Note 4 - Related Party Transactions

6 Months Ended

Dec. 31, 2016

Notes

Note 4 - Related Party Transactions

NOTE 4 – RELATED PARTY TRANSACTIONS

Notes Payable

Notes payable to related parties were as follows at December 31, 2016 and June 30, 2016:

	December 31, 2016		June 30, 2016
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	$	562,422	$	531,975
Note payable to Jay Hooper, due on demand, interest at 4% per annum		10,000		10,000
		572,422		541,975
Less: current portion		(572,422)		(10,000)
Notes payable, non-current portion	$	--	$	531,975

Advances

As of December 31, 2016 and June 30, 2016, $34,977 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 June 30, 2016, the Company, through its subsidiary, Crown Laboratory Inc., 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.

The lease was an operating lease and contained escalating rent payments and a period of free rent. The Company recognized rent expense on a straight-line basis over the entire lease period. During the three and six months ended December 31, 2015, the Company recorded $147,692 and $295,385 of rent expense, respectively. During the three and six months ended December 31, 2016, no rent expense was recorded relating to the lease agreement. As of December 31, 2016 and June 30, 2016, the Company owed $120,000 under this lease obligation.

As of June 30, 2016, the Company recorded a deferred lease obligation of $636,154. During the six months ended December 31, 2016, relating to the termination of the lease agreement, the Company recorded a gain on the termination of the deferred lease obligation of $636,154. As the deferred lease obligation was to a related party, the Company recorded the gain as a contribution to Additional Paid-in Capital on the December 31, 2016 Condensed Consolidated Statement of Shareholders’ Deficit.

During the six months ended December 31, 2016, the Company rented office and warehouse space from a third party company on a month-to-month basis. Rent expense for the six months was $27,786.

Due to Related Party

During the three and six months ended December 31, 2016, the Company used contract labor services provided by Temple CB totaling $9,400 and $14,400, respectively. As of June 30, 2016, a total of $5,600 was owed to Temple CB. Total payments made to Temple CB for the services during the three and six months ended December 31, 2016 were $10,000 and $20,000, respectively. There were no amounts owed to Temple CB as of December 31, 2016. The Company did not use contract labor services provided by Temple CB during the six months ended December 31, 2015.