Crown Equity Holdings, Inc. - Quarter Report: 2010 September (Form 10-Q)

 

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TABLE OF CONTENTS

		Page
PART I: FINANCIAL INFORMATION
Item 1.   Financial Statements (Unaudited)
Balance Sheets as of September 30, 2010 and December 31, 2009 (Unaudited)		3
Statements of Operations For the Three and Nine Months Ended September 30, 2010 and 2009 (Unaudited)		4
Statements of Cash Flows For  the Nine Months Ended September 30, 2010 and 2009 (Unaudited)		5
Notes to (Unaudited) Financial Statements		6
Item 2.   Management’s Discussion and Analysis and Plan of Operation		10
Item 3.   Quantitative and Qualitative Disclosures About Market Risk		11
Item 4T. Controls and Procedures		11
PART II: OTHER INFORMATION
Item 1.  Legal Proceedings		12
Item 1A.  Risk Factors		12
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds		12
Item 3.  Defaults upon Senior Securities		12
Item 4.  Submission of Matters to a vote of Security Holders		12
Item 5.  Other Information		13
Item 6.  Exhibits		13
Signatures		13

 

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Crown Equity Holdings Inc.

BALANCE SHEETS

(Unaudited)

		September 30, 2010				December 31, 2009
Assets
Current assets
Cash and cash equivalents		$	218,292			$	249,612
Marketable securities			154,332				-
Accounts receivable			4,000				-
Prepaid expenses			3,220				8,102
Total current assets			379,844				257,714
Fixed assets
Equipment, net of accumulated depreciation $81,420 and $58,141, respectively			61,449				17,993
Restricted securities			48,000				204,500
Total Assets			489,293				480,207
Liabilities & Stockholder's Equity
Current liabilities
Accounts payable and accrued expenses		$	20,809			$	14,332
Salaries payable			88,651				—
Taxes payable			—				16,990
Deferred revenue			—				62,000
Total current liabilities			109,460				93,322
Notes payable –related parties			95,209				87,209
Total liabilities			204,669				180,531
Stockholder's Equity
Preferred shares; $0.001 par value, 100,000,000 shares Authorized, none issued or outstanding			-				-
Common stock; $0.001 par value, 4,900,000,0000 shares authorized, 751,237,134 and 728,806,320 shares issued and outstanding, respectively			751,237				728,810
Additional paid-in capital			6,125,278				5,819,708
Accumulated deficit			(6,591,891	)			(6,248,842	)
Total stockholder's equity			284,624				299,676
Total Liabilities & Stockholders’ Equity		$	489,293			$	480,207

The accompanying notes are an integral part of the unaudited financial statements

 

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Crown Equity Holdings Inc.

STATEMENTS OF OPERATIONS

Three and Nine months ended September 30, 2010 and 2009

 (Unaudited)

		Three  Months								Nine Months
		2010				2009				2010				2009
Revenue		$	399,395			$	334,602				1,073,383			$	418,959
Cost of revenue			—				—				85,000				1,893
Gross margin			399,395				334,602				988,383				417,066
Operating Expenses:
General and administrative			381,555				119,036				1,019,631				434,523
Depreciation			10,589				6,692				23,297				19,466
Operating income (loss)			7,251				208,874				(54,527	)			(36,923	)
Other Income (Expense):
Other income			15				—				35,054				438
Interest income			11				81				77				81
Realized gain (loss) on securities			(6,211	)			2,483				(5,386	)			(7,242	)
Unrealized loss on securities			(138,349	)			—				(307,544	)			—
Gain on debt forgiveness			—				14,764				—				16,083
Investment expense			(606	)			(100	)			(1,389	)			(100	)
Interest expense			(3,502	)			(475	)			(9,334	)			(1,716	)
Total other income (expense)			(148,642	)			16,753				(288,522	)			7,544
Net income (loss)		$	( 141,391	)		$	225,627			$	(343,049	)		$	(29,379	)
Net income (loss) per common share (basic and diluted):		$	(0.00	)		$	0.00			$	(0.00	)		$	(0.00	)
Weighted average common shares outstanding (basic and diluted):			750,925,650				723,503,570				743,395,432				715,751,930

The accompanying notes are an integral part of the unaudited financial statements

 

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Crown Equity Holdings Inc.

STATEMENTS OF CASH FLOWS

Nine months ended September 30, 2010 and September 30, 2009

 (Unaudited)

		2010				2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(343,049	)		$	(29,379	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation expense			23,279				19,466
Stock for services			316,997				242,950
Gain on accounts payable forgiveness			—				(16,083	)
Unrealized loss on securities			307,544				—
Realized loss on securities			5,386				7,242
Changes in operating assets and liabilities:
Accounts receivable			(4,000	)			—
Prepaid expenses			4,882				—
Marketable securities received for revenue			(376,225	)			—
Restricted securities received for revenue			28,250				—
Accounts payable and accrued expenses			6,477				(1,148	)
Accounts payable - related party			—				37,480
Taxes payable			(16,990	)			—
Deferred revenue			(62,000	)			5,000
Accrued salaries			88,651				22,471
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES			(20,798	)			287,999
CASH FLOWS USED IN INVESTING ACTIVITIES
Cash paid for purchase of fixed assets			(55,735	)			(1,811	)
NET CASH USED IN INVESTING ACTIVITIES			(55,735	)			(1,811	)
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from related party, net			—				(63,226	)
Proceeds from sale of stock			37,213				25,000
Proceeds from notes payable			—				(1,000	)
Notes payable-related party			8,000				2,650
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES			45,213				(36,576	)
Net Increase (Decrease) in Cash			(31,320	)			249,612
Cash, beginning of period			249,612				2,898
Cash, end of period		$	218,292			$	252,510
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid		$	576			$	—
Income taxes paid			—				—
Noncash Investing and Financing Activities:
Securities received for deferred revenue		$	56,250			$	138,940
Stock issued for acquisition of fixed assets			11,000				—
Contributed capital			—				106,064
Common stock for accounts payable and accrued liabilities			—				29,000
Common Stock for vehicle			—				8,500

The accompanying notes are an integral part of the unaudited financial statements

 

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Crown Equity Holdings Inc.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited interim consolidated financial statements of Crown Equity Holdings Inc. (“Crown Equity”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in Crown Equity’s December 31, 2009 Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year end December 31, 2009 as reported on Form 10-K, have been omitted.

NOTE 2 - GOING CONCERN

As shown in the accompanying financial statements, Crown Equity has an accumulated deficit of September 30, 2010. Unless profitability and increase in shareholders equity continues, these conditions raise substantial doubt as to Crown Equity's ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if Crown Equity is unable to continue as a going concern.

NOTE 3 – MARKETABLE & RESTRICTED SECURITIES

Marketable securities are classified as available-for-sale and are presented in the balance sheet at fair market value.  Crown Equity classified certain securities as long-term due to restrictions on transfers.

Per Accounting Standards Codification 820 “Fair Value Measurement”, fair values defined establishes a framework for measuring fair value under generally accepted accounting principles and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements.

ASC 820 establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows:

Level 1: Quoted market prices in active markets for identical assets or liabilities

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data

 

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Level 3: Unobservable inputs that are not corroborated by market data

Crown Equity has classified these marketable securities at level 1 with a fair value of $154,332 and restricted securities with a market value of $48,000 as of September 30, 2010.

Per Accounting Standards Codification 825 “The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of FASB Statement No. 115”, an entity is permitted to irrevocably elect fair value on a contract-by-contract basis for new assets or liabilities within the scope of ASC 825 as the initial and subsequent measurement attribute for those financial assets and liabilities and certain other items including property and casualty insurance contracts. Entities electing the fair value option are required to (i) recognize changes in fair value in earnings and (ii) expense any up-front costs and fees associated with the item for which the fair value option is elected. Entities electing the fair value option are required to distinguish, on the face of the statement of financial position, the fair value of assets and liabilities for which it has elected the fair value option, and similar assets and liabilities measured using another measurement attribute. An entity can accomplish this either by reporting the fair value and non-fair-value carrying amounts as separate line items or by aggregating those amounts and disclosing parenthetically the amount of fair value included in the aggregate amount.

Crown Equity adopted ASC 825 this quarter and elected the fair value option for their marketable securities. The related gain/loss based on valuation on the mark to market each balance sheet date is reflected in the income statement.

NOTE 4 – REVENUE RECOGNITION

The Company provides various consulting services to companies and individuals dealing with corporate structure and operations globally. Crown Equity’s revenue is recognized pursuant to ASC 605 “Revenue Recognition.” The Company recognizes its revenue from services as those services are performed. Revenue recognition is limited to the amount that is not contingent upon delivery of any future product or service or meeting other specified performance conditions. Product sales, accounted for within fulfillment services, are recognized upon shipment to the customer and satisfaction of all obligations.

Contract revenues include royalties under license and collaboration agreements. Contract revenue related to technology licenses is fully recognized only after the license period has commenced, the technology has been delivered and no further involvement of Crown Equity is required.

Crown Equity receives payment for its services in both cash and equity instruments issued by the customer.  The equity instruments are accounted for in accordance with the provisions of ASC 718 “Compensation – Stock Compensation” and is based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date of the fair value of the equity instrument issued is the date on which they are received by Crown Equity.

 

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Amounts received for revenue not earned as of period end are accounted for as deferred revenues. As of September 30, 2010, there was no deferred revenue.

Restricted Securities

Crown Equity has classified the marketable securities they hold as of period-end as long-term in accordance with rule 144 due to restrictions on sale & transfers of unregistered shares. As of September 30, 2010 $48,000 of the marketable securities which are non controlling shares received from customers as consulting income has been classified as restricted securities in accordance with Accounting Standards Codification 825 and 718. The related gain/loss based on valuation on the mark to market each balance sheet date is reflected in the income statement.

NOTE 5 - RELATED PARTY TRANSACTIONS

On December 2, 2009, the Company signed a one year lease for 2,400 square feet of office space.  The rent for the space is $2,400 per month. The landlord is related to one of the officers of the Company.

On November 20, 2009, the Company converted accounts payable and advances from Montse Zaman, a related party, of $71,184 to a three-year unsecured note maturing on November 19, 2012. As of June 30, 2010 the balance increased by $10,000 to $81,184. During the period ending September 30, 2010 the amount outstanding was reduced by a payment of $2,000 to $79,184. Interest is incurred at 12% per annum unless the principal and interest are not paid by maturity at which time the interest rate accelerates to 18% per annum.

During the quarter ended March 31, 2007, the Company borrowed $12,700 from Phoenix Consulting Services Inc. controlled by a related party. The loan is unsecured and matured on April 1, 2008 and accrued interest at 12% per annum. The note may be converted into common shares of the company at the holder’s option at a conversion price to be determined in the future.  Amounts outstanding under this agreement subsequent to April 1, 2008 accrued interest at 18% per annum. On November 20, 2009, the note including principal and interest totaling $16,025 was converted to a long term note due November 19, 2012 with principal and interest due at maturity.  If the principal and interest are not paid by maturity, the interest rate accelerates to 18% per annum.  As of September 30, 2010 the outstanding principal balance due to the Montse Zaman and Phoenix Consulting Services was $95,209 plus accrued interest of $10,047 for a total of $105,256.

NOTE 6 – EQUITY

On March 25, 2010, the Company filed Amended and Restated Articles of Incorporation authorizing 10,000,000 shares of preferred shares with par value of $0.001 and reducing the authorized shares of common stock from 500,000,000 shares to 490,000,000 shares.

 

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On June 22, 2010 the Company approved a forward split of common stock at a ratio of 10 shares for each one share outstanding.  The Company approved the increase of authorized shares of common stock from 490,000,000 to 4,900,000,000 and increased the authorized number of preferred shares from 10,000,000 to 100,000,000, with both common and preferred having a par value of $0.001 per share.

During the nine months ended September 30, 2010, Crown Equity issued 21,330,814 common shares for services with a total value of $316,997 as follows:

·

20,030,814 shares of common stock for compensation for $278,998;

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1,000,000 shares of common stock for consulting services for $35,000:

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300,000 shares of common stock for a vehicle for an employee for $3,000.

During the nine months ended September 30, 2010, Crown Equity issued 1,100,000 common shares for the acquisition of fixed assets valued at $11,000.

NOTE 7 - CONTINGENCIES

On April 14, 2010 the pending litigation in Arizona small claims court - Strojnik v. Crown Equity Holdings, Inc. was dismissed without prejudice and without further notice for lack of prosecution  

NOTE 8 – SUBSEQUENT EVENTS

During October 2010, Crown Equity issued an aggregate of 2,216,375 common shares for compensation and consulting services.

 

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Item 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS

This report contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Crown Equity’s actual results could differ materially from those set forth on the forward looking statements as a result of the risks set forth in Crown Equity’s filings with the Securities and Exchange Commission, general economic conditions, and changes in the assumptions used in making such forward looking statements.

OVERVIEW

Crown Equity Holdings Inc. (”Crown Equity”) was incorporated in August 1995 in Nevada. The Company is offering its services to companies seeking to become public entities in the United States. It has launched a website, www.crownequityholdings.com, which offers its services in a wide range of fields. The Company provides various consulting services to companies and individuals dealing with corporate structure and operations globally.

In 2007, the Company, through a wholly-owned subsidiary, Crown Trading Systems, Inc. (“CTS”), a Nevada corporation, began to develop, sell and produce computer systems which are capable of running multiple monitors from one computer.  CTS is able to run 16 monitors off one CPU. In late 2007, CTS began to attend trade shows and starting selling these systems. In 2009, Crown Trading Systems was dissolved as a corporation and its business was absorbed into the Company.

On September, 30, 2009 Crown Marketing, Inc acquired controlling interest of the Company from Crown Partners, Inc.

Crown Equity is offering its services to companies and their management seeking to become public entities in the United States.  It has launched a website, www.crownequityholdings.com, which offers its services in a wide range of fields.

Crown Equity’s office is located at 5440 West Sahara, Suite 205, Las Vegas, Nevada 89146.

As of September 30, 2010, Crown Equity had 19 employees and utilizing the services of 10 independent contractors and consultants.

RESULTS OF OPERATIONS