10QSB 1 doc1.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2003 OR [ ] TRANSITION REPORT UNDER SECTION 13 OF 15(D) OF THE EXCHANGE ACT OF 1934 From the transition period from ___________ to ____________. Commission File Number 33-11986-LA CROWN PARTNER'S, INC. (Exact name of small business issuer as specified in its charter) NEVADA 91-2008803 (State or other jurisdiction of incorporation or organization)(IRS Employer Identification No.) 20700 VENTURA BOULEVARD, #227, WOODLAND HILLS, CALIFORNIA 91364 --------------------------------------------------------------- (Address of principal executive offices) (818) 598-6780 (Issuer's telephone number) N/A (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes [X] No [ ] As of March 31, 2003 there were 8,442,714 shares of Common Stock of the issuer outstanding. TABLE OF CONTENTS PART I FINANCIAL STATEMENTS Item 1 Financial Statements 2 Item 2 Management's Discussion and Analysis or Plan of Operation 7 PART II OTHER INFORMATION Item 1 Legal Proceedings 7 Item 2 Changes in Securities 7 Item 3 Default upon Senior Securities 7 Item 4 Submission of Matters to a Vote of Security Holders 7 Item 5 Other Information 7 Item 6 Exhibits and Reports on Form 8-K 7 CROWN PARTNER'S, INC. CONSOLIDATED BALANCE SHEET MARCH 31, 2003 (UNAUDITED) ASSETS Current assets Cash $ 3,988 ----------- Total current assets 3,988 Property and equipment, net 411,069 $ 415,057 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities Accounts payable $ 430,510 Accrued expenses 14,152 Advances 255,859 ----------- Total current liabilities 700,521 ----------- Commitments and contingencies STOCKHOLDERS' DEFICIT: Convertible preferred stock, $10 par value, 10,000,000 shares authorized, no shares issued and outstanding -- Common stock, $.001 par value, 50,000,000 shares authorized, 8,442,714 shares issued and outstanding 8,443 Additional paid in capital 3,782,077 Accumulated deficit (4,075,984) ----------- Total Stockholders' Deficit (285,464) ----------- TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 415,057 =========== CROWN PARTNER'S, INC. CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, (UNAUDITED) 2003 2002 ----------- ----------- Revenues $ 2,117 $ -- Costs and Expenses: General and administrative 231,181 120,449 Interest expense 6,390 4,949 ----------- ----------- 237,571 125,398 ----------- ----------- Net loss before minority interest (235,454) (125,398) Minority interest in loss of subsidiaries -- -- Net loss $ (235,454) $ (125,398) =========== =========== Net loss per share: Net loss basic and diluted $ (0.03) $ (0.02) =========== =========== Weighted average shares outstanding: Basic and diluted 7,148,067 7,069,372 =========== =========== CROWN PARTNER'S, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, (UNAUDITED) 2003 2002 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(235,454) $(125,398) Adjustments to reconcile net deficit to cash used by operating activities: Depreciation and amortization 17,267 919 Bad debt 58,311 -- Net change in: Trading securities -- 640 Accounts payable and accrued expense 126,595 4,874 --------- --------- CASH FLOWS USED IN OPERATING ACTIVITIES (33,281) (118,965) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (40,173) -- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the sale of stock -- 10,000 Proceeds (payments) on advances 58,068 116,000 --------- --------- CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 58,068 126,000 --------- --------- NET INCREASE IN CASH (15,386) 7,035 Cash, beg. Of period 19,374 5,232 --------- --------- Cash, end of period $ 3,988 $ 12,267 ========= ========= SUPPLEMENTAL CASH FLOW INFORMATION Interest paid $ -- $ -- Income taxes paid $ -- $ -- NONCASH TRANSACTION: Conversion of advances for common stock $ 117,900 $ -- CROWN PARTNER'S, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1:Presentation The condensed balance sheet of the Company as of March 31, 2003, the related condensed statements of operations for the three months ended March 31, 2003 and 2002 and the statements of cash flows for the three months ended March 31, 2003 and 2002 included in the condensed financial statements have been prepared by the Company without audit. In the opinion of management, the accompanying condensed financial statements include all adjustments (consisting of normal, recurring adjustments) necessary to summarize fairly the Company's financial position and results of operations. The results of operations for the three months ended March 31, 2003 are not necessarily indicative of the results of operations for the full year or any other interim period. The information included in this Form 10-QSB should be read in conjunction with Management's Discussion and Analysis and Financial Statements and notes thereto included in the Company's December 31, 2002 Form 10-KSB. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS THIS REPORT CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE SET FORTH ON THE FORWARD LOOKING STATEMENTS AS A RESULT OF THE RISKS SET FORTH IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, GENERAL ECONOMIC CONDITIONS, AND CHANGES IN THE ASSUMPTIONS USED IN MAKING SUCH FORWARD LOOKING STATEMENTS. General Crown Partners, Inc. (the "Company"), formerly known as "Stein's Holdings, Inc." has been involved in several different businesses. In early 1999, its Board of Directors entered into negotiations to acquire Multi-Source Capital, Ltd. ("MSC"), a Colorado corporation. As a condition to completing that acquisition, the Company's shareholders approved a 200-to-1 reverse stock split and changed the Company's name to "Stein's Holdings, Inc." MSC was a company engaged in web design, through a wholly owned subsidiary, 20/20 Web Design, Inc., import/export, business consulting and related services. Also, MSC had entered into an agreement with College Connection, Inc. dba Stein=s Bakery, Inc. ("Bakery") in Lewisville, Texas to acquire its bakery operations. MSC assigned that contract to the Company as part of its acquisition. MSC also transferred assets, consisting mostly of cash and securities, to the Company in exchange for the issuance of 4,247,754 shares of the Company's stock to the MSC shareholders. The Bakery filed for protection under the US Bankruptcy Code in 2000 and certain monies that the Company and the Company's subsidiary, 20/20 Web Design, Inc., advanced to the Bakery were written off due to the bankruptcy. B) Narrative Description of Business At the present time, the Company is utilizing its limited capital to fund its operations as it seeks business opportunities. In November, 2001, the Company acquired Sanitec(TM) Services of Hawaii, Inc. ("SSH"), a privately held Hawaiian corporation, developed to engage in medical waste collection and treatment in Honolulu, Hawaii. The Company issued 1,333,334 shares of its common stock to the shareholder of SSH and SSH became a wholly owned subsidiary of the Company. The Company borrowed funds and used capital it raised on order to pay past and present obligations of SSH during the year ended December 31, 2002. The Company anticipates either borrowing money or raising additional capital during fiscal 2003 to continue to fund SSH's operations. In February, 2003, SSH began to engage in limited operations and has received minimal revenues to date. There can be no assurances that the operations will result in material revenues to SSH or that profitability will be achieved in the near term, if ever. The Company has two additional subsidiaries of which it is the majority shareholder: 20/20 Networks, Inc. ("20/20 Net") and Universal Services & Acquisitions, Inc. ("USV"), which it acquired in October, 2000. The Company owns 80% of 20/20 Net, a Nevada corporation traded on the Electronic Bulletin Board under "TWNK." 20/20 Net established a subsidiary, Stein's Cake Box ("Cake Box"), a Nevada corporation, to engage in business with certain retail convenience stores in Texas through leasing production facilities through the Bakery. 20/20 Net lent $195,000 to Cake Box to fund its acquisition of these contracts from the Bakery. Since the transaction was not consummated, the money was to be repaid to 20/20 Net. However, given the bankruptcy of the Bakery, it is unlikely that 20/20 Net will ever be repaid anything. 20/20 Net is currently seeking acquisition or merger candidates. The Company owns 90% of the issued and outstanding shares of Universal Services & Acquisitions, Inc., a Colorado corporation. USV is a dormant shell company. USV entered into an agreement in September, 2001 with Universal Medical Alliance ("UMA"), a Nevada corporation, wherein the two companies were to merge and USV changed its name to Universal Medical Alliance Corp. The shareholder of UMA paid $60,000 of the fee of $400,000 owed to the Company but that shareholder has requested the return of the $60,000 and cancellation of the merger agreement and has filed suit against the Company. In June, 2001, the Company borrowed $93,750 which loan was secured by shares of 20/20 Net stock. The Company was unable to pay the loan back and the shares were transferred to the lender. The lender has filed suit against the Company seeking repayment of amounts its alleges are still due it. Employees As of March 31, 2003, the Company had no employees. SSH had one employee as of March 31, 2003. RESULTS OF OPERATIONS In 1999, the Company began operations after two years of being inactive/dormant. The Company appointed new management after its acquisition of MSC and rented office space. In 1999, the Company lent $37,500 to the Bakery, whose sole officer and director was Randy Sutton, former President of the Company. The Bakery failed to repay the loan when due in September, 2000 and subsequently filed bankruptcy. In addition, the Company's subsidiary, 20/20 Net, lent $195,000 to Stein's Cake Box ("Cake Box"), a Nevada corporation which was formed by 20/20 Net to acquire certain contracts owned by the Bakery. That loan has also not been paid and has been written off. For the three months ended March 31, 2003, the Company realized a loss of $235,454 with minimal revenues of approximately $2,000 and general and administrative expenses of approximately $231,000. For the three months ended March 31, 2002, the Company realized a loss of approximately $125,000 with no revenues and general, administrative and interest expenses of approximately $125,000. The costs and expenses for the three months ended March 31, 2003 totaled $238,000 which consisted of general and administrative expenses of approximately $231,000 and interest expense of approximately $6,000. The expenses for the three months ended March 31, 2002 consisted primarily of general and administrative expenses of approximately $120,000 and interest expense of approximately $5,000. The Company's net loss from continuing operations before income taxes for the three months ended March 31, 2003 was 235,000 compared to a net loss of $125,000 for the three months ended March 31, 2002. The net loss per share for the periods ended March 31, 2003 and 2002 were $0.03 and $0.02, respectively. At March 31, 2003, shareholder's deficit totaled $285,000 compared to shareholders' deficit of $168,000 at December 31, 2002. This decrease in shareholders' deficit is due primarily to the Company's loss on investments and the costs of operating itself and its subsidiaries. LIQUIDITY AND CAPITAL RESOURCES At March 31, 2003, the Company had negative working capital of approximately $697,000. At March 31, 2003, the Company had current assets of approximately $4,000 which consisted of cash. The current liabilities of the Company at March 31, 2003 were approximately $701,000 which consisted of approximately $431,000 in trade accounts payable, advances of approximately $256,000 and accrued expenses of approximately $14,000. Crown will attempt to increase its operating liquidity by exploring the availability of outside debt and equity financing, to the extent that such funding is available under reasonable terms and conditions. There can be no assurances that these measures will result in an improvement in Crown's operations or liquidity. To the extent that Crown's operations or liquidity do not improve, Crown may be forced to reduce operations to a level consistent with its available working capital. resources. Crown may also have to consider a formal or informal restructuring or reorganization. As a result of these factors, Crown's independent accountants have expressed substantial doubt about Crown's ability to continue as a going concern. The accompanying consolidated financial statements have been prepared assuming that Crown will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the consolidated financial statements do not purport to represent the realizable or settlement values, and is nor include any adjustments that might result from the outcome of this uncertainty. NEED FOR ADDITIONAL FINANCING The Company believes that its existing capital will not be sufficient to meet the Company's cash needs, including the costs of compliance with the continuing reporting requirements of the Securities Exchange Act of 1934, as amended, for itself and its subsidiaries. The Company is seeking to locate other potential acquisitions for its subsidiaries. No commitments to provide additional funds have been made by management or other stockholders. Accordingly, there can be no assurance that any funds will be available to the Company to allow it to cover its expenses. The Company might seek to compensate providers of services by issuances of stock in lieu of cash. The Company's balance sheet as of March 31, 2003 reflects limited assets and limited liabilities. Further, there exists no agreements or understandings with regard to loan agreements by or with the Officers, Directors, principals, affiliates or shareholders of the Company. ITEM 3. CONTROLS AND PROCEDURES Based on the evaluation by Mr. Charles Smith, both the president and chief accounting officer of the Company, of the effectiveness of the company's disclosure controls and procedures conducted as of a date within 90 days of the filing date of this quarterly report, Mr. Syracuse concluded that, as of the evaluation date, (i) there were no significant deficiencies or material weaknesses of the Company's disclosure controls and procedures, (ii) there were no significant changes in the internal controls or in other factors that could significantly affect internal controls subsequent to the evaluation date, and (iii) no corrective actions were required to be taken. PART II Items No. 1, 3, 4, 5 - Not Applicable. Item 2. Changes in Securities During the quarter ended March 31, 2003, the Company issued a total of 654,000 shares of its common stock in restricted form in cancellation of certain debts and for cash. Item No. 6 - Exhibits and Reports on Form 8-K (a) No reports on Form 8-K were filed during the three months ended March 31, 2003. (b) Exhibits None SIGNATURES In accordance with the requirements 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. CROWN PARTNER'S, INC. By /s/ Charles Smith -------------------------- Charles Smith, President, CFO Date: May 16, 2003 FORM OF CERTIFICATION PURSUANT TO RULE 13a-14 AND 15d-14 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED CERTIFICATION I, Charles Smith, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Crown Partner's, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. As the registrant's certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and I have: (a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this quarterly report (the "Evaluation Date"); and (c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on my evaluation as of the Evaluation Date; 5. As the registrant's certifying officer, I have disclosed, based on my most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls. 6. As the registrant's certifying officer, I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of my most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 16, 2003 /s/ Charles Smith Name: Charles Smith Title: President and Principal Accounting Officer CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Crown Partner's, Inc. on Form 10-QSB for the period ended September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. /s/ Charles Smith Charles Smith, President and Principal Accounting Officer Dated: May 16, 2003