UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2008
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number: 33-11986-LA
CROWN PARTNERS, INC.
(Exact name of Registrant as specified in its charter)
| Nevada | | 91-2008803 |
| (State or other jurisdiction of | | (IRS Employer |
| incorporation or organization) | | Identification Number) |
9663 St Claude Avenue, Las Vegas, NV 89148
(Address of principal executive offices)(Zip Code)
Company’s telephone number, including area code: (702) 448-1543
Securities registered pursuant to Section 12(b) of the Act: None.
Name of each exchange on which registered: None.
Securities registered pursuant to Section 12(g) of the Act: None.
Check whether the Issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or such shorter period of that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Check if there is no disclosure of delinquent filers to Item 405 of Regulation S-B contained in this form, and if no disclosure will be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K. o
The number of shares outstanding of the Company’s $.001 Par Value Common Stock, as of March 10, 2009 was 54,257,983. The aggregate number of shares of the voting stock held by non-affiliates was 52,094,793. The market value of these shares, computed by reference to the market closing price on March 10, 2009 was $520,948. For the purposes of the foregoing calculation only, all directors and executive officers of the registrant have been deemed affiliates.
DOCUMENTS INCORPORATED BY REFERENCE: None.
ITEM 1. BUSINESS
A) General
Crown Partners, Inc. (the “Company”), has been involved in several different businesses. At present, it has three subsidiaries.
B) Narrative Description of Business
The Company has three subsidiaries of which it is the majority shareholder: Crown Equity Holdings Inc. ("CRWE"), Universal Services & Acquisitions, Inc. ("USV"), and Sanitec Services Ltd. ("SSH").
The Company owns 64% of CEQN, a Nevada corporation traded on the Electronic Bulletin Board under "CEQN". In 2007, CRWE began selling computer systems for financial traders and is also a licensed reseller for computer components, hardware and software as well as computer accessories. In 2008, Crown continued to advance funds to CRWE to pay CRWE's expenses. The Company anticipates that it will be repaid these advances and loans at the time that CEQN acquires an operating business. In December, 2007, CRWE issued a total of ten million shares of its common stock in satisfaction of approximately $145,000 owed by CRWE to the Company. After the issuance of the shares, the Company advanced an additional $19,910 to CRWE.
The Company owns 90% of the issued and outstanding shares of Universal Services & Acquisitions, Inc. (“USV”), a Colorado corporation. USV is a dormant shell company. The Company continues to seek merger candidates for USV.
In November, 2001, the Company acquired Sanitec(TM) Services of Hawaii, Inc. ("SSH"), a privately held Hawaiian corporation, developed to engage in medical waste collection and treatment in Honolulu, Hawaii. The operations of SSH ceased in May, 2005 when SSH was evicted from its plant in Hawaii. At the present time, the Company is utilizing its limited capital to fund its operations as it seeks business opportunities.
In December, 2007, the Company issued 170,000 shares of its common stock in restricted form, to unrelated parties as compensation for services.
During the year ended December 31, 2006, the Company issued 9,000,000 options to certain officers, directors and consultants. The options are exercisable over a five year period at $.10 per share. In accordance with SFAS No. 123R, the Company recorded $625,880 of expense in connection with the issuance of these options. There have been no options granted, exercised, transferred or forfeited during the fiscal year 2008 or 2007.
Employees
As of December 31, 2008, the Company had no employees.
Item 2. Properties.
Prior to August 2007, Crown used office space of a related party on a rent free month to month basis. In August 2007, Crown began leasing office space for $845 per month. The lease expired July 31, 2008. From that date through December 31, 2008, Crown used office space of a related party on a rent free month to month basis. Rent expense for the years ended December 31, 2008 and 2007 were $8,450 and $6,338, respectively.
Item 3. Legal Proceedings.
The Company and its subsidiary have pending litigation in Arizona small claims court - - Strojnik v. Crown Equity Holdings, Inc. and Crown Partners, Inc. The Company has assessed the outcome of a loss as remote and furthermore the maximum liability in small claims court is $2,500. The Company has not accrued any amounts related to this contingency.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Market for Registrant’s Common Equity and Related Shareholder Matters.
The Company’s common stock has been traded on the OTC Electronic Bulletin Board since Spring, 1996 under the symbol “TELM,” since April, 1999, under the symbol “SNHS” and since January, 2002, under the symbol “CRWP”. The following table reflects the high and low quarterly bid prices for 2008. This information was provided to the Company by the National Association of Securities Dealers, Inc. (the “NASD”) and the Internet. These quotations reflect inter-dealer prices, without retail mark-up or mark-down or commissions. These quotations may not necessarily reflect actual transactions.
| Period | | High Bid | | | Low Bid | |
1 st Qtr 2008 | | | .02 | | | | .01 | |
2 nd Qtr 2008 | | | .02 | | | | .01 | |
3 rd Qtr 2008 | | | .01 | | | | .01 | |
4 th Qtr 2008 | | | .01 | | | | .01 | |
As of December 31, 2008, the Company had 54,257,983 shares of its common stock issued and outstanding, of which 10,891,343 were held by non-affiliates.
The Company’s CUSIP number is 85847R108. The Company has authorized a total of 50,000,000 shares of common stock, par value $.001. The Company has authorized a total of 10,000,000 shares of preferred stock, par value $10.00 and presently has no shares of preferred stock issued and outstanding. The Company estimates that it has in excess of 300 beneficial shareholders as of March 10, 2009.
Item 6. Selected Financial Data
None
Item 7. Management’s Discussion and Analysis or Plan of Operation.
FORWARD-LOOKING STATEMENTS MAY NOT PROVE ACCURATE
When used in this Form 10-K, the words “anticipated”, “estimate”, “expect”, and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks, uncertainties and assumptions including the possibility that the Company’s will fail to generate projected revenues. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected.
OVERVIEW
Due to the present and ongoing instability in the financial markets, the Company experienced substantial losses in its trading activities in 2008 and prior years. The Company continues to seek business opportunities for itself and its subsidiaries that will allow it and them to generate revenues to fund all their operations but has no suitable candidates under review at the present time. The Company, through its subsidiary, SSH, began generating revenues during 2003 which were not enough to fund and support its Hawaiian operations in the short term and resulted in the Company ceasing its Hawaii operations when the landlord evicted SSH for failing to pay its rent.
The Company will continue to seek suitable merger candidates for its other subsidiaries which should also result in revenues for the Company if mergers are consummated.
In 2008, CRWE had minimal income, although it was not sufficient to completely fund its operations.
The Company does not have adequate working capital for its current operations and will need additional working capital in 2009.
NEED FOR ADDITIONAL FINANCING
The Company believes that its existing capital will not be sufficient to meet the Company’s cash needs, including the costs of compliance with the continuing reporting requirements of the Securities Exchange Act of 1934, as amended, for itself and its subsidiaries. The Company is seeking to locate other potential acquisitions for its subsidiaries.
No commitments to provide additional funds have been made by management or other stockholders. Accordingly, there can be no assurance that any funds will be available to the Company to allow it to cover its expenses.
The Company might seek to compensate providers of services by issuances of stock in lieu of cash.
The Company’s balance sheet as of December 31, 2008 reflects limited assets and limited liabilities. Further, there exist no agreements or understandings with regard to loan agreements by or with the Officers, Directors, principals, affiliates or shareholders of the Company.
RESULTS OF OPERATIONS
In December, 2007, the Company’s subsidiary, Crown Equity Holdings Inc., issued ten million shares of its common stock in restricted form in satisfaction of $145,000 which it owed to the Company. Subsequently, the Company advanced an additional $19,910 to Crown Equity.
In December, 2007, the Company issued 170,000 shares of its common stock to unrelated third parties as compensation for services to the Company. In 2008, the Company issued 4,500,000 shares of its common stock for $22,500 and 26,000,000 shares to a related party for services and for accounts payable.
For the year ended December 31, 2008, the Company realized a net loss of $604,834, on income of $23,190, interest income of $198, interest expense of $2,927, and operating expenses of $607,954. For the year ended December 31, 2007, the Company realized a net loss of $423,581, other income of $14,003 realized loss from the sale of securities of $74,485, interest income of $4,133, and operating expenses of $355,144. The net loss per share for the years ended December 31, 2008 and 2007 was $.01 and $.02, respectively.
At December 31, 2008, shareholder’s deficit totaled $10,243,495 compared to shareholder’s deficit of $9,638,661 at December 31, 2007. This increase in shareholder’s deficit is due primarily to the Company’s continuing to pay its subsidiaries’ expenses without sufficient income to support these expenses.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2008, the Company had total current assets of $3,293, which consisted of cash of $2,943 and prepaid expenses of $350, resulting in negative working capital of $448,242. The Company’s current liabilities of $451,535 consisted of accounts payable of $207, 039, accounts payable to a related party of $113,897, advances of $42,689, notes payable to a related party of $51,210, salaries payable of $ 23,000 and notes payable of $13,700.
Crown will attempt to increase its operating liquidity by exploring the availability of outside debt and equity financing, to the extent that such funding is available under reasonable terms and conditions.
There can be no assurances that these measures will result in an improvement in Crown’s operations or liquidity. To the extent that Crown’s operations or liquidity do not improve, Crown may be forced to reduce operations to a level consistent with its available working capital resources. Crown may also have to consider a formal or informal restructuring or reorganization.
As a result of these factors, Crown’s independent registered public accounting firm has expressed substantial doubt about Crown’s ability to continue as a going concern. The accompanying consolidated financial statements have been prepared assuming that Crown will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the consolidated financial statements do not purport to represent the realizable or settlement values, nor include any adjustments that might result from the outcome of this uncertainty.
There were no disagreements with accountants on accounting and financial disclosure during the relevant period.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the "Act") is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. As of the end of the period covered by this Annual Report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our CEO and CFO has concluded that the Company’s disclosure controls and procedures are not effective because of the identification of a material weakness in our internal control over financial reporting which is identified below, which we view as an integral part of our disclosure controls and procedures.
Changes in Internal Controls over Financial Reporting
We have not yet made any changes in our internal controls over financial reporting that occurred during the period covered by this report on Form 10-K that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles. Because of inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on its evaluation, our management concluded that there is a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
The material weakness 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 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.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to the attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.
The Company’s management carried out an assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008. The Company’s management based its evaluation on criteria set forth in the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, management has concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2008.
Item 9B Other Information
None.
Part III
Item 10. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act.
Identification of Directors and Executive Officers of the Company
The following table sets forth the names and ages of all directors and executive officers of the Company and all persons nominated or chosen to become a director, indicating all positions and offices with the Company held by each such person and the period during which he has served as a director:
The principal executive officers and directors of the Company are as follows:
| | Position | | Term(s) of Office |
Arnulfo Saucedo-Bardan age is 37 | | Chairman of the Board, Director | | February, 2008 to the present |
| | | | | |
| Kenneth Bosket | | CEO, Director | | June 2008 to the present |
| | | | | |
| Steven Onoue age is 50 | | Director | | July, 2002 to the present |
| | | | | |
| Montse Zaman age is 34 | | CFO, Secretary | | February, 2008 to the present |
Family Relationships. There are no family relationships between any of the officers and directors except that Mr. Saucedo-Bardan and Mrs. Zaman are brother and sister.
Business Experience. The following is a brief account of the business experience during at the least the last five years of the directors and executive officers, indicating their principal occupations and employment during that period, and the names and principal businesses of the organizations in which such occupations and employment were carried out.
KENNETH BOSKET. Kenneth Bosket has been working with Crown Trading Systems, Inc., a wholly owned subsidiary of Crown Equity Holdings, Inc. for 9 months before being appointed Crown Equity Holdings, Inc. CEO in June of 2008. Mr. Bosket retired in 2004 after 30 years with Sprint (Telecommunication Division). Mr. Bosket is co-founder of JaHMa, a music company in Las Vegas, Nevada and a former Board Member and President of Bridge Counseling Associates, a mental health and substance abuse service company. His experience includes implementing appropriate procedures for positioning his organization's goals with successful teaming relationships, marketing and over 30 years of extensive customer service, as well as managing various departments, and being a western division facilitator working directly for a President of Sprint. Mr. Bosket has received numerous awards, such as the Pinnacle Award for his exceptional service with his former employer combined with his community service involvements. Mr. Bosket earned a Masters of Business Administration from the University of Phoenix and a Bachelor's of Business Administration from National University. Mr. Bosket is also a director of Crown Partners, Inc., the majority shareholder of the Company and a publicly traded company traded on the OTC Electronic Bulletin Board under “CRWP.”
STEVEN ONOUE. Mr. Onoue has been employed as vice president and manager of Sanitec™ Services of Hawaii, Inc., a wholly-owned subsidiary of Crown Partners, Inc., since 2000. Prior to that, Mr. Onoue was the president of Cathay Atlantic Trading Company in Honolulu, Hawaii which traded in hard commodities and acted as consultant to many construction and renovation projects. Mr. Onoue acts as a community liaison and legislative analyst to Rep. Suzuki of the State of Hawaii. Mr. Onoue has been a registered securities professional as well as a being involved in real estate in Hawaii for more than 15 years. Mr. Onoue is presently an officer and director of Crown Equity Holdings Inc., a subsidiary of the Company which trades on the OTC Electronic Bulletin Board under the symbol “CRWE.”
ARNULFO SAUCEDO-BARDAN. Mr. Saucedo-Bardan is a business man and developer and is self-employed. Mr. Saucedo-Bardan is the brother of Montse Zaman. Mr. Saucedo-Bardan is a director of Crown Equity Holdings Inc., a subsidiary of the Company and a publicly traded company traded on the OTC Electronic Bulletin Board under “CRWE.”
MONTSE ZAMAN, Montse Zaman is an administrative assistant for Crown Partners, Inc. and Crown Equity Holdings, Inc. She also works for Zaman & Company as an administrative assistant. She has an extensive background in journalism and has a degree in Communications from Instituto Superior De Ciencia Y Technologia A.C. in Mexcio. Mrs. Zaman is an officer of Crown Equity Holdings Inc., a subsidiary of the Company and a publicly traded company traded on the OTC Electronic Bulletin Board under “CRWE.”
Identification of Certain Significant Employees. The Company does not employ any persons who make or are expected to make significant contributions to the business of the Company.
CONFLICTS OF INTEREST
Most of the Officers and Directors of the Company will devote only a small portion of their time to the affairs of the Company, estimated to be no more than approximately 10 hours per month. There will be occasions when the time requirements of the Company’s business conflict with the demands of their other business and investment activities. Such conflicts may require that the Company attempt to employ additional personnel. There is no assurance that the services of such persons will be available or that they can be obtained upon terms favorable to the Company.
There is no procedure in place which would allow the Officers and Directors to resolve potential conflicts in an arms-length fashion. Accordingly, they will be required to use their discretion to resolve them in a manner which they consider appropriate.
The Company’s Officers and Directors may actively negotiate or otherwise consent to the purchase of a portion of their common stock as a condition to, or in connection with, a proposed merger or acquisition transaction. It is anticipated that a substantial premium over the initial cost of such shares may be paid by the purchaser in conjunction with any sale of shares by the Company’s Officers and Directors which is made as a condition to, or in connection with, a proposed merger or acquisition transaction. The fact that a substantial premium may be paid to the Company’s Officers and Directors to acquire their shares creates a potential conflict of interest for them in satisfying their fiduciary duties to the Company and its other shareholders. Even though such a sale could result in a substantial profit to them, they would be legally required to make the decision based upon the best interests of the Company and the Company’s other shareholders, rather than their own personal pecuniary benefit.
Item 11. Executive Compensation.
During year ended December 31, 2008, and as of the date of the filing of this report, the following Company’s officers were paid compensation by the Company.
| · | Montse Zaman CFO received $ 31,300 paid directly and $ 6,000 paid to the Montse Zaman Irrevocable Trust for a total of $37,300. |
Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meeting of the Board of Directors.
The Company has no material bonus or profit-sharing plans pursuant to which cash or non-cash compensation is or may be paid to the Company’s directors or executive officers.
The Company has no compensatory plan or arrangements, including payments to be received from the Company, with respect to any executive officer or director, where such plan or arrangement would result in any compensation or remuneration being paid resulting from the resignation, retirement or any other termination of such executive officer’s employment or from a change-in-control of the Company or a change in such executive officer’s responsibilities following a change-in-control and the amount, including all periodic payments or installments where the value of such compensation or remuneration exceeds $100,000 per executive officer.
During the last completed fiscal year, no funds were set aside or accrued by the Company to provide pension, retirement or similar benefits for Directors or Executive Officers.
The Company has no written employment agreements.
Termination of Employment and Change of Control Arrangement. Except as noted herein, the Company has no compensatory plan or arrangements, including payments to be received from the Company, with respect to any individual names above from the latest or next preceding fiscal year, if such plan or arrangement results or will result from the resignation, retirement or any other termination of such individual’s employment with the Company, or from a change in control of the Company or a change in the individual’s responsibilities following a change in control.
Compensation Pursuant to Plans. Other than disclosed above, the Company has no plan pursuant to which cash or non-cash compensation was paid or distributed during the last fiscal year, or is proposed to be paid or distributed in the future, to the individuals and group described in this item.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
There were 54,257,983 shares of the Company’s common stock issued and outstanding on December 31, 2008. No preferred shares were issued and outstanding at December 31, 2008. The following tabulates holdings of shares of the Company by each person who, subject to the above, at the date of this Report, holds or owns or is known by Management to own beneficially more than five percent (5%) of the Common Shares of the Company and, in addition, by all directors and officers of the Company individually and as a group.
Name and Address of Beneficial Owner | | Amount of Common Shares Currently Owned | | | Percent | |
| Cede & Co | | | 8,712,088 | | | | 16.06 | % |
| 9663 St Claude Avenue | | | | | | | | |
| Las Vegas NV 89148 | | | | | | | | |
| | | | | | | | | |
| Tisa Capital Corp. | | | 5,670,116 | | | | 10.45 | % |
| 9663 St Claude Avenue | | | | | | | | |
| Las Vegas NV 89148 | | | | | | | | |
| | | | | | | | | |
| Steven Onoue (1) | | | 2,163,190 | | | | 3.99 | % |
| 9663 St. Claude Avenue | | | | | | | | |
| Las Vegas NV 89147 | | | | | | | | |
| | | | | | | | | |
| Phoenix Consulting Services | | | 3,733,334 | | | | 6.88 | % |
| 9663 St Claude Avenue | | | | | | | | |
| Las Vegas NV 89148 | | | | | | | | |
| | | | | | | | | |
| Zaman Family Trust | | | 26,000,000 | | | | 47.92 | % |
| 9663 St Claude Avenue | | | | | | | | |
| Las Vegas NV 89148 | | | | | | | | |
| | | | | | | | | |
| Kenneth Bosket (1) | | | 0 | | | | 0.00 | % |
| 9663 St Claude Avenue | | | | | | | | |
| Las Vegas NV 89148 | | | | | | | | |
| | | | | | | | | |
| Arnulfo Saucedo-Bardan (1) | | | 0 | | | | 0.00 | % |
9663 St Claude Las Vegas NV 89148 | | | | | | | | |
| | | | | | | | | |
| Montse Zaman (1) | | | 0 | | | | 0.00 | % |
| 9663 St Claude Avenue | | | | | | | | |
| Las Vegas NV 89148 | | | | | | | | |
| | | | | | | | | |
| Nasrin Montazer | | | 4,500,000 | | | | 8.29 | % |
| 6993 St Claude Avenue | | | | | | | | |
| Las Vegas NV 89148 | | | | | | | | |
| | | | | | | | | |
| Officers & directors as a | | | | | | | | |
| Group (4 persons) | | | 2,163,190 | | | | 3.99 | % |
| (1) | Denotes officer and/or director. |
Change in Control. There are no arrangements known to the Company, including any pledge of securities of the Company, the operation of which may at a subsequent date result in a change of control of the Company.
Item 13. Certain Relationships and Related Transactions; and Director Independence.
In 2007, the Company shared office space with its subsidiary, Crown Equity Holdings Inc. The monthly rent was $845 and the parties would split the rent. The lease expired in July, 2008. Currently, office space is provided free by a related party on a month to month basis.
During the year ended December 31, 2008, the Company continued to pay certain expenses and obligations of its subsidiaries in order that they could continue to operate. In the event that these subsidiaries are acquired or merged into other entities, the Company anticipates being repaid for these advances. However, in the event that these companies are never merged or acquired, the Company may never be repaid. In addition, the Company may not continue to have the ability to continue advancing funds for operations for these entities. In the event that the Company cannot continue to fund their operations, these subsidiaries may cease to operate and exist.
In December, 2007, the Company’s subsidiary, Crown Equity Holdings Inc. issued ten million shares of its common stock in restricted form to the Company in satisfaction of approximately $145,000 which the Company was owed by Crown Equity. At December 31, 2008, the Company’s to Crown Equity Holdings totaled $63,226.
In December, 2007, the Company issued 170,000 shares of its common stock in restricted form to two unrelated parties for services provided to the Company.
In April 2008 the Company issued 4,500,000 shares of restricted common stock to one individual for cash.
In June 2008 the Company issued 26,000,000 shares of restricted common stock to legal counsel and former director for accounts payable and services. Subsequent to the issuance the shares were transferred to the Zaman Family Trust of which the recipient claims no direct or indirect interest.
Item 14. Principal Accounting Fees and Services
The following table presents for each of the last two fiscal years the aggregate fees billed in connection with the audits of our financial statements and other professional services rendered by our independent registered public accounting firm Malone & Bailey, PC, Certified Public Accountants and Consultants.
| | | 2008 | | | 2007 | |
| Audit fees | | $ | 18,715 | | | $ | 30,350 | |
| Audit related fees | | | 0 | | | | 0 | |
| Tax fees | | | 0 | | | | 0 | |
| All other fees | | | 0 | | | | 0 | |
Audit fees represent the professional services rendered for the audit of our annual financial statements and the review of our financial statements included in quarterly reports, along with services normally provided by the accounting firm in connection with statutory and regulatory filings or engagements. Audit-related fees represent professional services rendered for assurance and related services by the accounting firm that are reasonably related to the performance of the audit or review of our financial statements that are not reported under audit fees.
Tax fees represent professional services rendered by the accounting firm for tax compliance, tax advice, and tax planning. All other fees represent fees billed for products and services provided by the accounting firm, other than the services reported for in the other categories.
(a) Financial Statements and Schedules
The following financial statements and schedules are filed as part of this report:
Independent Auditors Report dated March 10, 2009
Consolidated Balance Sheet
Consolidated Statements of Operations
Consolidated Statement of Changes in Stockholders’ Deficit
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
List of Exhibits
The following exhibits are filed with this report.
Financial Statements for the Year Ended December 31, 2008.
(b) There were no Reports filed on Form 8-K during the fourth quarter of the Company’s fiscal year ended December 31, 2008.
Pursuant to the requirements of Section 13 or 15(d) 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.
| March 10, 2009 | | /s/Arnulfo Saucedo-Bardan | |
| | | Arnulfo Saucedo-Bardan, Chairman of the Board, Director | |
| | | | |
| | /s/ Kenneth Bosket | |
| | | Kenneth Bosket, CEO, Director | |
| | | | |
| | /s/Montse Zaman | |
| | | Montse Zaman, CFO, Director | |
| | | | |
| | /s/Steven Onoue | |
| | | Steve Onoue, Director | |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Crown Partners, Inc.
Las Vegas, NV
We have audited the accompanying consolidated balance sheet of Crown Partners, Inc. (“the Company”) as of December 31, 2008 and 2007, and the consolidated statements of operations, stockholders’ deficit, and cash flows for the two years then ended. These consolidated financial statements are the responsibility of Crown Partners, Inc.’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Crown Partners, Inc. as of December 31, 2008 and 2007, and the results of its operations and its cash flows for each of the two years then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that Crown Partner’s Inc. will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, The Company has incurred losses through December 31, 2008 and at December 31, 2008 had negative working capital. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to this matter are also described in Note 3. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Malone & Bailey, PC
www.malone-bailey.com
Houston, Texas
March 10, 2009
| CROWN PARTNERS, INC. |
| CONSOLIDATED BALANCE SHEETS |
| |
| ASSETS | |
| Current assets | | December 31, 2008 | | | December 31, 2007 | |
| Cash | | $ | 2,943 | | | $ | 180,182 | |
| Accounts receivable | | | -- | | | | 14,003 | |
| Prepaid expenses | | | 350 | | | | 1,195 | |
| Total current assets | | | 3,293 | | | | 195,380 | |
| | | | | | | | | |
| Fixed assets | | | | | | | | |
| Equipment, net of accumulated depreciation | | | 43,373 | | | | 68,753 | |
| Total Assets | | $ | 46,666 | | | $ | 264,133 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | |
| | | | | | | | | |
| Current liabilities | | | | | | | | |
| Accounts payable and accrued expenses | | $ | 207,039 | | | $ | 197,109 | |
| Accounts payable - related party | | | 113,897 | | | | 267,428 | |
| Advances - other | | | 42,689 | | | | 20,000 | |
| Note payable - related party | | | 51,210 | | | | 36,875 | |
| Salaries payable | | | 23,000 | | | | - | |
| Note payable | | | 13,700 | | | | 12,700 | |
| Total current liabilities | | | 451,535 | | | | 534,112 | |
| | | | | | | | | |
| Commitments and contingencies | | | - | | | | - | |
| | | | | | | | | |
| Stockholders’ deficit: | | | | | | | | |
| Convertible preferred stock, $10 par value, 10,000,000 | | | | | | | | |
| shares authorized, no shares issued and outstanding | | | - | | | | - | |
| Common stock, $.001 par value, 5,000,000,000 shares | | | | | | | | |
authorized, 54,257,983 and 23,757,983 shares issued and outstanding, respectively | | | 54,258 | | | | 23,758 | |
| Additional paid in capital | | | 9,784,368 | | | | 9,344,924 | |
| Accumulated deficit | | | (10,243,495 | ) | | | (9,638,661 | ) |
| Total stockholder's deficit | | | (404,869 | ) | | | (269,979 | ) |
| | | | | | | | | |
| Total Liabilities & Stockholders’ Deficit | | $ | 46,666 | | | $ | 264,133 | |
See summary of significant accounting policies and notes to financial statements.
| CROWN PARTNERS, INC. | |
| CONSOLIDATED STATEMENTS OF OPERATIONS | |
| Years Ended December 31, 2008 and 2007 | |
| | | 2008 | | | 2007 | |
| | | | | | | |
| Revenues | | $ | 23,190 | | | $ | - | |
| | | | | | | | | |
| Cost of revenues | | | 17,341 | | | | - | |
| | | | | | | | | |
| Gross profit | | | 5,849 | | | | - | |
| | | | | | | | | |
| Operating expenses: | | | | | | | | |
| Other general and administrative | | | 582,574 | | | | 347,764 | |
| Depreciation expense | | | 25,380 | | | | 7,380 | |
| | | | | | | | | |
| Net loss from operations | | | (607,954 | ) | | | (355,144 | ) |
| | | | | | | | | |
| Other income (expense): | | | | | | | | |
| Other income | | | -- | | | | 14,003 | |
| Interest income | | | 198 | | | | 4,133 | |
| Investment/interest expense | | | (2,927 | ) | | | (12,088 | ) |
| Realized (loss) on securities | | | - | | | | (74,485 | ) |
| Total other income (expense) | | | 2,729 | | | | (68,437 | ) |
| | | | | | | | | |
| Net loss | | $ | (604,834 | ) | | $ | (423,581 | ) |
| | | | | | | | | |
| Net loss per share: | | $ | (0.01 | ) | | $ | (0.02 | ) |
| Net loss basic and diluted | | | | | | | | |
| | | | | | | | | |
| Weighted average shares outstanding: | | | 41,553,873 | | | | 23,587,983 | |
| Basic and diluted | | | | | | | | |
See summary of significant accounting policies and notes to financial statements.
| CROWN PARTNERS, INC. |
| CONSOLIDATED STATEMENT OF STOCKHOLDER'S DEFICIT |
| Years Ended December 31, 2008 and 2007 |
| | | | | | | | | Additional | | | | | | | |
| | | Common Shares | | | Paid In | | | Accumulated | | | | |
| | | Shares | | | Amount | | | Capital | | | Deficit | | | Total | |
| Balance, December 30, 2006 | | | 23,587,983 | | | $ | 23,588 | | | $ | 9,237,694 | | | $ | (9,215,080 | ) | | $ | 46,202 | |
| | | | | | | | | | | | | | | | | | | | | |
| Issuance of common stock for services | | | 170,000 | | | | 170 | | | | 3,230 | | | | | | | | 3,400 | |
| Issuance of common stock by subsidiary for cash | | | | | | | | | | | 104,000 | | | | | | | | 104,000 | |
| Net loss | | | | | | | | | | | | | | | (423,581 | ) | | | (423,581 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Balance, December 31, 2007 | | | 23,757,983 | | | | 23,758 | | | | 9,344,924 | | | | (9,638,661 | ) | | | (269,979 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Issuance of common stock for accounts payable | | | 9,774,692 | | | | 9,775 | | | | 117,296 | | | | | | | | 127,071 | |
| Issuance of common stock for notes payable | | | 1,221,925 | | | | 1,222 | | | | 14,663 | | | | | | | | 15,885 | |
| Issuance of common stock for services | | | 15,003,383 | | | | 15,003 | | | | 180,041 | | | | | | | | 195,044 | |
| Issuance of common stock for cash | | | 4,500,000 | | | | 4,500 | | | | 18,000 | | | | | | | | 22,500 | |
| Issuance of common stock by subsidiary for accounts payable | | | | | | | | | | | 15,000 | | | | | | | | 15,000 | |
| Issuance of common stock by subsidiary for services | | | | | | | | | | | 94,134 | | | | | | | | 94,134 | |
| Cancellation of common stock by subsidiary | | | | | | | | | | | 310 | | | | | | | | 310 | |
| Net loss | | | | | | | | | | | | | | | (604,834 | ) | | | (604,834 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Balance, December 31, 2008 | | | 54,257,983 | | | $ | 54,258 | | | $ | 9,784,368 | | | $ | (10,243,495 | ) | | $ | (404,869 | ) |
See summary of significant accounting policies and notes to financial statements.
| CROWN PARTNERS, INC. |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| Years Ended December 31, 2008 and 2007 |
| | | 2008 | | | 2007 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | |
| Net Loss | | $ | (604,834 | ) | | $ | (423,581 | ) |
| Adjustments to reconcile net loss to cash (used in) operating activities: | | | | | | | | |
| Realized loss on sale of marketable securities | | | -- | | | | 74,485 | |
| Depreciation expense | | | 25,380 | | | | 7,380 | |
| Common stock issued for services | | | 195,044 | | | | 3,400 | |
| Common stock of subsidiary issued for services | | | 94,135 | | | | - | |
| Stock cancelled | | | 310 | | | | - | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Accounts Receivable | | | 14,003 | | | | (14,003 | ) |
| Prepaid | | | 845 | | | | (1,195 | ) |
| Investments in marketable securities | | | -- | | | | (41,534,260 | ) |
| Proceeds from sale of marketable securities | | | -- | | | | 41,459,775 | |
| Accounts payable and accrued expenses | | | 9,930 | | | | (56,408 | ) |
| Accrued salaries payable | | | 23,000 | | | | -- | |
| Related party accounts payable | | | 13,387 | | | | 94,630 | |
| Cash flows used in operating activities | | | (228,801 | ) | | | (389,777 | ) |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | |
| Purchase of Fixed Assets | | | -- | | | | (76,133 | ) |
| Cash flows used in investing activities | | | -- | | | | (76,133 | ) |
| | | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | |
| Advances from related party | | | 13,727 | | | | 24,846 | |
| Note payable - related party, net | | | 14,335 | | | | 36,875 | |
| Proceeds from note payable | | | 1,000 | | | | 12,700 | |
| Proceeds from the sale of stock | | | 22,500 | | | | -- | |
| Proceeds from the sale of subsidiary stock | | | -- | | | | 104,000 | |
| Cash flows provided by financing activities | | | 51,562 | | | | 178,421 | |
| | | | | | | | | |
| Net (Decrease) in Cash | | | (177,239 | ) | | | (287,489 | ) |
| Cash, beginning of period | | | 180,182 | | | | 467,671 | |
| Cash, end of period | | $ | 2,943 | | | $ | 180,182 | |
| | | | | | | | | |
| Supplemental Disclosures: | | | | | | | | |
| Cash paid for interest | | $ | - | | | $ | - | |
| Cash paid for income taxes | | | - | | | | - | |
| Noncash transactions: | | | | | | | | |
| Common stock issued for accounts payable | | $ | 127,071 | | | $ | - | |
| Common stock issued by subsidiary for subsidiary accounts payable | | | 15,000 | | | | - | |
| Common stock issued in satisfaction of related party debt | | | 15,885 | | | | - | |
See summary of significant accounting policies and notes to financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF BUSINESS
Crown Partners, Inc., (“Crown”) a Nevada corporation, was incorporated on November 3, 1986. Crown was originally incorporated as Ed Phills, Inc. and its name was changed to Vegas Ventures, Inc., Telemall Communications, Inc. and subsequently to Stein's Holdings, Inc. Crown was a development stage company until 1999, when it acquired the following companies and became an active company:
Multi-Source Capital Ltd. - Merged into Stein's Holdings, Inc. in May 1999.
Micro Bio-Medical Waste Systems, Inc. - Crown acquired 80% ownership in this company in March 1999.
In September 2000, Crown acquired 90% ownership in Universal Services and Acquisitions, Inc.
In November 2001, Crown acquired 100% of Sanitec Services of Hawaii, Inc. In May, 2005, Sanitec Services of Hawaii was evicted from its premises in Honolulu and has ceased operations.
Nature of Business
Crown Partners, Inc.'s main activities and sources of income were derived from daily trading in the stock markets and currently has no primary business activity.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Crown’s majority owned subsidiaries. All significant intercompany transactions and balances have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the balance sheet. Actual results could differ from those estimates.
Revenue Recognition
Crown recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered, the sales price is fixed or determinable, and collectability is reasonably assured.
Cash and Cash Equivalents
For purposes of the statement of cash flows, Crown considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.
Investments
Investments are classified as investments in trading securities and are held for resale in anticipation of short-term market movements or until such securities are registered or are otherwise unrestricted. Trading account assets, consisting of marketable equity securities, are stated at fair value. Unrealized gains or losses are recognized in the statement of operations on a monthly basis based on changes in the fair value of the security as quoted on national or inter-dealer stock exchanges. Realized gains or losses are recognized in the statement of operations as trading profits when the equity instruments are sold. There were no investments as of December 31, 2008.
Concentrations of Credit Risk
Crown maintains its cash balances at financial institutions that are insured by the federal deposit insurance Corporation (“FDIC”). At December 31, 2007, Crown’s cash balances exceeded the amount insured by the FDIC. During the year ended December 31, 2008 balances were less than the insured amount.
Property and Equipment
Property and equipment are stated at cost. Major renewals and improvements are charged to the asset accounts while replacements, maintenance and repairs, which do not improve or extend the lives of the respective assets, are expensed. At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses from retirements or sales are credited or charged to income. Crown depreciates its property and equipment for financial reporting purposes using the straight-line method based upon the following useful lives of the assets which is typically 3-5 years.
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 estimated based upon either discounted cash flow analysis or estimated salvage value. No impairment charge was recorded in the years ended December 31, 2008 or 2007
Income Taxes
The asset and liability approach is used to account for income taxes by recognizing deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Crown records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized.
Net Loss Per Share
Crown calculates earnings per share in accordance with Statement of Accounting Standards No. 128, (“SFAS No. 128”). In accordance with SFAS No. 128, basic earnings per share is computed using the weighted-average number of common stock outstanding and diluted earnings per share is computed using the weighted-average number of shares of common stock and the dilutive effect of options and warrants outstanding, using the “Treasury Stock” method. Crown had 9,000,000 option outstanding at December 31, 2008. Basic and diluted net loss per share is the same due to the anti-dilutive effect of the options.
Stock Based Compensation
Crown adopted SFAS No. 123(R), on January 1, 2006 using the modified prospective method. SFAS 123(R) requires companies to measure the cost of employee services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. For stock-based awards granted on or after January 1, 2006, stock-based compensation expense is recognized on a straight-line basis over the requisite service period. In prior years, we accounted for stock-based awards under APB No. 25, “Accounting for Stock Issued to Employees.” We account for non-employee share-based awards in accordance with EITF No. 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquisition, or in Conjunction with Selling, Goods or Services.”
Crown 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.
NOTE 3 - FINANCIAL CONDITION AND GOING CONCERN
At December 31, 2008, Crown had negative working capital. Because of recurring negative equity, Crown will require additional working capital to develop and/or renew its business operations.
Crown intends to raise additional working capital either through private placements, public offerings and/or bank financing. Crown is also identifying merger and/or acquisition candidates. As of December 31, 2008, no acquisition or merger agreements have been closed.
There are no assurances that Crown will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or bank financing necessary to support Crown's working capital requirements. To the extent that funds generated from any private placements, public offerings and/or bank financing are insufficient, Crown will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to Crown. If adequate working capital is not available Crown may not renew its operations.
These conditions raise substantial doubt about Crown's ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should Crown be unable to continue as a going concern.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
| | | 2008 | | | 2007 | |
| Office and computer equipment | | | 76,134 | | | | 76,134 | |
| Less accumulated depreciation | | | (32,761 | ) | | | (7,380 | ) |
| | | $ | 43,373 | | | | 68,753 | |
The depreciation expense for the years ended December 31, 2008 and 2006 was $25,380 and $7,380, respectively.
NOTE 5- NOTE PAYABLE
During the quarter ended March 31, 2007, a subsidiary borrowed $12,700 from an unrelated third party. The loan is unsecured, due April 1, 2008 and accrues interest at 12% per annum. The note can be converted into common shares of the company at the holder’s option at a to be determined in the future conversion price. Beginning April 1, 2008 the note accrues interest at 18% per annum. On December 12, 2008 a subsidiary borrowed $1,000 from an unrelated party. The note is an unsecured demand note bearing no interest.
NOTE 6 - RELATED PARTY TRANSACTIONS
In December 2007, Crown Equity issued 10,000,000 shares of common stock valued at $2,100,000 for the extinguishment of $145,000 in debt to Crown for advances made in previous periods. Accordingly, the value of the stock issued to the parent company was recorded as paid-in-capital and the value of the common stock in excess of the debt was recorded as expense on Crown Equity’s books. These items were eliminated upon consolidation.
Legal services are provided by a related party of the company. For the years ended December 31, 2008 and 2007, Crown recorded $15,000 and $204,425, respectively, in related party legal fees. In June, 2008 the Company issued 26,000,000 to the related party for accounts payable of $127,071, a note payable of $15,885 and legal services of $195,044 for a total value of $338,000. In October 2008 the party assigned the shares to the Zaman Family Trust of which the party has no direct or indirect interest. The party resigned as director and officer during 2008.
In 2007, $18,000 was paid to a related party consultant. During the period ended December 31, 2008 the Company paid two related parties $49,800 in consulting fees. Consulting fees in the amount of $23,000 have been accrued for related parties.
For the year ended December 31, 2008, accounts payable related parties are due to in the amount of $55,897, in the amount of $39,179, and Montse Zaman, Chief Financial Officer, in the amount of $18,822.
For the year ended December 31, 2008, advances from related parties are due to in the amount of $20,000 to Nano and Montse Zaman, Chief Financial Officer, in the amount of $22,689.
NOTE 7 - COMMON STOCK
During 2007, Crown issued 170,000 shares for services valued at $3,400.
During 2007, Crown’s majority owned subsidiary, Crown Equity Holdings, Inc. issued 1,040,000 shares of Crown Equity’s common stock for cash. This is accounted for as a contribution to capital on Crown’s books.
In March of 2008, Crown sold 4,500,000 shares of common stock at $.005 for total proceeds of $22,500, issued 9,774,692 common shares valued at $127,071 for accounts payable, 15,003,383 common shares valued at $195,044 for services and 1,221,925 common shares valued at $15,885 for advances from related parties.
In 2008 the Crown Equities, Inc. issued 836,668 shares of common stock valued at $94,135 for services, 100,000 shares of common stock valued at $15,000 for accounts payable and cancelled 310,020 shares of common stock valued at par or $310.
NOTE 8 - INCOME TAXES
The Company follows FASB Statement Number 109, Accounting for Income Taxes. 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. Net operating losses estimated $6.8 million as of December 31, 2008 and expire 20 years from when incurred.
The cumulative tax effect at the expected tax rate of 34% of significant items comprising the Company’s net deferred tax amounts as of December 31, 2008 are as follows:
Deferred tax assets attributable to:
| Total Deferred Tax Benefit | | $ | 2,338,614 | |
| | | | | |
| Valuation Allowance | | | (2,338,614 | ) |
| Net Deferred Tax Benefit | | $ | - | |
NOTE 9 - COMMITMENTS AND CONTINGENCIES
Prior to August 2007, Crown used office space of a related party on a rent free month to month basis. In August 2007, Crown began leasing office space for $845 per month. The lease expired February 23, 2008. Rent expense for the years ended December 31, 2008 and 2007 were $8,450 and $6,338, respectively.
There is pending litigation in Arizona small claims court - Strojnik v. Crown Equity Holdings, Inc. and Crown Partners, Inc. The Company has assessed the outcome of a loss as remote and furthermore the maximum liability in small claims court is $2,500. Crown has not accrued any amounts related to this contingency.
NOTE 10 - STOCK BASED COMPENSATION
In 2006, Crown adopted the Crown Partners, Inc. 2006 Stock Option Plan "2006 Plan"). The Plan provides for the granting of stock options and other stock grants to certain directors, key employees and certain independent contractors of Crown. Options granted under the Plan may be either incentive stock options or nonqualified stock options. Incentive stock options ("ISO") may be granted only to Company employees (including officers and directors who are also employees). Nonqualified stock options ("NSO") may be granted to Company employees and consultants. Crown has reserved 10,000,000 shares of common stock for issuance under the Plan.
Options under the Plan may be granted for periods of up to ten years and at an exercise price equal to the estimated fair value of the shares on the date of grant as determined by the Board of Directors, provided, however, that the exercise price of an ISO and NSO granted to a 10% shareholder shall not be less than 110% of the estimated fair value of the shares on the date of grant. To date, options granted generally are exercisable immediately as of the effective date of the option agreement.
Summary information regarding options is as follows:
| | | Options | | | Weighted Average Exercise Price | | | Aggregate Intrinsic Value | | | Weighted Average Contractual Life (Years) | |
| Outstanding at December 31, 2006 | | | 9,000,000 | | | $ | .10 | | | $ | - | | | | 5.0 | |
| Granted | | | - | | | $ | - | | | | - | | | | - | |
| Forfeited | | | - | | | | - | | | | - | | | | - | |
| Expired | | | - | | | | - | | | | - | | | | - | |
| Outstanding at December 31, 2007 | | | 9,000,000 | | | $ | .10 | | | | - | | | | 5.0 | |
| Granted | | | - | | | | - | | | | - | | | | - | |
| Forfeited | | | - | | | | - | | | | - | | | | - | |
| Expired | | | - | | | | - | | | | - | | | | - | |
| Outstanding at December 31, 2008 | | | 9,000,000 | | | $ | .10 | | | | - | | | | 5.0 | |
| Exercisable at December 31, 2008 | | | 9,000,000 | | | $ | .10 | | | | - | | | | 5.0 | |
We adopted SFAS No. 123R effective January 1, 2006. In our statement of operations for the year ended December 31, 2008 and 2007, we recorded $0 and $0 respectively of compensation cost for stock option share-based payment arrangements. No stock options were exercised during the year ended December 31, 2008 or the year ended December 31, 2007.
On January 5, 2009, a subsidiary of the Company issued a $ 2,000 demand note to a non related party bearing no interest.
On February 23, 2009 Crown Equity Holdings, Inc. issued 2,791,000 shares of common stock for debt and services:
The Company issue 290,000 shares of common stock to four individuals for debt and accrued expenses with a total value of $29,000 ($0.10 per share).
The Company issued 2,501,000 shares of common stock to 10 individuals with a total value of $ 250,100 ($0.10 per share).
