Note 3 - Related Party Transactions

12 Months Ended

Jun. 30, 2016

Notes

Note 3 - Related Party Transactions

NOTE 3 – RELATED PARTY TRANSACTIONS

Notes Payable

Notes payable to related parties were as follows at June 30, 2016 and 2015:

	June 30, 2016		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	$	531,975	$	-
Note payable to Jay Hooper, due on demand, interest at 4% per annum		10,000		10,000
		541,975		10,000
Less: current portion		(10,000)		(10,000)
Notes payable, non-current portion	$	531,975	$	-

Advances

As of June 30, 2016 and 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 leased 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. In October 2016, the Company and Temple CB agreed to terminate the lease effective as of July 1, 2016. The Company ceased using the premises prior to July 1, 2016. In the future, the Company may plan to lease and 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 years ended June 30, 2016 and 2015, the Company recorded $590,769 of rent expense for each period. As of June 30, 2016 and June 30, 2015, the Company recorded a deferred lease obligation of $636,154 and $535,384, respectively. In August, 2015, the lease was assigned to and assumed by Crown Laboratory, Inc. As of June 30, 2016 and June 30, 2015, the Company owed $120,000 and $400,000, respectively, under this lease obligation. During the year ended June 30, 2016, 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).

CROWN MARKETING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2016 AND 2015

NOTE 3 – RELATED PARTY TRANSACTIONS (CONTINUED)

Due to Related Party

During the year ended June 30, 2016, the Company used contract labor services provided by Temple CB totaling $10,000. Total payments made to Temple CB for the services during the year ended June 30, 2016 were $4,400. As of June 30, 2016, a total of $5,600 was owed to Temple CB. There were no amounts owed to Temple CB for contract services during the year ended June 30, 2015.