UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File No. 333-216180
CRONA CORP.
(Exact name of registrant as specified in its charter)
Nevada (State or Other Jurisdiction of Incorporation or Organization) | 7380 (Primary Standard Industrial Classification Number) | 35-2574778
(IRS Employer Identification Number)
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550 West C Street | Suite 2040 | San Diego | California | 92101
858-883-2642
management@corpcrona.com
(Address and telephone number of principal executive offices)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 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 shorter period that the registrant as 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's 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, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] 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]
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 6,087,500common shares issued and outstanding as of April 17, 2018.
| PART 1 |
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ITEM 1 | Description of Business | 4 |
ITEM 1A | Risk Factors | 5 |
ITEM 2 | Description of Property | 5 |
ITEM 3 | Legal Proceedings | 5 |
ITEM 4 | Submission of Matters to a Vote of Security Holders | 5 |
| PART II |
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ITEM 5 | Market for Common Equity and Related Stockholder Matters | 6 |
ITEM 6 | Selected Financial Data | 6 |
ITEM 7 | Management's Discussion and Analysis of Financial Condition and Results of Operations | 6 |
ITEM 7A | Quantitative and Qualitative Disclosures about Market Risk | 8 |
ITEM 8 | Financial Statements and Supplementary Data | 8 |
ITEM 9 | Changes In and Disagreements with Accountants on Accounting and Financial Disclosure | 18 |
ITEM 9A (T) | Controls and Procedures | 18 |
| PART III |
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ITEM 10 | Directors, Executive Officers, Promoters and Control Persons of the Company | 18 |
ITEM 11 | Executive Compensation | 19 |
ITEM 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 20 |
ITEM 13 | Certain Relationships and Related Transactions | 20 |
ITEM 14 | Principal Accountant Fees and Services | 20 |
| PART IV |
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ITEM 15 | Exhibits | 21 |
PART I
Item 1. Description of Business
FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. 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 management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. 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.
Brief description of Crona Corp. for last five years
On October 6, 2016, the Company was incorporated under the laws of the State of Nevada. We are engaged in the recording services business.
Andrei Gurduiala has served as our President, Treasurer and as a Director, from October 6, 2016, until March 21, 2018. On March 21, 2018, our board appointed Robert T. Malasek as a Director, Chief Executive Officer, Chief Financial Officer and Secretary of the Company.
Our board of directors is comprised of one person: Robert T. Malasek.
We are authorized to issue 75,000,000 shares of common stock, par value $0.001 per share. On November 25, 2016, Andrei Gurduiala, our former President and a Director purchased an aggregate of 5,000,000 shares of common stock at $0.001 per share, for aggregate proceeds of $5,000.
General description of our activity
We were incorporated on October 6, 2016 in the State of Nevada, USA. The Company’s business operations are located in Romania. As of December 31, 2017 Crona Corp. has generated revenues of $36,210 in Romania, Bucharest. We have never declared bankruptcy, have never been in receivership, and have never been involved in any legal action or proceedings.
We can book as little as one hour or as many as 24 hours per day, allowing the business to focus on providing recording services for record labels, music producers, and recording artists. The facility and its equipment are rented on either an hourly, daily, weekly, or monthly basis as dictated by the clients’ needs.
In addition to studio and engineer/producer services, and in the course of ongoing business, it is customary in the recording industry that the Studio will occasionally enter into certain licensing agreements that will provide revenue over and above the rental and services income. There is no particular standard as to the frequency or amount of this revenue and it is negotiated on an individual basis. These licensing agreements can include, but are not limited to, production agreements, writer agreements, and performing agreements, all yielding a percentage of revenue earned through the exploitation of the product produced.
Our target markets are artists, organizers of various events and representatives of various industries of show business (TV, cinema, and entertainment clubs).
Licensing
From time to time, the Company may enter into licensing agreements with music production and distribution companies.
The license agreements typically grant the production and distribution company rights to a music single or all of an act's music in a particular country or region with a term of three to fifteen years. The production or distribution company can then distribute the music in record or CD format, mp3, ring tone, or any other music media licensed in the agreement.
The Company will typically receive royalties of a negotiated percentage between 18% and 75% of sales of the production and Distribution Company’s published dealer price less certain packaging deductions. In addition, the Company may receive between 18% and 75% of net royalty receipts received by in the particular nation or region. In connection with the license agreement, the Company may receive a cash advance.
Crona Corp. signed recording studio contracts with the following customers: NM & Mike J Production, Vent Event Romania, World Music Ltd. and MALISTIRNO SRL.
Crona Corp. has generated revenues of $36,210 from recording services provided to our customers.
STARTUP EQUIPMENT
We believe that a lot of talented people will be interested in our services. The Company has purchased initially needed equipment for recording purposes, which is presented as following:
Crona Corp. is a professional recording studio. We are distinguished by skillful use of modern digital technology traditional analog devices. Music is our world, so we fully
OUR RECORDERS
Stand-alone digital multitrack recorders that have everything needed for recording, mixing, and producing music. The advantage digital multitrack recorders have over computer based mixing is that they force you to use your ears - when watching a computer screen it is sometimes tempting to mix with your eyes.
OUR MIXERS
We provide a guide to studio mixing consoles. The audio mixer is literally the heart of every live performance, where all sounds converge to be processed and blended - and finally pumped out through the speakers. It is where major connections are routed to, and where important parameters are set including volume, EQ adjustments, balancing and many more.
MICROPHONES
We focus on top rated condenser and dynamic microphones that are currently being used in professional studios. Note that while the main consideration is vocal recording, the microphones we feature also work well with instruments, making them ideal additions to any studio.
COMPRESSORS
A compressor reduces the dynamic range of a signal, in other words, it reduces the difference between the loudest and quietest levels. A limiter places an upper ceiling on the output level to prevent clipping - in the digital world clipping instantly becomes distortion.
MONITORS
When you need to work on your recorded music you need to hear exactly how it sounds, warts and all. Generally speaking, multimedia and hi-fi speakers are not suitable for the task because they tend to color the sound. This is where good studio monitors come in, they reproduce sound as transparently as possible, so you can make honest assessments and apply the right adjustments to your mix.
INSTRUMENTS
In the near future the Company is planning to add additional instruments to those already purchased, such as Electric Guitar, Bass, Acoustic Guitar, Keyboards and Drums.
Employees and Employment Agreements
We have no employees to date. Our sole officer and director, Robert T. Malasek, currently devotes approximately 20 hours per week to company matters. After receiving funding, Robert T. Malasek plans to devote as much time to the operation of the Company as he determines is necessary for him to manage the affairs of the Company. As our business and operations increase, we will assess the need for full time management and administrative support personnel.
Item 1A. Risk Factors
Not applicable to smaller reporting companies.
Item 2. Description of Property
We do not own any real estate or other properties. The Company entered into a one-year lease agreement for a $225 monthly fee on December 1, 2016. The property is located at C.A Rosetti 15, Bucharest 30167 Romania.
Item 3. Legal Proceedings
We know of no legal proceedings to which we are a party or to which any of our property is the subject which are pending, threatened or contemplated or any unsatisfied judgments against us.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
Market Information
There is a limited public market for our common shares. Our common shares are not quoted on the OTC Bulletin Board at this time. Trading in stocks quoted on the OTC Bulletin Board is often thin and is characterized by wide fluctuations in trading prices due to many factors that may be unrelated to a company’s operations or business prospects. We cannot assure you that there will be a market in the future for our common stock.
OTC Bulletin Board securities are not listed or traded on the floor of an organized national or regional stock exchange. Instead, OTC Bulletin Board securities transactions are conducted through a telephone and computer network connecting dealers in stocks. OTC Bulletin Board issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.
As of December 31, 2017, no shares of our common stock have traded.
Number of Holders
As of December 31, 2017, the 6,087,500 issued and outstanding shares of common stock were held by a total of 35 shareholder of record.
Dividends
No cash dividends were paid on our shares of common stock during the fiscal years ended December 31, 2017 and 2016. We have not paid any cash dividends since our inception and do not foresee declaring any cash dividends on our common stock in the foreseeable future.
Recent Sales of Unregistered Securities
None.
Purchase of our Equity Securities by Officers and Directors
None.
Other Stockholder Matters
Item 6. Selected Financial Data
Not applicable.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
RESULTS OF OPERATIONS
We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.
We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
FISCAL YEARENDED DECEMBER 31, 2017 COMPARED TO FISCAL YEAR ENDED DECEMBER 31, 2016.
Our net loss for the fiscal year ended December 31, 2017 was $18,678 compared to a net loss during the fiscal year ended December 31, 2016 of $923. During the fiscal year ended December 31, 2017, the Company generated $36,210 in sales.
During the fiscal year ended December 31, 2016, the Company had not generated any revenue.
Operating expenses for the year ended December 31, 2017 consisted of equipment rental of $23,970, professional fees of $19,003, and general and administrative expenses of $11,915. This compares with operating expenses for the year ended December 31, 2016 which consisted of general and administrative expenses of $923.
Operating Expenses incurred during the fiscal year ended December 31, 2017 compared to fiscal year ended December 31, 2016 increased primarily due to the increased scale and scope of business operations.
The weighted average number of shares outstanding was 5,679,688 for the fiscal year ended December 31, 2017 and 2,068,966 for the fiscal year ended December 31, 2016.
LIQUIDITY AND CAPITAL RESOURCES
FISCAL YEARS ENDED DECEMBER 31, 2017 and 2016
As of December 31, 2017, our total assets were $26,190 and were comprised of cash and cash equivalents, prepaid expenses, equipment and furniture; our total liabilities were $8,300 and were comprised of advances from a stockholder.
As of December 31, 2016, our total assets were $6,677 and were comprised of cash and cash equivalents and prepaid expenses; and liabilities consisted of advances from a stockholder of $2,600. Stockholders’ equity increased from $4,077 as of December 31, 2016 to $17,890 as of December 31, 2017. Stockholder’s equity increased due to common stock issuances.
Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities. For the fiscal year ended December 31, 2017, net cash flows used inoperating activities were ($19,748) consisting of a net loss of ($18,678) and an increase in prepaid expenses of $3,795.
Cash Flows from Investing Activities
We have not generated positive cash flows from investing activities. For the fiscal year ended December 31, 2017, net cash used in investing activities was $18,625 consisting of equipment purchases.
Cash Flows from Financing Activities
We have financed our operations primarily from either advancements or the issuance of equity and debt instruments. For the fiscal year ended December 31, 2017, net cash from financing activities was $38,190 consisting of issuance of common stock and related party loans.
PLAN OF OPERATION AND FUNDING
We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business.
Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next year. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) acquisition of software; (ii) developmental expenses associated with a start-up business; and (iii) marketing expenses. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.
MATERIAL COMMITMENTS
As of the date of this Annual Report, we do not have any material commitments.
PURCHASE OF SIGNIFICANT EQUIPMENT
We do not intend to purchase any significant equipment during the next twelve months.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this Annual Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
GOING CONCERN
The independent auditors' report accompanying our December 31, 2017 and December 31, 2016financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Not applicable to smaller reporting companies.
Item 8. Financial Statements
CRONA CORP.
TABLE OF CONTENTS
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Report of Independent Registered Public Accounting Firm |
| 13 |
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Balance Sheets as of December 31, 2017 and 2016 |
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Statements of Operations for the year ended December 31, 2017 and the Period from October 6, 2016 (Inception) to December 31, 2016 |
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Statement of Stockholders’ Equity from October 6, 2016 (Inception) through December 31, 2017 |
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Statements of Cash Flows for the year ended December 31, 2017 and the Period from October 6, 2016 (Inception) to December 31, 2016 |
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Notes to the Financial Statements |
| 18 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Crona Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Crona Corp. (the Company) as of December 31, 2017 and 2016, and the related statements of operations, changes in stockholders’ equity, and cash flows for the year ended December 31, 2017 and the period from inception (October 6, 2016) to December 31, 2016, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for the year ended December 31, 2017 and the period from inception (October 6, 2016) to December 31, 2016, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and negative operating cash flows since inception. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Accell Audit & Compliance, P.A.
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We have served as the Company’s auditor since 2017. | |
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Tampa, Florida | |
April 16, 2018 |
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CRONA CORP.
BALANCE SHEETS
ASSETS | December 31, 2017 | December 31, 2016 |
Current Assets |
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Cash and cash equivalents | $ 31 | $ 214 |
Prepaid assets | 5,408 | 1,613 |
Total Current Assets | 5,439 | 1,827 |
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Fixed Assets |
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Equipment and furniture, net of accumulated depreciation | 20,751 | 4,850 |
Total Fixed Assets | 20,751 | 4,850 |
Total Assets | $ 26,190 | $ 6,677 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Liabilities |
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Current Liabilities |
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Related party loan | $ 8,300 | $ 2,600 |
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Total Current Liabilities | 8,300 | 2,600 |
Total Liabilities | 8,300 | 2,600 |
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Commitments and Contingencies (Note 6) |
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Stockholders’ Equity |
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Common stock, par value $0.001; 75,000,000 shares authorized, 6,087,500 and 5,000,000 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively | 6,088 | 5,000 |
Additional paid-in capital | 31,403 | - |
Accumulated deficit | (19,601) | (923) |
Total Stockholders’ Equity | 17,890 | 4,077 |
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Total Liabilities and Stockholders’ Equity | $ 26,190 | $ 6,677 |
See accompanying notes to the financial statements and report of independent registered public accounting firm.
CRONA CORP.
STATEMENTS OF OPERATIONS
| For the Year ended December 31, 2017 | For the period from Inception (October 6, 2016) to December 31, 2016 |
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REVENUES | $ 36,210 | $ - |
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OPERATING EXPENSES |
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Equipment Rental Expense | 23,970 | - |
Professional Fees | 19,003 | - |
General and Administrative Expenses | 11,915 | 923 |
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TOTAL OPERATING EXPENSES | 54,888 | 923 |
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NET LOSS FROM OPERATIONS | (18,678) | (923) |
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PROVISION FOR INCOME TAXES | - | - |
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NET LOSS | $ (18,678) | $ (923) |
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NET LOSS PER SHARE: BASIC AND DILUTED | $ (0.00) | $ (0.00) |
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WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED | 5,679,688 | 2,068,966 |
See accompanying notes to the financial statements and report of independent registered public accounting firm.
CRONA CORP.
STATEMENT OF STOCKHOLDERS’ EQUITY
| Common Stock |
Additional Paid-in | Accumulated | Total Stockholders’ | |
| Shares | Amount | Capital | Deficit | Equity |
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Inception, October 6, 2016 | - | $ - | $ - | $ - | $ - |
Issuance of common stock | 5,000,000 | 5,000 | - | - | 5,000 |
Net loss | - | - | - | (923) | (923) |
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Balance, December 31, 2016 | 5,000,000 | 5,000 | - | (923) | 4,077 |
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Shares issued for cash | 1,087,500 | 1,088 | 31,403 | - | 32,491 |
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Net loss | - | - | - | (18,678) | (18,678) |
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Balance, December 31, 2017 | 6,087,500 | $ 6,088 | $ 31,403 | $ (19,601) | $ 17,890 |
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CRONA CORP.
| For the Year ended December 31, 2017 | For the period from Inception (October 6, 2016) to December 31, 2016 |
CASH FLOWS FROM OPERATING ACTIVITIES |
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Net loss | $ (18,678) | $ (923) |
Depreciation Expense | 2,725 | - |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Changes in assets and liabilities: |
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(Increase) decrease in prepaid expenses | (3,795) | (1,613) |
Cash flows used in operating activities | (19,748) | (2,536) |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Purchases of equipment and furniture | (18,625) | (4,850) |
Cash flows used in investing activities | (18,625) | (4,850) |
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CASH FLOWS FROM FINANCING ACTIVITIES
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Proceeds from issuance of common stock | 32,490 | 5,000 |
Related party loan | 5,700 | 2,600 |
Cash flows used in financing activities | 38,190 | 7,600 |
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NET INCREASE (DECREASE) IN CASH | (183) | 214 |
Cash, beginning of period | 214 | - |
Cash, end of period | $ 31 | $ 214 |
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SUPPLEMENTAL CASH FLOW INFORMATION: |
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Interest paid | $ - | $ - |
Income taxes paid | $ - | $ - |
See accompanying notes to the financial statements and report of independent registered public accounting firm.
CRONA CORP.
Notes to the Financial Statements
December 31, 2017 and 2016
Note 1 – ORGANIZATION AND NATURE OF BUSINESS
Crona Corp. (“the Company”) was incorporated in the State of Nevada on October 6, 2016. Crona Corp. was established for the purpose of quality sound recording needs. The Company is located in Romania and began its operations in early 2017.
The Company provides recording, studio and engineer/ producer services for record labels, music producers and recording artists.
Note 2 – GOING CONCERN
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”), which contemplate continuation of the Company as a going concern. The Company currently has losses and has not completed its efforts to establish a stabilized source of revenue sufficient to cover operating costs over an extended period of time. Therefore, there is substantial doubt about the Company’s ability to continue as a going concern. Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. The Company intends to position itself so that it will be able to raise additional funds through the capital markets. In light of management’s efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.
Note 3 – SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES
Basis of presentation
The accompanying financial statements have been prepared in accordance with GAAP. The Company’s year-end is December 31.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cashand Cash Equivalents
TheCompanyconsidersallhighlyliquidinvestmentswithoriginalmaturitiesofthreemonthsorlessto be cash equivalents.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
Equipment and furniture
Equipment is stated at cost, net of accumulated depreciation. The cost of equipment and furniture is depreciated using the straight-line method over 5 years. Expenditures for maintenance and repairs are charged to expense as incurred. Additions, major renewals and replacements that increase the equipment's useful life are capitalized. Equipment sold or retired, together with the related accumulated depreciation is removed from the appropriated accounts and the resultant gain or loss is included in net income.
Notes to the Financial Statements
December 31, 2017 and 2016
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 605, “Revenue Recognition”. ASC 605 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company will defer any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.
Basic Income (Loss) Per Share
The Company computes income (loss) per share in accordance with ASC 260 “Earnings Per Share”. Basic loss per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. For the period from October 6, 2016 (inception) through December 31, 2017 there were no potentially dilutive debt or equity instruments issued or outstanding.
Advertising
The Company expenses advertising costs as incurred. Advertising costs were $4,637 and $0 for the years ended December 31, 2017 and 2016, respectively. The company had a total of $3,313 and $0 of prepaid advertising costs as of Deember 31, 2017 and 2016, respectively.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivables. The Company places its cash with high credit quality financial institutions. At times such amount may exceed federally insured limits.
For the year ended December 31, 2017, three customers represented 90% of revenue.
Customer | % of Revenue |
MALISTIRNO SRL | 64% |
NM & Mike J Production | 13% |
World Music Ltd. | 13% |
Recent Accounting Pronouncements
We have reviewed all the recently issued, but not yet effective, accounting pronouncements and we do not believe any of these pronouncements will have a material impact on the Company.
In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, “Leases” (Topic 842), which issued new guidance related to leases that outlines a comprehensive lease accounting model and supersedes the current lease guidance. The new guidance requires lessees to recognize lease liabilities and corresponding right-of-use assets for all leases with lease terms of greater than 12 months. It also changes the definition of a lease and expands the disclosure requirements of lease arrangements. The new guidance must be adopted using the modified retrospective approach and will be effective for the Company in the fiscal year beginning January 1, 2019. Early adoption is permitted. The Company is currently evaluating the impact of this guidance, if any, on its financial statements and related disclosures.
Notes to the Financial Statements
December 31, 2017 and 2016
The Company will adopt ASU 2014-09 “Revenue from Contracts with Customers” (Topic 606) as of January 1, 2018. ASU 2014-09 will replace most existing revenue recognition guidance is US GAAP which it becomes effective. Management has evaluated the impact of the company’s adoption of ASU 2014-09 on its financial statements and does not expect the new standard to have a significant impact to its financial position, results of operations and related disclosures. To make this determination, management has identified the contract with its customer, identify the performance obligations, determined the transaction price, allocated the transaction price to the performance obligations in the contract, and recognized revenue when the Company satisfies the performance obligation.
Note 4 – PROPERTY AND EQUIPMENT, NET
| December 31, 2017 | December 31, 2016 |
Equipment | $18,650 | $4,850 |
Furniture | 4,825 | - |
Accumulated Depreciation | (2,724) | (-) |
Equipment and furniture, net | $20,751 | $4,850 |
Depreciation expense for the year ended December 31, 2017 was $2,724. There was no depreciation expense for the period from October 6, 2016 (Inception) to December 31, 2016, as the assets had not yet been placed into service.
Note 5 – RELATED PARTY TRANSACTIONS
The Company had an outstanding loan from its majority shareholder of $8,300 at December 31, 2017 and $2,600 at December 31, 2016. This loan is unsecured, non-interest bearing and due on demand.
Note 6 – COMMITMENTS AND CONTINGENCIES
The Company has entered into a one-year rental agreement for a $225 monthly fee, starting on December 1, 2016. Rent expense was $2,700 for the year ended December 31, 2017. Rent expense was $225 for the period from October 6, 2016 to December 31, 2016.
From time-to-time, the Company is subject to various litigation and other claims in the normal course of business. The Company establishes liabilities in connection with legal actions that management deems to be probable and estimable. No amounts have been accrued in the financial statements with respect to any matters.
Note 7 – INCOME TAXES
The Company adopted the provisions of uncertain tax positions as addressed in ASC 740 “Income Taxes” (“ASC 740”). As a result of the implementation of ASC 740, the Company recognized no increase in the liability for unrecognized tax benefits. As of December 31, 2017, the Company had net operating loss carry forwards of approximately $4,236 that may be available to reduce future years’ taxable income in varying amounts through 2036. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
CRONA CORP.
Notes to the Financial Statements
December 31, 2017 and 2016
The valuation allowance at December 31, 2017 was approximately $4,236. The net change in valuation allowance during the year ended December 31, 2017 was $3,922. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized.
The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on consideration of these items, management has determined that enough uncertainty exists relative to the realization of the deferred income tax asset balances to warrant the application of a full valuation allowance as ofDecember 31, 2017. All tax years since inception remain open for examination by taxing authorities.
The provision for Federal income tax consists of the following:
| At December 31, 2017 |
| At December 31, 2016 |
| |
Non-current deferred tax assets: |
|
|
|
| |
Net operating loss carry forward | $ | (4,236) |
| $ (314) |
|
Valuation allowance |
| 4,236 |
| 314 |
|
Net deferred tax assets | $ | - |
| $ - |
|
The actual tax benefit at the expected rate of 21% differs from the expected tax benefit for the year ended December 31, 2017 as follows:
|
| At December 31, 2017 | At December 31, 2016 |
Computed “expected” tax expense (benefit) |
$ | (3,922) | $ (314) |
Change in valuation allowance |
| 3,922 | 314 |
Actual tax expense (benefit) | $ | - | $ - |
The related deferred tax benefit on the above unutilized tax losses has a full valuation allowance not recognized against it as there is no certainty of its realization. Management has evaluated tax positions in accordance with ASC 740 and has not identified any significant tax positions, other than those disclosed.
Note 8 – SUBSEQUENT EVENTS
In accordance with ASC 855, “Subsequent Events”, the Company has analyzed its operations subsequent to December 31, 2017 to April 16, 2018, and has determined the following events:
On March 21, 2018, Andrei Gurduiala resigned as an officer and director of the Company and the Board of Directors appointed Robert T. Malasek as a Director, Chief Executive Officer, Chief Financial Officer and Secretary.
On March 21, 2018, our board appointed Robert T. Malasek as a Director, Chief Executive Officer, Chief Financial Officer and Secretary of the Company.
On March 21, 2018 the Company executed a Sale and Purchase of Assets Agreement in which it agrees to transfer all equipment and furniture owned at December 31, 2017 to its former majority shareholder for compensation owed for the period from January 1 to March 30, 2018.
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A(T). Controls and Procedures
Management’s Report on Disclosure Controls and Procedures
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2017 using the criteria established in “ Internal Control - Integrated Framework ” issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of December 31, 2017, the Company determined that there were control deficiencies that constituted material weaknesses, as described below.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting identified in connection with our evaluation we conducted of the effectiveness of our internal control over financial reporting as of December 31, 2017, that occurred during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.
PART III
Item 10. Directors, Executive Officers, Promoters and Control Persons of the Company
DIRECTORS AND EXECUTIVE OFFICERS
The name, address and position of our present officers and directors are set forth below:
Name and Address of Executive Officer and/or Director |
| Age |
| Position |
|
|
|
|
|
Robert T. Malasek
|
| 50 |
| President, Chief Executive Officer, Secretary, Chief Financial Officer and Chief Accounting Officer
|
|
|
|
|
|
Biographical Information and Background of officer and director
Robert T. Malasek
Mr. Malasek’s experience includes serving as the Assistant Controller for Starwood Hotel & Resorts Worldwide, Inc. and Chief Financial Officer for NatureWell, Inc. From 2011 to 2015, Robert served as the Chief Financial Officer, Secretary, Treasurer and a Director of Liberty Coal Energy Corp. Since 2015, Robert has served as the Chief Financial Officer of Cannalink, Inc. Robert received his Bachelor of Science in Accountancy from San Diego State University.
AUDIT COMMITTEE
We do not have an audit committee financial expert. We do not have an audit committee financial expert because we believe the cost related to retaining a financial expert at this time is prohibitive.
SIGNIFICANT EMPLOYEES
We have no employees other than our Treasurer and sole director, Robert T Malasek; he currently devotes approximately twenty hours per week to company matters. We intend to hire employees on an as needed basis.
Item 11. Executive Compensation
The following tables set forth certain information about compensation paid, earned or accrued for services by our President, and Secretary and all other executive officers (collectively, the “Named Executive Officers”) from inception on October 6, 2016 until December 31, 2017.
SUMMARY COMPENSATION TABLE
Name and Principal Position | Year | Salary (US$) | Bonus (US$) | Stock Awards (US$) | Option Awards (US$) | Non-Equity Incentive Plan Compensation (US$) | Nonqualified Deferred Compensation Earnings (US$) | All Other Compensation (US$) | Total (US$) |
Andrei Gurduiala (President) | 2017 | - | - | - | - | - | - | - | - |
Andrei Gurduiala (President) | 2016 | - | - | - | - | - | - | - | - |
There are no current employment agreements between the company and its sole officer. The compensation discussed herein addresses all compensation awarded to, earned by, or paid to our named executive officer. There are no other stock option plans, retirement, pension, or profit sharing plans for the benefit of our officers and directors other than as described herein.
CHANGE OF CONTROL
As of December 31, 2017, we had no pension plans or compensatory plans or other arrangements that provide compensation in the event of a termination of employment or a change in our control.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table provides certain information regarding the ownership of our common stock, as of December 31, 2017 and as of the date of the filing of this annual report by:
| • |
| each of our executive officers; |
| • |
| each director; |
| • |
| each person known to us to own more than 5% of our outstanding common stock; and |
| • |
| all of our executive officers and directors and as a group.
|
Title of Class |
| Name and Address of Beneficial Owner |
| Amount and Nature of Beneficial Ownership |
| Percentage |
| |
|
|
|
|
|
|
|
| |
Common Stock |
| Kettner Investments LLC
|
| 5,000,000 shares of common stock (director)
|
|
| 82%
| |
The percent of class is based on 6,087,500 shares of common stock issued and outstanding as of the date of this annual report.
Item 13. Certain Relationships and Related Transactions
During the year ended December 31, 2017, we had not entered into any transactions with our sole officer or director, or persons nominated for these positions, beneficial owners of 5% or more of our common stock, or family members of these persons wherein the amount involved in the transaction or a series of similar transactions exceeded the lesser of $120,000 or 1% of the average of our total assets for the last three fiscal years.
Item 14. Principal Accountant Fees and Services
During the fiscal year ended December 31, 2017, we incurred approximately $14,750 in fees to our principalindependent accountants for professional services rendered in connection with the audit of our financial statements and for the reviews of our financial statements for the year ended December 31, 2017 and $4,500 for the period ended December 31, 2016.
PART IV
Item 15. Exhibits
The following exhibits are filed as part of this Annual Report.
Exhibits:
31.1 Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act
31.2 Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act
32.1 Certification of Chief Executive Officer and Chief Financial Officer Under Section 1350 as Adopted Pursuant Section 906 of the Sarbanes-Oxley Act
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CRONA CORP. | |
Dated: April 17, 2018 | By: /s/ Robert T. Malasek
|
Robert T. Malasek, President andChief Executive Officer andChief Financial Officer |
