<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10-QSB/A1
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended March 31, 1996
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1933
Commission File No. 1-12848
CROWN LABORATORIES, INC.
(Name of small business issuer in its charter)
<TABLE>
<S> <C>
Delaware 75-2300995
(State of Incorporation) (I.R.S. Employer I.D. No.)
</TABLE>
6780 Caballo Street
Las Vegas, Nevada 89119
(Address of Principal Executive Office)
(702) 696-9300
(Registrant's Telephone Number, Including Area Code)
Indicate by a check mark whether the registrant (1) has filed all the reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ____
The number of outstanding shares of the registrant's only class of common stock
as of March 31, 1996
Common Stock, $.001 par value - 14,803,306
<PAGE> 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Except for the historical information contained herein, the matters discussed
are forward looking statements that involve risks and uncertainties, including
the reaction of the U.S. Food & Drug Administration (the "F.D.A."), to the
Company's filing for aseptic approval or when the F.D.A. will respond to the
Company's filing.
The Company has been in the pre-marketing phase of operation and had limited
sales of dry mix products in the fourth quarter of 1995. For the three month
period ended March 31, 1996, the Company incurred losses of ($906,993) vs.
($663,104) in the same period in 1995. The increased loss is due to additional
salary expense and operating expenses associated with the Company's entry into
the market. The accumulated consolidated deficit at March 31, 1996 was
($8,781,934) while shareholders' equity was $6,655,556. Losses have continued
since such date due primarily to expenditures for salaries, plant start-up and
other operating expenses.
The Company has presently completed all of the bacteriological testing required
for F.D.A. aseptic certification and has filed its results on April 22, 1996 and
is awaiting a response from the F.D.A. Prior to such filing, there was a panel
of six different bacteriological kill tests that must be passed to file with the
F.D.A. They measured the machinery's recording devices' ability to collect and
record information from the pre-sterilization process, (both process and
packaging related), and continue data collection during actual manufacturing,
assuring that complete compliance with aseptic manufacturing guidelines was
maintained. After the test samples were prepared, they were incubated for a 21
day period and, upon the test results being favorable, the Process Authority
summarized the results of the tests and combined it with a systems audit
(review of machinery, manuals and operating safeguards) and presented their
findings to the F.D.A. on the Company's behalf. The Process Authority has also
submitted the results of these tests along with a description of the
low-acid aseptic processing system, the aseptic filler manual and a piping
diagram for the entire production and packaging system as required by the F.D.A.
and is awaiting a response from the F.D.A. The Company expects that the F.D.A.
will complete its review process within 30-45 days from the date of filing and
certify that the Company's manufacturing equipment, specifically the processor
and aseptic filler/packaging machine, meets F.D.A. requirements for aseptic
machinery. There can be no assurance that either of these pieces of equipment
will be approved by the F.D.A. Failure to obtain F.D.A. approval of this
equipment will preclude the Company's ability to manufacture and ship its liquid
nutritional products. The Company expects to begin the marketing of its products
shortly after approval is received.
Although the equipment manufacturers have warranted that the purchased
equipment has been manufactured to the F.D.A. regulatory specifications for
aseptic packaging and processing equipment, the filler is the first of its kind
manufactured for a U.S. company requiring F.D.A. aseptic processing approval.
The delays in certifying the Company's production equipment can be attributed
to the aseptic filling machine. The machine was unable to pass certification
testing when it was originally shipped from Germany in February. Numerous
modifications, primarily related to installing monitoring devices to seek to
meet F.D.A. requirements, have been made to the machinery at the request of the
Process Authority. The manufacturer of the aseptic filling machine has filed
for bankruptcy in the German courts. The Company has filed claim against the
manufacturer of the aseptic filler for damages caused by the delays in
certifying the filler and seeks to have these damages applied against the
purchase price of the machine. Further, the Company has filed suit in Las
Vegas, Nevada against certain persons and entities involved with the
manufacturer. To further protect its rights to the machinery and its related
technology, the Company has purchased the blueprints and the rights to its
aseptic filling machine from the German bankruptcy court. While the Company
and the equipment manufacturer believe that the machinery will ultimately be
certified, there can be no assurances that the machinery will receive
certification from the F.D.A. or that the certification will be granted within
a specific timeframe. Furthermore, even if the machinery is certified there can
be no assurances regarding, if and when the Company will commence initial
production of its liquid nutritional products or that the products will meet
with acceptance in the market.
1
<PAGE> 3
The Company has entered into agreements with certain employees which provide
for the grant of common stock and stock options which vest over a five year
period. Compensation expense relating to these common stock and option grants
is approximately $42,000 for the three months ended March 31, 1996.
FINANCIAL CONDITION
Working capital at March 31, 1996 was ($922,365) with approximately $600,000 in
accounts payable attributable to capital expenditures and leasehold
improvements. Cash and equivalents balances were $596,714 as of March 31, 1996.
Since December 31, 1995, the Company has raised an additional $500,000 from the
sale of its Series C Preferred Stock and $843,821 from the exercise of its
discounted warrants. The Company believes that it has adequate funds to support
its operations through mid-June 1996. After that time, the Company will require
additional funding to support its working capital needs as it begins to enter
the market or to provide for normal operating expenses if certification has not
been achieved. The Company is presently exploring its possible alternatives for
raising additional funds. There can be no assurances that the Company will be
able to secure the necessary financing, or if a source of funding is identified,
that the funding will be on terms and conditions which are acceptable to the
Company.
As a result of delays in installing the equipment and problems encountered with
bacteriological tests which delayed filing with the F.D.A., the Company had
been required to raise further funds to sustain operations until the plant
becomes operational and it may require further funds to support working capital
needs as it begins to enter the market or to provide for normal operating
expenses if commissioning continues to be delayed.
Based upon the factors discussed in the preceding paragraph, the Company's
independent public accountants have modified their report on the Company's
financial statements in the Company's 1995 Form 10-KSB to indicate that factors
exist which create substantial doubt about the ability of the Company to
continue as a going concern and which raise uncertainty as to the
recoverability and classification of recorded asset amounts and the amounts and
classification of liabilities. The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. The
financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might result should the Company be unable to
continue as a going concern.
FUNDING
On February 15, 1996, the Company offered the holders of its warrants, (issued
in conjunction with private placements in 1994 and 1995), the opportunity to
lower the exercise price of the warrants from $3.00 to $1.375 per share
provided that they exercise at least 60% of their holdings. The expiration
date of the remaining warrants, if any, would be extended for one year at the
original exercise price. This offer was extended on March 12, 1996 until March
28, 1996. A total of 613,688 warrants representing $843,821 were exercised.
Through March 31, 1996, the Company received proceeds of $565,382 and issued
411,186 shares; the remaining proceeds were received shortly after March 31,
1996.
During the quarter ended March 31, 1996, the Company raised an additional
$500,000 through a "Reg S" sale of its Series C Preferred Stock bringing the
total of Series C Preferred Stock issued to $4 million. The Series C Preferred
Stock pays no dividends, but imputes a 6% effective annual interest rate upon
conversion into common stock which will be accounted for over the time during
which the preferred stock is outstanding. The conversion rate is determined by
the acquisition value of the preferred stock (plus imputed interest referred to
above) and an 18% discount to the 5 day average market price of the common
shares at the time of exercise. As of March 31, 1996, approximately 38% of the
Series C Preferred Stock issued had been converted into 1,315,054 common
shares. To the extent that the Company uses equity securities to raise
additional funds to satisfy its working capital needs, there will be additional
dilution to the Company's existing shareholders.
2
<PAGE> 4
CROWN LABORATORIES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS UNAUDITED AUDITED
March 31, 1996 December 31, 1995
-------------- -----------------
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents 596,714 677,431
Accounts Receivable 52,121 60,121
Inventory
Raw & Packaging Materials 117,378 97,647
Finished Goods 11,347 11,347
Prepaid expenses & employee and
officer advances 40,400 44,509
----------- ----------
Total current assets 817,960 891,055
PROPERTY AND EQUIPMENT
Leasehold improvements 1,294,092 1,291,497
Machinery & Equipment 7,827,071 7,595,945
----------- ----------
9,121,163 8,887,442
Accumulated Depreciation & Amortization (260,290) (208,679)
----------- ----------
Net Property and Equipment 8,860,873 8,678,763
MACHINERY RIGHTS & BLUEPRINTS 184,478 184,478
DEPOSITS & DEFERRED ASSETS 235,201 232,006
----------- ----------
TOTAL ASSETS $10,098,512 $9,986,302
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long term debt and capital
lease liabilities 274,418 267,713
Accounts payable and accrued expenses 1,465,907 1,451,633
----------- ----------
Total current liabilities 1,740,325 1,719,346
ACCRUED SALES TAX PAYABLE 362,415 387,124
LONG-TERM DEBT & CAPITAL LEASE LIABILITIES 1,340,216 1,408,912
SHAREHOLDERS' EQUITY
Preferred stock - $0.001 par value: 2,579,973 2,121,233
5,000,000 shares authorized:
250 shares outstanding in 1996 and in 1995
Common stock - $0.001 par value:
50,000,000 shares authorized:
14,803,306 and 14,290,613 shares outstanding
in 1996 and 1995, respectively 14,803 14,290
Additional paid-in-capital 12,842,714 12,163,600
Accumulated deficit (8,781,934) (7,828,203)
----------- ----------
Total shareholders' equity 6,655,556 6,470,921
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $10,098,512 $9,986,302
=========== ==========
</TABLE>
The Accompanying Notes to the Consolidated Financial Statements are
anIntegral Part of these Financial Statements
3
<PAGE> 5
CROWN LABORATORIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the three months ended
March 31, 1996 March 31, 1995
-------------- --------------
<S> <C> <C>
NET SALES $ -- $ --
Cost of Sales -- --
------------ ------------
GROSS PROFIT -- --
General and Administrative Expenses 895,896 654,971
LOSS FROM OPERATIONS (895,896) (654,971)
------------ ------------
Other Income/(Expense)
Other income 25,200 --
Interest expense (41,162) (26,409)
Interest income 4,865 18,275
------------ ------------
LOSS BEFORE INCOME TAXES (906,993) (663,104)
Income Tax Provision 0 --
------------ ------------
NET LOSS $(906,993) $(663,104)
============ ===+=========
NET LOSS PER SHARE $ (0.06) $ (0.06)
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES
OUTSTANDING 14,317,791 12,033,754
============ ============
</TABLE>
The Accompanying Notes to the Consolidated Financial Statements are
an Integral Part of these Financial Statements
4
<PAGE> 6
Crown Laboratories, Inc.
Statement of Shareholders Equity
For the Quarter ended March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares of Common Additional Accumulated Preferred Total
Common Stock Stock Paid-in Capital Deficit Stock -----
------------ ----- --------------- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance as of Dec. 31, 1995 14,290,513 $14,290 $12,163,601 ($7,828,203) $2,121,233 $6,470,921
Compensation expense for options 40,000 40 42,303 - - 42,343
granted to employees and consultants
Series C Preferred Stock Issued $500,000 500,000
Shares issued on the conversion 61,607 62 87,938 - (88,000) -
of Series C Preferred Stock
Fund raising expenses (16,098) (16,098)
Warrants converted 411,186 411 564,970 565,382
Imputed interest for Series C Preferred - - - (46,739) 46,739 -
Net loss for the period ended - - - (906,993) - (906,993)
March 31, 1996
---------- ------- ----------- ----------- ---------- ----------
Balance as of March 31, 1996 14,803,306 $14,803 $12,842,714 ($8,781,934) $2,579,972 $6,655,556
========== ======= =========== =========== ========== ==========
</TABLE>
The Accompanying Notes to the Consolidated Financial Statements are
an Integral Part of these Financial Statements
5
<PAGE> 7
Crown Laboratories, Inc.
Consolidated Statements of Cash Flow
(UNAUDITED)
<TABLE>
<CAPTION>
For the three months ended
-----------------------------------------
March 31, 1996 March 31, 1995
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $(906,993) $ (663,105)
ADD/(DEDUCT) ITEMS NOT IMPACTING CASH:
Depreciation and amortization 51,611 1,935
Issuance of shares to employees 42,343 7,407
and consultants
CHANGES IN ASSETS AND LIABILITIES:
(Increase)/Decrease in receivables 8,000 -
(Increase)/Decrease in inventories (19,731) (11,207)
(Increase)/Decrease in prepaid expenses 4,109 (29,778)
and employee advances
Increase/(Decrease) in accounts payable
and accrued expenses 14,274 50,101
--------- -----------
TOTAL CASH GENERATED FROM/(USED FOR) OPERATIONS (806,387) (644,647)
--------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures and leasehold improvements (233,720) (1,006,681)
(Increase)/Decrease in deposits and deferred assets (3,195) (267,345)
Increase/(Decrease) in accrued sales taxes payable (24,709) -
TOTAL CASH (USED IN)/GENERATED FROM INVESTING ACTIVITIES (261,624) (1,274,026)
--------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans 0 750,000
Repayment of loans payable (61,990) (50,403)
Proceeds from issuance of common and 1,065,382 1,047,500
preferred stock and the exercise of warrants
Fundraising costs (16,098) (129,697)
--------- -----------
TOTAL CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES 987,294 1,617,400
--------- -----------
Net increase/(decrease) in cash and cash equivalents (80,717) (301,273)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 677,431 1,826,935
--------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 596,714 $ 1,525,662
========= ===========
</TABLE>
The Accompanying Notes to the Consolidated Financial Statements are
an Integral Part of these Financial Statements
6
<PAGE> 8
CROWN LABORATORIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
1. BACKGROUND AND ORGANIZATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with instructions to Form 10-QSB and Item 310
of Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three month period
ended March 31, 1996 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1996. For further information,
refer to the consolidated financial statements and footnotes thereto included
in the Crown Laboratories, Inc. Annual Report on Form 10-KSB.
The Company's independent public accountants have modified their report on the
Company's financial statements in the Company's 1995 Form 10-KSB to indicate
that factors exist which create substantial doubt about the ability of the
Company to continue as a going concern and which raise uncertainty as to the
recoverability and classification of recorded asset amounts and the amounts and
classification of liabilities. The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. The
finanical statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might result should the Company be unable to
continue as a going concern.
2. MANUFACTURING FACILITY
The Company presently leases a 62,000 square foot manufacturing facility in Las
Vegas, Nevada for the purpose of manufacturing its line of nutritional products.
The Company selected its Las Vegas location based on a number of business
factors. The State of Nevada does not assess either corporate or personal
income taxes and is a "right to work" state. It has favorable freight rates
resulting from the large volume of shipments into the casino trade with Las
Vegas' limited manufacturing providing little outbound trucking demand and the
climate is also very favorable for shipping on a year round basis. The Company
has obtained an option to purchase its current manufacturing facility and
intends to exercise its option. See Note 5, "Commitments and Contingencies",
for additional information on the purchase of the building.
The Company is presently in the process of seeking to commission the equipment
necessary to manufacture its proprietary line of aseptic liquid products.
Commissioning of the equipment is required by the U.S. Food and Drug
Administration, (the, "F.D.A."). The commissioning process began on April 13,
1995 with the Company, working with the National Food Laboratories, (the
Process Authority), to review its manufacturing equipment, manufacturing
procedures and operating manuals and monitor the bacteriological kill tests for
compliance with applicable federal regulations. The National Food Laboratories
is an international food and research and development organization with
laboratory facilities in Dublin, California; Washington, D.C.; and Seattle,
Washington and is a wholly-owned subsidiary of the National Food Processors
Association.
The Company has presently completed all of the bacteriological testing required
for F.D.A. aseptic certification and has filed its results on April 22, 1996 and
is awaiting a response from the F.D.A. Prior to such filing, there was a panel
of six different bacteriological kill tests that had to be passed to file with
the F.D.A. They measured the machinery's recording devices' ability to collect
and record information from the pre-sterilization process, (both process and
packaging related), and continue data collection during actual manufacturing,
assuring that complete compliance with aseptic manufacturing guidelines was
maintained. After the test samples were prepared, they were incubated for
a 21 day period and upon the test results being favorable, the Process Authority
summarized the results of the tests and combined it with a systems audit,
(review of machinery, manuals and operating safeguards), and presented their
findings to the F.D.A. on the Company's behalf.
7
<PAGE> 9
The Process Authority has also submitted to the F.D.A. the results of these
tests along with a description of the low-acid aseptic processing system, the
aseptic filler manual and a piping diagram for the entire production and
packaging system as required by the F.D.A. and is awaiting a response from the
F.D.A. The Company expects that the F.D.A. will complete its review process
within 30-45 days from the date of filing and certify that the Company's
manufacturing equipment, specifically the processor and aseptic filler/packaging
machine, meets F.D.A. requirements for aseptic machinery. There can be no
assurance that either of these pieces of equipment will be approved by the
F.D.A. Failure to obtain F.D.A. approval of this equipment will preclude the
Company's ability to manufacture and ship its liquid nutritional products. The
Company expects to begin the marketing of its products shortly after approval is
received.
3. FINANCING
On February 15, 1996, the Company offered the holders of its warrants, (issued
in conjunction with private placements in 1994 and 1995), the opportunity to
lower the exercise price of the warrants from $3.00 to $1.375 per share
provided that they exercise at least 60% of their holdings. The expiration
date of the remaining warrants, if any, would be extended for one year at the
original exercise price. This offer was extended on March 12, 1996 until March
28, 1996. A total of 613,688 warrants representing $843,821 were exercised.
Through March 31, 1996, the Company received proceeds of $565,382 and issued
411,186 shares; the remaining proceeds were received shortly after March 31,
1996.
During the quarter ended March 31, 1996, the Company raised an additional
$500,000 through a "REG S" sale of its Series C Preferred Stock bringing the
total of Series C Preferred Stock issued to $4 million.
4. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
Refer to Form 10-KSB for discussions on Significant Accounting Policies.
5. COMMITMENTS AND CONTINGENCIES
The Company has entered into a five year lease for its Las Vegas manufacturing
facility, (with an option to renew the lease for an additional five year
period), which requires monthly payments of $25,802, subject to annual
inflation escalations which commenced in September 1995. During 1995, the
Company paid $278,768 in lease payments for the building. Minimum payments due
under the building lease are as follows:
<TABLE>
<S> <C>
1996 $309,624
1997 $309,624
1998 $309,624
1999 $154,812
2000 -0-
</TABLE>
The Company has obtained an option to purchase its current manufacturing
facility for $2,700,000 and intends to exercise its option. The Company has
secured a commitment for a first mortgage loan of $1,860,000 on the building
from General American Insurance Company. The mortgage, which will carry a
fixed effective annual interest rate of 8.65%, will provide for an 18 year
amortization, ($16,984 per month), with a balloon payment due at the end of ten
years at the insurance company's request. The seller of the property has
agreed to accept shares of the Company's common stock in lieu of $440,000 of
the purchase price. The number of shares to be issued will be based on the
market price of the stock on the day prior to closing. The seller has also
agreed to extend a 3 year, $300,000 second mortgage to the
8
<PAGE> 10
Company bearing a fixed 12% annual effective interest rate. The balance of the
purchase price, ($100,000), plus any closing costs will be paid by the Company.
If the building were purchased, the Company would have no significant long-term
operating lease liabilities unless it exercised the option that it possesses on
a building in Puerto Rico, as described below.
The Company also possesses an option to lease a building in the Fjardo region
of Puerto Rico. This option, which has been successfully renewed several
times, is currently scheduled to expire in July of 1996.
6. LITIGATION
The Company will be subject to normal business litigation and claims concerning
products and services rendered to the Company. Associated with the Company's
construction of its manufacturing facility, the Company has disputes with three
contractors over the services performed. The Company's claims are for
defective workmanship, excessive charges for services rendered, and returns
which have not been accepted by the vendor. One of these vendors, Lloyds
Refrigeration, Inc., ("Lloyds"), has filed suit against the Company and the
Company has filed its counterclaims, (see discussion below). Although the
Company believes that its claims and counterclaims have merit, there can be no
assurances that the Company will prevail on the merits of any or all of its
claims.
In addition to normal business litigation, the Company has the following
material litigation:
CROWN V. SWINNEY ET AL., the Company has sought to enforce the legends
on its stock under the Securities Act of 1933. The Court issued an
injunction, and after the injunction became moot, the court decided
that the injunction was wrongful. The Company has posted a
superscedeas bond in the amount of $89,695 secured by a certificate
of deposit to cover its potential liability in this case. As the
enforceability of the Company's legends on its securities is at stake,
the Company posted a bond and appealed the Nevada District Court's
decision. This appeal has been accepted by the Nevada Supreme Court.
Although, the Company believes that its liability, if any, will be
limited to attorney's fees, it has expensed the amount of the
preliminary judgment, approximately $64,000.
CROWN V. ROLFENADE ET AL., was filed by the Company, in March, 1995,
and subsequently amended to incorporate all of the respective "alter
egos" in September, 1995. The action is for breach of contract,
misrepresentation, fraud and alter ego. Rolfenade warranted that the
packaging machine would be in compliance with F.D.A. requirements.
The packaging machine was not in compliance with the applicable
regulations and the Company has made substantial modifications to the
filler to bring it into compliance. The Company has served all
defendants except those in Germany, which are still in the process of
being served under the Hague Convention. To date, no defendant has
answered the complaint.
CROWN V. LLOYDS which was filed by the Company in July, 1995 in
response to Lloyds' attempt to foreclose on its mechanics lien. The
dispute and the lien arose as a result of Lloyds' work on the
construction of the Company's manufacturing facility in Las Vegas.
The Company has had to correct the construction deficiencies made by
Lloyds and seeks to offset its incurred costs against the
approximately $123,000 claimed by Lloyds. The Company anticipates
that it will prevail on the merits of its case.
Standard Chartered Bank, ("Standard"), had provided financing to the
manufacturer of the filler machine and Standard has claimed that it has a $1
million security interest in the filler machine. Based upon the
representations made, the Company entered into a letter of intent to finance $1
million of such equipment through Standard. Prior to entering into any loan
documentation, the Company discovered that Standard
9
<PAGE> 11
cannot provide written evidence of a perfected security interest. Standard has
nevertheless continued to allege that it has a security interest in the machine
and has filed a claim with the German Bankruptcy Court. However, Standard has
still not produced documentation supporting its position, and the Company's
claims against the manufacturer of the filler currently exceed the $1 million
amount which Standard is allegedly owed. The Company cannot predict the
ultimate outcome of this claim.
10
<PAGE> 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See Note 6 in the Notes to Financial Statements
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
8-K statements dated March 1, 1996 and March 12, 1996
describing the terms of the Company's Warrant
Discount Offering
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CROWN LABORATORIES, INC.
Date: May 15, 1996 By: /s/ CRAIG E. NASH
_______________________________
Craig E. Nash
Chief Executive Officer
Chairman, Board of Directors
By: /s/ SCOTT E. HILLEY
_______________________________
Scott E. Hilley
Vice President, Finance
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
COMPANY'S CONSOLIDATED BALANCE SHEETS, THE CONSOLIDATED STATEMENT OF OPERATIONS
AND THE CONSOLIDATED STATEMENT OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH (B) FINANCIAL STATEMENTS CONTAINED IN THE COMPANY'S FORM 10-Q
5B FOR THE QUARTER ENDED MARCH 31, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 596714
<SECURITIES> 0
<RECEIVABLES> 52121
<ALLOWANCES> 0
<INVENTORY> 128725
<CURRENT-ASSETS> 817960
<PP&E> 9121163
<DEPRECIATION> (260290)
<TOTAL-ASSETS> 10098512
<CURRENT-LIABILITIES> 1740325
<BONDS> 0
0
2579973
<COMMON> 14803
<OTHER-SE> 4060780
<TOTAL-LIABILITY-AND-EQUITY> 10098512
<SALES> 0
<TOTAL-REVENUES> 0
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</TABLE>
