Document

 

101.DEF*

XBRL Taxonomy Extension Definition Linkbase Definition

 

101.PRE*

XBRL Taxonomy Extension Presentation Linkbase Document

 

101.LAB*

XBRL Taxonomy Extension Label Linkbase Document

 

 *XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are furnished and not filed.




20


SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 







 

 

 

  

CROWN MARKETING

  

  

  

Dated:  October 3, 2016

By:

/s/ Jay Hooper

  

  

Jay Hooper

  

  

President and Chief Financial Officer (chief financial and accounting officer and duly authorized officer)




21


EX-31 2 certification31.htm CROWN EX 31 crown ex 31

CERTIFICATION


I, Jay Hooper, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Crown Marketing;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrants other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


October 3, 2016


/s/ Jay Hooper

     

Jay Hooper

   

President and Financial Officer

    

(Principal Executive and Financial Officer)



EX-32 3 exhibit32.htm CROWN EX 32 Crown ex 32



EXHIBIT 32



CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Quarterly Report of Crown Marketing (the "Company") on Form 10-Q for the period ending March 31, 2016, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jay Hooper, President and Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:


(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and


(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


October 3, 2016


/s/ Jay Hooper

     

Jay Hooper

   

President and Financial Officer

    

(Principal Executive and Financial Officer)





EX-101.CAL 4 cwnm-20160331_cal.xml XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT EX-101.DEF 5 cwnm-20160331_def.xml XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT EX-101.INS 6 cwnm-20160331.xml XBRL INSTANCE DOCUMENT 15346 24276 200125 24276 200125 24276 5000 40000 400000 89977 481262 618462 500000 550000 -2070730 -997812 -1025230 -992370 200125 24276 999999999999 999999999999 500000 999999999999 999999999999 20056021800 19981021800 20056021800 19981021800 525000 39916 -184779 -228671 140000 270000 5000 83078 173077 -474645 -50117 25000 534977 72601 -23000 -71262 440715 72601 -8930 22484 24276 15346 22484 -274849 -158780 -1072918 -477194 1062916 2597752 1159242 2628033 -96326 -30281 147692 147692 443077 443077 -15058 -39916 -1854 -9942 -272995 -158780 -799923 -318414 0.00 0.00 0.00 0.00 10-Q 2016-03-31 false Crown Marketing 0001098009 --12-31 20056021800 3500000000 Smaller Reporting Company Yes No No 2016 Q1 <!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b>NOTE 1 &#150; BASIS OF PRESENTATION</b></p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:8.25pt;text-align:justify'>The accompanying unaudited condensed consolidated financial statements of Crown Marketing and Subsidiaries (the &#147;Company&#148;) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.&#160; Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included.&#160; Operating results for the nine months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending June 30, 2016.&#160; </p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b>Going Concern</b></p> <p style='text-align:justify'>The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying condensed consolidated financial statements, the Company has incurred recurring net losses. For the nine months ended March 31, 2016, the Company incurred a net loss of $1,082,860 and used cash to fund operating activities of $474,645, and at March 31, 2016, had a shareholders&#146; deficit of $1,025,230.&nbsp; These factors create substantial doubt about the Company's ability to continue as a going concern.&#160; The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.&#160; </p> <p style='text-align:justify'>The Company's management plans to continue as a going concern revolve around its ability to achieve profitable operations, as well as raise necessary capital to pay ongoing general and administrative expenses of the Company.&#160; The ability of the Company to continue as a going concern is dependent on securing additional sources of capital and the success of the Company's plan.&#160; There is no assurance that the Company will be successful in raising the additional capital or in achieving profitable operations.</p> <p style='margin-top:6.9pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify'>Our cash needs for the nine months ended March 31, 2016 were primarily met by a note payable of $500,000 from a company owned by our majority shareholder.&#160;&#160; As of March 31, 2016, we had a cash balance of $15,346.&#160; Our majority shareholder is providing all of our working capital and will continue to do so until at least June 30, 2016.&#160; We will require approximately $1 million and up to 12 months to complete remediation and building refit prior to being able to re-lease our warehouse space to customers.&#160; </p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b>NOTE 2 &#150; SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES </b></p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:2.75pt;margin-right:0in;margin-bottom:2.75pt;margin-left:0in'><b>Basis of Consolidation </b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Okra Energy, Crown Laboratory and Crown Mobile, Inc., a joint venture that is 50% owned by the Company (See Note 6). Intercompany transactions and accounts have been eliminated in consolidation.</p> <p><b>Estimates</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates include accounting for potential liabilities and the assumptions made in valuing stock instruments issued for services. Actual results could differ from those estimates.</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;line-height:13.0pt'><b>CROWN MARKETING AND SUBSIDIARIES </b></p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;line-height:13.0pt'><b>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</b></p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;line-height:13.0pt'><b>NINE MONTHS ENDED MARCH 31, 2015 AND 2014</b></p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;line-height:13.0pt'><b>(UNAUDITED)</b></p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'><b>NOTE 2 &#150; SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)</b></p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'><b><font style='background:white'>Revenues</font></b></p> <p>In the nine months ended March 31, 2016, we derived our revenue primarily from the sale of hover boards and vaping equipment, as well as minimal sales of cellular phones through September 30, 2015.&#160; The Company also markets Chinese herbal and other remedies in the People&#146;s Republic of China, but has not sold any of these products in China as of March 31, 2016.&#160; The Company recognizes revenue when the following fundamental criteria are met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) the price is fixed or determinable; and (iv) collectability is reasonably assured. Revenue is recognized for hardware product sales upon transfer of title and risk of loss to the customer. We record reductions to revenue for estimated product returns and pricing adjustments in the same period that the related revenue is recorded. These estimates are based on contractual return rights, historical sales returns, analysis of credit memo data and other factors known at the time. If actual future returns and pricing adjustments differ from past experience and our estimates, adjustments to revenue reserves may be required.</p> <p><b>Inventories</b></p> <p style='text-align:justify'>Inventories are stated at the lower of cost (first-in, first-out) or market value. At March 31, 2016, inventories consisted of recent purchases of vaping devices and related supplies, which the Company began selling during the three months ended December 31, 2015.</p> <p style='margin:0in;margin-bottom:.0001pt'><b>Fair Value Measurements</b></p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>Fair value measurements are determined using authoritative guidance issued by the FASB, with the exception of the application of the guidance to non-recurring, non-financial assets and liabilities as permitted. Fair value is defined in the authoritative guidance as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels as follows:</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in'>Level 1&#151;Quoted prices in active markets for identical assets or liabilities.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in'>Level 2&#151;Inputs, other than the quoted prices in active markets, are observable either directly or indirectly.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in'>Level 3&#151;Unobservable inputs based on the Company's assumptions.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in'>The Company is required to use observable market data if available without undue cost and effort.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>The Company&#146;s financial instruments include cash and accounts payable. Management has estimated that the carrying amounts approximate their fair value due to the short-term nature.</p> <p><b>Loss per Share</b></p> <p>Basic earnings (loss) per share are computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The Company&#146;s diluted loss per share is the same as the basic loss per share for the three and nine months ended March 31, 2016 and 2015, as there are no potential shares outstanding that would have a dilutive effect.</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;line-height:13.0pt'><b>CROWN MARKETING AND SUBSIDIARIES </b></p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;line-height:13.0pt'><b>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</b></p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;line-height:13.0pt'><b>NINE MONTHS ENDED MARCH 31, 2015 AND 2014</b></p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;line-height:13.0pt'><b>(UNAUDITED)</b></p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'><b>NOTE 2 &#150; SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)</b></p> <p><b>Stock-Based Compensation</b></p> <p>The Company periodically grants stock options and warrants to employees and non-employees in non-capital raising transactions as compensation for services rendered. The Company accounts for stock option and stock warrant grants to employees based on the authoritative guidance provided by the Financial Accounting Standards Board where the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and stock warrant grants to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board where the value of the stock compensation is determined based upon the measurement date at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option or warrant grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.</p> <p><b>Segment Information</b></p> <p style='text-align:justify;line-height:12.0pt'>At September 30, 2015, the Company had three reportable operating segments. During the quarter ended December 31, 2015, the Company disposed of its interest in one of its segments, the Mobile segment, which distributed prepaid SIM cards and wireless phones (see Note 6). On December 15, 2015, the Board of Directors of the Company approved the sale of the Company&#146;s interest in Crown Mobile for $25,000, which approximated the Company&#146;s basis in Crown Mobile on that date. The Marketing segment leases an 180,000 square foot facility which it plans to sublease. The Laboratory segment develops and markets Chinese herbal and other remedies in the People&#146;s Republic of China and also sells vaping equipment and balanced scooters, along with other products. </p> <p style='text-align:justify'>The chief operating decision-maker evaluates performance, makes operating decisions and allocates resources based on the operating income of each segment. The reporting segments follow the same accounting polices used in the preparation of the Company&#146;s condensed consolidated financial statements.&#160; </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>Summarized financial information by segment for the nine months ended March 31, 2016, based on the Company&#146;s internal financial reporting system utilized by the Company&#146;s chief operating decision maker, follows:</p> <table border="0" cellspacing="0" cellpadding="0" width="77%"> <tr align="left"> <td width="38%" style='width:38.58%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="14%" style='width:14.8%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="14%" style='width:14.78%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="14%" style='width:14.78%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="17%" style='width:17.04%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="38%" valign="top" style='width:38.58%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="14%" valign="top" style='width:14.8%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="14%" valign="top" style='width:14.78%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="14%" valign="top" style='width:14.78%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;line-height:12.0pt'>&nbsp;</p> </td> <td width="17%" valign="top" style='width:17.04%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="38%" valign="top" style='width:38.58%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="14%" valign="top" style='width:14.8%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;line-height:12.0pt'>&nbsp;</p> </td> <td width="14%" valign="top" style='width:14.78%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;line-height:12.0pt'>&nbsp;</p> </td> <td width="14%" valign="top" style='width:14.78%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;line-height:12.0pt'>&nbsp;</p> </td> <td width="17%" valign="top" style='width:17.04%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="38%" valign="top" style='width:38.58%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="14%" valign="top" style='width:14.8%;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;line-height:12.0pt'><b>Marketing</b></p> </td> <td width="14%" valign="top" style='width:14.78%;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;line-height:12.0pt'><b>Mobile</b></p> </td> <td width="14%" valign="top" style='width:14.78%;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;line-height:12.0pt'><b>Laboratory</b></p> </td> <td width="17%" valign="top" style='width:17.04%;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;line-height:12.0pt'><b>Consolidated</b></p> </td> </tr> <tr align="left"> <td width="38%" valign="top" style='width:38.58%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>Sales</p> </td> <td width="14%" valign="top" style='width:14.8%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -</p> </td> <td width="14%" valign="top" style='width:14.78%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>&#160;&#160; $&#160;&#160; 4,876</p> </td> <td width="14%" valign="top" style='width:14.78%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>&#160;&#160; $&#160; 2,592,876&#160;&#160; -</p> </td> <td width="17%" valign="bottom" style='width:17.04%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;line-height:12.0pt'>&#160; $&#160;&#160;&#160;&#160; &#160;2,597,752&#160;&#160;&#160; </p> </td> </tr> <tr align="left"> <td width="38%" valign="top" style='width:38.58%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>Cost of sales</p> </td> <td width="14%" valign="top" style='width:14.8%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -</p> </td> <td width="14%" valign="top" style='width:14.78%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 5,543</p> </td> <td width="14%" valign="top" style='width:14.78%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>&#160;&#160;&#160; &#160;&#160;&#160;2,622,490</p> </td> <td width="17%" valign="bottom" style='width:17.04%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;line-height:12.0pt'>&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;2,628,033</p> </td> </tr> <tr align="left"> <td width="38%" valign="top" style='width:38.58%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>Gross profit (loss)</p> </td> <td width="14%" valign="top" style='width:14.8%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -</p> </td> <td width="14%" valign="top" style='width:14.78%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;(667)</p> </td> <td width="14%" valign="top" style='width:14.78%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (29,614)</p> </td> <td width="17%" valign="bottom" style='width:17.04%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;line-height:12.0pt'>&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;(30,281)</p> </td> </tr> <tr align="left"> <td width="38%" valign="top" style='width:38.58%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>&nbsp;</p> </td> <td width="14%" valign="top" style='width:14.8%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>&nbsp;</p> </td> <td width="14%" valign="top" style='width:14.78%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.0pt'>&nbsp;</p> </td> <td width="14%" valign="top" style='width:14.78%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>&nbsp;</p> </td> <td width="17%" valign="bottom" style='width:17.04%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;line-height:12.0pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="38%" valign="top" style='width:38.58%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>Rent expense-related</p> </td> <td width="14%" valign="top" style='width:14.8%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 223,077</p> </td> <td width="14%" valign="top" style='width:14.78%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.0pt'>&#160;&#160;&#160;&#160;&#160;&#160;&#160; - </p> </td> <td width="14%" valign="top" style='width:14.78%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 220,000</p> </td> <td width="17%" valign="bottom" style='width:17.04%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;line-height:12.0pt'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 443,077</p> </td> </tr> <tr align="left"> <td width="38%" valign="top" style='width:38.58%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>Stock issued for services</p> </td> <td width="14%" valign="top" style='width:14.8%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 525,000</p> </td> <td width="14%" valign="top" style='width:14.78%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -</p> </td> <td width="14%" valign="top" style='width:14.78%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -</p> </td> <td width="17%" valign="bottom" style='width:17.04%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;line-height:12.0pt'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 525,000</p> </td> </tr> <tr align="left"> <td width="38%" valign="top" style='width:38.58%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>Selling, general and administrative</p> </td> <td width="14%" valign="top" style='width:14.8%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;32,458 </p> </td> <td width="14%" valign="top" style='width:14.78%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>&#160;&#160;&#160;&#160; &#160; 19,218</p> </td> <td width="14%" valign="top" style='width:14.78%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;38,210&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -</p> </td> <td width="17%" valign="bottom" style='width:17.04%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;line-height:12.0pt'>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;89,886</p> </td> </tr> <tr align="left"> <td width="38%" valign="top" style='width:38.58%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>Loss from operations</p> </td> <td width="14%" valign="bottom" style='width:14.8%;border:none;border-bottom:double windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;line-height:12.0pt'>&nbsp;</p> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;line-height:12.0pt'>$&#160;&#160;&#160;&#160;&#160; (780,535) </p> </td> <td width="14%" valign="bottom" style='width:14.78%;border:none;border-bottom:double windowtext 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>&#160;&#160; $(19,885)</p> </td> <td width="14%" valign="bottom" style='width:14.78%;border:none;border-bottom:double windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;line-height:12.0pt'>&#160;&#160; $&#160;&#160; (287,824)&#160; -</p> </td> <td width="17%" valign="bottom" style='width:17.04%;border:none;border-bottom:double windowtext 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.0pt'>&#160;&#160; $&#160; &#160;&#160;(1,088,244)</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>For the three and nine months ended March 31, 2016, no single customer accounted for 10% or more of sales. During the nine months ended March 31, 2016, the Company had foreign sales of $2,605 to one person located in the Peoples Republic of China. All other sales were domestic sales in the United States. For the nine months ended March 31, 2015, there was only one segment, the Marketing segment, which recorded no revenues, $443,077 of rent expense (related party), $34,117 of selling, general, and administrative expenses, and a net loss of $477,194.</p> <!--egx--><p><b>NOTE 4 &#150; CONVERTIBLE, REDEEMABLE PREFERRED STOCK</b></p> <p style='text-align:justify'>During the nine months ended March 31, 2016, the Company&#146;s Board of Directors authorized the creation of a series of preferred stock consisting of 1,000,000 shares designated as Series A Preferred Stock (the &#147;Series A&#148;). The Series A is entitled to a dividend of 4%, when and as declared, and is entitled to a liquidation preference of $1 per share plus unpaid dividends. The Series A is redeemable at the option of the Company at any time, in whole or in part, at a price of $1.00 per share, plus 4% per annum thereupon from the date of issuance (the &#147;Stated Value&#148;). In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the Series A shall be entitled to a preferential amount equal to the Stated Value, prior to the holders of common stock receiving any distribution. Each share of Series A is automatically converted on the Conversion Date into a number of shares of common stock of the Company at the initial conversion rate (the &#147;Conversion Rate&#148;), which shall be the Stated Value as of the date of conversion divided by the Market Price. The Market Price for purposes of this Section 5 shall be equal to the average closing sales price of the Common Stock over the 5 previous trading days.</p> <p style='text-align:justify'>The Series A is also subject to adjustments to the Conversion Rate. If the common stock issuable on conversion of the Series A is changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares provided for above), the holders of the Series A shall, upon its conversion, be entitled to receive, in lieu of the common stock which the holders would have become entitled to receive but for such change, a number of shares of such other class or classes of stock that would have been subject to receipt by the holders if they had exercised their rights of conversion of the Series A immediately before that change.</p> <p style='text-align:justify'>During the nine months ended March 31, 2016, the Company issued 500,000 shares of its Series A to Temple CB, a single member LLC owned by the Company&#146;s majority shareholder, in satisfaction of $500,000 of accrued rent (see Note 3). The Company plans to issue the remaining 500,000 authorized shares of its Series A preferred stock to Temple CB during the second half of 2016 in satisfaction of additional accrued rent.</p> <p><b>NOTE 5 &#150; SHAREHOLDERS&#146; DEFICIT</b></p> <p style='text-align:justify'>During the nine months ended March 31, 2016, the Company issued 75,000,000 shares of common stock to a consultant, which was valued at $525,000 based on the closing price of the Company&#146;s common stock on the date of the grant, and included in selling, general, and administrative expenses. In July 2016, the Company entered into a settlement agreement under which the consultant agreed to return the shares to the Company in exchange for a cash payment (see Note 7).</p> <p style='text-align:justify;line-height:12.0pt'>During the nine months ended March 31, 2016, the Board of Directors of the Company approved the sale of the Company&#146;s interest in Crown Mobile for $25,000, which approximated the Company&#146;s basis in Crown Mobile on that date.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <!--egx--><p><b>Inventories</b></p> <p style='text-align:justify'>Inventories are stated at the lower of cost (first-in, first-out) or market value. At March 31, 2016, inventories consisted of recent purchases of vaping devices and related supplies, which the Company began selling during the three months ended December 31, 2015.</p> 0001098009 2016-01-01 2016-03-31 0001098009 2016-03-31 0001098009 2015-06-30 0001098009 2014-01-01 2015-03-31 0001098009 2015-07-01 2016-03-31 0001098009 2014-07-01 2015-03-31 0001098009 2015-03-31 iso4217:USD shares iso4217:USD shares EX-101.LAB 7 cwnm-20160331_lab.xml XBRL TAXONOMY EXTENSION LABELS LINKBASE DOCUMENT Net cash provided by/(used in) financing activities Common Stock, Shares Outstanding Retained earnings ASSETS Current Fiscal Year End Date Document and Entity Information: Note 3 - Related Party Transactions Statement of Income Accrued rent due to related parties Entity Current Reporting Status Net increase in cash and cash equivalents Repayment of accrued interest Net cash provided by/(used in) operating activities Sales Repayment of advances from related party Preferred Stock, Value, Outstanding Total current liabilities Inventories Entity Central Index Key Document Period End Date Document Type Cash flows from financing activities: Amendment Flag Basic and diluted-actual per share Operating expenses Common Stock, Shares Issued Total current assets Entity Filer Category Going Concern Proceeds from note payable - related party Adjustments to reconcile net income before allocation to non-controlling interests to net cash provided by/(used in) operating activities: Preferred Stock, Shares Issued Stockholders' Equity, Number of Shares, Par Value and Other Disclosures Document Fiscal Year Focus Entity Common Stock, Shares Outstanding Cash and cash equivalents- beginning of period Cash and cash equivalents- beginning of period Cash and cash equivalents- end of period Net cash provided by/(used in) investing activities (Increase) decrease in inventory Common Stock, Shares Authorized Additional paid in capital Shareholders' equity Note payable and accrued interest - Related Party Current liabilities Entity Well-known Seasoned Issuer Note 1 - Basis of Presentation Cash flows from investing activities: Increase(decrease) in deferred rent obligation to related party Earnings per share Earnings per share Net loss attributable to Crown Marketing common shareholders Preferred Stock, Shares Authorized Policies Notes Cash paid for interest expense Other Income(Expense) Accounts payable and accrued expenses Supplementary cash flow information: Total Assets Entity Public Float Note 2 - Summary of Significant Accounting Policies Net loss Cash flows from operating activities: Document Fiscal Period Focus (Increase)decrease in interest due to related parties Common stock Entity Voluntary Filers Increase(decrease) in accounts payable and accrued expenses Increase(decrease) in rent payable to related parties Statement of Cash Flows Net loss attributable to non controlling interest Interest expense, related party Gross margin Cash and cash equivalents (Increase)decrease in advances to suppliers Fair value of shares issued for services Cost of sales Preferred stock Rent expense-related party Preferred Stock, Shares Outstanding LIABILITIES AND EQUITY Total Equity Current assets Entity Registrant Name EX-101.PRE 8 cwnm-20160331_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT EX-101.SCH 9 cwnm-20160331.xsd XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT 000020 - Statement - CROWN MARKETING AND SUBSIDIARIES - CONSOLIDATED BALANCE SHEETS link:presentationLink link:definitionLink link:calculationLink 000080 - Disclosure - Note 3 - Related Party Transactions link:presentationLink link:definitionLink link:calculationLink 000050 - Disclosure - Note 1 - Basis of Presentation link:presentationLink link:definitionLink link:calculationLink 000040 - Statement - CROWN MARKETING AND SUBSIDIARIES - STATEMENTS OF CASH FLOWS link:presentationLink link:definitionLink link:calculationLink 000070 - Disclosure - Note 2 - Summary of Significant Accounting Policies link:presentationLink link:definitionLink link:calculationLink 000060 - Disclosure - Going Concern link:presentationLink link:definitionLink link:calculationLink 000010 - Document - Document and Entity Information link:presentationLink link:definitionLink link:calculationLink 000030 - Statement - CROWN MARKETING AND SUBSIDIARIES - STATEMENTS OF INCOME link:presentationLink link:definitionLink link:calculationLink 000100 - Disclosure - Note 2 - Summary of Significant Accounting Policies: Inventories (Policies) link:presentationLink link:definitionLink link:calculationLink XML 10 R1.htm IDEA: XBRL DOCUMENT v3.5.0.2
Document and Entity Information - USD ($)
$ in Billions
3 Months Ended
Mar. 31, 2016
Jun. 30, 2015
Document and Entity Information:    
Entity Registrant Name Crown Marketing  
Document Type 10-Q  
Document Period End Date Mar. 31, 2016  
Amendment Flag false  
Entity Central Index Key 0001098009  
Current Fiscal Year End Date --12-31  
Entity Common Stock, Shares Outstanding 20,056,021,800  
Entity Public Float   $ 3.5
Entity Filer Category Smaller Reporting Company  
Entity Current Reporting Status Yes  
Entity Voluntary Filers No  
Entity Well-known Seasoned Issuer No  
Document Fiscal Year Focus 2016  
Document Fiscal Period Focus Q1  
XML 11 R2.htm IDEA: XBRL DOCUMENT v3.5.0.2
CROWN MARKETING AND SUBSIDIARIES - CONSOLIDATED BALANCE SHEETS - USD ($)
Mar. 31, 2016
Jun. 30, 2015
Current assets    
Cash and cash equivalents $ 15,346 $ 24,276
Total current assets 200,125 24,276
Total Assets 200,125 24,276
Current liabilities    
Accounts payable and accrued expenses 5,000  
Accrued rent due to related parties 40,000 400,000
Total current liabilities 89,977 481,262
Note payable and accrued interest - Related Party 618,462  
Shareholders' equity    
Preferred stock 500,000  
Additional paid in capital 550,000  
Retained earnings (2,070,730) (997,812)
Total Equity (1,025,230) (992,370)
LIABILITIES AND EQUITY $ 200,125 $ 24,276
Stockholders' Equity, Number of Shares, Par Value and Other Disclosures    
Preferred Stock, Shares Authorized 999,999,999,999 999,999,999,999
Preferred Stock, Value, Outstanding $ 500,000  
Common Stock, Shares Authorized 999,999,999,999 999,999,999,999
Common Stock, Shares Issued 20,056,021,800 19,981,021,800
Common Stock, Shares Outstanding 20,056,021,800 19,981,021,800
XML 12 R3.htm IDEA: XBRL DOCUMENT v3.5.0.2
CROWN MARKETING AND SUBSIDIARIES - STATEMENTS OF INCOME - USD ($)
3 Months Ended 9 Months Ended 15 Months Ended
Mar. 31, 2016
Mar. 31, 2016
Mar. 31, 2015
Mar. 31, 2015
Statement of Income        
Sales $ 1,062,916 $ 2,597,752    
Cost of sales 1,159,242 2,628,033    
Gross margin (96,326) (30,281)    
Operating expenses        
Rent expense-related party 147,692 443,077 $ 443,077 $ 147,692
Other Income(Expense)        
Interest expense, related party (15,058) (39,916)    
Net loss attributable to non controlling interest (1,854) (9,942)    
Net loss attributable to Crown Marketing common shareholders $ (272,995) $ (799,923) $ (318,414) $ (158,780)
Earnings per share        
Basic and diluted-actual per share $ 0.00 $ 0.00 $ 0.00 $ 0.00
XML 13 R4.htm IDEA: XBRL DOCUMENT v3.5.0.2
CROWN MARKETING AND SUBSIDIARIES - STATEMENTS OF CASH FLOWS - USD ($)
3 Months Ended 9 Months Ended 15 Months Ended
Mar. 31, 2016
Mar. 31, 2016
Mar. 31, 2015
Mar. 31, 2015
Cash flows from operating activities:        
Net loss $ (274,849) $ (1,072,918) $ (477,194) $ (158,780)
Adjustments to reconcile net income before allocation to non-controlling interests to net cash provided by/(used in) operating activities:        
Fair value of shares issued for services   525,000    
(Increase)decrease in interest due to related parties   39,916    
(Increase) decrease in inventory   (184,779)    
(Increase)decrease in advances to suppliers   (228,671)    
Increase(decrease) in rent payable to related parties   140,000 270,000  
Increase(decrease) in accounts payable and accrued expenses   5,000    
Increase(decrease) in deferred rent obligation to related party   83,078 173,077  
Net cash provided by/(used in) operating activities   (474,645) (50,117)  
Cash flows from investing activities:        
Net cash provided by/(used in) investing activities   25,000    
Cash flows from financing activities:        
Proceeds from note payable - related party   534,977 72,601  
Repayment of accrued interest   (23,000)    
Repayment of advances from related party   (71,262)    
Net cash provided by/(used in) financing activities   440,715 72,601  
Net increase in cash and cash equivalents   (8,930) 22,484  
Cash and cash equivalents- beginning of period   24,276    
Cash and cash equivalents- end of period $ 15,346 $ 15,346 $ 22,484 $ 22,484
XML 14 R5.htm IDEA: XBRL DOCUMENT v3.5.0.2
Note 1 - Basis of Presentation
3 Months Ended
Mar. 31, 2016
Notes  
Note 1 - Basis of Presentation

NOTE 1 – BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Crown Marketing and Subsidiaries (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included.  Operating results for the nine months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending June 30, 2016. 

XML 15 R6.htm IDEA: XBRL DOCUMENT v3.5.0.2
Going Concern
3 Months Ended
Mar. 31, 2016
Notes  
Going Concern

Going Concern

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying condensed consolidated financial statements, the Company has incurred recurring net losses. For the nine months ended March 31, 2016, the Company incurred a net loss of $1,082,860 and used cash to fund operating activities of $474,645, and at March 31, 2016, had a shareholders’ deficit of $1,025,230.  These factors create substantial doubt about the Company's ability to continue as a going concern.  The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. 

The Company's management plans to continue as a going concern revolve around its ability to achieve profitable operations, as well as raise necessary capital to pay ongoing general and administrative expenses of the Company.  The ability of the Company to continue as a going concern is dependent on securing additional sources of capital and the success of the Company's plan.  There is no assurance that the Company will be successful in raising the additional capital or in achieving profitable operations.

Our cash needs for the nine months ended March 31, 2016 were primarily met by a note payable of $500,000 from a company owned by our majority shareholder.   As of March 31, 2016, we had a cash balance of $15,346.  Our majority shareholder is providing all of our working capital and will continue to do so until at least June 30, 2016.  We will require approximately $1 million and up to 12 months to complete remediation and building refit prior to being able to re-lease our warehouse space to customers. 

XML 16 R7.htm IDEA: XBRL DOCUMENT v3.5.0.2
Note 2 - Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2016
Notes  
Note 2 - Summary of Significant Accounting Policies

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Okra Energy, Crown Laboratory and Crown Mobile, Inc., a joint venture that is 50% owned by the Company (See Note 6). Intercompany transactions and accounts have been eliminated in consolidation.

Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates include accounting for potential liabilities and the assumptions made in valuing stock instruments issued for services. Actual results could differ from those estimates.

CROWN MARKETING AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED MARCH 31, 2015 AND 2014

(UNAUDITED)

 

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Revenues

In the nine months ended March 31, 2016, we derived our revenue primarily from the sale of hover boards and vaping equipment, as well as minimal sales of cellular phones through September 30, 2015.  The Company also markets Chinese herbal and other remedies in the People’s Republic of China, but has not sold any of these products in China as of March 31, 2016.  The Company recognizes revenue when the following fundamental criteria are met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) the price is fixed or determinable; and (iv) collectability is reasonably assured. Revenue is recognized for hardware product sales upon transfer of title and risk of loss to the customer. We record reductions to revenue for estimated product returns and pricing adjustments in the same period that the related revenue is recorded. These estimates are based on contractual return rights, historical sales returns, analysis of credit memo data and other factors known at the time. If actual future returns and pricing adjustments differ from past experience and our estimates, adjustments to revenue reserves may be required.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market value. At March 31, 2016, inventories consisted of recent purchases of vaping devices and related supplies, which the Company began selling during the three months ended December 31, 2015.

Fair Value Measurements

 

Fair value measurements are determined using authoritative guidance issued by the FASB, with the exception of the application of the guidance to non-recurring, non-financial assets and liabilities as permitted. Fair value is defined in the authoritative guidance as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels as follows:

 

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Inputs, other than the quoted prices in active markets, are observable either directly or indirectly.

Level 3—Unobservable inputs based on the Company's assumptions.

 

The Company is required to use observable market data if available without undue cost and effort.

 

The Company’s financial instruments include cash and accounts payable. Management has estimated that the carrying amounts approximate their fair value due to the short-term nature.

Loss per Share

Basic earnings (loss) per share are computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The Company’s diluted loss per share is the same as the basic loss per share for the three and nine months ended March 31, 2016 and 2015, as there are no potential shares outstanding that would have a dilutive effect.

CROWN MARKETING AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED MARCH 31, 2015 AND 2014

(UNAUDITED)

 

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Stock-Based Compensation

The Company periodically grants stock options and warrants to employees and non-employees in non-capital raising transactions as compensation for services rendered. The Company accounts for stock option and stock warrant grants to employees based on the authoritative guidance provided by the Financial Accounting Standards Board where the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and stock warrant grants to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board where the value of the stock compensation is determined based upon the measurement date at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option or warrant grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.

Segment Information

At September 30, 2015, the Company had three reportable operating segments. During the quarter ended December 31, 2015, the Company disposed of its interest in one of its segments, the Mobile segment, which distributed prepaid SIM cards and wireless phones (see Note 6). On December 15, 2015, the Board of Directors of the Company approved the sale of the Company’s interest in Crown Mobile for $25,000, which approximated the Company’s basis in Crown Mobile on that date. The Marketing segment leases an 180,000 square foot facility which it plans to sublease. The Laboratory segment develops and markets Chinese herbal and other remedies in the People’s Republic of China and also sells vaping equipment and balanced scooters, along with other products.

The chief operating decision-maker evaluates performance, makes operating decisions and allocates resources based on the operating income of each segment. The reporting segments follow the same accounting polices used in the preparation of the Company’s condensed consolidated financial statements. 

Summarized financial information by segment for the nine months ended March 31, 2016, based on the Company’s internal financial reporting system utilized by the Company’s chief operating decision maker, follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketing

Mobile

Laboratory

Consolidated

Sales

$                      -

   $   4,876

   $  2,592,876   -

  $      2,597,752   

Cost of sales

                       -

         5,543

       2,622,490

          2,628,033

Gross profit (loss)

                       -

          (667)

          (29,614)

              (30,281)

 

 

 

 

 

Rent expense-related

           223,077

        -

          220,000

            443,077

Stock issued for services

           525,000

                -

                     -

            525,000

Selling, general and administrative

             32,458

       19,218

            38,210                          -

              89,886

 

Loss from operations

 

$      (780,535)

   $(19,885)

   $   (287,824)  -

   $    (1,088,244)

 

 

For the three and nine months ended March 31, 2016, no single customer accounted for 10% or more of sales. During the nine months ended March 31, 2016, the Company had foreign sales of $2,605 to one person located in the Peoples Republic of China. All other sales were domestic sales in the United States. For the nine months ended March 31, 2015, there was only one segment, the Marketing segment, which recorded no revenues, $443,077 of rent expense (related party), $34,117 of selling, general, and administrative expenses, and a net loss of $477,194.

XML 17 R8.htm IDEA: XBRL DOCUMENT v3.5.0.2
Note 3 - Related Party Transactions
3 Months Ended
Mar. 31, 2016
Notes  
Note 3 - Related Party Transactions

NOTE 4 – CONVERTIBLE, REDEEMABLE PREFERRED STOCK

During the nine months ended March 31, 2016, the Company’s Board of Directors authorized the creation of a series of preferred stock consisting of 1,000,000 shares designated as Series A Preferred Stock (the “Series A”). The Series A is entitled to a dividend of 4%, when and as declared, and is entitled to a liquidation preference of $1 per share plus unpaid dividends. The Series A is redeemable at the option of the Company at any time, in whole or in part, at a price of $1.00 per share, plus 4% per annum thereupon from the date of issuance (the “Stated Value”). In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the Series A shall be entitled to a preferential amount equal to the Stated Value, prior to the holders of common stock receiving any distribution. Each share of Series A is automatically converted on the Conversion Date into a number of shares of common stock of the Company at the initial conversion rate (the “Conversion Rate”), which shall be the Stated Value as of the date of conversion divided by the Market Price. The Market Price for purposes of this Section 5 shall be equal to the average closing sales price of the Common Stock over the 5 previous trading days.

The Series A is also subject to adjustments to the Conversion Rate. If the common stock issuable on conversion of the Series A is changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares provided for above), the holders of the Series A shall, upon its conversion, be entitled to receive, in lieu of the common stock which the holders would have become entitled to receive but for such change, a number of shares of such other class or classes of stock that would have been subject to receipt by the holders if they had exercised their rights of conversion of the Series A immediately before that change.

During the nine months ended March 31, 2016, the Company issued 500,000 shares of its Series A to Temple CB, a single member LLC owned by the Company’s majority shareholder, in satisfaction of $500,000 of accrued rent (see Note 3). The Company plans to issue the remaining 500,000 authorized shares of its Series A preferred stock to Temple CB during the second half of 2016 in satisfaction of additional accrued rent.

NOTE 5 – SHAREHOLDERS’ DEFICIT

During the nine months ended March 31, 2016, the Company issued 75,000,000 shares of common stock to a consultant, which was valued at $525,000 based on the closing price of the Company’s common stock on the date of the grant, and included in selling, general, and administrative expenses. In July 2016, the Company entered into a settlement agreement under which the consultant agreed to return the shares to the Company in exchange for a cash payment (see Note 7).

During the nine months ended March 31, 2016, the Board of Directors of the Company approved the sale of the Company’s interest in Crown Mobile for $25,000, which approximated the Company’s basis in Crown Mobile on that date.

 

 

XML 18 R9.htm IDEA: XBRL DOCUMENT v3.5.0.2
Note 2 - Summary of Significant Accounting Policies: Inventories (Policies)
3 Months Ended
Mar. 31, 2016
Policies  
Inventories

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market value. At March 31, 2016, inventories consisted of recent purchases of vaping devices and related supplies, which the Company began selling during the three months ended December 31, 2015.

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