ITEM
1. FINANCIAL STATEMENTS:
NEWTOWN
LANE MARKETING, INCORPORATED
CONDENSED
BALANCE SHEETS
|
|
|
|
|
|
|
ASSETS
|
|
September
30
|
|
|
March
31,
|
|
|
|
2017
|
|
|
2017
|
|
|
|
(unaudited)
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
16,732
|
|
|
$
|
40,300
|
|
TOTAL
CURRENT ASSETS
|
|
$
|
16,732
|
|
|
$
|
40,300
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
$
|
38,664
|
|
|
$
|
31,371
|
|
Convertible
notes payable - Related Party
|
|
|
267,000
|
|
|
|
267,000
|
|
TOTAL
CURRENT LIABILITIES
|
|
|
305,664
|
|
|
|
298,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS
AND CONTINGENCIES
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’
DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock, $0.001 par value, 1,000,000 shares authorized, none issued and outstanding
|
|
|
0
|
|
|
|
0
|
|
Common
stock, $0.001 par value; 100,000,000 shares authorized,
13,757,550
shares issued and outstanding, respectively
|
|
|
13,758
|
|
|
|
13,758
|
|
Additional
paid-in capital
|
|
|
2,058,256
|
|
|
|
2,055,756
|
|
Accumulated
deficit
|
|
|
(2,360,946
|
)
|
|
|
(2,327,585
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL
STOCKHOLDERS’ DEFICIT
|
|
|
(288,932
|
)
|
|
|
(258,071
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
$
|
16,732
|
|
|
$
|
40,300
|
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
NEWTOWN
LANE MARKETING, INCORPORATED
CONDENSED
STATEMENTS OF OPERATIONS
(unaudited)
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative
|
|
$
|
11,981
|
|
|
$
|
18,133
|
|
|
$
|
26,668
|
|
|
$
|
29,976
|
|
Interest
expense, net
|
|
|
3,365
|
|
|
|
2,677
|
|
|
|
6,693
|
|
|
|
5,077
|
|
Total
expense
|
|
$
|
15,346
|
|
|
$
|
20,810
|
|
|
$
|
33,361
|
|
|
$
|
35,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss before provision for income taxes
|
|
$
|
(15,346
|
)
|
|
$
|
(20,810
|
)
|
|
$
|
(33,361
|
)
|
|
$
|
(35,053
|
)
|
Income
taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(15,346
|
)
|
|
$
|
(20,810
|
)
|
|
$
|
(33,361
|
)
|
|
$
|
(35,053
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per share - basic and diluted
|
|
|
13,757,550
|
|
|
|
13,757,550
|
|
|
|
13,757,550
|
|
|
|
13,757,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding - basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
The
accompanying notes are an integral part of these unaudited condensed financial statements
NEWTOWN LANE MARKETING, INCORPORATED
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT
Six Months Ended September 30, 2017
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
|
|
Preferred
Stock
|
|
Common
Stock
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Deficit
|
|
Balances at March 31, 2017
|
|
|
—
|
|
|
$
|
—
|
|
|
|
13,757,550
|
|
|
$
|
13,758
|
|
|
$
|
2,055,756
|
|
|
$
|
(2,327,585
|
)
|
|
$
|
(258,071
|
)
|
Contributed services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
2,500
|
|
|
|
—
|
|
|
|
2,500
|
|
Net
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(33,361
|
)
|
|
|
(33,361
|
)
|
Balances at September
30, 2017
|
|
|
—
|
|
|
$
|
—
|
|
|
|
13,757,550
|
|
|
$
|
13,758
|
|
|
$
|
2,058,256
|
|
|
$
|
(2,360,946
|
)
|
|
$
|
(288,932
|
)
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
NEWTOWN
LANE MARKETING, INCORPORATED
CONDENSED
STATEMENTS OF CASH FLOWS
(unaudited)
|
|
Six Months
Ended September 30,
|
|
|
|
2017
|
|
|
2016
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(33,361
|
)
|
|
$
|
(35,053
|
)
|
Adjustments to reconcile
net loss to cash used in operating activities:
|
|
|
|
|
|
|
|
|
Contributed
services
|
|
|
2,500
|
|
|
|
2,500
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Decrease
(increase) in other assets
|
|
|
—
|
|
|
|
500
|
|
Increase
(decrease) in accounts payable and accruals
|
|
|
7,293
|
|
|
|
2,053
|
|
NET
CASH USED IN OPERATING ACTIVITIES
|
|
|
(23,568
|
)
|
|
|
(30,000
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
|
Issuance
of notes payable
|
|
|
—
|
|
|
|
35,000
|
|
|
|
|
|
|
|
|
|
|
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
|
|
—
|
|
|
|
35,000
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH
AND CASH EQUIVALENTS
|
|
|
(23,568
|
)
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
|
|
40,300
|
|
|
|
4,555
|
|
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
|
$
|
16,732
|
|
|
$
|
9,555
|
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
NEWTOWN
LANE MARKETING, INCORPORATED
NOTES TO CONDENSED FINANCIAL STATEMENTS
September 30, 2017
(unaudited)
NOTE
1 - DESCRIPTION OF COMPANY
Newtown
Lane Marketing, Incorporated (“we”, “our”, “us” or “Newtown”) was incorporated
in Delaware on September 26, 2005. We previously held the exclusive license to exploit the Dreesen’s Donut Brand in the
United States with the exception of the states of Florida and Pennsylvania, and in Suffolk County, New York, which Dreesen retained
for itself. In August 2007 there was a change in control, as detailed below, and we discontinued our efforts to promote the Dreesen’s
Donut Brand at that time. The license from Dreesen expired on December 31, 2007.
The
interim financial information as of September 30, 2017 and for the three and six month periods ended September 30, 2017 and 2016
have been prepared without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission
(the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although
we believe that the disclosures made are adequate to provide for fair presentation. These financial statements should be read
in conjunction with the financial statements and the notes thereto, included in our Annual Report on Form 10-K, for the fiscal
year ended March 31, 2017, previously filed with the SEC.
In
the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement
of our financial position as of September 30, 2017 and results of operations and cash flows for the three and six months ended
September 30, 2017 and 2016, as applicable, have been made. The results of operations for the three and six months ended September
30, 2017 are not necessarily indicative of the operating results that may be expected for the full fiscal year or any future periods.
EQUITY
TRANSACTIONS
On
August 8, 2007 (the “Effective Date”), we entered into a Stock Purchase Agreement (the “Purchase Agreement”)
with Moyo Partners, LLC, a New York limited liability company (“Moyo”) and R&R Biotech Partners, LLC, a Delaware
limited liability company (“R&R” collectively with Moyo, the “Purchasers”), pursuant to which we sold
to them, in the aggregate, approximately, four million four hundred seventy nine thousand two hundred fifty (4,479,250) shares
of our common stock, par value $0.001 per share (“Common Stock”) and five hundred (500
)
shares of our Series
A Preferred Stock, par value $.001 per share (“Series A Preferred Stock”), each share convertible at the option of
the holder into, approximately, fourteen thousand eight hundred twenty (14,820) shares of Common Stock, for aggregate gross proceeds
to us of $600,000. The shares of Series A Preferred Stock were convertible only to the extent there were a sufficient number of
shares of Common Stock available for issuance upon any such conversion.
On
the Effective Date: (i) the Purchasers acquired control of Newtown, with (a) R&R acquiring nine million five hundred nine
thousand four hundred forty (9,509,440) shares of Common Stock (assuming the conversion by R&R of the four hundred (400) shares
of Series A Preferred Stock it acquired pursuant to the Purchase Agreement into five million nine hundred twenty eight thousand
(5,928,000) shares of Common Stock) constituting 72% of the then issued and outstanding shares of Common Stock, and (b) Moyo acquiring
two million three hundred seventy seven thousand three hundred sixty (2,377,360) shares of Common Stock (assuming the conversion
by Moyo of its one hundred (100) shares of Series A Preferred Stock it acquired pursuant to the Purchase Agreement into one million
four hundred eighty one thousand five hundred ten (1,481,510) shares of Common Stock) constituting 18% of the then issued and
outstanding shares of Common Stock; and (ii) in full satisfaction of our obligations under outstanding convertible promissory
notes in the principal amount of $960,000 (the “December Notes”), the Note holders of the December Notes converted
an aggregate of $479,811 of principal and accrued interest into 274,200 shares of Common Stock and accepted a cash payment from
us in the aggregate amount of $625,030 for the remaining principal balance.
On
the Effective Date: (i) Arnold P. Kling was appointed to our Board of Directors (“Board”) and served together with
Vincent J. McGill, a then current director who continued to serve until August 20, 2007, the effective date of his resignation
from our Board; (ii) all of our then officers and directors, with the exception of Mr. McGill, resigned from their respective
positions with us; (iii) our Board appointed Mr. Kling as president and Kirk M. Warshaw as chief financial officer and secretary;
and (iv) we relocated our headquarters to Chatham, New Jersey.
Following
Mr. McGill’s resignation from our Board on August 20, 2007, Mr. Kling became our sole director and president.
NEWTOWN
LANE MARKETING, INCORPORATED
NOTES TO CONDENSED FINANCIAL STATEMENTS
September 30, 2017
(unaudited)
NOTE
1 - DESCRIPTION OF COMPANY (continued):
On
October 19, 2007, we put into effect an amendment to our Certificate of Incorporation to increase to 100,000,000 the number of
authorized shares of Common Stock available for issuance (the “Charter Amendment”). As a result of the Charter Amendment,
as of October 19, 2007, we had adequate shares of Common Stock available for issuance upon the conversion of all the issued and
outstanding shares of Series A Preferred Stock.
On
December 19, 2007, the holders of all the issued and outstanding shares of Series A Preferred Stock elected to convert all of
their shares into shares of Common Stock. As a result, the 500 shares of Series A Preferred Stock outstanding were exchanged for
7,407,540 shares of Common Stock, and all 500 shares of the Series A Preferred Stock were returned to the status of authorized
and unissued shares of undesignated preferred stock, par value $.001 per shares.
On
August 15, 2008 (the “Series A Preferred Elimination Date”), all 500 shares of the Series A Preferred Stock were returned
to the status of authorized and unissued shares of undesignated preferred stock, par value $0.001 per shares. None of the Series
A Preferred Stock were outstanding as of the Series A Preferred Elimination Date.
On
August 29, 2008 (the “Reverse Split Effective Date”), we implemented a 1 for 50 reverse stock split (the “Reverse
Split”) of the Common Stock. Pursuant to the Reverse Split, each 50 shares of Common Stock issued and outstanding as of
the Reverse Split Effective Date was converted into one (1) share of Common Stock. All share and per share data herein has been
retroactively restated to reflect the Reverse Split.
In
December 2008, we sold 550,000 shares of Common Stock to Kirk Warshaw, our CFO, for $2,000. We determined such shares were issued
below their fair value; hence $11,750 of compensation expense was recorded for the difference in value of the shares issued for
cash versus fair value of such shares.
On
May 6, 2013, Ironbound Partners Fund, LLC (“Ironbound”) acquired 9,509,440 shares of Common Stock (the “Acquired
Shares”) for an aggregate purchase price of $15,000, or $0.00157737 per share. The Acquired Shares represent 69.1% of our
total issued and outstanding shares of Common Stock. The Acquired Shares were purchased by Ironbound, utilizing its available
and uncommitted cash, from the Chapter 7 Trustee of the Estates of Rodman & Renshaw, LLC (“Rodman”), Direct Markets,
Inc., and Direct Markets Holdings, Corp. in Chapter 7 bankruptcy proceedings pending in the United States Bankruptcy Court for
the Southern District of New York (Cases No. 13-10087, 13-10088 and 13-10089). The Acquired Shares constitute all the shares of
Common Stock previously owned by R&R, an affiliate of Rodman.
On
May 14, 2013, Ironbound – related party loaned $100,000 to us and we issued a convertible promissory note in the principal
amount of $100,000 to Ironbound (the “May 2013 Note”). The May 2013 Note was initially issued with a two-year term
and bore interest at the rate of 5.0% per annum, payable at maturity. The principal and accrued interest on the May 2013 Note
was convertible into shares of Common Stock upon the consummation of a “Fundamental Transaction” (as defined in the
May 2013 Note) at the “Conversion Price” (as defined in the May 2013 Note). The May 2013 Note was amended in July
2014 in accordance with the Amended and Restated Note, as described below.
On
August 15, 2013, we declared a stock dividend on our outstanding Common Stock for stockholders of record as of August 15, 2013
(the “Record Date”). As a result, all stockholders on the Record Date received nine new shares of Common Stock for
each share of Common Stock owned by them as of the that date (the “2013 Stock Dividend”). All share and per share
data herein has been retroactively restated to reflect the Reverse Split and the 2013 Stock Dividend, since the 2013 Stock Dividend
was in substance a forward stock split.
On
July 25, 2014, we raised gross proceeds of $72,000 in a debt financing transaction with Ironbound and, in connection therewith,
issued to Ironbound a convertible promissory note (the “2014 Note”) in the principal amount of $72,000. The 2014 Note
had a maturity date of August 31, 2015 (amended as described below) and bears interest at the rate of 5.0% per annum, payable
at maturity. The principal and accrued interest on the 2014 Note is convertible, at the election of Ironbound, into shares of
our common stock following the consummation of a “Qualified Financing” (as defined in the 2014 Note), or upon the
consummation of a “Fundamental Transaction” (as defined in the 2014 Note) at the “Conversion Price” (as
defined in the 2014 Note).
NEWTOWN
LANE MARKETING, INCORPORATED
NOTES TO CONDENSED FINANCIAL STATEMENTS
September 30, 2017
(unaudited)
NOTE
1 - DESCRIPTION OF COMPANY (continued):
Further,
on July 25, 2014, we issued an amended and restated convertible promissory note (the “Amended and Restated Note”)
to Ironbound in the principal amount of $100,000, in substitution for the May 2013 Note. The Amended and Restated Note extended
the maturity of the May 2013 Note to August 31, 2015 (amended as described below) and provides for the principal and accrued interest
on the May 2013 Note to be convertible, at the election of Ironbound, into shares of our common stock following the consummation
of a “Qualified Financing” (as defined in the May 2013 Note), or upon the consummation of a “Fundamental Transaction”
(as defined in the May 2013 Note) at the “Conversion Price” (as defined in the May 2013 Note). The May 2013 Note otherwise
remains unchanged.
Effective
September 1, 2015, the maturity dates of the Prior Notes was extended from August 31, 2015 to August 31, 2016.
On
October 30, 2015, Mr. Kling resigned from his position as our sole director and from his position as our President. Also on October
30, 2015, Mr. Warshaw resigned from his positions as our Chief Financial Officer and Secretary. Messrs. Kling’s and Warshaw’s
resignation were not due to any disagreement with the Company or its management on any matter relating to the Company’s
operations, policies or practices. Prior to Mr. Kling’s resignation, our Board of Directors appointed Jonathan J. Ledecky,
the managing member of Ironbound, our largest stockholder, to fill the vacancy created by Mr. Kling’s resignation and will
assume the role of President of the Company.
On
December 31, 2015, Ironbound advanced us an additional $10,000. This amount was subsequently evidenced by a promissory note with
the same terms as the Prior Notes. The proceeds of this note was utilized by the Company to fund working capital needs.
On
April 1, 2016, we issued a convertible promissory note (the “April 2016 Note”) in the principal amount of $10,000
to Ironbound. The 2016 Note has the same terms as the Prior Notes. The proceeds of the 2016 Note was and will be utilized by the
Company to fund working capital needs.
On
July 15, 2016, we issued a convertible promissory note (the “July 2016 Note”) in the principal amount of $25,000 to
Ironbound Partners Fund, LLC. The July 2016 Note has a maturity date of August 31, 2017 and bears interest at the rate of 5.0%
per annum, payable at maturity. The principal and accrued interest on the July 2016 Note is convertible, at the election of Ironbound,
into shares of the Company’s common stock following the consummation of a “Qualified Financing” (as defined
in the July 2016 Note), or upon the consummation of a “Fundamental Transaction” (as defined in the July 2016 Note)
at the “Conversion Price” (as defined in the July 2016 Note). The proceeds of the July 2016 Note will be utilized
by the Company to fund working capital needs.
Effective
September 1, 2016, the maturity dates of the outstanding notes at such date was extended from August 31, 2016 to August 31, 2017.
On
February 14, 2017, we issued a convertible promissory note (the “February 2017 Note” and together with the Prior Notes,
the April 2016 Note and the July 2016 Note, the “Outstanding Notes”) in the principal amount of $50,000 to Ironbound.
The February 2017 Note has a maturity date of August 31, 2017 and bears interest at the rate of 5.0% per annum, payable at maturity.
The principal and accrued interest on the February 2017 Note is convertible, at the election of Ironbound, into shares of our
common stock following the consummation of a “Qualified Financing” (as defined in the February 2017 Note), or upon
the consummation of a “Fundamental Transaction” (as defined in the February 2017 Note) at the “Conversion Price”
(as defined in the February 2017 Note). The proceeds of the February 2017 Note will be utilized by the Company to fund working
capital needs.
Effective
September 1, 2017, the maturity dates of the Outstanding Notes was extended from August 31, 2016 to August 31, 2018.
As
of September 30, 2017, our authorized capital stock consisted of 100,000,000 shares of Common Stock and 1,000,000 shares of Preferred
Stock of which 13,757,550 shares of Common Stock, and no shares of Preferred Stock, were issued and outstanding. All shares of
Common Stock currently outstanding are validly issued, fully paid and non-assessable.
During
the three and six months ended September 30, 2017, we recorded a $1,250 and $2,500 contribution to capital, respectively, for
the fair value relating to the use, occupancy and administrative services rendered by the officers.
NEWTOWN
LANE MARKETING, INCORPORATED
NOTES TO CONDENSED FINANCIAL STATEMENTS
September 30, 2017
(unaudited)
THE
COMPANY TODAY
Since
the Effective Date, our main purpose has been to serve as a vehicle to acquire an operating business and we are currently considered
a “shell” company in as much as we are not generating revenues, do not own an operating business, and have no specific
plan other than to engage in a merger or acquisition transaction with a yet-to-be identified operating company or business. Our
principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through
a combination with an operating business rather than immediate, short-term earnings. We will not restrict our potential candidate
target companies to any specific business, industry or geographical location and, thus, may acquire any type of business. The
analysis of new business opportunities will be undertaken by or under the supervision of our officers and directors. We have no
employees and no material assets.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Going
Concern - The accompanying financial statements have been prepared in conformity with accounting principles generally accepted
in the United States of America, which contemplates Newtown continuing as a going concern. Our purpose has been to serve as a
vehicle to acquire an operating business and we are currently considered a “shell” company inasmuch as we are not
generating revenues, we do own an operating business, and have no specific plan other than to engage in a merger or acquisition
transaction with a yet-to-be-identified operating company or business. We currently have no definitive agreements or understandings
with any prospective business combination candidates and there are no assurances that we will find a suitable business with which
to combine. The implementation of our business objectives is wholly contingent upon a business combination and/or the successful
sale of our securities. We intend to utilize the proceeds of any offering, any sales of equity securities or debt securities,
bank and other borrowings or a combination of those sources to effect a business combination with a target business which we believe
may have significant growth potential. While we may, under certain circumstances, seek to effect business combinations with more
than one target business, unless additional financing is obtained, we will not have sufficient proceeds remaining after an initial
business combination to undertake additional business combinations. There is no assurance that these plans will be realized in
whole or in part. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Since
inception, Newtown has incurred an accumulated deficit of $2,360,946 through September 30, 2017. For the six months ended September
30, 2017 and 2016, Newtown had net losses of $33,361 and $35,053, respectively. Newtown has incurred negative cash flow from operating
activities since its inception. Newtown has spent, and subject to obtaining additional financing, expects to continue to spend,
substantial amounts in connection with executing its business strategy. These conditions raise substantial doubt about Newtown’s
ability to continue as a going concern.
Use
of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United
States of America 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 reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those estimates.
Fair
Value of Financial Instruments - Pursuant to the FASB guidance, “Disclosures About Fair Value of Financial Instruments,”
we are required to estimate the fair value of all financial instruments included on our balance sheet. We consider the carrying
value of accrued expenses in the financial statements to approximate their face value.
Statements
of Cash Flows - For purposes of the statements of cash flows we consider all highly liquid investments purchased with a remaining
maturity of three months or less to be cash equivalents.
NOTE
3 – NEW ACCOUNTING PRONOUNCEMENTS
Except
as set forth below, management does not believe that any other new accounting pronouncements not yet effective will have a material
impact on our financial statements once adopted.
NEWTOWN
LANE MARKETING, INCORPORATED
NOTES TO CONDENSED FINANCIAL STATEMENTS
September 30, 2017
(unaudited)
In
August 2014, the FASB issued ASU 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) –
Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently, there is no guidance
in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability
to continue as a going concern or to provide related footnote disclosures. The amendments in this ASU provide that guidance. In
doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require
management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles
that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt,
(2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating
effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration
of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated,
and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to
be issued). The amendments in this ASU are effective for public and nonpublic entities for annual periods ending after December
15, 2016. Early adoption is permitted.
NOTE
4 – SUBSEQUENT EVENTS
The
Company has evaluated all subsequent events and has determined that there were no subsequent events to recognize or disclose in
these financial statements.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Use
of Forward-Looking Statements
Some
of the statements in this Form 10-Q, including some statements in “Management’s Discussion and Analysis or Plan of
Operation” are forward-looking statements about what may happen in the future. They include statements regarding our current
beliefs, goals, and expectations about matters such as our expected financial position and operating results, our business strategy,
and our financing plans. These statements can sometimes be identified by our use of forward-looking words such as “anticipate,”
“estimate,” “expect,” “intend,” “may,” “will,” and similar expressions.
We cannot guarantee that our forward-looking statements will turn out to be correct or that our beliefs and goals will not change.
Our actual results could be very different from and worse than our expectations for various reasons. You are urged to carefully
consider these factors, as well as other information contained in this Form 10-Q and in our other periodic reports and documents
filed with the United States Securities and Exchange Commission (“SEC”).
In
our Form 10-K filed with the SEC for the year ended March 31, 2017, we have identified critical accounting policies and estimates
for our business.
Plan
of Operation
We
are a corporation with limited operations and have very limited revenues from our business operations since our incorporation
in September 2005. Until December 31, 2007, we held the exclusive license to exploit the Dreesen’s Donut Brand in the United
States with the exception of the states of Florida and Pennsylvania, and in Suffolk County, New York, which Dreesen retained for
itself. The license from Dreesen expired on December 31, 2007.
On
August 8, 2007 (the “Effective Date”), we entered into a Stock Purchase Agreement (the “Purchase Agreement”)
with Moyo Partners, LLC, a New York limited liability company (“Moyo”) and R&R Biotech Partners, LLC, a Delaware
limited liability company (“R&R” collectively with Moyo, the “Purchasers”), pursuant to which we sold
to them, in the aggregate, approximately, four million four hundred seventy nine thousand two hundred fifty (4,479,250) shares
of our common stock, par value $0.001 per share (“Common Stock”) and five hundred (500
)
shares of our Series
A Preferred Stock, par value $.001 per share (“Series A Preferred Stock”), each share convertible at the option of
the holder into, approximately, fourteen thousand eight hundred twenty (14,820) shares of Common Stock, for aggregate gross proceeds
to us of $600,000. The shares of Series A Preferred Stock were convertible only to the extent there were a sufficient number of
shares of Common Stock available for issuance upon any such conversion.
On
the Effective Date: (i) the Purchasers acquired control of Newtown, with (a) R&R acquiring nine million five hundred nine
thousand four hundred forty (9,509,440) shares of Common Stock (assuming the conversion by R&R of the four hundred (400) shares
of Series A Preferred Stock it acquired pursuant to the Purchase Agreement into five million nine hundred twenty eight thousand
(5,928,000) shares of Common Stock) constituting 72% of the then issued and outstanding shares of Common Stock, and (b) Moyo acquiring
two million three hundred seventy seven thousand three hundred sixty (2,377,360) shares of Common Stock (assuming the conversion
by Moyo of its one hundred (100) shares of Series A Preferred Stock it acquired pursuant to the Purchase Agreement into one million
four hundred eighty one thousand five hundred ten (1,481,510) shares of Common Stock) constituting 18% of the then issued and
outstanding shares of Common Stock; and (ii) in full satisfaction of our obligations under outstanding convertible promissory
notes in the principal amount of $960,000 (the “December Notes”), the Note holders of the December Notes converted
an aggregate of $479,811 of principal and accrued interest into 274,200 shares of Common Stock and accepted a cash payment from
us in the aggregate amount of $625,030 for the remaining principal balance.
On
the Effective Date: (i) Arnold P. Kling was appointed to our Board of Directors (“Board”) and served together with
Vincent J. McGill, a then current director who continued to serve until August 20, 2007, the effective date of his resignation
from our Board; (ii) all of our then officers and directors, with the exception of Mr. McGill, resigned from their respective
positions with us; (iii) our Board appointed Mr. Kling as president and Kirk M. Warshaw as chief financial officer and secretary;
and (iv) we relocated our headquarters to Chatham, New Jersey.
Following
Mr. McGill’s resignation from our Board on August 20, 2007, Mr. Kling became our sole director and president.
On
October 19, 2007, we put into effect an amendment to our Certificate of Incorporation to increase to 100,000,000 the number of
authorized shares of Common Stock available for issuance (the “Charter Amendment”). As a result of the Charter Amendment,
as of October 19, 2007, we had adequate shares of Common Stock available for issuance upon the conversion of all the issued and
outstanding shares of Series A Preferred Stock.
On
December 19, 2007, the holders of all the issued and outstanding shares of Series A Preferred Stock elected to convert all of
their shares into shares of Common Stock. As a result, the 500 shares of Series A Preferred Stock outstanding were exchanged for
7,407,540 shares of Common Stock, and all 500 shares of the Series A Preferred Stock were returned to the status of authorized
and unissued shares of undesignated preferred stock, par value $.001 per shares.
On
August 15, 2008 (the “Series A Preferred Elimination Date”), all 500 shares of the Series A Preferred Stock were returned
to the status of authorized and unissued shares of undesignated preferred stock, par value $0.001 per shares. None of the Series
A Preferred Stock were outstanding as of the Series A Preferred Elimination Date.
On
August 29, 2008 (the “Reverse Split Effective Date”), we implemented a 1 for 50 reverse stock split (the “Reverse
Split”) of the Common Stock. Pursuant to the Reverse Split, each 50 shares of Common Stock issued and outstanding as of
the Reverse Split Effective Date was converted into one (1) share of Common Stock. All share and per share data herein has been
retroactively restated to reflect the Reverse Split.
In
December 2008, we sold 550,000 shares of Common Stock to Kirk Warshaw, our CFO, for $2,000. We determined such shares were issued
below their fair value; hence $11,750 of compensation expense was recorded for the difference in value of the shares issued for
cash versus fair value of such shares.
On
May 6, 2013, Ironbound Partners Fund, LLC (“Ironbound”) acquired 9,509,440 shares of Common Stock (the “Acquired
Shares”) for an aggregate purchase price of $15,000, or $0.00157737 per share. The Acquired Shares represent 69.1% of our
total issued and outstanding shares of Common Stock. The Acquired Shares were purchased by Ironbound, utilizing its available
and uncommitted cash, from the Chapter 7 Trustee of the Estates of Rodman & Renshaw, LLC (“Rodman”), Direct Markets,
Inc., and Direct Markets Holdings, Corp. in Chapter 7 bankruptcy proceedings pending in the United States Bankruptcy Court for
the Southern District of New York (Cases No. 13-10087, 13-10088 and 13-10089). The Acquired Shares constitute all the shares of
Common Stock previously owned by R&R, an affiliate of Rodman.
On
May 14, 2013, Ironbound loan $100,000 to us and we issued a convertible promissory note in the principal amount of $100,000 to
Ironbound (the “May 2013 Note”). The May 2013 Note is for a two-year term and bears interest at the rate of 5.0% per
annum, payable at maturity. The principal and accrued interest on the May 2013 Note is convertible into shares of Common Stock
upon the consummation of a “Fundamental Transaction” (as defined in the May 2013 Note) at the “Conversion Price”
(as defined in the May 2013 Note).
On
August 15, 2013, we declared a stock dividend on our outstanding Common Stock for stockholders of record as of August 15, 2013
(the “Record Date”). As a result, all stockholders on the Record Date received nine new shares of Common Stock for
each share of Common Stock owned by them as of the that date (the “2013 Stock Dividend”). All share and per share
data herein has been retroactively restated to reflect the Reverse Split and the 2013 Stock Dividend, since the 2013 Stock Dividend
was in substance a forward stock split.
On
July 25, 2014, we raised gross proceeds of $72,000 in a debt financing transaction with Ironbound and, in connection therewith,
issued to Ironbound a convertible promissory note (the “2014 Note”) in the principal amount of $72,000. The 2014 Note
had a maturity date of August 31, 2015 (amended as described below) and bears interest at the rate of 5.0% per annum, payable
at maturity. The principal and accrued interest on the 2014 Note is convertible, at the election of Ironbound, into shares of
our common stock following the consummation of a “Qualified Financing” (as defined in the 2014 Note), or upon the
consummation of a “Fundamental Transaction” (as defined in the 2014 Note) at the “Conversion Price” (as
defined in the 2014 Note).
Further,
on July 25, 2014, we issued an amended and restated convertible promissory note (the “Amended and Restated Note”)
to Ironbound in the principal amount of $100,000, in substitution for the May 2013 Note. The Amended and Restated Note extended
the maturity of the May 2013 Note to August 31, 2015 (amended as described below) and provides for the principal and accrued interest
on the May 2013 Note to be convertible, at the election of Ironbound, into shares of our common stock following the consummation
of a “Qualified Financing” (as defined in the May 2013 Note), or upon the consummation of a “Fundamental Transaction”
(as defined in the May 2013 Note) at the “Conversion Price” (as defined in the May 2013 Note). The May 2013 Note otherwise
remains unchanged.
Effective
September 1, 2015, the maturity dates of the Prior Notes was extended from August 31, 2015 to August 31, 2016.
On
October 30, 2015, Mr. Kling resigned from his position as our sole director and from his position as our President. Also on October
30, 2015, Mr. Warshaw resigned from his positions as our Chief Financial Officer and Secretary. Messrs. Kling’s and Warshaw’s
resignation were not due to any disagreement with the Company or its management on any matter relating to the Company’s
operations, policies or practices. Prior to Mr. Kling’s resignation, our Board of Directors appointed Jonathan J. Ledecky,
the managing member of Ironbound, our largest stockholder, to fill the vacancy created by Mr. Kling’s resignation and will
assume the role of President of the Company.
On
December 31, 2015, Ironbound advanced us an additional $10,000. This amount was subsequently evidenced by a promissory note with
the same terms as the Prior Notes. The proceeds of this note was utilized by the Company to fund working capital needs.
On
April 1, 2016, we issued a convertible promissory note (the “April 2016 Note”) in the principal amount of $10,000
to Ironbound. The 2016 Note has the same terms as the Prior Notes. The proceeds of the 2016 Note was and will be utilized by the
Company to fund working capital needs.
On
July 15, 2016, we issued a convertible promissory note (the “July 2016 Note”) in the principal amount of $25,000 to
Ironbound Partners Fund, LLC. The July 2016 Note has a maturity date of August 31, 2017 and bears interest at the rate of 5.0%
per annum, payable at maturity. The principal and accrued interest on the July 2016 Note is convertible, at the election of Ironbound,
into shares of the Company’s common stock following the consummation of a “Qualified Financing” (as defined
in the July 2016 Note), or upon the consummation of a “Fundamental Transaction” (as defined in the July 2016 Note)
at the “Conversion Price” (as defined in the July 2016 Note). The proceeds of the July 2016 Note will be utilized
by the Company to fund working capital needs.
Effective
September 1, 2016, the maturity date of the outstanding notes at such date was extended from August 31, 2016 to August 31, 2017.
On
February 14, 2017, we issued a convertible promissory note (the “February 2017 Note” and together with the Prior Notes,
the April 2016 Note and the July 2016 Note, the “Outstanding Notes”) in the principal amount of $50,000 to Ironbound.
The February 2017 Note has a maturity date of August 31, 2017 and bears interest at the rate of 5.0% per annum, payable at maturity.
The principal and accrued interest on the February 2017 Note is convertible, at the election of Ironbound, into shares of our
common stock following the consummation of a “Qualified Financing” (as defined in the February 2017 Note), or upon
the consummation of a “Fundamental Transaction” (as defined in the February 2017 Note) at the “Conversion Price”
(as defined in the February 2017 Note). The proceeds of the February 2017 Note will be utilized by the Company to fund working
capital needs.
Effective
September 1, 2017, the maturity date of the Outstanding Notes was extended from August 31, 2016 to August 31, 2018.
As
of September 30, 2017, our authorized capital stock consisted of 100,000,000 shares of Common Stock and 1,000,000 shares of Preferred
Stock of which 13,757,550 shares of Common Stock, and no shares of Preferred Stock, were issued and outstanding. All shares of
Common Stock currently outstanding are validly issued, fully paid and non-assessable.
As
of the Effective Date, we discontinued our efforts to promote the Dreesen’s Donut Brand, we have no employees and our main
purpose has been to effect a business combination with an operating business which we believe has significant growth potential.
As of yet, we have no definitive agreements or understandings with any prospective business combination candidates and there are
no assurances that we will find a suitable business with which to combine. The implementation of our business objectives is wholly
contingent upon a business combination and/or the successful sale of our securities. We intend to utilize the proceeds of any
offering, any sales of equity securities or debt securities, bank and other borrowings or a combination of those sources to effect
a business combination with a target business which we believe has significant growth potential. While we may, under certain circumstances,
seek to effect business combinations with more than one target business, unless and until additional financing is obtained, we
will not have sufficient proceeds remaining after an initial business combination to undertake additional business combinations.
A
common reason for a target company to enter into a merger with us is the desire to establish a public trading market for its shares.
Such a company would hope to avoid the perceived adverse consequences of undertaking a public offering itself, such as the time
delays and significant expenses incurred to comply with the various Federal and state securities law that regulate initial public
offerings.
As
a result of our limited resources, we expect to have sufficient proceeds to effect only a single business combination. Accordingly,
the prospects for our success will be entirely dependent upon the future performance of a single business. Unlike certain entities
that have the resources to consummate several business combinations or entities operating in multiple industries or multiple segments
of a single industry, we will not have the resources to diversify our operations or benefit from the possible spreading of risks
or offsetting of losses. A target business may be dependent upon the development or market acceptance of a single or limited number
of products, processes or services, in which case there will be an even higher risk that the target business will not prove to
be commercially viable.
Our
officers are only required to devote a small portion of their time (less than 10%) to our affairs on a part-time or as-needed
basis. We expect to use outside consultants, advisors, attorneys and accountants as necessary. We do not anticipate hiring any
full-time employees so long as we are seeking and evaluating business opportunities.
We
expect our present management to play no managerial role in our company following a business combination. Although we intend to
scrutinize closely the management of a prospective target business in connection with our evaluation of a business combination
with a target business, our assessment of management may be incorrect. We cannot assure you that we will find a suitable business
with which to combine.
Our
principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through
a combination with an operating business. We will not restrict our potential candidate target companies to any specific business,
industry or geographical location and, thus, may acquire any type of business. The analysis of new business opportunities will
be undertaken by or under the supervision of our officers and directors.
Results
of Operations
THREE
MONTH PERIOD ENDED SEPTEMBER 30, 2017 COMPARED TO THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 2016
We
are a corporation with limited operations and did not have any revenues during the three month periods ended September 30, 2017
and 2016, respectively.
Total
expenses from continuing operations for the three months ended September 30, 2017 and 2016 were $15,346 and $20,810, respectively.
The majority of these expenses primarily constituted general and administrative expenses related to accounting and compliance
with the Securities Exchange Act of 1934, as amended (“Exchange Act”).
SIX
MONTH PERIOD ENDED SEPTEMBER 30, 2017 COMPARED TO THE SIX MONTH PERIOD ENDED SEPTEMBER 30, 2016
We
are a corporation with limited operations and did not have any revenues during the six month periods ended September 30, 2017
and 2016, respectively.
Total
expenses from continuing operations for the six months ended September 30, 2017 and 2016 were $33,361 and $35,053, respectively.
The majority of these expenses primarily constituted general and administrative expenses related to accounting and compliance
with the Securities Exchange Act of 1934, as amended (“Exchange Act”).
Liquidity
and Capital Resources
At
September 30, 2017, we did not have any revenues from operations. Absent a merger or other combination with an operating company,
we do not expect to have any revenues from operations. No assurance can be given that such a merger or other combination will
occur or that we can engage in any public or private sales of our equity or debt securities to raise working capital. We are dependent
upon future loans or capital contributions from our present stockholders and/or management and there can be no assurances that
our present stockholders or management will make any loans or capital contributions to us.
At
September 30, 2017, we had the Outstanding Notes payable in the aggregate principal amount of $267,000 payable to Ironbound, our
majority stockholder. We had cash and cash equivalents of $16,732 and negative working capital of $288,932. Such funds will not
be sufficient to satisfy our cash requirements during the next twelve months and we will require additional funds. We cannot provide
assurance that adequate additional funds will be available or, if available, will be offered on acceptable terms.
Our
present material commitments are professional and administrative fees and expenses associated with the preparation of our filings
with the SEC and other regulatory requirements. In the event that we engage in any merger or other combination with an operating
company, we will have additional material professional commitments.
Critical
Accounting Policies
Our
unaudited financial statements are prepared in conformity with accounting principles generally accepted in the United States of
America (“GAAP”), which require management to make estimates and assumptions that affect the amounts reported in such
financial statements and related notes. Actual results can and will differ from estimates. These differences could be material
to the financial statements. We believe our application of accounting policies and the estimates required therein are reasonable.
Outlined below are those policies considered particularly significant.
Use
of Estimates
In
preparing financial statements in accordance with GAAP, management makes certain estimates and assumptions, where applicable,
that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. While actual results
could differ from those estimates, management does not expect such variances, if any, to have a material effect on the financial
statements.
Income
Taxes
The
asset and liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are
recognized for operating loss and tax credit carry forwards and for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates
is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to
reduce the carrying amounts of deferred tax assets unless it is more likely than not that such assets will be realized.
Financial
Instruments
The
estimated fair values of all reported assets and liabilities which represent financial instruments, none of which are held for
trading purposes, approximate their carrying value because of the short term maturity of these instruments or the stated interest
rates are indicative of market interest rates.
Equity
Based Compensation
The
accounting guidance for “Share Based Payments” requires the recognition of the fair value of employee stock options
and similar awards and applies to all outstanding and vested stock-based awards. In computing the impact, the fair value of each
option is estimated on the date of grant based on the Black-Scholes options-pricing model utilizing certain assumptions for a
risk free interest rate; volatility; and expected remaining lives of the awards. The assumptions used in calculating the fair
value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties
and the application of management judgment. As a result, if factors change and we use different assumptions, our stock-based compensation
expense could be materially different in the future. In addition, we are required to estimate the expected forfeiture rate and
only recognize expense for those shares expected to vest. In estimating our forfeiture rate, we analyzed its historical forfeiture
rate, the remaining lives of unvested options, and the amount of vested options as a percentage of total options outstanding.
If our actual forfeiture rate is materially different from its estimate, or if we reevaluate the forfeiture rate in the future,
the stock-based compensation expense could be significantly different from what we have recorded in the current period. The last
equity based compensation issued by us was more than two years ago and such shares were fully vested upon issuance, hence an expense
was recorded at that time.
New
Accounting Pronouncements
In
August 2014, the FASB issued ASU 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) –
Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently, there is no guidance
in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability
to continue as a going concern or to provide related footnote disclosures. The amendments in this ASU provide that guidance. In
doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require
management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles
that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt,
(2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating
effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration
of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated,
and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to
be issued). The amendments in this ASU are effective for public and nonpublic entities for annual periods ending after December
15, 2016. Early adoption is permitted.
All
other new accounting pronouncements issued but not yet effective have been reviewed and determined to be not applicable. As a
result, the adoption of such new accounting pronouncements, when effective, is not expected to have a material impact on our financial
position.
Commitments
We
do not have any commitments which are required to be disclosed in tabular form as of September 30, 2017.
Off-Balance
Sheet Arrangements
As
of September 30, 2017, we have no off-balance sheet arrangements such as guarantees, retained or contingent interest in assets
transferred, obligation under a derivative instrument and obligation arising out of or a variable interest in an unconsolidated
entity.