As filed with the Securities and Exchange Commission on May 12, 2011 Registration No. 333—169501
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 3 to
FORM S-1/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Crown Dynamics Corp.
(Name of Small Business Issuer in its Charter)
Delaware
(State or other jurisdiction of incorporation or organization)
3841
(Primary Standard Industrial Classification Code Number)
98-0665018
(I.R.S. Employer Identification Number)
c/o Amir Rehavi
12 Yemimah Street
Jerusalem 96387, Israel
Phone number: 972-506503520
Fax number: 972-506503520
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Crown Dynamics Corp.
113 Barksdale Professional Center
Newark, DE 19711
Tel. 302-266-9367
(Name, address, including zip code, and telephone number,
Including area code, of agent for service)
Copies of communications to:
John A, Cacchioli, Esq.
99 Tulip Avenue, Suite 108
Floral Park, New York 11001
Telephone No.: (516) 639-7676
Facsimile No.: (516) 328-8772
Approximate date of commencement of proposed sale to the public: Promptly after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.
x
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
¨
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
o
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.
o
Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer
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Accelerated Filer
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Non-accelerated filer
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Smaller reporting company
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x
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(Do not check if a smaller reporting company)
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Calculation of Registration Fee
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Proposed
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Proposed
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Amount
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Title
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Amount
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Maximum
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Maximum
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of
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Of Securities
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to be
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Offering Price
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Aggregate
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Registration
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To be Registered
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Registered
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Per Share
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Offering Price (1)
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Fee (1)
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Common Stock,(1)
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2,500,000
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$
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0.03
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$
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75,000
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$
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6.00
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Par value $0.0001
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Per share
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(1) Estimated pursuant to Rule 457 (o) under the securities Act of 1933 solely for the purpose of computing the amount of the registration fee.
Crown Dynamics does not intend to escrow any funds received through this offering. Once funds are received as the result of a completed sale of common stock being issued by us, those funds will be placed into our corporate bank account and may be used at the discretion of the management (as per Item 501(b)(8)(iii) of Regulation S-K).
The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND IS SUBJECT TO COMPLETION AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Preliminary Prospectus Subject To Completion Dated May 12, 2011
Crown Dynamics Corp.
Up to a Maximum of 2,500,000 Shares of Common Stock at $0.03 Per Share
We are offering for sale a maximum of 2,500,000 shares of our common stock in a self-underwritten offering directly to the public at a price of $0.03 per share. The offering will commence promptly after the effective date of this Registration Statement and close no later than 180 days after such date. However, we may extend the offering for up to 90 days following the 180-day offering period. We will pay all expenses incurred in this offering. There is no minimum amount of shares that we must sell in our direct offering, and therefore no minimum amount of proceeds will be raised. We may need to file for protection under bankruptcy laws if we do not raise net proceeds of at least $46,690. No arrangements have been made to place funds into escrow or any similar account. Upon receipt, offering proceeds will be deposited into our operating account and used to conduct our business and operations. We are offering the shares without any underwriting discounts or commissions. The purchase price is $0.03 per share. If all of the shares offered by us are purchased, the gross proceeds to us will be $75,000. This is our initial public offering and no public market currently exists for shares of our common stock.
We intend for our common stock to be sold by our officers and Directors. Such persons will not be paid any commissions for such sales.
Our common stock is presently not traded on any public market or securities exchange, and we have not applied for listing or quotation on any public market.
THE SECURITIES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE HEADING "RISK FACTORS" BEGINNING ON PAGE 7.
BECAUSE THERE IS NO MINIMUM NUMBER OF SHARES REQUIRED TO BE SOLD IN ORDER TO CLOSE THIS OFFERING, PROCEEDS FROM THIS OFFERING WILL NOT BE HELD IN ESCROW AND WILL BE IMMEDIATELY AVAILABLE FOR OUR USE, WITHOUT CONDITION, REGARDLESS OF THE AMOUNT OF PROCEEDS RAISED. IF WE FILE FOR BANKRUPTCY PROTECTION OR A PETITION FOR INVOLUNTARY BANKRUPTCY IS FILED BY CREDITORS AGAINST US, YOUR FUNDS WILL BECOME PART OF THE BANKRUPTCY ESTATE AND ADMINISTERED ACCORDING TO THE BANKRUPTCY LAWS. AS SUCH, YOU WILL LOSE YOUR INVESTMENT AND YOUR FUNDS WILL BE USED TO PAY CREDITORS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The information in this prospectus is not complete and may be changed. This prospectus is included in the registration statement that was filed by us with the Securities and Exchange Commission. We may not sell these securities until the registration statement becomes effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
The date of this prospectus is ________ __, 2011
TABLE OF CONTENTS
Prospectus Summary
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4
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Our Company
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4
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Our Direct Public Offering
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5
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The Offering
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5
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Selected Summary Financial Data
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7
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RISK FACTORS
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8
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RISKS RELATING TO OUR COMPANY
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8
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Use of Proceeds
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14
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Percent of Net Proceeds Received
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15
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Determination of Offering Price
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15
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Dilution
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15
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Our Business
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16
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General Development
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16
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THIRD-PARTY MANUFACTURERS
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17
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INTELLECTUAL PROPERTY
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18
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COMPETITION
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18
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Patent, Trademark, License & Franchise Restrictions
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19
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Contractual Obligations & Concessions
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19
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Employees
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19
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Transfer Agent
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19
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Research and Development
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19
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Description of Property
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19
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Management's Discussion
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20
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Analysis or Plan of Operation
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20
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Plan of Operation
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20
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General Working Capital
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21
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Quantitative and Qualitative Disclosures about Market Risk.
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21
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Analysis of Financial Condition and Results of Operations
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21
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Other
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21
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Recently Issued Accounting Pronouncements
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22
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Off-Balance Sheet Arrangements
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22
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Inflation
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22
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Market for Common Equity
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23
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Related Stockholder Matters
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23
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Market Information
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23
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Security Holders
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23
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Dividend Policy
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23
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Securities Authorized Under Equity Compensation Plans
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23
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Directors, Executive Officers, Promoters
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24
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Control Persons
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24
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Directors and Executive Officers
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24
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Audit Committee and Financial Expert
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24
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Code of Ethics
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25
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Potential Conflicts of Interest
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25
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Involvement in Certain Legal Proceedings
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25
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Executive Compensation
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25
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SUMMARY COMPENSATION TABLE
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25
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Option/SAR Grants
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25
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Long-Term Incentive Plans and Awards
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25
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Compensation of Directors
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26
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Employment Contracts, Termination of Employment
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26
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Change-in-control Arrangements
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26
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Certain Relationships and Related Transactions
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26
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Director Independence
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26
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Security Ownership of Certain Beneficial Owners and Management
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27
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Legal Proceedings
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27
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Description of Securities
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27
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Our Common Stock
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27
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Our Preferred Stock
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28
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Plan of Distribution
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28
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OFFERING PERIOD AND EXPIRATION DATE
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29
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PROCEDURES FOR SUBSCRIBING
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29
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Right to Reject Subscriptions
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30
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Underwriters
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30
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Regulation M
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30
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Section 15(G) of the Exchange Act
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30
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Changes In and Disagreements with Accountants On Accounting And Financial Disclosure
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30
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Indemnification for Securities Act Liabilities
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31
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Legal Matters
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31
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Experts
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31
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Interest of Named Experts and Counsel
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31
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Available Information
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31
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Information Not Required in Prospectus
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32
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Signatures
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35
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Exhibits Table
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36
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Prospectus Summary
The following summary highlights selected material information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the "Risk Factors" section, the financial statements, and the notes to the financial statements.
Our Company
We were incorporated in Delaware on June 15, 2010 and are a development stage company. On July 15, 2010, we entered into an exclusive worldwide patent sale agreement (the "Patent Transfer and Sale Agreement ") with Illanit Appelfeld, (the “Seller”), in relation to a patented technology (U.S. Patent Number: 5,799,354) (the “Patent”) for a toothbrush having a handle and a brush head, the brush head comprising two side, and one central bristle tuft bundles, each mounted to a respective separate base. The patented technology has the potential to be adopted as a standard in all homes, making a decisive contribution to dental hygiene.
The patent and technology were transferred to us in exchange of payment to Illanit Appelfeld (the Seller) of US $9,000 (Nine thousands United States Dollars), according to the terms and conditions specified in the Patent Transfer and Sale Agreement related to the U.S. Patent Number: 5,799,354.
The invention that is the subject of the Patent is for a toothbrush having a handle and a brush head, the brush head comprising two side, and one central bristle tuft bundles, each mounted to a respective separate base, each of the side bases being mounted to the brush head by an elongated, flexible hinge extending in the axial direction of the handle, and the central base being connected to the bases of the side bundles with hinges, so that under a force applied against the central bristles tuft, the bases of the side bundles pivot one in the direction of the other, and resume their initial position when the central bundle is relieved from said force. We plan to license the Patent to one or more third-parties to design, manufacture and market a product based on the Patent, in exchange for payment to us of an initial one-time license fee and of percentage royalty payments on future sales of products based on the Patent.
Our principal offices are located at 12 Yemimah Street, Jerusalem 96387, Israel. Our telephone number is 972- 506503520. Our registered office in Delaware is located at 113 Barksdale Professional Center, Newark, DE 19711, and our registered agent is Delaware Intercorp.
All references to "we," "us," "our," or similar terms used in this prospectus refer to Crown Dynamics Corp. Our fiscal year end is December 31.
Our auditors have issued an audit opinion which includes a statement describing our going concern status. Our financial status creates substantial doubt whether we will continue as a going concern. Investors should note that we have not generated any revenues to date, that we do not yet have any products available for sale, and that we have not entered into any license agreements with licensees for the development and manufacture of a proposed product based on our Patent.
As of May 12, 2011, our company has no cash and will need to raise additional capital within the next twelve months, even if we are able to sell the maximum number of shares. The company has no full time employees and our two current officers/directors intend to devote approximately five hours per week to Crown Dynamics business activities.
Our Direct Public Offering
We are offering for sale up to a maximum of 2,500,000 shares of our common stock directly to the public. There is no underwriter involved in this offering. We are offering the shares without any underwriting discounts or commissions. The purchase price is $0.03 per share. If all of the shares offered by us are purchased, the gross proceeds before deducting expenses of the offering will be $75,000. There is no minimum offering and we can use the proceeds even before we raise a sufficient amount of offering proceeds to pay our current liabilities. Because we can use the proceeds even before we raise a sufficient amount of offering proceeds to delay a bankruptcy filing, investors may lose their entire investment before they know whether we have raised sufficient proceeds to pay our current liabilities. The expenses associated with this offering are estimated to be $21,500 or approximately 28.7% of the gross proceeds of $75,000 if all the shares offered by us are purchased. Thus, the net proceeds from the offering if all of the shares offered are purchased would be $53,500. If all the shares offered by us are not purchased, then the percentage of offering expenses to gross proceeds will be higher and a lower amount of proceeds will be realized from this offering.
This is our initial public offering and no public market currently exists for shares of our common stock. We can offer no assurance that an active trading market will ever develop for our common stock.
The offering will terminate six months after this registration statement is declared effective by the Securities and Exchange Commission. However, we may extend the offering for up to 90 days following the six month offering period.
The Offering
Total shares of common stock outstanding prior to the offering
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3,000,000 shares
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Shares of common stock being offered by us
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2,500,000 shares
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Total shares of common stock outstanding after the offering
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5,500,000 shares
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Gross proceeds:
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Gross proceeds from the sale of all of the 2,500,000 shares of our common stock being offered pursuant to this registration statement will be $75,000..
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Use of Proceeds
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The proceeds from the sale of our shares will be used as general operating capital to help create and maintain a marketing effort to identify and contract with third party licensees interested in developing a product based on our Patent and bringing such product to market.
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Risk Factors
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There are substantial risk factors involved in investing in our Company. For a discussion of certain factors you should consider before buying shares of our common stock, see the section entitled "Risk Factors."
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Primary Market
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We intend to locate and contract with licensees that will sell a product based on our Patent in the Israeli market.
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This is a self-underwritten public offering, with no minimum purchase requirement. Shares will be offered on a best efforts basis and we do not intend to use an underwriter for this offering. We do not have an arrangement to place the proceeds from this offering in an escrow, trust, or similar account. Any funds raised from the offering will be immediately available to us for our immediate use.
As used in this prospectus, references to the "Company," "we," "our," or "us" refer to Crown Dynamics Corp., unless the context otherwise indicates.
A Cautionary Note on Forward-Looking Statements
This prospectus contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors,” that may cause our or our industry’s actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements.
While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Selected Summary Financial Data
This table summarizes our operating and balance sheet data as of the periods indicated. You should read this summary financial data in conjunction with the "Plan of Operations" and our audited financial statements and notes thereto included elsewhere in this prospectus.
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(June 15,
2010)
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Through
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(December 31
2010)
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Statement of Operations:
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Total revenues
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$
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-
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Total operating expenses
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$
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23,112
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(Loss) from operations
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$
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(23,112
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)
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Net (loss)
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$
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(23,112
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)
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(Loss) per common share
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$
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(0.01
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Weighted average number of common shares outstanding - Basic and diluted
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7,970,000
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As of
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(December
31,
2011)
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Balance Sheet:
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Cash in bank
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$
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300
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Deferred Offering Costs
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$
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20,000
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$
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Total current assets
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$
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20,300
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Total assets
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$
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20,300
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Total current liabilities
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$
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43,112
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Total liabilities
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$
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43,112
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Total stockholders' (deficit)
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$
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(22,812
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)
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Total liabilities and stockholders' (deficit)
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$
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20,300
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RISK FACTORS
This investment has a high degree of risk. Before you invest you should carefully consider the risks and uncertainties described below and the other information in this prospectus. If any of the following risks actually occur, our business, operating results and financial condition could be harmed and the value of our stock could go down. This means you could lose all or a part of your investment.
RISKS RELATING TO OUR COMPANY
1.
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We are a development stage company with no operating history and may never be able to carry out our business plan or achieve any revenues or profitability; at this stage of our business, even with our good faith efforts, potential investors have a high probability of losing their entire investment.
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We are subject to all of the risks inherent in the establishment of a new business enterprise. We were established on June 15, 2010, for the purpose of engaging in the development, manufacture, and sale of a toothbrush having a handle and a brush head (the brush head comprising two side, and one central bristle tuft bundles, each mounted to a respective separate base) intended to attain a non-longitudinal movement by normal longitudinal movement of the brush over teeth. We have not generated any revenues nor have we realized a profit from our operations to date, and there is little likelihood that we will generate any revenues or realize any profits in the short term. Any profitability in the future from our business will be dependent upon the successful marketing and licensing of our Patent to one or more third party design and manufacturing companies that would develop and sell a specially-designed toothbrush based on our Patent. Our business plan is subject to numerous industry-related risk factors as set forth herein. We may not be able to successfully carry out our business. There can be no assurance that we will ever achieve any revenues or profitability. Accordingly, our prospects must be considered in light of the risks, expenses, and difficulties frequently encountered in establishing a new business in our industry, and our Company is a highly speculative venture involving significant financial risk.
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We expect to incur operating losses in the next twelve months because we have no plan to generate revenues unless and until we successfully find a third party manufacturer to design, market, and sell a specially-designed toothbrush based on our Patent.
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We have never generated revenues. We intend to license our Patent to one ore more third party manufacturers, which will be responsible for developing a specially-designed toothbrush based on our Patent and bringing it to market. We own the right to exploit the technology and patent for the new invention. However, we have not developed or manufactured any toothbrushes based on our Patent for sale. We intend to license our Patent to one or more third parties to develop and manufacture an actual product based on our Patent. We will rely on these third parties to develop workable prototypes and to manufacture the proposed product. We expect to incur operating losses over the next twelve months because we have no source of revenues unless and until we are successful in licensing our Patent to one or more third parties. We cannot guarantee that we will ever be successful in licensing our Patent or in generating revenues in the future. We recognize that if we are unable to generate revenues, we will not be able to earn profits or continue operations. We can provide investors with no assurance that we will generate any operating revenues or ever achieve profitable operations.
3.
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We do not have sufficient cash to fund our operating expenses for the next twelve months, and we will require additional funds through the sale of our common stock, which requires favorable market conditions and interest in our activities by investors. We may not be able to sell our common stock and funding may not be available for continued operations.
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There is not enough cash on hand to fund our administrative expenses and operating expenses or our proposed marketing and promotion campaign for the next twelve months. Because we do not expect to have any cash flow from operations within the next twelve months, we will need to raise additional capital, which may be in the form of loans from current stockholders and/or from public and private equity offerings. Our ability to access capital will depend on our success in implementing our business plan. It will also depend upon the status of the capital markets at the time such capital is sought. Should sufficient capital not be available, the implementation of our business plan could be delayed and, accordingly, the implementation of our business strategy would be adversely affected. If we are unable to raise additional funds in the future, we may have to cease all substantive operations. In such event it would not be likely that investors would obtain a profitable return on their investment or a return of their investment at all.
4.
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Our auditors have expressed substantial doubt about our ability to continue as a going concern, and if we do not raise net proceeds of at least $40,000 from our offering, we may have to suspend or cease operations within twelve months.
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Our audited financial statements for the period from June 15, 2010, through December 31, 2010, were prepared using the assumption that we will continue our operations as a going concern. We were incorporated on June 15, 2010, and do not have a history of earnings. As a result, our independent accountants in their audit report have expressed substantial doubt about our ability to continue as a going concern. Continued operations are dependent on our ability to complete equity or debt financing activities or to generate profitable operations. Such capital formation activities may not be available or may not be available on reasonable terms. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty. We believe that if we do not raise net proceeds of at least $40,000 from our offering, we may have to suspend or cease operations within twelve months. Therefore, we may be unable to continue operations in the future as a going concern. If we cannot continue as a viable entity, our stockholders may lose some or all of their investment in the Company.
5.
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We have no track record that would provide a basis for assessing our ability to conduct successful business activities. We may not be successful in carrying out our business objectives.
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The revenue and income potential of our proposed business and operations are unproven as the lack of operating history makes it difficult to evaluate the future prospects of our business. There is nothing at this time on which to base an assumption that our business operations will prove to be successful or that we will ever be able to operate profitably. Accordingly, we have no track record of successful business activities, strategic decision-making by management, fund-raising ability, and other factors that would allow an investor to assess the likelihood that we will be successful in licensing our technology for the development, manufacture and sale of a product based on our Patent. There is a substantial risk that we will not be successful in implementing our business plan, or if initially successful, in thereafter generating any operating revenues or in achieving profitable operations.
6.
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Because we are not making provisions for a refund to investors, you may lose your entire investment.
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Even though our business plan is based upon the complete subscription of the shares offered through this offering, the offering makes no provisions for refund to an investor. We will utilize all amounts received from newly issued common stock purchased through this offering even if the amount obtained through this offering is not sufficient to enable us to go forward with our planned operations. Any funds received from the sale of newly issued stock will be placed into our corporate bank account. We do not intend to escrow any funds received through this offering. Once funds are received as the result of a completed sale of common stock being issued by us, those funds will be placed into our corporate bank account and may be used at the discretion of management.
7.
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As a development stage company, we may experience substantial cost overruns in marketing our technology and in locating and negotiating a license agreement with a third party for the licensing of our Patent and the manufacture of a product based on our Product
.
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We may experience substantial cost overruns in marketing our technology and in locating and negotiating a license agreement with a third party for the licensing of our Patent and the manufacture of a product based on our Product. We may not have sufficient capital to successfully implement and complete our project. We may not be able to find a third party manufacturer willing to license our technology and manufacture a product based on our Patent because of industry conditions, general economic conditions, and/or competition from potential manufacturers and distributors of competing products. In addition, the commercial success of any product is often dependent upon factors beyond the control of the company attempting to market the product, including, but not limited to, market acceptance of the product and whether or not third parties promote the products through prominent marketing channels and/or other methods of promotion. Even if we do succeed in raising the capital to locate and negotiate a license agreement with a third party for the licensing of our Patent and the manufacture of a product based on our Patent, we cannot ensure that the final cost for producing this product will be found to be warranted and reasonable, and therefore we cannot ensure that the product, if developed, will actually find popularity and acceptance.
8.
|
We will rely on third party licensees to develop, manufacture, and market a product
based on our Patent
.
|
We will rely on third parties to develop, manufacture, and market a product based on our Patent. If we are unable to enter into satisfactory license agreements, or if such third parties’ manufacturing and distribution plans are not satisfactory, we may not be able to commercialize products based on our Patent as planned. We may not be able to contract with third parties to manufacture products based on our Patent in an economical manner. Furthermore, third-party manufacturers may not adequately perform their obligations, which may impair our competitive position. If a manufacturer fails to perform, we could experience significant time delays or we may be unable to commercialize specialized toothbrushes based on our Patent, which would result in losses of sales and goodwill.
9.
|
We are a small company with limited resources compared to some of our current and potential competitors, and the third party licensees to whom we will license our technology may not be able to compete effectively and increase market share.
|
Specially-designed and patented toothbrushes are part of an industry that is competitive, and although we believe our technology offers unique developments, we cannot guarantee that these unique features are enough to effectively capture a significant enough market share to successfully launch and sustain a product based on our Patent. Based on our company’s initial research through both the Internet and trade journals, as well as through an extensive search through existing patents, we believe there is no one in the industry that has successfully brought a product like ours to market; nonetheless, our current and potential competitors have longer operating histories, significantly greater resources and name recognition, and a larger base of distributors and customers than we have. In addition, any third parties with whom we will eventually sign license agreements may not be able to successfully compete with current companies in the field. These competitors may have greater name credibility than our future third party licensees with our potential distributors and customers. These competitors also may be able to adopt more aggressive pricing policies and devote greater resources to the development, promotion, and sale of their products and services than our third party licensees can to products based on our Patent. To be competitive, our third party licensees will have to continue to invest significant resources in research and development, sales and marketing, and customer support. They may not have sufficient resources to make these investments or to develop the technological advances necessary to be competitive, which in turn will cause our business to suffer and restrict our profitability potential.
10.
|
Changing consumer preferences may negatively impact our business.
|
The Company's success is dependent upon the ongoing need and appeal for a specially-designed and patented toothbrush. Consumer preferences with respect to such devices are continuously changing and are difficult to predict. As a result of changing consumer preferences, we cannot assure you that a product based on our Patent will achieve customer acceptance, or that it will continue to be popular with consumers for any significant period of time, or that new products will achieve an acceptable degree of market acceptance, or that if such acceptance is achieved, it will be maintained for any significant period of time. Our success is dependent upon our third party licensees’ ability to develop, introduce, and gain customer acceptance, and on consumer willingness to continue on a long term basis to adapt their current hygienic practices to include the use of a specialized toothbrush based on our Patent. The failure of a product based on our Patent to achieve and sustain market acceptance and to produce acceptable margins could have a material adverse effect on our financial condition and results of operations.
11.
|
Because our Directors and officers have no experience in running a company that licenses the right to develop, manufacture, and sell specially-designed and patented toothbrushes, they may not be able to successfully operate such a business which could cause you to lose your investment
.
|
We are a development stage company and we intend to license our Patent to one or more third parties to manufacture, market, and sell specially-designed toothbrushes based on our Patent. Amir Rehavi and Chanah Zehavi, our current Directors and Officers, have effective control over all decisions regarding both policy and operations of our Company with no oversight from other management. Our success is contingent upon the ability of these individuals to make appropriate business decisions in these areas. However, our Directors and Officers have no experience in operating a company that licenses the right to develop, manufacture, and sell specially-designed and patented toothbrushes. It is possible that this lack of relevant operational experience could prevent us from becoming a profitable business and hinder an investor from obtaining a return on his investment in us.
12.
|
Because Amir Rehavi and Chanah Zehavi have other outside business activities and will only be devoting up to 10% of their time to our operations, our operations may be sporadic which may result in periodic interruptions or suspensions of our business activities.
|
Our Directors and officers are only engaged in our business activities on a part-time basis. This could cause the officers a conflict of interest between the amount of time they devote to our business activities and the amount of time required to be devoted to their other activities. Amir Rehavi and Chanah Zehavi, our current Directors and officers, intend to devote only approximately 5 hours per week to our business activities. Subsequent to the completion of this offering, we intend to increase our business activities in terms of business development, marketing and promotion. This increase in business activities may require that either our Directors or our Officers engage in our business activities on a full-time basis or that we hire additional employees; however, at this time, we do not have sufficient funds to pursue either option.
13.
|
Our Directors own 100% of the outstanding shares of our common stock, and may be able to influence control of the company or decision making by management of the Company.
|
Our Directors presently own 100% of our outstanding common stock. If all of the 2,500,000 shares of our common stock being offered hereby are sold, the shares held by our Directors will constitute approximately 55% of our outstanding common stock. After sale of all stock, the current Directors will still have a majority control and will still have a majority of the voting power for all business decisions.
14.
|
If our intellectual property protection is inadequate, competitors may gain access to our technology and undermine our competitive position.
|
We regard our current and future intellectual property as important to our success, and we rely on patent law to protect our proprietary rights. Despite our precautions, unauthorized third parties may copy certain portions of products based on our Patent or reverse engineer or obtain and use information that we regard as proprietary. We have been granted one patent in the United States and we may seek additional patents in the future. We do not know if any future patent application will be issued with the scope of the claims we seek, if at all, or whether any patents we receive will be challenged or invalidated. Thus, we cannot assure you that our intellectual property rights can be successfully asserted in the future or that they will not be invalidated, circumvented or challenged. In addition, the laws of some foreign countries do not protect proprietary rights to the same extent as do the laws of the United States. Our means of protecting our proprietary rights in the United States or abroad may not be adequate and competitors may independently develop a similar technology. Any failure to protect our proprietary information and any successful intellectual property challenges or infringement proceedings against us could have a material adverse affect on our business, financial condition, or results of operations.
15.
|
We may be subject to intellectual property litigation, such as patent infringement claims, which could adversely affect our business.
|
Our success will also depend in part on our ability to locate one or more third party licensees to develop a commercially viable product without infringing the proprietary rights of others. Although we have not been notified of any infringement claims, other patents could be filed which would prohibit or limit our third party licensees’ ability to develop and market specialized toothbrushes based on our Patent in the future. In the event of an intellectual property dispute, we may be forced to litigate. Intellectual property litigation would divert management's attention from developing our product and would force us to incur substantial costs regardless of whether or not we are successful. An adverse outcome could subject us to significant liabilities to third parties, and force us to cease operations.
16.
|
You may experience difficulties in attempting to enforce liabilities based upon U.S. federal securities laws against our non-U.S. resident Directors and officers.
|
Since all of our officers and Directors are located in Israel, any attempt to enforce liabilities upon such individuals under the U.S. securities and bankruptcy laws may be difficult.
In accordance with the Israeli Law on Enforcement of Foreign Judgments, 5718-1958, and subject to certain time limitations (the application to enforce the judgment must be made within five years of the date of judgment or such other period as might be agreed between Israel and the United States), an Israeli court may declare a foreign civil judgment enforceable if it finds that:
|
•
|
the judgment was rendered by a court which was, according to the laws of the State in which the court is located, competent to render the judgment;
|
|
•
|
the judgment may no longer be appealed;
|
|
•
|
the obligation imposed by the judgment is enforceable according to the rules relating to the enforceability of judgments in Israel and the substance of the judgment is not contrary to public policy; and
|
|
•
|
the judgment is executory in the State in which it was given.
|
An Israeli court will not declare a foreign judgment enforceable if:
|
•
|
the judgment was obtained by fraud;
|
|
•
|
there is a finding of lack of due process;
|
|
•
|
the judgment was rendered by a court not competent to render it according to the laws of private international law in Israel;
|
|
•
|
the judgment is in conflict with another judgment that was given in the same matter between the same parties and that is still valid; or
|
|
•
|
the time the action was instituted in the foreign court, a suit in the same matter and between the same parties was pending before a court or tribunal in Israel.
|
In general, an obligation imposed by the judgment of a United States court is enforceable according to the rules relating to the enforceability of judgments in Israel, and a United States court is considered competent to render judgments according to the laws of private international law in Israel.
Furthermore, Israeli courts may not adjudicate a claim based on a violation of U.S. securities laws if the court determines that Israel is not the most appropriate forum in which to bring such a claim. Even if an Israeli court agrees to hear such a claim, it may determine that Israeli law, not U.S. law, is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proven as a fact, which can be a time-consuming and costly process.
Since our Directors and executive officers do not reside in the United States it may be difficult for courts in the United States to obtain jurisdiction over our foreign assets or persons and, as a result, it may be difficult or impossible for you to enforce judgments rendered against us or our Directors or executive officers in United States courts. Thus, investing in us may pose a greater risk because should any situation arise in the future in which you have a cause of action against these persons or us, you may face potential difficulties in bringing lawsuits or, if successful, in collecting judgments against these persons or us.
17.
|
If and when products based on our Patent are sold, we may be liable for product liability claims and we presently do not maintain product liability insurance.
|
The specially-designed and patented toothbrushes may expose us to potential liability from personal injury or property damage claims by end-users of the product. We currently have no product liability insurance to protect us against the risk that in the future a product liability claim or product recall could materially and adversely affect our business. Inability to obtain sufficient insurance coverage at an acceptable cost or otherwise to protect against potential product liability claims could prevent or inhibit the commercialization of our product. We cannot assure you that when our third party licensees commence distribution of a product based on our Patent that we will be able to obtain or maintain adequate coverage on acceptable terms, or that such insurance will provide adequate coverage against all potential claims. Moreover, even if we maintain adequate insurance, any successful claim could materially and adversely affect our reputation and prospects, and divert management’s time and attention. If we are sued for any injury allegedly caused by future products based on our Patent, our liability could exceed our total assets and our ability to pay the liability.
18
.
|
We did not conduct due diligence regarding the inventors’ experience nor regarding what was involved in designing and patenting the technology
.
|
We did not conduct due diligence regarding the inventor’s experience in the dental field nor regarding what was involved in designing and patenting the technology that underlies the Patent. We do not know whether the inventor had experience in the dental field or whether he properly designed the technology. Neither can we assure you that we will be able to develop the patented technology into a product. Any failure in the design of the patented technology could have a material adverse affect on our business, financial condition, or results of operations.
Risks Relating to our Common Stock
19.
|
We may in the future issue additional shares of our common stock which would reduce investors’ ownership interests in the Company and which may dilute our share value. We do not need stockholder approval to issue additional shares.
|
Our certificate of incorporation authorizes the issuance of 200,000,000 shares of common stock, par value $0.0001 per share. The future issuance of all or part of our remaining authorized common stock may result in substantial dilution in the percentage of our common stock held by our then existing stockholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock.
20.
|
Our common stock is subject to the "penny stock" rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.
|
The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person's account for transactions in penny stocks; and (ii) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must: (i) obtain financial information and investment experience objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Security and Exchange Commission relating to the penny stock market, which, in highlight form: (i) sets forth the basis on which the broker or dealer made the suitability determination; and (ii) that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
21.
|
We do not intend to pay cash dividends on our shares of common stock but rather, we intend to finance the development and expansion of our business, delaying or perhaps preventing investors from receiving a return on their shares.
|
Because we do not intend to pay any cash dividends on our shares of common stock, our stockholders will not be able to receive a return on their shares unless they sell them.
We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them at a price higher than that which they initially paid for such shares.
22.
|
The investors may sustain a loss of their investment based on the offering price of our common stock.
|
The price of our common stock in this offering has not been determined by any independent financial evaluation, market mechanism or by our auditors, and is therefore, arbitrary. Because we have no significant operating history and have not generated any revenues to date, the price of our common stock is not based on past earnings, nor is the price of our common stock indicative of the current market value of the assets owned by us. . As a result, the price of the common stock in this offering may not reflect how the stock is received on the market. There can be no assurance that the shares offered hereby are worth the price for which they are offered and investors may therefore lose a portion or all of their investment.
23.
|
State securities laws may limit secondary trading, which may restrict the states in which you may sell the shares offered by this prospectus.
|
If you purchase shares of our common stock sold in this offering, you may not be able to resell the shares in any state unless and until the shares of our common stock are qualified for secondary trading under the applicable securities laws of such state or there is confirmation that an exemption, such as listing in certain recognized securities manuals, is available for secondary trading in such state. Thirty-three states have what is commonly referred to as a “manual exemption” for secondary trading of securities such as those to be resold by selling stockholders under this registration statement. In these states, so long as the issuer obtains and maintains a listing in Mergent, Inc. or Standard and Poor’s Corporate Manual, secondary trading of common stock can occur without any filing, review or approval by state regulatory authorities in these states. These states are: Alaska, Arizona, Arkansas, Colorado, Connecticut, District of Columbia, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Nebraska, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Texas, Utah, Washington, West Virginia, and Wyoming. Ten states provide for an exemption for non-issuer transactions in outstanding securities effected through a registered broker-dealer when the securities are subject to registration under Section 12 of the Securities Exchange Act of 1934 for at least 90 days (180 days in Alabama). These states are: Alabama, Colorado, District of Columbia, Illinois, Kansas, Missouri, New Jersey, New Mexico, Oklahoma, and Rhode Island.
We currently do not intend to register or qualify our stock in any state or seek coverage in one of the recognized securities manuals. Because the shares of our common stock registered hereunder have not been registered for resale under the blue sky laws of any state, and we have no current plans to register or qualify our shares in any state, the holders of such shares and persons who desire to purchase such shares in any trading market that might develop in the future should be aware that there may be significant state blue sky restrictions upon the ability of investors to purchase and sell such shares. In this regard, each state's statutes and regulations must be reviewed before engaging in any securities sales activities in a state to determine what is permitted, or not permitted, in a particular state. Nevertheless, we do intend to file a Form 8-A promptly after this registration statement becomes effective, thereby subjecting our stock registered hereunder to registration under Section 12 of the Securities Exchange Act of 1934. Furthermore, even in those states that do not require registration or qualification for the resale of registered securities, such states may require the filing of notices or place additional conditions on the availability of exemptions. Accordingly, since many states continue to restrict the resale of securities that have not been qualified for resale, investors should consider any potential secondary market for our securities to be a limited one.
In addition, at this time we do not know in which states, if any, we will be selling the offered securities or whether our securities will be registered or exempt from registration under the laws of such state. Our officers reside outside of the United States, and initially they intend to sell the offered securities to foreign investors. Should they be unsuccessful in selling all of the offered securities to foreign investors, they may seek to locate investors in the United States, in which case, we will then address all applicable state law registration requirements. In addition, in connection with our intent to have our securities listed on the OTCBB, a determination regarding state law registration requirements will be made in conjunction with those market makers, if any, who agree to serve as market makers for our common stock. We have not yet applied to have our securities registered in any state, and we will not do so until we receive expressions of interest from investors resident in specific states after they have reviewed our Registration Statement. We will comply with the relevant blue-sky laws of any state in which we decide to sell our securities.
Use of Proceeds
The net proceeds to us from the sale of up to 2,500,000 shares offered at a public offering price of $0.03 per share will vary depending upon the total number of shares sold. Regardless of the number of shares sold, we expect to incur offering expenses estimated at approximately $21,500, $20,000 for legal, accounting (incurred), and $1,500 of other costs in connection with this offering (estimated transfer agent fees). The table below shows the intended net proceeds from this offering we expect to receive for scenarios where we sell various amounts of the shares. Since we are making this offering without any minimum requirement, there is no guarantee that we will be successful at selling any of the securities being offered in this prospectus. Accordingly, the actual amount of proceeds we will raise in this offering, if any, may differ.
None of the proceeds from this offering will be used to pay the salaries or make any other payments to our officers and directors.
Percent of Net Proceeds Received
|
|
40%
|
|
|
60%
|
|
|
80%
|
|
|
100%
|
|
Shares Sold
|
|
|
1,000,000
|
|
|
|
1,500,000
|
|
|
|
2,000,000
|
|
|
|
2,500,000
|
|
Gross Proceeds
|
|
$
|
30,000
|
|
|
$
|
45,000
|
|
|
$
|
60,000
|
|
|
$
|
75,000
|
|
Less Offering Expenses
|
|
$
|
(21,500
|
)
|
|
$
|
(21,500
|
)
|
|
$
|
(21,500
|
)
|
|
$
|
(21,500
|
)
|
Net Offering Proceeds
|
|
$
|
8,500
|
|
|
$
|
23,500
|
|
|
$
|
38,500
|
|
|
$
|
53,500
|
|
The Use of proceeds set forth below demonstrates how we intend to use the funds under the various percentages of amounts of the related offering. All amounts listed below are estimates.
|
|
40%
|
|
|
60%
|
|
|
80%
|
|
|
100%
|
|
General working capital
|
|
$
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
6,810
|
|
Marketing Licensing Rights to Third Parties
|
|
$
|
1,000
|
|
|
|
3,500
|
|
|
|
8,810
|
|
|
$
|
10,000
|
|
Existing Liabilities
|
|
$
|
4,000
|
|
|
|
5,000
|
|
|
|
6,690
|
|
|
|
6,690
|
|
SEC reporting, legal fees, accounting, auditing, and transfer agent fees
|
|
$
|
3,500
|
|
|
|
15,000
|
|
|
|
23,000
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
8,500
|
|
|
|
23,500
|
|
|
|
38,500
|
|
|
$
|
53,500
|
|
Our offering expenses are comprised of legal and accounting expenses and transfer agent fees related to the offering. Our Officers and Directors will not receive any compensation for their efforts in selling our shares.
We intend to use the proceeds of this offering in the manner and in order of priority set forth above. We do not intend to use the proceeds to acquire assets or finance the acquisition of other businesses. At present, no material changes are contemplated. Should there be any material changes in the projected use of proceeds in connection with this offering, we will issue an amended prospectus reflecting the new uses.
In all instances, after the effectiveness of this registration statement, the Company will need some amount of working capital to maintain its general existence and comply with its public reporting obligations. Our Company estimates that we will need approximately $30,000 per year to cover expenses for public reporting, legal fees, accounting, auditing, and transfer agent fees. The Company recognizes that if it does not raise net proceeds of at least $46,690 in this offering it will have to seek additional funds to cover these expenses. The $46,690 in net proceeds that we need to stay in business for twelve months is comprised of (i) $6,690 for existing liabilities, (ii) $10,000 for marketing expenses to locate and contract with one or more third party licensees, and (iii) $30,000 for reporting and operating expenses. While the existing liabilities on our balance sheet also include $14,922 in shareholder loans and $21,500 in deferred offering costs, the shareholders loans do not have a fixed repayment date and the deferred offering costs will be paid out of the gross proceeds from the offering. The net proceeds from the offering will not be used to pay either of these liabilities.
In addition to changing allocations because of the amount of proceeds received, we may change the use of proceeds because of required changes in our business plan. Investors should understand that we have wide discretion over the use of proceeds. Therefore, management decisions may not be in line with the initial objectives of investors who will have little ability to influence these decisions.
Determination of Offering Price
Our common stock is presently not traded on any market or securities exchange and we have not applied for listing or quotation on any public market. Our Company will be offering the shares of common stock being covered by this prospectus at a price of $0.03 per share. Such offering price does not have any relationship to any established criteria of value, such as book value or earnings per share. Because we have no significant operating history and have not generated any revenues to date, the price of our common stock is not based on past earnings, nor is the price of our common stock indicative of the current market value of the assets owned by us. No valuation or appraisal has been prepared for our business and potential business expansion.
The offering price was determined arbitrarily based on a determination by the Board of Directors of the price at which they believe investors would be willing to purchase the shares. Additional factors that were included in determining the offering price are the lack of liquidity resulting from the fact that there is no present market for our stock and the high level of risk considering our lack of profitable operating history.
Dilution
Purchasers of our securities in this offering will experience immediate and substantial dilution in the net tangible book value of their common stock from the initial public offering price. Historical net tangible book value per share of common stock is equal to our total tangible assets less total liabilities, divided by the number of shares of common stock outstanding as of December 31 2010, as adjusted to give effect to the receipt of net proceeds from the sale of shares of common stock for $0.03, which represents net proceeds after deducting estimated offering expenses of $21,500. Dilution in net tangible book value per share represents the difference between the amount per share paid by purchasers of shares of our common stock in this offering and the net tangible book value per share of our common stock immediately following this offering. The following table represents the related Dilution under each offering scenario accordingly.
Shares Sold
|
|
|
1,000,000
|
|
|
|
1,500,000
|
|
|
|
2,000,000
|
|
|
|
2,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Proceeds less offering Expenses
|
|
|
8,500
|
|
|
|
23,500
|
|
|
|
38,500
|
|
|
|
53,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical Net Tangible Book Value before the Offering
|
|
|
-22,812
|
|
|
|
-22,812
|
|
|
|
-22,812
|
|
|
|
-22,812
|
|
Historical Net Tangible Book Value Per Share before the Offering
|
|
|
-0.0076
|
|
|
|
-0.0076
|
|
|
|
-0.0076
|
|
|
|
-0.0076
|
|
Historical Net Tangible Book Value after the Offering
|
|
|
(14,312
|
)
|
|
|
688
|
|
|
|
15,688
|
|
|
|
30,688
|
|
Historical Net Tangible Book Value Per Share after the Offering
|
|
|
-0.0336
|
|
|
|
0.0002
|
|
|
|
0.0031
|
|
|
|
0.0056
|
|
Increase per share to existing Shareholders
|
|
|
-0.0037
|
|
|
|
0001
|
|
|
|
30
|
|
|
|
0.0055
|
|
Dilution Per Share to New Shareholders
|
|
|
0.0336
|
|
|
|
0.0298
|
|
|
|
0.0269
|
|
|
|
0.0244
|
|
Dilution Percentage to New investors in the Offering
|
|
|
1.1193
|
|
|
|
0.9949
|
|
|
|
0.8954
|
|
|
|
0.8140
|
|
The following table sets forth as of December 31 , 2010, the number of shares of common stock purchased from us and the total consideration paid by our existing stockholders and by new investors in this offering if new investors purchase 100% of the offering, before deducting offering expenses payable by us, assuming a purchase price in this offering of $0.03 per share of common stock.
|
|
Shares
|
|
|
|
|
|
|
Number
|
|
|
Percent
|
|
|
Amount
|
|
Existing Stockholders
|
|
|
3,000,000
|
|
|
|
55
|
%
|
|
$
|
300
|
|
New Investors
|
|
|
2,500,000
|
|
|
|
45
|
%
|
|
$
|
75,000
|
|
Total
|
|
|
5,500,000
|
|
|
|
100
|
%
|
|
$
|
75,300
|
|
Our Business
General Development
We were incorporated in Delaware on June 15, 2010 and we are a development stage company. We have acquired the rights, title, and interest in and to a specially-designed and patented toothbrush having a handle and a brush head (the brush head comprising two side, and one central bristle tuft bundles, each mounted to a respective separate base) intended to attain a non-longitudinal movement by normal longitudinal movement across the teeth. This transverse movement of the side bristles will bring about a brushing action of the teeth surfaces in a direction perpendicular to the tangential direction of the brush during the normal toothbrushing movement. We have not generated any revenues to date and our operations have been limited to organizational, start-up, and capital formation activities. We currently have no employees other than our Officers, who are also our Directors and work only part time.
We have never declared bankruptcy, have never been in receivership, and have never been involved in any legal action or proceedings. We have not made any significant purchase or sale of assets, nor has the Company been involved in any mergers, acquisitions or consolidations. We are not a blank check registrant as that term is defined in Rule 419(a)(2) of Regulation C of the Securities Act of 1933, because we have a specific business plan and purpose. Neither Crown Dynamics Corp., nor its Officers, Directors, promoters or affiliates, has had preliminary contact or discussions with, nor do we have any present plans, proposals, arrangements or understandings with any representatives of the owners of any business or company regarding the possibility of an acquisition or merger.
A Patent Transfer and Sale Agreement was signed between Illanit Appelfeld (the “Seller”), in relation to a patented technology on July 15, 2010, granting Crown Dynamics Corp. exclusive rights, title and interest in and to the Patent (U.S. Patent Number: 5,799,354) and all Intellectual Property rights, free and clear of any lien, charge, claim, preemptive rights, etc. for a toothbrush having a handle and a brush head (the brush head comprising two side, and one central bristle tuft bundles, each mounted to a respective separate base) intended to attain a non-longitudinal movement by normal longitudinal movement.
The invention, based on a patented technology, is a toothbrush having a handle and a brush head (the brush head comprising two side, and one central bristle tuft bundles, each mounted to a respective separate base) intended to attain a non-longitudinal movement by normal longitudinal movement.
Crown Dynamics’ invention relates to toothbrushes and more particularly to toothbrushes with more than one bristle tuft bundles which are adapted to perform different relative movements during use thereof. Though there are countless toothbrush design variations being manufactured and sold globally, it is common for the design to strive to achieve the goal of attaining a movement of the bristles in a direction perpendicular to the tangential direction of the teeth during and generated by normal use of the brush. Electric toothbrushes come closer to this movement, but involve higher cost and upkeep than standard non-electric models.
Crown Dynamics’ Patent Transfer and Sales Agreement was entered into with Illanit Appelfeld, a representative of a patent attorney firm that assisted the inventor, who lacked the funds to develop a prototype and bring the invention to market. This firm of patent lawyers is in the business of matching inventors to patent buyers and has no interest in or intention of developing themselves products based on the patents that they sell. Crown Dynamic, its directors, officers and affiliates have no relationship with the Seller or her affiliates. When we purchased the Patent, we were not aware of any other patented technology for a toothbrush sold by the Seller. We have since been informed that the Seller sold a patented technology regarding the same category of product to Dynamic Ventures. We are not aware of any other patented technology relating to toothbrushes sold by this patent attorney firm
When we purchased the Patent from the Seller, we were not aware of any other purchasers of other patented technology for a toothbrush that were able to commercialize the patents purchased or that changed their business plans. We have since been informed that Dynamic Ventures had purchased a patented technology for a toothbrush from the Seller, and that Dynamic Ventures did not commercialize the purchased patent, but instead changed its line of business. We are not aware of what efforts, if any, Dynamic Ventures made to commercialize the patented technology before deciding to change its line of business.
We are not aware of any other purchasers of other patented technologies relating to toothbrushes from the Seller that have commercialized their patents. Those on the market are different from our patented technology, as detailed in this document.
Finally, there is no relationship between Crown Dynamics, its officers, directors and/or affiliates and other parties that purchased other technologies for toothbrushes, their affiliates and/or promoters.
Crown Dynamic’s design is a non-electric toothbrush which is simple and straightforward to use and of an integral structure, which is expected to be low-cost and simple to produce, and should achieve better and more healthy toothbrushing. We plan to license our Patent to one or more third party licensees to develop, manufacture, and sell a specialized toothbrush based on our Patent, in exchange for a one-time license fee and ongoing royalty payments based on sales.. An example of another patented design using a similar, though different, design, is disclosed in U.S. Pat. No. 5,269,038 dated December 14, 1993, relating to "Rocker Toothbrush". However, according to United States Patent 5,799,354, which presents the technology upon which our proposed product will be manufactured, while the concept of providing separate hinged bristle-carrying pads is in fact sound, the particular arrangement proposed in the “Rocker Toothbrush” failed to achieve its goal. By contrast, our design consists of two side and one central bristle tuft bundles, each mounted to a respective separate base. Each of the side bases being mounted to the brush head by an elongated, flexible hinge extending in the axial direction of the handle; and the central base is hingedly connected to the bases of the side bundles, so that under a force applied against the central bristles tuft, the bases of the side bundles pivot one in the direction of the other, and resume their initial position when the central bundle is relieved from said force.
Another example is U.S. Pat. No. 5,483,22 dated January 16, 1996, related to a Toothbrush with resilient flexible bristle support. The bristles of this toothbrush are mounted on a flexed, resilient member supported from a handle by means of one or more handle extensions. The bristles are arranged in arrays with a center array for engaging the biting surface of a tooth and outer arrays for simultaneously engaging the sides of the tooth and adjacent gums when the resilient member is flexed by the engagement of the center array bristles with the tooth. However, this design does not include the hinged connection the base for the side bundles as in the Crown Dynamics model. Thus the bundles cannot pivot one in the direction of the other, as our toothbrush is expected to do.
In effect, while there may be several dozen types of toothbrushes on the market or patented, none offer the hinged, pivoting motion that should attain a non-longitudinal movement by normal longitudinal movement.
The design and development of a commercial product will be carried out by one or more third party licensees offering expertise in several relevant disciplines, including plastics for the handle and recommendations for bristles and other elements, device design, operation and control, automation and mechanics involved in manufacturing, as required.
The Company estimates that a third party licensee will need approximately 9 months to develop a working prototype and engineering specifications, after a licensing agreement is entered into. Once the prototype is successfully tested and operational, the Company estimates that a third party licensee will need another 4-6 months to successfully bring the product based on our Patent to the market.
Our principal office is located c/o Amir Rehavi, 12 Yemimah Street Jerusalem 96387, Israel. Our telephone number is 972-506503520.
Business Summary and Background
Crown Dynamics owns a Patent for the design of a specialized toothbrush having a handle and a brush head (handle and a brush head (the brush head comprising two side, and one central bristle tuft bundles, each mounted to a respective separate base) intended to attain a non-longitudinal movement by normal longitudinal movement across the teeth. This transverse movement of the side bristles will bring about a brushing action of the teeth surfaces in a direction perpendicular to the tangential direction of the brush during the normal toothbrushing movement.
Crown Dynamic’s design is a non-electric toothbrush which is simple and straightforward to use and of an integral structure, which is expected to be low-cost and simple to produce, If the purpose of the invention is realized, the planned product based on our Patent should achieve better and more healthy toothbrushing by simulating longitudinal brushing even when moving in a lateral direction. Once we are successful in locating and entering into a contract with a third party to license a product based on our Patent and to develop a prototype, the device will be tested to confirm these results. However, until the Company’s third party licensee successfully develops a prototype and test it, the Company cannot currently estimate the full extent of the benefits to be gained from this specially-designed toothbrush.
As soon as the company starts to raise equity (following the S-1 becoming effective), it will begin to use the raised proceeds to commence its marketing campaign to identify and come to terms with one or more third party licensees.
THIRD-PARTY MANUFACTURERS
We will rely on third party licensees to develop, manufacture, and market a product based on our Patent. If our licensing agreements are not satisfactory, we may not be able to commercialize our Patent as planned. In addition, we may not be able to contract with third parties to manufacture our device in an economical manner. Furthermore, third-party manufacturers may not adequately perform their obligations, which may impair our competitive position. If a manufacturer fails to perform, we could experience significant time delays or we may be unable to commercialize our Patent.
INTELLECTUAL PROPERTY
On July 15, 2010, we signed a Patent Transfer and Sale Agreement with Illanit Appelfeld, in relation to a patented technology (U.S. Patent number: 5,799,354), wherein we purchased all rights, title and interest in, a toothbrush having a handle and a brush head (the brush head comprising two side, and one central bristle tuft bundles, each mounted to a respective separate base) intended to attain a non-longitudinal movement by normal longitudinal movement. As cited in Item 101 (h)(4)(vii) of Regulation S-K, the Patent was issued on September 1, 1998 and will expire on August 31, 2015. No other trademarks, licenses, franchises, concessions, royalty agreement s or labor contracts are in effect regarding this prospectus.
COMPETITION
The present invention (covered by patent number 5,799,354) is a toothbrush having a handle and a brush head (the brush head comprising two side, and one central bristle tuft bundles, each mounted to a respective separate base) intended to attain a non-longitudinal movement by normal longitudinal movement. There are several manufacturers of toothbrushes in general, and manual (versus electric) toothbrushes specifically. American Dental Association recommends changing toothbrushes every three months and possibly more often in some cases (such as illness). While difficult to estimate, according to a 1983 estimate by Colgate, a leading toothbrush manufacturer, over 1.6 billion Colgate toothbrushes were being sold annually worldwide. Although Colgate is a leading manufacturer, they are closely ranked with other companies, including Oral B and Reach. Manual toothbrush sales in 2009 were measured at $443.7 million in annual sales .
In addition, more than two dozen companies in China alone manufacture toothbrushes , with many more in other parts of the world.
An evaluation of companies and sales indicates widespread use of toothbrushes and an established and accepted standard of regularly changing toothbrushes to maintain dental hygiene. Beyond these numbers, are ongoing efforts to improve the effectiveness of the toothbrush itself. According to the American Dental Hygienists’ Association, “research studies have shown both powered and manual toothbrushes to be equally effective when used correctly. So probably, in practical terms, which brush you use is not the critical factor, but how you use it” .
In terms of other similar patents for the design of specialized toothbrushes, U.S. Pat. No. 5,269,038 dated Dec. 14, 1993, relating to "Rocker Toothbrush" also provides a variation on the standard manual toothbrush. However, it has been proven that while the concept of providing separate hinged bristle-carrying pads, is in fact sound—the particular arrangement proposed failed to achieve its goal.
By contrast, our design consists of two side and one central bristle tuft bundles, each mounted to a respective separate base. Each of the side bases being mounted to the brush head by an elongated, flexible hinge extending in the axial direction of the handle; and the central base is hingedly connected to the bases of the side bundles, so that under a force applied against the central bristles tuft, the bases of the side bundles pivot one in the direction of the other, and resume their initial position when the central bundle is relieved from said force.
Another example is U.S. Pat. No. 5,483,22 dated January 16, 1996, related to a toothbrush with resilient flexible bristle support. The bristles of this toothbrush are mounted on a flexed, resilient member supported from a handle by means of one or more handle extensions. The bristles are arranged in arrays with a center array for engaging the biting surface of a tooth and outer arrays for simultaneously engaging the sides of the tooth and adjacent gums when the resilient member is flexed by the engagement of the center array bristles with the tooth. However, this design does not include the hinged connection the base for the side bundles as in the Crown Dynamics model. Thus the bundles cannot pivot one in the direction of the other, as our toothbrush is expected to do.
In effect, while there may be several dozen types of toothbrushes on the market or patented, none offer the hinged, pivoting motion that should attain a non-longitudinal movement by normal longitudinal movement. Based on the patent, the Company intends to develop a working prototype and test the results of its use. However, until the Company can successfully develop a prototype and test it, the Company cannot currently estimate the full extent of the benefits to be gained from this apparatus.
Patent, Trademark, License & Franchise Restrictions
Contractual Obligations & Concessions
As described above, we have entered into Patent Transfer and Sale Agreement for the technology on which our specially-designed and patented toothbrushes will be based. According to this agreement, we acquired full rights to all title, interests etc. related to the patented technology. Finally, we have received a patent (U.S. Patent Number: 5,799,354) recognizing our patent rights. As cited in Item 101 (h)(4)(vii) of Regulation S-K, the Patent was issued on September 1, 1998 and will expire on August 31, 2015. No other trademarks, licenses, franchises, concessions, royalty agreement s or labor contracts are in effect regarding this prospectus.
In addition, we are developing a website related to our Patent, which we intend to use to promote, advertise, and potentially market our invention to third party licensees. We intend to full protect our invention with copyright and trade secrecy laws.
Employees
Other than our current Directors and officers, Amir Rehavi and Chanah Zehavi, we have no other full time or part-time employees. Our only employees, our Directors and officers, Amir Rehavi and Chanah Zehavi, are expected to work approximately five hours per week. If and when we develop a prototype for our specially-designed and patented toothbrush, and are able to begin manufacturing and marketing a product, we may need additional employees for such operations. We do not foresee any significant changes in the number of employees or consultants we will have over the next twelve months.
Transfer Agent
We have engaged Nevada Agency and Trust as our stock transfer agent. Nevada Agency and Trust is located at 50 West Liberty Street, Reno, Nevada 89501. Their telephone number is (775) 322-0626 (775) 322-0626 and their fax number is (775) 322-5623. The transfer agent is responsible for all record-keeping and administrative functions in connection with our issued and outstanding common stock.
Existing or Probable Government Regulations
The Center for Devices and Radiological Health (CDRH) is the branch of the United States Food and Drug Administration responsible for the premarket approval of all medical devices. The CDRH splits medical devices into three classes with different regulatory requirements. Class 1 includes everyday items such as toothbrushes which are unlikely to cause serious consequences if they fail. Manufacturers of Class I items are required to follow what are called "general controls" which closely match ISO 9000 requirements. We intend to require our third party licensees to manufacture products based on our Patent in conformance with these general controls.
Research and Development
We have incurred minimal research and development activities. We do, however, have plans for one or more third party licensees to engage in research and development activities relating to the development of a product based on our Patent during our first year of operation.
If we are able to raise funds in this offering, we will license to one or more third parties the right to engage in research and development concerning specially-designed toothbrushes based on our Patent and to develop a prototype model. We have not yet entered into any agreements, negotiations, or discussions with any third parties with respect to such research and development activities. We do not intend to do so until we commence this offering. For a detailed description, see "Plan of Operation."
Description of Property
Our Principal executive offices are located at c/o Amir Rehavi, 12 Yemimah Street, Jerusalem 96387, Israel. This location is the home of the President and Director and we have been allowed to operate out of such location at no cost to the Company. We believe that this space is adequate for our current and immediately foreseeable operating needs. We do not have any policies regarding investments in real estate, securities, or other forms of property.
Management's Discussion
Analysis or Plan of Operation
You should read the following plan of operation together with our audited financial statements and related notes appearing elsewhere in this prospectus. This plan of operation contains forward-looking statements that involve risks, uncertainties, and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those presented under "Risk Factors" on elsewhere in this prospectus.
Plan of Operation
We are a development stage company that has acquired the technology and received a patent for a specially-designed toothbrush.
Although we have not yet engaged a licensee to develop a fully operational prototype of the specially-designed and patented toothbrush, based on our preliminary discussions with certain manufacturing vendors, we believe that it will take approximately 9 months to construct a basic valid prototype of a product based on our Patent. We intend for the design and development of a commercial product to be carried out by specialist contractors offering expertise in several relevant disciplines, including plastics for the handle and recommendations for bristles and other elements, device design, operation and control, and automation and mechanics in manufacturing, as required, .
We expect design and product development to be divided into three individual stages:
a) Technical Concept/Definition (one-two months)
b) Engineering Specification (two-three months)
c) Engineering & Preparation for Production (three-four months) (total nine months)
Though we anticipate the prototype and testing to be relatively simple for our third party licensee, we anticipate the various stages of development will take nine months because we cannot estimate the resources that will be applied by our third party licensee to each particular task.
We estimate that our third party licensee would need approximately an additional four to six months to bring this product to market. Our objective is to license the manufacturing rights to a product based on our Patent and related technology to third party manufacturers who would then assume responsibility for marketing and sales.
Depending on the relative success of this offering, we intend to use the funds realized from this offering to execute our plan of operation in accordance with the table in the Use of Proceeds section above.
If net proceeds of less than $46,690 are raised from this offering, we will attempt to raise additional capital through the private sale of our equity securities or borrowings from third party lenders. We have no commitments or arrangements from any person to provide us with any additional capital. If additional financing is not available when needed, we may need to dramatically change our business plan, sell the Company or cease operations. We do not presently have any plans, arrangements, or agreement s to sell or merge our Company.
Our auditors have issued an opinion on our financial statements which includes a statement describing our going concern status. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills and meet our other financial obligations. This is because we have not generated any revenues and no revenues are anticipated until we begin marketing the product. Accordingly, we must raise capital from sources other than the actual sale of the product. We must raise capital to implement our project and stay in business. Even if we raise the maximum amount of money in this offering, we do not know how long the money will last, however, we do believe it will last at least twelve months.
General Working Capital
We may be wrong in our estimates of funds required in order to proceed with executing our general business plan described herein. Should we need additional funds, we would attempt to raise these funds through additional private placements or by the issuance of convertible debt by the company as it starts to plan for seeking further financing through the placing of equity and/or debt securities in Q3 2011. The company currently has no arrangements with any entities with regard to this debt. We do not have any arrangements with potential investors or lenders to provide such funds and there is no assurance that such additional financing will be available when required in order to proceed with the business plan or that our ability to respond to competition or changes in the market place or to exploit opportunities will not be limited by lack of available capital financing. If we are unsuccessful in securing the additional capital needed to continue operations within the time required, we may not be in a position to continue operations.
We can offer no assurance that we will raise any funds in this offering. As disclosed above, we have no revenues and, as such, if we do not raise net proceeds of at least $46,690 from our offering we will not have sufficient funds to fully implement our plan to market our technology to third party licensees. If we are unable to raise net proceeds of at least $46,690_, we may attempt to sell the Company or file for bankruptcy since we will not have sufficient funds to cover all of our projected liabilities and operating costs over the next 12 months. We do not have any current intentions, negotiations, or arrangements to merge or sell the Company.
The Company has at December 31, 2010 total liabilities of approximately $43,112 and will need to seek additional funds in addition to the proceeds from this offering through equity financing and / or directors loans in order to fully satisfy these liabilities.
We are not aware of any material trend, event or capital commitment, which would potentially adversely affect liquidity. We may need additional funds. In this case, we would attempt to raise these funds through additional private placements or by the issuance of convertible debt by the company as it starts to plan for seeking further financing through the placing of equity and/or debt securities. The company currently has no arrangements with any entities with regard to this debt. We do not have any arrangements with potential investors or lenders to provide such funds and there is no assurance that such additional financing will be available when required in order to proceed with the business plan or that our ability to respond to competition or changes in the market place or to exploit opportunities will not be limited by lack of available capital financing. If we are unsuccessful in securing additional capital needed to continue operations within the time required, we may not be in a position to continue operations.
Quantitative and Qualitative Disclosures about Market Risk.
Management does not believe that we face any material market risk exposure with respect to derivative or other financial instruments or otherwise.
Analysis of Financial Condition and Results of Operations
The Company has had limited operations since its inception and limited funds. Since our business was formed, we have incurred the following business expenses: incorporation fees, purchase of the patent, legal and accounting fees, S-1 preparation and filing fees and transfer agent fees. The Company plans to raise equity from this offering and through additional private placements or by the issuance of convertible debt. There are currently no arrangements in place of any form of financing, however the Company is not aware of any uncertainties and or other events that will preclude the Company from raising equity in the normal manner of its business conducts. The Company has no commitments for capital expenditures and is not aware of any material trends that will have a favorable and / or unfavorable outcome on the Company seeking in the future equity financing. The Company has limited operations and is not aware of any trends or uncertainties that will have an impact on the Company’s future operations. The Company has no off balance sheet arrangements. The Company has no contractual obligations, long term debt, capital leases, operating leases, purchase obligations at this time other than its current liabilities in the amount of $43,112 reflected in the Financial Statements as at December 31, 2010.
Other
Except for historical information contained herein, the matters set forth above are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ from those in the forward-looking statements.
Recently Issued Accounting Pronouncements
In April 2010, the FASB issued ASU No. 2010-17,
Revenue Recognition—Milestone Method
(ASU 2010-017). ASU 2010-017 provides guidance in applying the milestone method of revenue recognition to research or development arrangements. This guidance concludes that the milestone method is a valid application of the proportional performance model when applied to research or development arrangements. Accordingly, an entity can make an accounting policy election to recognize a payment that is contingent upon the achievement of a substantive milestone in its entirety in the period in which the milestone is achieved. The guidance is effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2010. The adoption of this accounting standard had no impact on the Company's financial position or results of operations.
In February 2010, the FASB issued amended guidance on subsequent events. Under this amended guidance, SEC filers are no longer required to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. This guidance was effective immediately and the Company adopted these new requirements upon issuance of this guidance.
In January 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-06,
Fair Value Measurements and Disclosures (Topic 820)—Improving Disclosures about Fair Value Measurements
(ASU No. 2010-06). ASU No. 2010-06 requires: (1) fair value disclosures of assets and liabilities by class; (2) disclosures about significant transfers in and out of Levels 1 and 2 on the fair value hierarchy, in addition to Level 3; (3) purchases, sales, issuances, and settlements be disclosed on gross basis on the reconciliation of beginning and ending balances of Level 3 assets and liabilities; and (4) disclosures about valuation methods and inputs used to measure the fair value of Level 2 assets and liabilities. ASU No. 2010-06 becomes effective for the first financial reporting period beginning after December 15, 2009, except for disclosures about purchases, sales, issuances, and settlements of Level 3 assets and liabilities which will be effective for fiscal years beginning after December 15, 2010. The adoption of this accounting standard had no impact on the Company's financial position or results of operations.
In October 2009, the FASB issued ASU No. 2009-13,
Revenue Recognition (Topic 605)—Multiple-Deliverable Revenue Arrangements: a consensus of the FASB Emerging Issues Task Force
(ASU 2009-13). ASU 2009-13 establishes a selling-price hierarchy for determining the selling price of each element within a multiple-deliverable arrangement. Specifically, the selling price assigned to each deliverable is to be based on vendor-specific objective evidence (VSOE) if available, third-party evidence, if VSOE is unavailable, and estimated selling prices if neither VSOE or third-party evidence is available. In addition, ASU 2009-13 eliminates the residual method of allocating arrangement consideration and instead requires allocation using the relative selling price method. ASU 2009-13 will be effective prospectively for multiple-deliverable revenue arrangements entered into, or materially modified, in fiscal years beginning on or after June 15, 2010
The adoption of this accounting standard had no impact on the Company's financial position or results of operations.
In August 2009, the FASB issued ASU No. 2009-05, Fair Value Measurements and Disclosures (Topic 820)—Measuring Liabilities at Fair Value (ASU 2009-05). ASU 2009-05 provides guidance in measuring the fair value of a liability when a quoted price in an active market does not exist for an identical liability or when a liability is subject to restrictions on its transfer. ASU 2009-15 was effective for the Company beginning with the quarter ended December 31, 2009.
The adoption of this accounting standard had no impact on the Company's financial position or results of operations.
Off-Balance Sheet Arrangements
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.
Inflation
The amounts presented in the financial statements do not provide for the effect of inflation on the Company’s operations or its financial position. Amounts shown for machinery, equipment, and leasehold improvements and for costs and expenses reflect historical cost and do not necessarily represent replacement cost. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.
Market for Common Equity
Related Stockholder Matters
Market Information
There has been no market for our securities. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority, FINRA for our common stock to eligible for trading on the OTC Bulletin Board. We do not yet have a market maker who has agreed to file such application. There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so when eligible for public resale.
Security Holders
As of May 12, 2011, there were 3,000,000 shares of common stock issued and outstanding, which were held by two stockholders of record.
Dividend Policy
We have not declared or paid dividends on our common stock since our formation, and we do not anticipate paying dividends in the foreseeable future. Declaration or payment of dividends, if any, in the future, will be at the discretion of our Board of Directors and will depend on our then current financial condition, results of operations, capital requirements and other factors deemed relevant by the Board of Directors. There are no contractual restrictions on our ability to declare or pay dividends.
Securities Authorized Under Equity Compensation Plans
We have no equity compensation plans.
Directors, Executive Officers, Promoters
Control Persons
Directors and Executive Officers
The following table sets forth certain information regarding the members of our Board of Directors and our executive officers as of May 12, 2011.
Name
|
|
Age
|
|
Positions and Offices Held
|
|
|
|
|
|
Amir Rehavi
|
|
39
|
|
President and Director
|
|
|
|
|
|
Chanah Zehavi
|
|
44
|
|
Secretary, Director and Principal Accounting and Financial Officer
|
Our Directors hold office until the next annual meeting of our stockholders or until their successors are duly elected and qualified. Set forth below is a summary description of the principal occupation and business experience of each of our Directors and executive officers for at least the last five years.
Amir Rehavi has been our President and Director since the Company's inception on June 15, 2010. Amir Rehavi earned his BA in Business Management from Ono Academic College in Kiryat Ono, Israel in 2004. From 2004 to the present, Mr Rehavi has worked at Strauss Ltd., Israel’s largest food distribution Company. Mr. Rehavi currently serves as a Senior Executive Manager at Strauss. As a Senior Executive Manager, Mr. Rehavi is responsible for working with the corporate management team to oversee the management of the company as a whole. His responsibilities include management of personnel as well as divisional responsibilities. He is also responsible for overseeing the smooth running of various departments. The managers of these departments report to Mr. Rehavi, who in turn reports to the Board of Directors
.
The ability to manage both individuals and departments is the main reason why Mr. Rehavi was chosen as President and Director of our Company. The Company believes that his impressive background will help the Company through its development stage and finally manufacturing and sales stages. As President and Director of the Company, Mr. Rehavi is responsible for overseeing the business aspects of the operation of the Company related to determining the Company’s direction, personnel or consulting options, and overall management of funds and tasks.
Chana Zehavi has been our Secretary, Director and Principal Accounting and Financial Officer since the Company's inception on June 15, 2010. She studied from September 1985 thru August 1988 in "Lustig Academic High School " , in Israel , accounting , where she received her BA in accounting and finance. From August 1988 thru June 2003 she worked as an account executive in Malam Ltd. in Israel, a large company engaged in the distribution of computer peripherals. From June 2003 to the present, she has worked as a Senior Account Executive at Derech Eretz Ltd. in Israel, a privately owned company that contracts and builds major highways for the Israeli Government. As a Senior Account Executive, Ms. Zehavi is responsible for all aspects of managing, monitoring, and reporting on the financial activities related to overseeing various projects. For each project she handles, this included working to create the budgetary requirements and limitations and then, once approved, monitoring to confirm adherence to the costs and decisions that went into creating that budget
The ability to see a project from start to completion, including phased management, goal planning, and monitoring are key factors in Ms. Zehavi’s success and are among many reasons why she was selected for her position with Crown Dynamics.
The Company believes that her impressive background and accounting experience will help the Company manage and control its accounting and finance controls and reporting obligations as well as assisting the Company through its development stage and further growth accordingly . Ms. Zehavi, as Secretary, Director, and Principal Accounting and Financial Officer is responsible for overseeing the finances of the Company, determining spending and budgeting issues with the other Directors/Officers of the Company to ensure fiscal responsibility.
There are no familial relationships among any of our Directors or officers. None of our Directors or officers is or has been a Director or has held any form of directorship in any other U.S. reporting companies except as mentioned above. None of our Directors or officers has been affiliated with any company that has filed for bankruptcy within the last five years. The Company is not aware of any proceedings to which any of the Company’s Officers or Directors, or any associate of any such officer or Director, is a party that are adverse to the Company. We are also not aware of any material interest of any of our officers or directors that is adverse to our own interests.
Each Director of the Company serves for a term of one year or until the successor is elected at the Company's annual stockholders' meeting and is qualified, subject to removal by the Company's stockholders. Each Officer serves, at the pleasure of the Board of Directors, for a term of one year and until the successor is elected at the annual meeting of the Board of Directors and is qualified.
Audit Committee and Financial Expert
We do not have an audit committee or an audit committee financial expert. Our corporate financial affairs are simple at this stage of development and each financial transaction can be viewed by any officer or Director at will.
Code of Ethics
We do not currently have a Code of Ethics applicable to our principal executive, financial and accounting officers; however, the Company plans to implement such a code in the third quarter of 2011.
Potential Conflicts of Interest
Since we do not have an audit or compensation committee comprised of independent Directors, the functions that would have been performed by such committees are performed by our Board of Directors. Thus, there is a potential conflict of interest in that our Directors have the authority to determine issues concerning management compensation, in essence their own, and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our Executives or Directors.
Involvement in Certain Legal Proceedings
We are not aware of any material legal proceedings that have occurred within the past five years concerning any Director, Director nominee, or control person which involved a criminal conviction, a pending criminal proceeding, a pending or concluded administrative or civil proceeding limiting one's participation in the securities or banking industries, or a finding of securities or commodities law violations.
Executive Compensation
We have not paid, nor do we owe, any compensation to our executive officer. We have not paid any compensation to our Officers since our inception.
We have no employment agreement s with any of our executive officers or employees.
SUMMARY COMPENSATION TABLE
|
|
|
|
Annual Compensation
|
|
|
Long Term Compensation
|
|
|
|
|
Name and Principal
Position
|
|
Year
(1)
|
|
Salary
|
|
|
Bonus
|
|
|
Stock
Awards
|
|
|
Option
Awards
|
|
|
NonEquity
Incentive
Plan
Compensation
|
|
|
Nonqualified
Deferred
Compensation
Earnings
|
|
|
All
Other
Compensation
|
|
|
Total
|
|
Amir Rehavi
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President and Director
|
|
2010
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
Chanah Zehavi
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secretary and Director and Principal Accounting and Financial Officer
|
|
2010
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
(1) We were incorporated on June 15, 2010.
Option/SAR Grants
We do not currently have a stock option plan. No individual grants of stock options, whether or not in tandem with stock appreciation rights known as SARs or freestanding SARs have been made to any executive officer or any Director since our inception; accordingly, no stock options have been granted or exercised by any of the officers or Directors since we were founded.
Long-Term Incentive Plans and Awards
We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance. No individual grants or agreement s regarding future payouts under non-stock price-based plans have been made to any Executive Officer or any Director or any employee or consultant since our inception; accordingly, no future payouts under non-stock price-based plans or agreement s have been granted or entered into or exercised by our officer or Director or employees or consultants since we were founded.
Compensation of Directors
There are no arrangements pursuant to which our Director is or will be compensated in the future for any services provided as a Director.
Employment Contracts, Termination of Employment
Change-in-control Arrangements
There are currently no employment agreement s or other contracts or arrangements with our Officers or Directors. There are no compensation plans or arrangements, including payments to be made by us, with respect to our Officers, Directors or Consultants that would result from the resignation, retirement or any other termination of any of our Directors, officers or consultants. There are no arrangements for our Directors, Officers, Employees or Consultants that would result from a change-in-control.
Certain Relationships and Related Transactions
Other than the transactions discussed below, we have not entered into any transaction nor are there any proposed transactions in which our Director, executive officer, stockholders or any member of the immediate family of the foregoing had or is to have a direct or indirect material interest.
On June 17, 2010, we subscribed 1,500,000 shares of our common stock to Mr. Amir Rehavi, our President and Director, for a payment of $150. As of November 23, 2010 this amount has been paid in cash. We believe this issuance was deemed to be exempt under Regulation S of the Securities Act. No advertising or general solicitation was employed in offering the securities. The offering and sale were made only to a non-U.S. citizen, and transfer was restricted by us in accordance with the requirements of the Securities Act of 1933.
On June 17, 2010, we subscribed 1,500,000 shares of our common stock to Ms Chanah Zehavi, our Secretary and Director and Principal Financial Officer, for a payment of $150. As of November 23, 2010 this amount has been paid in cash. We believe this issuance was deemed to be exempt under Regulation S of the Securities Act. No advertising or general solicitation was employed in offering the securities. The offering and sale were made only to a non-U.S. citizen, and transfer was restricted by us in accordance with the requirements of the Securities Act of 1933.
As of December 31 2010, loans from our two Directors and officers (Mr. Amir Rehavi and Ms Chanah Zehavi) made in cash amounted to $14,922 and represented working capital advances from directors who are also stockholders of the Company ($7,461 from each Director). The loans were provided on July 10, 2010 ($12,972) and October 7, 2010 ($1,950). The loans are unsecured, non-interest bearing, and due on demand. No formal written agreement regarding the loans was signed, however it is documented in the accounting records of the Company.
Director Independence
According to Item 407 (a)(1)(ii), we are not subject to listing requirements of any national securities exchange or national securities association and, as a result, we are not at this time required to have our board comprised of a majority of “independent Directors.” We do not believe that any of our directors currently meets the definition of “independent” as promulgated by the rules and regulations of NASDAQ.
Security Ownership of Certain Beneficial Owners and Management
(i) The following table sets forth certain information concerning the ownership of the Common Stock by (a) each person who, to the best of our knowledge, beneficially owned on that date more than 5% of our outstanding common stock, (b) each of our Directors and executive officers and (c) all current Directors and executive officers as a group. The following table is based upon an aggregate of 3,000,000 shares of our common stock outstanding as of May 12, 2011.
Name and Address of
Beneficial Owner
|
|
Number of Shares
of Common
Stock Beneficially
Owned or Right to
Direct Vote (1)
|
|
|
Percent of Common
Stock Beneficially
Owned or Right
to Direct Vote (1)
|
|
|
|
|
|
|
|
|
Amir Rehavi,
12 Yemimah Street Jerusalem 96387, Israel
|
|
|
1,500,000
|
|
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
Chanah Zehavi
61 Ahad Haam Street
Petach Tikvah
Israel
|
|
|
1,500,000
|
|
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
All stockholders, and / or Directors and
/ or executive officers as a
group
(Two persons)
|
|
|
3,000,000
|
|
|
|
100
|
%
|
(1) Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission (the "SEC") and generally includes voting or investment power with respect to securities. In accordance with SEC rules, shares of common stock issuable upon the exercise of options or warrants which are currently exercisable or which become exercisable within 60 days following the date of the information in this table are deemed to be beneficially owned by, and outstanding with respect to, the holder of such option or warrant. Except as indicated by footnote, and subject to community property laws where applicable, to our knowledge, each person listed is believed to have sole voting and investment power with respect to all shares of common stock owned by such person.
Legal Proceedings
There are no pending legal proceedings to which the Company or any Director, officer or affiliate of the Company, any owner of record or beneficial holder of more than 5% of any class of voting securities of the Company, or security holder is a party that is adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.
Description of Securities
The following description of our capital stock is a summary and is qualified in its entirety by the provisions of our Articles of Incorporation, with amendments, all of which have been filed as exhibits to our registration statement of which this prospectus is a part.
Our Common Stock
We are authorized to issue 200,000,000 shares of our Common Stock, $0.0001 par value, of which, as of May 12, 2011, 3,000,000 shares are issued and outstanding. Holders of shares of common stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Holders of common stock do not have cumulative voting rights. Holders of common stock are entitled to share ratably in dividends, if any, as may be declared from time to time by the Board of Directors in its discretion from funds legally available therefore. In the event of our liquidation, dissolution, or winding up, the holders of common stock are entitled to share pro rata all assets remaining after payment in full of all liabilities. All of the outstanding shares of common stock are fully paid and non-assessable. Holders of common stock have no preemptive rights to purchase our common stock. There are no conversion or redemption rights or sinking fund provisions with respect to the common stock.
As of the date of this prospectus, there are two (2) stockholders of record holding a total of 3,000,000 shares of our common stock. All of our issued shares of common stock are "restricted securities", as that term is defined in Rule 144 of the Rules and Regulations of the SEC promulgated under the Securities Act. All of these 3,000,000 shares are held by our “affiliates”, as such term is defined in Rule 144, and as long as the Company is a non-reporting issuer may be sold in the public market commencing one year after their acquisition (i.e., June 17, 2011), subject to the availability of current public information, volume restrictions, and certain restrictions on the manner of sale. If the Company becomes a reporting issuer, the holding period is reduced to six months, but the other restrictions remain in place. Since we have not commenced operations and we have nominal operations and nominal non-cash assets, we are considered an issuer with no or nominal operations and no or nominal non-cash assets, and Rule 144(i) applies to us. Therefore, our stockholders holding unregistered shares will be unable to use Rule 144 to resell their stock until at least 12 months after we have operations and more than nominal assets.
Our Preferred Stock
We are not authorized to issue shares of preferred stock.
Plan of Distribution
We are offering for sale a maximum of 2,500,000 shares of our common stock in a self-underwritten offering directly to the public at a price of $0.03 per share. There is no minimum amount of shares that we must sell in our direct offering, and therefore no minimum amount of proceeds will be raised. No arrangements have been made to place funds into escrow or any similar account. Upon receipt, offering proceeds will be deposited into our operating account and used to conduct our business and operations. We are offering the shares without any underwriting discounts or commissions. The purchase price is $0.03 per share. If all 2,500,000 shares are not sold within 180 days from the date hereof, (which may be extended an additional 90 days in our sole discretion), the offering for the balance of the shares will terminate and no further shares will be sold.
Our offering price of $0.03 per share was arbitrarily decided upon by our management and is not based upon earnings or operating history, does not reflect our actual value, and bears no relation to our earnings, assets, book value, net worth, or any other recognized criteria of value. No independent investment banking firm has been retained to assist in determining the offering price for the shares. Such offering price was not based on the price of the issuance to our founders. Accordingly, the offering price should not be regarded as an indication of any future price of our stock.
We anticipate applying for trading of our common stock on the over-the-counter (OTC) Bulletin Board upon the effectiveness of the registration statement of which this prospectus forms a part. To have our securities quoted on the OTC Bulletin Board we must: (1) be a company that reports its current financial information to the Securities and Exchange Commission, banking regulators or insurance regulators; and (2) has at least one market maker who completes and files a Form 211 with FINRA Regulation, Inc. The OTC Bulletin Board differs substantially from national and regional stock exchanges because it (1) operates through communication of bids, offers and confirmations between broker-dealers, rather than one centralized market or exchange; and, (2) securities admitted to quotation are offered by one or more broker-dealers rather than "specialists" which operate in stock exchanges. We have not yet engaged a market maker to assist us to apply for quotation on the OTC Bulletin Board and we are not able to determine the length of time that such application process will take. Such time frame is dependent on comments we receive, if any, from the FINRA regarding our Form 211 application.
There is currently no market for our shares of common stock. There can be no assurance that a market for our common stock will be established or that, if established, such market will be sustained. Therefore, purchasers of our shares registered hereunder may be unable to sell their securities, because there may not be a public market for our securities. As a result, you may find it more difficult to dispose of, or obtain accurate quotes of our common stock. Any purchaser of our securities should be in a financial position to bear the risks of losing their entire investment.
We intend to sell the shares in this offering through Ms. Chanah Zehavi, and/or Mr. Amir Rehavi who are officers and Directors of the Company. They will receive no commission from the sale of any shares. They will not register as a broker-dealer under section 15 of the Securities Exchange Act of 1934 in reliance upon Rule 3a4-1. Rule 3a4-1 sets forth those conditions under which a person associated with an issuer may participate in the offering of the issuer's securities and not be deemed to be a broker/dealer. As Ms. Zehavi and Mr. Rehavi are Israeli citizens and do not reside in the US, and since our operations are in Israel, they intend to offer the shares in this offering outside the United States to non-US investors. . Should they be unsuccessful in selling all of the shares in this offering to foreign investors, they may seek to sell these shares in the United States. Should they choose to attempt to sell shares in the United States, they are aware that this will present challenges and they may not be successful. These challenges include, but may not be limited to, having to manage offices, directors, and officers in a foreign country, in this case, Israel, while being incorporated and being subject to all the relevant laws and rules of the United States.
The conditions are that:
1. The person is not statutorily disqualified, as that term is defined in Section 3(a)(39) of the Act, at the time of his participation; and,
2. The person is not compensated in connection with his participation by the payment of commissions or other remuneration based either directly or indirectly on transactions in securities;
3. The person is not at the time of their participation, an associated person of a broker/dealer; and,
4. The person meets the conditions of Paragraph (a)(4)(ii) of Rule 3a4-1 of the Exchange Act, in that he (A) primarily performs, or is intended primarily to perform at the end of the offering, substantial duties for or on behalf of the Issuer otherwise than in connection with transactions in securities; and (B) is not a broker or dealer, or an associated person of a broker or dealer, within the preceding twelve (12) months; and (C) do not participate in selling and offering of securities for any Issuer more than once every twelve (12) months other than in reliance on Paragraphs (a)(4)(i) or (a)(4)(iii).
Neither Chanah Zehavi nor Amir Rehavi are not statutorily disqualified, are not being compensated, and are not associated with a broker/dealer. They are and will continue to be our officers at the end of the offering and have not been during the last twelve months and are currently not a broker/dealer or associated with a broker/dealer. They have not during the last twelve months and will not in the next twelve months offer or sell securities for another corporation.
We will not utilize the Internet to advertise our offering.
OFFERING PERIOD AND EXPIRATION DATE
This offering will start on the date of this registration statement is declared effective by the SEC and continue for a period of 180 days. We may extend the offering period for an additional 90 days, or unless the offering is completed or otherwise terminated by us if we have not been able to raise the money by the end of the initial period. We will not accept any money until this registration statement is declared effective by the SEC. After investors execute and deliver the subscription agreement with funds, and we have accepted their subscriptions, they will be entitled to their shares and become registered shareholders with all the rights and privileges that entails.
PROCEDURES FOR SUBSCRIBING
We will not accept any money until this registration statement is declared effective by the SEC. Once the registration statement is declared effective by the SEC, if you decide to subscribe for any shares in this offering, you must:
1. execute and deliver a subscription agreement
2. deliver a check or certified funds to us for acceptance or rejection.
All checks for subscriptions must be made payable to "
Crown Dynamics Corp
."
Right to Reject Subscriptions
We have the right to accept or reject subscriptions in whole or in part, for any reason or for no reason. All monies from rejected subscriptions will be returned by us to the subscriber within 12 business days of our having received the monies, without interest or deductions.
Underwriters
We have no underwriter and do not intend to have one. In the event that we sell or intend to sell by means of any arrangement with an underwriter, then we will file a post-effective amendment to this S-1 to accurately reflect the changes to us and our financial affairs and any new risk factors, and in particular to disclose such material relevant to this Plan of Distribution.
Regulation M
We are subject to Regulation M of the Securities Exchange Act of 1934. Regulation M governs activities of underwriters, issuers, selling security holders, and others in connection with offerings of securities. Regulation M prohibits distribution participants and their affiliated purchasers from bidding for purchasing or attempting to induce any person to bid for or purchase the securities being distribute.
Changes In and Disagreements with Accountants On Accounting And Financial Disclosure
Weinberg and Baer, LLC. is our registered independent auditor. There have not been any changes in or disagreement s with our auditors on accounting and financial disclosure or any other matter.
Indemnification for Securities Act Liabilities
Our Bylaws in Article 12 provide that to the fullest extent permitted by Delaware law the Company shall indemnify our Directors and officers against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred in connection with any threatened, pending or completed action, suit, or proceeding in which such person was or is a party or is threatened to be made a party by reason of the fact that such person is or was a director or officer of the corporation.
The indemnification provisions in our bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. In addition, your investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. We believe that the indemnification provisions in our Certificate of Incorporation, as amended, are necessary to attract and retain qualified persons as Directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to Directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a Director, officer, or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such Director, officer, or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
Legal Matters
The legal opinion rendered by John A, Cacchioli Esq. regarding the common stock of Crown Dynamics Corp. registered on Form S-1 is as set forth in their opinion letter included in this prospectus.
Experts
Our financial statements as of December 31, 2010, and for the period then ended and cumulative from inception (June 15, 2010), appearing in this prospectus and registration statement have been audited by Weinberg and Baer, LLC., an independent registered Public Accounting Firm, as set forth on their report thereon appearing elsewhere in this prospectus, and are included in reliance upon such report given upon the authority of such firm as experts in accounting and auditing.
Interest of Named Experts and Counsel
No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis or had, or is to receive, in connection with the offering, a substantial interest, directly or indirectly, in the Registrant or any of its parents or subsidiaries. Nor was any such person connected with the Registrant or any of its parents, subsidiaries as a promoter, managing or principal underwriter, voting trustee, Director, officer, or employee.
Available Information
We have filed with the SEC a registration statement on Form S-1, including exhibits, schedules and amendments filed with the registration statement, under the Securities Act with respect to the shares of common stock being offered. This prospectus does not contain all of the information described in the registration statement and the related exhibits and schedules, portions of which have been omitted as permitted by the rules and regulations of the SEC. A copy of the registration statement and the related exhibits, schedules and amendments may be inspected without charge at the public reference facilities maintained by the SEC in Washington D.C. at 100 F Street, N.E., Room 1580, Washington, D.C. 20549, and copies of all or any part of the registration statement may be obtained from these offices upon the payment of the fees prescribed by the SEC. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the site is http://www.sec.gov.
Reports to Security Holders
We will make available to securities holders an annual report, including audited financials, on Form 10-K. While we intend to become a “reporting issuer” under Section 12 of the Securities Exchange Act of 1934 by promptly filing a Form 8-A after this registration statement becomes effective, we are not currently a reporting company. Nevertheless, upon effectiveness of this registration statement, we will be required to file reports with the SEC pursuant to the Securities Exchange Act of 1934, such as quarterly reports on Form 10-Q and current reports on Form 8-K.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
DECEMBER 31, 2010
Report of Registered Independent Auditors
|
|
F-2
|
|
|
|
Financial Statements-
|
|
|
|
|
|
Balance Sheet as of December 31, 2010
|
|
F-3
|
|
|
|
Statements of Operations for the Year Ended
|
|
|
December 31, 2010, and Cumulative from Inception
|
|
F-4
|
|
|
|
Statement of Changes in Stockholders’ Equity for the Period from Inception
|
|
|
Through December 31, 2010
|
|
F-5
|
|
|
|
Statements of Cash Flows for the Year Ended December 31, 2010 and
|
|
|
Cumulative from Inception
|
|
F-6
|
|
|
|
Notes to Financial Statements
|
|
F-7
|
REPORT OF REGISTERED INDEPENDENT AUDITORS
To the Board of Directors and Stockholders
of Crown Dynamics Corp.:
We have audited the accompanying balance sheet of Crown Dynamics Corp. (a Delaware corporation in the development stage) as of December 31 , 2010, and the related statements of operations, stockholders’ equity, and cash flows for the periods ended December 31 , 2010, and from inception (June 15, 2010) through December 31 , 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Crown Dynamics Corp. as of December 31 , 2010, and the results of its operations and its cash flows for the periods ended December 31 , 2010, and from inception (June 15, 2010) through December 31 , 2010, in conformity with accounting principles generally accepted in the United States of America.
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 is in the development stage, and has not established any source of revenue to cover its operating costs. As such, it has incurred an operating loss since inception. Further, as of December 31 , 2010, the cash resources of the Company were insufficient to meet its planned business objectives. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plan regarding these matters is also described in Note 2 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Respectfully submitted,
Weinberg & Baer LLC
Baltimore, Maryland
January 23, 2011
CROWN DYNAMICS CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS OF DECEMBER 31, 2010
|
|
As of
|
|
|
|
December 31,
|
|
|
|
2010
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
Cash and cash equivalents
|
|
|
300
|
|
Deferred offering costs
|
|
$
|
20,000
|
|
|
|
|
|
|
Total current assets
|
|
|
20,300
|
|
|
|
|
|
|
Total Assets
|
|
$
|
20,300
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
28,190
|
|
Loans from related parties - Directors and stockholders
|
|
|
14,922
|
|
Total current liabilities
|
|
|
43,112
|
|
|
|
|
|
|
Total liabilities
|
|
|
43,112
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
Stockholders' (Deficit):
|
|
|
|
|
Common stock, par value $.0001 per share, 200,000,000 shares
|
|
|
|
|
authorized; 3,000,000 shares issued and outstanding
|
|
|
300
|
|
(Deficit) accumulated during the development stage
|
|
|
(23,112
|
)
|
|
|
|
|
|
Total stockholders' (deficit)
|
|
|
(22,812
|
)
|
|
|
|
|
|
Total Liabilities and Stockholders' (Deficit)
|
|
$
|
20,300
|
|
The accompanying notes to financial statements
are an integral part of these financial statements.
CROWN DYNAMICS CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 2010
AND CUMULATIVE FROM INCEPTION (JUNE 15, 2010)
|
|
Year Ended
|
|
|
Cumulative
|
|
|
|
December 31,
|
|
|
From
|
|
|
|
2010
|
|
|
Inception
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Filig fees
|
|
|
3,690
|
|
|
|
3,690
|
|
Transfer agent fees
|
|
|
2,472
|
|
|
|
2,472
|
|
Professional fees
|
|
|
6,450
|
|
|
|
6,450
|
|
Patent
|
|
|
9,000
|
|
|
|
9,000
|
|
Legal - incorporation
|
|
|
1,500
|
|
|
|
1,500
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
23,112
|
|
|
|
23,112
|
|
|
|
|
|
|
|
|
|
|
(Loss) from Operations
|
|
|
(23,112
|
)
|
|
|
(23,112
|
)
|
|
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net (Loss)
|
|
$
|
(23,112
|
)
|
|
$
|
(23,112
|
)
|
|
|
|
|
|
|
|
|
|
(Loss) Per Common Share:
|
|
|
|
|
|
|
|
|
(Loss) per common share - Basic and Diluted
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Common Shares
|
|
|
|
|
|
|
|
|
Outstanding - Basic and Diluted
|
|
|
2,970,000
|
|
|
|
|
|
The accompanying notes to financial statements are
an integral part of these financial statements.
CROWN DYNAMICS CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION (JUNE 15, 2010)
THROUGH DECEMBER 31, 2010
|
|
|
|
|
|
|
|
(Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
During the
|
|
|
|
|
|
|
Common stock
|
|
|
Development
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Stage
|
|
|
Totals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - at inception
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for cash
|
|
|
3,000,000
|
|
|
|
300
|
|
|
|
-
|
|
|
|
300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
(23,112
|
)
|
|
|
(23,112
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2010
|
|
|
3,000,000
|
|
|
$
|
300
|
|
|
$
|
(23,112
|
)
|
|
$
|
(22,812
|
)
|
The accompanying notes to financial statements are
an integral part of these financial statements.
CROWN DYNAMICS CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE PERIOD ENDED DECEMBER 31, 2010
AND CUMULATIVE FROM INCEPTION (JUNE 15, 2010)
|
|
Year Ended
|
|
|
Cumulative
|
|
|
|
December 31,
|
|
|
From
|
|
|
|
2010
|
|
|
Inception
|
|
|
|
|
|
|
|
|
Operating Activities:
|
|
|
|
|
|
|
Net (loss)
|
|
$
|
(23,112
|
)
|
|
$
|
(23,112
|
)
|
Adjustments to reconcile net (loss) to net cash
|
|
|
|
|
|
|
|
|
(used in) operating activities:
|
|
|
|
|
|
|
|
|
Changes in net assets and liabilities-
|
|
|
|
|
|
|
|
|
Deferred offering costs
|
|
|
(20,000
|
)
|
|
|
(20,000
|
)
|
Accounts payable and accrued liabilities
|
|
|
28,190
|
|
|
|
28,190
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Operating Activities
|
|
|
(14,922
|
)
|
|
|
(14,922
|
)
|
|
|
|
|
|
|
|
|
|
Investing Activities:
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Investing Activities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Financing Activities:
|
|
|
|
|
|
|
|
|
Proceeds from stock issued
|
|
|
300
|
|
|
|
300
|
|
Loans from related parties - directors and stockholders
|
|
|
14,922
|
|
|
|
14,922
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Financing Activities
|
|
|
15,222
|
|
|
|
15,222
|
|
|
|
|
|
|
|
|
|
|
Net (Decrease) Increase in Cash
|
|
|
300
|
|
|
|
300
|
|
|
|
|
|
|
|
|
|
|
Cash - Beginning of Period
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash - End of Period
|
|
$
|
300
|
|
|
$
|
300
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
-
|
|
|
$
|
-
|
|
Income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
The accompanying notes to financial statements are
an integral part of these financial statements.
CROWN DYNAMICS CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(1)
Summary of Significant Accounting Policies
Basis of Presentation and Organization
Crown Dynamics corp. (“Crown Dynamics” or the “Company”) is a Delaware corporation in the development stage and has not commenced operations. The Company was incorporated under the laws of the State of Delaware on June 15, 2010. The business plan of the Company is to seek third party entities interested in licensing the rights to manufacture and market the Company's patent design. The accompanying financial statements of the Company were prepared from the accounts of the Company under the accrual basis of accounting.
Cash and Cash Equivalents
For purposes of reporting within the statement of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.
Revenue Recognition
The Company is in the development stage and has yet to realize revenues from operations. Once the Company has commenced operations, it will recognize revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.
Loss per Common Share
Basic loss per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Fully diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no dilutive financial instruments issued or outstanding for the period ended December 31, 2010.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.
The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carryforward period under the Federal tax laws.
Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.
Fair Value of Financial Instruments
The Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts the Company could realize in a current market exchange. As of December 31, 2010, the carrying value of accrued liabilities, and loans from directors and stockholders approximated fair value due to the short-term nature and maturity of these instruments.
Deferred Offering Costs
The Company defers as other assets the direct incremental costs of raising capital until such time as the offering is completed. At the time of the completion of the offering, the costs are charged against the capital raised. Should the offering be terminated, deferred offering costs are charged to operations during the period in which the offering is terminated.
Impairment of Long-Lived Assets
The Company evaluates the recoverability of long-lived assets and the related estimated remaining lives when events or circumstances lead management to believe that the carrying value of an asset may not be recoverable. For the period ended December 31, 2010, no events or circumstances occurred for which an evaluation of the recoverability of long-lived assets was required.
Common Stock Registration Expenses
The Company considers incremental costs and expenses related to the registration of equity securities with the SEC, whether by contractual arrangement as of a certain date or by demand, to be unrelated to original issuance transactions. As such, subsequent registration costs and expenses are expensed as incurred.
Estimates
The financial statements are prepared on the basis of accounting principles generally accepted in the United States. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of December 31, 2010, and expenses for the period ended December 31, 2010, and cumulative from inception. Actual results could differ from those estimates made by management.
Fiscal Year End
The Company has adopted a fiscal year end of December 31.
Recent Accounting Pronouncements
In April 2010, the FASB issued ASU No. 2010-17,
Revenue Recognition—Milestone Method
(ASU 2010-017). ASU 2010-017 provides guidance in applying the milestone method of revenue recognition to research or development arrangements. This guidance concludes that the milestone method is a valid application of the proportional performance model when applied to research or development arrangements. Accordingly, an entity can make an accounting policy election to recognize a payment that is contingent upon the achievement of a substantive milestone in its entirety in the period in which the milestone is achieved. The guidance is effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2010. The adoption of this accounting standard had no impact on the Company's financial position or results of operations.
In February 2010, the FASB issued amended guidance on subsequent events. Under this amended guidance, SEC filers are no longer required to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. This guidance was effective immediately and the Company adopted these new requirements upon issuance of this guidance.
In January 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-06,
Fair Value Measurements and Disclosures (Topic 820)—Improving Disclosures about Fair Value Measurements
(ASU No. 2010-06). ASU No. 2010-06 requires: (1) fair value disclosures of assets and liabilities by class; (2) disclosures about significant transfers in and out of Levels 1 and 2 on the fair value hierarchy, in addition to Level 3; (3) purchases, sales, issuances, and settlements be disclosed on gross basis on the reconciliation of beginning and ending balances of Level 3 assets and liabilities; and (4) disclosures about valuation methods and inputs used to measure the fair value of Level 2 assets and liabilities. ASU No. 2010-06 becomes effective for the first financial reporting period beginning after December 15, 2009, except for disclosures about purchases, sales, issuances, and settlements of Level 3 assets and liabilities which will be effective for fiscal years beginning after December 15, 2010. The adoption of this accounting standard had no impact on the Company's financial position or results of operations.
In October 2009, the FASB issued ASU No. 2009-13,
Revenue Recognition (Topic 605)—Multiple-Deliverable Revenue Arrangements: a consensus of the FASB Emerging Issues Task Force
(ASU 2009-13). ASU 2009-13 establishes a selling-price hierarchy for determining the selling price of each element within a multiple-deliverable arrangement. Specifically, the selling price assigned to each deliverable is to be based on vendor-specific objective evidence (VSOE) if available, third-party evidence, if VSOE is unavailable, and estimated selling prices if neither VSOE or third-party evidence is available. In addition, ASU 2009-13 eliminates the residual method of allocating arrangement consideration and instead requires allocation using the relative selling price method. ASU 2009-13 will be effective prospectively for multiple-deliverable revenue arrangements entered into, or materially modified, in fiscal years beginning on or after June 15, 2010
The adoption of this accounting standard had no impact on the Company's financial position or results of operations.
In August 2009, the FASB issued ASU No. 2009-05, Fair Value Measurements and Disclosures (Topic 820)—Measuring Liabilities at Fair Value (ASU 2009-05). ASU 2009-05 provides guidance in measuring the fair value of a liability when a quoted price in an active market does not exist for an identical liability or when a liability is subject to restrictions on its transfer. ASU 2009-15 was effective for the Company beginning with the quarter ended December 31, 2009.
The adoption of this accounting standard had no impact on the Company's financial position or results of operations.
(2)
Development Stage Activities and Going Concern
The Company is currently in the development stage, and has no operations. The business plan of the Company is to seek third party entities interested in licensing the rights to manufacture and market the Company's patent design.
On July 15, 2010, the Company entered into a Patent Transfer and Sale Agreement whereby the Company acquired all of the right, title and interest in the patent known as the “Toothbrush” for consideration of $9,000 including attorney's fees. The United States Patent number is 5,799,354.
The Company has commenced a capital formation activity by filing a Registration Statement on Form S-1 to the SEC to register and sell in a self-directed offering 2,500,000 shares of newly issued common stock at an offering price of $0.03 per share for proceeds of up to $75,000. As of December 31, 2010, the Company accrued $20,000 of legal and audit fees as deferred offering costs related to this capital formation activity.
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has not established any source of revenue to cover its operating costs, and as such, has incurred an operating loss since inception. Further, as of December 31, 2010, the cash resources of the Company were insufficient to meet its current business plan, and the Company had negative working capital. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
(3)
Patent
On July 15, 2010, the Company entered into a Patent Transfer and Sale Agreement whereby the Company acquired all of the right, title and interest in the patent known as the “Toothbrush” for consideration of $9,000 including attorney's fees. The United States Patent number is 5,799,354. Under the terms of the Patent Transfer and Sale Agreement, the Company was assigned rights to the patent free of any liens, claims, royalties, licenses, security interests or other encumbrances. The cost of obtaining the patent was expensed. The patent was filed on September 1, 1998 and assigned to the Company on July 15, 2010.
(4)
Loans from Related Parties - Directors and Stockholders
As of December 31, 2010, loans from related parties amounted to $14,992 and represented working capital advances from Directors who are also stockholders of the Company. The loans are unsecured, non-interest bearing, and due on demand.
(5)
Common Stock
On July 17, 2010, the Company issued 3,000,000 shares of its common stock to individuals who are Directors and officers of the company for $300.
The Company has commenced a capital formation activity by filing a Registration Statement on Form S-1 to the SEC to register and sell in a self-directed offering 2,500,000 shares of newly issued common stock at an offering price of $0.03 per share for proceeds of up to $75,000. As of December 31, 2010, the Company accrued $20,000 of legal and audit fees as of deferred offering costs related to this capital formation activity.
(6)
Income Taxes
The provision (benefit) for income taxes for the period ended December 31, 2010, was as follows (assuming a 23% effective tax rate):
|
|
2010
|
|
|
|
|
|
Current Tax Provision:
|
|
|
|
Federal-
|
|
|
|
Taxable income
|
|
$
|
-
|
|
|
|
|
|
|
Total current tax provision
|
|
$
|
-
|
|
|
|
|
|
|
Deferred Tax Provision:
|
|
|
|
|
Federal-
|
|
|
|
|
Loss carryforwards
|
|
$
|
5,316
|
|
Change in valuation allowance
|
|
|
(5,316
|
)
|
|
|
|
|
|
Total deferred tax provision
|
|
$
|
-
|
|
The Company had deferred income tax assets as of December 31, 2010, as follows:
Loss carryforwards
|
|
$
|
5,316
|
|
Less - Valuation allowance
|
|
|
(5,316
|
)
|
|
|
|
|
|
Total net deferred tax assets
|
|
$
|
-
|
|
The Company provided a valuation allowance equal to the deferred income tax assets for the period ended December 31, 2010, because it is not presently known whether future taxable income will be sufficient to utilize the loss carryforwards.
December 31, 2010, the Company had approximately $23,112 in tax loss carryforwards that can be utilized in future periods to reduce taxable income, and expire by the year 2030.
The Company did not identify any material uncertain tax positions on tax returns that will be filed. The Company did not recognize any interest or penalties for unrecognized tax benefits during the year ended December 31, 2010.
The Company will file income tax returns in the United States. All tax years are closed by expiration of the statute of limitations. The year ended December 31, 2010 is open for examination.
(7)
Related Party Transactions
As described in Note 4, as of December 31, 2010, the Company owed $14,992 to Directors, officers, and principal stockholders of the Company for working capital loans.
As described in Note 5, on June 17, 2010, the Company issued 3,000,000 shares of its common stock to Directors and officers for $300.
(8)
Subsequent Events
Subsequent events have been evaluated through January 23, 2010, which is the date these financial statements were available to be issued.
“Dealer Prospectus Delivery Obligation
Until ________, 201_, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.”
PART II
Information Not Required in Prospectus
Item 24. Indemnification of Directors and Officers
Our bylaws provide to the fullest extent permitted by Delaware law, our Directors, or officers shall not be personally liable to us or our stockholders for damages for breach of such Director's or officer's fiduciary duty. The effect of this provision of our bylaws is to eliminate our right and our stockholders (through stockholders' derivative suits on behalf of our Company) to recover damages against a Director or officer for breach of the fiduciary duty of care as a Director or officer (including breaches resulting from negligent or grossly negligent behavior), except under certain situations defined by statute. We believe that the indemnification provisions in our bylaws are necessary to attract and retain qualified persons as Directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to Directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a Director, officer, or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such Director, officer, or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
Item 25. Other Expenses of Issuance and Distribution
The following table sets forth an itemization of all estimated expenses, all of which we will pay, in connection with the issuance and distribution of the securities being registered:
Nature of Expense
|
|
Amount
|
|
|
|
|
|
SEC Registration fee
|
|
$
|
6
|
|
|
|
|
|
|
Transfer Agent Fees ( Estimated )
|
|
|
1,500
|
|
|
|
|
|
|
Accounting fees and expenses ( recorded in the FS )
|
|
|
10,000
|
|
|
|
|
|
|
Legal fees and expenses ( recorded in the FS )
|
|
|
10,000
|
|
|
|
|
|
|
Total:
|
|
$
|
21,506
|
|
Item 26. Recent Sales of Unregistered Securities
The following sets forth information regarding all sales of our unregistered securities during the past three years. None of the holders of the shares issued below have subsequently transferred or disposed of their shares and the list is also a current listing of the Company's stockholders.
On June 17, 2010, we issued a total of 3,000,000 shares of our common stock to two individuals, including to our Principal Executive Officer and Treasurer, Principal Financial and Accounting Officer. The purchase price for such shares was equal to their par value, $0.0001 per share, amounting in the aggregate for all 3,000,000 shares to $300. None of these transactions involved any underwriters, underwriting discounts or commissions or any public offering, and we believe these issuances were exempt under Regulation S of the Securities Act. No advertising or general solicitation was employed in offering the securities. The offering and sale were made in an offshore transaction and only to the following individuals who are all non-U.S. citizens, all in accordance with the requirements of Regulation S of the Securities Act.
Name and Address of
Beneficial Owner
|
|
Number of
Shares of Common
Stock Beneficially
Owned
|
|
|
|
|
|
Amir Rehavi
|
|
|
1,500,000
|
|
|
|
|
|
|
Chanah Zehavi
|
|
|
1,500,000
|
|
Item 27. Undertakings
The undersigned Registrant hereby undertakes to:
(a)(1) File, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement;
(iii) Include any additional or changed material information on the plan of distribution.
(2) For determining liability under the Securities Act, each post-effective amendment shall be deemed to be a new registration statement of the securities offered, and the offering of the securities at that time shall be deemed to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.
(4) For determining liability of the undersigned Registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to Directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a Director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such Director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
(c) That, for the purpose of determining liability under the Securities Act to any purchaser:
(2) If the Registrant is subject to Rule 430C,
Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
Signatures
In accordance with the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing on Form S-1 and authorizes this registration statement to be signed on its behalf by the undersigned, in Jerusalem, Israel May 12, 2010.
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Crown Dynamics Corp.
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Date May 12, 2010
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By:
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/s/ Amir Rehavi
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Amir Rehavi
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President (Principal Executive Officer)
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In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and on the dates stated.
Name
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Title
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Date
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/s/ Amir Rehavi
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President and Director (Principal
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May 12, 2010
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Amir Rehavi
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Executive Officer)
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/s/Chanah Zehavi
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Secretary and Director (and Principal
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May 12, 2010
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Chanah Zehavi
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Accounting and Financial Officer )
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Chanah Zehavi is authorized to sign our document in the capacity of Principal Accounting and Financial Officer
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Exhibits Table
EXHIBIT
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NUMBER
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DESCRIPTION
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3.1*
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Articles of Incorporation of the Company
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3.2*
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By-Laws of the Company
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3.3
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Form of Common Stock Certificate of the Company
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5.1*
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Opinion of Legal Counsel
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10.1*
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Patent Transfer and Sale Agreement dated July 15, 2010
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23.1*
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Consent of Weinberg and Baer, LLC.
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23.2*
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Consent of legal counsel (see Exhibit 5.1)
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99.1*
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Subscription Agreement
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CROWN DYNAMICS CORP.
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BY-LAWS
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A Delaware Corporation
ARTICLE I
OFFICES
Section 1
The registered office of the Corporation in the State of Delaware shall be located in the City and State designated in the Certificate of Incorporation.
Section 2
The corporation may also have offices at such other places both within and without the state of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1
All meetings of shareholders for the election of directors shall be held at such time and at such place, either within or without the State of Delaware, as may be fixed from time to time by the Board of Directors. The Board of Directors may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Article IV, Section 6 of these Bylaws. Unless directors are elected by written consent in lieu of an annual meeting as permitted by Article IV, Section 5 of these Bylaws, an annual meeting of the stockholders for the election of the directors shall be held on a date and a time as shall be designated by the Board of Directors and stated in the notice of the meeting. Any other proper business may be transacted at the annual meeting.
Section 2
Written or printed notice of the annual meeting stating the place, date and hour of the meeting shall be delivered not less than ten nor more than sixty days before the date of the meeting, either personally or by mail, by or at the direction of the president, the secretary, or the officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting.
Section 3
The officer who has charge of the stock ledger of the corporation shall prepare and make, or cause a third party to prepare and make, at least 10 days before every meeting of the stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1
Special meetings of shareholders may be held at such time and place within or without the State of Delaware as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof.
Section 2
Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the chairman or the president or vice president(if any) or secretary at the request in writing of the majority of the members of the Board of Directors or holders of a majority of the total voting power of all outstanding shares of stock of this corporation then entitled to vote, and may not be called by the stockholders absent such request. Any such request shall state the purpose or purposes of the proposed meeting.
Section 3
Written or printed notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be delivered not less than ten nor more than sixty days before the date of the meeting, either personally or by mail, by, or at the direction of, the chairman or the president or vice president, to each shareholder of record entitled to vote at such meeting. The notice should also indicate that it is being issued by, or at the direction of, the person calling the meeting.
Section 4
The business transacted at any special meeting of shareholders shall be limited to the purposes stated in the notice.
Section 5
After fixing a record date for a meeting, the officer who has charge of the stock ledger of the Corporation, shall prepare an alphabetical list of the names of all its shareholders entitled to notice of the meeting, arranged by voting group with the address of and the number, class, and series, if any, of shares held by each shareholder. The stock ledger shall be the only evidence as to who are the shareholders entitled to examine the stock ledger, the list required by Section 219 of the Delaware General Corporation Law or the books of the Corporation, or to vote in person or by proxy at any shareholders’ meeting.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1
The holders of a majority of the shares of stock issued and outstanding and entitled to vote, represented in person or by proxy, shall constitute a quorum at all meetings of the shareholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the shareholders, the shareholders present in person or represented by proxy shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than 30 day, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting as provided in Section 3 of Article III.
Section 2
If a quorum is present, the affirmative vote of a majority of the shares of stock represented at the meeting shall be the act of the shareholders, unless the vote of a greater or lesser number of shares of stock is required by law or the certificate of incorporation.
Section 3
Each outstanding share of stock having voting power shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders. A shareholder may vote either in person or by proxy executed in writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4
The Board of Directors in advance of any shareholders' meeting may appoint one or more inspectors to act at the meeting or any adjournment thereof. If inspectors are not so appointed, the person presiding at a shareholders' meeting may, and, on the request of any shareholder entitled to vote there-at, shall appoint one or more inspectors. In case any person appointed as inspector fails to appear or act, the vacancy may be filled by the Board in advance
of the meeting or at the meeting by the person presiding thereat. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability.
Section 5
Unless otherwise provided in the certificate of incorporation, any action required to be taken at an annual meeting or special meeting of the stockholders of the corporation, or any action which may be taken at any annual meeting or special meeting, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation by delivery to its registered office in Delaware, to its principal place of business, or to an officer or agent of the corporation having custody of the book in which proceedings of meetings are recorded.
Section 6
Unless otherwise restricted in the certificate of incorporation or these Bylaws, the Board of Directors may in its sole discretion permit stockholders to participate in meetings of stockholders by means of remote communication and shall be deemed present in person and permitted to vote at such meeting, provided that (i) the corporation shall implement reasonable measures to verify that each person deemed present in person and permitted to vote at such meeting by means of remote communication is a stockholder, (ii) the corporation shall implement reasonable measures to provide such stockholders a reasonable opportunity to participate in such meeting and to vote on matters submitted to the stockholders, and (iii) if any stockholder votes or takes action at such meeting by means of remote communication, a record of such vote or other action shall be maintained by the corporation.
ARTICLE V
DIRECTORS
Section 1
The first Board of Directors and all subsequent Boards of the Corporation shall consist of at least one person, unless and until otherwise determined by vote of a majority of the entire Board of Directors. Directors shall be at least eighteen years of age and need not be residents of the State of Delaware nor shareholders of the corporation. The directors, other than the first Board of Directors, shall be elected at the annual meeting of the shareholders, except as hereinafter provided, and each director elected shall serve until the next succeeding annual meeting and until his successor shall have been elected and qualified. The first Board of Directors shall hold office until the first annual meeting of shareholders.
Section 2
Any or all of the directors may be removed, with or without cause, at any time by the vote of the shareholders at a special meeting called for that purpose. Any director may be removed for cause by the action of the directors at a special meeting called for that purpose. If elected by cumulative voting, a director may be removed
only by the shareholders and then only when the votes cast against his removal would not be sufficient to elect him if voted cumulatively at an election at which the same total number of votes were cast and the entire Board or the entire class of directors of which he is a member were then being elected. If the director being removed was elected by the holders of the shares of any class or series he cannot be removed by the directors and may be removed only by the applicable vote of the holders of shares of that class or series, voting as a class.
Section 3
Unless otherwise provided in the certificate of incorporation, newly created directorships resulting from an increase in the Board of Directors and all vacancies occurring in the Board of Directors, including vacancies caused by removal without cause, may be filled by the affirmative vote of a majority of the Board of Directors, however, if the number of directors then in office is less than a quorum then such newly created directorships and vacancies may be filled by a vote of a majority of the directors then in office. A director elected to fill a vacancy shall hold office until the next meeting of shareholders at which election of directors is the regular order of business, and until his successor shall have been elected and qualified. A director elected to fill a newly created directorship shall serve until the next succeeding annual meeting of shareholders and until his successor shall have been elected and qualified.
Section 4
The business affairs of the corporation shall be managed by its Board of Directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the shareholders.
Section 5
The compensation of the officers of the Corporation shall be fixed from time to time by the Board of Directors.
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1
Meetings of the Board of Directors, regular or special, may be held either within or without the State of Delaware.
Section 2
The first meeting of each newly elected Board of Directors shall be held at such time and place as shall be fixed by the vote of the shareholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present, or it may convene at such place and time as shall be fixed by the consent in writing of all the directors. In the event that such meeting is not held at such time, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors, or as shall be specified in a written waiver signed by all of the directors.
Section 3
Regular meetings of the Board of Directors may be held upon such
notice, or without notice, and at such time and at such place as shall from time to time be determined by the Board.
Section 4
Special meetings of the Board of Directors may be called by the chairman or the president on one (1) days notice to each director personally or by mail, or on two (2)days notice to each director by telegram, telefax, telecopier or telephone; special meetings shall be called by the chairman, the president or secretary in like manner and on like notice on the written request of two directors.
Section 5
Notice of a meeting need not be given to any director who submits a signed waiver of notice whether before or after the meeting, or who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.
Section 6
A majority of the directors shall constitute a quorum for the
transaction of business unless a greater or lesser number is required by law or by the certificate of incorporation. The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors, unless the vote of a greater number is required by law or by the certificate of incorporation. If a quorum shall not be present at any meeting of directors, the directors present may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
Section 7
Unless the certificate of incorporation provides otherwise, any action required or permitted to be taken at a meeting of the directors or a committee thereof may be taken without a meeting if a consent in writing to the adoption of a resolution authorizing the action so taken, shall be signed by all of the directors entitled to vote with respect to the subject matter thereof.
Section 8
Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the Board of Directors, may participate in a meeting of the Board of Directors or any committee by means of conference telephone or any other communications equipment by means of which all persons participating in a meeting can hear each other and such participation in a meeting shall constitute presence in person at the meeting.
ARTICLE VII
EXECUTIVE COMMITTEE
Section 1
The Board of Directors, by resolution adopted by a majority of the entire board, may designate, from among its members, one or more committees, each consisting of one or more directors, and each of which, to the extent provided in the resolution, shall have all the authority of the board, except as otherwise required by law.
Vacancies in the membership of the committee shall be filled by the Board of Directors at a regular or special meeting of the Board of Directors. Each committee shall keep regular minutes of its proceedings and report the same to the board when required.
ARTICLE VIII
NOTICES
Section 1
Whenever, under the provisions of the statutes or of the certificate of incorporation or of these Bylaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by electronic transmission when such director or stockholder has consented to the delivery of notice in such form or in writing by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice given by electronic transmission shall be deemed given: (a if by facsimile telecommunication, when directed to the number at which a stockholder or director has consented to receive notice; (by) if by electronic mail, when directed to an electronic mail address at which a stockholder or director has consented to receive notice to directors may also be given by telegram, telefax, telecopier or telephone.
Section 2
Whenever any notice of a meeting is required to be given under the provisions of the statutes or under the provisions of the certificate of incorporation or these by-laws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1
The officers of the corporation shall be chosen by the Board of Directors and shall be a president, a secretary and a treasurer. The Board of Directors in its discretion may also elect a Chairman of the board of directors. The Board of Directors may also choose one or more vice-presidents, and one or more assistant secretaries and assistant treasurers.
Section 2
The Board of Directors at its first meeting after each annual meeting of shareholders shall choose a president, a secretary and a treasurer, none of whom need be a member of the board. Any two or more offices may be held by the same person, except the offices of president and secretary. Notwithstanding the above, when all the issued and outstanding stock of the corporation is owned by one person, such person may hold all or any combination of offices.
Section 3
The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.
Section 4
The salaries of all officers and agents of the corporation shall be fixed by the Board of Directors.
Section 5
The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the Board of Directors.
CHAIRMAN OF THE BOARD OF DIRECTORS
Section 6
The Chairman of the Board of Directors shall be a director and shall preside at all meetings of the Board of Directors at which he shall be present, and shall have such power and perform such duties as may from time to time be assigned to him by the Board of Directors.
THE PRESIDENT
Section 7
The president shall be the chief executive officer of the corporation, shall preside at all meetings of the shareholders and, in the absence of the Chairman of the Board of Directors, the Board of Directors shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. He shall have the power to call special meetings of the stockholders or of the Board of Directors or of the Executive Committee at any time.
Section 8
The President shall execute bonds, mortgages and other contracts, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 9
The vice-president or, if there shall be more than one, the vice-presidents in the order determined by the board of directors, shall, in the absence or disability of the president, perform the duties and exercise the powers of the president and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 10
The secretary shall attend all meetings of the Board of Directors and all meetings of the shareholders and record all the proceedings
of the meetings of the corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or president, under whose supervision he shall be.
Section 11
The assistant secretary or, if there be more than one, the assistant secretaries in the order determined by the Board of Directors, shall, in the absence or disability of the secretary, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 12
The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors.
Section 13
He shall disburse the funds of the corporation as may be ordered
by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the president and the Board of Directors at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation.
Section 14
If required by the Board of Directors, he shall give the corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation.
Section 15
The assistant treasurer, or, if there shall be more than one, the assistant treasurers in the order determined by the Board of Directors, shall, in the absence or disability of the treasurer, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1
The shares of the corporation shall be represented by certificates signed by the chairman or vice-chairman of the board or the president or a vice-president and the secretary or an assistant secretary or the treasurer or an assistant treasurer of the corporation. When the corporation is authorized to issue shares of more than one class there shall be set forth upon the face or back of the certificate, or the certificate shall have a statement that the corporation will furnish to any shareholder upon request, the designation, relative rights, preferences and limitations of each such series so far as the same have been fixed and the authority of the board of directors to designate and fix the relative rights, preferences and limitations of other series.
Section 2
The signatures of the officers of the corporation upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent or registered by a registrar other than the corporation itself or an employee of the corporation. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of issue.
LOST CERTIFICATES
Section 3
The board of directors may direct a new certificate to be issued in
place of any certificate theretofore issued by the corporation alleged to have been lost or destroyed. When authorizing such issue of a new certificate, the board of directors, in its discretion and as a condition precedent to the issuance thereof, may prescribe such terms and conditions as it deems expedient, and may require such indemnities as it deems adequate, to protect the corporation from any claim that may be made against it with respect to any such certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4
Upon surrender to the corporation or the transfer agent of the corporation of a certificate representing shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, a new certificate shall be issued to the person entitled thereto, and the old certificate cancelled and the transaction recorded upon the books of the corporation.
FIXING RECORD DATE
Section 5
For the purpose of determining shareholders entitled to notice of
or to vote at any meeting of shareholders or any adjournment thereof, or to express consent to or dissent from any proposal without a meeting, or for the purpose of determining shareholders entitled to receive payment of any dividend or the allotment of any rights, or for the purpose of any other action, the Board of Directors may fix, in advance, a date as the record date for any such determination of shareholders. Such date shall not be more than fifty nor less than ten days before the date of any meeting nor more than sixty days prior to any other action. When a determination of shareholders of record entitled to notice of or to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof, unless the board fixes a new record date for the adjourned meeting.
REGISTERED SHAREHOLDERS
Section 6
The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.
LIST OF SHAREHOLDERS
Section 7
A list of shareholders as of the record date, certified by the corporate officer responsible for its preparation or by a transfer agent, shall be produced at any meeting upon the request thereat or prior thereto of any shareholder. If the right to vote at any meeting is challenged, the inspectors of election, or person presiding thereat, shall require such list of shareholders to be produced as evidence of the right of the persons challenged to vote at such meeting and all persons who appear from such list to be shareholders entitled to vote thereat may vote at such meeting.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1
Subject to the provisions of the certificate of incorporation relating thereto, if any, dividends may be declared by the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in shares of the capital stock or in the corporation's bonds or its property, including the shares or bonds of other corporations subject to any provisions of law and of the certificate of incorporation.
Section 2
Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created.
CHECKS
Section 3
All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.
FISCAL YEAR
Section 4
The fiscal year of the corporation shall be fixed by resolution of the Board of Directors.
ARTICLE XII
INDEMNIFICATION
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1
The corporation shall, to the maximum extent and in the manner permitted by the General Corporation Law of Delaware as the same now exists or may hereafter be amended, indemnify any person against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred in connection with any threatened, pending or completed action, suit, or proceeding in which such person was or is a party or is threatened to be made a party by reason of the fact that such person is or was a director or officer of the corporation. For purposes of this Section 1, a "director" or "officer" of the corporation shall mean any person (i) who is or was a director or officer of the corporation, (ii) who is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was a director or officer of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.
The corporation shall be required to indemnify a director or officer in connection with an action, suit, or proceeding (or part thereof) initiated by such director or officer only if the initiation of such action, suit, or proceeding (or part thereof) by the director or officer was authorized by the Board of Directors of the corporation.
The corporation shall pay the expenses (including attorney's fees) incurred by a director or officer of the corporation entitled to indemnification hereunder in defending any action, suit or proceeding referred to in this Section 1 in advance of its final disposition; provided, however, that payment of expenses incurred by a director or officer of the corporation in advance of the final disposition of such action, suit or proceeding shall be made only upon receipt of an undertaking by the director or officer to repay all amounts advanced if it should ultimately be determined that the director of officer is not entitled to be indemnified under this Section 1 or otherwise.
The rights conferred on any person by this Article shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the corporation's Certificate of Incorporation, these Bylaws, agreement, vote of the stockholders or disinterested directors or otherwise.
Any repeal or modification of the foregoing provisions of this Article shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification.
INDEMNIFICATION OF OTHERS
Section 2
The corporation shall have the power, to the maximum extent and in the manner permitted by the General Corporation Law of Delaware as the same now exists or may hereafter be amended, to indemnify any person (other than directors and officers) against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred in connection with any threatened, pending or completed action, suit, or proceeding, in which such person was or is a party or is threatened to be made a party by reason of the fact that such person is or was an employee or agent of the corporation. For purposes of this Section 2, an "employee" or "agent" of the corporation (other than a director or officer) shall mean any person (i) who is or was an employee or agent of the corporation, (ii) who is or was serving at the request of the corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was an employee or agent of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.
INSURANCE
Section 3
The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability under the provisions of the General Corporation Law of Delaware.
ARTICLE XIII
AMENDMENTS
These by-laws may be amended or repealed or new by laws may be adopted at any regular or special meeting of shareholders at which a quorum is present or represented, by the vote of the holders of shares entitled to vote in the election of any directors, provided notice of the proposed alteration, amendment or repeal be contained in the notice of such meeting.
ARTICLE XIII
No contract or transaction shall be void or void-able if such contract or transaction is between the Corporation and one or more of its Directors or Officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its Directors or Officers, are Directors or Officers, or have a financial interest, when such Director or Officer is present at or participates in the meeting of the board or committee which authorizes the contract or transaction or his/her votes are counted for such purpose, if:
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(a)
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the material facts as to his/her relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors or the committee, and the board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or
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(b)
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the material facts as to his/her relationship or relationships or interest and as to the contract or transaction are disclosed or are known to the shareholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the shareholders; or
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(c)
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the contract or transaction is fair as to the Corporation as of the time its is authorized, approved or ratified, by the board of directors, a committee or the shareholders. Such interested directors may be counted when determining the presence of a quorum at the board of directors or committee meeting authorizing the contract or transaction.
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Dated: June 17, 2010
CERTIFICATE OF SECRETARY
OF
Crown Dynamics Corp.
The undersigned certifies:
1 That the undersigned is the duly elected and acting Secretary of Crown Dynamics Corp., a Delaware Corporation (the "
Corporation
"); and
2 That the foregoing Bylaws constitute the Bylaws of the Corporation as duly adopted by the Board of Directors of the Corporation on June 17th, 2010.
3 IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the seal of the Corporation as of June 17, 2010.