U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

(Mark One)

[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
     1934

For the fiscal year ended December 31, 2005

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

                          Commission File No.: 0-22936

                              Crown NorthCorp, Inc.
                 (Name of small business issuer in its charter)


                                                          
                Delaware                                          22-3172740
     (State or other jurisdiction of                           (I.R.S. Employer
     incorporation or organization)                          Identification No.)



                                                               
     P.O. Box 613, Cheyenne, Wyoming                                 82001
(Address of principal executive offices)                          (Zip Code)


                                 (614) 488-1169
                           (Issuer's telephone number)

         Securities registered under Section 12(b) of the Exchange Act:
                                      NONE

         Securities registered under Section 12(g) of the Exchange Act:
                     Common Stock, par value $.01 per share

        Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act.  Yes     No  X
                                                                 ---    ---
        Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the issuer 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 disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.  X
                                      ---

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

     Issuer's revenues for the fiscal year ended December 31, 2005 were
$11,216,263.

     The aggregate market value of the voting and non-voting common equity held
by non-affiliates of the Registrant cannot be determined at this time as the
company's common equity has not been quoted within the past sixty days on the
OTC Bulletin Board pursuant to Rule 6530 of the National Association of
Securities Dealers.

     As of April 10, 2006 the issuer had 13,319,528 shares of its common stock
outstanding.

     Transitional Small Business Disclosure Format. Yes     No  X
                                                        ---    ---



                              CROWN NORTHCORP, INC.

                                   FORM 10-KSB
                      FOR THE YEAR ENDED DECEMBER 31, 2005
                                      INDEX



                                                                       PAGES
                                                                   -------------
                                                                
         PART I.
Item 1.  Description of Business................................          1
Item 2.  Description of Property................................          3
Item 3.  Legal Proceedings......................................          4
Item 4.  Submission of Matters to a Vote of Security Holders....          4

         PART II.
Item 5.  Market for Common Equity and Related Stockholder
         Matters................................................          4
Item 6.  Management's Discussion and Analysis...................          5
Item 7.  Financial Statements...................................   F-1 thru F-25
Item 8.  Changes in and Disagreements with Accountants
         on Accounting and Financial Disclosure.................         12
Item 8a. Procedures and Controls................................         12
Item 8b. Other Information......................................         12

         PART III.
Item 9.  Directors and Executive Officers of the Registrant.....         12
Item 10. Executive Compensation.................................         15
Item 11. Security Ownership of Certain Beneficial Owners
         and Management and Related Stockholder Matters.........         17
Item 12. Certain Relationships and Related Transactions.........         19
Item 13. Exhibits...............................................         22
Item 14. Principal Accountant Fees and Services.................         22



PART I

ITEM 1. - DESCRIPTION OF BUSINESS

BUSINESS OVERVIEW

Crown NorthCorp, Inc. provides comprehensive financial services to holders of
real estate interests in Europe and the United States. Principal business
activities include third-party asset management and loan servicing. Additional
businesses include mortgage banking. The company, formed in 1994, is a Delaware
corporation presently operating through seven offices in Europe and two in the
United States. At December 31, 2005, Crown and its operating subsidiaries
employed 80 people. Affiliates engaged in asset management overseen by Crown
employed an additional 23 people.

The company acquired Crown NorthCorp Limited ("CNL"), a corporation under the
laws of the United Kingdom, and its operating subsidiaries, including Crown
Mortgage Management ("CMM") at the end of 2003. See "Item 12 - Certain
Relationships and Related Transactions" below. CNL and CMM were actively engaged
in loan servicing and asset management activities in Europe; this acquisition
allowed Crown to significantly expand its business beginning in 2004.

In 2004, Crown generated net income primarily from asset sales that yielded very
significant returns from the residual interest the company held in a
securitization of tax-exempt bonds. In 2005, the company realized significant
fees from the planned disposition of certain assets under management. These fees
partially offset losses realized from reductions in loan servicing values and
from ongoing operations.

Crown receives revenues from: third-party asset management agreements through
which the company administers commercial, multifamily and residential real
estate and loan assets for the accounts of others; contracts to service on an
active or standby basis individual loans, loan portfolios and assets in
securitized transactions; mortgage banking activity; asset evaluations;
transaction support; risk management and financial advisory services; and the
administration of the interests of various corporations, partnerships, trusts
and special-purpose entities. Compensation arrangements are wide-ranging and may
include recurring management, loan origination or servicing fees; disposition
fees associated with transactions; and incentive fees or profit-participations
based on the overall performance of particular portfolios.

Third-Party Asset Management. The company offers to holders of real estate and
financial assets comprehensive management services. These services include fund
or portfolio management, advice on asset acquisition or disposition, due
diligence reviews and development of portfolio strategies. Clients receiving
these services include partnerships, investment consortiums and funds, financial
institutions and governmental entities. Assets under management are often
impacted by multifaceted financing structures or multiple, complex factors
impacting value. Management contracts are generally for indefinite terms and


                                       1



typically provide for recurring revenues. Additionally, Crown or one of its
affiliates may have a residual equity interest in an entity formed by Crown's
client to hold the assets under management. If the managed assets are resolved
within certain agreed parameters, Crown may receive returns on such equity
interests. The company focuses on asset management opportunities in emerging or
niche market sectors that offer opportunities for growth as well as recurring
loan servicing revenues.

Crown's management activities in Europe encompass several portfolios of
commercial and residential real estate assets. Assets under management are
presently concentrated in Sweden, Germany, Finland and the United Kingdom.

Asset management activities in the United States have contracted significantly
in recent years as successful dispositions have occurred. Managed assets in the
U.S. currently include multifamily housing projects impacted by U.S. government
subsidies.

Loan Servicing and Mortgage Management. Crown offers its clients comprehensive
loan servicing and mortgage management. The company's services include primary
servicing of loans performing according to their contractual terms, special
servicing of distressed loans and standby servicing relationships calling for
Crown to step in if a primary servicer fails. In Europe, Crown jointly owns and
operates with a bank a company offering master servicing capability to supervise
and administer the activities of multiple primary servicers involved in a common
transaction.

In Europe, Crown services portfolios of residential, commercial and consumer
loans. Customers include investment banks, investors in securitized transactions
and portfolio managers and advisors. Many of these client relationships derive
from Crown's asset management and mortgage banking activities. U.S. servicing
operations are concentrated on commercial loans.

Over the course of several years, Crown has developed servicing systems and
procedures that are regularly reviewed by internationally recognized rating
agencies. In Europe, CMM's commercial and residential servicing operations were
the first to receive ratings from multiple rating agencies. Crown's commercial
servicing operations in the U.S. have also received ratings.

Loan Origination and Mortgage Banking. The company has a minority interest in an
entity that originates sub-prime residential loans in the United Kingdom. These
loans are immediately sold into conduit or correspondent programs that
accumulate loans for further disposition in capital markets transactions.

Crown continues to develop systems and procedures to originate commercial loans
in European markets. Crown anticipates implementing this program in 2006.


                                       2



COMPETITIVE ENVIRONMENT

Crown operates as an independent provider of asset management, mortgage
management and mortgage banking services and has numerous competitors in each of
these business lines in both Europe and the United States. The great majority of
these competitors operate as significant units of companies that are much larger
and better capitalized than Crown. In pursuing new business, Crown typically
attempts to maximize its relatively limited capital resources by utilizing or
developing business alliances or capital partnerships. At the same time,
management believes that Crown's smaller size, independent status and
comprehensive servicer ratings provide certain competitive advantages when
pursuing opportunities in emerging or niche markets that could benefit from
highly tailored financial services.

ITEM 2. - DESCRIPTION OF PROPERTY

OFFICES

In Europe, Crown operates through three offices the United Kingdom, two in
Germany, one in Sweden and one in Belgium. In the U.S., the company maintains
offices in Columbus, Ohio and Austin, Texas. See "Note 5 - Leases - to the
Consolidated Financial Statements."

INVESTMENT POLICIES

Real Estate; Securities of or Interests in Entities Primarily Engaged in Real
Estate Activities. Crown is a third-party asset manager, managing real estate
and interests in real estate for the accounts of others. Even though Crown is
not investing in real estate for its own account, the company from time to time
invests in entities engaged in real estate activities. Any such investments are
part of an overall client relationship through which Crown secures or retains
asset management, mortgage management or mortgage banking business. The
company's investments typically take the form of equity or partnership positions
or subordinate debt. Crown's relatively limited liquidity and capital resources
affect its ability to make these types of investments at any particular time.

Real Estate Mortgages. Crown is not originating or investing in mortgage loans
for its own account. Rooftop Holdings Limited, in which Crown has a minority
interest, originates sub-prime residential real estate loans for sale at closing
and delivery into securitizations or whole loan sale programs. The company's
mortgage banking activities are intended to support its third-party asset
management, loan servicing and mortgage management businesses.

The company from time to time has acquired the rights to service mortgage loan
assets through the negotiated purchases of or successful bids for the servicing
rights themselves. Here again, Crown's liquidity and capital resources may limit
its ability to pursue purchases of servicing rights.


                                       3



ITEM 3. - LEGAL PROCEEDINGS

Crown is not a party to any material legal proceedings involving itself or its
property.

ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

                                     PART II

ITEM 5. - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

COMMON STOCK

Records maintained by the National Quotation Bureau show that, for the quarter
ended March 31, 2001, the high and low bid prices for the company's common stock
were $.02 and $.005 respectively. These quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not represent actual
transactions. In periods subsequent to March 31, 2001, there has generally been
no active public trading market for the common stock.

At April 10, 2006, there were approximately 2,600 holders of record of shares of
the common stock.

During its 2005 and 2004 fiscal years, the company neither declared nor paid
cash dividends or returns of capital on common shares. The company may consider
paying dividends in the future.

As of April 10, 2006, Crown had 30,000,000 authorized shares of common stock and
1,000,000 authorized shares of preferred stock.

As part of a series of transactions to effect the merger of Royal into the
company, Crown intends to proceed with a 1:100 reverse and 10:1 forward stock
split to reduce the number of shareholders with extremely small holdings of the
company's stock (the "Stock Splits") and also to allot a sufficient number of
available shares of authorized common stock to permit the issuance of common
stock required under the terms of the merger and to accommodate the conversion
of the company's preferred stock into common stock. On September 6, 2005, the
company filed a Preliminary Information Statement on Schedule 14C with respect
to, among other things, the stockholder consents required to effect the Stock
Splits and the merger transaction pursuant to Delaware law. The company
intends to proceed with the Stock Splits as soon as practicable following
filing of a Definitive Information Statement. At December 31, 2003, the Company
had 12,455,778 common shares outstanding.  Giving effect to Stock Splits and
the conversion of all outstanding preferred stock to common (but before giving
effect to the merger transaction) would result in Crown having approximately
3,250,116 shares of common stock outstanding. In exchange for all of the issued
and outstanding stock of Royal, Mr. Roark, Crown's chairman and chief executive
officer, will receive 12,000,000 shares of Crown common stock. The common stock
of Crown held by Royal became treasury stock of Crown.


                                       4



ITEM 6. - MANAGEMENT'S DISCUSSION AND ANALYSIS

THE COMPANY'S BUSINESSES

Crown provides comprehensive financial services to the holders of real estate
interests in Europe and the United States. The acquisition of CNL and CMM
effective December 31, 2003 (see "Item 12 - Certain Relationships and Related
Transactions") allowed the company to significantly expand through
well-established operations in Europe. Principal business activities in Europe
include third-party asset management, loan servicing and an interest in a
company that originates sub-prime residential real estate loans. Crown's U.S.
operations service commercial loans and engage in third-party asset management.
The company's business lines generate revenues through agreements to manage
commercial, multifamily and residential real estate and loan assets for the
account of others; loan servicing and mortgage management on an active or
standby basis of individual loans, loan portfolios and assets in securitized
transactions; income associated with loan origination and the securitization of
those loans; asset evaluations; transaction support; risk management, financial
advisory and due diligence services; and administration of the interests of
various corporations, partnerships, investments consortiums and special-purpose
entities.

While the company's revenues in 2005 increased over those in 2004, Crown
sustained a substantial operating loss for the year because of significantly
higher operating expenses. The primary components of the increase in expenses
were charges to earnings to adjust downward the value of the company's servicing
rights as a result of a contract termination and faster-than-anticipated loan
payoffs. The company has obtained new servicing and asset management business in
Europe that can substantially replace revenues lost from contracts that have
terminated or have reduced in size. Additionally, the company is actively
pursuing opportunities in the banking sector in Europe that management believes
can significantly enhance all of Crown's business lines. At the same time,
presently unprofitable business lines are being evaluated as part of an overall
effort to improve operating performance. In pursuing these initiatives, Crown
has and continues to develop partnerships, business combinations and other
transactions or arrangements to leverage the company's limited liquidity and
capital resources and maximize the value of its core businesses.

FORWARD LOOKING STATEMENTS

The statements contained in this report that are not purely historical are
forward-looking statements within the meaning of Section 21E of the Exchange
Act, including statements regarding the company's expectations, hopes,
intentions or strategies regarding the future. Forward-looking statements
include terminology such as "anticipate," "believe," "has the opportunity,"
"seeking to," "attempting," "appear," "would," "contemplated," "believes," "in
the future" or comparable language. All forward-looking statements included in
this document are based on information available to the company on the date
hereof, and the company assumes no obligation to update any such forward-looking
statements. It is important to note that the company's actual results could
differ materially from those in such forward-


                                       5



looking statements. The factors listed below are among those that could cause
actual result to differ materially from those in forward-looking statements.
Additional risk factors are listed from time to time in the company's reports on
Forms 10-QSB, 8-K and 10-KSB.

Among the risk factors that could materially and adversely affect the future
operating results of the company are:

-    Crown is sustaining substantial losses from operations. Management believes
     that growth that is under way in the company's core asset management and
     servicing businesses, primarily in Europe, will continue and that resultant
     increases in recurring revenue will help the company achieve operating
     profitability. There can be no assurance of these results, however.

-    The company will continue to attempt to utilize proceeds from the
     resolution of assets under management to maintain and expand business
     volumes in both Europe and the United States. There can be no assurances
     that substantial resolutions will occur or that the company will
     successfully redeploy any proceeds to generate profitable new business.

-    Crown's liquidity and capital resources remain limited when compared to
     virtually all of its competitors. To compete for and realize upon many
     business opportunities, the company has a continuing need to form
     partnerships, alliances or other combinations. While the company has on
     several occasions successfully used such arrangements, there is no
     assurance that Crown will be able to timely enter appropriate arrangements
     in the future.

-    Crown and certain of its subsidiaries operate as rated servicers. If these
     entities were to no longer be rated, or if those ratings were lowered,
     there would be an adverse effect on the company's operations. Crown's
     business volumes and financial condition may affect its servicer ratings.

OUTLOOK

Crown's asset management and servicing businesses in Europe continue to develop
and expand. A transaction that closed at the end of the second quarter of 2005
generated not only substantial performance fees for the company but also
additional asset management business in Sweden. The asset ownership and
management relationships put in place through that transaction have now been
awarded a asset portfolio in Finland and are actively pursuing additional
portfolios in Sweden.

In Germany, an investment bank has engaged a joint venture in which Crown has a
50% interest to service and manage a substantial portfolio of non-performing
loans. The company has spent considerable time over an extended period
developing opportunities in the banking sector. Capitalizing on such an
opportunity, management believes, could be a key to further


                                       6



expansion of the company's core businesses in Germany and elsewhere. Crown
anticipates that it will enter into a banking-sector transaction in 2006.

While a contract termination and faster-than-expected loan payoffs reduced
servicing volumes in the United Kingdom in 2005, the company continues to
experience growth in the servicing portfolio of sub-prime residential loans
arising from Crown's minority interest in Rooftop. The company seeks to continue
this growth and to develop similar business lines elsewhere in Europe. The
company is also continuing to develop the capability to originate commercial
mortgage loans in the U.K. Increased loan origination activity should increase
the company's loan servicing and mortgage management businesses.

The company and a bank, operating through a joint venture based in Belgium,
offer master servicing and reporting services for securitized portfolios
throughout Europe. Crown anticipates growth in this business.

Crown believes it is well positioned to further expand its businesses in Europe.
In this effort, the company can draw upon the market knowledge its has obtained
from operating in several countries, the success it has had in completing
complex transactions and the multiple servicer ratings the company holds, which
are necessary for participation in many transactions.

In the United States, the company is devoting resources to attempt to increase
servicing volumes. In the first quarter of 2006, the company became the special
servicer for a securitization of commercial real estate loans. Management
anticipates receiving additional, similar assignments. Crown is also actively
exploring means of expanding its servicing portfolio of smaller-balance
commercial mortgage loans. Asset management activities in the U.S. continue at
modest levels following the disposition in 2004 of a substantial portion of
assets under management.

Crown continues to commit funds derived from its core businesses to expand those
businesses in Germany, Scandinavia, the United Kingdom and other European
markets as well as the United States. The company is targeting opportunities
that maximize the value of Crown's comprehensive financial services and that
offer the prospect of recurring revenue. To facilitate this business development
in certain cases, Crown is actively pursuing investment partners and other
business structures that allow the company to effectively utilize its relatively
limited liquidity and capital resources. The company believes this process is
the most appropriate course of action to expand Crown's revenue base and attain
operating profitability.

RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2005 COMPARED TO THE YEAR
ENDED DECEMBER 31, 2004.

Total revenues from continuing operations increased $840,747 to $11,216,263 in
2005 from $10,375,516 in 2004, with the largest increases being attributable to
management fees, loan servicing fees and disposition fees.


                                       7



Management fees are recorded as services required under a contract are performed
and, as defined in the applicable contracts, are derived either from percentages
of the aggregate value of assets under management or from original base monthly
amounts. Management fees increased $2,095,058 to $2,654,760 in 2005 from
$559,702 in 2004. This increase is in large measure due to the accrual of
special servicing fees relating to the management of sub-performing loans and
the addition of new management contracts in Europe. These fees totaled
approximately $2,050,000. Also contributing to the increase was the receipt of
approximately $276,000 as part of a final settlement of an early termination of
a servicing contract held by one of the company's European subsidiaries. These
increases were offset by a decrease in fees earned in the U.S. of some $210,000
due to a reduction in assets managed.

Disposition fees increased approximately $3.4 million for the year ended
December 31, 2005 compared to no disposition fees for the comparable period in
2004. On June 30, 2005, Crown European Holding Limited ("CEH"), a subsidiary of
Crown, sold all of the stock of Crown Fastigheter AB (formerly Crown Properties
Holdings AB)("CFAB"). At the time of the sale, CFAB held a portfolio of 59 real
estate assets in Sweden. Crown managed the assets in the portfolio. Pursuant to
the terms of agreements governing this management relationship, Crown received
incentive compensation of $3,439,389 net of payment of expenses.

Loan servicing fees increased $1,516,007 to $4,513,771 in 2005 from $2,977,764
in 2004. This increase is derived almost entirely from servicing fees earned in
Europe and is the result of increased volumes from new contracts.

Interest income decreased $6,108,071 to $131,862 for the twelve months ended
December 31, 2005 from $6,239,933 for the corresponding period in 2004. In 2004,
the company received substantial cash from the disposition of a residual
interest in a securitization of tax-exempt bonds owned by Crown subsidiaries.
The disposition followed the sale of a property collateralizing the bonds.

In conjunction with the sale of CFAB and its receipt of the incentive
compensation noted above, Crown purchased from two holders approximately $3.5
million in promissory notes payable by Royal Investments, LLC ("Royal LLC").
Royal LLC owned approximately 26.7% of CEH. Royal LLC then repaid the promissory
notes in full from its proceeds of sale. The distribution Royal LLC received in
excess of the amounts needed to repay the notes in full was approximately
$417,000.

Income from partnerships and joint ventures decreased to $(114,462) for the year
ended December 31, 2005 from $131,282 for the year of 2004. This decrease was
primarily the result of operating losses from a European partnership interest.

Other income decreased to $173,667 for the twelve months ended December 31, 2005
from $446,835 for the comparable period in 2004. Expected tax refunds in Europe
decreased $373,525 in 2005. This decrease was partially offset by the receipt of
approximately $92,000 as a guaranty fee in connection with the CEH sale of CFAB
mentioned above.



                                       8




Operating and administrative expense changes were as follows:



                                        2005         2004       $ Change
                                    -----------   ----------   ----------
                                                      
Personnel                           $ 5,823,021   $4,591,726   $1,231,295
Insurance, Professional and Other   $ 3,115,644   $2,551,386   $  564,258
Occupancy                           $ 1,821,751   $1,040,128   $  781,623
Write off servicing rights          $ 1,906,918   $  300,545   $1,606,373
Amortization and Depreciation       $   713,045   $  825,722   $ (112,677)
Total                               $13,380,379   $9,309,507   $4,070,872


Personnel expenses include salaries, related payroll taxes and benefits, travel
and living expenses and professional development expenses. Personnel expenses
increased $1,231,295 to $5,823,021 during 2005 from $4,591,726 for the same
period in 2004. The majority of the increase was due to an increase in payroll
and contract labor costs in Europe of approximately $757,000 arising from
additional personnel in the company's information technology, compliance and
loan servicing areas. Also contributing to the increase were start-up costs of
approximately $394,000 incurred for new company operations in Germany. Also
contributing to the increase were increases in U.S. payroll, contract payroll
and travel of some $108,000.

Insurance, professional and other costs increased by $564,258 to $3,115,644 in
2005 from $2,551,386 in 2004. The increase in these expenses was attributable to
increases in bad debt expenses of approximately $333,000 for European operations
as well as increases of some $177,000 related to activities of the company's new
office in Germany. Increases in business activity in the company's Nordic
offices were responsible for some $671,000 increases in expenses. In the U.S the
company experienced an increase of approximately $190,000 for professional
services. This increase was offset by decreases in legal expense, advertising
and bank charges totaling some $674,000. In the U.K., Crown's expenses for
professional services declined some $133,000.

Occupancy costs increased $781,623 to $1,821,751 in 2005 from $1,040,128 in
2004. The increase was attributable in part to European office rent and computer
expense of $198,000 and $510,000 respectively. Also contributing to the increase
were start-up costs in Germany of approximately $51,000. The remainder of the
increase is attributable to increases in office rent and computer expense in the
U.S. of some $21,000.

The write down of capitalized mortgage servicing rights increased by
approximately $1,606,373 in 2005 over the corresponding period in 2004. The
majority of this write down was necessitated by the termination of a
subservicing agreement held by one of the company's European subsidiaries, which
termination was not for cause but rather the result of a business


                                       9



decision by the company's client to perform the servicing itself. The
termination was effective as of March 31, 2005. In accordance with SFAS No. 5
"Accounting for Contingencies," the company provided for the reduction in the
value of its servicing portfolio by making the $1,069,000 charge to current
earnings at that date. The remainder of the write-down was due to declines in
the value of the servicing portfolios due to early loan payoffs.

Interest expense decreased to $111 in 2005 from $90,634 in 2004. The decrease is
due primarily to the repayment of European debt in 2004.

Depreciation and amortization decreased to $713,045 in 2005 from $825,722 in
2004. The majority of the $112,677 decrease is the result of goodwill being
fully amortized in 2004.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents decreased by $732,597 to $2,474,005 in 2005 from
$3,287,103 in 2004. The decrease in the cash position is the result of funding
ongoing operations in the U.S. and the U.K. The company presently has no bank
credit facilities. Crown seeks to improve liquidity and access to cash resources
by generating new business revenues, raising additional capital and, in selected
instances, entering into strategic alliances.

For the foreseeable future, the company expects to continue to fund operations
with cash provided by operations and funds received from its subsidiaries. Crown
will continue to attempt to develop new sources of revenue, to expand revenues
from its existing client base and to reduce operating expenses. The company will
continue to seek new capital resources as a means of funding its operations.

HISTORICAL CASH FLOWS

Cash flows from operating activities provided cash of $1,516,547 in 2005.
Operating activities provided $3,223,792 in 2004.

Investing activities used cash of $2,249,144 in 2005. Similar activities used
$16,823 in 2004. The increase in the use of funds over 2004 is attributable in
part to increases in investments and purchases of equipment.

Financing activities used $1,929,767 in cash in 2004. There was no comparable
financing activity in 2005.


                                       10



                         ITEM 7. - FINANCIAL STATEMENTS

                          INDEX TO FINANCIAL STATEMENTS



                                                                            Page
                                                                            ----
                                                                         
Independent Auditors' Report.............................................    F-1
Consolidated Balance Sheets, December 31, 2005 and 2004..................    F-2
Consolidated Statements of Operations for the years ended December 31,
   2005 and 2004.........................................................    F-3
Consolidated Statements of Shareholders' Equity for the years ended
   December 31, 2005 and 2004............................................    F-4
Consolidated Statements of Cash Flows for the years ended December 31,
   2005 and 2004.........................................................    F-5
Notes to Consolidated Financial Statements for the years ended December
   31, 2005 and 2004.....................................................    F-6



                                       11


                          INDEPENDENT AUDITORS' REPORT

To The Shareholders
Crown NorthCorp, Inc. and Subsidiaries
Cheyenne, Wyoming

We have audited the accompanying consolidated balance sheets of Crown NorthCorp,
Inc. and subsidiaries as of December 31, 2005 and 2004 and the related
consolidated statements of operations and comprehensive income, shareholders'
equity, and cash flows for the years then ended. These financial statements are
the responsibility of Crown NorthCorp, Inc. and subsidiaries' management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the 2004 consolidated financial statements of Crown
NorthCorp Limited, a wholly owned subsidiary operating principally in the United
Kingdom, which statements reflect total assets constituting 37% of consolidated
assets as of December 31, 2004 and revenues constituting 35% of consolidated
revenues for the year then ended of the related consolidated totals. Those
statements were audited by other auditors whose report has been furnished to us,
and our opinion, insofar as it relates to the amounts included for Crown
NorthCorp Limited and subsidiaries as of December 31, 2004, and for the year
then ended, is based solely on the report of the other auditors.

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 the 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, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Crown NorthCorp, Inc. and
subsidiaries as of December 31, 2005 and 2004, and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.

SCHOONOVER BOYER + ASSOCIATES


/s/
-------------------------------------

Columbus, Ohio
April 14, 2006


                                       F-1


CROWN NORTHCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2005 AND 2004



                                                                     2005          2004
                                                                 -----------   -----------
                                                                         
ASSETS
CURRENT ASSETS:
   Cash and cash equivalents                                     $ 2,474,005   $ 3,287,104
   Accounts receivable                                             1,864,859     1,756,639
   Prepaid expenses and other assets                               1,433,545       734,219
                                                                 -----------   -----------
         Total current assets                                      5,772,409     5,777,962
PROPERTY AND EQUIPMENT - Net                                         455,769       283,236
RESTRICTED CASH                                                      368,477       351,131
OTHER ASSETS
   Investment in partnerships and joint ventures                     545,282       889,449
   Other investments
      Mortgage loans, net of reserves                                647,607       937,678
      Other                                                               --        36,974
   Loan servicing rights- net of accumulated amortization
      of $315,683 in 2005 and $248,445 in 2004                     4,830,765     6,548,653
   Capitalized software cost - net of accumulated amortization
      of $944,839 in 2005 and $749,331 in 2004                       416,975       775,974
   Acquisition costs                                                      --         2,091
   Deposits                                                           38,895        42,059
                                                                 -----------   -----------
         Total other assets                                        6,479,524     9,232,878
                                                                 -----------   -----------
TOTAL                                                            $13,076,179   $15,645,207
                                                                 ===========   ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
   Accounts payable                                                  682,882       993,236
   Accrued expenses:
      Other                                                        1,121,260       778,125
                                                                 -----------   -----------
         Total current liabilities                                 1,804,142     1,771,361
LONG-TERM OBLIGATIONS:
   Allowance for loan losses & other                                 243,076       235,979
                                                                 -----------   -----------
         Total long-term obligations                                 243,076       235,979
SHAREHOLDERS' EQUITY:
   Common stock                                                      161,139       159,401
   Additional paid-in capital                                     20,150,533    20,117,522
   Accumulated comprehensive income                                   56,815       536,241
   Accumulated deficit                                            (9,162,468)   (6,998,239)
   Treasury stock, at cost                                          (177,058)     (177,058)
                                                                 -----------   -----------
         Total shareholders' equity                               11,028,961    13,637,867
                                                                 -----------   -----------
TOTAL                                                            $13,076,179   $15,645,207
                                                                 ===========   ===========


See notes to consolidated financial statements.


                                      F-2



CROWN NORTHCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004



                                                                    2005          2004
                                                                -----------   -----------
                                                                        
REVENUES:
   Management fees                                              $ 2,654,760   $   559,702
   Loan servicing fees, net                                       4,513,771     2,997,764
   Disposition fees                                               3,439,389
   Interest income                                                  131,862     6,239,933
   Income from partnerships and joint ventures                     (114,462)      131,282
   Gain on short term note disposition                              417,276
   Other                                                            173,667       446,835
                                                                -----------   -----------
      Total revenues                                             11,216,263    10,375,516
                                                                -----------   -----------
OPERATING AND ADMINISTRATIVE EXPENSES:
   Personnel                                                      5,823,021     4,591,726
   Insurance, professional and other                              3,115,644     2,551,386
   Occupancy                                                      1,821,751     1,040,128
   Write off mortgage servicing rights                            1,906,918       300,545
   Depreciation and amortization                                    713,045       825,722
                                                                -----------   -----------
      Total operating and administrative expenses                13,380,379     9,309,507
                                                                -----------   -----------
LOSS FROM CONTINUING OPERATIONS
   BEFORE INTEREST EXPENSE                                       (2,164,116)    1,066,009
INTEREST EXPENSE                                                        111        90,635
                                                                -----------   -----------
NET INCOME (LOSS) BEFORE TAX                                     (2,164,227)      975,374
INCOME TAX (BENEFIT)                                                     --            --
                                                                -----------   -----------
NET INCOME (LOSS)                                                (2,164,227)      975,374
OTHER COMPREHENSIVE INCOME
   Foreign currency translation adjustment, net of tax effect      (479,425)      536,241
                                                                -----------   -----------
COMPREHENSIVE INCOME (LOSS)                                     $(2,643,652)  $ 1,511,615
                                                                ===========   ===========
EARNINGS (LOSS) PER SHARE                                       $     (0.16)  $      0.08
                                                                ===========   ===========
WEIGHTED AVERAGE SHARES OUTSTANDING                              13,190,049    12,608,901
                                                                ===========   ===========


See notes to consolidated financial statements.


                                      F-3


CROWN NORTHCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004



                                                                              Convertible Preferred Stock
                                                        ----------------------------------------------------------------------
                                     Common Stock           Series CC         Series DD         Series EE         Series FF
                                 --------------------   ----------------   ---------------   ---------------   ---------------
                                   Shares               Shares             Shares            Shares            Shares
                                   Issued      Amount   Issued    Amount   Issued   Amount   Issued   Amount   Issued   Amount
                                 ----------   -------   ------   -------   ------   ------   ------   ------   ------   ------
                                                                                          
BALANCE, DECEMBER 31, 2003       12,455,778   152,501      1                  1                 1                 1
   Net loss
   Audit adjustments                               --
   Reclassification adjustment           --        --     --
   Comprehensive Income
   Issuance of common stock         690,000     6,900
                                 ----------   -------    ---       ---      ---      ---      ---      ---      ---      ---
BALANCE, DECEMBER 31, 2004       13,145,778   159,401      1        --        1       --        1       --        1       --
   Net income (loss)
   Reclassification adjustment
   Issuance of common stock         173,750     1,738     --                                   --
                                 ----------   -------    ---       ---      ---      ---      ---      ---      ---      ---
BALANCE, DECEMBER 31, 2005       13,319,528   161,139      1        --        1       --        1       --        1       --
                                 ==========   =======    ===       ===      ===      ===      ===      ===      ===      ===


                                             Convertible Preferred Stock
                                 ---------------------------------------------------
                                    Series GG         Series HH         Series II
                                 ---------------   ---------------   ---------------   Additional                  Accumulated
                                 Shares            Shares            Shares              Paid-In    Accumulated   Comprehensive
                                 Issued   Amount   Issued   Amount   Issued   Amount     Capital      Deficit         Income
                                 ------   ------   ------   ------   ------   ------   ----------   -----------   -------------
                                                                                       
BALANCE, DECEMBER 31, 2003          1                15                12              20,058,116   (8,101,180)      114,231
   Net loss                                                                                    --      975,374
   Audit adjustments                                                                      (11,694)      13,336
   Reclassification adjustment                                                                 --      114,231      (114,231)
   Comprehensive Income                                                                                              536,241
   Issuance of common stock                                                                71,100
                                  ---      ---      ---      ---      ---       ---    ----------   ----------      --------
BALANCE, DECEMBER 31, 2004          1       --       15       --       12        --     20,117,522   (6,998,239)      536,241
   Net income (loss)                                                                           --   (2,164,229)
   Reclassification adjustment                                                                              --      (479,426)
   Issuance of common stock        --                                                      33,011
                                  ---      ---      ---      ---      ---       ---    ----------   ----------      --------
 BALANCE, DECEMBER 31, 2005         1       --       15       --       12        --    20,150,533   (9,162,468)       56,815
                                  ===      ===      ===      ===      ===       ===    ==========   ==========      ========



                                     Treasury Stock          Total
                                 ---------------------   Shareholders'
                                   Shares      Amount        Equity
                                 ----------   --------   -------------
                                                
BALANCE, DECEMBER 31, 2003       (1,194,010)  (177,058)   12,046,610
   Net loss                                                  975,374
   Audit adjustments                                           1,642
   Reclassification adjustment           --         --            --
   Comprehensive Income                                      536,241
   Issuance of common stock              --                   78,000
                                 ----------   --------    ----------
BALANCE, DECEMBER 31, 2004       (1,194,010)  (177,058)   13,637,867
   Net income (loss)                                      (2,164,229)
   Reclassification adjustment                              (479,426)
   Issuance of common stock              --                   34,749
                                 ----------   --------    ----------
BALANCE, DECEMBER 31, 2005       (1,194,010)  (177,058)   11,028,961
                                 ==========   ========    ==========


See notes to consolidated financial statements.


                                      F-4



CROWN NORTHCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004



                                                                                     2005          2004
                                                                                 -----------   -----------
                                                                                         
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)                                                             $(2,164,227)  $   975,374
   Adjustments to reconcile net loss to net cash used in operating activities:
      Depreciation and amortization                                                  701,347     1,467,930
      Equity in income from investment in partnerships and joint ventures             74,927      (138,154)
      Write off unamortized cost of disposed asset                                        --       300,544
      Provision to impairment to mortgage servicing rights                         1,906,918
      Payment of board of directors' fees by the issuance of common stock             34,749        78,001
      Change in operating assets and liabilities: net of effects from purchase
         of subsidiary Accounts receivable                                          (951,865)      310,990
         Prepaid expenses and other assets                                           (35,287)      (48,459)
         Accounts payable and accrued expenses                                       118,395       277,566
                                                                                 -----------   -----------
            Net cash provided by (used in) operating activities                     (315,043)    3,223,792
                                                                                 -----------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of property and equipment                                               (276,241)     (366,352)
   Decrease (increase) in other investments                                         (134,170)      443,170
   Decrease (increase) in restricted cash                                             (7,097)      (93,641)
   Deposits                                                                              (46)           --
                                                                                 -----------   -----------
            Net cash provided by (used in) investing activities                     (417,554)      (16,823)
                                                                                 -----------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from notes payable                                                            --       238,472
   Principal payments on notes payable                                                    --    (2,168,239)
   Issuance of  common stock                                                              --            --
                                                                                 -----------   -----------
            Net cash provided by (used in) financing activities                           --    (1,929,767)
                                                                                 -----------   -----------

NET INCREASE (DECREASE) IN CASH DURING THE PERIOD                                   (732,597)    1,277,202
EFFECT OF EXCHANGE RATE ON CASH                                                      (80,501)      (42,163)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                   3,287,103     2,052,065
                                                                                 -----------   -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                       $ 2,474,005   $ 3,287,104
                                                                                 -----------   -----------
SUPPLEMENTAL CASH FLOW INFORMATION
   Cash paid for interest                                                        $        --   $    60,635


See notes to consolidated financial statements.


                                       F-5


                     CROWN NORTHCORP, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                 For the Years Ended December 31, 2005 and 2004

NOTE 1 - BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES

     Principles of Consolidation

     The accompanying consolidated financial statements included the accounts of
     Crown NorthCorp and its majority-owned subsidiaries (collectively, the
     "Company"). Investments in majority-owned affiliates where the Company does
     not have a majority voting interest and non-majority owned affiliates are
     accounted for on the equity method. All significant intercompany balances
     and transactions have been eliminated.

     Business Description

     The Company is a financial services company providing comprehensive asset
     management and risk management services to owners and operators of
     commercial real estate interests. Assets managed are located throughout the
     United States and Europe and include commercial and residential real
     estate, performing and non-performing real estate and commercial loans,
     partnership investments and other miscellaneous assets.

     Cash and Cash Equivalents

     The Company considers all highly liquid investments with an original
     maturity of three months or less to be cash equivalents.

     Accounts Receivable

     Accounts receivable are stated at the amount management expects to collect
     from outstanding balances. Management provides for probable uncollectible
     amounts through a charge to earnings and a credit to a reserve for
     uncollectible accounts, based upon its assessment of the current status of
     individual accounts. Balances that are still outstanding after management
     has used reasonable collection efforts are written off through a charge to
     the reserve account. Changes in the reserve have not been material to the
     financial statements.

     Property and Equipment

     Property and equipment are recorded at cost. Repairs, maintenance and minor
     replacements are expensed as incurred. Depreciation is computed using the
     straight-line method over estimated useful lives of three to five years.
     Upon retirement, sale or disposition of property and equipment, the cost
     and accumulated depreciation are eliminated from the accounts, and a gain
     or loss is included in operations.


                                       F-6



                     CROWN NORTHCORP, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                 For the Years Ended December 31, 2005 and 2004

NOTE 1 - BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES - Continued

     Capitalized Software Costs

     The Company follows the accounting guidance as specified in Statement of
     Position ("SOP") 98-1, "Accounting for the Costs of Computer Software
     Developed or Obtained for Internal Use." The Company capitalizes
     significant costs in the acquisition or development of software for
     internal use, including the costs of the software, materials, consultants,
     interest and payroll and payroll-related costs for employees incurred in
     developing internal-use computer software once final selection of the
     software is made. Costs incurred prior to the final selection of software
     and costs not qualifying for capitalization are charged to expense.

     Long - Lived Assets

     The Company evaluates long-lived assets and certain identifiable
     intangibles for impairment whenever events or changes in circumstances
     indicate that the carrying amount of an asset may not be recoverable. When
     discounted future cash flows will not be sufficient to recover an asset's
     carrying amount, the asset is written down to its fair value. The discount
     rate reflects the risk that is specific to that asset. Long-lived assets to
     be disposed of other than by sale are classified as held and used until
     they are disposed of. Long-lived assets to be disposed by sale are
     classified as held for sale and are reported at the lower of carrying
     amount or fair value less cost to sell, and depreciation is ceased.

     Loan Servicing Rights

     The Company records an asset upon the sale of a loan with servicing
     retained and allocates the cost of the loan to the servicing rights and to
     the loans based on their relative fair values. Fair values are estimated
     using discounted cash flows based on a current market interest rate. The
     resulting gain on sale of loans is included in mortgage origination. The
     Company also purchases mortgage servicing rights and records such rights at
     the cost to purchase.

     The cost of loan servicing rights is amortized in proportion to, and over
     the period of, estimated net servicing revenues. Impairment of loan
     servicing rights is assessed based on the fair value of those rights. The
     carrying amount of loan servicing rights approximates the fair value.

     Investments in Partnerships and Joint Ventures

     Certain of the Company's general partner and joint venture investments
     (ranging from 20% to 50%) are carried at cost, adjusted for the Company's
     proportionate share of undistributed earnings and losses because the
     Company exercises significant influence over their operating and financial
     activities.


                                       F-7



                     CROWN NORTHCORP, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                 For the Years Ended December 31, 2005 and 2004

NOTE 1 - BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES - Continued

     Investments in Mortgage Loans

     Mortgaged investments are stated at cost netted with a corresponding
     reserve to reflect the actual purchase price of the assets. The cost of the
     mortgaged investments is $2,119,706 and $2,728,187 at December 31, 2005 and
     2004, respectively, netted with a reserve of $1,472,099 and $1,790,509 at
     December 31, 2005 and 2004, respectively.

     Reserve for Loan Losses

     The Company established an allowance for loan losses to provide for
     estimated losses in acquired mortgage portfolios serviced. The Company sold
     the mortgage portfolio in December 1999 (See Note 4). At the time, a
     reserve balance was established to offset losses incurred or sustained by
     the purchaser by reason of or associated with the mortgage loans. There
     were no charges against the reserve in 2005 or 2004.

     Income Taxes

     Deferred tax assets and liabilities are reflected at currently enacted
     income tax rates applicable to the period in which the deferred tax assets
     or liabilities are expected to be realized or settled. As changes in the
     tax laws or rates are enacted, deferred tax assets and liabilities are
     adjusted through the provision for income taxes.

     Loan Servicing Fees

     Loan servicing fees are recognized as earned under the terms of the related
     servicing contract.

     Management Fees

     Management fees are recorded as services required under the contracts are
     performed, and are based on a percentage applied to the aggregate value of
     assets managed, as assigned in the contracts, or on original base monthly
     amounts, as defined in the contracts. Upon each disposition, withdrawal or
     addition of an asset or asset group, the management fee is adjusted to
     reflect the change in aggregate value of the assets. Management fees are
     calculated on a daily basis as set forth in the contracts.


                                       F-8



                     CROWN NORTHCORP, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                 For the Years Ended December 31, 2005 and 2004

NOTE 1 - BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES - Continued

     Disposition Fees

     Disposition and bonus fees, less retainages, are recorded as revenue when
     the disposition of an asset has been consummated and the gross proceeds
     from the disposition have been received by the asset owner. Disposition
     fees are generally based on a percentage of the proceeds of an asset
     disposition, as defined by the contracts, or a fixed amount per
     disposition.

     Incentive Fees

     Certain contracts provide for incentive fees if the Company achieves net
     cash collections in excess of thresholds established in the contracts. Upon
     substantial achievement of related thresholds, long-term contract revenues
     are recognized on the percentage-of-completion method based on assets
     realized relative to total contract assets, net of any anticipated losses.
     Billings for long-term contracts are rendered periodically, as permitted by
     contract terms.

     Foreign Currency Translation

     Results of operations for the Company's non-U.S. subsidiaries and
     affiliates are translated from the designated functional currency to the
     U.S. dollar using average exchange rates during the period, while assets
     and liabilities are translated at the average monthly exchange rate in
     effect at the reporting date. Resulting gains or losses from translating
     foreign currency financial statements are reported as other comprehensive
     income (loss). The effect of changes in exchanges rates between the
     designated functional currency and the currency in which a transaction is
     denominated are recorded as foreign currency transaction gains (losses).

     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 and disclosure of contingent assets and
     liabilities at the date of the financial statements and the reported
     amounts of revenue and expenses during the reporting period. Actual results
     could differ from those estimates.


                                       F-9



                     CROWN NORTHCORP, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                 For the Years Ended December 31, 2005 and 2004

NOTE 1 - BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES - Continued

     Credit Risk

     The Company maintains several cash accounts in the United States. The
     balances are insured by the Federal Deposit Insurance Corporation up to
     $100,000. At December 31, 2005 and 2004, the Company's uninsured cash
     balances total $1,775,673 and $2,297,355, respectively. Management believes
     that the risk is limited because the institutions are large national
     institutions with strong financial positions.

     The Company also maintains several cash accounts in the United Kingdom. The
     balances are insured by the Financial Services Compensation Scheme
     established under the Financial Services and Markets Act of 2000 up to
     approximately $61,000. At December 31, 2005 and 2004, the Company's
     uninsured cash balances total approximately $456,000 and $465,000,
     respectively. Management believes that the risk is limited because the
     institution is a large national institution with a strong financial
     position.

     Recently Issued Accounting Standards

     SFAS No. 123 (revised 2004) "Share-Based Payment" (SFAS No 123R), was
     issued December 2004. SFAS No 123R amends SFAS No. 123 and supersedes
     Accounting Principles Board Opinion No. 23, "Accounting for Stock Issued to
     Employees," and its related implementation guidance. SFAS No. 123R
     establishes standards for the accounting for transactions in which an
     entity exchanges its equity instruments for goods or services. SFAS No.
     123R also addresses transactions in which an entity incurs liabilities in
     exchange for goods or services that are based on the fair value of the
     entity's equity instruments or that may be settled by the issuance of such
     equity instruments. SFAS No. 123R requires a public entity to measure the
     cost of employee services received in exchange for an award of equity
     instruments based on the grant-date fair value of the award. That costs is
     to be recognized over the period during which an employee is required to
     provide services in exchange for the award. SFAS No. 123R is effective as
     of the beginning of the first interim or annual reporting period that
     begins after December 15, 2005. The Company does not anticipate that the
     adoption of this statement will have a material effect on the financial
     position or results of operations.

     SFAS No. 153 "Exchanges of Nonmonetary Assets, an amendment of Accounting
     Principles Board Opinion No. 29" SFAS No. 153 eliminates the exception for
     nonmonetary exchanges of similar productive assets and replaces it with a
     general exception of exchanges of nonmonetary assets that do not have
     commercial substance. A nonmonetary exchange has commercial substance if
     the future cash flows of the entity are expected to change significantly as
     a result of the exchange. SFAS No. 153 is effective for nonmonetary asset
     exchanges occurring in the fiscal period beginning after June 15, 2005. The
     Company does not anticipate that the adoption of this statement will have a
     material effect on the financial position or results of operations.


                                      F-10



                     CROWN NORTHCORP, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                 For the Years Ended December 31, 2005 and 2004

NOTE 1 - BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES - Continued

     SFAS No. 154, "Accounting Changes and Error Corrections, a replacement of
     APB Opinion No. 20, Accounting Changes and FASB Statement No. 3, Reporting
     Accounting Changes in Interim Financial Statements" was issued by the
     Financial Accounting Standards Board in May 2005. SFAS No. 154 provides
     guidance on the accounting for and reporting of accounting changes and
     error corrections. It establishes, unless impracticable, retrospective
     application as the required method for reporting a change in accounting
     principle in the absence of explicit transition requirements specific to
     the newly adopted accounting principle. SFAS No. 154 also provides guidance
     for determining whether retrospective application of a change in accounting
     principle is impracticable and for reporting a change when retrospective
     application is impracticable. The provisions of this Statement are
     effective for accounting changes and corrections of errors made in fiscal
     periods beginning after December 15, 2005. The adoption of the provisions
     of SFAS No. 154 is not expected to have a material impact on our financial
     position or results of operations.

     SFAS No. 156 "Accounting for Servicing of Financial Assets - an amendment
     of FASB No. 140" was issued by the Financial Accounting Standards Board in
     March 2006. SFAS No.156 requires an entity to recognize a servicing asset
     or servicing liability each time it undertakes an obligation to service a
     financial assets by entering into a servicing contract in any of the
     following situations: 1) a transfer of the servicer's financial assets that
     meets the requirements for sale accounting, 2) a transfer of the servicer's
     financial assets to a qualifying special-purpose entity in a guaranteed
     mortgage securization in which the transferor retains all of the resulting
     securities and classifies them as either available-for-sale securities or
     trading securities, or 3) an acquisition or assumption of an obligation to
     service a financial assets that does not relate to financial assets of the
     servicer or its consolidated affiliates. Further, SFAS No. 156 requires all
     separately recognized servicing assets and servicing liabilities to be
     initially measured at fair value, if practicable. And lastly, SFAS No. 156
     permits the entity to choose either the amortization method or fair value
     measurement method for subsequent measurement methods for each class of
     separately recognized servicing assets and servicing liabilities. SFAS No.
     156 is effective as of the beginning of the first fiscal year that begins
     after September 15, 2006, which earlier adoption permitted. The Company has
     not yet assessed the effect of this accounting standard on its financial
     position or results of operations.

     Reclassifications

     Certain reclassifications of prior year amounts have been made to conform
     with current year presentation.


                                      F-11



                     CROWN NORTHCORP, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                 For the Years Ended December 31, 2005 and 2004

NOTE 2 - PROPERTY AND EQUIPMENT AND CAPITALIZED SOFTWARE COSTS

     Property and equipment consists of the following at December 31:



                                    2005          2004
                                -----------   -----------
                                        
Furniture and equipment         $ 1,593,166   $ 1,365,133
Less accumulated depreciation    (1,137,397)   (1,081,897)
                                -----------   -----------
Property and equipment - net    $   455,769   $   283,236
                                ===========   ===========


     Depreciation expense for the year ended December 31, 2005 and 2004 was
     $340,295 and $437,627, respectively.

     Capitalized software consists of the following at December 31:



                                    2005         2004
                                -----------   ----------
                                        
Capitalized software            $ 1,538,011   $1,525,305
Less accumulated amortization    (1,121,036)    (749,331)
                                -----------   ----------
Capitalized software - net      $   416,975   $  775,974
                                ===========   ==========


     Amortization expense for capitalized software for the year ended December
     31, 2005 and 2004 was $372,750 and $388,095, respectively.

NOTE 3 - INVESTMENTS IN AFFILIATES AND JOINT VENTURES

     The Company has investments in affiliates that are accounted for using the
     equity method of accounting.

     TITRISATION BELGE-BELGISCHE EFFECTISERING SA/NV

     In October 2003, Crown Mortgage Management Limited, a subsidiary of the
     Company ("CMM") acquired 75% of the shares in Titrisation Belge-Belgische
     Effectisering SA/NV ("TBE") for 110% of the net asset value at September
     30, 2003, approximately $532,300. Fortis Bank acquired a 25% share. CMM and
     Fortis agreed to jointly own TBE with a view of developing its master
     servicing business. Within a few days of the original transaction, CMM sold
     25% of its share to Fortis for $177,434 thereby creating a 50/50 joint
     venture.


                                      F-12



                     CROWN NORTHCORP, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                 For the Years Ended December 31, 2005 and 2004

NOTE 3 - INVESTMENTS IN AFFILIATES AND JOINT VENTURES - Continued

     Summarized condensed financial information of TBE, a 50% owned corporate
     joint venture accounted for by the equity method follows:



Balance sheet at
December 31,                 2005       2004
----------------           --------   --------
                                
Assets:
   Current assets          $634,371   $767,820
   Fixed Assets            $177,610   $119,010
Liabilities:
   Current liabilities     $ 94,975   $127,828
Income statement:
   Revenue                 $737,304   $638,566
   Expense                  668,489    607,602
                           --------   --------
   Net income before tax     68,814     30,964
   Tax                       23,290     10,543
                           --------   --------
   Net income              $ 45,524   $ 20,421
                           ========   ========


NOTE 4 - DISCONTINUED OPERATIONS AND DISPOSITIONS

     In December 1999, the Company sold its portfolio of loans serviced under
     the Fannie Mae Delegated Underwriting and Servicing Program. Pursuant to
     the sale agreement, $500,000 was retained as a cash reserve, to offset
     losses incurred or sustained by the purchaser by reason of or associated
     with the mortgage loans. These funds are to be held in an escrow account
     until all of the mortgage loans have been paid off. During 2005 and 2004,
     the purchaser incurred no losses in the portfolio.

NOTE 5 - LEASES

     The Company, in its operations, leases office facilities located in
     Columbus, Ohio; Austin, Texas; London, Ipswich and Farnham, England;
     Stockholm, Sweden; Frankfurt and Bochum, Germany; and Brussels, Belgium.
     All leases in effect at December 31, 2005, which expire on various dates
     through February 2010, have been classified as operating leases. Rent
     expense for the years ending December 31, 2005 and 2004 was approximately
     $450,000 and $224,000 respectively.


                                      F-13


                     CROWN NORTHCORP, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                 For the Years Ended December 31, 2005 and 2004

NOTE 5 - LEASES - Continued

     Minimum future rentals under these non-cancelable lease agreements are as
     follows:



       Commitments   Sublease      Net
       -----------   --------   --------
                       
2006     $301,505    $(61,511)  $239,994
2007      146,538     (15,377)   131,161
2008      129,664          --    129,664
2009      129,664          --    129,664
2010       10,805          --     10,805
         --------    --------   --------
         $718,176    $(76,888)  $641,288
         ========    ========   ========


     The Company has entered into agreements to sublease office spaces that are
     included above. Rental income related to the subleases for the year ended
     December 31, 2005 and 2004 was $70,540 and $32,219, respectively.

NOTE 6 - RELATED PARTY TRANSACTIONS

     MERGER TRANSACTION WITH ROYAL AND RELATED TRANSACTIONS

     Effective December 31, 2003, the Company acquired all of the issued and
     outstanding stock of Royal, of which Mr. Roark was the sole shareholder.
     Mr. Roark recused himself from all deliberations and votes of the Company's
     board of directors on the merger transaction. Royal operated through
     subsidiaries and affiliates, including but not limited to Crown NorthCorp
     Limited ("CNL") and CMM, providing loan servicing and third-party asset
     management services for real estate-related assets in Europe. Through the
     merger transaction, the Company acquired these European operations.

     In conjunction with the merger transaction, the Company's board of
     directors has also authorized stock split transactions. (See Note 7).

     In exchange for all of the issued and outstanding stock of Royal, Mr. Roark
     will receive 12,000,000 shares of the Company's common stock. The
     principle followed in determining the amount of consideration was arm's
     length negotiation. The approximately 1,125,803 shares of the Company's
     common stock held by Royal become treasury stock of the Company.

     Prior to the merger transaction, Royal distributed to Mr. Roark, as its
     sole shareholder, all of Royal's assets other than the Company's common
     stock held by Royal and Royal's ownership of all of the stock of CNL, which
     subsidiary conducts the European operations acquired by the company.
     Simultaneously, Mr. Roark assumed all of Royal's liabilities and
     indemnified the Company from any losses arising from Royal's operations.


                                      F-14



                     CROWN NORTHCORP, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                 For the Years Ended December 31, 2005 and 2004

NOTE 6 - RELATED PARTY TRANSACTIONS - Continued

     At the time of the merger transaction, the Company owed Royal $500,000 plus
     interest under an unsecured promissory note, representing operating funds
     Royal has advanced to the Company from time to time. Royal distributed this
     promissory note to Mr. Roark as described above so that the Company then
     owed this indebtedness to Mr. Roark personally. The indebtedness was repaid
     during 2004.

     Also at the time of the merger transaction, CMM owed Royal $1,271,964.
     Royal distributed this promissory note to Mr. Roark so that CMM then owed
     this indebtedness to Mr. Roark personally. This indebtedness was also
     repaid during 2004.

     PREFERRED STOCK

     The company issued the following series of convertible preferred stock to
     affiliates of Mr. Roark: one share of Series CC Convertible Preferred Stock
     in September 2000 in exchange for $500,000 cash; one share of Series DD
     Convertible Preferred Stock in May 2001 in exchange for $200,000 cash; one
     share of Series FF Convertible Preferred Stock in September 2001 in
     exchange for $335,803.70 cash; one share of Series GG Convertible Preferred
     Stock in September 2001 in exchange for $140,000; pursuant to an agreement
     effective September 20, 2001, a total of 15 shares of Series HH Convertible
     Preferred Stock in exchange for $150,000 cash; and, pursuant to an
     agreement effective March 27, 2002, a total of 12 shares of Series II
     Convertible Preferred Stock in exchange for $120,000 cash. (See Note 7).
     Each of these issuances will be converted to common stock in accordance
     with the terms of the respective issuances.

     OTHER TRANSACTIONS AND RELATIONSHIPS

     In conjunction with his election as Chairman of the Company's Board of
     Directors effective January 1, 2005, the company and Stefan Lennhammer have
     entered into a retainer agreement calling for him to receive quarterly
     compensation of 2,500 Euros (approximately $3,200) during 2005 for his
     service as Chairman. Effective September 1, 2004, the company entered into
     an advisory services agreement with REEDA Management AB, of which Mr.
     Lennhammer is Managing Director, for a term expiring December 31, 2005.
     Under this agreement REEDA received a monthly fee of 17,500 Euros through
     December 31, 2004 and will receive a quarterly fee of 50,000 Euros
     (approximately $65,000) through the expiration of the agreement.

     In 2003, the Company's management asked Grace Jenkins, a member of the
     Company's board of directors, to perform certain tasks, including
     overseeing of an upgrade of the company's computer system and assisting in
     dealings with Midland Loan Services. During 2005 and 2004, the Company paid
     Ms. Jenkins $10,000 and $120,000, respectively.


                                      F-15



                     CROWN NORTHCORP, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                 For the Years Ended December 31, 2005 and 2004

NOTE 6 - RELATED PARTY TRANSACTIONS - Continued

     Since January 2001, the Company has performed asset management activities
     for parties holding ownership interests in several multifamily projects
     that receive subsidies from the U.S. Department of Housing and Urban
     Development. Mr. Roark, or an affiliate of his, has partnership interests
     in substantially all of the projects for which Crown presently performs
     services. The rates and fees the company charges for its services are in
     accordance with HUD's guidelines and regulations where applicable.
     Unregulated rates and fees are at market levels.

     The Company conducts some of its operations through joint ventures and
     partnerships and provides certain services to those entities.

NOTE 7 - SHAREHOLDERS' EQUITY

     At December 31, 2005 and 2004, the Company has 30,000,000 authorized shares
     of its $.01 par value common stock ("Common Stock") and 1,000,000
     authorized share of its preferred stock.

     During 2000 the Company entered into an employee termination agreement with
     various executive employees. As a result of that agreement the Company
     issued warrants entitling the holders to purchase, after accounting for the
     splits of the Company's Common Stock effective December 31, 2003, up to
     49,000 shares of common stock at $.70 per share. All of these warrants are
     exercisable and anti-dilutive.

     A stock option plan for the outside directors of the Company was approved
     by the Company's shareholders in 1995. Under the plan, each outside
     director may be granted options for 10,000 shares of the Company's common
     stock at an option price equal to the common stock's market value on the
     date of the grant. The options vest over a four-year period if the Company
     achieves certain stock price thresholds. No options have been granted as of
     December 31, 2005.

     The Company applies Accounting Principles Board ("APB") Opinion No. 25 and
     related interpretations in accounting for its stock options. Application of
     this accounting policy would have had a negligible effect on the
     accompanying financial statements for 2005 and 2004.


                                      F-16



                     CROWN NORTHCORP, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                 For the Years Ended December 31, 2005 and 2004

NOTE 8 - BENEFIT PLANS

     The Company sponsors a defined contribution retirement plan for certain of
     its U.S. employees who had attained the age of 21 and had provided six
     months of service. The Company matches 25% of the first 4% of the
     employees' contributions and employer contributions were $917 and $1,490 in
     2005 and 2004, respectively.

     The Company subsidiary in the United Kingdom sponsors a defined
     contribution retirement plan for its employees. The Company will match the
     employee's contributions to the plan up to a maximum of 5% per year. The
     plan is available to all full-time employees. The Company contributed
     $80,116 and $78,648 during 2005 and 2004, respectively.

NOTE 9 - INCOME TAXES

     For the years ended December 31, 2005 and 2004, the components of income
     tax expense consists of the following:



           2005   2004
           ----   ----
            
Current     $--    $--
            ---    ---
Deferred    $--    $--
            ===    ===


     The income tax (benefit) expense differs from the amount computed by
     applying the statutory federal income tax rate of 34% to pretax earnings
     (loss) from continuing operations as follows:



                                                2005         2004
                                             ---------   -----------
                                                   
Expected tax/(benefit) at statutory rates    $(735,837)  $   331,627
Non-deductible foreign losses                  853,361       808,837
Amortization of loan servicing rights          627,578            --
Management fees from UK operations             204,000       204,000
Tax-exempt income                                   --    (2,046,834)
Amortization of retained servicing rights       21,076        84,447
Depreciation expense and other                   3,588         1,431
Goodwill                                       (10,002)           --
(Decrease)/increase in valuation allowance    (963,764)      616,492
                                             ---------   -----------
Income tax expense                           $      --   $        --
                                             =========   ===========



                                      F-17


                     CROWN NORTHCORP, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                 For the Years Ended December 31, 2005 and 2004

NOTE 9 - INCOME TAXES - Continued

The Company has approximately $7,100,000 of operating loss carryforwards
available December 31, 2005, which expire in varying amounts from 2011 through
2019.

Included in net income before taxes are losses of $2,510,000 from CNL's
operations in the United Kingdom.

At December 31, 2005 and 2004, the Company had recorded a net deferred tax asset
as follows:



                                               2005          2004
                                           -----------   -----------
                                                   
Deferred tax assets:
   Operating loss carryforward             $ 2,494,277   $ 3,509,755
   Loan loss reserves                           85,077        82,593
   Goodwill                                     36,896            --
   Amortization of loan servicing rights         7,789            --
                                           -----------   -----------
Sub-total                                    2,624,039     3,592,348
   Valuation allowance                      (2,602,205)   (3,540,652)
                                           -----------   -----------
Total assets                                    21,834        51,696
Deferred tax liabilities:
   Software amortization                       (21,834)      (15,990)
   Deferred loan servicing                          --       (35,706)
                                           -----------   -----------
Total liabilities                              (21,834)      (51,696)
                                           -----------   -----------
Net deferred tax assets                    $        --   $        --
                                           ===========   ===========


NOTE 10 - MORTGAGE SERVICING FOR OTHERS

     Mortgage loans serviced for others are not included in the accompanying
     consolidated balance sheets. The unpaid principal balances of mortgage
     loans serviced for others were approximately $4.2 billion and $5.0 billion
     at December 31, 2005 and 2004, respectively. As of December 31, 2005 the
     Company was also the standby servicer for loans with an aggregate unpaid
     principal balance of $5.8 billion.

     Custodial escrow balances maintained in connection with the foregoing loan
     servicing, excluded from the accompanying consolidated balance sheet, were
     approximately $0.5 million and $2 million at December 31, 2005 and 2004,
     respectively.

     Mortgage servicing rights of $4.8 million and $6.5 million were capitalized
     as of December 31, 2005 and 2004, respectively. Mortgage servicing rights
     are recorded at fair value. Such value is determined by the discounted cash
     flow method using a 15% discount


                                      F-18



                     CROWN NORTHCORP, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                 For the Years Ended December 31, 2005 and 2004

NOTE 10 - MORTGAGE SERVICING FOR OTHERS - Continued

     rate over the average remaining contractual life of the mortgages adjusted
     for estimated delinquencies and estimated prepayments.

     The servicing assets are grouped by servicing type when evaluating such
     assets for impairment. During 2005, adjustments to the value of the
     servicing rights totaling $1.9 million were charged to expense due to
     deemed impairment.

NOTE 11 - VARIABLE INTEREST ENTITIES

     During the years ended December 31, 2005 and 2004, the Company had
     relationships with a total of three variable interest entities where the
     Company is deemed not to be the primary beneficiary. The Company
     transferred one of these interests, Rooftop Mortgages Limited ("Rooftop"),
     in 2004 and sold another owned by Crown European Holdings Limited ("CEH")
     in 2005. Consequently, the Company, as of December 31, 2005, has a
     relationship with only one variable interest entity, Crown Intressenter AB
     ("CIAB").

     ROOFTOP MORTGAGES LIMITED

     In September 2003, Crown Asset Management Limited ("CAM") formed Rooftop as
     a wholly owned subsidiary. Rooftop had 1,000 common shares authorized at
     one Pound Sterling per share. At December 31, 2003 there was 1 share issued
     and outstanding.

     Rooftop operated as a sub-prime residential lender in England, Wales,
     Scotland and Northern Ireland and as such was a party to agreements for the
     origination and sale of loans. Pursuant to the terms of a Mortgage Sale
     Agreement and related transaction documents, Rooftop agreed to forgo
     certain rights and transfer certain risks normally belonging to a
     stockholder to its funder, such that it was no longer appropriate to fully
     consolidate Rooftop into the Crown group. CAM was not deemed to be the
     primary beneficiary because of the significant rights and risks transferred
     pursuant to the transaction documents.

     In September 2004, CAM transferred its ownership in Rooftop to Rooftop
     Holdings Limited in exchange for 20 Ordinary Shares of Rooftop Holdings
     Limited. Each share is valued a 1 Pound Sterling. CAM's ownership interest
     in Rooftop Holdings Limited, is effectively 20%. CAM uses the equity method
     to account for this investment.

     CROWN EUROPEAN HOLDINGS LIMITED

     In May 2003, Crown Properties Holding AB ("CPH"), Crown Fastighter AB, HVB
     Real Estate Investment Banking Limited, Bayerische Hypo-und Vereinsbank
     Aktiengesellschaft, Real Estate Scandinavia, Stockholm Branch, and certain
     other parties entered into a $79,000,000 facilities agreement.


                                      F-19



                     CROWN NORTHCORP, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                 For the Years Ended December 31, 2005 and 2004

NOTE 11 - VARIABLE INTEREST ENTITIES - Continued

     Royal and CNL used the above funds to purchase the entire issued share
     capital of Axfood Fastigheter AB from Axfood AB (the "Axfood Shares"), a
     Swedish company that operated supermarket properties throughout Sweden. CNL
     contributed an additional $5,834,000 by way of $3,500,000 in equity in CPH
     and a subordinated loan of $2,300,000, originally advanced by Royal to CNL.

     In September 2003, CNL refinanced the majority of its investment in CPH
     by using $4,200,000 advanced from Kenmore Scandinavian Limited, a Kenmore
     Properties Group company (a third-party, Scottish-based property investment
     company). Crown European Holdings Limited ("CEH") used the funds to
     purchase the entire issued share capital of CPH and to acquire the
     subordinated loan advanced by CNL to CPH. Kenmore's loan was secured by a
     debenture and Kenmore was also granted three "A" preference shares carrying
     rights to the profit distribution from CPH in the proportion of their
     loans, approximately 73%. Royal received one "B" preference share with
     carrying rights to a share of the profit distribution from CPH,
     approximately 27%. This share was transferred to Ronald E. Roark, the
     Company's Chairman, as part of the merger of Royal. In addition, CNL
     pledged its ordinary stock in CEH as additional security for Kenmore.
     Thus, Kenmore has the voting control of the ordinary share of CEH via the
     security agreement.

     The Company could earn income under an Asset Manager agreement in four
     ways:

          1.   An annual management fee based as a percentage of the asset
               value;

          2.   Approximately $13,600 per month to cover management costs;

          3.   Subject to board approval, 1% of the gross sales price of any
               assets sold;

          4.   A promote fee as a percentage of net distributions if Return on
               Capital Employed ("ROCE") exceeded 20% per annum. However, the
               promote fee will not exceed the amounts paid out in distributions
               to Kenmore and Mr. Roark.

     This agreement was deemed to be a variable interest. The Company had only
     its equity investment at risk in the CEH venture. The equity investment was
     one Pound Sterling. CMM was not deemed to be the primary beneficiary
     because of the significant rights and risks assumed by Kenmore pursuant to
     the transaction documents. Due to Kenmore's voting rights via the security
     agreement, Kenmore can terminate the Asset Manager agreement at any time.
     In addition, Kenmore had to approve the operating budget, any capital
     expenditure, any disposals of assets, any borrowings, and any factoring or
     discounting of debt. Also, there was no financial recourse to CNL.
     Moreover Kenmore, through the 73% preference share dividend would absorb a
     majority of CEH's expected losses/residual returns.

     On June 30, 2005, CEH sold the Axfood Shares to Niam Retail Holding AB
     ("Niam Retail").


                                      F-20



                     CROWN NORTHCORP, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                 For the Years Ended December 31, 2005 and 2004

NOTE 11 - VARIABLE INTEREST ENTITIES - Continued

     CROWN INTRESSENTER AB

     With the purchase of the Axfood Shares, Niam Retail acquired the remaining
     portfolio of Axfood properties (59 retail properties throughout Sweden).
     Concurrent with the purchase of the Axfood Shares, Niam Retail also
     purchased an additional portfolio of 15 freestanding retail assets known as
     the "ICA portfolio." The purchase price for the Axfood Shares and the ICA
     portfolio amounted to approximately $95,550,000. The purchase was financed
     through an $81,350,000 loan facility from Svenska Handelsbanken AB
     ("Svenska") and $14,200,000 in equity contributions and loans: from Niam
     Fastighetsholding III AB ("Niam III") $10,625,000 and from CIAB $3,575,000.
     Niam III has guaranteed the loan from Svenska.

     The business plan of Niam Retail is to manage the day-to-day leasing of the
     portfolio, to sell individual properties as opportunities arise and to grow
     the portfolio through additional acquisitions of retail properties in the
     Nordic region.

     Niam Retail has executed a project management agreement with Crown Asset
     Management AB ("CAM"), a 100% owned subsidiary of CMM. The agreement is
     similar to the previous agreement between CMM and CEH, in that CAM will
     recognize revenue in four ways, as follows:

          -    A fixed annual management fee of 3.000,000 Swedish Krona
               (approximately $377,000 at December 31, 2005);

          -    Additional management fees of 0.20% of the initial book value of
               the portfolio assets up to and including 1.4 Billion Swedish
               Krona (approximately $176,040,000 at December 31, 2005) and 0.15%
               of book value in excess of 1.4 Billion Swedish Krona;

          -    Disposition fees equal to 1.25% plus VAT of the net proceeds from
               all single property sales; and

          -    Promote fees defined as a portion of annual net distributable
               cash.

     Although the Company owns 74.3% of the share capital of CIAB, CIAB is not
     consolidated in the accompanying financial statements because management
     believes that the Company does not control CIAB. To fund its portion of the
     equity and loans required by CIAB to consummate the Niam transaction
     (approximately $3,575,000), the Company arranged for a loan from Forum
     European Realty Income II, LP ("Forum") of approximately $2,520,000 to
     CIAB. The Company invested approximately $120,000 in cash and certain
     members of the Company's management team contributed the balance
     (approximately $935,000) in cash.

     In connection with the Forum loan, Forum and the Company entered into an
     option agreement whereby the Company has given Forum the right, as security
     for the loan, to acquire all of the Company's CIAB shares, at Forum's
     option at any time, for par value. Should Forum exercise the option, the
     Company would no longer be a shareholder in CIAB


                                      F-21



                     CROWN NORTHCORP, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                 For the Years Ended December 31, 2005 and 2004

NOTE 11 - VARIABLE INTEREST ENTITIES - Continued

     and the Forum loan would become paid-in capital in CIAB. The project
     management agreement discussed above would not be affected. The terms of
     the Forum loan preclude the Company and CIAB from repaying the loan prior
     to June 30, 2025. While the Forum loan is outstanding, the Company has
     irrevocably and unconditionally pledged to Forum all its rights, title and
     interest in and to the CIAB shares.

     For the reasons stated above, the Company is not considered the primary
     beneficiary of CIAB. The Company has only its initial capital contribution
     at risk. Should there be a significant asset sale by Niam Retail, it is
     presumed that Forum would exercise its option on the Company's shares,
     thereby denying the Company the significant benefits of ownership. The
     shareholders' agreement between CIAB and Niam III provides for capital
     calls, but specifically states that CIAB may elect not to contribute.
     Should CIAB elect not to contribute, its equity ownership would be diluted.


                                      F-22



                     CROWN NORTHCORP, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                 For the Years Ended December 31, 2005 and 2004

NOTE 11 - VARIABLE INTEREST ENTITIES - Continued

     Following are condensed financial statements of CIAB as of the year ended
     December 31, 2005 and the period June 30, 2005 (date business commenced)
     through December 31, 2005:


                                             
Assets
Receivables
   Loan to Niam Retail                          $3,419,159
   Interest receivable Niam                         75,222
Investment in Niam Retail                            3,144
Cash                                                17,350
                                                ----------
   Total assets                                 $3,514,875
                                                ==========
Liabilities and stockholder's equity
Loans payable
   Forum                                        $2,416,335
   Shareholders                                    848,786
Accrued interest payable                            75,731
Payable to Crown Asset Management AB                43,225
Other liabilities                                   13,912
Capital stock                                      157,183
Retained earnings                                  (40,297)
                                                ----------
   Total liabilities and stockholders' equity   $3,514,875
                                                ==========
Income statement
Interest income                                 $  153,862
                                                ----------
   Total revenue                                   153,862
                                                ----------
Interest expense                                   146,930
Consultants and legal fees                          47,229
                                                ----------
   Total expenses                                  194,159
                                                ----------
Net income                                      $  (40,297)
                                                ==========



                                      F-23



                     CROWN NORTHCORP, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                 For the Years Ended December 31, 2005 and 2004

NOTE 12 - CONTINGENCIES

     Axfood Shares

     Pursuant to the terms of the share transfer agreement governing the sale of
     the Axfood Shares discussed in Note 11 above, the buyer, until June 30,
     2006, may make claims against CEH for breaches of the representations and
     warranties CEH has made in the agreement. CEH's aggregate liability for
     claims shall not exceed 72,500,000 Swedish Krona, or approximately $10
     million. The Company has guaranteed CEH's liability to pay claims.

     The representations and warranties CEH has made in the share transfer
     agreement with respect to the Axfood Shares are usual and customary for a
     stock sale transaction and encompass matters relating to: corporate
     existence, power, authority, capitalization and title; the preparation of
     financial statements in accordance with governing standards; the accuracy
     and completeness of corporate records; and the operation of properties in
     the real estate portfolio. The Company has been involved in the governance
     and administration of the sold entity and the management of its real estate
     assets and is on the opinion that there is minimal likelihood of successful
     claims for breaches of representations and warranties.

     In conjunction with guaranteeing CEH's liability for claims under the share
     transfer agreement, the Company has obtained agreements from Kenmore and
     Royal LLC to timely fund any liability the Company may have for a breach of
     a representation or warranty made by CEH. Additionally, the Company has
     received a fee of approximately $92,000 from CEH for making the guarantee.

     Other

     The Company has certain contingent liabilities resulting from claims
     incident to the ordinary course of business. Management believes that the
     probable resolution of such contingencies will not materially effect the
     consolidated financial statements of the Company.

     The Company has certain contingent liabilities resulting from contractual
     requirements in the United Kingdom in regards to employment contracts
     acquired in the merger with Royal. Upon termination (but only in the event
     of redundancy, as defined under the employment laws of the United Kingdom),
     11 employees may be entitled to receive severances based upon a formula
     taking into account years and weekly pay. The total payout is capped at a
     maximum two years of pay. At December 31, 2005 and 2004, this liability is
     approximately $817,493 and $647,000, respectively.


                                      F-24



                     CROWN NORTHCORP, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                 For the Years Ended December 31, 2005 and 2004

NOTE 13 - FAIR VALUE

     The Company is required to disclose the estimated fair value of its
     financial instruments in accordance with SFAS No. 107, "Disclosures about
     Fair Value of Financial Instruments." These disclosures do not attempt to
     estimate or represent the Company's fair value as a whole. The disclosure
     excludes assets and liabilities that are not financial instruments. The
     fair value amounts disclosed represent point-in-time estimates that may
     change in subsequent reporting periods due to market conditions and other
     factors. Estimated fair value amounts in theory represent the amounts for
     which financial instruments could be exchanged in transactions between
     willing parties.

     Estimated Fair values:



                                                 2005                        2004
                                      -------------------------   -------------------------
                                        Carrying     Estimated      Carrying     Estimated
                                         Value       Fair Value      Value       Fair Value
                                      -----------   -----------   -----------   -----------
                                                                    
Financial assets:
   Cash and other short term
      financial instruments           $ 2,842,482   $ 2,842,482   $ 3,638,235   $ 3,638,235
   Investments                                 --            --
   Loans                                2,119,706     2,119,706     2,728,187     2,728,187
   Allowance for losses                (1,472,099)   (1,472,099)   (1,790,509)   (1,790,509)
   Servicing Rights                     4,830,765     4,830,765     6,548,653     6,548,653
Financial liabilities:
   Short-term financial instruments
   Long-term debt



                                      F-25


ITEM 8. - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

The firm of Deloitte & Touche LLP formerly served as CNL's independent
accountant. That firm's reports on CNL's financial statements contained no
adverse opinions or disclaimers of opinion and those reports were not modified
as to uncertainty, audit scope or accounting principles. Crown had no resolved
or unresolved disagreements with Deloitte & Touche on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure.

In December 2005, Roy H. Owen became a director of Crown (See "Item 9. -
Directors and Executive Officers of Registrant" below). Mr. Owen is a retired
principal of Deloitte. To avoid any appearance of conflict, the company decided
to no longer engage Deloitte for audit work.

ITEM 8A. - CONTROLS AND PROCEDURES

Crown's principal executive and financial officers have evaluated the company's
disclosure controls and procedures in place on December 31, 2005 and have
concluded that they are effective. There have been no significant changes in
Crown's internal controls or in other factors since that date that could
significantly affect these controls.

ITEM 8B. - OTHER INFORMATION

None.

                                    PART III

ITEM 9. - DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

The company currently has eight directors. All directors of the company hold
office until the next annual meeting of the stockholders and until their
successors have been duly elected and qualified. All officers of Crown do not
serve a term of years but serve at the pleasure of the Board of Directors. The
chairman serves under a one-year retainer agreement. The company and the vice
chairman and chief executive officer have an agreement to pay him base salary in
2006 with the possibility of incentive compensation.


                                       12



The directors and executive officers of the company as of April 10, 2006 are as
follows:



NAME                AGE                        POSITION WITH COMPANY
----                ---                        ---------------------
                    
Stefan Lennhammer    43   Chairman
Ronald E. Roark      55   Vice Chairman, Chief Executive Officer and Director
Gordon V. Smith      73   Director
David K. Conrad      50   Director
Grace Jenkins        54   Director
John S. Koczela      54   Director
Peter Walker         42   Director
Roy H. Owen          59   Director and Managing Director, United States
Clarence Dixon       45   Managing Director, Continental Europe
Hakan Larsson        37   Managing Director, Crown Asset Management, Sweden
Steven Winfield      48   Co-Managing Director, Crown Mortgage Management,
                          United Kingdom
Julien Holmes        36   Co-Managing Director, Crown Mortgage Management,
                          United Kingdom
David Scrivener      44   Assistant Secretary and Controller
Rick Lewis           52   Vice President, Treasurer and Chief Financial Officer of Crown
Stephen W. Brown     55   Secretary and Corporate Counsel


Set forth below are the principal occupations and affiliations during at least
the last five years of the directors and executive officers. All information is
as of April 10, 2006.

STEFAN LENNHAMMER became Chairman of the Board of Directors of the company
January 1, 2005. Since April 2004, he has served as Managing Director of REEDA
Management AB. From 1997 to 2004, he served as Group Chief Executive Officer of
Catella Property AB and as a director of that firm.

RONALD E. ROARK has served as Vice Chairman and Chief Executive Officer of the
company since January 1, 2005. He served as Chairman from August 4, 1994 through
December 31, 2004 and has served as Chief Executive Officer since September 1,
2000. He served as President of Royal Investments Corp. prior to its merger into
Crown and as Managing Member of Tucker Holding Company, Ltd. from 1995 to
December 31, 2003. Since 1979, he has been President of Brookville Associates,
Inc.

GORDON V. SMITH has served as a director of Crown since October 1, 1996. He has
been Chairman of the Board of Miller and Smith Holding, Inc. since 1964. From
1996 to 2000, he served as Chairman of Bank Plus. He has been a director of OMB
Bank of the Philippines since 2001.


                                       13



DAVID K. CONRAD has served as a director of Crown since January 5, 2000. Mr.
Conrad is a partner in the law firm of Bricker & Eckler LLP and has been
affiliated with that firm since 1980. The firm provides some legal services to
the company.

GRACE JENKINS has served as a director of Crown since October 30, 2000. From
February 2001 to April 2003, she served as IT Process Group Leader and Senior IT
Leader of American Electric Power. From March 6, 1997 until September 1, 2000,
she served as Executive Vice President of Crown. She served as a Vice President
of the company from September 13, 1994 to that date.

JOHN S. KOCZELA has served as a director of Crown since January 1, 2005 and as a
director of its European subsidiaries since 2000. From 1996 through 2001, he
served as Executive Vice President and Managing Director of European operations
for Crown. He has also served as President of Falcon Management Group, Inc.
since 1989.

PETER WALKER has served as a director of Crown since January 1, 2005. He became
Finance Director of CNL in March 1999 and was Managing Director, United Kingdom
from November 2004 to March 2006. Prior to his service with the company, he
served in the Corporate Recovery Department of Ernst & Young.

ROY H. OWEN has served as a director of Crown since December 2, 2005 and as
Managing Director, United States since January 1, 2006. Since 2003, he has
served as Principal of Amsterdam Advisors. From 1990 through 2002, he served as
a principal of Deloitte & Touche LLP and a principal of Deloitte Consulting.

CLARENCE DIXON has served as Managing Director, Continental Europe, since August
2004. Prior to joining Crown, he served as Executive Vice President of Aareal
Bank.

HAKAN LARSSON joined Crown in 2003 and became Managing Director, Crown Asset
Management, Sweden in 2005. From 1992 to 2003 he was employed by Axfood
Fastigheter AB, where he was appointed Managing Director in 1999.

STEVEN WINFIELD has headed servicing for CMM in November 2004 and was appointed
Co-Managing Director in March 2006. Prior to coming to Crown, he held various
positions with Birmingham & Midshires Building Society from 1993 to 2002 and
with Co-Operative Bank plc from 2002 to 2004.

JULIEN HOLMES joined Crown in 1985 and has held several management positions
with the company. He was appointed Co-Managing Director of CMM in March 2006.

DAVID SCRIVENER has managed corporate and client reporting functions for CNL for
approximately twenty years and, since September 1999, has served as finance
manager. He became Crown's Assistant Secretary and Controller in November 2004.


                                       14



RICK LEWIS has served as the company's Treasurer and Chief Financial Officer
since September 1, 2000 and as Vice President since February 22, 2000. Since
1994, he has administered the company's U.S. loan servicing operations.

STEPHEN W. BROWN has served as Secretary of Crown since September 13, 1994 and
as Corporate Counsel since August 1996. Since March 1992, he has served Crown in
various asset management capacities and as a legal counsel.

Audit Committee Financial Expert

The company's Board of Directors has determined that Mr. Smith, an independent
director, serves as the Audit Committee financial expert.

Code of Ethics

Crown has adopted a code of ethics applicable to its principal executive,
financial and accounting officers. A copy of the code is available without
charge, upon request, by writing to Secretary, Crown NorthCorp, Inc., 1251
Dublin Road, Columbus, Ohio 43215.


                                       15



ITEM 10. - EXECUTIVE COMPENSATION

The following table sets forth information for the year ended December 31, 2005
with respect to Crown's Chief Executive Officer and the next four most highly
compensated executive officers other than the Chief Executive Officer.



                            YEAR ENDED                          ALL OTHER
          NAME             DECEMBER 31    SALARY     BONUS    COMPENSATION
          ----             -----------   --------   -------   ------------
                                                  
Ronald E. Roark,              2005       $100,000   $     0      $     0
Vice Chairman and             2004       $100,000   $     0      $     0
CEO (1)                       2003       $      0   $     0      $10,000

Peter Walker,                 2005       $181,984   $     0      $     0
Managing Director,            2004       $149,281   $40,219      $     0
United Kingdom                2003       $125,867   $49,039      $     0

Rick Lewis, Vice              2005       $ 85,500   $     0      $     0
President, Treasurer and      2004       $ 85,500   $25,000      $     0
Chief Financial Officer       2003       $ 85,500   $     0      $     0

Stephen W. Brown,             2005       $ 80,000   $     0      $     0
Secretary and Corporate       2004       $ 80,000   $25,000      $     0
Counsel                       2003       $ 80,000   $     0      $     0

David Scrivener,              2005       $110,100   $ 4,550      $     0
Assistant Secretary and       2004       $ 74,002   $13,406      $     0
Controller                    2003       $ 83,366   $20,433      $     0


(1)  Mr. Roark served as Chairman of the company from August 4, 1994 through
     December 31, 2004 and as Vice Chairman since January 1, 2005. He as served
     as Chief Executive Officer from September 13, 1994 through March 28, 2000
     and again since September 1, 2000. The company pays family medical coverage
     premiums and disability insurance premiums on his behalf. In conjunction
     with the Royal merger transaction, Mr. Roark entered into a one-year
     employment agreement with the


                                       16



     company that provided for an annual salary of $100,000 plus incentive
     compensation based on Crown's earnings, with total compensation not to
     exceed $1 million. Mr. Roark elected not to receive incentive compensation
     in 2004. In 2005, Mr. Roark also received base compensation of $100,000
     with the opportunity for incentive compensation based on Crown's earnings,
     with total compensation not to exceed $1 million. He again waived any
     rights to bonus compensation in 2005. During 2006, Mr. Roark will receive
     base compensation of $100,000. Any bonus payable will be at the discretion
     of the Compensation Committee after a review of the company's performance
     for the year and an analysis of cash availability.

Each non-management director is paid an annual retainer of $12,000, payable
quarterly, $500 for each meeting of the Board of Directors and $500 for each
committee meeting attended except the Audit Committee, where the fee is $1,000
per meeting, plus expenses. The company makes retainer and attendance payments
to directors quarterly. In 2004, compensation was paid in stock of the company.
Beginning in 2005, compensation is paid half in cash and half in stock of the
company, with the stock issued at the higher of book value or market price.

ITEM 11. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

As noted above in Item 5, the Company, at December 31, 2003 had 12,455,778
shares of common stock outstanding. The following table sets forth security
ownership information regarding the common stock as of April 10, 2006 (after
giving effect to the transactions  decreased in Item 5 above) by: (i) each
person known by the company to own beneficially more than 5% of the shares of
the common stock; (ii) each director of the company; (iii) each of the
executive officers of the company named in Item 10 above and (iv) all directors
and executive officers of the company as a group. Except as otherwise noted
below, each of the shareholders identified in the table has sole voting and
investment power over the shares beneficially owned by each such shareholder.
Also, unless otherwise indicated, the address of each beneficial owner is in
care of the company, 1251 Dublin Road, Columbus, Ohio 43215.


                                       17




                                       NUMBER OF SHARES      APPROXIMATE
                NAME                    OF COMMON STOCK   PERCENT OF CLASS
                ----                   ----------------   ----------------
                                                    
Stefan Lennhammer (1)                              0             n/a
Ronald E. Roark                           10,931,157            77.1%
Gordon V. Smith(2)                           430,606             3.0%
Grace Jenkins(3)                              84,000              (7)
David K. Conrad (4)                           69,700              (7)
Peter Walker (5)                             350,000             2.5%
John S. Koczela                                    0             n/a
Roy H. Owen                                        0             n/a
Clarence Dixon                                     0             n/a
Hakan Larsson                                      0             n/a
Steven Winfield (5)                                0             n/a
Julien Holmes (5)                                  0             n/a
David Scrivener (5)                                0             n/a
Rick Lewis                                    70,000              (7)
Stephen W. Brown (6)                          78,500              (7)
All directors and executive officers
   as a group (15 persons)                12,013,963            84.8%


(1)  The mailing address for Mr. Lennhammer is c/o REEDA Management AB,
     Skeppargartan 7, SE-114 52, Stockholm, Sweden.

(2)  Represents 376,739 shares held by Mr. Smith and 53,867 shares held by The
     Gordon V. and Helen C. Smith Foundation. The mailing address for both Mr.
     Smith and the Smith Foundation is c/o Miller and Smith Holding, Inc., 1568
     Springhill Road, McLean, Virginia 22102. Mr. Smith, as president of the
     Smith Foundation, may be deemed the beneficial owner of such shares. Mr.
     Smith disclaims such beneficial ownership.

(3)  Represents ownership of 57,500 shares of common stock and warrants to
     acquire 26,500 shares of common stock at $.70 per share.

(4)  The mailing address for Mr. Conrad is c/o Bricker & Eckler LLP, 100 South
     Third Street, Columbus, Ohio 43215. The shares are owned by Bricker &
     Eckler LLP.

(5)  The mailing address for Messrs. Walker and Scrivener is c/o CNL, Crown
     House, Crown Street, Ipswich, IP1, 3HS UK.

(6)  Represents ownership of 70,000 shares of common stock and warrants to
     acquire 8,500 shares at $.70 per share.

(7)  Less than 1%.


                                       18



ITEM 12. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

MERGER TRANSACTION WITH ROYAL AND RELATED TRANSACTIONS

Effective December 31, 2003, Crown acquired all of the issued and outstanding
stock of Royal Investments Corp, a Delaware corporation of which Mr. Roark was
the sole shareholder. Mr. Roark recused himself from all deliberations and votes
of Crown's board of directors on the merger transaction. Royal operated through
subsidiaries and affiliates, including but not limited to CNL and CMM, providing
loan servicing and third-party asset management services for real estate-related
assets in Europe. Through the merger transaction, Crown acquired these European
operations.

In conjunction with the merger transaction, Crown's board of directors
authorized stock split transactions. See "Item 5 - Market for Common Equity and
Related Stockholder Matters" above.

In exchange for all of the issued and outstanding stock of Royal, Mr. Roark will
receive 12,000,000 shares of Crown's common stock following the Stock Splits.
The principle followed in determining the amount of consideration was arm's
length negotiation. The approximately 1,125,803 shares of Crown common stock
held by Royal became treasury stock of Crown.

Prior to the merger transaction, Royal distributed to Mr. Roark, as its sole
shareholder, all of Royal's assets other than the Crown common stock held by
Royal and Royal's ownership of all of the stock of CNL, which subsidiary
conducts the European operations acquired by the company. Simultaneously, Mr.
Roark assumed all of Royal's liabilities and indemnified Crown from any losses
arising from Royal's operations.

At the time of the merger transaction, Crown owed Royal $500,000 plus interest
under an unsecured promissory note, representing operating funds Royal has
advanced to Crown from time to time. Royal distributed this promissory note to
Mr. Roark as described above so that Crown owed this indebtedness to Mr. Roark
personally. Crown and Mr. Roark, through arm's length negotiations, revised the
repayment terms. The indebtedness was repaid during 2004.

Also at the time of the merger transaction, CMM owned Royal $1,271,964. Royal
distributed this promissory note to Mr. Roark so that CMM owed this indebtedness
to Mr. Roark personally. This indebtedness was also repaid during 2004.

Royal owned one "B" preference share in CFAB, entitling it to approximately 27%
of the profit distribution from CPH. This preference share was another one of
the assets distributed from Royal to Mr. Roark at the time of the merger. CMM
had an asset management contract to manage the assets held by CFAB. See "Note 11
- Variable Interest Entities - to the Consolidated Financial Statements."


                                       19



SALE OF CROWN FASTIGHETER AB

On June 30, 2005, Crown European Holding Limited ("CEH"), a subsidiary of Crown,
sold all of the stock of CFAB. At the time of the sale, CFAB held a portfolio of
59 real estate assets in Sweden. Crown managed the assets in the portfolio.
Pursuant to the terms of agreements governing this management relationship,
Crown received incentive compensation of $3,439,389 net of payment of expenses.

While Crown nominally held the equity of CEH, financing arrangements entered
into in 2003 placed 73.13% of the beneficial ownership of CEH in the hands of
Kenmore Scandinavian Limited ("Kenmore") and 26.87% of the beneficial ownership
with Royal LLC. Mr. Roark, Crown's vice chairman and chief executive officer, is
the managing member of Royal LLC.

In conjunction with the sale of CFAB, Crown has entered into a new asset
management agreement with the buyer to continue managing the acquired portfolio.

Also in conjunction with the sale of CFAB and its receipt of the incentive
compensation noted above, Crown purchased from two holders promissory notes
payable by Royal LLC for an aggregate purchase price of approximately $3.5
million. Royal LLC then repaid the promissory notes in full from its proceeds of
sale. The amount of the Royal distribution received in excess of the amounts
needed to repay the notes in full was approximately $417,000. See "Note 11 -
Variable Interest Entities - to the Consolidated Financial Statements."

The purchaser of CFAB was NIAM Retail Holding AB, an entity owned 75% by an
unaffiliated investment fund in Sweden and 25% by Crown Intressenter AB
("CIAB"). CIAB, in turn, is owned 74.3% by the company and 25.7% by various
Crown asset managers in Sweden, including a 10.1% interest held by REEDA
Management AB, of which Mr. Lennhammer is Managing Director.

CHAIRMAN AND VICE CHAIRMAN

In conjunction with his election as Chairman of Crown's Board of Directors
effective January 1, 2005, the company and Mr. Lennhammer entered into a
retainer agreement pursuant to which he received compensation of 90,000 Swedish
Kronor (approximately $12,800) during 2005 for his service as Chairman. The
company and Mr. Lennhammer have extended this agreement through 2006. Effective
September 1, 2004, the company entered into an advisory services agreement with
REEDA Management AB, of which Mr. Lennhammer is Managing Director. The extended
term of this agreement expires December 31, 2006. REEDA receives a quarterly fee
of 50,000 Euros (approximately $65,000) under this agreement.

During 2004, Mr. Roark received $100,000 under his employment agreement while
serving as the company's Chairman and Chief Executive Officer. During 2005, Mr.
Roark received a


                                       20



salary of $100,000 for his service as Vice Chairman and Chief Executive Officer.
His salary for 2006 is $100,000.

OTHER TRANSACTIONS AND RELATIONSHIPS

Crown's management asked Ms. Jenkins to perform certain tasks, including
overseeing of an upgrade of the company's computer system and assisting in
arbitration of a dispute involving the company's use of a loan servicing system.
Crown paid Ms. Jenkins $10,000 for services rendered in 2005 and $120,000 for
services in 2004.

Since January 2001, Crown has performed asset management activities for parties
holding ownership interests in several multifamily projects that receive
subsidies from the U.S. Department of Housing and Urban Development. Mr. Roark,
or an affiliate of his, has partnership interests in substantially all of the
projects for which Crown presently performs services. The rates and fees the
company charges for its services are in accordance with HUD's guidelines and
regulations where applicable. Unregulated rates and fees are at market levels.

The company conducts some of its operations through joint ventures and
partnerships and provides certain services to those entities.


                                       21


ITEM 13. - EXHIBITS

The following exhibits are filed as part of this report:



Number                    Exhibit                          Method of Filing
------                    -------                          ----------------
                                               
3.3      Restated Certificate of Incorporation       Filed herewith.

3.4      Bylaws                                      Filed herewith.

14.1     Code of Ethics                              Incorporated by reference to
                                                     Crown NorthCorp, Inc.'s
                                                     Form 10-KSB filed
                                                     April 14, 2004.

21.10    Subsidiaries of Crown NorthCorp, Inc.       Filed herewith.

31.11    Certification of officers of Crown          Filed herewith.

32.10    Certification of officers of Crown          Filed herewith.


ITEM 14. - PRINCIPAL ACCOUNTANT FEES AND SERVICES

The firm of Schoonover Boyer + Associates has served as Crown's principal
accountant for each of the past two fiscal years. The Audit Committee of Crown's
Board of Directors approved the engagement of the firm prior to the commencement
of work. Fees billed by the firm for those periods are as follows:



       AUDIT FEES   AUDIT-RELATED FEES   TAX FEES   ALL OTHER FEES
       ----------   ------------------   --------   --------------
                                        
2004     $83,251             0            $8,965           0
2005     $69,837             0            $8,147           0


Additionally, CNL engaged Deloitte & Touche LLP during each of the past two
fiscal years. Fees billed by the firm to CNL for those periods are as follows:



       AUDIT FEES   AUDIT-RELATED FEES   TAX FEES   ALL OTHER FEES
       ----------   ------------------   --------   --------------
                                        
2004    $101,105             0            $42,343          0
2005    $154,688             0            $79,261          0



                                       22



                                   SIGNATURES

     Pursuant to the requirements of Section 13 or Section 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.

Date: April 14, 2006                    Crown NorthCorp, Inc.


                                        By: /s/ Ronald E. Roark
                                            ------------------------------------
                                            Ronald E. Roark, Vice Chairman
                                            and Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.


Date: April 14, 2006                    By: /s/ Stefan Lennhammer
                                            ------------------------------------
                                            Stefan Lennhammer, Chairman


Date: April 14, 2006                    By: /s/ Ronald E. Roark
                                            ------------------------------------
                                            Ronald E. Roark, Vice Chairman and
                                            Chief Executive Officer
                                            (Principal Executive Officer)


Date: April 14, 2006                    By: /s/ Rick L. Lewis
                                            ------------------------------------
                                            Rick L. Lewis, Vice President,
                                            Treasurer and Chief Financial
                                            Officer
                                            (Principal Accounting Officer)


Date: April 14, 2006                    By: /s/ Stephen W. Brown
                                            ------------------------------------
                                            Stephen W. Brown, Secretary


Date: April 14, 2006                    By: /s/ David K. Conrad
                                            ------------------------------------
                                            David K. Conrad, Director


                                       23




Date: April 14, 2006                    By: /s/ Gordon V. Smith
                                            ------------------------------------
                                            Gordon V. Smith, Director


Date: April 14, 2006                    By: /s/ Grace Jenkins
                                            ------------------------------------
                                            Grace Jenkins, Director


Date: April 14, 2006                    By: /s/ John S. Koczela
                                            ------------------------------------
                                            John S. Koczela, Director


Date: April 14, 2006                    By: /s/ Peter Walker
                                            ------------------------------------
                                            Peter Walker, Director


Date: April 14, 2006                    By: /s/ Roy H. Owen
                                            ------------------------------------
                                            Roy H. Owen, Director


                                       24



                                INDEX TO EXHIBITS

3.3  Restated Certificate of Incorporation (1)

3.4  Bylaws (1)

14.1 Code of Ethics (2)

21.10 Subsidiaries of Crown NorthCorp, Inc. (1)

31.11 Certification of officers of Crown (1)

32.10 Certification of officers of Crown (1)

----------
(1)  Filed herewith.

(2)  Incorporated by reference to Crown NorthCorp, Inc.'s Form 10-KSB filed
     April 14, 2004.