Attached files

file filename
EXCEL - IDEA: XBRL DOCUMENT - CROWN MARKETINGFinancial_Report.xls
EX-31 - CERTIFICATION - CROWN MARKETINGcertification.htm
EX-32 - EXHIBIT 32 - CROWN MARKETINGex32.htm


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549


FORM 10-Q


x QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934


For the quarterly period ended December 31, 2012


oTRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from                   to                 

Commission File Number 000-27873


CROWN MARKETING

 (Exact name of registrant as specified in its charter)


Wyoming

98-0178621

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)


1340 Environ Way, Chapel Hill, North Carolina

27517

(Address of principal executive offices)

 (Zip Code)


Registrant’s telephone number: (919) 913-4762


Indicate by check mark whether registrant (1) has filed all reports 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.  o  Yes  x  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).   xYes o No


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

 

Large accelerated filer

o

Accelerated filer

o

Non-accelerated filer (Do not check if smaller reporting company)

o

Smaller reporting company

x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes o No x

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

There were 190,067,600 shares of common stock issued and outstanding as of January 31, 2012. 




 

CROWN MARKETING


PART I.  FINANCIAL INFORMATION

Page(s)


Item 1.

Financial Statements


Condensed Consolidated Balance Sheets as of December 31, 2012 (unaudited) and

June 30, 2012

4


Unaudited Condensed Consolidated Statements of Operations for the three and  six month

periods ended December 31, 2012 and 2011

5


Unaudited Consolidated Statements of Cash Flows for the six month periods ended

December 31, 3012 and 2011

6


Notes to the Unaudited Condensed Consolidated Financial Statements

7


Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of

Operations

13


Item 3.

Quantitative and Qualitative Disclosures About Market Risk

15


Item 4.

Controls and Procedures

15


PART II – OTHER INFORMATION


Item 1.

Legal Proceedings

16


Item 1A.

Risk Factors

16


Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

16


Item 3

Defaults Upon Senior Securities

16


Item 4.

Mine Safety Disclosures

16


Item 5.

Other Information

16


Item 6.

Exhibits

16


Signatures

17


2





PART I – FINANCIAL INFORMATION


Item 1.  Financial Statements.





3



CROWN MARKETING

(A Development Stage Company)

CONDENSED CONSOLIDATED BALANCE SHEETS


 

 

Dec. 31

 

 

June 30,

 

 

2012

 

 

2012

ASSETS

 

(unaudited)

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

    Cash

$

5,076

 

$

381

 

 

 

 

 

 

Total Current Assets

 

5,076

 

 

381

 

 

 

 

 

 

Other Assets

 

350

 

 

250

 

 

 

 

 

 

TOTAL ASSETS

$

5,426

 

$

631

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

   Accounts payable - related party

$

22,466

 

$

44,781

   Accounts payable

 

5,794

 

 

5,193

   Notes payable - related party

 

10,366

 

 

9,666

   Accrued interest on related party note

 

1,739

 

 

91

Total Current Liabilities

 

40,365

 

 

59,731

 

 

 

 

 

 

Note payable related party - net of current portion

 

140,000

 

 

--

   Total liabilities

 

180,365

 

 

59,731

 

 

 

 

 

 

Stockholders' Deficiency

 

 

 

 

 

   Preferred stock, no par value, unlimited

 

 

 

 

 

     shares authorized; no shares issued and outstanding

 

--

 

 

--

   Common stock, no par value; unlimited shares

 

 

 

 

 

      authorized; 190,067,600 and 43,467,600 shares

 

 

 

 

 

     issued and outstanding

 

49,260

 

 

21,160

    Common stock subscription receivable

 

(113,419)

 

 

--

   Accumulated Deficit

 

(110,780)

 

 

(80,260)

 

 

 

 

 

 

Total Stockholders' Deficiency

 

(174,939)

 

 

(59, 100)

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS'

 

 

 

 

 

   DEFICIENCY

$

5,426

 

$

631


See accompanying Notes to Consolidated Condensed Financial Statements.


4





CROWN MARKETING

(A Development Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


 

 

For The Six Months Ended Dec. 31, 2012

 

 

For The Six Months Ended Dec. 31, 2011

 

 

For The Three Months Ended Dec. 31, 2012

 

 

For The Three Months Ended Dec. 31, 2011

 

 

Period July 8, 2009 (Inception) Through Dec. 31, 2012

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

Sales

$

--

 

$

4,500

 

$

.--

 

$

4,500

 

$

4,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Goods Sold

 

--

 

 

456

 

 

--

 

 

456

 

 

456

Gross Margin

 

--

 

 

4,044

 

 

--

 

 

4,044

 

 

4,044

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

30,290

 

 

6,727

 

 

18,193

 

 

(6,728)

 

 

114,113

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from operations

 

(30,290)

 

 

(2,683)

 

 

(18,193)

 

 

(2,684)

 

 

(110,069)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income-interest expense, net

 

(230)

 

 

--

 

 

(384)

 

 

--

 

 

(711)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

$

(30,520)

 

$

(2,683)

 

$

(18,577)

 

$

(2,684)

 

$

(110,780)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss per share --

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 basic and diluted

$

(0.00)

 

$

(0.00)

 

$

(0.00)

 

$

(0.00)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding-basic and diluted

 

126,633,904

 

 

43,467,600

 

 

190,067,600

 

 

43,467,600

 

 

 


















See accompanying Notes to Condensed Consolidated Financial Statements.


5







CROWN MARKETING

(A Development Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


 

 

For The Six Months Ended Dec. 31, 2012

 

 

For The Six Months Ended Dec. 31, 2011

 

 

Period July 8, 2009 (Inception) Through Dec. 31, 2012

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(30,520)

 

$

(4,061)

 

$

(110,780)

Adjustments to reconcile net loss to net cash

 

 

 

 

 

 

 

 

   used in operating activities:

 

 

 

 

 

 

 

 

   Increase (decrease) in accounts payable

 

601

 

 

1,247

 

 

5,794

   Increase in interest receivable

 

(1,319)

 

 

--

 

 

(1,319)

   Increase in accrued interest

 

1,648

 

 

--

 

 

1,739

   Increase (decrease) in accounts payable -related party

 

(22,315)

 

 

(3,809)

 

 

22,466

Net cash used in operating activities

 

(51,905)

 

 

(6,623)

 

 

(82,100)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

   Payments to acquire other assets

 

(100)

 

 

--

 

 

(350)

Net cash used by investing activities

 

(100)

 

 

--

 

 

(350)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

   Proceeds from sale of common stock

 

 

 

 

 

 

 

 

       and warrants

 

56,000

 

 

--

 

 

69,500

   Proceeds from related party note

 

700

 

 

--

 

 

10,366

   Contribution to capital by officer

 

--

 

 

--

 

 

7,660

Net cash provided by financing activities

 

56,700

 

 

--

 

 

87,526

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and

 

 

 

 

 

 

 

 

    cash equivalents

 

4,695

 

 

(6,623)

 

 

5,076

Cash and cash equivalents, beginning of period

 

381

 

 

6,725

 

 

--

Cash and cash equivalents, end of period

$

5,076

 

$

102

 

$

5,076

 

 

 

 

 

 

 

 

 

Supplemental Disclosure of Cash Flow Information:

 

 

 

 

 

 

 

   Interest paid

$

--

 

$

--

 

$

--

   Income taxes paid

$

--

 

$

--

 

$

--

 

 

 

 

 

 

 

 

 

Supplemental Disclosure of non-Cash Transactions:

 

 

 

 

 

 

 

   Issuance of note payable upon change of control

$

140,000

 

$

--

 

$

140,000

   Issuance of common stock for subscription receivable

$

112,000

 

$

--

 

$

112,000


See accompanying Notes to Condensed Consolidated Financial Statements

6


 CROWN MARKETING

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

  FOR THE UNAUDITED THREE MONTHS ENDED DECEMBER 31, 2012 AND 2011

AND THE UNAUDITED PERIOD JULY 8, 2009 (INCEPTION) TO DECEMBER 31, 2012



NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

The Company

Green4Green was organized as a Wyoming corporation on July 8, 2009. On July 14, 2010, Crown Marketing (the "Company"), a successor by merger to SPCL Holding Corporation, acquired Green4Green pursuant to an Agreement and Plan of Reorganization (the Agreement).  The Company acquired all of the outstanding shares of Green4Green in exchange for 4,000,000 newly issued shares of the Company's Common Stock.  Pursuant to the Agreement, the issued and outstanding common shares of Green4Green were exchanged on a one-for-one basis for common shares of the Company.  After the merger was completed, the Green4Green shareholders owned approximately 98% of the outstanding shares of common stock of the Company.  The transaction was accounted for as a reverse merger (recapitalization) with Green4Green 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 given the effect of the issuance of 957,600 shares of common stock upon completion of the transaction.  After the acquisition, the Company closed on the issuance of 2,400,000 shares of common stock and warrants to purchase 24,000,000 shares of common stock for cash of $12,000 (See Note 5).


The Company is engaged in the wholesaling of generic pharmaceuticals to the developing world.  The Company has not realized revenues from its planned principal business purpose and is considered to be in its development state in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, “Development Stage Entities” (formerly Statement of Financial Accounting Standards (“SFAS”) No 7, “Accounting and Reporting by Development State Enterprises.”)

These consolidated financial statements include the accounts Green4Green and the Company.  All intercompany transactions and accounts have been eliminated in consolidation.

 

Interim Financial Statements


The accompanying consolidated financial statements as of and for the periods ended December 31, 2012 and 2011  have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the consolidated financial position, results of operations and cash flows at December 31,  2012 and 2011 and for all periods presented herein, have been made. The results of operations for the periods ended December 31, 2012 and 2011 are not necessarily indicative of the operating results for the full years. The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the instructions for Form 10-Q.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.


Revenue Recognition


The Company recognizes sales in accordance with the United States Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition”. The Company recognizes revenue when the following fundamental criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the price to the customer is fixed or determinable and (iv) collection of the resulting receivable is reasonably assured. Revenue is not recognized until title and risk of loss is transferred to the customer, which generally occurs upon delivery of goods, and objective evidence exists that customer acceptance provisions have been met.





7




 CROWN MARKETING

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

  FOR THE UNAUDITED THREE MONTHS ENDED DECEMBER 31, 2012 AND 2011

AND THE UNAUDITED PERIOD JULY 8, 2009 (INCEPTION) TO DECEMBER 31, 2012


NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)



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 issued for services. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions.


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 cash equivalents, accounts payable, and accrued expenses. Management has estimated that the carrying amounts approximate their fair value due to the short-term nature.


Loss Per Share


Basic loss per share has been computed using the weighted average number of common shares outstanding and issuable during the period. Diluted loss per share is computed based on the weighted average number of common shares and all common equivalent shares outstanding during the period in which they are dilutive. Common equivalent shares consist of shares issuable upon the exercise of stock options, warrants or other convertible securities such as convertible notes. As of December 31, 2011, common stock equivalents were comprised of warrants exercisable into 24,000,000 shares of the Company’s common stock.  There were no common stock equivalents outstanding as of December 31, 2012.  For the three and six months ended December 31, 2012 and 2011, common stock equivalent shares have been excluded from the calculation of loss per share as their effect is anti-dilutive.


8

 

 CROWN MARKETING

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

    FOR THE UNAUDITED THREE MONTHS ENDED DECEMBER 31, 2012 AND 2011

AND THE UNAUDITED PERIOD JULY 8, 2009 (INCEPTION) TO DECEMBER 31, 2012


NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)


Stock-Based Compensation


The Company periodically issues stock instruments, including shares of its common stock, stock options, and warrants to purchase shares of its common stock to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option awards issued and vesting to employees in accordance with authorization guidance of the FASB whereas the value of stock-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite service period. Options to purchase shares of the Company’s common stock vest and expire according to the terms established at the grant date.


The Company accounts for stock options and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB whereas the value of the stock compensation is based upon the measurement date as determined 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.


Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2011-  In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”.  ASU No. 2011-4 does not require additional fair value measurements and is not intended to establish valuation standards or affect valuation practices outside of financial reporting.  The ASU is effective for interim and annual periods beginning after December 15, 2011. The Company adopted ASU No. 2011-04 effective January 1, 2012 and it did not affect the Company’s results of operations, financial condition or liquidity.

 In December 2011, the FASB issued ASU No. 2011-11, “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities.” This ASU requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. ASU No. 2011-11 will be applied retrospectively and is effective for annual and interim reporting periods beginning on or after January 1, 2013.  The Company does not expect adoption of this standard to have a material impact on its consolidated results of operations, financial condition, or liquidity.

 Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the Securities Exchange Commission (the "SEC") did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.






9




CROWN MARKETING

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

    FOR THE UNAUDITED THREE MONTHS ENDED DECEMBER 31, 2012 AND 2011

AND THE UNAUDITED PERIOD JULY 8, 2009 (INCEPTION) TO DECEMBER 31, 2012


NOTE 2 - GOING CONCERN


These condensed consolidated financial statements have been prepared on a going concern basis, which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company incurred a net loss of $30,520 for the six months ended December 31, 2012.  The Company's liabilities exceed its assets by $174,939 as of December 31, 2012.  The Company has received limited revenues to date.  These factors create substantial doubt about the Company's ability to continue as a going concern.  As a result, the Company’s independent registered public accounting firm, in its report on the Company’s June 30, 2012 consolidated financial statements, raised substantial doubt about the Company’s ability to continue as a going concern.  These  condensed consolidated financial statements do not include any adjustments that might be necessary if  the  Company  is  unable  to  continue  as  a  going  concern.

 

The  ability  of  the  Company  to  continue  as a going concern is dependent on securing  additional  sources  of capital to pay ongoing general and administrative expenses, and the success of the Company's plan.

NOTE 3 - RELATED PARTY TRANSACTIONS


Accounts payable to related parties


As of June 30, 2012, the Company had outstanding accounts payable to related parties of $44,781 due to Mr. Learned Hand, which represented expenses paid by him on behalf of the Company.  Mr. Learned Hand did not have any relationship with the Company as of June 30, 2012; however in September 2012, he was elected as the Company’s director, and Chief Executive and Financial Officer following the resignation of predecessor director and Chief Executive Officer, Mr. Igor Produn.  During the period ended December 31, 2012, Mr. Hand was repaid $40,000 of this amount, and advanced an additional $13,685 during the six months ended December 31, 2012 for Company expenses, resulting in a balance due him of $18,466 as of December 31, 2012.


In addition, a warrant holder exercised her warrants for the purchase of 8,000,000 shares at the total exercise price of $56,000; however, this warrant holder paid $60,000 to the Company and the balance of $4,000 is being treated as a related party payable as of December 31, 2012. The Company intends to repay these $4,000 presently.


As of December 31, 2012, the aggregate balance of Accounts payable to related parties was $22,466.  These advances to related parties are unsecured, due on demand, and are non-interest bearing.


Notes payable to related party


During the year ended June 30, 2012, the Company issued an unsecured promissory note to an entity owned by a shareholder and former director of the Company for the an aggregate principal sum of $9,666.  The unpaid principal sum, together with all other amounts advanced to the Company by the lender from time to time, shall bear interest at 4% per annum until paid, and shall be due and payable on demand.  During the six months ended December 31, 2012, the lender advanced an additional $700 to the Company under the same terms.  As of December 31, 2012, notes payable to this related party had a balance of $10,366.


Notes payable to related party issued upon change of control


In September 2012, the Company issued an unsecured promissory note to an entity controlled by the Company’s Chief Executive and Financial Officer and director, for the principal sum of $140,000. The promissory note was issued in connection with the assignment of two patents and the related intellectual property (see Note 5).  The unpaid principal sum of the the promissory note bears interest at 4% per annum until paid.  The unpaid principal sum and all accrued but unpaid interest thereon shall be due and payable five years from the date of the promissory note.  As of December 31, 2012, the promissory note of $140,000 remained outstanding and was classified as non-current liability on the Company's condensed consolidated balance sheet at December 31, 2012.

10


CROWN MARKETING

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

    FOR THE UNAUDITED THREE MONTHS ENDED DECEMBER 31, 2012 AND 2011

AND THE UNAUDITED PERIOD JULY 8, 2009 (INCEPTION) TO DECEMBER 31, 2012


NOTE 4 – INCOME TAXES


As of December 31, 2012 and June 30, 2012, the Company had net operating loss carryforwards of approximately $110,780 and $80,260, which expire in varying amounts between 2017 and 2027.   Realization of this potential future tax benefit is dependent on generating   sufficient taxable income prior to expiration of the loss carryforward.  The deferred tax asset related to this (and other) potential future tax benefits has been offset by a valuation allowance in the same amount. The amount of the deferred tax asset ultimately realizable could be increased in the near term if estimates of future taxable income during the carryforward period are revised.


Deferred income tax assets of $38,773 and $28,091 at December 31, 2012 and June 30, 2012, respectively were offset in full by a valuation allowance.




The components of the Company's net deferred tax assets, including a valuation allowance, are as follows:



 

 

 

 

As of

 

 

As of

 

 

 

 

Dec. 31, 2012

 

 

June 30, 2012

 

 

 

 

 

 

 

 

Net deferred tax assets before valuation allowance

 

 

$

38,773

 

$

28,091

Less: Valuation Allowance

 

 

 

(38,773)

 

 

(28,091)

Net deferred tax assets

 

 

 

--

 

 

--


A reconciliation between the amounts of income tax benefit determined by applying the applicable U.S. and State statutory income tax rate to pre-tax loss is as follows:



 

 

 

As of

 

 

As of

 

 

 

 

Dec. 31, 2012

 

 

June 30, 2012

 

 

 

 

 

 

 

 

Tax expense at the U.S.

 

 

 

 

 

 

 

  statutory income tax

 

 

 

35%

 

 

35%

Statutory state income tax

 

 

 

--

 

 

--

Increase in valuation allowance

 

 

(35%)

 

 

(35%)

Effective tax rate

 

 

 

--

 

 

--

 

 

 

 

 

 

 

 


Due to the inherent uncertainty in forecasts and future events and operating results, the Company has provided for a valuation allowance in an amount equal to gross deferred tax assets resulting in the above figures for the periods audited.




11






CROWN MARKETING

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

    FOR THE UNAUDITED THREE MONTHS ENDED DECEMBER 31, 2012 AND 2011

AND THE UNAUDITED PERIOD JULY 8, 2009 (INCEPTION) TO DECEMBER 31, 2012


NOTE 5 – STOCKHOLDERS’ DEFICIENCY


The Company has authorized an unlimited number of shares of preferred stock, no par value, with such rights, preferences and designation and to be issued in such series as determined by the Board of Directors. No shares of preferred stock are issued and outstanding at December 31, 2012 or June 30, 2012.


The Company has authorized an unlimited number of shares of no par value common stock, of which 190,067,600 and 43,467,600 shares are outstanding at December 31, 2012 and June 30, 2012, respectively. All share numbers in these financial statements have been retroactively adjusted for a 10-for-1 forward stock split declared in September 2012 and effective for shareholders of record as of October 2, 2012.  


In the fiscal year ended June 30, 2011, the Company issued 957,600 shares in the reverse acquisition as described in Note 1.


In July 2010, the Company sold 240,000 units of its common stock for an aggregate consideration of $12,000.  Each unit consisted of 10 shares of common stock and 100 Class A warrants to acquire a share of the Company’s common stock at an exercise price of $0.007 per share with expiration date on December 31, 2014 (24,000,000 warrants in

aggregate).  As of  June 30, 2012 and 2011, the Company has outstanding and exercisable Class A warrants of 24,000,000 resulting from this transaction.


In March 2011, the Company sold 110,000 shares of its common stock for cash for net proceeds of $1,100.


The officer and director contributed $7,200 in cash to the Company in March, 2011, and $60 in the quarter ended December 31, 2011.


By resolution of the Board of Directors dated August 30, 2012, the Company authorized a 10-for-one forward stock split for all shareholders of record as of October 2, 2012.  All share amounts in these financial statements have been retroactively restated to reflect the stock split as if it had been effected at the beginning of the earliest period presented.


Class A Warrants to purchase 8,000,000 shares were exercised for cash of $56,000 on August 14, 2012, and the remaining Class A Warrants to purchase 16,000,000 shares were exercised on August 28, 2012 in exchange for promissory notes in the amount of $112,000.  The promissory notes were unsecured, bear interest at 4% per annum until paid, and all unpaid principal sum and all accrued but unpaid interest thereon was due and payable on December 31, 2012. The Company expects these notes to be repaid by February 28, 2013.  During the three months ended December 31, 2012, the Company accrued interest receivable of $299 in connection with these notes.


 By resolution dated September 20, 2012, the Board of Directors authorized the issuance of 122,600,000 restricted shares and a promissory note in the amount of $140,000 for the assignment of two patents and the related intellectual property from a  party which was non-affiliated at the time; in connection with this assignment, the party nominated a new President, Chief Financial Officer and director who is an affiliate of the assignor. The assignment took effect on September 22, 2012. The Company has valued the patent at the predecessor basis in the property exchanged because the assignor gained control of the Company after the acquisition.








12





Item 2.  Management’s 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.


Plan of Operations


Critical Accounting Policies and Estimates


Principles of consolidation. The condensed consolidated financial statements include the accounts of the Company and its subsidiary. All significant inter-company balances and transactions are eliminated on consolidation.


Use of estimates. In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. These accounts and estimates include, but are not limited to, the valuation of accounts receivable, inventories, deferred income taxes and the estimation on useful lives of property, plant and equipment. Actual results could differ from those estimates.


Plan of Operations


We did not enjoy any revenues until the quarter ended December 31, 2011. We had losses of $30,520 and $2,683 for the six months ended December 31, 2012 and 2011, respectively, and $18,193 and $2,684 for the three months periods ended December 31, 2012 and 2011. Our operating expenses in the 2011 quarter consisted primarily of costs related to the purchase, warehousing and transport of inventory; in the 2012 quarter, the expenses primarily were incurred in connection with the costs of being public and effecting a forward stock split. With the acquisition of the controlled release technology in September, 2012, the Company has increased its level of operations in connection with the development and exploitation of that technology. We expect that our operating, research and development costs and marketing costs will increase substantially through June 30, 2013 and we expect to require a total of $862,000 in cash during that time period.  We received $56,000 in August 2012 from the exercise of Class A Warrants. We believe we will be able to receive, prior to March 31, 2013,  the remaining $112,000 due on promissory notes from warrants exercised in the quarter ended  December 31, 2012, and that this amount will cover our operating expenses through that time. After March 31, 2013, we will need approximately $750,000 for marketing and development. Due to our limited operating history, we believe that we will not be able to obtain conventional bank loans to provide our cash needs and 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.  

13


Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”.  ASU No. 2011-4 does not require additional fair value measurements and is not intended to establish valuation standards or affect valuation practices outside of financial reporting.  The ASU is effective for interim and annual periods beginning after December 15, 2011. The Company adopted ASU No. 2011-04 effective January 1, 2012 and it did not affect the Company’s results of operations, financial condition or liquidity.

 

 

In December 2011, the FASB issued ASU No. 2011-11, “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities.” This ASU requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. ASU No. 2011-11 will be applied retrospectively and is effective for annual and interim reporting periods beginning on or after January 1, 2013.  The Company does not expect adoption of this standard to have a material impact on its consolidated results of operations, financial condition, or liquidity.

 

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the Securities Exchange Commission (the "SEC") did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

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.


Since we have not yet generated any signnificant revenues, we are a development stage company as that term is defined in Section 915 - Development Stage Entities, of the FASB Accounting Standards Codification.   Our activities have mostly been devoted to seeking capital; seeking supply contracts and development of a business plan.  Our auditors have included an explanatory paragraph in their report on our financial statements, relating to the uncertainty of our business as a going concern, due to our lack of operating history or current revenues, its nature as a start up business, management's limited experience and limited funds.  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 effect our business plan.


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


o     our success in entering into favorable arrangements  to license or exploit our technolog;


o     the success of our marketing efforts;


o     our ability to obtain additional financing; and


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


Any or all of our forward looking statements in this prospectus 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 prospectus.


Contractual Obligations and Off-Balance Sheet Arrangements


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


14

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.


Item 4.  Controls and Procedures.


Evaluation of Disclosure Controls and Procedures


The Company’s principal executive officer and its principal financial officer, based on his evaluation of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d -14 (c) as of December 31, 2012. 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 Company’s 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 error 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 quarter ended December 31, 2012 that have materially affected or are reasonably likely to materially affect our internal controls.






15




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.


31. Certification of CEO and CFO.

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






16



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:  January 31, 2013

By:

/s/ Learned Hand

  

  

Learned Hand

  

  

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

  

 

 

 

 

 

 

 

 





17