See accompanying notes, which are an integral part of these condensed financial statements
See accompanying notes, which are an integral part of these condensed financial statements
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
June 30, 2020
The accompanying condensed financial statements of Crona Corp. are unaudited, but in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) necessary to fairly state the Company’s financial position, results of operations, and cash flows as of and for the dates and periods presented. The condensed financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information.
These unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements and footnotes included in the Company’s Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission (the “Commission”) on November 3, 2020.
Note 1 – ORGANIZATION AND NATURE OF BUSINESS
Crona Corp. (“the Company”) was incorporated in the State of Nevada on October 6, 2016. Crona Corp. was established for the purpose of quality sound recording needs. The Company is located in Romania and began its operations in early 2017.
The Company provides recording, studio and engineer/ producer services for record labels, music producers and recording artists.
Note 2 – GOING CONCERN
The accompanying condensed financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern. The Company generated no revenues for the six months ended June 30, 2020. The Company currently has losses of $4,300 and $44,591 for the six months ended June 30, 2020 and the period from inception (October 6, 2016) to June 30, 2020, respectively, and has not completed its efforts to establish a stabilized source of revenue sufficient to cover operating costs over an extended period of time. Therefore, there is substantial doubt about the Company’s ability to continue as a going concern. Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. The Company intends to position itself so that it will be able to raise additional funds through the capital markets. In light of management’s efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.
Note 3 – SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES
Basis of presentation
The accompanying condensed financial statements have been prepared in accordance with GAAP. The Company’s year-end is December 31.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
8
Crona Corp.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
June 30, 2020
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers”. The core principle of ASC 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognizes revenue in accordance with that core principle by applying the following steps: Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. An entity must also disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative information about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract.
The contract between the Company and the customer is signed without specific quantity of service to be used from the date of signing. The revenue depends on the hours spent on the recording services. The rates of the specific services are set out in the contract. The Company’s revenues are recognized at a point-in-time as ownership of track, mix or master (when it is approved by the customer) is transferred at a distinct point in time per the terms of a contract. The Company shall not be liable for any failure to perform its obligations if such failure is due to circumstances beyond its reasonable control. Any liability of the Company shall be limited to the total of all amounts paid by the customer for services under the contract.
Basic Income (Loss) Per Share
The Company computes income (loss) per share in accordance with ASC 606. Basic loss per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. As of June 30, 2020, there were no potentially dilutive debt or equity instruments issued or outstanding.
Recent Accounting Pronouncements
There have been no recent accounting pronouncements or changes in accounting pronouncements during the six months ended June 30, 2020, that are of significance or potential significance to the Company.
Note 4– RELATED PARTY TRANSACTIONS
For the six months ended June 30, 2020 our sole director Andrei Gurduiala has advanced to the Company $5,005. This advance is unsecured, non-interest bearing and due on demand. In March 2020, a $3,000 advance from Robert T. Malasek was forgiven and is included on the condensed statements of operations as a gain on forgiveness of debt.
Note 5 – COMMITMENTS AND CONTINGENCIES
From time-to-time, the Company is subject to various litigation and other claims in the normal course of business. The Company establishes liabilities in connection with legal actions that management deems to be probable and estimable. No amounts have been accrued in the financial statements with respect to any matters.
Note 6 – INCOME TAXES
The Company adopted the provisions of uncertain tax positions as addressed in ASC 740 “Income Taxes” (“ASC 740”). As a result of the implementation of ASC 740, the Company recognized no increase in the liability for unrecognized tax benefits. As of June 30, 2020, the Company had net operating loss carry forwards of approximately $9,484 that may be available to reduce future years’ taxable income in varying amounts through 2037. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
The valuation allowance at June 30, 2020 was approximately $9,484. The net change in valuation allowance for the six months ended June 30, 2020 was $903. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized.
9
Crona Corp.
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2020
The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on consideration of these items, management has determined that enough uncertainty exists relative to the realization of the deferred income tax asset balances to warrant the application of a full valuation allowance as of June 30, 2020. All tax years since inception remains open for examination by taxing authorities.
The provision for Federal income tax consists of the following:
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|
|
|
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|
|
|
As of June 30, 2020
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As of December 31, 2019
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|
Non-current deferred tax assets:
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|
|
|
|
|
Net operating loss carry forward
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$
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(9,484)
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$
|
(8,581)
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|
Valuation allowance
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|
9,484
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|
8,581
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|
Net deferred tax assets
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$
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-
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$
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-
|
The actual tax benefit at the expected rate of 21% differs from the expected tax benefit for the periods as follows:
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|
|
| |
|
|
|
As of June 30, 2020
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As of December 31, 2019
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Computed “expected” tax expense (benefit)
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$
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(903)
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$
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(252)
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|
Change in valuation allowance
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|
903
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|
252
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|
Actual tax expense (benefit)
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$
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-
|
$
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-
|
The related deferred tax benefit on the above unutilized tax losses has a full valuation allowance not recognized against it as there is no certainty of its realization. Management has evaluated tax positions in accordance with ASC 740 and has not identified any significant tax positions, other than those disclosed.
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ITEM 2.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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Forward looking statement notice
Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
Financial information contained in this quarterly report and in our unaudited interim financial statements is stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.
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DESCRIPTION OF BUSINESS
Brief description of Crona Corp. for last five years
On October 6, 2016, the Company was incorporated under the laws of the State of Nevada. We are engaged in recording services business.
Andrei Gurduiala has served as our President, Treasurer and as a Director, from October 6, 2016, until March 21, 2018. On March 21, 2018, our board appointed Robert T. Malasek as a Director, Chief Executive Officer, Chief Financial Officer and Secretary of the Company. Our board of directors is comprised of one person: Robert T. Malasek.
We are authorized to issue 75,000,000 shares of common stock, par value $0.001 per share. On November 25, 2016, Andrei Gurduiala, our former President and a Director purchased an aggregate of 5,000,000 shares of common stock at $0.001 per share, for aggregate proceeds of $5,000.
On March 20, 2020, our board appointed initial Incorporator of the Company Andrei Gurduiala as a Director, President, Treasurer and Secretary of the Company. As of date these financial statements were issued, our board of directors is comprised of one person: Andrei Gurduiala.
General description of our activity
We were incorporated on October 6, 2016 in the State of Nevada, USA. The Company’s business operations are located in Romania. We have never declared bankruptcy, have never been in receivership, and have never been involved in any legal action or proceedings.
We can book as little as one hour or as many as 24 hours per day, allowing the business to focus on providing recording services for record labels, music producers, and recording artists. The facility and its equipment are rented on either an hourly, daily, weekly, or monthly basis as dictated by the clients’ needs. In addition to studio and engineer/producer services, and in the course of ongoing business, it is customary in the recording industry that the Studio will occasionally enter into certain licensing agreements that will provide revenue over and above the rental and services income. There is no particular standard as to the frequency or amount of this revenue and it is negotiated on an individual basis. These licensing agreements can include, but are not limited to, production agreements, writer agreements, and performing agreements, all yielding a percentage of revenue earned through the exploitation of the product produced.
Our target markets are artists, organizers of various events and representatives of various industries of show business (TV, cinema, and entertainment clubs).
We expect to face strong competition from well-established companies and small independent companies like our self that may result in price reductions and decreased demand for service of music studio. There are several companies in Romania in our industry, such as: DAW.RO, INES Studios, and Harmonix Recording Studio. Management believes that we can develop ourselves in the industry, once we attract customers and become profitable.
Licensing
From time to time the Company may enter into licensing agreements with music production and distribution companies.
The license agreements may typically grant the production and distribution company rights to a music single or all of an act's music in a particular country or region with a term of three to fifteen years. The production or distribution company can then distribute the music in record or CD format, mp3, ring tone, or any other music media licensed in the agreement.
The Company will typically receive royalties of a negotiated percentage between 18% and 75% of sales of the production and Distribution Company’s published dealer price less certain packaging deductions. In addition, the Company may receive between 18% and 75% of net royalty receipts received in the particular nation or region. In connection with the license agreement, the Company may receive a cash advance.
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RESEARCH AND DEVELOPMENT EXPENDITURES
We have not incurred any research expenditures since our incorporation.
BANKRUPTCY OR SIMILAR PROCEEDINGS
There has been no bankruptcy, receivership or similar proceeding.
COMPLIANCE WITH GOVERNMENT REGULATION
We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the construction and operation of any facility in any jurisdiction which we would conduct activities.
We do not believe that any existing or probable government regulation on our business, including any applicable export or import regulation or control imposed by China or Romania will have a material impact on the way we conduct our business.
FACILITIES
Our previously leased office was located at Strada C. A. Rosetti 5, Bucharest 030167 Romania. Our current office is provided by our sole director Andrei Gurduiala rent-free at the following address: Jean-Louis Calderon 31, Bucharest, 030167, Romania. Our telephone number is +40371700093.
EMPLOYEES AND EMPLOYMENT AGREEMENTS
We have no employees as of the date of this prospectus. Our sole officer and director, Andrei Gurduiala, currently devotes approximately 20 hours per week to company matters. After receiving funding, Andrei Gurduiala plans to devote, as much time to the operation of the Company as he determines is necessary for him to manage the affairs of the Company. As our business and operations increase, we will assess the need for full time management and administrative support personnel.
LEGAL PROCEEDINGS
There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section includes a number of forward-looking statements that reflect our current views regarding the future events and financial performance of Crona Corp.
We qualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:
Have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;
Comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis) unless the SEC determines that the application of such additional requirements is necessary or appropriate in the public interest, after considering protection of investors, and whether the action will promote efficiency, competition and capital formation; Submit certain executive compensate on matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency;” and Disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation.
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
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In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
We will remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
RESULTS OF OPERATION
Results of Operations for the three and six months ended June 30, 2020 and 2019:
Revenue and cost of goods sold
For the three months ended June 30, 2020 and 2019 the Company had not generated any revenue.
For the six months ended June 30, 2020 and 2019 Crona Corp. had not generated any revenue.
Operating expenses
Total operating expenses for the three months ended June 30, 2020 were $2,000. The operating expenses for the three months ended June 30, 2020 included professional fees of $2,000.
Total operating expenses for the three months ended June 30, 2019 were $300. The operating expenses for the three months ended June 30, 2019 included professional fees of $300.
Total operating expenses for the six months ended June 30, 2020 were $7,300. The operating expenses for the six months ended June 30, 2020 included audit fees of $5,000 and professional fees of $2,300.
Total operating expenses for the six months ended June 30, 2019 were $600. The operating expenses for the six months ended June 30, 2019 included professional fees of $600.
The increase in operating expenses for the six months ended June 30, 2020 compared to the operating expenses for the six months ended June 30, 2019 is connected with the increase in professional fees.
Net Loss
The net loss for the three months ended June 30, 2020 and 2019 was $2,000 and $300, respectively.
The net loss for the six months ended June 30, 2020 and 2019 was $4,300 and $600, respectively. The changes are related to increase in operating expenses. On March 19, 2020, Robert T. Malasek advanced to the Company $3,000 to cover the costs on professional services of Globex Transfer, LLC. On March 19, 2020 Robert T. Malasek forgave the mentioned indebtness. This resulted in gain on debt forgiveness of $3,000.
Liquidity and capital resources
As at June 30, 2020, our total assets were $0.
As at June 30, 2020, our current liabilities were $7,100.
As at June 30, 2020, we had a working capital deficit of $7,100.
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CASH FLOWS FROM OPERATING ACTIVITIES
We have not generated positive cash flows from operating activities. For the six months ended June 30, 2020 net cash flows used in operating activities was $8,005.
CASH FLOWS FROM INVESTING ACTIVITIES
For the six months ended June 30, 2020 we generated $0 in investing activities.
CASH FLOWS FROM FINANCING ACTIVITIES
For the six months ended June 30, 2020 net cash flows from financing activities was $8,005.
OFF-BALANCE SHEET ARRANGEMENTS
We have no 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.