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PART I

Item 1. Business

Company Overview

We are a publicly reporting Nevada corporation formed March 4, 2010.  Our business is focused on acquiring an ongoing portfolio of life settlement policies and to eventually build our own portfolio of policy purchases.  A life settlement is the purchase of a life insurance policy at a discount from face value from a person who no longer needs or wants the policy.  The policy owner receives a lump sum settlement and the title for the policy is transferred to the third party, which pays the future premiums due on the policy and eventually collects the death benefit.

Overview of Life Settlements

A life settlement (also sometimes known as a "viatical" if the life insured has less than 2 years to live) is the purchase of a life insurance policy at a discount from face value from a person who no longer needs or wants the policy.  The policy owner receives a lump sum settlement and the title for the policy is transferred to the third party, which pays the future premiums due on the policy and eventually collects the death benefit.

Traditionally, policy owners of a life insurance contract would get access to the value built up in a policy while they are living by surrendering the policy for its cash value, withdrawing some of the accumulated surplus value (if there is any), or borrowing against the cash value. Generally, the actual value that can be accessed through these options is fairly limited. Life settlements are an alternative for those wishing to sell their policy. With a life settlement, the owner of the policy can sell their beneficial interest in a policy for cash - a life settlement. The owner often receives a higher value compared to the traditional options and is relieved from paying future premium obligations.

There is a network of licensed brokers throughout the United States through whom an individual or institution may purchase or sell an insured person's life insurance policy. These brokers represent the insured person, and they effectively 'shop' out or list for sale these insurance policies through their networks. Competing bids from life settlement companies or institutional buyers are received by the broker, who in time chooses to whom the policy will be sold. Like the real estate market, the highest offer usually secures the asset. The purchase of a life insurance policy asset is referred to as a life settlement transaction.

Life settlements are potentially profitable because the purchaser acquires a policy at a discount from the face value which is based on the insured person's life expectancy and the purchaser’s desired return on capital.  The investor then continues to pay the premiums and collects the death benefit when the policy matures. The annual rates of return that purchasers can expect typically vary between 8% and 12%. In the case of an early maturity (i.e death of an insured) the return on investment can be substantially higher. In the case where the insured person lives longer than anticipated, the return on investment will be lower, and can potentially be negative.

There are many reasons for policies becoming available for settlement. These include:

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Policy-holder is terminally ill and requires funds to pay medical and/or living expenses

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Policy-holder no longer needs coverage

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Change in business ownership makes policy obsolete

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Key-man leaves the business

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Policy-holder needs to raise cash

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Non-profit organization owns a policy insuring the life of a key donor or benefactor who no longer wants to pay premiums

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Estate tax reform in USA

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Growing number of sophisticated market participants

Further regulation, demographics and a low national savings rate will drive the expansion of supply to the life settlement market. The demographic of the baby boomer generation, people born in the U.S. between 1945 and 1965, is well known and is moving towards retirement with minimal savings relative to expected post-retirement expenditures.

U.S. Life Settlement Industry

The life settlement industry began in the late 1980's. The first year of credible data available is from 1989 when about $2 million in life insurance (face amount) was purchased. This figure has grown to approximately $12 billion in 2006. Processes and technologies allowing for more efficient transfer of life policies were established in the late 90's. The life settlements market developed and began to provide liquidity to a growing segment of Americans holding life insurance policies that they no longer needed.

Though individuals have many reasons for exiting their policies, few are aware of the life settlements marketplace and either accepts the cash surrender value from the insurance company (often only a fraction of what the policy could be worth in the life settlement market) or let the policy lapse. The fundamental reason for the rapid growth of the life settlements market is consumer value. The life settlements purchaser can pay more than cash surrender value and still expect a competitive rate of return on their investment.

A report by Conning Research states that as of 2005, there was approximately US $9 trillion of life insurance in force in the US. Estimates place the US life settlement market potential between USD $240 and USD $600 billion." Bernstein Equity Research indicates that from 1990 to today the life settlement industry has grown from nil to over US $12 Billion and is expected to grow more than 10 fold to over US $125 Billion over the next several years.

Plan of Operations

Our primary objective will be to build a diversified inventory of life insurance policies both through new investment and the re-investment of the proceeds of matured policies. Initial management and administration of our current life settlements portfolio will be provided by Universal Settlements International Inc. (“USI”) under an Administrative Services Agreement.  USI is a Canadian company based in Burlington, Ontario. USI was incorporated in 1997 and has been operating in the life settlements sector for over a decade. USI facilitates the sale of interests in the benefits of U.S. life insurance policies to both institutional and individual purchasers and deals in numerous markets with representation across North America, South America, Central America, Asia and Europe. Further information on USI can be found on USI's website, www.universalsettlements.com.  The shareholders of USI are Jeffrey Panos of Burlington, Ontario and Christopher Halas of Mississauga, Ontario.  The shareholders of USI are also shareholders in Crown Alliance Capital Limited.

Pursuant to the Administrative Services Agreement, USI has agreed to provide, on a non-exclusive basis, a number of services relating to the administration of our life settlement contracts and additional services. These services include dealing with change of ownership and change of beneficiary issues, verifying coverage under a policy, monitoring and validating premium payments required to be made, tracking each insured, managing claims, dealing with group insurance plans, maintaining records and reports on all insureds, and such other services as may be requested from time to time by us, including identifying additional policies for purchase. The Services Agreement has a fixed term of five (5) years with a mutual early termination provision of 90 days without cause. Fees for services will be charged by USI on a per policy basis.  

After acquiring an initial portfolio of life settlement contracts with the assistance of USI, we intend to focus on growing our portfolio of life settlement policies going forward. The primary strategy will be to acquire additional life settlement policies that meet certain criteria and pricing guidelines, including the following:

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Policies must be issued in the United States on US lives.

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Policies must be issued by insurance companies rated at least "A-" or equivalent by AM Best, Moody's or S&P.

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Policies must be beyond any contestability and suicide period.

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Policies must allow for irrevocable beneficiary designations and absolute assignment of ownership.

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Policies must allow for coverage for the whole life of the insured or allow for conversion so that coverage will continue for the whole life of the insured.

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The cost of each policy acquired will be influenced by five major factors:

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Face value of the policy upon maturity.

o

Annual premium on the policy.

o

Life expectancy (LE) of the insured.

o

Administration costs associated with the policy.

o

Competitive bids from other potential purchasers.

Sources for New Portfolio Acquisitions

We will use our own network of licensed providers and brokers throughout the United States to purchase policies. Each U.S. state has different licensing requirements and, consequently, we will only transact with providers and brokers who have demonstrated they have met these licensing requirements and show financial reliability.

Process and Procedures for Policy Purchases

Each life settlement will be subject to the due diligence process as described below:

1.

Due Diligence Underlying a Policy Purchase

We will source policies which meet our criteria from Qualified Service Providers (QSP’s). If a policy meets the criteria, we will conduct due diligence to ensure that the policy is valid and meets the necessary standards. Due diligence will include:

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Obtaining verification of coverage (VOC) from the insurance company. VOC will confirm various policy details such as: face amount, premium, issue date, contestability, loans, withdrawals, lapses of coverage, beneficiary and ownership information, etc.

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Obtaining and reviewing actual policy or copy of policy.

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Obtaining a Physician's Statement of Mental Competency for the owner of policy.

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Analyzing policy illustrations.

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Obtaining an authorization to procure and subsequent analysis of medical records.

2.

Required Documents for Due Diligence

Documents listed below are required as part of the due diligence process:

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Consent to Release Medical Information (Notarized)

We must be able to receive all medical documentation for at least 5 years from all physicians that an insured person may have in order to obtain an accurate life expectancy evaluation. We must also have the ability to receive updated medical records as the situation requires.

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Letter of Competency (Signed by attending Physician)

This ensures that an insured person is aware of what they are doing and that they are of sound mind.

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Release and Consent to Change Beneficiaries (Notarized)

All current beneficiaries must sign off with the acknowledgement that they understand and consent to being removed as beneficiaries.

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Authorization to Provide Death Certificate (Notarized)

This allows us to acquire a death certificate in a legal and timely manner.

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Seller's Premium Indemnification Letter (Notarized)

This ensures that all premiums are paid up to the point where ownership and beneficiary rights have been transferred.

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Special Power of Attorney (Notarized)

This gives us the authority to contact and obtain any required information from doctors or insurance companies.

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Personal Information of the Insured and their Contact Information

We must be able to monitor and track the insured. Contact is maintained either directly with an insured or through a friend, family member, lawyer, physician or financial planner.

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Payment Instructions

This details the method of payment to an insured for their rights to ownership and beneficiary status once the closing of a policy purchase occurs.

3.

Life Expectancy (LE) Evaluations

Insured persons who seek to sell their policies on the secondary market usually retain qualified representation to facilitate the sale. These policy brokers typically provide all medical information and LE evaluations to us so that we are able to make an informed bid on a policy. The LE evaluation is completed by independent LE evaluators who have experience in the mortality assessment domain.

We will utilize the following LE providers to determine life expectancy:

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American Viatical Services of Woodstock, Georgia, USA.

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21st Services of Minneapolis, Minnesota, USA.

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Examination Management Services, Inc. of Waco, Texas, USA.

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Fasano Associates of Washington, DC, USA.

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ISC Services of Clearwater, Florida, USA.

USI research indicates that over the last several years, LE evaluators have become more conservative in their reports, largely due to the adoption of updated mortality tables.  

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4.

Closing

If a policy meets all necessary criteria and the due diligence process has been completed to our satisfaction, the parties enter into a "Policy Funding Agreement" which is the agreement between the policy owner and us as the buyer of the policy. The following documents are required for the closing of each individual transaction:

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Contract between us and the seller of the policy.

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LE reports from 2 (two) approved list of LE providers.

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Original insurance policy (certified true copy if original is lost). Identification for the insured, such as copy of social security card or driver's license. If the owner is a trust or corporation, a copy of the trust or a corporate resolution showing individuals who have signing authority.

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Completed and signed tax forms for all sellers and brokers.

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Executed Ownership and Beneficiary Change forms.

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Funds are not disbursed to the owner or brokers until all changes are reflected in insurance company records.

5.

Change of Ownership

We will review and verify all policy information to ensure accuracy and to verify that there have been no changes, and submit the Absolute Assignment of Ownership and Beneficiary Change forms to the insurance company. Once the executed change forms are received back from the insurance company verifying that we are the owner and beneficiary of the policy, we will disburse funds as directed.

6.

Tracking

Insured persons whose policies have been purchased by us are tracked by qualified personnel in our office and reporting occurs on a regular basis. Tracking includes the following:

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Periodic contact with the insured, attending physician of record, or a designated person such as a family member.

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Weekly social security death index checks.

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Other database checks on a monthly basis.

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Health statements of insured from attending physician on an as needed basis.

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Regularly updated information reports.

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Updated medical reports from primary physician on an as needed basis.

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Updated life expectancy reports from qualified providers on an as needed basis.

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Alerts when premium payments are due.

7.

Premiums Management

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Obtaining and analyzing completed VOC (verification of coverage) forms from insurance companies for each policy. VOC forms indicate policy information, cash value figures and premium data.

·

Monitoring and validating premium payments required to be made.

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Providing us with a premiums due schedule at least 30 days in advance of required payments.

·

Confirming receipt of premium payment by Insurance companies

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Obtaining and analyzing updated premium illustrations as required.

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Performing premium optimization analysis as appropriate.

8.

Claims Management

Whenever there is a maturity, we submit a death claim to the insurance company. This process involves obtaining the death certificate, obtaining necessary claim documents from the insurance company, submitting of completed documentation to the insurance company and following up verbally and in writing with the insurance carrier on the claim status until such time as the death benefit is paid to us. The death benefit check is sent directly to us by the insurance company.

As part of our long term growth strategy, we intend to vertically integrate and internalize some of the services which will initially be outsourced. There are cost reductions that could be achieved in policy tracking costs, premium management, claims management, and agent commissions.

We can accomplish vertical integration by either buying existing companies that provide the above services or creating an internal employee pool to accomplish these tasks. By integrating the above functions, we could potentially provide these services to other life settlement companies and develop an additional income stream.

Item 1A.  Risk Factors

A smaller reporting company is not required to include this item.  For a discussion of risks related to our business, please refer to our Annual Report on Form 10-K filed September 27, 2012.

Item 2. Properties

We do not own any real property. On March 16, 2013, we entered into a lease agreement for a term of two years for our offices at 2985 Drew Road, Mississauga, Ontario, Canada.  We expect that these offices will be adequate for our needs for the foreseeable future. Our commitment for annual minimum lease payments under our office lease agreement is as follows:

Item 3. Legal Proceedings

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock is quoted under the symbol “CACL” on the OTCBB operated by the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the OTCQB operated by OTC Markets Group, Inc.  Few market makers continue to participate in the OTCBB system because of high fees charged by FINRA.  Consequently, market makers that once quoted our shares on the OTCBB system may no longer be posting a quotation for our shares. As of the date of this report, however, our shares are quoted by several market makers on the OTCQB. The criteria for listing on either the OTCBB or OTCQB are similar and include that we remain current in our SEC reporting. Our reporting is presently current and, since inception, we have filed our SEC reports on time.

To date, an active trading market has not developed for our securities. There is no assurance that a regular trading market will develop, or if developed, that it will be sustained. Therefore, a shareholder may be unable to resell his securities in our company.

The following tables set forth the range of high and low prices for our common stock for the each of the periods indicated as reported by the OTCQB. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

Penny Stock

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.

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The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer's account.

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.

These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty selling our securities.

Holders of Our Common Stock

As of October 7, 2013, we had 212,746,848 shares of our common stock issued and outstanding, held by fifty-six (56) shareholders of record.

Recent Sales of Unregistered Securities

1.

On April 25, 2012, we issued a total of 714,285 shares of common stock to a total of five subscribers at a price of $0.70 per share, for total subscription proceeds of $500,000.  The offer and sale of these securities was made pursuant to Rule 506 under Regulation D.  All purchasers represented and warranted to us that they were “accredited investors” within the meaning of Rule 501, and we did not engage in any general solicitation or advertising.

2.

On August 1, 2012, we issued a total of 130,000 Units to a total of three subscribers at a price of $0.70 per Unit, for total subscription proceeds of $91,000.  Each Unit consists of one (1) share of common stock and one (1) warrant to buy one (1) share of common stock ata price of $1.10, exercisable for a period of forty-eight months. The offer and sale of these securities was made pursuant to Rule 506 under Regulation D.  All purchasers represented and warranted to us that they were “accredited investors” within the meaning of Rule 501, and we did not engage in any general solicitation or advertising.

3.

On August 28, 2012, we issued 50,000 Units to a single subscriber at a price of $0.70 per Unit, for subscription proceeds of $35,000.  Each Unit consists of one (1) share of common stock and one (1) warrant to buy one (1) share of common stock at a price of $1.10, exercisable for a period of forty-eight months. The offer and sale of these securities was made pursuant to Rule 506 under Regulation D.  The purchaser represented and warranted to us that they were an “accredited investor” within the meaning of Rule 501, and we did not engage in any general solicitation or advertising.

4.

Also on August 28, 2012, we issued 71,428 shares of common stock to a single subscriber at a price of $0.70 per share, for subscription proceeds of $50,000.  The offer and sale of these securities was made pursuant to Rule 506 under Regulation D.  The purchaser represented and warranted to us that they were an “accredited investor” within the meaning of Rule 501, and we did not engage in any general solicitation or advertising.

5.

On August 29, 2012, we issued 50,000 shares of common stock to a single subscriber at a price of $0.70 per share, for subscription proceeds of $35,000.  The offer and sale of these securities was made pursuant to Rule 506 under Regulation D.  The purchaser represented and warranted to us that they were an “accredited investor” within the meaning of Rule 501, and we did not engage in any general solicitation or advertising.

6.

On September 12, 2012, we issued a total of 305,000 shares of common stock to a total of nine subscribers at a price of $0.70 per share, for total subscription proceeds of $213,500.  The offer and sale of these securities was made pursuant to Rule 506 under Regulation D.  All purchasers represented and warranted to us that they were “accredited investors” within the meaning of Rule 501, and we did not engage in any general solicitation or advertising.

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7.

On October 16, 2012, we issued a total of 95,000 shares of common stock to a total of seven subscribers at a price of $0.70 per share, for total subscription proceeds of $66,500. The offer and sale of these securities was made pursuant to Rule 506 under Regulation D.  All purchasers represented and warranted to us that they were “accredited investors” within the meaning of Rule 501, and we did not engage in any general solicitation or advertising.

8.

On November 2, 2012, we issued a total of 350,000 shares of common stock to a total of eight subscribers at a price of $0.70 per share, for total subscription proceeds of $245,000. The offer and sale of these securities was made pursuant to Rule 506 under Regulation D.  All purchasers represented and warranted to us that they were “accredited investors” within the meaning of Rule 501, and we did not engage in any general solicitation or advertising.

9.

On May 15, 2013, we issued 2,000,000 shares of our common stock to a single purchaser for $2,000.  This issuance was made to Caro Capital, LLC and in accord with the terms of a Consulting Agreement with the purchaser.  This was an issuance of shares not involving any public offering within the meaning of Section 4(2) of the Securities Act of 1933.

10.

On September 6, 2013, we issued 43,228 shares of common stock to one subscriber at a price of $0.55 per share, for total subscription proceeds of $23,775.56. The offer and sale of these securities was made pursuant to Rule 506 under Regulation D.  All purchasers represented and warranted to us that they were “accredited investors” within the meaning of Rule 501, and we did not engage in any general solicitation or advertising.

Securities Authorized for Issuance under Equity Compensation Plans

To date, we have not adopted any equity compensation plans.

Capital Stock

We have 10,000,000 preferred shares with a par value of $0.001 per share of preferred stock authorized, of which no shares were outstanding as of October 7, 2013.

We have 450,000,000 common shares with a par value of $0.001 per share of common stock authorized, of which 212,746,848 shares were outstanding as of October 7, 2013.

Voting Rights

Holders of common stock have the right to cast one vote for each share of stock in his or her own name on the books of the corporation, whether represented in person or by proxy, on all matters submitted to a vote of holders of common stock, including the election of directors. There is no right to cumulative voting in the election of directors. Except where a greater requirement is provided by statute or by the Articles of Incorporation, or by the Bylaws, the presence, in person or by proxy duly authorized, of the holder or holders of a majority of the outstanding shares of the our common voting stock shall constitute a quorum for the transaction of business. The vote by the holders of a majority of such outstanding shares is also required to effect certain fundamental corporate changes such as liquidation, merger or amendment of the Company's Articles of Incorporation.

Dividends

There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where after giving effect to the distribution of the dividend:

1. we would not be able to pay our debts as they become due in the usual course of business, or;

2. our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.

We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future.

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Pre-emptive Rights

Holders of common stock are not entitled to pre-emptive or subscription or conversion rights, and there are no redemption or sinking fund provisions applicable to the Common Stock. All outstanding shares of common stock are, and the shares of common stock offered hereby will be when issued, fully paid and non-assessable.

Share Purchase Warrants

We currently have warrants to purchase 900,000 shares of common stock at a price of $0.22 per share issued and outstanding.  650,000 of these warrants expire on August 8, 2016, and 250,000 of these warrants expire on August 28, 2016.

Options

We have not issued and do not have outstanding any options to purchase shares of our common stock.

Convertible Securities

We have not issued and do not have outstanding any securities convertible into shares of our common stock or any rights convertible or exchangeable into shares of our common stock.

Nevada Anti-Takeover Laws

Nevada Revised Statutes sections 78.378 to 78.379 provide state regulation over the acquisition of a controlling interest in certain Nevada corporations unless the articles of incorporation or bylaws of the corporation provide that the provisions of these sections do not apply. Our articles of incorporation and bylaws do not state that these provisions do not apply. The statute creates a number of restrictions on the ability of a person or entity to acquire control of a Nevada company by setting down certain rules of conduct and voting restrictions in any acquisition attempt, among other things. The statute is limited to corporations that are organized in the state of Nevada and that have 200 or more stockholders, at least 100 of whom are stockholders of record and residents of the State of Nevada; and does business in the State of Nevada directly or through an affiliated corporation. Because of these conditions, the statute currently does not apply to our company.

Item 6. Selected Financial Data

A smaller reporting company is not required to provide the information required by this Item.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

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Results of Operations for the Years Ended June 30, 2013 and 2012 and for the period from March 4, 2010 (date of inception) through June 30, 2013.

During the year ended June 30, 2013, we earned revenue of $452,923.  The source of this revenue was the maturity of one of our insurance contracts.  Our costs for our insurance contacts during the year were $83,715, resulting in gross profit of $369,208.  Our total expenses for the year ended June 30, 2013 were $906,107, resulting in a net loss of $536,899.  The largest components of our expenses were consulting fees in the amount of $413,212, management fees in the amount of $221,957, and rent expense in the amount of $64,991.

The large majority of the consulting fees reported for the year ended June 30, 2013 represents amortized stock-based compensation paid to Caro Capital, LLC.  The 2,000,000 shares of common stock issued to Caro under its Consulting Agreement were valued for accounting purposes at a total of $1,318,000.  Of that total value, $979,497 was deemed a pre-paid expense and $339,503 was booked as an expense for the year ended June 30, 2013. This valuation was based solely on a small sale of shares made by the Company subsequent to the issuance of the consulting shares, and not on any appraisal or other valuation of the shares issued.

By comparison, during the fiscal year ended June 30, 2012, we generated no revenues and had total expenses and a net loss of $259,219. From our inception on March 4, 2010 through the year ending June 30, 2013, we have generated total revenue of $452,953 and have experienced a net loss since inception of $871,916.

We began the acquisition of our initial portfolio of life settlements on March 15, 2012, when we entered into a Policy Purchase agreement (the “Agreement”) with Universal Settlements International, Inc. (“USI”).  Pursuant to the Agreement, we agreed to purchase all right, title, and interest in a portfolio of four (4) life insurance policies for a total purchase price of $570,000.  The four policies we agreed to purchase featured death benefits which total $4,500,000.  

Under the Agreement, we are required to pay all premiums due under each of the acquired policies until they mature. The Agreement originally required us to deposit the full purchase price of $570,000 on or before April 23, 2012 in order to close our purchase of the four life insurance policies.  Under a series of Amendments to the Agreement, the final payment deadline has been extended. Most recently, the Agreement was amended to change the final payment deadline to October 31, 2013.

On June 19, 2012, we completed acquisition of the first of the four life settlement policies being purchased under the Agreement.  The face value of the policy purchased is $500,000.  As of June 30, 2013, the carrying value of the policy is $153,375. On December 28, 2012 we completed the acquisition of a second life settlement policy under the Agreement.  The second policy purchased has a face value of $2,000,000. As of June 30, 2013, this policy has a carrying value of $462,076.

On February 5, 2013, we received notice that another of the policies being purchased under the Agreement had matured prior to our completing the acquisition of the policy.  The policy had a face value of $1,000,000.  Under the terms of the Agreement with USI, as extended, we received proceeds equal to one half of the net proceeds less acquisition costs paid by USI. The gross revenue we received from the maturity of this policy was $452,923.   At maturity, we had $83,715 capitalized into life settlement premiums paid for this policy.

To date, we have completed the purchase of two of the four policies under the Agreement, and a third policy has matured prior to completion of our purchase, as described above.  We must pay $120,000 by October 31, 2013 to complete our purchase the last of the four policies covered by the Agreement.

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Estimated premiums to be paid for each of the five succeeding fiscal years to keep all three remaining policies being purchased under the Agreement, as of June 30, 2013, are as follows.

Liquidity and Capital Resources

As of June 30, 2013, we had current assets of $1,270,669, consisting of cash in the amount of $144,769 and prepaid expenses valued for accounting purposes at $1,125,900.  Prepaid expenses consisted of prepaid consulting fees related to two separate consultants, Caro Capital, LLC ($979,497) and Emerging Markets ($146,403).  These will be amortized over the life of each agreement ranging from six months to one year.  

As of June 30, 2013, we had current liabilities of $154,474, consisting of accounts payable in the amount of $59,037, accrued interest payable to a related party of $437 and a note payable to a related party of $95,000. On June 18, 2013, our sole officer and director, Lorraine Fusco, lent us the sum of $95,000 under a Promissory Note.  The Note bears interest at a rate of fourteen percent (14%) per year.  The Note was originally due on or before July 18, 2013.  The Note was subsequently amended to be due and payable upon demand.

We will require substantial additional funding in order to continue the development of our business of acquiring a portfolio of life settlement policies. Although we are currently seeking and raising additional equity funding, we have no firm arrangements for financing and can provide no assurance that such funding will be received in an amount sufficient to pursue our planned line of business.

Off Balance Sheet Arrangements

As of June 30, 2013, there were no off balance sheet arrangements.

Going Concern

We have yet to achieve profitable operations, have accumulated losses of $871,916 since our inception, and we have no established source of revenue, all of which casts substantial doubt about our ability to continue as a going concern.  

Critical Accounting Policies

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.  As of June 30, 2013, we believe that our critical accounting policies consist of the following:

13

1.

Investments in Insurance Contracts. We have adopted FASB ASC Topic 325-30 “Investments in Insurance Contracts.” As of March 31, 2012, we will account for life settlement contracts using the investment method.  Life settlement contracts will be initially recognized at the transaction price.  Any additional costs, such as premium paid, will be capitalized.  In accordance with ASC 230, “Statement of Cash Flows”, cash paid towards acquiring and maintaining life settlement policies will be treated as an investing outflow while the receipt of proceeds over the cash invested will be shown as an operating cash flow with return of investment and premiums shown as investing inflows.

Recently Issued Accounting Pronouncements

None.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

A smaller reporting company is not required to provide the information required by this Item.

Item 8. Financial Statements and Supplementary Data

Index to Financial Statements Required by Article 8 of Regulation S-X:

Audited Financial Statements:

14

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Crown Alliance Capital Ltd.

We have audited the accompanying balance sheets of Crown Alliance Capital Ltd. (A Development Stage Company) (the “Company”) as of June 30, 2013 and 2012 and the related statements of operations, stockholders’ equity (deficit) and cash flows for the each of years in the two-year period ended June 30, 2013 and for the period from inception (March 4, 2010) through June 30, 2013. Crown Alliance Capital Ltd.’s management is responsible for these financial statements.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Crown Alliance Capital Ltd. as of June 30, 2013 and 2012 and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2013 and for the period from inception (March 4, 2010) through June 30, 2013 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered losses from operations, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ De Joya Griffith, LLC

Henderson, Nevada

October 2, 2013

Corporate Headquarters:

De Joya Griffith, LLC

2580 Anthem Village Drive, Henderson, NV 89052 Phone:  (702) 563-1600 Fax: (702) 920-8049

F-1

CROWN ALLIANCE CAPITAL LTD

(formerly Kinetic Resources Corp).

(A Development Stage Company)

BALANCE SHEETS

(Stated in US Dollars)

(Audited)

The following notes are an integral part of these financial statements.

F-2

CROWN ALLIANCE CAPITAL LTD.

(A Development Stage Company)

STATEMENTS OF OPERATIONS

(Stated in US Dollars)

(Audited)

The following notes are an integral part of these financial statements.

F-3

CROWN ALLIANCE CAPITAL LTD.

(A Development Stage Company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

for the period from inception (March 4, 2010) to June 30, 2013

(Stated in US Dollars)

(Audited)

The following notes are an integral part of these financial statements.

F-4

CROWN ALLIANCE CAPITAL LTD.

(A Development Stage Company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

for the period from inception (March 4, 2010) to June 30, 2013

(Stated in US Dollars)

The following notes are an integral part of these financial statements.

F-5

CROWN ALLIANCE CAPTIAL LTD

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

(Stated in US Dollars)

The following notes are an integral part of these financial statements.

F-6

CROWN ALLIANCE CAPITAL LTD

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

June 30, 2013

(Stated in US Dollars)

Note 1

Nature of Operations and Ability to Continue as a Going Concern

The Company was incorporated in the state of Nevada, United States of America on March 4, 2010.  The Company was an exploration stage company and was formed for the purpose of acquiring exploration and development stage mineral properties.  The Company’s year-end is June 30.

On June 4, 2010, the Company incorporated a wholly-owned subsidiary, KRC Exploration LLC (“KRC”) in the State of Nevada, United States of America (“USA”) for the purpose of mineral exploration in the USA.

On August 31, 2011, the Company changed its business focus to the development of a portfolio of life settlement policies and sold KRC to the former president.

On January 30, 2012, the Board of Directors approved a change in name from Kinetic Resources Corp. to Crown Alliance Capital Limited and a forward-split of its Common Stock on the basis of 17.85715 shares of Common Stock for one share of Common Stock held by shareholders of record at the close of business on February 10, 2012.

On March 15, 2013, the Board of Directors approved a forward-split of its Common Stock on the basis of five shares of Common Stock for one share of Common Stock held by shareholders of record at the close of business on March 31, 2013.

On March 20, 2013, the Board of Directors approved an increase in the number of authorized common shares of the Company from 90,000,000 to 450,000,000.

All share and per share data has been retroactively adjusted to reflect the effect of the forward-splits.

On March 15, 2012, the Company entered into its first contract to acquire life settlement policies.  The agreement is expected to close on October 31, 2013.

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year.

Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern.  The Company has yet to achieve profitable operations, has accumulated losses of $871,916 since its inception and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern.  The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing from shareholders or other sources to meet its obligations and repay its liabilities arising from normal business operations when they come due.  

F-7

CROWN ALLIANCE CAPITAL LTD

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

June 30, 2013

(Stated in US Dollars)

Note 1

Nature of Operations and Ability to Continue as a Going Concern - (cont’d)

Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available or on acceptable terms, if at all.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

Note 2

Summary of Significant Accounting Policies

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and are stated in US dollars.  Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates, which may have been made using careful judgment. Actual results may vary from these estimates.

The financial statements have, in management’s opinion, been properly prepared within the framework of the significant accounting policies summarized below:

Principles of Consolidation

These financial statements include the accounts of the Company and KRC until KRC was disposed of by sale to the former president on August 31, 2011.  Accordingly, the statements of operations and cash flows presented include the results of KRC from June 4, 2010 to August 31, 2011 and the balance sheets presented at June 30, 2013 and June 30, 2012 are solely that of Crown Alliance Capital Ltd.  All significant inter-company transactions and balances have been eliminated.

Development Stage Company

From inception through August 31, 2011, the Company was an exploration stage company.  On August 31, 2011, the Company changed business directions from acquiring exploration and development stage mineral properties to development of a portfolio of life settlement policies.  The Company is now a development stage company.  All losses accumulated since inception have been considered as part of the Company’s development stage activities.

Cash and cash equivalents

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents.  There were no cash equivalents held at June 30, 2013 or June 30, 2012.

F-8

CROWN ALLIANCE CAPITAL LTD

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

June 30, 2013

(Stated in US Dollars)

Note 2

Summary of Significant Accounting Policies - (cont’d)

Earnings per share

In accordance with accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share,”  basic earnings per share (“EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive. The weighted average number of common and common equivalent shares used in the calculation of basic and diluted earnings per share consisted of the following:

Investments in Insurance Contracts

The Company adopted FASB ASC Topic 325-30 “Investments in Insurance Contracts” and accounts for life settlement contracts using the investment method.  Life settlement contracts will be initially recognized at the transaction price.  Any additional costs, such as premiums paid, will be capitalized.  In accordance with ASC 230, “Statement of Cash Flows”, cash paid towards acquiring and maintaining life settlement policies will be treated as an investing outflow while the receipt of proceeds over the cash invested will be shown as an operating cash flow with return of investment and premiums shown as investing inflows.

Stock-based Compensation

The Company is required to record compensation expense, based on the fair value of the awards, for all awards granted after the date of the adoption.

Foreign Currency Translation

The Company’s functional currency is the United States dollar as substantially all of the Company’s operations are in the USA. The Company uses the United States dollar as its reporting currency for consistency with registrants of the Securities and Exchange Commission (“SEC”).

F-9

CROWN ALLIANCE CAPITAL LTD

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

June 30, 2013

(Stated in US Dollars)

Note 2

Summary of Significant Accounting Policies - (cont’d)

Assets and liabilities denominated in a foreign currency are translated at the exchange rate in effect at the balance sheet date and capital accounts are translated at historical rates.  Income statement accounts are translated at the average rates of exchange prevailing during the period.  Translation adjustments from the use of different exchange rates from period to period are included in the Accumulated Other Comprehensive Income account in Stockholder’s Equity, if applicable.  Transactions undertaken in currencies other than the functional currency of the entity are translated using the exchange rate in effect as of the transaction date.  Any exchange gains and losses are included in the Statement of Operations.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and loss carry-forwards and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Property and equipment

Property and equipment is stated at the lower of cost or fair value.  Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets.  The cost of repairs and maintenance is charged to expense as incurred.  Expenditures for property betterments and renewals are capitalized.  Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected as other income (expense).

The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful life of its office equipment or whether the remaining balance of office equipment should be evaluated for possible impairment.

Depreciation has been charged using the following estimates of useful lives:

Newly Adopted Accounting Policy

Revenue Recognition

The Company recognizes realized gains (revenue) from life settlement contracts upon one of the two following events:

1)

Receipt of death notice or verified obituary of insured;

2)

Sale of policy and filing of change of ownership forms and receipt of payment.

F-10

CROWN ALLIANCE CAPITAL LTD

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

June 30, 2013

(Stated in US Dollars)

Note 2

Summary of Significant Accounting Policies - (cont’d)

The Company recognizes the difference between the death benefits and carrying values of the policy when an insured event has occurred and the Company determines that settlement and ultimate collection of the death benefits is realizable and reasonably assured. Revenue from a transaction must meet both criteria in order to be recognized.  In an event of a sale of a policy the Company recognizes gain or loss as the difference between the sale price and the carrying value of the policy on the date of the receipt of payment on such sale.

Impairment of Long-lived Assets

The carrying value of long-lived assets is evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable from the estimated undiscounted future cash flows expected to result from its use and eventual disposition. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment is measured as the amount by which the carrying amount of the assets exceeds the fair value as estimated by discounted cash flows. No impairment was recognized in the years ended June 30, 2013 and 2012.

Newly Issued Accounting Pronouncements

The Company has reviewed issued accounting pronouncements and plans to adopt those that are applicable to it. The Company does not expect the adoption of any other pronouncements to have an impact on its results of operations or financial position.

Note 3

Property and equipment

As of June 30, 2013 and  2012 depreciation expense was $8,529 and $2,413, respectively.  Additionally, during the year ended June 30, 2013, the Company recognized a loss on the disposal of equipment related to lease hold improvements of $6,279.

F-11

CROWN ALLIANCE CAPITAL LTD

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

June 30, 2013

(Stated in US Dollars)

Note 4

Sale of Subsidiary

On August 31, 2011, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Membership Interests and Assumption of Obligations (the “Agreement”), with the former President of the Company.  Pursuant to the Agreement, the Company’s interest in KRC was transferred to the former President and the former president assumed all interests and liabilities of KRC amounting to $82,745 in exchange for the Company’s interest in KRC.

The following table summarizes the identifiable assets and liabilities of KRC that were disposed of, the consideration received, and the loss of KRC for the period from July 1, 2011 to August 31, 2011.

Subsequently, on November 11, 2011, the former President of the Company and several shareholders entered into a stock cancellation agreement with the Company whereby 73,571,458 and 41,517,872, common shares, respectively, were returned to treasury and cancelled.

Note 5

Financial Instruments

Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.

F-12

CROWN ALLIANCE CAPITAL LTD

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

June 30, 2013

(Stated in US Dollars)

Note 5

Financial Instruments - (cont’d)

In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs.  The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.  Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

Level 1 - inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

Level 2 - inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

The carrying value of the Company’s financial assets and liabilities which consist of cash, prepaid expenses, accounts payable and accrued liabilities in management’s opinion approximate their fair value due to the short maturity of such instruments.  These financial assets and liabilities are valued using level 3 inputs, except for cash which is at level 1.  Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, exchange, or credit risks arising from these financial instruments.

Note 6

Related Party Transactions

On August 31, 2011, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Membership Interests and Assumption of Obligations (the “Agreement”), with the former President of the Company.  Pursuant to the agreement, the former President of the Company assumed $82,745 of accounts payable, related party notes payable and accrued interest. (Note 5)

On October 3, 2011, the Company issued 89,285,750 common shares pursuant to a share subscription agreement at $0.0005 per share for total proceeds of $45,000.  Shares were issued to a company managed by our President.

On January 26, 2012, the Company repurchased and cancelled 89,285,750 shares of its own stock and as consideration issued a $45,000 promissory note to a company managed by our President.  The promissory note is unsecured, bears interest at 10% per annum, and is due on or before January 26, 2013.  During the year ended June 30, 2013, the Company settled the note in the amount of $48,205 including accrued interest to settlement.  During the year ended June 30, 2013 the Company accrued $2,404 (year ended June 30, 2012 - $801) of interest expense in respect of this note payable.

F-13

CROWN ALLIANCE CAPITAL LTD

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

June 30, 2013

(Stated in US Dollars)

Note 6

Related Party Transactions - (cont’d)

On February 8, 2012, the Company entered into an Employment Agreement with the President of the Company.  Pursuant to the agreement the President will receive a signing bonus of $25,000 and $180,000 per annum February 8, 2012 until February 8, 2013 (the initial term) for services rendered plus reimbursement of the Company’s expenses.

The initial term shall be automatically renewed for up to 3 years successive years in consecutive one year periods. The agreement will continue in force unless either party gives notice of termination not more than 270 days and not less than 30 days prior to the then existing term of employment.

The annual base compensation pursuant to the employment agreement is as follows:

$180,000 until February 8, 2013;

$200,000 until February 8, 2014;

$255,000 until February 8, 2015;

$255,000 per annum thereafter, - unless renewal terms are renegotiated

The Agreement also allows in addition to the base salary noted above for bonus payments to be made as deemed reasonable at the time by the Board of Directors either as cash, or grants of stock options.  On March 26, 2013, the Board of Directors approved and paid a bonus to the president of $35,000.

As of June 30, 2013, accounts payable and accrued liabilities includes $3,207 (June 30, 2012 - $3,750) in respect of unpaid management fees.  Management fees for the year ended June 30, 2013 includes $221,957 (nine month period to March 31, 2012 -$96,250) pursuant to this agreement.

On June 18, 2013, the Company issued a promissory note for $95,000 and received $95,000 in exchange.  The promissory note is unsecured, bears interest at 14% per annum, and is due on or before July 18, 2013.  The Company accrued $437 (year ended June 30, 2012 - $nil) of interest expense in respect of this note payable.  The Company has amended the maturity date of the promissory note to an on demand note.

Note 7

Prepaid Expenses

As of June 30, 2013 and 2012, prepaid expenses were $1,125,900 and $0, respectively.  Prepaid expenses consist of prepaid consulting fees related to two separate consultants and will be amortized over the life of each agreement ranging from six months to one year.  Of the total prepaid expenses, $979,497 is attributable to prepaid stock-based compensation.

Note 8

Capital Stock

The authorized common stock of the Company consists of 450,000,000 shares of common stock with par value of $0.001 and 10,000,000 shares of preferred stock with a par value of $0.001. As of June 30, 2013 the Company had 210,703,620 (June 30, 2012 - 205,446,480) common stock and zero (June 30, 2012 - zero) preferred stock outstanding.

F-14

CROWN ALLIANCE CAPITAL LTD

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

June 30, 2013

(Stated in US Dollars)

Note 8

Capital Stock - (cont’d)

a)

Issued

On June 1, 2010, the Company issued 178,571,500 common shares to the founder pursuant to share subscription agreement at $0.00087 for total proceeds of $15,558.

On June 1, 2010, the Company issued 138,392,885 common shares pursuant to share subscription agreements at $0.00089 for total proceeds of $12,255.

On October 3, 2011, the Company issued 89,285,750 common shares pursuant to a share subscription agreement at $0.045 per share for total proceeds of $45,000.  

On November 11, 2011, the former President of the Company and several shareholders entered into a stock cancellation agreement with the Company whereby 73,571,460 and 41,517,870, common shares respectively, were returned to treasury and cancelled.

Due to the fact that the shares under this agreement have been cancelled without the exchange of consideration to reduce the number of shares outstanding, the Company considered the change in capital structure from the cancellation agreement a reverse stock split.  In accordance with SAB Topic 4-C, the Company recorded the cancellation retrospectively as a reduction to the par value of common stock with a corresponding increase to additional paid-in capital.

On January 26, 2012, the Company repurchased and cancelled 89,285,750 common shares of its own stock and in consideration issued a $45,000 promissory note (Note 6).

On March 7, 2012, the Company issued 1,428,570 common shares pursuant to subscription agreements at $0.70 per share for total share proceeds of $200,000.

On May 15, 2012, the Company issued 2,142,855 common shares pursuant to subscription agreements at $0.70 per share for total share proceeds of $300,000.

In August 2012 the Company initiated a non-brokered private placement whereby the Company is offering up to 72,500,000 Stock Units at $0.14 per Unit.  Each Unit consists of one share of common stock of the Company and one warrant.  Each warrant may be exercised at $0.22 into one common stock of the Company for a period of 48 months subsequent to issuance.

Pursuant to this non-brokered private placement the Company issued 650,000 units on August 8, 2012 and 250,000 units on August 28, 2012 for aggregate gross proceeds of $126,000.

On August 29, 2012, the Company issued 607,140 common shares pursuant to subscription agreements at $0.14 per share for total share proceeds of $85,000.

On September 12, 2012, the Company issued 1,525,000 common shares pursuant to subscription agreements at $0.14 per share for total share proceeds of $213,500.

F-15

CROWN ALLIANCE CAPITAL LTD

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

June 30, 2013

(Stated in US Dollars)

Note 8

Capital Stock - (cont’d)

On October 16, 2012, the Company issued 475,000 common shares pursuant to subscription agreements at $0.14 per share for total share proceeds of $66,500.

On November 2, 2012, the Company issued 1,750,000 common shares pursuant to subscription agreements at $0.14 per share for total share proceeds of $245,000.

On May 14, 2013, the Company issued 2,000,000 common shares at $0.01 in accord with a share subscription required pursuant to a consultancy agreement for total proceeds of $2,000. Accounting rules require the shares to be recorded at their fair market valued of $1,320,000 ($0.66/share) as of the agreement date of which $979,497 is included in prepaid expenses.

b)

Share Purchase Warrants

A summary of changes in share purchase warrants for the years ended June 30, 2013 and 2012 is presented below:

As at June 30, 2013, share purchase warrants were outstanding for the purchase of common shares as follows:

Note 9

Share subscriptions received

On May 31, 2013 the Company received $23,775 pursuant to a share subscription agreement to acquire 43,228 common shares at $0.55 per share.  The Company received Cdn$25,000 as subscription proceeds.

F-16

CROWN ALLIANCE CAPITAL LTD

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

June 30, 2013

(Stated in US Dollars)

Note 10

Income Taxes

The following table presents income before taxes and income tax expense as well as the taxes charged to stockholders equity:

A reconciliation of the expected consolidated income tax expense, computed by applying a 35% U.S. Federal corporate income tax rate to income before taxes to income tax expense is as follows:

At June 30, 2013 and 2012, the Company had available a net-operating loss carry-forward for Federal tax purposes of approximately $516,200 and $319,255, respectively, which may be applied against future taxable income, if any, at various times through 2033. Certain significant changes in ownership of the Company may restrict the future utilization of these tax loss carry-forwards.

The Company recognizes interest and penalties, if any, related to uncertain tax positions in general and administrative expenses.  No interest and penalties related to uncertain tax positions were accrued at June 30, 2013 and 2012.

The tax years 2013, 2012, 2011 and 2010 remain open to examination by the major taxing jurisdictions in which the Company operates.  The Company expects no material changes to unrecognized tax positions within the next twelve months.

Note 11

Commitments

On March 16, 2013, the Company entered into a lease agreement for a term of two years commencing April 1, 2013.

F-17

CROWN ALLIANCE CAPITAL LTD

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

June 30, 2013

(Stated in US Dollars)

Note 11

Commitments - (cont’d)

As of June 30, 2013, the Company’s commitment for annual minimum future lease payments under office rental agreements are as follows:

On May 14, 2013, the Company entered into a Consultancy agreement with Cara Capital LLC. (“Caro”) which expires on November 14, 2013.  Pursuant to the agreement the Company receive consultancy services with respect to investor relations, sourcing financing and introducing the Company to investment managers and analysts.  As compensation for services rendered the Company will issue Caro 2,000,000 common shares with a fair value of $1,320,000 for proceeds of $2,000 which is being amortised over the period of the Contract.  Additionally, the Company will also pay a monthly retainer of $2,000 during the term of the agreement.  The contract can be terminated by either party upon delivery of 30 days written notice of termination.

Note 12

Investment in Life Settlement Policies

On March 15, 2012, the Company entered into its first contract to acquire four life settlement policies for the aggregate sum of $570,000, payable on or before April 23, 2012.  Pursuant to the agreement the Company is responsible for all premiums payable pursuant to the terms of the policies and are entitled to fifty percent of the death benefits of those policies not formally closed pursuant to the terms of the agreement.  ASC 325-30, Investments in Insurance Contracts, provides that a purchaser may elect to account for its investments in life settlement contracts based on the initial investment at the purchase price plus all initial direct costs. Continuing costs (e.g., policy premiums, statutory interest and direct external costs, if any) to keep the policy in force are capitalized. The Company has elected to use the investment method and refer to the recorded amount as the carrying value of the policies.

On June 19, 2012, the Company acquired one of the four life settlement policies.  The face value of the policy is $500,000 with a remaining life expectancy of 2.50 years.  As of June 30, 2013, the carrying value of the policy is $153,375.

On December 28, 2012, the Company acquired the second life settlement policy pursuant to the above agreement.  The face value of the policy is for $2,000,000 with a remaining life of 3.75 years.  As of June 30, 2013, the carrying value of the policy is $462,076.

During January 2013, one life settlement policy which the Company had not formally acquired matured upon the death of the insured.  The Company received proceeds equal to one half of the net proceeds less acquisition costs paid by Universal Settlements International Inc. aggregating $452,923.  At Maturity the Company had capitalized into life settlement premiums paid an amount of $83,715 in respect of this policy.

The Company evaluates the carrying value of their investment in life settlement policies on a regular basis and adjusts their total basis in the policies using new or updated information that

F-18

CROWN ALLIANCE CAPITAL LTD

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

June 30, 2013

(Stated in US Dollars)

Note 12

Investment in Life Settlement Policies - (cont’d)

affects their assumptions about remaining life expectancy, credit worthiness of the policy issuer, funds needed to maintain the asset until maturity, discount rates and potential return.

The Company recognizes impairment on individual policies if the expected undiscounted cash flows are less than the carrying amount of the investment, plus anticipated undiscounted future premiums and capitalizable direct external costs, if any. Impairment of policies is generally caused by the insured significantly exceeding the estimate of the original life expectancy, which causes the original policy costs and projected future premiums to exceed the estimated maturity value. The Company does not believe the life settlement policies to be impaired as of June 30, 2013.

Estimated premiums to be paid for each of the five succeeding fiscal years to keep all three remaining policies in force as June 30, 2013, are as follows.

As of June 30, 2013, $76,003 of the policy premiums has been paid on the remaining policy and the premium payments have been capitalized in the financial statements.

On April 27, 2012, the Company amended the original life settlement contract to extend the $570,000 payable due date to May 10, 2012, the contract was further amended on May 23, 2012 to extend the $570,000 payable due date to September 17, 2012, and on September 24, 2012, the contract was amended again to extend the $570,000 payable due date to October 17 2012.  On April 18, 2012 the contract was further amended to extend the contract due date for the remaining amount payable to June 28, 2013.  On July 18, 2013, the contract was amended to extend the contract due date to September 30, 2013.  The contract was further amended on September 30, 2013 to extend the remaining amount payable to October 31, 2013.

As of June 30, 2013, the Company has paid a total of $325,000 towards the $445,000 payable and amended the contract to extend the due date for the remaining payable of $120,000 to October 31, 2013.

Note 13

Subsequent Events

On July 18, 2013, the Company amended the terms of the $95,000 promissory note to amend the principle maturity date of July 18, 2013 to due on demand.

On September 6, 2013, we issued 43,228 shares of common stock in satisfaction of $23,775 of subscriptions payable.

F-19

CROWN ALLIANCE CAPITAL LTD

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

June 30, 2013

(Stated in US Dollars)

Note 13

Subsequent Events - (cont’d)

On September 30, 2013, the Company amended the original life settlement contract to extend the remaining $120,000 payable due date to October 31, 2013.

F-20

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

No events occurred requiring disclosure under Item 307 and 308 of Regulation S-K during the fiscal year ending June 30, 2012.

Item 9A(T). Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report, being June 30, 2013. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Based upon that evaluation, including our Chief Executive Officer and Chief Financial Officer, we have concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this annual report.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). Management has assessed the effectiveness of our internal control over financial reporting as of June 30, 2013 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management concluded that, as of June 30, 2013, our internal control over financial reporting was not effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this annual report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending June 30, 2014: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to an exemption for non-accelerated filers set forth in Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Item 9B. Other Information

Item 10. Directors, Executive Officers and Corporate Governance

The following information sets forth the names, ages, and positions of our current directors and executive officers as of October 7, 2013.

Lorainne Fusco is our President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer, and Director.  Ms. Fusco has an Honours Bachelor of Science from the University of Toronto and has worked in the life insurance industry since 2003. She holds several high level distinctions, including being a member of the Million Dollar Round Table (2005, 2006, and 2008), Court of the Table (2005 and 2006) and Top of the Table (2006).  In 2007, she was #2 in Canada for life insurance sales from Des Jardin Financial Security. She has run Fusco Financial since 2005 - a successful life insurance brokerage selling life insurance, critical illness insurance and investments through segregated funds.

Term of Office

Our Directors are appointed for a one year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws.  Our officers are appointed by our board of directors and hold office until removed by the board.

Family Relationships

There are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.

Involvement in Certain Legal Proceedings

To the best of our knowledge, during the past ten years, none of the following occurred with respect to a present or former director, executive officer, or employee: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

Committees of the Board

We do not currently have a compensation committee, executive committee, or stock plan committee.

Audit Committee

We do not have a separately-designated standing audit committee. The entire Board of Directors performs the functions of an audit committee, but no written charter governs the actions of the Board when performing the functions of what would generally be performed by an audit committee. The Board approves the selection of our independent accountants and meets and interacts with the independent accountants to discuss issues related to financial reporting. In addition, the Board reviews the scope and results of the audit with the independent accountants, reviews with management and the independent accountants our annual operating results, considers the adequacy of our internal accounting procedures and considers other auditing and accounting matters including fees to be paid to the independent auditor and the performance of the independent auditor. Our Board of Directors, which performs the functions of an audit committee, does not have a member who would qualify as an “audit committee financial expert” within the definition of Item 407(d)(5)(ii) of Regulation S-K. We believe that, at our current size and stage of development, the addition of a special audit committee financial expert to the Board is not necessary.

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Nomination Committee

Our Board of Directors does not maintain a nominating committee. As a result, no written charter governs the director nomination process. Our size and the size of our Board, at this time, do not require a separate nominating committee.

When evaluating director nominees, our directors consider the following factors:

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The appropriate size of our Board of Directors;

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Our needs with respect to the particular talents and experience of our directors;

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The knowledge, skills and experience of nominees, including experience in finance, administration or public service, in light of prevailing business conditions and the knowledge, skills and experience already possessed by other members of the Board;

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Experience in political affairs;

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Experience with accounting rules and practices; and

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The desire to balance the benefit of continuity with the periodic injection of the fresh perspective provided by new Board members.

Our goal is to assemble a Board that brings together a variety of perspectives and skills derived from high quality business and professional experience. In doing so, the Board will also consider candidates with appropriate non-business backgrounds.

Other than the foregoing, there are no stated minimum criteria for director nominees, although the Board may also consider such other factors as it may deem are in our best interests as well as our stockholders. In addition, the Board identifies nominees by first evaluating the current members of the Board willing to continue in service. Current members of the Board with skills and experience that are relevant to our business and who are willing to continue in service are considered for re-nomination. If any member of the Board does not wish to continue in service or if the Board decides not to re-nominate a member for re-election, the Board then identifies the desired skills and experience of a new nominee in light of the criteria above. Current members of the Board are polled for suggestions as to individuals meeting the criteria described above. The Board may also engage in research to identify qualified individuals. To date, we have not engaged third parties to identify or evaluate or assist in identifying potential nominees, although we reserve the right in the future to retain a third party search firm, if necessary. The Board does not typically consider shareholder nominees because it believes that its current nomination process is sufficient to identify directors who serve our best interests.

Code of Ethics

As of June 30, 2013, we had not adopted a Code of Ethics for Financial Executives, which would include our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.

Item 11. Executive Compensation

Compensation Discussion and Analysis

Currently, the objective of the cash compensation paid by the company is to provide fair reimbursement for the time spent by our executive officer to the extent feasible within the financial constraints faced by our developing business.  

On February 8, 2012, we entered into an Employment Agreement with our sole officer and director, Lorraine Fusco.  Under Agreement, Ms. Fusco is required to devote her full time and effort to serving as our President and CEO in exchange for a signing bonus and annual salary.  The term of the agreement is three years, subject to renewal.  Ms. Fusco received a $25,000 signing bonus and an initial annual salary of $180,000 per year, payable in semi-monthly installments.  Her salary is scheduled to increase under the agreement as follows:

17

·

February 8, 2013 - $200,000 per year

·

February 8, 2014 - $225,000 per year

·

Renewal Terms - as further agreed in writing by the Company and the Executive or, if no further agreement is made, $225,000 per year.

The Agreement also allows in addition to the base salary noted above for bonus payments to be made as deemed reasonable at the time by the Board of Directors either as cash, or grants of stock options.  On March 26, 2013, the Board of Directors approved and paid a bonus to the president of $35,000.  This bonus was paid in recognition of the first revenues generated by our life settlement business.

The Agreement contains certain covenants against competition, terms governing termination of the Agreement by us or Ms. Fusco under certain circumstances, and other terms.  The Agreement should be reviewed in its entirety for more information.

Summary Compensation Table

The table below summarizes all compensation awarded to, earned by, or paid to our former or current executive officers for the fiscal years ended June 30, 2012 and 2011.

Narrative Disclosure to the Summary Compensation Table

During the fiscal year ended June 30, 2013, our sole officer and director, Lorraine Fusco, earned a total of $221,957.

Outstanding Equity Awards at Fiscal Year-End

The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officer as of June 30, 2012.

18

Director Compensation

The table below summarizes all compensation of our directors as of June 30, 2012.