PART
1
THE
COMPANY’S HISTORY
Newtown
Lane Marketing, Incorporated (“we”, “our”, “us” or “Newtown”) was incorporated
in Delaware on September 26, 2005. 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. 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.
On
August 29, 2008, we implemented a 1 for 50 reverse stock split (the “Reverse Split”) of our Common Stock. Pursuant
to the Reverse Split, each 50 shares of Common Stock issued and outstanding was converted into one share of Common Stock.
Effective
August 15, 2013, we declared and paid a stock dividend on our outstanding Common Stock to 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 contained in this Report has been retroactively restated to reflect the Reverse Split and the 2013 Stock
Dividend and all fractional shares, if any, as a result thereof have been rounded upward to the next whole share.
As
of March 31, 2020, 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.
CHANGE
OF OWNERSHIP 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 $.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 effected 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. None of the Series A Preferred Stock were outstanding
as of the Series A Preferred Elimination Date.
In
December 2008, we sold 550,000 shares of restricted Common Stock to our Chief Financial Officer, for $2,000. The issuance of these
shares was exempt from registration pursuant to Sections 4(2) and 4(6) or the Securities Act of 1933, as amended (the “Act”).
The stock certificate representing these shares was imprinted with a legend restricting transfer unless pursuant to an effective
registration statement or an exemption from registration under the Act.
On
May 6, 2013, Ironbound Partners Fund, LLC (“Ironbound”) acquired 9,509,440 shares of our outstanding Common Stock
(the “Acquired Shares”) for an aggregate purchase price of $15,000, or $0.00157737 per share, 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 constituted all the shares of Common Stock previously owned by R&R,
an affiliate of Rodman, and represented 69.1% of our total issued and outstanding shares of Common Stock as of May 6, 2013.
On
May 14, 2013, Ironbound 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
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
has a maturity date of August 31, 2015 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” and
together with the 2014 Note, the “Prior Notes”) 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 and provided
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 remained 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 to us an additional $10,000. This amount was subsequently evidenced by a promissory note
(the “December 2015 Note”) with the same terms as the Prior Notes. The proceeds of the December 2015 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 April 2016 Note has the same terms as the Prior Notes. The proceeds of the April 2016 Note was 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. 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 promissory notes held by Ironbound 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 December 2015 Note, 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, 2017 to August 31, 2018.
In
August 2018, the maturity dates of the Outstanding Notes was extended from August 1, 2018 to August 31, 2019.
On
August 27, 2018, we issued a convertible promissory note (the “August 2018 Note”) in the principal amount of $15,000
to Ironbound. The August 2018 Note has a maturity date of August 31, 2019 and bears interest at the rate of 5.0% per annum, payable
at maturity. The principal and accrued interest on the August 2018 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 August 2018 Note), or
upon the consummation of a “Fundamental Transaction” (as defined in the August 2018 Note) at the “Conversion
Price” (as defined in the August 2018 Note). The proceeds of the August 2018 Note has been and will be utilized by the Company
to fund working capital needs.
On
December 4, 2018, we issued a convertible promissory note (the “December 2018 Note”) in the principal amount of $25,000
to Ironbound. The December 2018 Note has a maturity date of August 31, 2019 and bears interest at the rate of 5.0% per annum,
payable at maturity. The principal and accrued interest on the December 2018 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 December 2018 Note), or upon the consummation of a “Fundamental Transaction” (as defined in the December 2018
Note) at the “Conversion Price” (as defined in the December 2018 Note). The proceeds of the December 2018 Note has
been and will be utilized by the Company to fund working capital needs.
Effective
November 12, 2019, the maturity dates of the outstanding promissory notes held by Ironound was extended from August 31, 2019 to
August 31, 2020.
On
November 27, 2019, we issued a convertible promissory note (the “November 2019 Note”) in the principal amount of $40,000
to Ironbound. The November 2019 Note has a maturity date of August 31, 2020 and bears interest at the rate of 5.0% per annum,
payable at maturity. The principal and accrued interest on the November 2019 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 November 2019 Note), or upon the consummation of a “Fundamental Transaction” (as defined in the November 2019
Note) at the “Conversion Price” (as defined in the November 2019 Note). The proceeds of the November 2019 Note have
been and will be utilized by the Company to fund working capital needs.
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 company or 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. We have no employees and no material assets.
We
currently have no 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.
A
common reason for a target company to enter into a merger with a shell company 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, unless and until additional financing is obtained, we expect to have sufficient proceeds to
effect only a single business combination. Accordingly, the prospects for our success will likely be 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 do not expect to 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.
We
do not expect our present management to play any managerial role for us 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.
In
evaluating a prospective target business, we expect to consider several factors, including the following:
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experience and skill
of management and availability of additional personnel of the target business;
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costs associated
with effecting the business combination;
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equity interest
retained by our stockholders in the merged entity;
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growth potential
of the target business;
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capital requirements
of the target business;
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capital available
to the target business;
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stage of development
of the target business;
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proprietary features
and degree of intellectual property or other protection of the target business;
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the financial statements
of the target business; and
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the regulatory environment
in which the target business operates.
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The
foregoing criteria are not intended to be exhaustive and any evaluation relating to the merits of a particular target business
will be based, to the extent relevant, on the above factors, as well as other considerations we deem relevant. In connection with
our evaluation of a prospective target business, we anticipate that we will conduct a due diligence review which will encompass,
among other things, meeting with incumbent management as well as a review of financial, legal and other information.
The
time and costs required to select and evaluate a target business (including conducting a due diligence review) and to structure
and consummate the business combination (including negotiating and documenting relevant agreements and preparing requisite documents
for filing pursuant to applicable corporate and securities laws) cannot be determined at this time. Our president intends to devote
only a very small portion of his time to our affairs, and, accordingly, the consummation of a business combination may require
a longer time than if he devoted his full time to our affairs. However, he will devote such time as he deems reasonably necessary
to carry out our business and affairs. The amount of time devoted to our business and affairs may vary significantly depending
upon, among other things, whether we have identified a target business or are engaged in active negotiation of a business combination.
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
anticipate that various prospective target businesses will be brought to our attention from various sources, including securities
broker-dealers, investment bankers, venture capitalists, bankers and other members of the financial community, including, possibly,
the executive officers and our affiliates.
As
a general rule, federal and state tax laws and regulations have a significant impact upon the structuring of business combinations.
We will evaluate the possible tax consequences of any prospective business combination and will endeavor to structure a business
combination so as to achieve the most favorable tax treatment to our company, the target business and our respective stockholders.
There can be no assurance that the Internal Revenue Service or relevant state tax authorities will ultimately assent to our tax
treatment of a particular consummated business combination. To the extent the Internal Revenue Service or any relevant state tax
authorities ultimately prevail in recharacterizing the tax treatment of a business combination, there may be adverse tax consequences
to our company, the target business, and our respective stockholders.
We
may acquire a company or business by purchasing the securities of such company or business. However, we do not intend to engage
primarily in such activities. Specifically, we intend to conduct our activities so as to avoid being classified as an “investment
company” under the Investment Company Act of 1940, as amended (the “Investment Act”) and therefore avoid application
of the costly and restrictive registration and other provisions of the Investment Company Act and the regulations promulgated
thereunder.
Section
3(a) of the Investment Company Act excepts from the definition of an “investment company” an entity which does not
engage primarily in the business of investing, reinvesting or trading in securities, or which does not engage in the business
of investing, owning, holding or trading “investment securities” (defined as “all securities other than government
securities or securities of majority-owned subsidiaries”) the value of which exceed 40% of the value of its total assets
(excluding government securities, cash or cash items). We intend to operate any business in the future in a manner which will
result in the availability of this exception from the definition of an investment company. Consequently, our acquisition of a
company or business through the purchase and sale of investment securities will be limited. Although we intend to act to avoid
classification as an investment company, the provisions of the Investment Company Act are extremely complex and it is possible
that we may be classified as an inadvertent investment company. We intend to vigorously resist classification as an investment
company, and to take advantage of any exemptions or exceptions from application of the Investment Company Act, which allows an
entity a one-time option during any three-year period to claim an exemption as a “transient” investment company. The
necessity of asserting any such resistance, or making any claim of exemption, could be time consuming and costly, or even prohibitive,
given our limited resources.
Various
impediments to a business combination may arise, such as appraisal rights afforded the stockholders of a target business under
the laws of its state of organization. This may prove to be deterrent to a particular combination.
IN
ADDITION TO THE OTHER INFORMATION PROVIDED IN THIS REPORT, YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS IN EVALUATING OUR
BUSINESS, OPERATIONS AND FINANCIAL CONDITION. ADDITIONAL RISKS AND UNCERTAINTIES NOT PRESENTLY KNOWN TO US, THAT WE CURRENTLY
DEEM IMMATERIAL OR THAT ARE SIMILAR TO THOSE FACED BY OTHER COMPANIES IN OUR INDUSTRY OR BUSINESS IN GENERAL, SUCH AS COMPETITIVE
CONDITIONS, MAY ALSO IMPAIR OUR BUSINESS OPERATIONS. THE OCCURRENCE OF ANY OF THE FOLLOWING RISKS COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
WE
HAVE NO RECENT OPERATING HISTORY OR BASIS FOR EVALUATING PROSPECTS.
Since
the Effective Date, we have no operating business or plans to develop one. We are currently seeking to enter into a merger or
business combination with another company. To date, our efforts have been limited to meeting our regulatory filing requirements
and searching for a merger target.
CERTAIN
CONDITIONS RAISE SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN
Since
inception, we have incurred negative cash flow from operating activities and an accumulated deficit of $2,497,169 through March
31, 2020. For the years ended March 31, 2020 and 2019, we had net losses of $62,411 and $51,322, respectively. We have spent,
and subject to obtaining additional financing, expect to continue to spend, substantial amounts in connection with executing our
business strategy. These conditions raise substantial doubt about our ability to continue as a going concern.
WE
HAVE LIMITED RESOURCES AND NO REVENUES FROM OPERATIONS, AND WILL NEED ADDITIONAL FINANCING IN ORDER TO EXECUTE ANY BUSINESS PLAN
AND HISTORICALLY RELIED UPON FUNDING FROM OUR MAJORITY STOCKHOLDER.
We
have limited resources, no revenues from operations to date and our cash on hand may not be sufficient to satisfy our cash requirements
during the next twelve months. In addition, we will not achieve any revenues (other than insignificant investment income) until,
at the earliest, the consummation of a merger and we cannot ascertain our capital requirements until such time. Further limiting
our abilities to achieve revenues, in order to avoid status as an “Investment Company” under the Investment Company
Act, we can only invest our funds prior to a merger in limited investments which do not invoke Investment Company status. There
can be no assurance that determinations ultimately made by us will permit us to achieve our business objectives.
We
have historically relied upon funding through capital contributions from our former majority stockholder, R&R, an affiliate
of Rodman. On January 11, 2013, Rodman filed a chapter 7 bankruptcy petition. As a result, we do not expect any further
funding from R&R. Subsequent to our fiscal year ended March 31, 2013, on May 6, 2013, Ironbound acquired the 9,509,440
shares of Common Stock then owned by R&R from the Chapter 7 Trustee of the Estates of 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). Since May 14, 2013, we have borrowed $347,000 from Ironbound and issued
the aforementioned Outstanding Notes, July 2016 Note, February 2017 Note, August 2018 Note, December 2018 Note and November 2019
Note to it. As of March 31, 2020, we have $13,831 on hand. 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. Failure to receive adequate additional funding will cause
us to cease operations.
WE
WILL BE ABLE TO EFFECT AT MOST ONE MERGER, AND THUS MAY NOT HAVE A DIVERSIFIED BUSINESS.
Our
resources are limited and we will most likely have the ability to effect only a single merger. This probable lack of diversification
will subject us to numerous economic, competitive and regulatory developments, any or all of which may have a material adverse
impact upon the particular industry in which we may operate subsequent to the consummation of a merger. We will become dependent
upon the development or market acceptance of a single or limited number of products, processes or services.
WE
DEPEND SUBSTANTIALLY UPON OUR PRESIDENT tO MAKE ALL MANAGEMENT DECISIONS.
Our
ability to effect a merger will be dependent upon the efforts of our president, Jonathan J. Ledecky. Notwithstanding the importance
of Mr. Ledecky, we have not entered into any employment agreement or other understanding with Mr. Ledecky concerning compensation
or obtained any “key man” life insurance on any of his life. The loss of the services of Mr. Ledecky will have a material
adverse effect on our business objectives and success. We rely upon the expertise of Mr. Ledecky and do not anticipate that we
will hire additional personnel.
THERE
MAY BE CONFLICTS OF INTEREST BETWEEN OUR MANAGEMENT AND OUR NON-MANAGEMENT STOCKHOLDERS.
Conflicts
of interest create the risk that management may have an incentive to act adversely to the interests of other investors. An officer
may be entitled to receive compensation from a target company he or she identifies or provides services to in connection with
a business combination. A conflict of interest may arise between our management’s personal pecuniary interest and their
fiduciary duty to our stockholders. Further, our management’s own pecuniary interest may at some point compromise their
fiduciary duty to our stockholders. In addition, Mr. Ledecky, our president and sole director, is currently involved with other
companies and conflicts in the pursuit of business combinations with such other companies with which he and affiliates of our
majority stockholder are, and may in the future be affiliated with, may arise. We cannot assure you that conflicts of interest
among us, our management and our stockholders will not develop or be resolved in our favor.
THERE
IS COMPETITION FOR THOSE PRIVATE COMPANIES SUITABLE FOR A MERGER TRANSACTION OF THE TYPE CONTEMPLATED BY MANAGEMENT.
We
are in a highly competitive market for a small number of business opportunities which could reduce the likelihood of consummating
a successful business combination. We are and will continue to be an insignificant participant in the business of seeking mergers
with, joint ventures with and acquisitions of small private and public entities. A large number of established and well-financed
entities, including small public companies and venture capital firms, are active in mergers and acquisitions of companies that
may be desirable target candidates for us. Nearly all these entities have significantly greater financial resources, technical
expertise and managerial capabilities than we do; consequently, we will be at a competitive disadvantage in identifying possible
business opportunities and successfully completing a business combination. These competitive factors may reduce the likelihood
of our identifying and consummating a successful business combination.
FUTURE
SUCCESS IS HIGHLY DEPENDENT ON THE ABILITY OF MANAGEMENT TO LOCATE AND ATTRACT A SUITABLE ACQUISITION.
The
nature of our operations is highly speculative. The success of our plan of operation will depend to a great extent on the operations,
financial condition and management of the identified business opportunity. While management intends to seek business combination(s)
with entities having established operating histories, we cannot assure you that we will be successful in locating candidates meeting
that criterion. In the event we complete a business combination, the success of our operations may be dependent upon management
of the successor firm or venture partner firm and numerous other factors beyond our control.
WE
HAVE NO AGREEMENT FOR A BUSINESS COMBINATION OR OTHER TRANSACTION.
We
have no agreement with respect to engaging in a merger with, joint venture with or acquisition of, a private or public entity.
No assurances can be given that we will successfully identify and evaluate suitable business opportunities or that we will conclude
a business combination. Management has not identified any particular industry or specific business within an industry for evaluation.
We cannot guarantee that we will be able to negotiate a business combination on favorable terms, and there is consequently a risk
that funds allocated to the purchase of our shares will not be invested in a company with active business operations.
MANAGEMENT
WILL CHANGE UPON THE CONSUMMATION OF A MERGER.
After
the closing of a merger or business combination, it is likely our current management will not retain any control or managerial
responsibilities. Upon such event, Mr. Ledecky intends to resign from his positions with us.
CURRENT
STOCKHOLDERS WILL BE IMMEDIATELY AND SUBSTANTIALLY DILUTED UPON A MERGER OR BUSINESS COMBINATION.
Our
Certificate of Incorporation authorized the issuance of 100,000,000 shares of our Common Stock. There are currently 86,242,450
authorized but unissued shares of Common Stock available for issuance. To the extent that additional shares of Common Stock are
authorized and issued in connection with a merger or business combination, our stockholders could experience significant dilution
of their respective ownership interests. Furthermore, the issuance of a substantial number of shares of Common Stock may adversely
affect prevailing market prices, if any, for our Common Stock and could impair our ability to raise additional capital through
the sale of equity securities.
CONTROL
BY EXISTING STOCKHOLDER.
As
of March 31, 2020, Ironbound beneficially owned approximately 69% of the outstanding shares of our Common Stock. As a result,
Ironbound is able to exercise control over matters requiring stockholder approval, including the election of directors, and the
approval of mergers, consolidations and sales of all or substantially all of our assets.
WE
OR ANY BUSINESS WE SEEK TO ACQUIRE COULD BE SUBJECT TO CYBERSECURITY RISKS.
We
or any company we seek to acquire may rely on information technology systems, including third-party hosted servers and cloud-based
servers, to keep business, financial, and corporate records, communicate internally and externally, and operate other critical
functions. If any of those internal systems or the systems of its third-party providers are compromised due to cyber incidents,
then sensitive documents could be exposed or deleted, and our ability to conduct business could be impaired. Cyber incidents can
result from deliberate attacks or unintentional events. These incidents can include, but are not limited to, unauthorized access
to systems, computer viruses or other malicious code, denial of service attacks, malware, ransomware, phishing, SQL injection
attacks, human error, or other events that result in security breaches or give rise to the manipulation or loss of sensitive information
or assets. Cyber incidents can be caused by various persons or groups, including disgruntled employees and vendors, activists,
organized crime groups, and state-sponsored and individual hackers. Cyber incidents can also be caused or aggravated by natural
events, such as earthquakes, floods, fires, power loss, and telecommunications failures. In addition to operational and business
consequences, if a target business’ cybersecurity is breached, it could be held liable to its customers or other parties
in regulatory or other actions, and it may be exposed to reputation damages and loss of trust and business. This could result
in costly investigations and litigation, civil or criminal penalties, fines, and negative publicity. Any of the foregoing could
have a material adverse effect.
OUR
COMMON STOCK IS A “PENNY STOCK” WHICH MAY RESTRICT THE ABILITY OF STOCKHOLDERS TO SELL OUR COMMON STOCK IN THE SECONDARY
MARKET.
The
Securities and Exchange Commission (“SEC”) has adopted regulations which generally define “penny stock”
to be an equity security that has a market price, as defined, of less than $5.00 per share, or an exercise price of less than
$5.00 per share, subject to certain exceptions, including an exception of an equity security that is quoted on a national securities
exchange. Our Common Stock is not now quoted on a national securities exchange and has a market price of less than $5.00 per share
and therefore may be deemed to be a penny stock. As such, they are subject to rules that impose additional sales practice requirements
on broker-dealers who sell these securities. For example, the broker-dealer must make a special suitability determination for
the purchaser of such securities and have received the purchaser’s written consent to the transactions prior to the purchase.
Additionally, the rules require the delivery, prior to the transaction, of a disclosure schedule prepared by the SEC relating
to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered
underwriter, and current quotations for the securities, and, if the broker-dealer is the sole market maker, the broker-dealer
must disclose this fact and the broker-dealer’s presumed control over the market. Finally, among other requirements, monthly
statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited
market in penny stocks. The “penny stock” rules, may restrict the ability of our stockholders to sell our Common Stock
and warrants in the secondary market.
OUR
COMMON STOCK HAS BEEN THINLY TRADED, LIQUIDITY IS LIMITED, AND WE MAY BE UNABLE TO OBTAIN LISTING OF OUR COMMON STOCK ON A MORE
LIQUID MARKET.
Our
Common Stock has been thinly traded and is currently quoted on the OTC Markets, which provide significantly less liquidity than
a national securities exchange such as the NYSE or the NASDAQ. There is uncertainty that we will ever be accepted for a listing
on a national securities exchange. The purchasers of shares of our Common Stock may find it difficult to resell their shares at
prices quoted in the market or at all.
WE
MAY. BE IMPACTED BY THE RECENT CORONAVIRUS OUTBREAK.
In
December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread
throughout China and other parts of the world, including the United States. On January 30, 2020, the World Health Organization
declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.”
On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United
States to aid the U.S. healthcare community in responding to COVID-19. A significant outbreak of COVID-19 and other infectious
diseases could result in a widespread health crisis that could adversely affect the economies and financial markets worldwide,
and the business of any potential target business with which we consummate a business combination could be materially and adversely
affected. Furthermore, we may be unable to complete a transaction if continued concerns relating to COVID-19 restrict travel,
limit the ability to have meetings with potential investors or the target company’s personnel, vendors and services providers
are unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts us will depend
on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning
the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19
or other matters of global concern continue for an extensive period of time, our ability to consummate a transaction, or the operations
of a business with which we ultimately consummate a transaction, may be materially adversely affected.
ITEM 1B.
|
UNRESOLVED STAFF
COMMENTS.
|
None.
We
currently rely on office space provided to our executive officer by Graubard Miller, our legal counsel, located at 405 Lexington
Avenue, New York, NY 10174. Graubard Miller provides such space free of charge. We do not own or intend to invest in any real
property. We currently have no policy with respect to investments or interests in real estate, real estate mortgages or securities
of, or interests in, persons primarily engaged in real estate activities.
ITEM 3.
|
LEGAL PROCEEDINGS.
|
None.
ITEM 4.
|
MINE SAFETY DISCLOSURES.
|
Not
applicable.
NEWTOWN LANE MARKETING, INCORPORATED
BALANCE SHEETS
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
ASSETS
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
13,831
|
|
|
$
|
10,778
|
|
TOTAL CURRENT ASSETS
|
|
$
|
13,831
|
|
|
$
|
10,778
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
79,486
|
|
|
$
|
59,022
|
|
Convertible notes payable - Related Party
|
|
|
347,000
|
|
|
|
307,000
|
|
TOTAL CURRENT LIABILITIES
|
|
|
426,486
|
|
|
|
366,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value, 1,000,000 shares authorized, none issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
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
|
|
|
2,070,756
|
|
|
|
2,065,756
|
|
Accumulated deficit
|
|
|
(2,497,169
|
)
|
|
|
(2,434,758
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL STOCKHOLDERS’ DEFICIT
|
|
|
(412,655
|
)
|
|
|
(355,244
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
$
|
13,831
|
|
|
$
|
10,778
|
|
The accompanying notes are an integral part
of these financial statements.
NEWTOWN LANE MARKETING, INCORPORATED
STATEMENTS OF OPERATIONS
|
|
Year Ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Expenses
|
|
|
|
|
|
|
Selling, general and administrative
|
|
$
|
46,340
|
|
|
$
|
37,058
|
|
Interest expense, net
|
|
|
16,071
|
|
|
|
14,264
|
|
Total expense
|
|
|
62,411
|
|
|
|
51,322
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(62,411
|
)
|
|
$
|
(51,322
|
)
|
|
|
|
|
|
|
|
|
|
Net loss per share - basic and diluted
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic and diluted
|
|
|
13,757,550
|
|
|
|
13,757,550
|
|
The accompanying notes are an integral part
of these financial statements
NEWTOWN LANE MARKETING, INCORPORATED
STATEMENT OF CHANGES IN STOCKHOLDERS’
DEFICIT
For the years ended March 31, 2020 and 2019
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Deficit
|
|
Balances at March 31, 2018
|
|
|
0
|
|
|
$
|
0
|
|
|
|
13,757,550
|
|
|
$
|
13,758
|
|
|
$
|
2,060,756
|
|
|
$
|
(2,383,436
|
)
|
|
$
|
(308,922
|
)
|
Contributed Services
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
5,000
|
|
|
|
0
|
|
|
|
5,000
|
|
Net loss
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(51,322
|
)
|
|
|
(51,322
|
)
|
Balances at March 31, 2019
|
|
|
0
|
|
|
$
|
0
|
|
|
|
13,757,550
|
|
|
$
|
13,758
|
|
|
$
|
2,065,756
|
|
|
$
|
(2,434,758
|
)
|
|
$
|
(355,244
|
)
|
Contributed services
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
5,000
|
|
|
|
0
|
|
|
|
5,000
|
|
Net loss
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(62,411
|
)
|
|
|
(62,411
|
)
|
Balances at March 31, 2020
|
|
|
0
|
|
|
$
|
0
|
|
|
|
13,757,550
|
|
|
$
|
13,758
|
|
|
$
|
2,070,756
|
|
|
$
|
(2,497,169
|
)
|
|
$
|
(412,655
|
)
|
The accompanying notes are an integral part
of these financial statements.
NEWTOWN LANE MARKETING, INCORPORATED
STATEMENTS OF CASH FLOWS
|
|
Year Ended March 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
Net loss
|
|
$
|
(62,411
|
)
|
|
$
|
(51,322
|
)
|
Contributed services
|
|
|
5,000
|
|
|
|
5,000
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Increase in accounts payable and accruals
|
|
|
20,464
|
|
|
|
13,843
|
|
NET CASH USED IN OPERATING ACTIVITIES
|
|
|
(36,947
|
)
|
|
|
(32,479
|
)
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Issuance of convertible notes payable - Related Party
|
|
|
40,000
|
|
|
|
40,000
|
|
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
|
|
40,000
|
|
|
|
40,000
|
|
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
|
|
3,053
|
|
|
|
7,521
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
|
|
|
10,778
|
|
|
|
3,527
|
|
CASH AND CASH EQUIVALENTS AT END OF YEAR
|
|
$
|
13,831
|
|
|
$
|
10,778
|
|
The accompanying notes are an integral part
of these financial statements.
NEWTOWN LANE MARKETING, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
Years Ended March 31, 2020 and 2019
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.
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 $.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 effected 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. None of the Series A Preferred Stock were outstanding as of the Series A Preferred Elimination
Date.
In December 2008, we sold 550,000 shares
of restricted Common Stock to our Chief Financial Officer, for $2,000. The issuance of these shares was exempt from registration
pursuant to Sections 4(2) and 4(6) or the Securities Act of 1933, as amended (the “Act”). The stock certificate representing
these shares was imprinted with a legend restricting transfer unless pursuant to an effective registration statement or an exemption
from registration under the Act.
On May 6, 2013, Ironbound Partners Fund,
LLC (“Ironbound”) acquired 9,509,440 shares of our outstanding Common Stock (the “Acquired Shares”) for
an aggregate purchase price of $15,000, or $0.00157737 per share, 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 constituted all the shares of Common Stock previously owned by R&R, an affiliate of Rodman, and represented 69.1% of
our total issued and outstanding shares of Common Stock as of May 6, 2013.
On May 14, 2013, Ironbound 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 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 has a maturity date of August 31, 2015 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” and together with the 2014 Note,
the “Prior Notes”) 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 and provided 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
remained 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 April 1, 2016, we issued a convertible
promissory note (the “2016 Note” and together with the Prior Notes, the “Outstanding Notes”) 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 was extended from August 31, 2016 to August 31, 2017.
On February 14, 2017, we issued a convertible
promissory note (the “February 2017 Note”) 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 1, 2017 to August 31, 2018.
In August 2018, the maturity dates of the
Outstanding Notes was extended from August 1, 2018 to August 31, 2019.
On August 27, 2018, we issued a convertible
promissory note (the “August 2018 Note”) in the principal amount of $15,000 to Ironbound. The August 2018 Note has
a maturity date of August 31, 2019 and bears interest at the rate of 5.0% per annum, payable at maturity. The principal and accrued
interest on the August 2018 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 August 2018 Note), or upon the consummation of a “Fundamental Transaction”
(as defined in the August 2018 Note) at the “Conversion Price” (as defined in the August 2018 Note). The proceeds of
the August 2018 Note has been and will be utilized by the Company to fund working capital needs.
On December 4, 2018, we issued a convertible
promissory note (the “December 2018 Note”) in the principal amount of $25,000 to Ironbound. The December 2018 Note
has a maturity date of August 31, 2019 and bears interest at the rate of 5.0% per annum, payable at maturity. The principal and
accrued interest on the December 2018 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 December 2018 Note), or upon the consummation
of a “Fundamental Transaction” (as defined in the December 2018 Note) at the “Conversion Price” (as defined
in the December 2018 Note). The proceeds of the December 2018 Note has been and will be utilized by the Company to fund working
capital needs.
Effective November 12, 2019, the maturity dates of the outstanding
promissory notes held by Ironbound was extended from August 31, 2019 to August 31, 2020.
On November 27, 2019, we issued a convertible
promissory note (the “November 2019 Note”) in the principal amount of $40,000 to Ironbound. The November 2019 Note
has a maturity date of August 31, 2020 and bears interest at the rate of 5.0% per annum, payable at maturity. The principal and
accrued interest on the November 2019 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 November 2019 Note), or upon the consummation
of a “Fundamental Transaction” (as defined in the November 2019 Note) at the “Conversion Price” (as defined
in the November 2019 Note). The proceeds of the November 2019 Note have been and will be utilized by the Company to fund working
capital needs.
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
company or 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. We have no employees and no material assets.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Newtown’s accounting policies are
in accordance with accounting principles generally accepted in the United States of America. Outlined below are those policies
considered particularly significant.
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 no
assurances that we 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 $2,97,169 through March 31, 2020. For the years ended March 31, 2020 and 2019, Newtown had net
losses of $62,411 and $51,322, respectively. Newtown has incurred negative cash flow from operating activities since its inception.
Newtown has spent, and subject to obtaining additional funding, 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.
In preparing financial statements
with accounting principles generally accepted in the United States of America, 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.
|
(c)
|
Statement of Cash Flows:
|
For purposes of the statements
of cash flows Newtown considers all highly liquid investments purchased with a remaining maturity of three months or less to be
cash equivalents.
|
(d)
|
Loss per Common Share:
|
The Financial Accounting Standards
Board (FASB) has issued accounting guidance “Earnings Per Share” that provides for the calculation of “Basic”
and “Diluted” earnings per share. Basic earnings per share include no dilution and is computed by dividing the loss
to common stockholders by the weighted average number of common shares outstanding for the period. All potentially dilutive securities
have been excluded from the computations since they would be antidilutive. However, these dilutive securities could potentially
dilute earnings per share in the future. As of March 31, 2020 and 2019, we had a total of 886,990 of potentially dilutive securities
comprised solely of stock options and shares issuable on the conversion of the convertible note payable for $347,000 and $307,000,
respectively.
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 carryforwards 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 I more likely than not that such assets will be realized.
|
(f)
|
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 values because of the short term maturity of these instruments or the stated interest rates are indicative of market
interest rates.
|
(g)
|
Equity Based Compensation:
|
We adopted the FASB accounting
guidance for share based payment transactions. This standard requires us to measure the cost of employee services received in exchange
for equity share options granted based on the grant date fair value of the options 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 bet 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 our historical forfeiture
rate, the remaining lives of unvested options, and the amount of vested option 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 accounting guidance requires
the use of a valuation model to calculate the fair value of each stock-based award. We use the Black-Scholes model to estimate
the fair value of stock options granted based on the following assumptions:
No options were exercised in
the year ended March 31, 2020 and 2019.
|
(h)
|
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.
In February 2016, the FASB
issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing a right-of-use
asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as
either operating or financing, with such classification affecting the pattern of expense recognition in the income statement.
ASU 2016-02 is effective for fiscal years and interim periods within those years beginning after December 15, 2018, and early
adoption is permitted. The adoption of ASU 2016-02 did not have material impact on the Company’s financial statements.
NOTE 3 – STOCKHOLDERS’ DEFICIT
During the years ended March 31, 2020 and
March 31, 2019, the Company recorded a $5,000 contribution to capital for the fair value relating to the use, occupancy and administrative
services rendered by the officers.
STOCK OPTIONS
During the year ended March 31, 2014, we issued
886,990 non-qualified stock options to an officer and consultant. These options have a ten year term with exercise prices ranging
from $0.002 to $0.02 per share. Some of these options immediately and other options issued vested 50% upon issuance and the remainder
vet on their six month anniversary.
A summary of the common stock option activity
for officers and consultants as of March 31, 2020 and 2019 and the three years then ended is as follows:
|
|
|
|
|
Weighted Average Exercise
|
|
|
Weighted Average
Remaining
Contractual
|
|
|
|
Shares
|
|
|
Price
|
|
|
Term (Years)
|
|
Outstanding at March 31, 2018
|
|
|
886,990
|
|
|
$
|
0.009
|
|
|
|
5.2
|
|
Granted
|
|
|
-
|
|
|
|
0
|
|
|
|
0
|
|
Exercised
|
|
|
-
|
|
|
|
0
|
|
|
|
0
|
|
Forfeited
|
|
|
-
|
|
|
|
0
|
|
|
|
0
|
|
Expired
|
|
|
-
|
|
|
|
0
|
|
|
|
0
|
|
Outstanding at March 31, 2019
|
|
|
886,990
|
|
|
$
|
0.009
|
|
|
|
4.2
|
|
Granted
|
|
|
-
|
|
|
|
0
|
|
|
|
0
|
|
Exercised
|
|
|
-
|
|
|
|
0
|
|
|
|
0
|
|
Forfeited
|
|
|
-
|
|
|
|
0
|
|
|
|
0
|
|
Expired
|
|
|
-
|
|
|
|
0
|
|
|
|
0
|
|
Outstanding at March 31, 2020
|
|
|
886,990
|
|
|
$
|
0.009
|
|
|
|
3.2
|
|
Exercisable at March 31, 2020
|
|
|
886,990
|
|
|
$
|
0.009
|
|
|
|
3.2
|
|
Based on the last trade or purchase of
Newtown’s shares at a per share price of $0.15 as of March 31, 2020. The intrinsic value of stock options outstanding was
$133,049.
The following summarizes certain information
regarding stock options at March 31, 2020
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
Weighted
|
|
|
Weighted
|
|
|
|
|
|
|
|
Average
|
|
|
Average
|
|
Exercise
|
|
|
|
|
|
Exercise
|
|
|
Remaining
|
|
Price Range
|
|
|
Number
|
|
|
Price
|
|
|
Life
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$0.00-0.002
|
|
|
|
520,880
|
|
|
|
0.002
|
|
|
|
3.2
|
|
|
$0.01-0.02
|
|
|
|
366,110
|
|
|
|
0.020
|
|
|
|
3.2
|
|
|
|
|
|
|
886,990
|
|
|
|
|
|
|
|
|
|
NOTE 4 – NOTES PAYABLE – RELATED
PARTY
On May 14, 2013, Ironbound Partners Fnd LLC
(“Ironbound”) 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
a 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 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 has a maturity date of August 31, 2015 and
bears interest at a 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” and together with the 2014 Note,
the “Prior Notes”) 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 and provided 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
remained 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 April 1, 2016, we issued a convertible
promissory note (the “2016 Note” and together with the Prior Notes, the “Outstanding Notes”) 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. 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 was extended from August 31, 2016 to August 31, 2017.
On February 14, 2017, we issued a convertible
promissory note (the “February 2017 Note”) 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 1, 2017 to August 31, 2018.
In August 2018, the maturity dates of the
Outstanding Notes was extended from August 1, 2018 to August 31, 2019.
On August 27, 2018, we issued a convertible
promissory note (the “August 2018 Note”) in the principal amount of $15,000 to Ironbound. The August 2018 Note has
a maturity date of August 31, 2019 and bears interest at the rate of 5.0% per annum, payable at maturity. The principal and accrued
interest on the August 2018 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 August 2018 Note), or upon the consummation of a “Fundamental Transaction”
(as defined in the August 2018 Note) at the “Conversion Price” (as defined in the August 2018 Note). The proceeds of
the August 2018 Note has been and will be utilized by the Company to fund working capital needs.
On December 4, 2018, we issued a convertible
promissory note (the “December 2018 Note”) in the principal amount of $25,000 to Ironbound. The December 2018 Note
has a maturity date of August 31, 2019 and bears interest at the rate of 5.0% per annum, payable at maturity. The principal and
accrued interest on the December 2018 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 December 2018 Note), or upon the consummation
of a “Fundamental Transaction” (as defined in the December 2018 Note) at the “Conversion Price” (as defined
in the December 2018 Note). The proceeds of the December 2018 Note has been and will be utilized by the Company to fund working
capital needs.
Effective November 12, 2019, the maturity dates of the outstanding
promissory notes held by Ironbound was extended from August 31, 2019 to August 31, 2020.
On November 27, 2019, we issued a convertible
promissory note (the “November 2019 Note”) in the principal amount of $40,000 to Ironbound. The November 2019 Note
has a maturity date of August 31, 2020 and bears interest at the rate of 5.0% per annum, payable at maturity. The principal and
accrued interest on the November 2019 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 November 2019 Note), or upon the consummation
of a “Fundamental Transaction” (as defined in the November 2019 Note) at the “Conversion Price” (as defined
in the November 2019 Note). The proceeds of the November 2019 Note have been and will be utilized by the Company to fund working
capital needs
NOTE 5 – INCOME TAXES
Deferred tax assets and liabilities consist
of the following:
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Deferred tax assets:
|
|
|
|
|
|
|
Net operating loss carryforwards & capital loss carry forward
|
|
|
533,640
|
|
|
|
522,860
|
|
Less: valuation allowance
|
|
|
(533,640
|
)
|
|
|
(522,860
|
)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
The provision for income taxes differs
from the amount computed by applying the US statutory income tax rate as follows:
|
|
March 31
|
|
|
|
2020
|
|
|
2019
|
|
Provision for expected federal statutory rate
|
|
|
21
|
%
|
|
|
21
|
%
|
Permanent differences – equity based compensation
|
|
|
5
|
%
|
|
|
5
|
%
|
Loss for which no benefit is available or a valuation allowance Has been recorded
|
|
|
26
|
%
|
|
|
26
|
%
|
At March 31, 2019, Newtown had approximately
$2,067,000 of net operating loss carry forwards (“NOL’s”) available. In addition, there is a $25,000 capital
loss carryover, which is fully reserved as well. This capital loss expires in 2026. The utilization of the net operating loss carryforward
has been limited as to its use pursuant to the Internal Revenue Code Section 382 due to the recent and past changes in ownership
of Newtown. The benefits of these NOL’s may be reduced in the future if Newtown is successful in establishing a new business.
Newtown’s federal and state income tax returns for the years 2015 through 2020 remain open for audit by applicable regulatory
authority.
NOTE 6 – COMMITMENTS AND CONTINGENCIES
During the years ended March 31, 2020 and
March 31, 2019, the Company recorded a $5,000 contribution to capital for the fair value relating to the use, occupancy and administrative
services rendered by our officers.
NOTE 7 – SUBSEQUENT EVENTS
We have evaluated all subsequent events
and determined that there were no subsequent events to recognize or disclose in these financial statements.
F-16