Note 3 - Related Party Transactions

6 Months Ended

Dec. 31, 2015

Notes

Note 3 - Related Party Transactions

NOTE 3 – RELATED PARTY TRANSACTIONS

NOTES PAYABLE

Notes payable to related parties were as follows at December 31, 2015 and June 30, 2015:

	December 31,         2015		June 30, 2015
Note payable, interest at 12% per annum, secured by essentially all assets of the   Company, due July 31, 2017. The lender is Temple CB LLC (“Temple”), a limited liability company controlled by Jay Hooper, the Company’s President and majority shareholder	$	501,857	$	-
Note payable to Jay Hooper, due on demand, interest at 4% per annum		10,000		10,000
		511,857		10,000
Less: current portion		(10,000)		(10,000)
Notes payable, non-current portion	$	501,857	$	-

ADVANCES

As of December 31, 2015 and June 30, 2015, $34,977 and $71,262, respectively, was due to 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 are due on demand.

LEASE OBLIGATION

Through its subsidiary, Crown Laboratory Inc., the Company leases a warehouse in El Monte, California. The warehouse is owned by Temple CB LLC, (“Temple CB”), a single member limited liability company owned by the Company’s President and majority shareholder. The Company plans to sublease the warehouse but will require approximately $1 million and up to 12 months to complete remediation and a 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. The Company recognizes rent expense on a straight-line basis over the entire lease period. During the three months ended December 31, 2015 and 2014, the Company recorded $147,693 of rent expense for each period, respectively. During the six months ended December 31, 2015 and 2014, the Company recorded $295,385 of rent expense for each period, respectively. As of December 31, 2015 and June 30, 2015, the Company recorded a deferred lease obligation of $590,769 and $535,384, respectively. In August, 2015, the lease was assigned to and assumed by Crown Laboratory, Inc. As of December 31, 2015 and June 30, 2015, the Company owed $20,000 and $400,000, respectively, under this lease obligation. During the six months ended December 31, 2015, the Company issued 500,000 shares of its Series A Preferred Stock to Temple CB in satisfaction of $500,000 of accrued rent (see Note 4).

At December 31, 2015, the Company’s minimum operating lease commitments for the next five fiscal years are summarized below.

Years Ending June 30,		Amount
Remainder of 2016	$	250,000
2017		610,000
2018		730,000
2019		840,000
2020 and beyond		770,000
Total	$	3,200,000