NOTES TO 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.
In 2010, the Company formed two subsidiaries Crown Tele Services, Inc. and CRWE Direct, Inc. Crown Tele Services Inc. will provide voice over IP messaging at a competitive price to other competitors and CRWE Direct will provide its client with direct sales of products. This entity was divested at the end of 2017.
In 2011, the Company formed a wholly owned subsidiary CRWE Real Estate Inc. CRWE Real Estate Inc. will hold real estate. CRWE Real Estate Inc., Crown Tele Services, Inc. and CRWE Direct, Inc. were sold in December of 2016 for aggregate consideration of $100, resulting in a gain of $5,967.
In 2016, the company sale of the subsidiaries is not considered to be a strategic shift since there were minimal activities during the year in the subsidiaries.
Assets
|
|
|
-
|
|
Intercompany
|
|
|
-
|
|
Total Assets sold
|
|
|
-
|
|
|
|
|
|
|
Cash
|
|
|
100
|
|
Payable assumed by buyer
|
|
|
5,867
|
|
Total Consideration
|
|
|
5,967
|
|
|
|
|
|
|
Gain on sale of subsidiaries
|
|
|
5,967
|
|
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
Crown Equity adopted Accounting Standard Update 2014-09, Revenue from Contracts with Customers, at the start of the first quarter of 2018 using the modified retrospective approach and recorded a cumulative effect adjustment to retained earnings based on the current terms and conditions for open contracts as of January 1, 2018. The adoption of the standard did not have a material impact on the Company’s Financial Statements. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.
Accounting Standards Not Yet Adopted
In June 2016, the FASB issued ASU 2016-3, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instructions (ASU 2016-13), which requires measurement and recognition of expected credit losses for financial assets held. ASU 2016-3 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 ASU 2018-07 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:
|
1.
|
Identify the contract with the customer
|
|
|
|
|
|
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.
|
|
2.
|
Identify the performance obligations in the contract
|
|
|
|
|
|
Our sales and account management teams define the scope of services to be offered, to ensure all parties are in agreement 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.
|
|
3.
|
Determine the transaction price
|
|
|
|
|
|
Pricing is discussed and identified by the operations team prior to submitting an invoice to the customer.
|
|
4.
|
Allocate the transaction price to the performance obligations in the contract
|
|
|
|
|
|
If a contract involves multiple obligations, the transaction pricing is allocated accordingly, during the performance obligation phase.
|
|
5.
|
Recognize revenue when (or as) we satisfy a performance obligation
|
|
|
|
|
|
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.
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
|
|
Third Party
|
|
|
Related Party
|
|
|
Total
|
|
|
Third Party
|
|
|
Related Party
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IT Services on Company Server
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
7,000
|
|
|
$
|
7,000
|
|
Click Based and Impressions Ads
|
|
$
|
2,743
|
|
|
$
|
50,000
|
|
|
$
|
52,743
|
|
|
$
|
2,885
|
|
|
$
|
-
|
|
|
$
|
2,885
|
|
Domain Registrations
|
|
$
|
10
|
|
|
$
|
-
|
|
|
$
|
10
|
|
|
$
|
67
|
|
|
$
|
-
|
|
|
$
|
67
|
|
Publishing and Distribution
|
|
$
|
1,040
|
|
|
$
|
-
|
|
|
$
|
1,040
|
|
|
$
|
400
|
|
|
$
|
100
|
|
|
$
|
500
|
|
|
|
$
|
3,793
|
|
|
$
|
50,000
|
|
|
$
|
53,793
|
|
|
$
|
3,352
|
|
|
$
|
7,100
|
|
|
$
|
10,452
|
|
Revenue is based on providing through the Company’s server services, Managed Information Technology, 24/7 support, which includes designing, developing, testing, maintaining functionality, infrastructure monitoring, managing and hosting, combined with revenue received from the display of click based and impressions ads located on the Company’s websites, domain name registration, publishing and distribution of news and press releases.
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Deferred Revenue
|
|
$
|
-
|
|
|
$
|
50,000
|
|
Deferred revenue is based on cash received or billings in excess of revenue recognized until revenue recognition criteria are met. Client prepayments are deferred and recognized over future periods as services are delivered or performed.
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 December 31, 2019 and 2018.
Risk Concentrations
As of December 31, 2019 , 98% of the Company’s revenues were received through advertisements, which 95% of the advertisement revenue was received through a related party. The remaining 2% of the remaining total revenues were from third parties for the displaying of click based and impressions ads located on the company’s websites, as well as for press releases and article publishing and distribution by the Company.
In 2018, 68% of the Company’s revenues were received through a related party for Managed Information Technology services and 24/7 support which included designing, developing, testing, maintain functionality, infrastructure monitoring, managing, and hosting. 28% of the third party revenues were from the displaying of click based and impressions ads located on the company’s websites. The Company does not hold cash in excess of federally insured limits.
General and Administrative Expenses
Crown Equity’s general and administrative expenses consisted of the following types of expenses during 2019 and 2018: Compensation expense, payroll expense, rent, 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 2019 or 2018.
Basic and Diluted Net (Loss) per Share
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
Numerator:
|
|
|
|
|
|
|
Net (Loss) attributable to common shareholders of Crown Equity Holdings, Inc.
|
|
$
|
(153,026
|
)
|
|
$
|
(374,820
|
)
|
Net (Loss) attributable to Crown Equity Holdings, Inc.
|
|
$
|
(153,026
|
)
|
|
$
|
(374,820
|
)
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Weighted average common and common equivalent shares outstanding – basic and diluted
|
|
|
11,936,422
|
|
|
|
11,583,371
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) per Share attributable to Crown Equity Holdings, Inc.:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.01
|
)
|
|
$
|
(0.03
|
)
|
Diluted
|
|
$
|
(0.01
|
)
|
|
$
|
(0.03
|
)
|
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 years ended December 31, 2019 and 2018. The number of potential anti-dilutive shares excluded from the calculation shares for the year ended December 31, 2019 is 1,520.
Income Taxes
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, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. No liability for unrecognized tax benefits was recorded as of December 31, 2019 and 2018.
Fair Value of Financial Instruments
The ASC guidance for fair value measurements and disclosure establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1 Inputs – Quoted prices for identical instruments in active markets.
Level 2 Inputs – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 Inputs – Instruments with primarily unobservable value drivers. The Company has no Level 3 Inputs.
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 years ended December 31, 2019 and 2018.
Advertising Cost
The Company spent no money for advertisement for the years ended December 31, 2019 and 2018.
Depreciation expense was $31,668 and $28,895 for the years ended December 31, 2019 and 2018, respectively.
NOTE 2 – GOING CONCERN
As shown in the accompanying financial statements, Crown Equity an accumulated deficit of $11,792,059 since its inception and had a working capital deficit of $321,331 negative cash flows from operations and limited business operations as of December 31, 2019. These conditions raise substantial doubt as to Crown Equity’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if Crown Equity is unable to continue as a going concern.
Crown Equity continues to review its expense structure reviewing costs and their reduction to move towards profitability. 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
NOTE 3 – PROPERTY AND EQUIPMENT
The Company’s policy is to capitalize all property purchases over $1,000 and depreciates the assets over their useful lives of 3 to 7 years.
Property consists of the following at December 31, 2019 and 2018:
|
|
December 31,
2019
|
|
|
December 31,
2018
|
|
Computers – 3 year estimated useful life
|
|
$
|
96,669
|
|
|
$
|
86,684
|
|
Less – Accumulated Depreciation
|
|
|
(67,787
|
)
|
|
|
(36,119
|
)
|
Property and Equipment, net
|
|
$
|
28,882
|
|
|
$
|
50,565
|
|
Depreciation has been provided over each asset’s estimated useful life. Depreciation expense was $31,668, and $28,895 for the twelve months ended December 31, 2019 and 2018, respectively.
NOTE 4 – CAPITAL LEASES
During the period ending December 31, 2019, the Company paid an aggregate of $6,611 toward capital lease balances. During 2019 and 2018, the Company borrowed an aggregate $9,985 and $0 under the following third-party finance lease transactions:
¨
|
A $9,985 note from a third party for the lease of fixed assets, bearing interest at 22%, amortized over 24 months with a payments of $498 in additional to a $22 management fee for a total monthly payment of $520. The lease has a bargain purchase option of $1 at the end of the lease term.
|
The following is a schedule of the net book value of the finance lease.
Assets
|
|
December 31, 2019
|
|
Leased equipment under finance lease,
|
|
$
|
96,669
|
|
less accumulated amortization
|
|
|
(67,787
|
)
|
Net
|
|
$
|
28,882
|
|
Liabilities
|
|
December 31,
2019
|
|
Obligations under finance lease (current)
|
|
$
|
30,681
|
|
Obligations under finance lease (noncurrent)
|
|
|
25,976
|
|
Total
|
|
$
|
56,657
|
|
Below is a reconciliation of leases to the financial statements.
|
|
Finance
Leases
|
|
Leased asset balance
|
|
$
|
21,679
|
|
Liability balance
|
|
$
|
56,657
|
|
Cash flow (operating)
|
|
$
|
—
|
|
Cash flow (financing)
|
|
$
|
6,611
|
|
Interest expense
|
|
$
|
11,794
|
|
The following is a schedule, by years, of future minimum lease payments required under finance leases.
Years ended December 31
|
|
Finance Leases
|
|
|
|
|
|
2020
|
|
|
35,010
|
|
2021
|
|
|
15,726
|
|
2022
|
|
|
11,860
|
|
Thereafter
|
|
|
-
|
|
Total
|
|
|
62,596
|
|
Less: Imputed Interest
|
|
|
(5,939
|
)
|
Total Liability
|
|
|
56,657
|
|
Other information related to leases is as follows:
Lease Type
|
|
Weighted Average Remaining Term
|
|
Weighted Average Discount Rate (1)
|
|
Finance Leases
|
|
2.03 years
|
|
|
16
|
%
|
Based on average interest rate of 16%, average term remaining (months) 24.33 Average term remain (years) 2.03
(1) This discount rate is consistent with our borrowing rates from various lenders.
NOTE 5 – NOTES PAYABLE AND CONVERTIBLE NOTE PAYABLES
During 2019, third party convertible note payables of $8,531and related interest of $1,349 were settled thru issuance of 17,062 common stock shares. The company recorded a $1,349 gain on the conversion.
As of December 31, 2019 and 2018, the Company had unamortized discount of $0 and $38,920 respectively.
The Company analyzed the below convertible notes for derivatives noting none. The Company evaluated these convertible notes for beneficial conversion features and concluded that the beneficial conversion features resulted in a debt discount in the amount of $0, as of December 31, 2019.
|
|
Original
|
|
Due
|
|
Interest
|
|
|
Conversion
|
|
|
Dec 31,
|
|
Name
|
|
Note Date
|
|
Date
|
|
Rate
|
|
|
Rate
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related Party:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mike Zaman
|
|
12/30/2015
|
|
12/30/2018
|
|
|
12
|
%
|
|
$
|
0.50
|
|
|
|
-
|
|
Mike Zaman
|
|
04/12/2017
|
|
04/12/2018
|
|
|
12
|
%
|
|
$
|
0.50
|
|
|
|
-
|
|
Mike Zaman
|
|
11/15/2017
|
|
11/15/2018
|
|
|
12
|
%
|
|
$
|
0.50
|
|
|
|
-
|
|
Mike Zaman
|
|
11/27/2017
|
|
11/27/2018
|
|
|
12
|
%
|
|
$
|
0.50
|
|
|
|
-
|
|
Mike Zaman
|
|
11/30/2017
|
|
11/30/2018
|
|
|
12
|
%
|
|
$
|
0.50
|
|
|
|
760
|
|
Mike Zaman
|
|
01/19/2018
|
|
01/19/2019
|
|
|
12
|
%
|
|
$
|
0.50
|
|
|
|
-
|
|
Montse Zaman
|
|
06/07/2018
|
|
06/07/2019
|
|
|
12
|
%
|
|
$
|
0.50
|
|
|
|
-
|
|
OCHC, LLC
|
|
08/21/2018
|
|
08/21/2019
|
|
|
12
|
%
|
|
$
|
0.50
|
|
|
|
-
|
|
OCHC, LLC
|
|
10/02/2018
|
|
10/02/2019
|
|
|
12
|
%
|
|
$
|
0.50
|
|
|
|
-
|
|
OCHC, LLC
|
|
10/24/2018
|
|
10/24/2019
|
|
|
12
|
%
|
|
$
|
0.50
|
|
|
|
-
|
|
OCHC, LLC
|
|
11/16/2018
|
|
11/16/2019
|
|
|
12
|
%
|
|
$
|
0.50
|
|
|
|
-
|
|
OCHC, LLC
|
|
12/04/2018
|
|
12/04/2019
|
|
|
12
|
%
|
|
$
|
0.50
|
|
|
|
-
|
|
Munti Consulting LLC
|
|
10/03/2018
|
|
10/03/2019
|
|
|
10
|
%
|
|
$
|
0.50
|
|
|
|
-
|
|
Munti Consulting LLC
|
|
12/19/2018
|
|
12/19/2019
|
|
|
10
|
%
|
|
$
|
0.50
|
|
|
|
-
|
|
Total Convertible Related Party Notes Payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Less: Debt Discount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Convertible Notes Payable, net of Discount - Related Party
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
760
|
|
Chris Knudsen
On March 25, 2019, the holder exercised their right to convert the principal and interest balance of three notes into Common Shares at a rate of $0.50 per share for total of 2,062 shares issued to holder. The accrued interest converted on the July 7, 2017 note for $631, August 23, 2017 note for $200 and the September 18, 2017 note for $200 note are $103, $37 and $65 respectively. The gain for interest converted was $205. As of December 31, 2019 all notes were paid.
Kevin Wiltz
On March 25, 2019, the holder exercised their right to convert the principal and interest balance of the note into Common Shares at a rate $0.50 per share for a total of 3,000 shares issued to holder. The accrued interest converted on the November 27, 2017 note for $1,500 was $238. The gain for interest converted was $238. As of December 31, 2019, the note was paid.
Richard W. LeAndro
On March 25, 2019, the holder exercised their right to convert the principal and interest balance of two notes into Common Shares at a rate of $0.50 per share for a total of 12,000 shares issued to holder. The accrued interest converted on the December 5, 2017 note for $3,000 and January 4, 2018 note for $3,000 were $468 and $438 respectively. The gain on the interest converted was $906. As of December 31, 2019, both notes were paid.
OCHC, LLC
On August 21, 2018, October 2, 2018, October 24, 2018, November 16, 2018 and December 4, 2018, the Company entered into convertible promissory notes for with OCHC, LLC for loans in the amounts of $631 each of the mentioned dates for a total principal balance of $3,155.
On March 25, 2019, the holder exercised their right to convert the principal and interest balance of the five notes into Common Shares at a rate of $0.50 per share for a total of 6,315 shares issued to holder. The total accrued interest converted for the five notes were $163 and included in accrued expenses. As of December 31, 2019, all notes were paid.
Munti Consulting, LLC
On October 3, 2018 and December 19, 2018, the Company entered into convertible promissory notes for with Munti Consulting, LLC for loans in the amounts of $35,000 and $10,000.
On April 29, 2019, the holder exercised their right to convert the aggregate principal balance of the two notes of $45,000 and accrued interest of $170 into Common Shares for a total of 90,000 shares issued to holder. The total accrued interest for the two notes were $2,741 with a remaining balance of $2,571 of accrued interest still owed.
Mike Zaman
As of January 1, 2019, the Company owed Mike Zaman a total of $3,478. During the period ending December 31, 2019, $2,718 of the notes were paid and $9,282 of accrued interest were forgiven by the holder. The remaining principal balance of $760 and remaining accrued interest of $3,503 were not converted as of December 31, 2019.
Montse Zaman
As of January 1, 2019, the Company owed Montse Zaman a total of $293 plus accrued interest of $87. During the period ending December 31, 2019, the principal balance of $293 was paid. The remaining accrued interest of $87 remained outstanding as of December 31, 2019.
During the period ending December 31, 2019, the Company had $2,242 current interest expense on notes payable and $7,849 of current interest expense on credit card debt.
NOTE 6 – COMMITMENTS AND CONTINGENCIES
The Company is obligated for payments under third and related party notes payable and automobile lease payments.
The Company agreed to pay the automobile lease of $395 a month, on a month to month basis and can be cancelled at any time. The Company reevaluates their obligation at the end of each quarter an determines if they will continue paying the lease on a month to month basis.
NOTE 7 – RELATED PARTY TRANSACTIONS
The Company is provided office space by one of the officers and directors at no charge. The Company believes that this office space is sufficient for its needs for the foreseeable future.
During the period ending December 31, 2019, the Company issued 96,315 shares Common stock for the settlement of $48,324 debt from related parties.
OCHC LLC total notes payable of $3,155 was converted to restricted shares of common stock during March of 2019 at a rate of $0.50 per share, as stated within the terms of the agreement.
On January 8, 2019, Mr. Cantor resigned. On December 18, 2019, his 300,000 restricted shares of common stock were returned to the Company.
As of December 31, 2019, the company recognized $50,000 of related party revenue for nine months of Advertising services for client during July 1, 2018 through April 1, 2019
As of December 31, 2019, the Company had a payable of $760 to Mike Zaman, director for expenses paid on behalf of the Company. The holder has the right to convert principal of the note and accrued interest into Common shares at a rate of $0.50 per share or receive cash. At the time of the issuance of payables, the conversion price was less than the trading price of the stock. The Company recorded a discount for the beneficial conversion feature of the notes, which has been amortized over the life of the note using the straight-line method.
As of December 31, 2019, Mike Zaman has forgiven the Company $9,282 of interest owed in reference to his notes.
The Company is periodically advanced operating funds from related parties with convertible notes payable. During the nine months ended December 31, 2019, there were no convertible notes from related parties. The Company is also periodically advanced funds to cover account payables by direct payment of the account payables from related parties.
As of December 31, 2019, the Company had a payable of $18,756 to Vinot Sambandam, an officer of the Company for services performed.
As of December 31, 2019 and 2018, the outstanding balance of accounts payable to related parties was $80,664 and $61,156 respectively.
As of December 31, 2019, the outstanding balance of convertible notes payable to related parties was $760.
As of December 31, 2019 and 2018, the company had an expense of $4,343 and $8,160 respectively to Mike Zaman, a director and CEO of the Company for automobile lease agreements.
NOTE 8 – STOCKHOLDERS’ EQUITY
Common Stock
During the period ended December 31, 2019, the CEO of the Company forgave the interest on debt due to CEO, reducing accrued interest for the period by $9,282.
During the period ended December 31, 2019, the Company issued 113,377 shares of Common stock for the conversion of $56,855 in notes and $0 in accrued interest. The notes were converted in accordance with the terms of the note and the Company recorded a gain of $1,349 on the extinguishment of debt.
The shares for cash proceeds were sold at the price of fifty cents $0.50 per share on the date of grant. Shares issued for notes were converted into shares of Common Stock at a conversion rate of fifty cents ($.50) per share per dollar ($1.00) owed. $25,008 common shares for services were committed to Vinoth Sambandam for issuance, and is reflected in the stockholders’ equity section as Common Stock Payable.
As of December 31, 2019, the Company issued -0- shares for $7,698 to Steve Cantor for services rendered per agreement. These were valued using the market value on the date of grant for 300,000 shares issued in prior year.
As of December 31, 2019, the Company issued 130,000 shares for $65,000 in cash proceeds for sale of the common shares. These shares were sold at the price of $0.50 per share on the date of the grant.
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 3.0 million shares of common stock are authorized for issuance under the Equity Incentive Plan, of which 3.0 million shares were available for issuance as of December 31, 2019.
Preferred Stock
The Company has designated 1,000 shares of its preferred stock as Series A Preferred Stock. Each share of Series A Preferred shall have no dividend, voting or other rights except for the right to elect Class I Directors. As of December 31, 2019, the Company has 1,000 shares of Series A Preferred Stock outstanding
NOTE 9 – 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 2019 or 2018.
The Company’s deferred tax assets consisted of the following as of December 31, 2019 and 2018:
|
|
2019
|
|
|
2018
|
|
Net operating loss
|
|
$
|
416,916
|
|
|
$
|
399,821
|
|
Valuation allowance
|
|
|
(416,916
|
)
|
|
|
(399,821
|
)
|
Net deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
As of December 31, 2019 and 2018, the Company’s accumulated net operating loss carry forward was approximately $2,056,937 and $1,903,911 respectively and will begin to expire in the year 2032. The deferred tax assets have been adjusted to reflect the recently enacted corporate tax rate of 21%.
NOTE 10 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events as of the date of the Financial Statements and has determined that all events are disclosed herein.
On January 2, 2020, the Company issued 40,000 shares of Company stock to Willy Ariel Saint-Hilaire at a purchase price of $20,000.
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.
On January 27, 2020, the company entered into convertible promissory note with Willy Ariel Saint-Hilaire in the amount of $14,500. The note carries interest at 12% per annum. The holder has the right to convert principal of the notes and accrued interest into Common shares at a rate of $0.50 per share.
On February 7, 2020, the Company issued 345,016 shares to Vinoth Sambandam for settlement of debt owed for services rendered through December 31, 2019.
On February 13, 2020, Munti Consulting LLC was issued a warrant at a price of $0.000025 per share ($25 total) to purchase 1,000,000 shares of common stock at the exercise price of $0.60 per share. Exercisable after the first (1st) anniversary of the date of filing of the first Form S-1 filed with the U.S. Securities and Exchange Commission after the issuance of this Warrant.
On February 24, 2020, Addicted 2 Marketing was issued a warrant at a price of $0.000025 per share ($2.50 total) to purchase 100,000 shares of common stock at the exercise price of $0.60 per share.
On March 8, 2020 and March 24, 2020, the company entered into convertible promissory note with Willy Ariel Saint-Hilaire in the amounts of $1,581 and $1,552 respectively. The notes carry interest at 12% per annum. The holder has the right to convert principal of the notes and accrued interest into Common shares at a rate of $0.50 per share.
On March 13, 2020, Kevin Wiltz was issued a warrant at a price of $0.000025 per share ($25.00 total) to purchase 1,000,000 shares of common stock at the exercise price of $0.60 per share.
On March 13, 2020, Willy Ariel Saint-Hilaire was issued a warrant at a price of $0.000025 per share ($25.00 total) to purchase 1,000,000 shares of common stock at the exercise price of $0.60 per share.
On March 25, 2020 and April 28, 2020, the Company entered into a convertible promissory note with Montse Zaman in the amounts of $5,000 and $4,000, respectively. The note carries interest at 12% per annum. The holder has the right to convert principal of the notes and accrued interest into Common shares at a rate of $0.50 per share.
On March 31, 2020, the Company issued 8,336 shares to Vinoth Sambandam for services rendered for the first quarter 2020.
On May 15, 2020, the Company agreed to issue 160,000 shares to Steven Cantor to settle compensation dispute. As of the date of this filing, the draft agreement has not been executed and shares have not been issued.