CRWE 10-Q
Crown Equity Holdings, Inc. (CRWE)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934 |
For the transition period from ___________ to ____________
Commission File Number
(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) |
| (IRS Employer Identification No.) |
(Address of principal executive offices)
(
(Issuer’s telephone number)
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:
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☐ | Smaller reporting company | ||
|
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Company is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of November 1, 2022, the number of shares outstanding of the registrant’s class of common stock was
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION
DEFINITIONS
In this Quarterly Report on Form 10-Q, the words “Crown Equity”, the “Company”, the “Registrant”, “we”, “our”, “ours” and “us” refer to Crown Equity Holdings, Inc.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes certain statements that may be deemed “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, all of which are based upon various estimates and assumptions that the Company believes to be reasonable as of the date hereof. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “could,” “should,” “expect,” “plan,” “project,” “intend,” “anticipate,” “believe,” “seek,” “estimate,” “predict,” “potential,” “pursue,” “target,” “continue,” the negative of such terms or other comparable terminology. These statements involve risks and uncertainties that could cause the Company’s actual future outcomes to differ materially from those set forth in such statements. Such risks and uncertainties include, but are not limited to:
| · | the possibility that certain tax benefits of our net operating losses may be restricted or reduced in a change in ownership or a further change in the federal tax rate; |
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| · | the inability to carry out plans and strategies as expected; |
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| · | limitations on the availability of sufficient credit or cash flow to fund our working capital needs and capital expenditures and debt service; |
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| · | difficulty in fulfilling the terms of our convertible note payables, which could result in a default and acceleration of our indebtedness under our convertible note payables; |
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| · | the possibility that we issue additional shares of common stock or convertible securities that will dilute the percentage ownership interest of existing stockholders and may dilute the book value per share of our common stock; |
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| · | the relatively low trading volume of our common stock, which could depress our stock price; |
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| · | competition in the industries in which we operate, both from third parties and former employees, which could result in the loss of one or more customers or lead to lower margins on new projects; |
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| · | a general reduction in the demand for our services; |
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| · | our ability to enter into, and the terms of, future contracts; |
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| · | uncertainties inherent in estimating future operating results, including revenues, operating income or cash flow; |
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| · | complications associated with the incorporation of new accounting, control and operating procedures; |
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| · | the recognition of tax benefits related to uncertain tax positions; |
You should understand that the foregoing, as well as other risk factors discussed in this document and in Part I, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, could cause future outcomes to differ materially from those experienced previously or those expressed in such forward-looking statements. We undertake no obligation to publicly update or revise any information, including information concerning our controlling shareholder, net operating losses, borrowing availability or cash position, or any forward-looking statements to reflect events or circumstances that may arise after the date of this report. Forward-looking statements are provided in this Quarterly Report on Form 10-Q pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995 and should be evaluated in the context of the estimates, assumptions, uncertainties, and risks described herein.
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| Table of Contents |
CROWN EQUITY HOLDINGS, INC.
BALANCE SHEETS
(Unaudited)
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| September 30, 2022 |
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| December 31, 2021 |
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Current assets |
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Cash |
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Investments in trading securities |
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Total Current Assets |
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Property and Equipment, net |
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Total Assets |
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Liabilities and Stockholders' Deficit | ||||||||
Current liabilities |
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Accounts payable and accrued expenses |
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Accounts payable and accrued expenses to related party |
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Margin loan – Brokerage account |
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Notes payable to related parties |
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Convertible notes payable to related parties, net of debt discount |
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Current portion of long-term debt |
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Total Liabilities |
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Non-Current liabilities |
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Long-term debt |
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Total Liabilities |
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Stockholders' deficit |
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Preferred Stock, |
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Series A Convertible Preferred Stock, $ |
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Common Stock, |
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Stock Payable |
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Additional paid-in capital |
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Accumulated deficit |
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Total stockholders' deficit |
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Total liabilities and stockholders' deficit |
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The accompanying notes are an integral part of these financial statements.
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| Table of Contents |
CROWN EQUITY HOLDINGS, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
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| Three Months Ended |
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| Nine Months Ended |
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| September 30, |
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| September 30, |
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| 2022 |
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| 2021 |
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| 2021 |
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Revenue |
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Revenue – related party |
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Total Revenue |
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Operating expenses |
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Depreciation |
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General and Administrative |
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Total Operating Expenses |
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Net Operating Income (Loss) |
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Other (expense) |
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Interest expense |
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Gain on Forgiveness of Debt |
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Debt Discount Amortization |
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Gain (Loss) on Stocks Held |
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Other Income (Expense) |
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Total other expense |
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Net (loss) |
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Net (loss) per common share – basic and diluted |
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Weighted average number of common shares outstanding - basic and diluted |
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The accompanying notes are an integral part of these financial statements
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| Table of Contents |
CROWN EQUITY HOLDINGS, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021
(Unaudited)
For the Three Months Ended September 30, 2022
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| Preferred Stock |
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| Common Stock |
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| Common Stock |
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| Additional Paid-In |
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| Accumulated |
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| Total Stockholders' |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Payable |
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| Capital |
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| Deficit |
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Balances at June 30, 2022 |
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Net loss |
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Balances at Sept 30, 2022 |
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For the Three Months Ended September 30, 2021
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| Common Stock |
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| Common Stock |
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| Additional Paid-In |
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| Accumulated |
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| Total Stockholders’ |
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| Shares |
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| Amount |
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| Payable |
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| Capital |
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| Deficit |
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Balances at June 30, 2021 |
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Net loss |
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Balances at Sept 30, 2021 |
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For the Nine Months Ended September 30, 2022
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| Preferred Stock |
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| Common Stock |
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| Common Stock |
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| Additional Paid-In |
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| Accumulated |
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| Total Stockholders' |
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| Shares |
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| Amount |
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| Payable |
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| Capital |
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| Deficit |
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Balances at December 31, 2021 |
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Common Stock issued for cash |
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Net loss |
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Balances at Sept 30, 2022 |
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For the Nine Months Ended September 30, 2021
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| Preferred Stock |
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| Common Stock |
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| Accumulated |
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| Total Stockholders’ |
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| Shares |
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| Amount |
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Balances at December 31, 2020 |
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Common Stock Issued for Common Stock Payable |
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Settlement of AP for Common Stock |
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Common Stock Issued for services |
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Warrant Subscription |
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Net loss |
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Balances at Sept 30, 2021 |
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The accompanying notes are an integral part of these financial statements.
| 6 |
| Table of Contents |
CROWN EQUITY HOLDINGS, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
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| For the Nine Months Ended |
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Cash flows from operating activities |
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Net (loss) |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation |
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Loss (gain) on brokerage account |
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Loss on investment |
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Debt discount amortization |
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Gain of forgiveness of debt |
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Changes in operating assets and liabilities |
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Cash transfer |
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Deferred revenue |
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Accounts payable and accrued expenses – related party |
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Accounts payable and accrued expenses |
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Net cash (used in) operating activities |
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Cash flows from investing activities |
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Cash withdrawn from brokerage account |
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Net cash (used in) investing activities |
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Cash flows from financing activities |
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Payments on convertible notes payable, related party |
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Borrowings from convertible notes payable, related party |
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Payments on convertible notes payable – related party |
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Principal payment son debt |
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Borrowings from notes payable, related party |
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Proceeds from Sale of Stock |
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Principal payments on debt |
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Warrant Subscriptions |
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Shares subscribed for cash |
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Net cash provided by financing activities |
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Net increase (decrease) in cash |
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Cash, beginning of period |
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Cash, end of period |
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SUPPLEMENTAL DISCLOSURE: |
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Interest paid |
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Income taxes paid |
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NONCASH INVESTING AND FINANCING ACTIVITIES : |
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RP-AP Converted into common stock |
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Shares issued for stock payable |
| $ |
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Repayments of margin loan from brokerage account |
| $ |
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The accompanying notes are an integral part of these financial statements.
| 7 |
| Table of Contents |
CROWN EQUITY HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – NATURE OF BUSINESS AND SUMMARY OF ACCOUNTING POLICIES
Nature of Business
Crown Equity Holdings Inc. ("Crown Equity" or the "Company") was incorporated in August 1995 in Nevada. The Company offers through its digital network of websites, advertising branding, marketing solutions and other services to boost customer awareness, as well as merchant visibility as a worldwide online multi-media publisher. The Company focuses on the distribution of information for the purpose of bringing together its audience with the advertisers that want to reach them. Its advertising services cover and connect a range of marketing specialties, as well as provide search engine optimization for clients interested in online media awareness. Crown Equity Holdings' objective is making its endeavor known as CRWE WORLD into a global online news and information source, as well as a global one stop shop for various distinct products and services. The Company also offers services to companies seeking to become public entities in the United States, as well as providing various consulting services to companies and individuals dealing with corporate structure and operations globally.
On January 27, 2020, the Company re-acquired from AVOT the online business iB2BGlobal.com and since company had not received the shares promised during the original sale.
Basis of Preparation
The accompanying financial statements include the financial information of Crown Equity Holdings Inc. (“Crown Equity”, the “Company”) have been prepared in accordance with the instructions to financial reporting as prescribed by the Securities and Exchange Commission (the “SEC”). The preparation of these financial statements and accompanying notes in conformity with U.S. generally accepted accounting principles (“GAAP”). In the opinion of management, the financial statements contained in this report include all known accruals and adjustments necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods reported herein.
Reclassifications
Certain prior period amounts have been reclassified to conform to current period presentation.
Adoption of New Accounting Standard
In February 2016, the FASB issued ASU 2016-02 “Leases”, which is codified in ASC 842 “Leases” and supersedes current lease guidance in ASC 840. These provisions require lessees to put a right-of-use asset and lease liability on their balance sheet for operating and financing leases that have a term of more than one year. Expense will be recognized in the income statement similar to current accounting guidance. For lessors, the ASU modifies the classification criteria and the accounting for sales-type and direct financing leases. Entities will need to disclose qualitative and quantitative information about their leases, including characteristics and amounts recognized in the financial statements. These provisions are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. We adopted the provisions on January 1, 2019, including interim periods subsequent to the date of adoption. Entities are required to use a modified retrospective approach upon adoption to recognize and measure leases at the beginning of the earliest comparative period presented in the financial statements. Since all the leases were finance leases, there was no effect on the financial statements when ASC 842 was adopted.
In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation, to simplify the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments for employees, with certain exceptions. Under the new guidance, the cost for nonemployee awards may be lower and less volatile than under current US GAAP because the measurement generally will occur earlier and will be fixed at the grant date. This update is effective for annual financial reporting periods, and interim periods within those annual periods, beginning after December 15, 2018, although early adoption is permitted. The Company adopted the standard effective January 1, 2019 and found the adoption did not have a material effect on our financial statements.
Crown Equity does not expect the adoption of any recently issued accounting pronouncements to have a significant impact on their financial position, results of operations or cash flows.
| 8 |
| Table of Contents |
Accounting Standards not yet Adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires measurement and recognition of expected credit losses for financial assets held. ASU 2016-13 is effective for us in our first quarter of fiscal 2023, and earlier adoption is permitted. We are currently evaluating the impact of our pending adoption of ASU 2016-13 on our financial statements.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities, disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates are primarily used in our revenue recognition, long-lived asset impairments and adjustments, deferred tax, stock-based compensation, and reserves for legal matters.
Cash and Cash Equivalents
Crown Equity considers all highly liquid investments purchased with an original maturity of three months or less to be cash and cash equivalents.
Stock-Based Compensation
The Company accounts for stock-based compensation to employees in accordance with ASC 718 requiring employee equity awards to be accounted for under the fair value method. Accordingly, share-based compensation is measured at grant date, based on the fair value of the award, and is recognized as expense over the requisite employee service period. The Company accounts for stock-based compensation to other than employees in accordance with ASC 505-50. Equity instruments issued to other than employees are valued at the earlier of a commitment date or upon completion of the services, based on the fair value of the equity instruments and is recognized as expense over the service period. The Company estimates the fair value of share-based payments using the Black-Scholes option-pricing model for common stock options and the closing price of the company's common stock for common share issuances.
Revenue Recognition
|
| The core principles of revenue recognition under ASC 606 include the following five criteria: |
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| 1. | Identify the contract with the customer |
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| Contract with our customers may be oral, written, or implied. A written and signed invoice stating the terms and conditions is the Company’ preferred method. The terms of a written contract may be contained within the body of an invoice or in an email. No work is commenced without an understanding between the Company and our client that a valid contract exists. |
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| 2. | Identify the performance obligations in the contract |
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| Our sales and account management teams define the scope of services to be offered, to ensure all parties agree, and obligations are being delivered to the customer as promised. The performance obligation may not be fully identified in a mutually signed contract, but may be outlined in email correspondence, face-to-face meetings, additional proposals or scopes of work, or phone conversations. |
| 9 |
| Table of Contents |
| 3. | Determine the transaction price |
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| Pricing is discussed and identified by the operations team prior to submitting an invoice to the customer. |
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| 4. | Allocate the transaction price to the performance obligations in the contract |
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| If a contract involves multiple obligations, the transaction pricing is allocated accordingly, during the performance obligation phase. |
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| 5. | Recognize revenue when (or as) we satisfy a performance obligation |
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| The Company uses digital marketing that includes digital advertising, SEO management and digital ad support. We provide whether presenting a vibrant but simple message about our clients that will enlighten their audience or deploying an influential digital marketing campaign on our online site or across one or multiple social media platforms. Revenue is recognized when ads are run on Company’s advertising platform |
The company generates analytical reports monthly or as required to show how the ad dollars were spent and how the targeting resulted in click-through. The report satisfies the performance obligation, regardless of the outcome or effectiveness of the campaign.
Sales are recognized when promised services are started in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Sales for service contracts generally are recognized as the services are being provided.
|
| Nine Months Ended Sept. 30, 2022 |
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| Nine Months Ended Sept. 30, 2021 |
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| Third Party |
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| Related Party |
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| Total |
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| Third Party |
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| Related Party |
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| Total |
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Advertising |
| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
| ||||||
Click Based and Impressions Ads |
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Accounting |
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Publishing and Distribution |
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| ||||||
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
| ||||||
Revenues was received through provided accounting services, click based and impression ads located on the Company’s websites, publishing and disseminating press releases, as well as from banner advertising.
Accounts Receivable and Allowance for Doubtful Accounts
The Company establishes an allowance for bad debts through a review of several factors including historical collection experience, current aging status of the customer accounts, and financial condition of our customers. The Company does not generally require collateral for our accounts receivable. There were no accounts receivable and allowance for doubtful accounts as of September 30, 2022 and December 31, 2021.
Risk Concentrations
The Company does not hold cash more than the federally insured limits.
During the nine-month period ending September 30, 2022,
| 10 |
| Table of Contents |
General and Administrative Expenses
Crown Equity's general and administrative expenses consisted of the following types of expenses during 2022 and 2021: Compensation expense, auto, travel and entertainment, legal and accounting, utilities, web sites, office expenses, depreciation, and other administrative related expenses.
Property and Equipment
Property and equipment are carried at the cost of acquisition or construction and depreciated over the estimated useful lives of the assets. Costs associated with repair and maintenance are expensed as incurred. Costs associated with improvements which extend the life, increase the capacity, or improve the efficiency of our property and equipment are capitalized and depreciated over the remaining life of the related asset. Gains and losses on dispositions of equipment are reflected in operations. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets.
Impairment of Long-Lived Assets
The Company reviews the carrying value of its long-lived assets annually or whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the asset by comparing the undiscounted future net cash flows expected to result from the asset to its carrying value. If the carrying value exceeds the undiscounted future net cash flows of the asset, an impairment loss is measured and recognized. An impairment loss is measured as the difference between the net book value and the fair value of the long-lived asset. Fair value is determined based on either expected future cash flows at a rate we believe incorporates the time value of money. No indications of impairments were identified in 2022 or 2021.
Basic and Diluted Net (Loss) per Share
|
| Nine Months Sept. 30, 2022 |
|
| Nine Months Sept. 30, 2021 |
| ||
Numerator: |
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| ||
Net (Loss) attributable to common shareholders of Crown Equity Holdings, Inc. |
| $ | ( | ) |
| $ | ( | ) |
Net (Loss) attributable to Crown Equity Holdings, Inc. |
| $ | ( | ) |
| $ | ( | ) |
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Denominator: |
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Weighted average common and common equivalent shares outstanding – basic and diluted |
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Earnings (Loss) per Share attributable to Crown Equity Holdings, Inc.: |
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Basic |
| $ | ( | ) |
| $ | ( | ) |
Diluted |
| $ | ( | ) |
| $ | ( | ) |
When an entity has a net loss, it is prohibited from including potential common shares in the computation of diluted per share amounts. Accordingly, we have utilized basic shares outstanding to calculate both basic and diluted loss per share for the periods ended September 30, 2022 and 2021. The number of potential anti-dilutive shares excluded from the calculation shares for the period ended September 30, 2022 is
| 11 |
| Table of Contents |
Income Taxes
In December 2017,
The Company’s deferred tax assets consisted of the following as of September 30, 2022 and December 31, 2021:
|
| Sept. 30, 2022 |
|
| Dec. 31, 2021 |
| ||
Net operating loss |
| $ |
| $ |
| |||
Valuation allowance |
|
| ( | ) |
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| ( | ) |
Net deferred tax asset |
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Uncertain tax position
The Company also follows the guidance related to accounting for income tax uncertainties. In accounting for uncertainty in income taxes, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold,
Fair Value of Financial Instruments
The Company's financial instruments consist of cash and cash equivalents, accounts payable and debt. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Research and Development
The Company spent no money for research and development cost for the periods ended September 30, 2022 and December 31, 2021.
Advertising Cost
The Company spent $
NOTE 2 – GOING CONCERN
As shown in the accompanying condensed consolidated financial statements, Crown Equity has an accumulated deficit of $
Crown Equity continues to review its expense structure reviewing costs and their reduction to move towards profitability. Management plans to continue raising funds through debt and equity financing to grow the business to profitability. This financing may be insufficient to fund expenditures or other cash requirements. There can be no assurance that additional financing will be available to the Company on acceptable terms or at all. These financial statements do not give effect to adjustments to assets would be necessary for the Company be unable to continue as going concern.
| 12 |
| Table of Contents |
NOTE 3 – PROPERTY AND EQUIPMENT
The Company’s policy is to capitalize all property purchases over $
Property consists of the following on September 30, 2022 and December 31, 2021:
|
| Sept. 30, 2022 |
|
| Dec. 31, 2021 |
| ||
Computers – 3 year estimated useful life |
| $ |
|
| $ |
| ||
Less – Accumulated Depreciation |
|
| ( | ) |
|
| ( | ) |
Property and Equipment, net |
| $ |
|
| $ |
| ||
Depreciation has been provided over each asset’s estimated useful life. Depreciation expense was $
NOTE 4 – BROKERAGE ACCOUNT
As of September 30, 2022, the market value of the Company’s account portfolio was $
Net loss on investment in securities account for the nine months ended September 30, 2022 |
| $ |
| |
Less – Net gain and losses recognized during 2022 on equity securities sold during the period |
| $ |
| |
Unrealized losses recognized during 2022 on equities securities still held on September 30, 2022 |
| $ |
|
NOTE 5 – FINANCE LEASES
During 2019 and 2020, the Company borrowed an aggregate $
| ☐ | A $ |
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|
| The following is a schedule of the net book value of the finance lease. |
Assets |
| Sept. 30, 2022 |
| |
Leased equipment under finance lease, |
| $ |
| |
less accumulated amortization |
|
| ( | ) |
Net |
| $ |
| |
Liabilities |
| Sept. 30, 2022 |
| |
Obligations under finance lease (current) |
| $ |
| |
Obligations under finance lease (noncurrent) |
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Total |
| $ |
| |
| 13 |
| Table of Contents |
Below is a reconciliation of leases to the financial statements.
|
| Finance Leases |
| |
Leased asset balance |
| $ |
| |
Liability balance |
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| |
Cash flow (operating) |
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| |
Cash flow (financing) |
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| |
Interest expense |
| $ |
| |
The following is a schedule, by years, of future minimum lease payments required under finance leases.
Years ended December 31 |
| Finance Leases |
| |
2022 |
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| |
2023 |
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| |
Thereafter |
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| |
Total |
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| |
Less: Imputed Interest |
| ( ) |
| |
Total Liability |
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|
Other information related to leases is as follows:
Lease Type |
| Weighted Average Remaining Term |
| Weighted Average Discount Rate (1) |
| |
Finance Leases |
|
|
| % | ||
(1) This discount rate is consistent with our borrowing rates from various lenders.
NOTE 6 – NOTES PAYABLE AND CONVERTIBLE NOTE PAYABLES
As of September 30, 2022, and December 31, 2021, the Company had unamortized discount of $0 and $0 respectively.
The Company analyzed the below convertible notes for derivatives noting none.
|
| Original |
| Due |
| Interest |
|
| Conversion |
|
| Sept. 30, |
| |||
Name |
| Note Date |
| Date |
| Rate |
|
| Rate |
|
| 2022 |
| |||
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| |||
Related Party Notes Payable: |
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| |||
Jamie Hadfield |
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| % |
| $ |
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| |||||
Willy A Saint-Hilaire |
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| % |
| $ |
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| |||||
Willy A. Saint-Hilaire |
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| % |
| $ |
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| |||||
Total Related Party Notes Payable |
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| |
Related Party Convertible Notes Payable: |
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Willy A Saint-Hilaire |
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| % |
| $ |
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| |||||
Willy A Saint-Hilaire |
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| % |
| $ |
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Willy A Saint-Hilaire |
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| % |
| $ |
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| |||||
Shahram Khial |
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| % |
| $ |
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| |||||
Willy A Saint-Hilaire |
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| % |
| $ |
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Willy A Saint-Hilaire |
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| % |
| $ |
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| |||||
Willy A Saint-Hilaire |
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| % |
| $ |
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| |||||
Mohammad Sadrolashrafi |
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| % |
| $ |
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| |||||
Total Convertible Related Party Notes Payable |
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| |
Less: Debt Discount |
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| |
Convertible Notes Payable, net of Discount - Related Party |
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| 14 |
| Table of Contents |
Willy Ariel Saint-Hilaire
On March 12, 2021, the Company entered into a promissory note with Willy A Saint-Hilaire in the amount of $
On April 6, 2021, the Company entered into a promissory note with Willy A Saint-Hilaire in the amount of $
On April 16, 2021, the Company entered into a convertible promissory note with Willy A Saint-Hilaire in the amount of $
On April 21, 2021, the Company entered into a convertible promissory note with Willy A Saint-Hilaire in the amount of $
On April 22, 2021, the Company entered into a convertible promissory note with Shahram Khial in the amount of $
On April 30, 2021, the Company entered into a convertible promissory note with Willy A Saint-Hilaire in the amount of $
On May 4, 2021, the Company entered into a convertible promissory note with Willy A Saint-Hilaire in the amount of $
On May 21, 2021, the Company entered into a convertible promissory note with Willy A Saint-Hilaire in the amount of $
On February 28, 2022, the Company entered into a promissory note with Willy A Saint-Hilaire in the amount of $
Shahram Khial
On April 27, 2020, the Company entered into a convertible promissory note with Shahram Khial in the amount of $
Jamie Hadfield
On April 7, 2022, the Company entered into a promissory note with Jamie Hadfield in the amount of $
Mohammad Sadrolashrafi
On September 9, 2022, the Company entered into a promissory note with Mohammad Sadrolashrafi in the amount of $
| 15 |
| Table of Contents |
NOTE 7 – COMMITMENTS AND CONTINGENCIES
The Company is obligated for payments under related party notes payable and automobile lease payments.
The Company agreed to pay the automobile lease of $
The Company entered into an agreement, effective January 1, 2020, to pay Arnulfo Saucedo-Bardan $
On February 13, 2020, Munti Consulting LLC was issued a warrant at a price of $
On March 13, 2020, BBCKQK Trust Kevin Wiltz was issued a warrant at a price of $
On March 13, 2020, Willy Ariel Saint--Hilaire was issued a warrant at a price of $
On April 1, 2020, Addicted 2 Marketing LLC was issued a warrant at a price of $
On April 28, 2020, Shahram Khial was issued a warrant at a price of $
On May 4, 2020, Arnulfo Saucedo- Bardan was issued a warrant at a price of $
On May 7, 2020, Arnold F. Sock was issued a warrant at a price of $
On May 7, 2020, Rudy Chacon was issued a warrant at a price of $
On May 7, 2020, Sadegh Salmassi was issued a warrant at a price of $
On May 8, 2020, Glen J. Rineer was issued a warrant at a price of $
| 16 |
| Table of Contents |
On May 8, 2020 Barry Cohen was issued a warrant at a price of $
On May 8, 2020, Malcom Ziman was issued a warrant at a price of $
On May 8, 2020 Brett Matus was issued a warrant at a price of $
On May 8, 2020 Brian Colvin was issued a warrant at a price of $
On May 8, 2020 Jacob Colvin was issued a warrant at a price of $
On May 11, 2020, Mohammad Sadrolashrafi was issued a warrant at a price of $
On May 13, 2020 Steven A. Fishman was issued a warrant at a price of $
On May 13, 2020 Wendell and Sharon Piper was issued a warrant at a price of $
On May 19, 2020 Joan R. Saint-Hilaire was issued a warrant at a price of $
On May 19, 2020 Marvin A Saint-Hilaire was issued a warrant at a price of $
On May 20, 2020 Willy Rafael Saint-Hilaire was issued a warrant at a price of $
On May 27, 2020 James Bobrik was issued a warrant at a price of $
On May 28, 2020 Richard R Shehane was issued a warrant at a price of $
On May 29, 2020 Ybelka Saint Hilaire was issued a warrant at a price of $
On June 3, 2020, Jeffery Connell was issued a warrant at a price of $
On June 8, 2020 Hassan M. Oji was issued a warrant at a price of $
On June 9, 2020, Kim Smith was issued a warrant at a price of $
On June 12, 2020 Violet Gewerter was issued a warrant at a price of $
On June 16, 2020, Roy S Worbets was issued a warrant at a price of $
On June 19, 2020, Elvis E. Saint-Hilaire was issued a warrant at a price of $
| 17 |
| Table of Contents |
On June 30, 2020, Chris Knudsen was issued a warrant at a price of $
On July 1, 2020, Theresa Kitt was issued a warrant at a price of $
On July 1, 2020, Donald Kitt was issued a warrant at a price of $0.000025 per share ($
On July 10, 2020, Shahram Khial was issued a warrant at a price of $
On August 13, 2020, Monireh Sepahpour was issued a warrant at a price of $
On August 18, 2020, Monica Shayesteh was issued a warrant at a price of $
On September 2, 2020, Hongsing Phou was issued a warrant at a price of $
On September 8, 2020, Pejham Khial was issued a warrant at a price of $
On September 15, 2020, Salvatore Marasa was issued a warrant at a price of $
On September 21, 2020, Richard W LeAndro was issued a warrant at a price of $
On September 21, 2020, Richard W LeAndro Jr was issued a warrant at a price of $
On September 25, 2020, Seyed M Javad was issued a warrant at a price of $
On October 6, 2020, Nasrin Montazer was issued a warrant at a price of $
On October 13, 2020, Jagjit Dhaliwal was issued a warrant at a price of $
On January 3, 2021, Marjan Tina Suwarno & Reno Suwarno were issued a warrant at a price of $
| 18 |
| Table of Contents |
Summary of Warrants Issued:
Issue Date |
| Issued To |
| Shares |
|
| Exercise price per share |
|
| Warrant price per share |
|
| Total Paid for Warrants |
| ||||
| Munti Consulting LLC |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| BBCKQK Trust Kevin Wiltz |
|
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|
| $ |
|
| $ |
|
| $ |
| |||||
| Addicted 2 Marketing LLC |
|
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|
| $ |
|
| $ |
|
| $ |
| |||||
| Arnold F Sock |
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| $ |
|
| $ |
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| $ |
| |||||
| Rudy Chacon |
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| $ |
|
| $ |
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| $ |
| |||||
| Sadegh Salmassi |
|
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| $ |
|
| $ |
|
| $ |
| |||||
| Glen J Rineer |
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| $ |
|
| $ |
|
| $ |
| |||||
| Barry Cohen |
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| $ |
|
| $ |
|
| $ |
| |||||
| Steven A Fishman |
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|
| $ |
|
| $ |
|
| $ |
| |||||
| Wendell & Sharon Piper |
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| $ |
|
| $ |
|
| $ |
| |||||
| James Bobrik |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
05/28/2020 |
| Richard R Shehane |
|
|
|
| $ |
|
| $ |
|
| $ |
| ||||
| Jeffery Connell |
|
|
|
| $ |
|
| $ |
|
| $ | 2.50 |
| ||||
| Hassan M Oji |
|
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|
| $ |
|
| $ |
|
| $ |
| |||||
| Kim Smith |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Violet Gewerter |
|
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| $ |
|
| $ |
|
| $ |
| |||||
| Roy S Worbets |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Chris Knudsen |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Donald Kitt |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Monireh Sepahpour |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Monica Shayestehpour |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Hongsing Phou |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Pejham Khial |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Salvatore Marasa |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Richard W LeAndro |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Richard W LeAndro Jr |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Seyed M Javad |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Nasrin Montazer |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Jagit Dhaliwal |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Marjan Tina Suwarno & Reno Suwarno |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
|
| Total: |
|
|
|
|
|
|
|
|
|
|
|
| $ |
| ||
Related Party: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Willy A Saint-Hilaire |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Shahram Khial |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Mike Zaman |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Montse Zaman |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Malcolm Ziman |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Brett Matus |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Mohammad Sadrolashrafi |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Arnulfo Saucedo-Bardan |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Brian D Colvin |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Jacob Colvin |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Joan R Saint-Hilaire |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Marvin A Saint-Hilaire |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Willy Rafael Saint-Hilaire |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Ybelka Saint-Hilaire |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Kenneth Cornell Bosket |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Elvis E Saint-Hilaire |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Theresa Kitt |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
| Shahram Khial |
|
|
|
| $ |
|
| $ |
|
| $ |
| |||||
|
| Total Related Party: |
|
|
|
|
|
|
|
|
|
|
|
| $ |
| ||
| 19 |
| Table of Contents |
NOTE 8 – RELATED PARTY TRANSACTIONS
On March 1, 2020, Willy A Saint-Hilaire was issued a warrant at a price of $
On April 28, 2020, Shahram Khial was issued a warrant at a price of $
On May 1, 2020, Mike Zaman was issued a warrant at a price of $
On May 1, 2020, Montse Zaman was issued a warrant at a price of $
On May 4, 2020 Arnulfo Saucedo-Bardan was issued a warrant at a price of $
On May 8, 2020, Malcolm Ziman was issued a warrant at a price of $
On May 8, 2020 Brian D Colvin was issued a warrant at a price of $
On May 8, 2020 Jacob Colvin was issued a warrant at a price of $
On May 8, 2020 Brett Matus was issued a warrant at a price of $
On May 11, 2020, Mohammad Sadrolashrafi was issued a warrant at a price of $
On May 19, 2020 Joan R Saint-Hilaire was issued a warrant at a price of $
On May 19, 2020 Marvin A Saint-Hilaire was issued a warrant at a of $
On May 20, 2020 Willy Rafael Saint-Hilaire was issued a warrant at a price of $
On May 29, 2020 Ybelka Saint-Hilaire was issued a warrant at a price of $
On June 9, 2020 Kenneth Cornell Bosket was issued a warrant at a price of $
On July 1, 2020 Theresa Kitt was issued a warrant at a price of $
On July 10, 2020, Shahram Khial was issued a warrant at a price of $
The Company periodically advanced operating funds from related parties with convertible notes payable. During the nine months ended September 30, 2022, total convertible notes and non-convertible notes from related parties were $0.00 and $
The Company entered into an agreement, effective January 1, 2020, to pay Mike Zaman $
The Company entered into an agreement, effective January 1, 2020, to pay Kenneth Bosket $
The Company entered into an agreement, effective January 1, 2020, to pay Montse Zaman $
As of September 30, 2022, the Company has a balance of $
| 20 |
| Table of Contents |
NOTE 9 – STOCKHOLDERS’ DEFICIT
Common Stock
During the nine months ending September 30, 2022, the Company issued the following:
| · | On March 9, 2022, the Company issued |
| · | On May 3, 2022, the Company issued |
On February 13, 2020, the Company granted non-qualified stock warrants purchasing up to
On March 13, 2020, the Company granted non-qualified stock warrants purchasing up to
Equity Incentive Plan
The Company’s 2006 Equity Incentive Plan, as amended and restated (the “Equity Incentive Plan”), provides for grants of stock options, as well as grants of stock, including restricted stock. Approximately
Preferred Stock
The Company has designated
| 21 |
| Table of Contents |
NOTE 10 – INCOME TAXES
The Company follows ASC 740, Accounting for Income Taxes. During 2009, there was a change in control of the Company. Under section 382 of the Internal Revenue Code such a change in control negates much of the tax loss carry forward and deferred income tax. Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes, and (b) net operating loss carry forwards. For federal income tax purposes, the Company uses the accrual basis of accounting, the same that is used for financial reporting purposes.
The Company did not have taxable income during 2021.
The Company's deferred tax assets consisted of the following as of September 30, 2022 and December 31, 2021:
|
| Sept. 30, |
|
| Dec. 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
Net operating loss |
| $ |
|
| $ |
| ||
Valuation allowance |
|
| ( | ) |
|
| ( | ) |
Net deferred tax asset |
| $ |
|
| $ |
| ||
As of September 30, 2022, and December 31, 2021, the Company's accumulated net operating loss carry forward was approximately $
NOTE 11 – SUBSEQUENT EVENTS
On October 21, 2022, a $
On October 21, 2022, Mohammad Sadrolashrafi purchased
Management has analyzed its operations for subsequent events to November 1, 2022, the date these Financial Statements were issued.
| 22 |
| Table of Contents |
ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS
The following discussion and analysis should be read in conjunction with our Financial Statements and the notes thereto, set forth in Item 8. “Financial Statements” as set forth in our Annual Report on Form 10-K for the year ended December 31, 2021, and the Condensed Consolidated Financial Statements and notes thereto included in Part I of this Quarterly Report on Form 10-Q. The following discussion may contain forward looking statements. For additional information, see “Disclosure Regarding Forward Looking Statements” in Part I of this Quarterly Report on Form 10-Q.
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
CRWE 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 Downs Street, Las Vegas, NV 89141.
As of September 30, 2022, Crown Equity has 4 employees and utilized the services of one independent contractor and the following four officers, Mike Zaman, Kenneth Bosket, Montse Zaman, and Vinoth Sambandam.
| 23 |
| Table of Contents |
RESULTS OF OPERATIONS
Three months ended September 30, 2022 Compared to the Three months ended September 30, 2021
For the three months ended September 30, 2022, revenues were $126 and $3,061 for the same period in 2021.
Revenues for the three months ended September 30, 2022 was lower primarily due to the advertising revenue not earned through a related party during the same period in 2021.
Operating expenses were $123,229 for the three months ended September 30, 2022 and $123,982 for the same period in 2021. The decrease in operating expenses was primarily due to a decrease of $831 in the depreciation.
Other expenses for the three-month period ended September 30, 2022 were $1,922 and $20,097 for the same quarter in 2021. The decrease in other expenses was primarily due to loss on stock held.
Interest expense for the three months ended September 30, 2022 and 2021 was $1,922 and $2,216, respectively.
Nine months ended September 30, 2022 Compared to the Nine months ended September 30, 2021
For the nine months ended September 30, 2022, revenues were $2,833 and $15,386 for the same period in 2021. Revenues for the nine months ended September 30, 2021 was significantly lower compared to the same period in 2021 primarily due to advertising income from related parties earned in the same period in 2021.
Operating expenses were $377,736 for the nine months ended September 30, 2022 and $388,397 for the same period in 2021. Decrease in operating expenses was primarily due to the decrease administrative services.
Other expenses for the nine-month period ended September 30, 2022 were $260,545 and $5,374 for the same period in 2021. The increase in other expenses was primarily due to the recording of loss on stock held.
Interest expense for nine months ended September 30, 2022 and 2021 was $3,360 and $5.466, respectively.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2022, Crown Equity had current assets of $6,804 and current liabilities of $1,306,789 resulting in working capital deficit of $1,299,985. Net cash used by operating activities for the nine months ended September 30, 2021 was $72,439 compared to net cash used of $7,555 for the same period in 2021.
Net cash provided byinvesting activities was $67,000 and $0.00 for the nine months ended September 30, 2022 and 2021, respectively.
Net cash provided by financing activities during the nine months ended September 30, 2022 was $7,923compared to net cash provided of $7,686 for the same period in 2021. For the nine months ended September 30, 2022, we borrowed $19,500 from related parties. We also sold 28,000 shares of common stock for $14,000 during the nine months ended September 30, 2022
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.
| 24 |
| Table of Contents |
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”) are not required 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 relate 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. These material weaknesses are 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.
| 25 |
| Table of Contents |
PART II – OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS.
For information regarding legal proceedings, see Note 7, “Commitments and Contingencies – Legal Matters” in the Notes to our Condensed Consolidated Financial Statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.
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, 2021.
ITEM 2: SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
During the nine months ended September 30, 2022, Crown Equity issued 28,000 shares for cash at $0.50 per share of common stock for operating capital.
ITEM 3: DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4: MINE SAFETY INFORMATION.
None
ITEM 5: OTHER INFORMATION.
None
| 26 |
| Table of Contents |
ITEM 6: EXHIBITS
| ||
| ||
| ||
| ||
| ||
| ||
| ||
|
|
|
101.INS ** |
| Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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 |
|
|
|
104. ** |
| Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
____________
** | XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
| 27 |
| Table of Contents |
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 4, 2022 | By: | /s/ Mike Zaman | |
| Mike Zaman, CEO | ||
| By: | /s/ Kenneth Bosket | |
| Kenneth Bosket, CFO | ||
| 28 |