UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

 FORM 10-Q

 

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

For the quarterly period ended June 30, 2012

 

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

For the transition period from ______ to _______

 

Commission File Number 333-169501

 

CROWN DYNAMICS CORP.

(Exact name of registrant as specified in its charter)

 

Delaware		98-0665018
(State of incorporation)		(I.R.S. Employer Identification No.)

 

c/o Jeffrey Rassas

9590 E. Ironwood Square Drive

Building A, Suite 101

Scottsdale, AZ 85258

(Address of principal executive offices)

 

(480) 463-4246

(Registrant’s telephone number) 

 

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     ☐ No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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     ☐ No (Not required)

 

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

 

Large Accelerated Filer ☐ Accelerated Filer ☐

Non-Accelerated Filer ☐ Smaller Reporting Company ☑

 

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

 ☐ Yes  ☑ No

 

As of June 30, 2012, there were 39,769,609 shares of the registrant’s $0.001 par value common stock issued and outstanding.

 

CROWN DYNAMICS CORP.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	3
ITEM 2.	MANAGEMENT’S 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	18
PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	18
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	21

 

Special Note Regarding Forward-Looking Statements

 

Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Crown Dynamics Corp. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," or "CDYY" refers to Crown Dynamics Corp.

PART I - FINANCIAL INFORMATION

 

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 

INDEX	F-1
Unaudited Consolidated Balance Sheet for the Six months ended June 30, 2012 and Audited Consolidated Balance Sheet as of December 31, 2011	F-2
Unaudited Consolidated Statement of Operations for the Six Months Ended June 30, 2012 and 2011	F-3
Unaudited Consolidated Statement of Cash Flows for the Six Months Ended June 30, 2012 and 2011	F-4
Notes to Condensed Consolidated Financial Statements Unaudited	F-5

 

 

F-1

CROWN DYNAMICS CORP.

BALANCE SHEET

AS OF JUNE 30, 2012 AND DECEMBER 31, 2011

 

	As of	As of
	June 30,	December 31,
	2012	2011
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalent	$14,111	$ -
Deposits	25,000	-
Prepaid expenses	6,612	-
Inventory	22,393	-
Total current assets	68,116	-
Other Assets:
Property and equipment, net	46,595	-
Intangible assets, net	334,061	-
Security deposits	2,400	-
Total Assets	$451,172	-
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current Liabilities:
Accounts payable	$1,370,396	$5,000
Accrued interest	43,694	-
Accrued expenses	179,043	-
Notes  payable	127,400	-
Loans payable to shareholders	40,000	-
Convertible notes payable - Current Portions	415,000	-
Convertible notes payable to related parties - current portion	658,315	-
Total current liabilities	2,833,848	5,000
Accrued interest to related parties	11,048	-
Notes payable to related party	47,520	-
Convertible notes payable - less current portion	100,000	-
Convertible notes payable to related parties, less current portion	5,000	-
Total liabilities	2,997,416	5,000
Commitments and Contingencies
Stockholders' (Deficit):
Common stock, par value $.0001 per share, 200,000,000 shares authorized; 39,769,609 and 16,500,000 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively	3,977	1,650
Discount on common stock	-	(600)
Additional paid-in capital	9,285,961	54,250
Accumulated deficit	(11,836,182)	(60,300)
Total stockholders' (deficit)	(2,546,244)	(5,000)
Total Liabilities and Stockholders' (Deficit)	$451,172	$  -

 

The accompanying notes to financial statements are an integral part of these financial statements

 

F-2

CROWN DYNAMICS CORP.

STATEMENTS OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2012

(unaudited)

 

 

		Three Months Ended				Six Months Ended
		June 30,		June 30,		June 30,		June 30,
		2012		2011		2012		2011
Revenues, net		$         909		$     60,113		$       14,697		$       82,822
Cost of products sold		6,958		71,115		12,344		77,192
		(6,049)		(11,002)		2,353		5,630
Operating expenses
General and Administrative		393,767		268,430		2,312,610		404,368
Sales and Marketing		35,713		113,995		89,812		162,581
Total expenses		429,480		382,425		2,402,422		566,949
(Loss) from Operations		(435,529)		(393,427)		(2,400,069)		(561,319)
Other income (expense)
Interest income		2,007		838		2,661		1,629
Interest expense		(55,941)		(31,447)		(114,398)		(381,393)
Induced note conversion expense				(439,771)				(439,771)
Other income		-		1,397		-		30,844
Loss on disposition of property and equipment		(64,238)				(64,238)
Other expense		(550)		-		(550)		(18,671)
Total other income (expense)		(118,722)		(468,983)		(176,525)		(807,362)
Loss before income  taxes		(554,251)		(862,410)		(2,576,594)		(1,368,681)
Income tax expense		-		-		-		-
Net (Loss)		$(554,251)		$  (862,410)		$(2,576,594)		$(1,368,681)
Basic and diluted net loss per common share		$      (0.01)		$        (0.08)		$         (0.09)		$         (0.14)
Basic and diluted weighted average common
shares outstanding		39,769,609		10,495,003		28,228,327		9,534,834

 

The accompanying notes to financial statements are an integral part of these financial statements

 

F-3

CROWN DYNAMICS CORP.

STATEMENTS OF CASHFLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2012

(Unaudited)

 

	2012	2011
Operating Activities:
Net (loss)	$(2,824,337)	$(1,368,681)
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
Depreciation and amortization	29,110	36,103
Increase in notes receivable related party for interest earned	(655)	(1,629)
Common stock issued for services	1,898,646	2,500
Assets assumed in recapitalization with Airware Holding, Inc.	(123)	-
Liabilities assumed in recapitalization with Airware Holdings, Inc.	39,806	-
Increase in notes payable issued for services	37,500	-
Amortization of debt discount to related parties	44,639	7,325
Notes payable to officer for compensation and accrued compensation	-	275,694
Reduction in accrued compensation from salary and option forfeitures to related party	-	144,580
Stock options issued for services	-	2,600
Loss on disposition of property and equipment	64,238	-
Induced conversion expense	-	439,771
Interest on notes converted to common stock	-	39,674
Changes in operating assets and liabilities:
Accounts receivable	6,814	(14,734)
Inventory	36,303	9,608
Prepaid expenses	(1,612)	(10,118)
Deposits	(15,097)	-
Accounts payable	255,149	29,696
Accrued interest	25,806	(6,848)
Accrued expenses	69,738	(115,580)
		-
Net cash (used in) operating activities	(334,075)	(530,039)
Investing Activities:
Purchases of property and equipment	(5,000)	-
Notes payable to related parties	(35,000)	(56,400)
Net Cash Provided (used for) Investing Activities	(40,000)	(56,400)
Financing Activities:
Common Stock For Cash	5,000	433,500
Proceeds from convertible note payable to related party	-	145,000
Proceeds from convertible notes payable	105,000	-
Proceeds from convertible debenture - note payable	75,000	-
Proceeds from exercise of warrants	195,000	-
Net Cash Provided by Financing Activities	380,000	578,500
Net (Decrease) Increase in Cash	5,925	(7,939)
Cash - Beginning of Period	8,186	61,972
Cash - End of Period	$ 14,111	$ 54,033
Interest paid in cash	$ 25,000	$ 25,000
Non-cash investing and financing activities:
Common stock issued for convertible notes	$ -	$ 703,117
Common stock issued for convertible note to related party	$ -	$ 1,140,000
Debt discount on note payable	$ 10,100	$ -
Debt discount on related party note	$ -	$ 38,029

 

The accompanying notes to financial statements are an integral part of these financial statements

 

F-4

CROWN DYNAMICS CORP.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

 

1.

Summary of Significant Accounting Policies and Use of Estimates

Basis of Presentation and Organization

Crown Dynamics Corp. (“Crown Dynamics” or the “Company”) is a Delaware corporation. The Company was incorporated under the laws of the State of Delaware on June 15, 2010.

On March 20, 2012, through an equity exchange agreement, the Company acquired all of the issued and outstanding stock of Airware Holdings, Inc. (“Airware”), a Nevada corporation, in exchange for 21,844,136 shares of the Company’s newly-issued common stock. Airware was formed in February 2010 and is a non-prescription medical products company. The principal business purpose of the Company is to develop, manufacture and distribute nasal breathing devices. The Company targets prospective customers such as compassionate sleeping partners, individuals with allergies and athletic enthusiasts throughout the United States and the United Kingdom.

The Company has included the eleven days of the acquiree’s operations within its Statement of Operations and Statement of Cash Flows for the six month period ending June 30, 2012. The Company’s losses for the period were increased by $239,144 as a result of including the acquiree’s operating results for the eleven days. The Company’s cash flow was unchanged as a result of including the acquiree’s cash flows for the eleven days.

The Company’s Balance Sheet as of June 30, 2012 includes the assets and liabilities of the acquiree as of that date.

Unaudited Interim Financial Statements

The interim financial statements of the Company as of June 30, 2012 and 2011, and for the periods then ended, are unaudited. However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the Company’s financial position as of June 30, 2012 and 2011 and the results of its operations and its cash flows for the periods then ended. These results are not necessarily indicative of the results expected for the calendar year ending December 31, 2012. The accompanying financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States (U.S. “GAAP”). Refer to the Company’s audited financial statements as of December 31, 2010, filed with the SEC, for additional information, including significant accounting policies.

Inventory

Inventory at June 30, 2012 consists of finished goods and raw materials and is stated at the lower of cost, determined by the first-in, first-out method, or market. Inventories are determined by physical counts.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is provided for on the straight-line method, over the estimated useful lives of the assets. Maintenance and repairs that neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. Betterments or renewals are capitalized when incurred. Depreciation expense for the six month periods ended June 30, 2012 and 2011 amounted to $6,088 and $9,987, respectively.

The estimated useful lives of property and equipment are:

 

·

Manufacturing equipment

3 years

·

Office furniture and equipment

5-7 years

 

Intangible Assets

Intangible assets consist of patent and intellectual property and are amortized over the period that the Company believes best reflects the period in which the economic benefits will be consumed. The Company evaluates intangible assets with definite lives for recoverability when events or circumstances indicate that these assets might be impaired. The Company tests those assets for impairment by comparing their respective carrying values to estimates of the sum of the undiscounted future net cash flows expected to result from the assets. If the carrying amount of an asset exceeds the sum of the undiscounted net cash flows expected from that asset, the Company recognizes an impairment loss based on the amount by which the carrying value exceeds the fair value of the asset. Amortization expense for the six month period ended June 30, 2012 and 2011 amounted to $8,598 and $8,064 respectively, and is included in general and administrative expenses on the statement of operations.

Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company uses an estimate of the related undiscounted cash flows, excluding interest, over the remaining life of the property and equipment or other long-lived asset in assessing its recoverability. Impairment losses are recognized for the amount by which the carrying amount of the asset(s) exceeds the fair value of the asset(s). The Company primarily employs two methodologies for determining the fair value of a long-lived asset: (i) the amount at which the asset could be bought or sold in a current transaction between willing parties; or (ii) the present value of expected future cash flows grouped at the lowest level for which there are identifiable independent cash flows. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

 

Revenue Recognition

The Company recognizes revenue on the sale of products at the time of delivery and acceptance. Delivery is generally FOB shipping point. At the time of delivery, the following have occurred:

·

Delivery has been evidenced by the appropriate signature on the delivery ticket;

·

A price per unit has been determined; and

·

Collectability has been reasonably assured.

 

Revenues are recorded net of slotting payments and co-operative advertising costs when applicable.

 

Fair Value of Financial Instruments

 

The carrying amounts of financial instruments including cash, certain current maturities of long-term debt and accrued liabilities approximate fair value because of their short maturities or for long term debt based on borrowing rates currently available to the Company for loans with similar terms and maturities.

 

Long-term receivables with related parties are carried at an approximate fair value based on rates available to Company for risk free investments.

 

Earnings per Share

Basic earnings per share does not include dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. Dilutive securities are not included in the weighted average number of shares when inclusion would be anti-dilutive. Due to the net losses for the periods ended June 30, 2012 and 2011, basic and diluted loss per common share were the same, as the effect of potentially dilutive securities would have been anti-dilutive.

As of June 30, 2012 there were 3,202,500 shares issuable upon conversion of notes payable, exercise of warrants and options that were not included in the earnings per share calculation as they were anti-dilutive. There is an additional convertible note that has a provision to convert to 5,000,000 shares upon default on the note, which has not been included as management deems the issuance unlikely.

Shipping and Handling

Shipping and handling costs associated with the shipment of products to the customer are recorded as costs of revenue.

Advertising Costs

Costs associated with producing, communicating and advertising are capitalized and expensed when first viewed by the public.  There no cost capitalized or expensed for the periods ending June 30, 2012 and 2011 respectively. Advertising expense is included in selling and marketing expenses on the accompanying statements of operations.

Recent Accounting Pronouncements:

In May 2011, the FASB issued ASU 2011-04, "Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards ("IFRSs")." Under ASU 2011-04, the guidance amends certain accounting and disclosure requirements related to fair value measurements to ensure that fair value has the same meaning in U.S. GAAP and in IFRS and that their respective fair value measurement and disclosure requirements are the same. ASU 2011-04 is effective for public entities during interim and annual periods beginning after December 15, 2011. The Company has adopted the requirements of this ASU.

There were various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries. None of the updates are expected to a have a material impact on the Company's financial position, results of operations or cash flows

2.

Going Concern:

 The Company has incurred losses since inception and requires additional funds for future operating activities. The Company selling activity has not yet reached a level of revenue sufficient to fund its operating activities. These factors create an uncertainty as to how the Company will fund its operations and maintain sufficient cash flow to operate as a going concern.

In response to these financial difficulties, management is continuing to pursue financing from various sources, including private placements from investors and institutions. In addition, the Company has introduced an expanded product line and has had positive response to the product from a number of large potential customers. Management believes these efforts will contribute toward funding the Company’s activities until sufficient revenue can be earned from future operations. Management believes these combined efforts, if successful, will be sufficient to meet its working capital needs and its currently anticipated expenditure levels for the next year.

The Company’s ability to meet its cash requirements in the next year is dependent upon obtaining this financing and achieving improved sales level. If this is not achieved, the Company may be unable to obtain sufficient cash flow to fund its operations and obligations, and therefore, may be unable to continue as a going concern. The accompanying financial statements have been prepared on a going concern basis, and accordingly, do not include any adjustments relating to the recoverability and classification of recorded asset amounts; nor do they include adjustments to the amounts and classification of liabilities that might be necessary should the Company be unable to continue operations or be required to sell its assets.

 

3.

Notes Payable:

 

Notes payable consists of the following:

 

20.00% notes payable, due March 8, 2012, interest payable at maturity, unsecured	$37,500
7.00% note payable due April 4, 2011, interest payments are due annually, unsecured	25,000
24% convertible debenture due September 12, 2012, original issue of $75,000 and redeemable at $79,500 net of unamortized debt discount of $10,100	64,900
	$127,400

 

4.

Loans Payable to Shareholders

 

Loans payable to shareholders consists of the following:

 

Non-interest bearing loan due on demand, unsecured	$15,000
Non-interest bearing loan due on demand, unsecured	25,000
	$40,000

 

See “Subsequent Events,” Footnote 14, for additional information.

 

5.

Convertible Notes Payable:

 

Convertible notes payable consist of the following:

 

8.00% notes payable, due dates ranging from August 22, 2012 to March 19,2014, convertible to common stock at $.50 per share, interest payments are due annually, unsecured	$ 405,000
6.50% note payable, due dates ranging from September 20, 2011 to October 19, 2011, convertible to common stock at $1.00 per share, interest payments are due annually, unsecured	10,000
6.50% note payable, due November 26, 2011, convertible to common stock at $2 per share, interest payments are due annually, unsecured	50,000
6.50% note payable, due date August 31, 2010, convertible to common stock at $10.00 per share, interest payments are due annually, unsecured	$50,000
	515,000
Less current portion	(415,000)
	100,000

 

6.

Notes Payable to Related Party:

Notes payable to party of the following:

 

3.00% note payable, due March 2021, interest due at maturity, unsecured

$47,520

 

7.

Convertible Notes Payable to Related Parties:

 

Convertible notes payable to related parties consist of the following:

 

Dynamics Corp. common stock at $.10 per share, interest payments are due monthly. Debt is secured by substantially all of the assets of Airware Holdings, Inc.	$493, 315
8.00 % note payable due March 15, 2014, convertible to common stock at $.50 per share, interest payments are due annually, unsecured	5,000
8.00 % note payable due August 26, 2012, convertible to common stock at $.50 per share, interest payments are due annually, unsecured	20,000
6.50% note payable, due May 2, 2013 convertible to common stock at $2.00 per share, interest payment is due at maturity, unsecured	$145,000
	663,315
Less current portion	(658,315)
	5,000

See “Related Party Transactions,” Footnote 8, for additional information.

8.

Related Party Transactions:

As detailed in Note Payable to Related Party Footnote 6, the Company has notes payable to its President and Board Member, David Dolezal. Certain convertible notes are with parties related to the Company are former officers and significant consultants as further detailed in Footnote 7. Certain other related party transactions are detailed in the “Subsequent Events,” Footnote 13.

9.

Commitments and Contingencies:

 
The Company has agreed to indemnify its officers and director for certain events or occurrences that may arise as a result of the officers or director serving in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited.

The Company enters into indemnification provisions under its agreements with other companies in its ordinary course of business, typically with business partners, customers, landlords, lenders and lessors. Under these provisions the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company’s activities or, in some cases, as a result of the indemnified party’s activities under the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is unlimited.

The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the estimated fair value of these agreements is minimal. Accordingly, the Company has no liabilities recorded for these agreements as of June 30, 2012.

On August 10, 2011 the Company granted 700,000 stock options to a current employee and three consultants to the Company. The option grant was effective as of July 19, 2011 with the options vesting over one year in quarterly increments commencing on October 17, 2011 and continuing each quarter from that date forward.  These warrants are exercisable at $.50 per share of common stock over a 10 year term.  

 On November 7, 2011 the Company was named as a defendant in a lawsuit alleging a default on a note payable of $50,000 plus accrued interest. The note and accrued interest are reflected in the Company’s Balance Sheet as of March 31, 2012. The Company is working towards settling the litigation.

On December 22, 2011 the Company entered into a distribution agreement that provides for the issuance of common stock warrants, with an expiration date of 3 years, for the purchase of the Company’s common stock in an amount equal to 15% of the total products purchased by the distributor from the Company at the invoice price against the previous year’s purchases of paid invoices. The warrant price will be equal to the closing price of Crown Dynamics Corp.’s stock price at the anniversary date of the agreement.

On December 27, 2011, the Company was named as a defendant in a lawsuit alleging a default on a two notes payable total $75,000 plus accrued interest. The note and accrued interest are reflected in the Company’s Balance Sheet as of March 31, 2012. Subsequent to June 30, 2012 a judgment was entered against the Company as a result of this lawsuit.

On June 8, 2012 the Company entered a 12month lease for the rental of a new Company office. The commitment for the rental of the space is as follows:

FYE December 31	Annual Rent
2012	$16,800
2013	$12,000

 

10.

Stockholders’ Equity:

 

Common Stock

 

As further detailed in “Business Combination,” Footnote 13, the Company issued 21,844,136 shares to effect the business combination with Airware Holding, Inc. on March 20, 2012. Airware Holdings, Inc. is the accounting acquirer for the purposes of the business combination and has treated the transaction as a recapitalization through a reverse merger process. As a consequence, the common stock of the company has been restated to reflect the differences in par values of the stock.

 

Warrants:

 

The balance of warrants outstanding for purchase of the Company’s common stock as of March 31, 2012 are as follows:

 

Name of Warrants	Common Share Issuable Upon Exercise of Warrants	Exercise Price of Warrants	Date Issued	Expiration Date
Warrants issued under a Unit Purchase Agreement	535,000	$0.50	5/18/2010	5/17/2013
Warrants issued under a Private Placement Memorandum	250,000	$1.00	4/26/2011	4/25/2014
Warrants issued under a Private Placement Memorandum	50,000	$1.00	4/27/2011	4/26/2014
Warrants issued under a Private Placement Memorandum	25,000	$1.00	4/28/2011	4/27/2014
Warrants issued under a Private Placement Memorandum	200,000	$1.00	5/3/2011	5/02/2014

 

Stock Options:

The balances of outstanding stock option for the Company’s stock as of June 30, 2012 are as follows:

275,000 stock options for the purchase of the Company’s common stock, to a former officer of the Company and 250,000 each to two former Senior Advisory Board Members of the Company. These options are exercisable at $.50 per share of common stock over a 10 year term expiring April 19, 2021.

On August 10, 2011 the Company granted 700,000 stock options to a current employee and three consultants to the Company. The option grant was effective as of July 19, 2011 with the options vesting over one year in quarterly increments commencing on October 17, 2011 and continuing each quarter from that date forward.  These warrants are exercisable at $.50 per share of common stock over a 10 year term.    

On April 11, 2012 the Company issued 52,334 shares of the Company’s common stock in exchange for a convertible note of $25,000 and accrued interest of $1,167.

For the 3 month period ended June 30, 2012 the Company issued 38,140 shares of the Company’s common stock in exchange for services.

As further detailed in Footnote 3 under the terms of a Convertible Debenture agreement on June 12, 2012 the Company issued 10,000 shares of the Company’s common stock.

11.

Significant Customer:

The Company generally sells through a limited number of large distributors. The Company invoices the distributors directly as opposed to the ultimate retail store. Consequently, the Company’s sales are to a small number of customers.

12.

Business Combination:

On March 20, 2012 the Company entered into a share exchange agreement with Airware Holdings, Inc. (Airware) to exchange 21,844,136 of its newly-issued shares of common stock in exchange for 43,688,272 of the issued and outstanding shares and preferred stock of Airware, to exchange 860,000 Class A and B warrants of the Company for 1,720,000 Class A and B warrants of Airware and to exchange 1,1250,00 Options to purchase the Company’s common stock , at $.50 per share for 2,225,000 Options to purchase Airware common shares at $.25 per share.

The Company has accounted for the business combination with Airware as the accounting acquirer and a recapitalization of Airware through a reverse merger. The net loss from Crown, the acquiree, from operations of $239,144 is included in the Company’s Statement of Operations for the six month period ending June 30, 2012.

The Company has recorded the assets of Crown the acquiree of $123 at book value, the estimated fair value and liabilities of $58,950 at their book value. The $58,950 consists of accounts payable to an entity controlled by a Crown shareholder. See subsequent events Footnote 13.

13.

Subsequent Events

On June 28, 2012 and effective August 29, 2012 the Company entered into a trade financing, guaranty and advance agreement that allows to Company to factor purchase orders and accounts receivable up to the total amount of $250,000 and $1,000,000, respectively. The Company will pay a fee equal to 4% for the first 30 days and 1.34% for every ten day thereafter against the face amount of each advance. As of September 14, 2012 the Company had received and repaid purchase order advances of $172,172. As of September 14, 2012 the Company had received and had outstanding accounts receivable advances of $544,922.

On July 26, 2012 the Company was named as a Defendant alleging patent infringement. The Company believes the lawsuit is without merit and is seeking dismissal of the action.

On August 15, 2012 the Company executed an unsecured promissory note to a related party for $121,000 with a related party. The note is due together with any unpaid interest at a rate of 10% per month (120% per annum) on October 15, 2012. In addition, at the date of the note, the Company issued 10,000 shares of the Company’s common stock to the note holder.

On August 23, 2012 the Company entered into an agreement with its former President to modify an existing license agreement with Zorah LLC (“Zorah”), as further detailed in Footnote 1, from an exclusive license to a non-exclusive license. Among other requirements of the agreement, the former President agreed to surrender back to the Company 10,122,000 shares of the Company’s common stock.

In May and June of 2012 two shareholders of the Company provided loans to the Company totaling $40,000. In August 2012, the shareholders forgave the loans as well a $58,950 due to by the Company to an entity controlled by the shareholders.

 

 

End of Notes to Financials

 

 

F-5

 

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

The following Management's Discussion and Analysis should be read in conjunction with Crown Dynamic’s financial statements and the related notes thereto. The Management's Discussion and Analysis contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this Report on Form 10-Q. The Company’s actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Report on Form 10-Q.

The following discussion should be read in conjunction with our unaudited consolidated financial statements and related notes and other financial data included elsewhere in this report. See also the notes to our consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2011.

Critical Accounting Policies and Estimates

 

The discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s condensed financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. In consultation with the Company’s Board of Directors, management has identified the following accounting policies that it believes are integral to understanding its financial statements. These are important accounting policies that require management’s most difficult, subjective judgments.

 

Discussion of Acquirer for Accounting Purposes

 

On March 20, 2012 Crown Dynamics Corp. (“Crown”) and AirWare Holdings, Inc. (“Airware”) executed a share exchange agreement (the “Exchange”) to effectively merge the two entities. Below is the analysis under ASC 805-10-55-12 to determine who the accounting acquirer is as of March 20, 2012. Based on the analysis as detailed below, the Company believes that the acquirer for accounting purposes would be Crown.

 

ASC 805-10-55-12 states in part that in business combination effected primarily by exchanging equity interest (as is the case in the instant combination) the acquirer usually is the entity that issues the equity interest. In our combination, Crown is the entity that issued the equity interest, pursuant to the Exchange.

 

ASC 805-10-55-12 further indicates that all pertinent facts and circumstances also shall be considered in identifying the acquirer in a business combination effected by or through an exchange of equity interest. Particularly those in ASC 805-10-55-12(a) through 12(e) and that additional facts and circumstances that may be pertinent should be considered as well as the relative size of the combining entities.

 

In the instant case, there are facts that would support either party as being the accounting acquirer; however a preponderance of the facts support Crown as the acquirer. Specifically, as follows:

 

ASC 805-10-55-12 (a): The relative voting rights in the combined entity after the business combination.

 

The acquirer usually is the combining entity whose owners as a group retain or receive the largest portion of the voting rights of the combined entity. Here, the Exchange leaves the existing Crown shareholders with 22,725,000 shares and Airware shareholders with 21,844,136 shares before taking into account Airware’s options, warrants and convertible securities. There are no unusual voting arrangements. Although Airware could have a greater control, they were not the larger shareholder group as far as vested shares are concerned at the time of the transaction.

 

Airware options and warrants would add another 1,972,500 for Airware. In addition there are convertible notes that would result in issuance of another 1,022,500 shares for Airware. There is another note that is convertible in the event of default on the note by Airware that would add 10,000,000 shares to Airware. Management does not feel the contingent convertible note is likely to be converted. While the Airware shareholder could ultimately have the controlling shares, Crown had the controlling rights at the date of the acquisition.

 

Section 12(b): The existence of a large minority voting interest in the combined entity if no other owner or organized group of owners has a significant voting interest.

 

The acquirer usually is the combining entity whose owners or organized group of owners holds the largest minority voting interest in the combined entity.

 

Section 12(c): The composition of the governing body of the combined entity.

 

The acquirer usually is the combining entity whose owners have the ability to elect or appoint or to remove a majority of the members of the governing body of the combined entity. At the time of Exchange, the Board of Directors was composed of three Board Members from the Crown group and three from the Airware group.

 

Section 12(d): The composition of senior management of the combined entity.

 

The acquirer usually is the combining entity whose former management dominates the management of the combined entity. At the date of Exchange the management consisted of Steve Aninye as CEO (Crown) and Jeffry Rassas, President (Airware).

 

Section 12(e): The terms of the exchange of equity interest.

 

The acquirer usually is the combining entity that pays a premium over the pre-combination fair value of the equity interest of the other combining entity. Crown paid a premium for the equity interest in Airware. Airware fair value at the time of the combination was equal to $.50 per share, taking into account the 2 - 1 exchange. Crown shares were publicly trading at that time for $2.40.

 

Although ASC 805-10-55-13 states that, “The acquirer usually is the combining entity whose relative size is significantly larger than that of the other combining entity.” While Airware was the larger entity at the time of the transaction, based on the aforementioned analysis there are facts that support Crown as the accounting acquirer since ASC 805-10-55-13 is not dispositive on the issue.

 

However, taking into account the intent of the both parties together with giving a significant weight to Item 12(b), 12(c) and 12(e), the Company has elected that Crown is the acquirer for accounting purposes.

 

Corporate Background

 

We were incorporated in Delaware on June 15, 2010 and are a development stage company. On July 15, 2010, we entered into an exclusive worldwide patent sale agreement (the "Patent Transfer and Sale Agreement ") with Illanit Appelfeld, (the “Seller”) in relation to a patented technology (U.S. Patent Number: 5,799,354) (the “Patent”) for a toothbrush having a handle and a brush head. The brush head comprises two sides with one central bristle of tufted bundles, each mounted to a respective separate base. The patent and technology were transferred to us in exchange of payment to Illanit Appelfeld (the Seller) of US $9,000 (Nine thousands United States Dollars), according to the terms and conditions specified in the Patent Transfer and Sale Agreement related to the U.S. Patent Number: 5,799,354.

 

Since 2010, we have migrated from dental technology to greater applications in home medical technology.  On January 20th, the company entered into a Technology License Agreement (the “Agreement”) with Zorah LLC (“Zorah”).  

 

Now, the Company has exclusive rights to Zorah’s Technology for development and distribution worldwide of Zorah’s technologies. These technologies include a wireless technology to remotely monitor senior citizens and special needs adults and the development of a transdermal blood sugar monitoring unit,which will allow people to take their blood sugar levels without pricking themselves.

 

On March 20, 2012, Crown Dynamics Corp., a Delaware Corporation (the "Company or CDYY"), executed a Share Exchange Agreement (the "Agreement") with Airware Holdings, Inc., a Nevada corporation (“AirWare”). Under the Terms of the Agreement, Crown would acquire Airware and their business for operating and accounting purposes.

 .

Transfer Agent

 

We have engaged Nevada Agency and Trust as our stock transfer agent. Nevada Agency and Trust is located at 50 West Liberty Street, Reno, Nevada 89501. Their telephone number is (775) 322-0626 and their fax number is (775) 322-5623. The transfer agent is responsible for all record-keeping and administrative functions in connection with our issued and outstanding common stock.

 

Liquidity and Capital Resources

 

For the Six Months Ended June 30, 2012

During the six months ended June 30, 2012, net cash used in the Company’s operating activities totaled $334,075. Net cash provided by investing activities during the six month period ended June 30, 2012 totaled $40,000. For the six month period ended June 30, 2012, the Company’s cash balance decreased during the year by $5,925.

At June 30, 2012, the Company had cash of $14,111, accounts receivable of $25,000 and inventory of $22,393 that comprised the Company’s total current assets totaling $68,116. The Company’s property and equipment at June 30, 2012 had a net book value of $46,595. The Company also had intangible assets totaling $334,061 and security deposits at $2,400 at June 30, 2012, while the Company’s total assets at June 30, 2012 were $ 451,172.

 

At June 30, 2012, the Company had total current liabilities totaling $2,833,848 consisting of $658,315 in notes payable to related parties.

 

Therefore, at June 30, 2012, the Company had total liabilities of $2,997,416. Other than anticipated increases in the legal and accounting costs associated with being a public company, Company management is not aware of any other known trends, events or uncertainties which may affect the Company’s future liquidity.

 

RESULTS OF OPERATIONS

 

For the Six Months Ended June 30, 2012 versus June 30, 2011

 

Revenues and Gross Profit (Loss)

 

The Company’s revenue for the six months ended June 30, 2012 was $909 with associated sales and marketing costs of $35,713. The Company’s loss from operations the six months ended June 30, 2012 was $435,529. The Company’s incurred other administrative expenses for the six months ended June 30, 2012 included interest expense of $55,941. Other general and administrative expenses for the six months ended June 30, 2012 amounted to $393,767.

 

Going Concern Consideration

 

Our auditors have issued an opinion on our annual financial statements which includes a statement describing our going concern status. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills and meet our other financial obligations because we have not generated any revenues and no revenues are anticipated until we begin marketing the product. Accordingly, we must raise capital from sources other than the actual sale of the product. We must raise capital to implement our project and stay in business.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

ITEM 3. QUANTITATIVE AND QUALITATATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act").

 

Based on this evaluation, our principal executive and principal financial and accounting officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were effective as of June 30, 2012.

 

Management’s Report on Internal Control Over Financial Reporting

 

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Changes In Internal Control and Financial Reporting

 

Our management, including our chief executive officer and chief financial officer, has also evaluated our internal control over financial reporting, and there have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

ITEM 1.  LEGAL PROCEEDINGS

 

On November 7, 2011 Airware Holdings, Inc. was named as a defendant in a lawsuit alleging a default on a note payable of $50,000 plus accrued interest. The note and accrued interest are reflected in the Company’s Balance Sheet as of March 31, 2012. The Company is working towards settling the litigation.

On December 27, 2011, Airware Holding, Inc. was named as a defendant in a lawsuit alleging a default on a two notes payable total $75,000 plus accrued interest. The note and accrued interest are reflected in the Company’s Balance Sheet as of March 31, 2012. The Company is working towards settling the litigation.

 

Other than those stated above, we know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

 

ITEM 1A. RISK FACTORS

 

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

  ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

1.

Quarterly Issuances:

 

None.

 

2.

Subsequent Issuances:

 

None.

 

  ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

None.

 

ITEM 5. OTHER INFORMATION

 

1.

Quarterly Events

 

On May 8, 2012 the Company received a Note Receivable from its Chief Executive Officer, Mr. Rassas for $21,522 in exchange for periodic cash advances made to Mr. Rassas from December, 2011 through March, 2012. The note is due on May 7, 2015 with interest accrued at 2% per annum. Accrued interest included in the note on May 8, 2012 of $100 is included in the note receivable balance of $21,522. The portion of the note and accrued interest receivable that reflects advances made as of December 31, 2011 and 2010 have been reflected as notes receivable on the Company’s Balance Sheets as of those dates of $3,823 and $0, respectively. Subsequent to receipt of the note, the Note Receivable was deducted from accrued payroll due to the Officer; thus, repaying the Note Receivable in full.

 

On May 8, 2012 the Company received a Note Receivable from its President, Mr. Dolezal for $131,202 in exchange for periodic cash advances made to Mr. Dolezal from December, 2009 through March, 2012. The note is due on May 7, 2015 with interest accrued at 2% per annum. Accrued interest included in the note on May 8, 2012 of $2,973 is included in the note receivable balance of $131,201. The portion of the note and accrued interest receivable that reflects advances made as of December 31, 2011 and 2010 have been reflected as notes receivable on the Company’s Balance Sheets as of those dates of $110,737 and $0, respectively. Subsequent to receipt of the note, the Note Receivable was deducted against a note payable to the Officer; thus, repaying the Note Receivable in full.

 

On May 10, 2012, the Company approved a resolution to enter into a lease agreement with Kierland Crossing, LLC for the commercial space located at B2-245 on the Second Floor in Building B, at 15279 N. Scottsdale, Arizona and that 20,000 restricted shares of common stock of the corporation be issued pursuant to the lease agreement as a security deposit. The amount of the issuance will depend on an average trading price of the stock for the last five business days prior to the issuance date.

 

On May 10, 2012 the Company approved a resolution to enter into an Advisory and Consulting Agreement with Anderson Feldman LLC for consulting services for the corporation and that 20,000 shares of restricted common stock be issued as payment pursuant to the Consulting Agreement. Andersen Feldman, LLC shall act as the Company’s Advisor and Consultant in providing certain advisory services related to Company’s development of a private placement, financial forecast, business plan, strategic planning regarding, including but not limited to, capital strategies, strategies with regard to strategic alliances and/or mergers/acquisitions and possible divestitures or sales, and facilitating introductions to financial institutions and accredited investors

 

On May 10, 2012, the Company approved a resolution that the Company may issue shares of restricted stock in a capital raising effort under Rule 506 of Regulation D, wherein, the amount raised may not to exceed $5,000,000, and the time of the offering may not exceed 12 months. The corporation may take any steps necessary to begin the capital raising process described.

 

2.

Subsequent Events

 

On June 8, 2012, the Company approved a resolution to enter into an Advisory and Consulting Agreement with Perigon Companies, LLC for consulting services for the corporation and to issue 500,000 shares of restricted Common Stock to Perigon Companies, LLC as payment pursuant to the approved consulting agreement. Perigon Companies, LLC will utilize its extensive experience in small business consultation and their background in consumer product industries to provide assistance and the introduction of industry contacts to Company Management as it develops the Company’s business strategies. Such services will include 1) assisting in preparing updated business plans, executive summaries and company presentation materials based on current market conditions and trends, 2) consulting with management and their advisors to formulate comprehensive business development strategies focused on rapidly monetizing intellectual property and other company capital, 3) providing expertise and guidance to management and its other, outside consultants regarding public relations and investor communication strategies, 4) introducing qualified candidates for key positions, including legal counsel, marketing, accounting, customer service, and public or investor relations, if and as needed, and 5) making personnel available to assist management in performing other various tasks.

 

On July 23, 2012, the Company approved a resolution that the Nevada Agency and Transfer Company be authorized by the Board of Directors to cancel and return to treasury 9,000,000 post-split shares of the Company’s Common Stock held by Chana Zehavi and Amir Rehavi, respectively represented by certificate number 001 and 0100.

 

On August 1, 2012, the Company approved a resolution that the Nevada Agency and Transfer Company be authorized by the Board of Directors to cancel and return to treasury 6,125,000 post-split shares of the Company’s Common Stock held by Steve Aninye and Zorah, LLC, which were undeliverable and held by custodian, respectively represented by certificate number 0155 and 0156. These shares are also to be cancelled pursuant to the Share Exchange Agreement dated March 20, 2012.

 

On August 16, 2012, the Company resolved that The Corporation may enter into a Non-Exclusive Licensing Agreement with Zorah Technology, a limited liability company, with offices at 5400 Laurel Springs Pkwy, Suite 107, Suwanee, GA 30024, for non-exclusive rights to Zorah's technology for development and distribution worldwide of Zorah's technologies which include a wireless technology to remotely monitor senior citizens and special needs adults, as well as the development of a transdermal blood sugar monitoring unit, which will allow people to take their blood sugar levels without pricking themselves. This Non-Exclusive License Agreement is meant to modify the existing license agreement originally entered into on January 20, 2012. Restricted shares of common stock of the Corporation may be issued pursuant to the Non-Exclusive Licensing Agreement as payment for license.

 

On August 16, 2012, the Company resolved that restricted shares of 10,000 shares of restricted common stock of the Corporation be issued pursuant to the Subscription and Purchase Agreement dated June 12, 2012 to Gary Berlin.

 

On August 30, 2012, the Company resolved that the Company be authorized to change the name of the Company to Airware Labs Corp. on the close of business on August 30, 2012, that the Secretary of the Corporation be instructed to forward a copy of the resolution notifying the Transfer Agent of the name change, and that Nevada Agency and Transfer Company, as the Corporation’s Transfer Agent, act in accordance with its general practice and regulation for the transfer and registration of stock and the disbursing of dividends.

 

ITEM 6. EXHIBITS

 

Exhibit Number		Description of Exhibit	Filing
3.01		Articles of Incorporation	Filed on Form S-1 on August 22, 2011
3.02		Bylaws	Filed on Form S-1 on August 22, 2011
31.01		Certification of Principal Executive Officer Pursuant to Rule 13a-14	Filed Herewith
31.02		Certification of Principal Financial Officer Pursuant to Rule 13a-14	Filed Herewith
32.01		CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act	Filed Herewith
32.02		CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act	Filed Herewith

 

 

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

CROWN DYNAMICS CORP.

 

Dated:  September 14, 2012

/s/ Jeffrey Rassas

By: Jeffrey Rassas

Its: CEO

 

Dated:  September 14, 2012

/s/ John Glassgow

By: John Glassgow

Its: CFO

 

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.

 

Dated:  September 14, 2012

/s/Jeffrey Rassas

By: Jeffrey Rassas

Its: Director

 

Dated:  September 14, 2012

/s/ David Dolezal

By: David Dolezal

Its: Director

 

Dated:  September 14, 2012

/s/ Ron Miller, Jr.

By: Ron Miller, Jr.

Its: Director