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1

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K


[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2015


[  ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND 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

(State or other jurisdiction of incorporation or organization)

98-0178621

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

4350 Temple City Boulevard, El Monte, CA

(Address of principal executive offices)

91731-0000

(Zip Code)


Registrants telephone number, including area code:   (626) 283-6600


Securities registered pursuant to Section 12(b) of the Act:   None


Securities registered pursuant to Section 12(g) of the Act:   Common Stock, no par value


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yes [   ]   No [X]


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.  

Yes [  ]   No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]   No [  ]


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


Indicate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K  (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   Yes [  ]   No [X]

 

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



Large accelerated filer [  ]

Non-accelerated filer [  ]

Accelerated filed [  ]

Smaller reporting company [X]


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

Yes [  ]   No [X]


The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of December 31, 2014 was approximately $53,554,000.


Indicate the number of shares outstanding of each of the registrants classes of common stock, as of the latest practicable date.  The number of shares outstanding of the registrants common stock as of September 30, 2015 was 20,181,021,800.


Documents Incorporated by Reference


None.



FORM 10-K For the Year Ended June 30, 2015

INDEX

 

 

 

 

Page


PART I

 

 

Item 1.

 

Business

 

4

Item 1A.

 

Risk Factors

 

5

Item 1B.

 

Unresolved Staff Comments

 

5

Item 2.

 

Properties

 

5

Item 3.

 

Legal Proceedings

 

5

Item 4.

 

Mine Safety Disclosures

 

6

PART II

 


Item 5.

 

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 

6

Item 6.

 

Selected Financial Data

 

7

Item 7.

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

 

7

Item 7A.

 

Quantitative and Qualitative Disclosures about Market Risk

 

11

Item 8.

 

Financial Statements and Supplementary Data

 

11

Item 9.

 

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 

11

Item 9A.

 

Controls and Procedures

 

11

Item 9B.

 

Other Information

 

11

PART III

 


Item 10.

 

Directors, Executive Officers and Corporate Governance

 

12

Item 11.

 

Executive Compensation

 

13

Item 12.

 

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

13

Item 13.

 

Certain Relationships and Related Transactions, and Director Independence

 

14

Item 14.

 

Principal Accounting Fees and Services

 

14


PART IV


 


Item 15.

 

Exhibits, Financial Statement Schedules

 

15

Signatures

 

16





2


In this annual report the words "we," "us," "our," and the "Company" refer to Crown Marketing and subsidiaries.  


FORWARD LOOKING STATEMENTS


When used in this report, the words may, will, expect, anticipate, continue, estimate, project, intend, and similar expressions are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 regarding events, conditions, and financial trends that may affect the Companys future plans of operations, business strategy, operating results, and financial position.  Persons reviewing this report are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and that actual results may differ materially from those included within the forward-looking statements as a result of various factors.


Statements made in this Form 10-K that are not historical or current facts are  "forward-looking  statements" made pursuant to the safe harbor  provisions of Section 27A of the  Securities Act of 1933, as amended, and Section 21E of the Securities  Exchange Act of 1934, as amended.  We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.  Any forward-looking statements represent our best judgment as to what may occur in the future.  These forward-looking statements include our plans and objectives for our future growth, including plans and objectives related to the consummation of acquisitions and future private and public issuances of our equity and debt securities.   The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties.  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 our control.  Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Form 10-K will prove to be accurate.   In light of the significant uncertainties inherent in the forward-looking statements included herein, you should not regard the inclusion of such information as our representation or the representation of any other person that we will achieve our objectives and plans.  We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.


 



3


PART I


ITEM 1.  BUSINESS


Historical Development

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


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


Through its subsidiary, OKRA Energy Inc., the Company leases a warehouse in El Monte, California, which is owned by a single member limited liability company owned by the Company's President and majority shareholder, which it plans to sublease in 2015. We will require approximately $1 million and up to 12 months to complete remediation and building refit prior to being able to re-lease the warehouse building to customers.  


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


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


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


Our Business


Crown Marketing is a United States based publicly traded company, ticker symbol CWNM. It is focused on mergers and acquisitions of high-growth, high-profit, technology companies.  Our current wholly owned subsidiaries are Okra Energy, Crown Laboratory and we have a joint venture with Crown Mobile, for which the Company owns a 50% interest.  A description of our subsidiaries and joint venture is below.  


Okra Energy is a subsidiary of Crown Marketing Inc. with the vision of providing healthy energy for everyday living. The goal and objective of Okra Energy is to be the leader in management of the cannabis industry and its related industries. Currently in the United States, there are 20 States and District of Columbia that have legalized the use of medical marijuana. Two states, Colorado and Washington have already legalized marijuana for recreational use. The legalization of marijuana is still in the infant stages but it is inevitable as more and more Americans (more than 50%) have approved the use of recreational marijuana according to a recent 2013 Gallop Poll. Okra Energy located in El Monte, California has an 180,000 square foot facility with its own ground water and high pressure gas lines. Construction and renovation is underway to build a facility that will allow industry leader to aggregate at one central location to exchange technologies and research ideas.  We will require approximately $1 million and up to 12 months to complete remediation and building refit prior to being able to re-lease our warehouse building in to customers.  This property will allow Okra Energy to house and develop green energy solutions, hydroponic, and agroponic technologies for the Cannabis Industry. Okra Energys main objective is to position itself to become the leader in managing and providing Standard Operating Procedures for the Cannabis Industry.  


In August, 2015, Okra Energy assigned all of its interest in the lease to Crown Laboratory. The lessor is a related party and consented to the assignment of the interest. Although Okra Energy is continuing to develop its business plan, the Company is focusing most of its current resources to Crown Laboratory.

4


Crown Laboratory Inc. was formed in December 2014 in order to develop and market Chinese herbal and other remedies in the Peoples Republic of China. Two products have been announced. Ionic Herb Liquid, patent pending, is an all-natural herbal tonic which is believed to aid in the functioning of cellular processes in the human body. Breathing Haze Catcher, also patent pending, is designed to be worn as a conventional surgical mask and to filter out airborne environmental pollutants which are endemic in the PRC.

The Company also entered into a letter of intent in July 27, 2015 to export alfalfa to the Peoples Republic of China.

Crown Mobile is taking advantage of the fast growing prepaid wireless industry to become a highly distinguished and recognized industry leader in the cellular communications industry. It is the goal of our company to become a leading distributor of wireless communications services through the distribution of prepaid SIM cards and new wireless phones. We believe our vision and strategy will revolutionize the traditional models and make us successful in the ultra-competitive world of wireless telecommunications.  In order to achieve this goal, Crown Mobiles critical success factors will be to identify emerging trends and integrate them into Crown Mobiles operations, respond quickly to technology changes, provide high-quality services, continue to invest time and money in marketing and advertising, continue to expand into specialty markets, and stay ahead of the technology curve.

Employees and Outside Services


The Company's only employee at the present time is its sole executive officer and director, who devotes full time to the affairs of the Company.  Remaining administrative (non-policy making) officers and consultants and technical personnel such as marketing specialists are being compensated as independent contractors.  We pay these persons on a contract basis as required.


Competition


The Company competes with innumerable lessors of warehouse space in the East San Gabriel Valley of Los Angeles County. Competitive factors include location, price and building amenities. Crown Mobile competes with a large number of other entrants in the prepaid cellular business as well as conventional cellular service providers. Crown Laboratory faces competition from existing Chinese herbal remedy companies.  Competitors in all these sectors are all better established with operating histories.


ITEM 1A.  RISK FACTORS


 This item is inapplicable because we are a smaller reporting company as defined in Exchange Act Rule 12b-2.  


ITEM 1B.  UNRESOLVED STAFF COMMENTS


This item is inapplicable because we are a smaller reporting company as defined in Exchange Act Rule 12b-2.


ITEM 2.  PROPERTIES


Through its subsidiary, OKRA Energy Inc., the Company leases a warehouse in El Monte, California, which is owned by a single member limited liability company owned by the Companys President and majority shareholder, which it plans to sublease in 2015. We will require approximately $1 million and up to 12 months to complete remediation and building refit prior to being able to re-lease our warehouse building to customers.  The lease commenced December 2, 2013, terminates May 31, 2020, and requires monthly lease payments of $30,000 beginning June 1, 2014.  The monthly lease payment increases to $40,000 on June 1, 2015, $50,000 on June 1, 2016, $60,000 on June 1, 2017, and $70,000 on June 1, 2019.  The lease includes a period of free rent from December 2, 2013 to May 31, 2014. The lease is an operating lease.  The Company recognizes rent expense on a straight-line basis over the entire lease period.  Accordingly, for the twelve months ended June 30, 2015, the Company recorded $590,769 of rent expense and a deferred rent liability as of June 30, 2015 of $535,384 related to the free rent.  As of June 30, 2015 and 2014, the Company owed $400,000 and $30,000, respectively, under this lease obligation. In August, 2015, the lease was assigned to and assumed by Crown Laboratory, Inc., which intends to commence remediation for the sublease in the 2016 fiscal year.


ITEM 3.  LEGAL PROCEEDINGS


No legal proceedings are threatened or pending against us or any of our officers or directors.  Further, none of our officers, directors or affiliates are parties against us or have any material interests in actions that are adverse to the Companys interests.


5


ITEM 4.  MINE SAFETY DISCLOSURES


Not applicable.



PART II


ITEM 5.  MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES


Market Information


Our common stock is currently listed on the OTC Bulletin Board under the symbol CWNM.  There has been limited trading of the common stock from December 2, 2013 (Inception) through June 30, 2015.  The last sale price of our common stock on September 29, 2015 was $0.0070 per share.


The following table sets forth the high and low transaction price for each quarter within the fiscal years ended June 30, 2015 and 2014, as provided by the Nasdaq Stock Markets, Inc.  The information reflects prices between dealers, and does not include retail markup, markdown, or commissions, and may not represent actual transactions.

 

Fiscal Year Ended

 

Bid Prices

June 30,

Period

High

Low

 

 

 

 

2015

First Quarter

$0.0180

$0.0110

 

Second Quarter

$0.0270

$0.0045

 

Third Quarter

$0.0231

$0.0140

 

Fourth Quarter

$0.0198

 $0.0080

 

 

 

 

2014

First Quarter

N/A

N/A

 

Second Quarter

$0.1160

$0.0035

 

Third Quarter

$0.0300

$0.0050

 

Fourth Quarter

$0.0300

$0.0111

 

 

 

 

Our shares are subject to Section 15(g) and Rule 15g-9 of the Securities and Exchange Act, commonly referred to as the penny stock rule.  The rule defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions.  The rule provides that any equity security is considered to be a penny stock unless that security is:

 

 - registered and traded on a national securities exchange meeting specified criteria set by the SEC;

- issued by a registered investment company;

- excluded from the definition on the basis of price (at least $5.00 per share) or the issuers net tangible assets.


Trading in the penny stocks is subject to additional sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors.  Accredited investors, in general, include certain institutional investors and individuals with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with their spouse.  


For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of our securities and must have received the purchasers written consent to the transaction prior to the purchase.  Additionally, for any transaction involving a penny stock, the rules require the delivery, prior to the first transaction, of a risk disclosure document relating to the penny stock.  A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for the security.  Finally, monthly statements must be sent to the purchaser disclosing recent price information for the penny stocks.  Consequently, these rules may restrict the ability of broker-dealers to trade or maintain a market in our common stock and may affect the ability of shareholders to sell their shares.


Holders


As of September 30, 2015, there were approximately 100 shareholders of record holding 20,181,021,800 shares of common stock.  The holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of the common stock have no preemptive rights and no right to convert their common stock into any other securities.  There are no redemption or sinking fund provisions applicable to the common stock.



6


Dividends


The Company has not paid any dividends on its common stock.  The Company current intends to retain any earnings for use in its business, and therefore does not anticipate paying cash dividends in the foreseeable future.   


Securities Authorized Under Equity Compensation Plans


The following table lists the securities authorized for issuance under any equity compensation plans approved by our shareholders and any equity compensation plans not approved by our shareholders as of June 30, 2015.   This chart also includes individual compensation agreements.

 

EQUITY COMPENSATION PLAN INFORMATION

Plan category

Number of securities to

be issued upon exercise

of outstanding options,

warrants and rights

(a)

Weighted-average

exercise price of

outstanding options,

warrants and rights

(b)

Number of securities

remaining available for

future issuance under

equity compensation

plans (excluding

securities reflected in

column (a))

(c)

Equity compensation plans  approved

by security holders            

0

$  0.00

0

Equity compensation plans

not approved by security holders

0

$ 0.00

0

Total

0

$ 0.00

0


Company repurchases of common stock during the year ended June 30, 2015


None


Performance Graphic


 This item is not required to provide a performance graph since it is a smaller reporting company as defined in Exchange Act Regulation S-K Rule 10(f).    


Share issuances in 2015


All share issuances have been previously reported.  


ITEM 6.  SELECTED FINANCIAL DATA


This item is inapplicable because we are a smaller reporting company as defined in Exchange Act Rule 12b-2.


ITEM 7.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION


Disclaimer Regarding Forward-Looking Statements


This Current Report on Form 10-K contains forward-looking statements within the meaning of the federal securities laws. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as anticipate, expect, intend, plan, will, we believe, believes, management believes and similar language.  Except for the historical information contained herein, the matters discussed in this Managements Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in this report are forward-looking statements that involve risks and uncertainties. The factors listed in the section captioned Risk Factors, as well as any cautionary language in this report; provide examples of risks, uncertainties and events that may cause our actual results to differ materially from those projected. Except as may be required by law, we undertake no obligation to update any forward-looking statement to reflect events after the date of this Form 10-K.


7



Critical Accounting Policies and Estimates


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, the estimation on useful lives of property, plant and equipment, and accrual of potential liabilities. Actual results could differ from those estimates.


Operating Lease


The Company leases a warehouse in El Monte, California, which is owned by a single member limited liability company owned by the Companys President and majority shareholder, which it plans to sublease in 2015.  We will require approximately $1 million and up to 12 months to complete remediation and building refit prior to being able to re-lease our warehouse building in to customers.  The lease commenced December 2, 2013, terminates May 31, 2020, and requires monthly lease payments of $30,000 beginning June 1, 2014.  The monthly lease payment increases to $40,000 on June 1, 2015, $50,000 on June 1, 2016, $60,000 on June 1, 2017, and $70,000 on June 1, 2019.  The lease includes a period of free rent from December 2, 2013 to May 31, 2014. The lease is an operating lease.  As of June 30, 2015 and June 30, 2014, the Company owed $400,000 and $30,000, respectively, under this lease obligation.  The Company recognizes rent expense on a straight-line basis over the entire lease period.  Accordingly, for the twelve months ended June 30, 2015, the Company recorded $590,770 of rent expense and a deferred rent liability as of June 30, 2015 of $535,384 related to the free rent.  As of June 30, 2015 and 2014, the Company owed $400,000 and $30,000, respectively, under this lease obligation.   


Results of Operations for Year ended June 30, 2015


The Company is engaged in the business of operating a warehouse building in Rosemead, California and in acquiring commercial properties, with a focus on properties in Los Angeles County in need of environmental remediation.  We will require approximately $1 million and up to 12 months to complete remediation and building refit prior to being able to re-lease our warehouse building in Rosemead, California to customers.  For the twelve months ended June 30, 2015 and 2014, we had a loss of $644,536 and $353,276, respectively.  We expect that our level of operating expenses will increase during fiscal 2016.


In the year ended June 30, 2015, we expanded our business to include the development and marketing of all natural Chinese herbal remedies, through a newly-formed subsidiary, Crown Laboratory Inc., and we also made an investment in a joint venture in the MNVO business through a 50% owned subsidiary, Crown Mobile.  In the year ended June 30, 2015, we recorded revenue of $43,370 from Crown Mobile and no revenue from Crown Laboratory or Okra Energy.


Results of Operations for the Period December 2, 2013 (Inception) to June 30, 2014


The Company is engaged in the business of operating a warehouse building in Rosemead, California and in acquiring commercial properties, with a focus on properties in Los Angeles County in need of environmental remediation.  We had a loss of $353,276 for the period December 2, 2013 (Inception) to June 30, 2014.  


8


Liquidity

The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company is still in the development stage and has not yet been successful in establishing profitable operations. The Company incurred a net loss of $644,536 for the twelve months ended June 30, 2015, and the Company's liabilities exceed its assets by $992,370 as of June 30, 2015.  These factors create substantial doubt about the Company's ability to continue as a going concern.  As such, the accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

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

Our cash needs for the twelve months ended June 30, 2015 were primarily met by extension of loans of $81,262 from our majority shareholder.   As of June 30, 2015, we had a cash balance of $24,276.  Our majority shareholder is providing all of our working capital and will continue to do so until at least June 30, 2016.  We will require approximately $1 million and up to 12 months to complete remediation and building refit prior to being able to re-lease our warehouse space to customers.  The Company is negotiating with the lessor of the property, Temple CB LLC, which is owned by our President, to obtain a loan in the amount of $500,000 to $1,000,000 for the renovation.  In August 2015, $500,000 was loaned to Crown Laboratories in order to fund its business and the first stage of the remodel. Due to our limited operating history, we believe that we will otherwise need to sell common equity to raise the required funds. We have no other arrangement or understanding pursuant to which we might obtain such funding.


In August 2015, the Company issued $500,000 shares of its Series A Convertible Preferred Stock to the lessor of its premises, in satisfaction of $480,000 in accrued rent and $20,000 as a tenant deposit. The Series A Convertible Preferred Stock is entitled to a dividend of 4%, when and as declared, and is entitled to a liquidation preference of $1 per share plus unpaid dividends. The Company intends to issue 40,000 shares of Series A Convertible Preferred Stock to the lessor each month in rent.

Recent Accounting Pronouncements


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


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


9


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


Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or 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 generated limited 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 startup 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 affect our business plan.


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


· the success of our develop and marketing efforts for our own products;

· our ability to obtain additional financing; and

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


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


10


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


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


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


Our financial statements appear at the end of this report beginning with the Index to Financial Statements on page 17.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE


We have not had a change in, or disagreement with, our independent registered public accounting firm for the past two fiscal years.


ITEM 9A.  CONTROLS AND PROCEDURES


Disclosure Controls and Procedures


Under the supervision and with the participation of our management, including our Chief Executive Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Securities and Exchange act of 1934 Rules 13a-15(f), for the period ended June 30, 2015.  Based on this evaluation, our Chief Executive Officer concluded that our disclosure controls and procedures were effective as of June 30, 2015.


Managements Annual Report on Internal Control over Financial Reporting


Our Chief Executive Officer and Chief Financial Officer are responsible to design or supervise a process to be effected by our Board of Directors that provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  The policies and procedures include:


- maintenance of records in reasonable detail to accurately and fairly reflect the transactions and dispositions of assets,

- provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors, and

- provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.


For the year ended June 30, 2015, management has relied on the framework of the Committee of Sponsoring Organizations of the Treadway Commission (COSO), to evaluate the effectiveness of our internal control over financial reporting and based upon that framework, management has determined that our internal control over financial reporting is effective.  A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

 

Our management determined that there were no changes made in our internal controls over financial reporting during the fourth quarter of 2015 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.


This annual report does not include, and is not required to include, an attestation report of our registered public accounting firm regarding internal control over financial reporting.  Managements report was not subject to attestation by the our registered public accounting firm pursuant to rules of the SEC that permit the company to provide only managements report in this annual report.


ITEM 9B.  OTHER INFORMATION


None.

11


PART III


ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE


Directors and Executive Officers


The members of the Board of Directors of Crown Marketing serve until the next annual meeting of stockholders, or until their successors have been elected.  The officers serve at the pleasure of the Board of Directors.  The following are the directors, executive officers and key employees of Crown Marketing.


Our management team is headed by experienced Chief Executive Officer Jay Hooper, who was elected on December 2, 2013.


Jay Hooper, age 57, founded Temple CB, LLC in 2012 and Okra in October 2013.  He is Chief Executive Officer and Director of the Registrant.  From January 2009 to November, 2013, he has operated TRC International Corporation, a company engaged in Export Business. He founded ARC International Corp. in 1996 and was its Chief Executive Officer and a director from inception until December 2008, when that company ceased operations.  Mr. Hooper guaranteed ARC's lines of credit with financial institutions, and Mr. Hooper filed a petition under Chapter 7 of the Bankruptcy Code and was discharged from that guaranty in February 2010.  From 1985 to 1996 he was the founder and President of American Research Corp., an early stage supplier of Dell Computer. From 1980 to 1985 he was founder and President of Plus and Plus Corporation, in Taiwan. Plus and Plus was the first company to display Chinese fonts on a PC. From 1978 to 1980 Mr. Hooper was Sales Manager of Pulse Technology, Inc., in Tokyo, Japan. Mr. Hooper has a degree in Electrical Engineering from the Oriental Institute of Technology College in Taiwan, and studied business management in the United States.


Code of Ethics


Crown Marketing has not adopted a code of ethics which applies to the chief executive officer, or principal financial and accounting officer, because of our level of operations of the public entity in 2015.  Crown Marketing intends to adopt a code of ethics during calendar 2016.


Audit Committee Financial Expert


Crown Marketing does not have either an Audit Committee or a financial expert on the Board of Directors.   The Board of Directors believes that obtaining the services of an audit committee financial expert is not economically rational at this time in light of the costs  associated  with  identifying and retaining an individual  who  would  qualify  as  an audit committee financial  expert,  the limited scope of our operations and the  relative  simplicity  of our financial statements and accounting procedures.


Section 16(a) Beneficial Ownership Reporting Compliance


Section   16(a)  of  the  Exchange  Act  requires  Crown Marketing's  officers, directors and persons  who  own  more than ten percent of a registered class of our equity securities to file reports  of  ownership  and  changes in ownership with the SEC.  Officers, directors and ten percent stockholders are required by regulation to furnish Crown Marketing with copies of all Section 16(a) forms they file.  During the year ended June 30, 2015, Crown Marketing believes that all such persons failed to file the reports required by Section 16(a) of the Exchange Act, including Forms 3, 4 and 5.  Based on representations submitted by such people, Crown Marketing does not believe that such individuals purchased or sold any Crown Marketing Common Stock during 2015.


12


ITEM 11.  EXECUTIVE COMPENSATION


Executive Officers and Directors



The following tables set forth certain information about compensation paid, earned or accrued for services by (i) the Companys Chief Executive Officer in the years ended June 30, 2015 and 2014 (Named Executive Officers):


 

 

Name and

Principal

Position

 

 

 

 

Year

 

 

 

Salary

($)

 

 

 

 

Bonus

($)

 

 

 

Stock

Awards

($)

 

 

 

Option

Awards

($)

 

 

Non-Equity

Incentive

Plan

Compensation

($)

 

 

Nonqualified

Deferred

Compensation

($)

 

 

 

All Other

Compensation

($)

 

 

 

 

Total

($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jay Hooper
Chief Executive/Chief Financial Officer

2015

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 


2014

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 


Employment Contracts


We currently do not have any written employment agreements with our executive officers.  

 

Director Compensation


Our directors currently serve without compensation.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


Beneficial Ownership


The following table sets forth, as of the date of this Report the outstanding common stock of Crown Marketing owned of record or beneficially by each person who owned of record, or was known by Crown Marketing to own beneficially, more than 5% of Crown Marketings 20,181,121,800 shares of common stock issued and outstanding, and the name and share holdings of each director and all of the executive officers and directors as a group:

 

CERTAIN BENEFICIAL OWNERS


 

Name

Office

Amount and nature of

beneficial owner (1)

Percent

of class

 

 

 

 

Jay Hooper

CEO, CFO, Director

16,155,746,000

80.05%

 

 

 

 

All officer and directors as a group (1 person)

N/A

16,155,746,000

80.05%


(1)Except as otherwise noted, shares are owned beneficially and of record, and such record shareholder has sole voting, investment and dispositive power. Does not include 540,000 shares of Series A Convertible Preferred Stock owned by Temple CB, LLC, a company controlled by Mr. Hooper. The Series A Convertible Preferred Stock was issued in August and September 2015, and each share of the Series A Convertible Preferred Stock is redeemable at a price of $1.00 per share plus 4% annual dividends. The Series A Convertible Preferred Stock is convertible into common stock at the redemption price divided by the current market price, and votes with the common stock on an as-converted basis.  

 

13


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE


As of June 30, 2015, the Company had outstanding accounts payable of $400,000 due to a limited liability company controlled by the Companys President and majority shareholder, Mr. Jay Hooper, which represented a lease payment on an operating lease.     


As of June 30, 2015, $81,262 was due the Companys President and majority shareholder, Mr. Jay Hooper, for advances made to the Company to pay for operating expenses.  The advances are non-interest bearing and due on demand.  In view of the Companys limited operations and resources, Mr. Hooper did not receive any compensation from the Company for the year ended June 30, 2015.


The Company leases a warehouse in El Monte, California, which is owned by a single member limited liability company owned by the Companys President and majority shareholder, which it plans to sublease in 2015.  We will require approximately $1 million and up to 12 months to complete remediation and building refit prior to being able to re-lease our warehouse building to customers.  The lease commenced December 2, 2013, terminates May 31, 2020, and requires monthly lease payments of $30,000 beginning June 1, 2014.  The monthly lease payment increases to $40,000 on June 1, 2015, $50,000 on June 1, 2016, $60,000 on June 1, 2017, and $70,000 on June 1, 2019.  The lease includes a period of free rent from December 2, 2013 to May 31, 2014. The lease is an operating lease.  As of June 30, 2015 and June 30, 2014, the Company owed $400,000 and $30,000, respectively, under this lease obligation.  The Company recognizes rent expense on a straight-line basis over the entire lease period.  Accordingly, for the twelve months ended June 30, 2015, the Company recorded $590,770 of rent expense and a deferred rent liability as of June 30, 2015 of $535,384 related to the free rent.  As of June 30, 2015 and 2014, the Company owed $400,000 and $30,000, respectively, under this lease obligation.


Director Independence

 

Currently, the Company does not have any independent directors. Since the Companys Common Stock is not currently listed on a national securities exchange, we have used the definition of independence of The NASDAQ Stock Market to make this determination.

 

Under NASDAQ Listing Rule 5605(a)(2), an "independent director" is a "person other than an officer or employee of the company or any other individual having a relationship which, in the opinion of the


company's board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director."


We do not currently have a separately designated audit, nominating or compensation committee.  However, we do intend to comply with the independent director and committee composition requirements in the future.


ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES


Audit Fee


The aggregate fees billed for each of the last two fiscal years for professional services rendered by the independent registered public accounting firm for the audit of Crown Marketing and Subsidiaries annual financial statement and review of financial statements included in our periodic reports and services normally provided by the accounting firm in connection with statutory and regulatory filings or engagements were $21,000 for fiscal year ended 2015 and $7,284 for fiscal year ended 2014.

 

Audit-Related Fees


We did not have fees for other audit related services for fiscal years ended 2015 and 2014.


14


Tax Fees


We did not have fees for tax compliance, tax advice and tax planning for the fiscal years 2015 and 2014.


All Other Fees


There were no other aggregate fees billed in either of the last two fiscal years for products and services provided by the independent registered public accounting firm, other than the services reported above.


Pre-approval Policies


We do not have a standing audit committee currently serving and as a result our Board of Directors performs the duties of an audit committee.  Our Board of Directors evaluates and approves, in advance, the scope and cost of the engagement of an accounting firm before the accounting firm renders audit and non-audit services.  We do not rely on pre-approval policies and procedures.



PART IV


ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


1.

(a)

Financial Statements. All Financial Statements are listed in Item 7. No schedules are required.

(b)

Exhibits.  The following exhibits of the Company are included herein.


2.   Agreement and Plan of Reorganization


2.1  Agreement and Plan of Reorganization between the Company and Okra Energy, Inc. dated December 2, 2013.(4)


3.  Certificate of Incorporation and Bylaws


3.1.  Articles of Incorporation (1)*

3.2   Articles of Merger (2)

3.3   Bylaws(1)

3.4   Certificate of Designation for the Series A Convertible Preferred Stock (5)


10.  Material Contracts


10.1  Promissory Note to Strategic Global Resources, Ltd. (3)

10.2  Promissory Note to Farrington Pharmaceuticals, LLC (3)

10.3   Lease Agreement between Okra Energy, Inc and Temple CB, LLC(4)


21.  Subsidiaries of the registrant  Okra Energy, a California corporation and Crown Laboratory, Inc. Crown Mobile is a California corporation which is 50% owned by the Company.  No trade names are employed.


23.  Consents


23.1  Consent of Accountants. (5)


31.1. Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a)(5)

31.2. Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a)(5)

32.1. Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350(5).

32.2. Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350(5).

* The Company had filed an amendment to its Articles of Incorporation to change the name to Okra, Inc. but this amendment was reversed in an additional amendment filed with the Secretary of State. The name of the Company continues to be Crown Marketing.


All other Exhibits called for by Rule 601 of Regulation S-K are not applicable to this filing.

                          




(1)                 Filed with original registration statement.

(2)                 Filed with amendment no. 1

(3)                 Filed with the Annual Report on Form 10-K for the year ended June 30, 2013.

(4)                 Filed with Current Report on Form 8-K dated December 2, 2013

(5)                 Filed herewith




15


SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) 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

 

 

 

 

 

 

 

 

 

 

Date:  October 13, 2015

 

/s/ Jay Hooper

 

 

 

Jay Hooper, Chief Executive Officer,

Chief Financial Officer, Secretary and Director

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

 

 

 

 

Date:  October 13, 2015

 

/s/ Jay Hooper

 

 

 

Jay Hooper, Chief Executive Officer,

Chief Financial Officer, Secretary and Director

 

 

 

 

 

 

 

 

 


16





INDEX TO CONSOLIDATED FINANCIAL STATEMENTS




 

 

 

 

 

Page

 

 

 

 

 

 

 Report of Independent Registered Public Accounting Firm

 

17

 

 

 

 Consolidated Balance Sheets as of  June 30, 2015 and 2014

 

18

  

 

 

 Consolidated Statements of Operations for the Year Ended June 30, 2015 and for the

          period December 2, 2013 (Inception) to June 30, 2014

 

19

 

 

 

 Consolidated Statements of Changes in Stockholders Deficit for the Year Ended

         June 30, 2015 and for the period December 2, 2013 (Inception) to June 30, 2014  

 

10

 

 

 

 Consolidated Statements of Cash Flows for the Year Ended June 30, 2015 and for the

          period December 2, 2013 (Inception) to June 30, 2014

 

21

 

 

 

 Notes to the Consolidated Financial Statements

 

22

 

 

 










17


Report of Independent Registered Public Accounting Firm




To the Board of Directors and Stockholders

Crown Marketing
El Monte, California  


We have audited the consolidated balance sheets of Crown Marketing and Subsidiaries (the Company) as of June 30, 2015 and 2014, and the related consolidated statements of operations, stockholders deficit and cash flows for the year ended June 30, 2015 and for the period December 2, 2013 (Inception) to June 30, 2014. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.


We conducted our audits in accordance with 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 consolidated 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 Companys internal control over financial reporting.  Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements.  An audit also includes 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Crown Marketing and its Subsidiaries as of June 30, 2015 and 2014, and the results of their operations and their cash flows for the year ended June 30, 2015 and for the period December 2, 2013 (Inception) to June 30, 2014, in conformity with accounting principles generally accepted in the United States of America.


The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses and negative cash flows from operating activities, which have resulted in a negative working capital and a stockholders' deficit. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.




/s/ Weinberg & Company, P.A.

Los Angeles, California

October 13, 2015



18


>

CROWN MARKETING AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS





June 30, 2015

 

June 30, 2014

Assets









Current assets:








    Cash



$

24,276


$

-

        Total current assets




24,276



-




 

 


 

 

Total assets



$

24,276


$

-









Liabilities and Stockholders Deficit









Current liabilities:





    Accrued rent payable related party



$

400,000


$

30,000

    Advances -  related party




71,262



8,661

    Note payable related party



 

10,000


 

-

        Total current liabilities



481,262



38,661









Deferred rent obligations related party



 

535,384


 

314,615

Total liabilities



 

1,016,646


 

353,276









Commitments and contingencies

-



-









Stockholders equity:








Common Stock, no par value; unlimited shares authorized; 19,981,021,800 shares issued and outstanding at June 30, 2015 and June 30, 2014, respectively




-



-

Additional paid-in capital




-



-

Accumulated deficit



 

(997,812)


 

(353,276)

Total stockholders deficit of Crown Marketing



 

(997,812)


 

(353,276)

Non-controlling interest



 

5,442


 

-

Total  deficit



 

(992,370)


 

(353,276)

Total liabilities and stockholders deficit



$

24,276


$

-
















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

19



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CROWN MARKETING AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS


 

For the Period

 





December 2, 2013



Year Ended


(Inception) to



June 30, 2015


June 30, 2014















Sales


$

43,370


$

-

Cost of sales


 

59,311


 

-

Gross loss


 

(15,941)


 

-

Operating expenses:







Rent expense  related party



590,769



344,615

Selling, general and administrative expenses


 

53,384


 

8,661

       Total operating expenses


 

644,153


 

353,276

Net loss



(660,094)



(353,276)

    Net loss attributable to non-controlling interest


 

(15,558)


 

-

Net loss attributable to Crown Marketing Common Shareholders


$

(644,536)


$

(353,276)




 



 

Net income per common share  basic and fully diluted


$

(0.00)


$

(0.00)



$




 

Weighted average common shares outstanding  basic and fully diluted


 

19,981,021,800


 

19,981,021,800

























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




20


CROWN MARKETING AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT

YEAR ENDED JUNE 30, 2015 AND FOR THE PERIOD

DECEMBER 2, 2013 (INCEPTION) TO JUNE 30, 2014





  

  





  




Additional

  


Total Crown


Non-

 Total


Common Stock

Paid In

Accumulated


Marketing


Controlling

 Stockholders


Shares

Amount

Capital

Deficit

 

Deficit


Interests

Deficit

Balance, December 2, 2013 (Inception)

  -

$

 -

$

-

$

  -

$

-


-

$

-















Shares issued on inception

16,155,746,000

 

 -

 

 

-

 

-


-

 

-















Shares issued on reverse merger

3,825,275,800


-


-


-


-


-


-















Net loss

-

 

 

 

(353,276) 

 

(353,276)


-

 

(353,276)

Balance, June 30, 2014

19,981,021,800


-


-


(353,276)


(353,276)


-


(353,276)















Capital proceeds from non-controlling interest

--


-


-


--


--


21,000


21,000















Net loss

-


-


-


(644,536)


(644,536)


(15,558)


(660,094)















Balance, June 30, 2015

19,981,021,800

$

-

$

-

$

(997,812)

$

(997,812)

$

5,442

$

(992,370)




























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



21


CROWN MARKETING AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS



 

For the Period

 





December 2, 2013



Year Ended


(Inception) to



June 30, 2015


June 30, 2014















Operating activities:






-

   Net loss of Crown Marketing


$

(660,094)


$

(353,276)

   Adjustment to reconcile net loss to net cash used in




operating activities:







        Accounts payable  related party



370,000



30,000

        Advances  related party



62,600



8,661

        Deferred rent obligation  related party

 

220,770


 

314,615

           Net cash used in operating activities

 

(6,724)


 

-








Financing activities:







       Proceeds from related party loan



10,000




       Capital proceeds from non-controlling interest

 

21,000


 

-

           Net cash provided by financing activities

 

51,000


 

-








Change in cash and cash equivalents



24,276



-

Cash and cash equivalents, beginning of period

 

-


 

-

Cash and cash equivalents, end of period

$

24,276


$

-








Supplemental cash flow information:







    Cash paid for interest


$

-


$

-

    Cash paid for income taxes


$

-


$

-

























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




22


CROWN MARKETING AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2015 AND THE PERIOD DECEMBER 2, 2013

(INCEPTION) TO JUNE 30, 2014


NOTE 1NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES


Nature of Operations


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


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


Through its subsidiary, OKRA Energy Inc., the Company leases a warehouse in El Monte, California, which is owned by a single member limited liability company owned by the Company's President and majority shareholder, which it plans to sublease in 2015. We will require approximately $1 million and up to 12 months to complete remediation and building refit prior to being able to re-lease the warehouse building to customers.  


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


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


Basis of Presentation


These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Okra Energy, Crown Laboratory andCrown Mobile, Inc., a joint venture that is 50% owed by the Company (See Note 7).   Intercompany transactions and accounts have been eliminated in consolidation.





23


Summary of Significant Accounting Policies


We derive our revenue from sales of our hardware products including cellular phones and sim cards and rental revenue.  


Hardware Revenue


We derive our revenue from sales of our hardware products including cellular phones and sim cards.  We recognize hardware product revenue when the following fundamental criteria are met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) the price is fixed or determinable; and (iv) collectability is reasonably assured. Revenue is recognized for hardware product sales upon transfer of title and risk of loss to the customer. We record reductions to revenue for estimated product returns and pricing adjustments in the same period that the related revenue is recorded. These estimates are based on contractual return rights, historical sales returns, analysis of credit memo data and other factors known at the time. If actual future returns and pricing adjustments differ from past experience and our estimates, adjustments to revenue reserves may be required.  For the twelve months ended June 30, 2015, the Company recorded 100% of its revenue from hardware sales.   


Rental Revenue


At lease inception, the Company reviews all necessary criteria under ASC 840-10-25 to determine proper lease classification.  The Company will recognize rental income from tenants on the straight-line basis over the lease term when collectability is reasonably assured and the tenant has taken possession or controls the physical use of the leased asset.  During the twelve months ended June 30, 2015, the Company did not generate any rental revenue.  



Estimates


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


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




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value is defined in the authoritative guidance as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels as follows:


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

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

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


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


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


Segment Information


At June 30, 2015, the Company had three reportable operating segments.  The Marketing segment leases a 180,000 square foot facility which it plans to sublease.   The Mobile segment distributes prepaid SIM cards and wireless phones.  The Laboratory segment plans to develop and market Chinese herbal and other remedies in the Peoples Republic of China.


The chief operating decision-maker evaluate performance, make operating decisions, and allocate resources based on the operating income of each segment. The reporting segments follow the same accounting polices used in the preparation of the Companys consolidated financial statements.  The Company does not revenue or operating expenses, and there are currently no intersegment sales.  


Summarized financial information by segment for the year ended June 30, 2015, based on the Companys internal financial reporting system utilized by the Companys chief operating decision maker, follows:




Marketing

Mobile

Laboratory

Consolidated

Sales

$                 -

$       43,370

$                 -

$       43,370

Cost of sales

-

59,311

-

59,311

Gross loss

-

(15,941)

-

(15,941)

Rent expense-related

590,769

-

-

590,769

Selling, general, and administrative

33,312

15,175

4,897

53,384

Net loss

$   (624,081)

$    (31,116)

$      (4,897)

$  (660,094)


At June 30, 2014, there was only one segment, the Marketing segment, which recorded no revenues, $344,615 of rent expense-related, $8,661 of selling, general, and administrative, and a net loss of $(353,276).  


For the years ended June 30, 2015 and for the period December 2, 2013 (Inception) to June 30, 2014, the Company is domiciled in the United States of America and all sales were in the United States of America.



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 June 30, 2015 and 2014, the weighted average common shares outstanding totaled 19,981,021,800 and 19,981,021,800, respectively.  There were no potentially dilutive shares as of June 30, 2015 and 2014.


Recent Accounting Pronouncements


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


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


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


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


NOTE 2 - GOING CONCERN

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplate continuation of the Company as a going concern.  However, the Company is still in the development stage and has not yet been successful in establishing profitable operations.  The Company incurred a net loss of $644,536 for the twelve months ended June 30, 2015, and the Company's liabilities exceed its assets by $992,370 as of June 30, 2015.  The Company has not generated any revenues to date.  These factors create substantial doubt about the Company's ability to continue as a going concern.  The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.  

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

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

Our cash needs for the year ended June 30, 2015 were primarily met by an advance of $50,000 from our majority shareholder.   As of June 30, 2015, we had a cash balance of $24,276.  Our majority shareholder is providing all of our working capital and will continue to do so until at least June 30, 2016.  We will require approximately $1 million and up to 12 months to complete remediation and building refit prior to being able to re-lease our warehouse space to customers.  Due to our limited operating history, we believe that we will need to sell common equity to raise the required funds. We have no arrangement or understanding pursuant to which we might obtain such funding. In August, 2015, the lessor of the Companys premises, which is also a related party, loaned $500,000 to Crown Laboratory.


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NOTE 3 - ADVANCES AND NOTE PAYABLE - RELATED PARTY


As of June 30, 2015 and 2014, $71,262 and $8,661, respectively, was due to the Companys President and majority shareholder, Mr. Jay Hooper, for advances made to the Company to pay for operating expenses.  Advances of $71,262 are non-interest bearing and due on demand.  


A loan of $10,000 due to Mr. Hooper is due on demand and bears interest at 4%.  In view of the Companys limited operations and resources, Mr. Hooper did not receive any compensation from the Company for the twelve months ended June 30, 2015.   


NOTE 4  ACCRUED RENT DUE RELATED PARTY


Operating Lease Obligation to Related Party


Through its subsidiary, Okra Energy Inc., the Company leases a warehouse in El Monte, California, which is owned by a single member limited liability company owned by the Companys President and majority shareholder, which it plans to sublease in 2015.  We will require approximately $1 million and up to 12 months to complete remediation and building refit prior to being able to re-lease the warehouse building to customers.  The lease commenced December 2, 2013, terminates May 31, 2020, and requires monthly lease payments of $30,000 beginning June 1, 2014.  The monthly lease payment increases to $40,000 on June 1, 2015, $50,000 on June 1, 2016, $60,000 on June 1, 2017, and $70,000 on June 1, 2019.  The lease includes a period of free rent from December 2, 2013 to May 31, 2014. The lease is an operating lease.  As of June 30, 2015 and June 30, 2014, the Company owed $400,000 and $30,000, respectively, under this lease obligation.  The Company recognizes rent expense on a straight-line basis over the entire lease period.  Accordingly, for the twelve months ended June 30, 2015, the Company recorded $590,770 of rent expense and a deferred rent liability as of June 30, 2015 of $535,384.  As of June 30, 2015 and 2014, the Company owed $400,000 and $30,000, respectively, under this lease obligation. In August, 2015, the lease was assigned to and assumed by Crown Laboratory, Inc.


At June 30, 2015, the Companys minimum operating lease commitments for the next five fiscal years are summarized below.


Years Ending June 30,

 

Amount

2016

$

490,000

2017

 

610,000

2018

 

730,000

2019

 

840,000

2020 and beyond

 

770,000

Total

$

3,440,000


NOTE 6  STOCKHOLDERS DEFICIT


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 June 30, 2015.

Pursuant to an Agreement and Plan of Reorganization dated December 2, 2013, the Company agreed to acquire all of the common stock of Okra Energy, Inc., a California corporation, in exchange for 16,155,746,000 shares of Common Stock of the Company (the "Common Stock") at the Closing of the Agreement, which took place on December 3, 2013.  Immediately prior to the closing, there were approximately 3,825,275,800 shares of Common Stock outstanding.  After the closing, the beneficial owner of the shares of Okra Energy, Inc., Jay Hooper, owned approximately 98.8% of the outstanding shares of common stock of the Company.  The assets and liabilities of Crown Marketing were retained by prior ownership and the amounts were minor


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NOTE 7 NON-CONTROLLING INTEREST


During 2015, the Company entered into a joint venture to create Crown Mobile.  The Company owns 50% of the joint venture while two other owners own 35% and 15%, respectively.  Based on the provisions of ASC Topic 810, the Company determined it should include Crown Mobile in its consolidated financial statements as the Company has a controlling financial interest and directs the operating activities of Crown Mobile.  The Company has committed, if needed, to make additional contributions to the joint venture.  



In accordance with the provisions of ASC Topic 810, the Company has classified the non-controlling interest as a component of stockholders deficit in the accompanying consolidated balance sheets. Additionally, the Company has presented the net income attributable to the Company and the non-controlling ownership interests separately in the accompanying consolidated financial statements.


Non-controlling interest represents the minority stockholders share of 50% of the equity of Crown Mobile, which is a subsidiary of the Company.


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




For the Year Ended June 30, 2015

Beginning balance

$

0

Capital proceeds from non-controlling interest


21,000

Net loss attributable to non-controlling interest


(15,558)

Ending balance

$

5,442




NOTE 8  SUBSEQUENT EVENTS

On August 3, 2015, the Company entered in a Consulting Agreement (the Agreement) to receive services relating to the marketing of the Companys products in social media and issued 200,000,000 shares of common stock to the consultant valued at approximately $1.8 million.

In August 2015, the Companys Board authorized the creation of a series of preferred stock consisting of 1,000,000 shares designated as Series A Convertible Preferred Stock, which is entitled to a dividend of 4%, when and as declared, and is entitled to a liquidation preference of $1 per share plus unpaid dividends.

In August 2015, the Company issued $500,000 shares of its Series A Convertible Preferred Stock to the lessor of its premises, in satisfaction of $480,000 in accrued rent (see Note 4) and $20,000 as a tenant deposit. The Company intends to issue 40,000 shares of Series A Convertible Preferred Stock to the lessor each month in rent.

In August 2015, the lessor of the Companys premises, which is also a related party, loaned $500,000 to Crown Laboratory.

 



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