America Great Health - Annual Report: 2015 (Form 10-K)

1

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 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 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 Company’s 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 Company’s financial statements and disclosures.

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s 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 entity’s 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 entity’s 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 Company’s 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 Company’s 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.

Management’s 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.  Management’s 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 management’s 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 Company’s 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 Marketing’s 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 Company’s 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 Company’s 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 Company’s 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 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 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 Company’s 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.