UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(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, 2006
|_| 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: 000-29935
CROWN EQUITY HOLDINGS INC.
(Exact name of Registrant as specified in its charter)
Nevada 33-0677140
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
27430 Riverside Lane, Valencia, CA 91354
(Address of principal executive offices) (Zip Code)
Company's telephone number, including area code: (661) 287-3772
Micro Bio-Medical Waste Systems, Inc.
(Former Name of the Registrant)
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: Common Stock
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 |_|
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. |_|
The number of shares outstanding of the Company's $.001 Par Value Common Stock,
as of December 31, 2006 were 5,324,465. The aggregate number of shares of the
voting stock held by non-affiliates on April 13, 2007 was 1,889,856. The market
value of these shares, computed by reference to the market closing price on
April 13, 2007 was $963,827. 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.
PART I
ITEM 1. BUSINESS
A) General
Crown Equity Holdings Inc. formerly known as Micro Bio-Medical Waste Systems,
Inc. (the "Company") was incorporated on August 31, 1995 as "Visioneering
Corporation" under the laws of the State of Nevada, to engage in any lawful
corporate undertaking, including, but not limited to, selected mergers and
acquisitions. None of the proposed business activities for which the Company's
name was changed produced any revenues or created any appreciable business
activities for the Company.
In November, 2003, the Company entered into an agreement with its majority
shareholder, Crown Partners, Inc. ("Crown"), wherein the Company agreed to
purchase Crown's wholly-owned subsidiary Sanitec(TM) Services of Hawaii, Inc.
("SSH") for $550,000, assumption of all liabilities of SSH. The Company paid a
non-refundable deposit of $45,520 to Crown towards the purchase price, of which
$20,000 was advanced to SSH for use in its operations. Crown agreed to let the
Company retain the balance of the deposit for use in funding the Company's
operations. In May 2005, SSH ceased operations and the Company will not acquire
it. It is unlikely that the Company will be able to recoup its advance to
SSH but the Company still owes $45,520 to Crown. The Company is still seeking a
suitable acquisition candidate.
The Company's office is located at 27430 Riverside Lane, Valencia, CA 91354.
As of December 31, 2006, the Company had no employees.
Item 2. Properties.
The Company presently shares office space provided at no cost to it by an
officer. The Company anticipates that this space is sufficient for the near
future.
Item 3 Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Security Holders
In October, 2006, the Company's shareholders approved a name change from Micro
Bio-Medical Waste Systems, Inc. to Crown Equity Holdings Inc.
Item 5. Market for Registrant's Common Equity and Related Shareholder Matters.
The Company's common stock is currently traded on the OTC Electronic Bulletin
Board in the United States, having the trading symbol "CEQN" and CUSIP
#22834M107. The Company's stock is traded on the OTC Electronic Bulletin Board.
As of December 31, 2006, the Company had 5,324,465 shares of its common stock
issued and outstanding, of which 1,889,856 were held by non-affiliates.
2
The following table reflects the high and low quarterly bid prices for the
fiscal year ended December 31, 2006.
Period High Bid Low Bid
------------ -------- -------
1st Qtr 2006 .45 .26
2nd Qtr 2006 .65 .28
3rd Qtr 2006 1.21 .26
4th Qtr 2006 .66 .37
The Internet provided the above information to the Company. These quotations may
reflect inter-dealer prices without retail mark-up/mark-down/commission and may
not reflect actual transactions.
As of December 31, 2006, the Company estimates there are 50 "holders of record"
of its common stock and estimates that there are approximately 150 beneficial
shareholders of its common stock. The Company has authorized 500,000,000 shares
of common stock, par value $.001.
Item 6. Management's Discussion and Analysis or Plan of Operation.
FORWARD-LOOKING STATEMENTS MAY NOT PROVE ACCURATE
When used in this Form 10-KSB, 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
The following discussion of the financial condition, changes in financial
condition and results of operations of the Company for the fiscal years ended
December 31, 2006 and 2005 should be read in conjunction with the financial
statements of the Company and related notes included therein.
The Company was incorporated on August 31, 1995 as Visioneering Corporation. On
January 12, 1996, the Company amended its Articles of Incorporation to change
its name to Asiamerica Energy Corporation, to Care Financial Corporation in
April 29, 1996 and to Trump Oil Corporation on May 15, 1997. In 1999, the
Company acquired 20/20 Web Design, Inc., a Colorado corporation wholly owned by
Crown Partners, Inc. As part of that transaction, the Company issued 8,620,000
shares of its common stock to Crown Partners with the result that Crown Partners
owns 80% of the issued and outstanding shares of the Company. The Company also
approved a ten-for-one reverse stock split as part of that transaction.
Since the agreements described above, the Company has financed its activities
through the issuance of equity capital, including private placements of its
common stock resulting in the Company raising capital of $749,494 from 1995 to
the present. The Company used the proceeds from these offerings to fund its
proposed operations, to pay salaries, to pay general and administrative expenses
and any necessary expenses.
The Company entered into an agreement to acquire Sanitec(TM) Services of Hawaii,
Inc. ("SSH") from its majority shareholder, Crown Partners, in November, 2003.
The Company was unable to secure the funding necessary to complete this
transaction and SSH ceased operations in May, 2005. The Company paid a
non-refundable deposit to Crown Partners of $45,520, of which $20,000 was
advanced to SSH and Crown allowed the Company to the retain the remaining
$25,520 to pay the Company's obligations. The Company still owes Crown this
amount although it is unlikely that SSH will repay any monies to the Company.
3
The Company will attempt to carry out its business plan as discussed below. The
Company cannot predict to what extent its lack of liquidity and capital
resources will hinder its business plan prior to the consummation of a business
combination.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has experienced no significant change in liquidity
or capital resources or stockholders' equity other than receipts of proceeds
from offerings of its capital stock. The Company's balance sheet as of December
31, 2006 reflects very limited assets and substantial 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.
At December 31, 2006, the Company had negative working capital of approximately
($152,000) which consisted of minimal assets and current liabilities of
approximately $152,000. The current liabilities of the Company at December 31,
2006 are composed primarily of accounts payable of $25,228, accounts payable to
a related party for legal expenses of approximately $24,994 and amounts due to
parent of $101,607.
The Company will attempt to carry out its plan of business as discussed above.
The Company cannot predict to what extent its lack of liquidity and capital
resources will hinder its business plan. The Company needs to pay for its
proposed acquisition of SSH and will need additional capital to fund that
proposed operation.
NEED FOR ADDITIONAL FINANCING
The Company's existing capital is not 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. Once a business
combination is completed, the Company's needs for additional financing are
likely to increase substantially. It is anticipated that Crown Partners will
likely continue to advance the funds necessary to insure that the Company is
able to meet its reporting obligations under the 1934 Act and that these loans
will be repaid either when the Company merges or acquires a business. However,
Crown Partners has not agreed in writing to provide these funds and can only
provide these funds to the extent that it has available funds to loan to the
Company.
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 is presently inactive and since inception has experienced no
significant change in liquidity or capital resources or stockholders' equity
other than the receipt of proceeds from offerings conducted under Rule 504 of
Regulation D. The Company's balance sheet as of December 31, 2006 reflects
minimal assets and extensive 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.
4
RESULTS OF OPERATIONS
Since its inception the Company has engaged in limited operations and attempted
to commence operations in a number of different fields, none of which was
ultimately successful or resulted in any appreciable revenues for the Company.
For the years ended December 31, 2006 and 2005, the Company had no revenues. For
the year ended December 31, 2006, the Company had general and administrative
expenses of $138,623 resulting in a net loss of $138,623. For the year ended
December 31, 2005, the Company had general and administrative expenses of
approximately $45,848, resulting in a net loss of $45,848. The difference in
expenses between the two periods resulted from the Company's increased expenses
in complying with its reporting obligations and other services. The net loss per
share was ($.03) and ($.01), respectively, for the years ended December 31, 2006
and 2005.
For the year ended December 31, 2006, the Company had minimal assets and current
liabilities of $151,829. For the year ended December 31, 2005, the Company had
no assets and current liabilities of approximately $268,000. Shareholders'
deficit for the year ended December 31, 2006 was $151,802 compared to
shareholders' deficit of $268,179 at December 31, 2005. The decrease in current
liabilities from 2005 to 2006 is due to the Company issuing stock as payment for
certain account payables.
The Company anticipates that until a business combination is completed with an
acquisition candidate, it will not generate revenues and may operate at a loss
after completing a business combination, depending upon the performance of the
acquired business.
5
Item 7. Financial Statements.
Page
----
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 7-8
BALANCE SHEET 9
STATEMENTS OF OPERATIONS 10
STATEMENTS OF CASH FLOWS 11
STATEMENTS OF STOCKHOLDERS' DEFICIT 12
NOTES TO FINANCIAL STATEMENTS 13-15
6
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Crown Equity Holdings Inc.
(Formerly Micro Bio-Medical Waste Systems, Inc.)
Valencia, California
We have audited the accompanying balance sheet of Crown Equity Holdings Inc. as
of December 31, 2006, and the related statements of operations, stockholders'
deficit, and cash flows for the year then ended. These financial statements are
the responsibility of Crown Equity's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amount and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides 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 Equity Holdings Inc. as
of December 31, 2006, and the results of its operations and its cash flows for
the year 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 Equity Holdings Inc. will continue as a going concern. As discussed
in Note 2 to the consolidated financial statements, Crown Equity has negative
working capital and suffered recurring losses from operations, which raises
substantial doubt about its ability to continue as a going concern. Management's
plans regarding those matters are described in Note 2. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Malone & Bailey, PC
Houston, Texas
April 2, 2007
7
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Crown Equity Holdings, Inc.
(formerly Micro Bio-Medical Waste Systems, Inc.)
Woodland Hills, California
We have audited the accompanying statements of operations, stockholders'
deficit, and cash flows of Micro Bio-Medical Waste Systems, Inc. for the year
ended December 31, 2005. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amount and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Micro
Bio-Medical Waste Systems, Inc. for the year ended December 31, 2005, and for
each of the two years then ended, in conformity with accounting principles
generally accepted in the United States of America.
As discussed in Note 2 to the financial statements, the Company's recurring
losses from operations and the need to raise additional financing in order to
satisfy its vendors and other creditors and execute its Business Plan raise
substantial doubt about its ability to continue as a going concern. Management's
plans as to these matters are also described in Note 2. The 2005 financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
LBB & Associates, Ltd. LLP
(formerly Lopez, Blevins, Bork & Associates, LLP)
Houston, Texas
March 28, 2006
8
Crown Equity Holdings Inc.
(Formerly Micro Bio-Medical Waste Systems, Inc.)
BALANCE SHEET
December 31, 2006
ASSETS
Cash 27
Total Assets $ 27
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 25,228
Accounts payable - related party 24,994
Advances from related party 101,607
-----------
Total current liabilities 151,829
-----------
STOCKHOLDERS' DEFICIT:
Common stock, $.001 par value, 500,000,000 shares authorized,
5,324,465 shares issued and outstanding 5,324
Additional paid in capital 2,881,146
Accumulated deficit (3,038,272)
-----------
Total Stockholders' Deficit (151,802)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 27
===========
See accompanying summary of accounting policies
and notes to financial statements
9
Crown Equity Holdings Inc.
(Formerly Micro Bio-Medical Waste Systems, Inc.)
STATEMENTS OF OPERATIONS
Years Ended December 31, 2006 and 2005
2006 2005
---------- ----------
Costs and Expenses:
General and administrative $ 138,623 $ 45,848
---------- ----------
Net loss $ (138,623) $ (45,848)
========== ==========
Net loss per share:
Net loss basic and diluted $ (0.03) $ (0.01)
========== ==========
Weighted average shares outstanding:
Basic and diluted 5,148,383 4,829,291
========== ==========
See accompanying summary of accounting policies
and notes to financial statements
10
Crown Equity Holdings Inc.
(Formerly Micro Bio-Medical Waste Systems, Inc.)
STATEMENTS OF CASH FLOWS
Years Ended December 31, 2006 and 2005
2006 2005
--------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(138,623) $(45,848)
Adjustments to reconcile net deficit to cash used
by operating activities:
Provision for advances-related party -- 20,000
Common stock issued for services 73,000 --
Net change in:
Accounts payable - related party 42,000 --
Accounts payable 11,592 6,829
--------- --------
TOTAL CASH FLOWS USED IN OPERATING ACTIVITIES (12,031) (19,019)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from related party 12,058 --
Proceeds from advances - related party -- 19,019
--------- --------
TOTAL CASH FLOWS FROM FINANCING ACTIVITIES 12,058 19,019
NET INCREASE IN CASH 27 --
Cash, beginning of period -- --
--------- --------
Cash, end of period $ 27 $ --
========= ========
NON-CASH ACTIVITIES:
Common stock issued for accounts payable $ 182,000 $ --
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ -- $ --
Income taxes paid $ -- $ --
See accompanying summary of accounting policies
and notes to financial statements
11
Crown Equity Holdings Inc.
STATEMENTS OF STOCKHOLDERS' DEFICIT
Years Ended December 31, 2006 and 2005
Common stock Additional
------------------ paid in Accumulated
Shares Amount capital deficit Total
--------- ------ ---------- ----------- ---------
Balance, December 31, 2004 4,957,966 4,960 2,626,510 (2,853,801) (222,331)
Cancelled shares (133,501) (136) 136 -- --
Net loss -- -- -- (45,848) (45,848)
--------- ------ ---------- ----------- ---------
Balance, December 31, 2005 4,824,465 4,824 2,626,646 (2,899,649) (268,179)
Issuance of common stock
for services 500,000 500 254,500 -- 255,000
Net loss -- -- -- (138,623) (138,623)
--------- ------ ---------- ----------- ---------
Balance, December 31, 2006 5,324,465 $5,324 $2,881,146 $(3,038,272) $(151,802)
========= ====== ========== =========== =========
See accompanying summary of accounting policies
and notes to financial statements
12
Crown Equity Holdings Inc.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES
Nature of Business
Crown Equity Holdings Inc. (Formerly Micro Bio-Medical Waste Systems, Inc.) was
incorporated in August 1995 in Nevada. Crown Equity is in the business of
managing and acquiring subsidiary corporations.
Cash and Cash Equivalents
Crown Equity considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
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.
Basic and diluted net loss per share
Basic and diluted net loss per share calculations are presented in accordance
with Financial Accounting Standards Statement 128, and are calculated on the
basis of the weighted average number of common shares outstanding during the
year. They include the dilutive effect of common stock equivalents in years with
net income. Basic and diluted loss per share are the same due to the absence of
common stock equivalents.
Income Taxes
Crown Equity recognizes deferred tax assets and liabilities based on differences
between the financial reporting and tax bases of assets and liabilities using
the enacted tax rates and laws that are expected to be in effect when the
differences are expected to be recovered. Crown Equity provides a valuation
allowance for deferred tax assets for which it does not consider realization of
such assets to be more likely than not.
Fair Value of Financial Instruments
The Company's financial instruments consist of cash 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 consolidated financial statements.
13
Recent Accounting Pronouncements
Crown Equity does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on Crown Equity's results of
operations, financial position or cash flow.
Reclassification
Certain amounts in the 2005 financial statements have been reclassified to
conform with the 2006 financial statements.
NOTE 2 - GOING CONCERN
As shown in the accompanying financial statements, Crown Equity incurred
recurring net losses of $138,623 and $45,848 in 2006 and 2005, respectively, has
an accumulated deficit of $3,038,272 and a working capital deficit of $151,802
as of December 31, 2006. These conditions raise substantial doubt as to Crown
Equity's ability to continue as a going concern. Management is trying to raise
additional capital through sales of common stock. The financial statements do
not include any adjustments that might be necessary if Crown Equity is unable to
continue as a going concern.
NOTE 3 - INCOME TAXES
Crown Equity is a member of its parent's consolidated tax group. However, income
tax expense is calculated under the separate return method. Crown Equity uses
the liability method, where deferred tax assets and liabilities are determined
based on the expected future tax consequences of temporary differences between
the carrying amounts of assets and liabilities for financial and income tax
reporting purposes. During 2006, Crown Equity incurred net losses and,
therefore, has no tax liability. The net deferred tax asset generated by the
loss carry-forward has been fully reserved. The cumulative net operating loss
carry-forward is approximately $2,066,000 at December 31, 2006, and will expire
in the years 2020 through 2026.
The Company's valuation allowance increased by $6,870.
At December 31, 2006, deferred tax assets consisted of the following:
December 31,
2006
------------
Deferred tax asset:
Net operating losses $ 702,370
Less: valuation allowance (702,370)
---------
Net deferred tax asset $ --
=========
NOTE 4 - COMMON STOCK
In May 2006, 500,000 shares of common stock valued at $255,000 were issued for
the extinguishment of $182,000 in debt to a related party for services performed
in previous periods. Accordingly, the value of the stock issued to the related
party was recorded as paid-in-capital and the value of the common stock in
excess of the debt was recorded as expense.
14
NOTE 5 - RELATED PARTY TRANSACTIONS
Crown Equity neither owns nor leases any real or personal property. An officer
has provided office services without charge. Such costs are immaterial to the
financial statements and accordingly are not reflected herein. The officers and
directors are involved in other business activities and most likely will become
involved in other business activities in the future. If a specific business
opportunity becomes available, such persons may face a conflict of interest.
Legal services are provided by an officer of the company. For the years ended
December 31, 2006 and 2005, Crown Equity recorded $42,000 and $14,500,
respectively, in related party legal fees. In addition, $72,829 of additional
compensation expense was recorded in connection with the issuance of common
stock for the extinguishment of a $182,000 payable related to legal services
previously provided.
Crown Equity advanced to Sanitec Services of Hawaii, Inc., a subsidiary of Crown
Partners, Inc., the sum of $20,000, as part of the consideration to be paid to
Crown Partners in connection with Crown Equity's planned purchase of the Sanitec
subsidiary. In the event that the transaction had been consummated, the advance
would have been credited toward the purchase price of $550,000. In July 2005,
Sanitec ceased operations and Crown Equity will no longer proceed with this
transaction. Due to the uncertainty of collections, Crown Equity has established
an allowance for the full $20,000.
Crown Partners, Inc., the majority shareholder of Crown Equity, has advanced the
sum of $101,607 to fund Crown Equity's operations.
15
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
There were no disagreements with accountants on accounting and financial
disclosure during the relevant period.
The Company engaged new accountants in August, 2006. Prior to engaging our
previous auditor, we were audited by Malone & Bailey.
Item 8A. Controls and Procedures.
As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the
"Exchange Act"), we carried out an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures as of December 31, 2006.
This evaluation was carried out under the supervision and with the participation
of our Chief Executive Officer and Chief Financial Officer. Based on their
evaluation of our disclosure controls and procedures we concluded that such
disclosure controls and procedures were not effective to ensure that information
required to be disclosed by us in reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules and forms, because
of several adjustments required by our auditors predominantly in the areas of
equity. Specifically, our independent auditors identified deficiencies in our
internal controls and disclosure controls related to expense recognition and
issuances of our common stock. Appropriate adjustments and footnote disclosures
have been recorded and disclosed in our Annual Report on Form 10-KSB. We are in
the process of improving our internal controls in an effort to remediate these
deficiencies through improving supervision and training of our accounting staff.
We are continuing our efforts to improve and strengthen our control processes
and procedures to fully remedy these deficiencies. Our management and directors
will continue to work with our auditors and other outside advisors to ensure
that our controls and procedures are adequate and effective. There have been no
significant changes in our internal controls or in other factors that could
significantly affect internal controls subsequent to the date we carried out our
evaluation.
There were no significant changes in our internal controls over financial
reporting that occurred during the last fiscal quarter that has materially
affected, or is reasonably likely to materially affect, internal controls over
financial reporting.
Part III
Item 9. 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:
Name Age Positions Held and Tenure
------------------- --- ------------------------------
Harold Gewerter 52 Director since September, 2006
Steven Onoue 50 Director since July, 2002
Dr. Sadegh Salmassi 60 Director since November, 2003
Claudia Zaman 50 CEO, CFO since January, 2007
The Directors named above will serve until the next annual meeting of the
Company's stockholders. Thereafter, Directors will be elected for one-year terms
at the annual stockholders' meeting. Officers will hold their positions at the
pleasure of the Board of Directors, absent any employment agreement, of which
none currently exist or is contemplated. There is no arrangement or
understanding between the Directors and Officers of the Company and any other
person pursuant to which any Director or Officer was or is to be selected as a
Director or Officer of the Company.
16
There is no family relationship between or among any Officer and Director.
The Directors and Officers of the Company will devote their time to the
Company's affairs on an "as needed" basis. As a result, the actual amount of
time which each will devote to the Company's affairs is unknown and is likely to
vary substantially from month to month.
The Company has no audit or compensation committee.
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.
STEVEN ONOUE. Mr. Onoue has been employed as vice president and manager of
Sanitec Services of Hawaii, Inc. since 2000. Prior to that, Mr. Onoue was the
president of Cathay Atlantic Trading Company in Honolulu, Hawaii which trades in
hard commodities and acted as a 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 was a registered securities
professional as well as being involved in real estate in Hawaii for more than 15
years.
Mr. Onoue is an officer and 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."
SADEGH SALMASSI, M.D. Dr. Salmassi is a physician in private practice in Delano,
California. Dr. Salmassi graduated from Pahlavi University School of Medicine in
1973 and came to the United States in 1975 to complete his residency training at
the University of Illinois in Chicago, Illinois. Dr. Salmassi began practicing
medicine in Illinois in 1978. Dr. Salmassi is Board Certified by the American
Board of Pathology in Anatomic and Clinical Pathology as well as being Board
certified by the American Board of General Practice in General Medicine and
Surgery. Dr. Salmassi is a Fellow in the College of American Pathologists, a
Fellow of the American College of International Physicians and a Fellow in the
American Academy of Family Physicians.
Dr. Salmassi is 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."
HAROLD GEWERTER. Mr. Gewerter is an attorney in private practice in Las Vegas,
Nevada. Mr. Gewerter has been an attorney since 1979. Mr. Gewerter received his
Bachelor of Arts and his Master of Arts from the University of Southern
California. Mr. Gewerter received his law degree from Southwestern University
School of Law and is licensed in the State of Nevada.
17
CLAUDIA ZAMAN. Ms. Zaman is an attorney in private practice and has represented
the Company since 1999. Ms. Zaman holds a Bachelor of Arts in International
Relations and a Bachelor of Science in Computer Science from Florida
International University in Miami, Florida. Ms. Zaman received her law degree
from the University of Denver and is licensed to practice law in California and
Colorado. Ms. Zaman serves as CEO and CFO of Crown Partners, Inc., the majority
shareholder of the Company and a publicly traded company traded on the OTC
Electronic Bulletin Board under "CRWP."
CONFLICTS OF INTEREST
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 5 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.
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.
Item 10. Executive Compensation.
During fiscal 2006, and as of the date of the filing of this report, none of the
Company's officers were paid compensation for their services as officers by the
Company. In 2006, prior to becoming an officer of the Company, Ms. Zaman,
presently CEO and CFO of the Company, was issued 500,000 shares of the Company's
common stock as compensation for past due legal services totaling approximately
$255,000. Ms. Zaman charges the Company for her legal services but does not
accrue any salary or other compensation for serving as an officer of the
Company, a position that she accepted in January, 2007. As of December 31, 2006,
the Company was indebted to Ms. Zaman in the amount of $24,994 for legal
services.
18
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.
In August, 2005, the Company adopted the Micro Bio-Medical Waste Systems, Inc.
Non-employee Directors, Advisors and Consultants Retainer Stock Plan for 2005.
Under the Plan, 500,000 shares are reserved for issuance to non-employee
directors, advisors and consultants. The Company registered the shares under the
Plan and 500,000 shares were issued under the Plan in 2006.
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 named 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.
Section 16(a) Beneficial Ownership Reporting Compliance. During the year ended
December 31, 2006, the following persons were officers, directors and more than
ten-percent shareholders of the Company's common stock:
Name Position Filed Reports
-------------------- ------------------ -------------
Charles Smith CEO, CFO, Director No
Steven Onoue Director No
Dr. Sadegh Salmassi Director No
Harold Gewerter Director No
Crown Partners, Inc. Shareholder No
19
Item 11. Security Ownership of Certain Beneficial Owners and Management.
There were 5,324,465 shares of the Company' common stock issued and outstanding
on December 31, 2006. There are no preferred shares authorized. 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 record 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.
Number of Shares Percent of
Names and Addresses Owned Beneficially Beneficially Owned Shares
-------------------------- ------------------ -------------------------
Steven Onoue (1)(2) 16,668 0.31%
27430 Riverside Lane
Valencia CA 91354
Sadegh Salmassi (1)(2) 10,000 0.19%
27430 Riverside Lane
Valencia CA 91354
Harold Gewerter (1) 0 0.00%
27430 Riverside Lane
Valencia CA 91354
Crown Partners, Inc.(2) 3,407,941 64.00%
27430 Riverside Lane
Valencia CA 91354
Claudia Zaman (1)(2) 382,866 7.19%
27430 Riverside Lane
Valencia CA 91354
All directors and officers
as a group (4) 409,534 7.69%
(1) Denotes officer or director. Two directors, Mr. Onoue and Dr. Salmassi,
are also officers and directors of Crown Partners, Inc. which is the
majority shareholder of the Company.
(2) Two of the control persons of Crown Partners, Dr. Salmassi and Mr. Onoue,
are directors of the Company. Ms. Zaman, an officer of the Company, is a
control person of Crown Partners, serving as a director and officer. These
persons have both investment and voting power for the 3,407,940 shares
beneficially owned by Crown.
Changes in Control. There are no arrangements known to the Company, including
any pledge by any person of securities of the Company, the operation of which
may at a subsequent date result in a change of control of the Company.
20
Item 12. Certain Relationships and Related Transactions.
The Company is provided office space by an officer at no cost to the Company.
The Company received $45,520 from an unrelated third party in 2004 which was to
be paid as a non-refundable deposit to Crown Partners, Inc., the majority
shareholder of the Company, who had entered into an agreement with the Company
in 2003 to sell Sanitec Services of Hawaii, Inc. to the Company. In return for
the deposit, Crown agreed to allow the Company more time to raise the funds
necessary to purchase SSH. The Company advanced $20,000 to SSH to fund its
operations and Crown allowed the Company to retain the balance of the deposit to
fund the Company's operations. The Company was unsuccessful in raising the funds
necessary and SSH ceased operations in 2005. It is doubtful that the Company
will be repaid the advance of $20,000 from SSH but the Company still owes
$45,520 to Crown related to this transaction. At December 31, 2006, the total
amount due to Crown Partners, Inc. was $101,607.
The Company owes $24,994 to Ms. Zaman, an officer of the Company, for legal
services provided by her to the Company.
Item 13. Exhibits and Reports on Form 8-K.
(a) Financial Statements and Schedules
The following financial statements and schedules are filed as part of this
report:
Report of Independent Registered Public Accounting Firm dated April 2, 2007
Balance Sheet for the Fiscal Year Ended December 31, 2006
Statements of Operations for the Years Ended December 31, 2006 and 2005
Statement of Stockholders' Deficit for the Years Ended December 31, 2006 and
2005
Statements of Cash Flows for the Years Ended December 31, 2006 and 2005 Notes to
Financial Statements
EXHIBITS FILED WITH THIS REPORT
Exhibit
Number Description
------- ----------------------------------------------------------------------
31.1 Certifications Required by Rule 13a-14(a) of the Securities Exchange
Act of 1934, as amended, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer and Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
(b) There was one report filed on Form 8-K during the fourth quarter of the
Company's fiscal year ended December 31, 2006.
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.
21
CROWN EQUITY HOLDINGS INC.
April 13, 2007 /s/ Claudia Zaman
----------------------------------------
Claudia Zaman, CEO, CFO
April 13, 2007 /s/ Steven Onoue
----------------------------------------
Steven Onoue, Director
April 13, 2007 /s/ Dr. Sadegh Salmassi
----------------------------------------
Dr. Sadegh Salmassi, Director
April 13, 2007 /s/ Harold Gewerter
----------------------------------------
Harold Gewerter, Director
22