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EX-31.1 - CERTIFICATION - Crown Equity Holdings, Inc.crwe_ex311.htm

   

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2016

 

OR

 

¨ TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934

 

For the transition period from ___________ to ____________.

 

Commission File Number 000-29935

 

CROWN EQUITY HOLDINGS INC.

(Exact name of registrant as specified in its charter)

 

Nevada

 

33-0677140

(State or other jurisdiction of
incorporation or organization)

 

(IRS Employer
Identification No.)

 

11226 Pentland Downs Street, Las Vegas, NV 89141

(Address of principal executive offices)

 

(702) 683-8946

(Issuer's telephone number)

 

_____________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the Company (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ¨ No x

 

Indicate by check mark whether the Company is a large accelerated filer, an accelerated file, non-accelerated filer, or a smaller reporting company.

 

Large accelerated filer

¨

Accelerated filed

¨

Non-accelerated filer

¨

Smaller reporting company

x

 

Indicate by check mark whether the Company is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

 

As of November 17, 2016, there were 11,195,831 shares of Common Stock of the issuer outstanding.

 

 

 
 
 

 TABLE OF CONTENTS

 

 

Page

 

PART I: FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

 

Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015 (Unaudited)

 

3

 

Consolidated Statements of Operations for the Three Months Ended March 31, 2016 and 2015 (Unaudited)

 

4

 

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2016 and 2015 (Unaudited)

 

5

 

Notes to Consolidated Financial Statements (Unaudited)

 

6

 

Item 2.

Management’s Discussion and Analysis and Plan of Operation

 

8

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

9

 

Item 4T.

Controls and Procedures

 

9

 

PART II: OTHER INFORMATION

 

Item 1.

Legal Proceedings

 

10

 

Item 1A.

Risk Factors

 

10

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

10

 

Item 3.

Defaults upon Senior Securities

 

10

 

Item 4.

Mine Safety Information

 

10

 

Item 5.

Other Information

 

10

 

Item 6.

Exhibits

 

11

 

Signatures

 

12

 

 
2
 

 

Crown Equity Holdings, Inc.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

March 31,

 

 

December 31,

 

 

 

2016

 

 

2015

 

Assets

Current Assets

 

 

 

 

 

 

Cash

 

$81,658

 

 

$2,448

 

Total Current Assets

 

 

81,658

 

 

 

2,448

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$81,658

 

 

$2,448

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Deficit

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$182,497

 

 

$187,567

 

Accounts payable to related parties

 

 

5,026

 

 

 

5,026

 

Notes payable

 

 

10,500

 

 

 

11,500

 

Notes payable to related parties

 

 

21,444

 

 

 

23,674

 

Total Current Liabilities

 

 

219,467

 

 

 

227,767

 

 

 

 

 

 

 

 

 

 

Stockholders' Deficit

 

 

 

 

 

 

 

 

Preferred Stock, 10,000,000 shares authorized, 9,000,000 undesignated authorized at $.001 par value, none issued or outstanding

 

 

-

 

 

 

-

 

Series A Convertible Preferred Stock, $0.001 par value, 1,000,000 shares authorized, none issued or outstanding

 

 

-

 

 

 

-

 

Common Stock, 490,000,000 authorized at $0.001 par value; 11,164,564 and 10,904,564 shares issued and outstanding

 

 

11,165

 

 

 

10,905

 

Additional paid-in capital

 

 

10,512,630

 

 

 

10,335,890

 

Accumulated deficit

 

 

(10,661,604)

 

 

(10,572,114)

Total Stockholders’ Deficit

 

 

(137,809)

 

 

(225,319)

Total Liabilities and Stockholders’ Deficit

 

$81,658

 

 

$2,448

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 
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Table of Contents

 

Crown Equity Holdings, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2016

 

 

2015

 

 

 

 

 

 

 

 

Revenues

 

$934

 

 

$363

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

Depreciation

 

 

-

 

 

 

618

 

General and Administrative

 

 

42,194

 

 

 

228,560

 

Total Operating Expenses

 

 

42,194

 

 

 

229,178

 

 

 

 

 

 

 

 

 

 

Net Operating Loss

 

 

(41,260)

 

 

(228,815)

 

 

 

 

 

 

 

 

 

Other (expense) income

 

 

 

 

 

 

 

 

Interest expense

 

 

(45,230)

 

 

(777)

Loss on debt settlement

 

 

(3,000)

 

 

(5,205)

Settlement expense

 

 

-

 

 

 

(10,000)

Total other expense

 

 

(48,230)

 

 

(15,982)

 

 

 

 

 

 

 

 

 

Net loss

 

$(89,490)

 

$(244,797)

 

 

 

 

 

 

 

 

 

Net loss per share – basic and diluted

 

$(0.01)

 

$(0.02)

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding - basic and diluted

 

 

10,975,927

 

 

 

10,602,560

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 
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Crown Equity Holdings, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2016

 

 

2015

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$(89,490)

 

$(244,797)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

-

 

 

 

618

 

Common stock issued for services

 

 

-

 

 

 

187,000

 

Loss on debt settlement

 

 

3,000

 

 

 

5,205

 

Amortization of debt discount

 

 

44,000

 

 

 

-

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepayment for services - Related party

 

 

-

 

 

 

(6,000)

Accounts payable and accrued expenses

 

 

(5,070)

 

 

34,718

 

Net cash used in operating activities

 

 

(47,560)

 

 

(23,256)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from sale of common stock

 

 

72,000

 

 

 

22,081

 

Payments on related party notes payable

 

 

(2,230)

 

 

-

 

Borrowings on third-party notes payable

 

 

-

 

 

 

983

 

Borrowings on third-party convertible notes payable

 

 

17,000

 

 

 

 

 

Borrowings on related party convertible notes payable

 

 

40,000

 

 

 

-

 

Net cash provided by financing activities

 

 

126,770

 

 

 

23,064

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

 

79,210

 

 

 

(192)

Cash, beginning of period

 

 

2,448

 

 

 

2,369

 

Cash, end of period

 

$81,658

 

 

$2,177

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information

 

 

 

 

 

 

 

 

Interest paid

 

$-

 

 

$-

 

Income taxes paid

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Noncash investing and financing activities

 

 

 

 

 

 

 

 

Common stock issued for settlement of debt and interest

 

$1,000

 

 

$5,983

 

Forgiveness of debt – related party

 

 

-

 

 

 

97,720

 

Common stock issued for conversion of debt and interest

 

 

57,000

 

 

 

-

 

Beneficial conversion feature discount on convertible notes

 

 

44,000

 

 

 

-

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 
5
Table of Contents

  

CROWN EQUITY HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

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, 2015 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, 2015 as reported on Form 10-K, have been omitted. Certain prior period amounts have been reclassified to conform to current period presentation.

 

NOTE 2 – GOING CONCERN

 

As shown in the accompanying financial statements, Crown Equity has an accumulated deficit of $10,661,604 and a working capital deficit of $137,809 as of March 31, 2016. 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.

 

Crown Equity continues to review its expense structure reviewing costs and their reduction to move towards profitability. The Company’s expenses are planned to decrease as a percent of revenue resulting in profitability and increased shareholders’ equity.

 

NOTE 3 – RELATED PARTY TRANSACTIONS

 

The Company is provided office space by one of the officers and directors at no charge. The Company believes that this office space is sufficient for its needs for the foreseeable future.

 

As of March 31, 2016 and December 31, 2015, the Company had a payable of $5,026 to Montse Zaman, director. The payable is unsecured, bears no interest and due on demand.

 

As of December 31, 2015, the Company had outstanding notes payable to related parties of $23,674. During the three months ended March 31, 2016 the Company issued a convertible note of $40,000 with conversion price at $0.50, and repaid $2,230 under other related party notes. The $40,000 convertible note has been converted to 80,000 shares of common stock according to the term of the note agreement at $0.5 per share. As of March 31, 2016 the aggregate outstanding balance under these related party notes payable was $21,444. These notes payables are with various officers and directors of the Company and with entities controlled by officers or directors of the Company including Mike Zaman, Montse Zaman and etc.

 

The Company evaluated embedded conversion features within convertible debt under ASC 815 "Derivatives and Hedging" and determine the embedded conversion feature(s) should not be bifurcated from the host instrument and not accounted for as a derivative. The Company further evaluated the instrument under ASC 470-20 "Debt with Conversion and Other Options" and determine the conversion option is a beneficial conversion feature (BCF). The intrinsic value of the BCF is determined to be $36,000, and is recognized as debt discount against additional paid in capital. Since the note is converted during the quarter ended March 31, 2016, the intrinsic value of the BCF is fully recognized as amortization of debt discount during the quarter ended March 31, 2016.

 

During the three months ended March 31, 2016, the Company paid an aggregate of $2,504 of expenses on behalf of two related entities with common officers and directors. The Company holds investments in these entities.

 

 
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NOTE 4 – NOTES PAYABLE

 

As of March 31, 2016 and December 31, 2015, the aggregate unpaid principal balance under notes payable was $10,500 and $11,500 respectively. During the three months ended March 31, 2016, the Company has a total additional borrowing of $17,000 convertible note from third parties. The notes payable are convertible into common stock at $0.50 per share. The $17,000 of convertible notes was fully converted into 34,000 shares of common stock during the period. $1,000 of non-convertible note was settled by issuing 2,000 shares of common stock at fair value of $4,000, resulted in a $3,000 loss on settlement of debt. At March 31, 2016, the total outstanding short-term notes payable due to non-related third parties was $10,500. The notes were unsecured subject to annual interest ranging from 0% to 12%, due on demand.

 

The Company evaluated embedded conversion features within convertible debt under ASC 815 "Derivatives and Hedging" and determine the embedded conversion feature(s) should not be bifurcated from the host instrument and not accounted for as a derivative. The Company further evaluated the instrument under ASC 470-20 "Debt with Conversion and Other Options" and determine the conversion option is a beneficial conversion feature (BCF). The intrinsic value of the BCF is determined to be $8,000, and is recognized as debt discount against additional paid in capital. Since the note is converted during the quarter ended March 31, 2016, the intrinsic value of the BCF is fully recognized as amortization of debt discount during the quarter ended March 31, 2016.

 

NOTE 5 – EQUITY

 

During the three months ended March 31, 2016, the Company issued the following shares of common stock:

 

·144,000 shares for total $72,000 cash

 

 

·2,000 shares were issued to settle $1,000 in debt. Such stock was valued at $4,000 at the date of issue and $3,000 was recognized as loss on settlement of debt.

 

 

·114,000 shares of common stock were issued for debt conversion at $0.5 per share.

  

NOTE 6 - SUBSEQUENT EVENTS

 

Total common shares issued for the period from April 1, 2016 through November 21, 2016 was 31,267 shares which are broken down as follows:

 

·3,000 shares for settlement of debt and interest of $1,707. The fair value of shares issued is $18,150, resulting in a loss of $16,443.

 

 

·28,267 shares issued for cash of $25,767.

 

On June 1, 2016 the following executive changes occurred:

 

·

Appointed its CFO, Rudy Chacon to Vice President, its Chairman, Kenneth Bosket to Chief Financial Officer and appointed Mike Zaman as Chairman of the Board, who also remained as the corporation’s President/ CEO and Arnulfo Saucedo-Bardan as it Chief Operations Officer.

 

 
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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. The Company also provides public relations and news dissemination for publicly and privately held companies.

 

In December, 2010, the Company formed two wholly owned subsidiaries Crown Tele Services, Inc. and Crown Direct, Inc. Crown Tele Services, Inc. was formed to provide voice over internet (“VoIP”) services to clients at a competitive price and Crown Direct, Inc. was formed to provide direct sales to customers. Both entities had minimum sales during the quarter.

 

In March, 2011, the Company formed a wholly owned subsidiary CRWE Real Estate, Inc. as a subsidiary to engage in potential real estate holdings. The entity had minimal activity during the quarter.

 

The Company has focused its primary vision to using its network of websites to provide advertising and marketing services, as a worldwide online media advertising publisher, dedicated to the distribution of quality branding information. The Company offers Internet media-driven advertising services, which cover and connect a wide range of marketing specialties, as well as search engine optimization for clients interested in online media awareness. As part of its operations, the Company has utilized the services of software and hardware technicians in developing its websites and adding additional websites. This allows the Company to disseminate news and press releases for its customers as well as general news and financial information on a much bigger scale than it did previously. The Company markets its services to companies seeking market awareness of them and the services or goods that they offer. The Company then publishes information concerning these companies on its many websites.

 

Crown Equity’s office is located at 11226 Pentland Down Street, Las Vegas, NV 89141.

 

As of March 31, 2016, Crown Equity had no paid employees and was utilizing the services of one independent contractor and consultant.

 

RESULTS OF OPERATIONS

 

For the three month period ending March 31, 2016, revenues were $934 and revenues were $363 for the same period in 2015. Net loss was $89,490 for the three month periods ending March 31, 2016 and $244,797 for the three months ended March 31, 2015. Operating expenses were $42,194 for the three months ended March 31, 2016 and $229,178 for the same period in 2015. Other income and expenses for the three month periods ended March 31, 2016 were other expense of $48,230 and other expenses were $15,982 for the same period in 2015.

 

Interest expense incurred during the three period ending March 31, 2016 was $45,230 compared to $777 for the same period in 2015.

 

Crown Equity will attempt to carry out its business plan as discussed above; however, it cannot predict to what extent its capital resources could hinder its business plan.

 

 
8
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LIQUIDITY AND CAPITAL RESOURCES

 

At March 31, 2016, Crown Equity had total current assets of $81,658 and current liabilities of $219,467, resulting in working capital deficit of $137,809.

 

Net cash used in operating activities for the three months ended March 31, 2016 was $47,560 compared to $23,256 for the same period in 2015, a net change of $24,304.

 

Net cash used in investing activities for the three months ended March 31, 2016 was $0 compared to net cash used of $0 for the same period in 2015.

 

Net cash provided by financing activities during the three months ended March 31, 2016 was $126,770 compared to net cash provided of $23,064 in 2015, an increase of $103,706. Cash received from borrowings on notes payable and notes payable to related parties constituted all of the funds raised in both periods presented.

 

Our existing capital may not be sufficient to meet Crown Equity's cash needs, including the costs of compliance with the continuing reporting requirements of the Securities Exchange Act of 1934, as amended. This condition raises 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.

 

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As a “smaller reporting company” as defined by Item 12b-2 of the securities exchange act of 1934 (the "exchange act") and are not requires to provide information required under this Item.

 

ITEM 4: CONTROLS AND PROCEDURES

 

(a) Evaluation of Disclosure Controls and Procedures

 

Based on their evaluation of our disclosure controls and procedures(as defined in Rule 13a-15e under the Securities Exchange Act of 1934 the "Exchange Act"), our principal executive officer and principal financial officer have concluded that as of the end of the period covered by this quarterly report on Form 10-Q such disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms because of the identification of material weaknesses in our internal control over financial reporting which we view as an integral part of our disclosure controls and procedures. The material weaknesses relates to the lack of segregation of duties in financial reporting, as our financial reporting and all accounting functions are performed by an external consultant with no oversight by a professional with accounting expertise. Our CEO and CFO also do not possess accounting expertise and our Company does not have an audit committee. This weakness is due to the company’s lack of working capital to hire additional staff. To remedy this material weakness, we intend to engage another accountant to assist with financial reporting as soon as our finances will allow.

 

Changes in Internal Control over Financial Reporting

 

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our first quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 
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PART II – OTHER INFORMATION

 

ITEM 1: LEGAL PROCEEDINGS.

 

The Company was subject to the following judgment:

 

Lowell Holden vs. Kenneth Bosket, Crown Equity Holdings Inc.

 

On March 3, 2015, Lowell Holden received a judgment for $39,965 in the Hennepin County District Court in Minneapolis, MN in reference to monies owed for prior services rendered. The judgment was settled with the plaintiff for $10,000. The Company accrued the $10,000 as settlement expense at March 31, 2015. The amount was paid during the three months ended March 31, 2016.

 

ITEM 1A: RISK FACTORS.

 

There have been no material changes to Crown Equity’s risk factors as previously disclosed in our most recent 10-K filing for the year ended December 31, 2015.

 

ITEM 2: SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

During the three months ended March 31, 2016, Crown Equity issued 260,000 common shares with a total value of $133,000 as follows:

 

 

·

 144,000 shares of common stock for cash of $72,000 and

 

·

 116,000 shares of common stock for debt conversion and settlement of $58,000, such stock valued at $61,000 on the date of issue.

 

ITEM 3: DEFAULTS UPON SENIOR SECURITIES.

 

None

 

ITEM 4: MINE SAFETY INFORMATION.

 

None

 

ITEM 5: OTHER INFORMATION.

 

None

 

 
10
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ITEM 6: EXHIBITS

 

EXHIBIT 31.1

 

Certification of Principal Executive Officer

 

EXHIBIT 31.2

 

Certification of Principal Financial Officer

 

EXHIBIT 32.1

 

Certification of Compliance to Sarbanes-Oxley

 

EXHIBIT 32.2

 

Certification of Compliance to Sarbanes-Oxley

 

101.INS **

 

XBRL Instance Document

 

101.SCH **

 

XBRL Taxonomy Extension Schema Document

 

101.CAL **

 

XBRL Taxonomy Extension Calculation Linkbase Document

 

101.DEF **

 

XBRL Taxonomy Extension Definition Linkbase Document

 

101.LAB **

 

XBRL Taxonomy Extension Label Linkbase Document

 

101.PRE **

 

XBRL Taxonomy Extension Presentation Linkbase Document

______________ 

**

XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

 
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SIGNATURES

 

In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

CROWN EQUITY HOLDINGS INC.

 

Date: November 21, 2016

By:

/s/ Mike Zaman

 

Mike Zaman

 

 

CEO

 

 

By:

/s/ Kenneth Bosket

 

Kenneth Bosket

 

 

CFO

 

  

 

12