<PAGE>
FORM 10-Q
COMPLETE WITH
EXHIBITS
SECURITIES AND EXCHANGE COMMISSIONS
Washington, DC 20559
______________________________________________________________________________
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended MARCH 31, 1996
AND
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 2-41015
______________________________________________________________________________
LBU, INC.
(Exact name of Registrant as specified in its charter)
formerly New Century Media, Ltd.
- -------------------------------------------------------------------------------
Nevada 62-1203301
(Jurisdiction of Incorporation) (I.R.S. Employer Identification No.)
310 PATERSON PLANK ROAD, CARLSTADT, NJ 07072
(Address of executive offices) (zip code)
Registrant's telephone number, including are code: (201)933-2800
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
YES [ ] NO [X] (Indicate by check mark whether the Registrant (1) has filed
all report required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the proceeding 12 months (or for such shorter period
the Registrant was required to file such report(s) and (2) has been subject to
such filing requirements for the past 90 days.)
As of March 31, 1996, the number of shares outstanding of the Registrant's
Common Stock was 1,310,834.
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ITEM 1. FINANCIAL STATEMENTS
Attached hereto and incorporated herein by reference are unaudited financial
statements of the Company for March 31, 1996 and results of operations for the
three months then ended.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Sales volume for the first quarter is approximately double fourth quarter
levels. This was expected due to the cyclical nature of its retail sales.
Based on the orders currently in process, the Company expects sales volume to
increase significantly in the second quarter.
Operations for the first quarter produced a profit that is consistent with the
same period in the prior years. Expenses are also within expected levels.
LIQUIDITY AND CAPITAL RESOURCES
The sales growth, profits and its borrowing capacity has been hindered due to
the current level of capital resources available in the Company. Until
additional capital is invested in the Company, it will continue to incur high
interest expense and large fluctuations in its liquidity. Company management is
investigating various alternatives in attracting capital for the Company.
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On April 17, 1996 the registered agent of the Company was served with a
complaint arising from a financial services contract entered into by the company
on July, 24, 1995. The lawsuit was filed in the Eighth District Court, Las
Vegas, Nevada. The plaintiff's are Glenneyre Capital Corporation, Pominandres
Financial Corporation and HJS Financial Services, Inc. The suit alleges the
Company committed breach of contract, and other causes of action against the
plaintiffs in connection with the financial services contract and the
securities issued to the plaintiffs which were subsequently cancelled by the
company. The Company believes the action it has taken, in the cancellation of
said stock, is appropriate. The initial complaint has been answered by the
Company denying all allegations of any wrong doing.
ITEM 2. CHANGES IN SECURITIES
None during the first quarter of 1996
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTER TO VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8 K
None
EXHIBIT INDEX
Financial Statements and documents furnished as part of this
registration statement.
EXHIBIT F-2
Financial Statements (unaudited) March 31, 1996 and 1995
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the form
10-Q report for the quarter ended March 31, 1996 has been signed below by the
following person on behalf of the registrant and in the capacity and on the data
indicated.
Date:______________________
LBU, Inc.
___________________________ ______________________________
JEFFREY MAYER FRED KING
President/Director Director
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LBU, INC.
FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
FOR THE THREE MONTHS ENDED MARCH 31, 1996
AND
ACCOUNTANT'S REPORT
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JAMES A. MARTIN
CERTIFIED PUBLIC ACCOUNTANT
885 ROUTE 27 SOUTH
RAMSEY, NJ 07446
TEL (201) 236-1211
FAX (201) 236-1825
Board of Directors
LBU, Inc.
310 Paterson Plank Road
Carlstadt, NJ 07072
Gentlemen:
I have compiled the accompanying balance sheet of LBU, Inc., as of March 31,
1996, and the related statement of income and retained earnings for the periods
indicated in accordance with statements in standards for accounting and review
services established by the American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. I have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
Management has elected to omit substantially all of the disclosures required by
generally accepted accounting principles. If the omitted disclosures were
included in the financial statements, they might influence the user's
conclusions about the company's financial position and results of operations.
Accordingly, these financial statements are not designed for those who are not
informed about such matters.
A statement of changes in cash flows for the periods indicated has not been
presented. Generally accepted accounting principles requires that such a
statement be presented when financial statements purport to present financial
position and results of operations.
JAMES A. MARTIN
September 23, 1996
MEMBER AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
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LBU, INC.
BALANCE SHEET
MARCH 31, 1996
(unaudited)
ASSETS
<TABLE>
<CAPTION>
CURRENT ASSETS
<S> <C>
Cash $ 87,247
--------
Accounts Receivable 170,404
Inventory 540,100
Deferred Tax Asset 23,000
Other Assets 7,136
--------
Total Current Assets 827,887
FIXED ASSETS (Net of accumulated Depreciation
of $41,854) 158,449
OTHER ASSETS
Security Deposits 38,782
TOTAL ASSETS $1,025,118
=========
</TABLE>
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LBU, INC.
BALANCE SHEET
MARCH 31, 1996
(unaudited)
<TABLE>
<CAPTION>
CURRENT LIABILITIES
<S> <C>
Accounts Payable $ 369,459
Accrued Expenses 106,879
Customer Deposits 92,868
Federal Income Taxes Payable 10,942
State Income Taxes Payable 8,639
-------
Total Current Liabilities 588,787
-------
<CAPTION>
STOCKHOLDERS' EQUITY
<S> <C>
Common Stock (50,000,000 Shares authorized,
1,310,843 Shares Issued, Stated Value $.001) 1,311
Paid in Capital 702,236
Retained Earnings (Deficit) (267,216)
---------
Total Stockholders' Equity 463,331
-------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,025,118
==========
</TABLE>
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LBU, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(unaudited)
<TABLE>
<S> <C>
SALES $941,895
COST OF GOODS SOLD 578,666
GROSS PROFIT 363,229
OPERATING EXPENSES
Payroll 95,552
Occupancy 55,150
Selling and Shipping 123,580
General and Administrative 64,503
Factor Fees and Interest 11,394
Depreciation 3,972
--------
Total Operating Expenses 354,151
--------
INCOME FROM OPERATIONS 9,078
--------
OTHER INCOME
Interest Income 475
Retail Income 12,000
--------
Total other Income 12,475
INCOME BEFORE INCOME TAXES 21,553
--------
PROVISIONS BEFORE INCOME TAXES
Federal 2,941
State 1,940
--------
Total Income Taxes 4,881
NET INCOME 16,672
RETAINED EARNINGS (DEFICIT)
Beginning December 31, 1995 (283,888)
---------
Ending March 31, 1996 $ (267,216)
---------
</TABLE>
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LBU, INC.
(FORMERLY NEW CENTURY MEDIA, LTD.)
NOTES TO FINANCIAL STATEMENT
MARCH 31, 1996
Note 1 - Organization and Significant Accounting Policies
- ---------------------------------------------------------
Organization: LBU, Inc. (a Nevada corporation) (the "Company) previously
-------------
known as New Century Media Ltd. is a manufacturing marketing operation that
specializes in the creation of innovative, fashionable utility and wearable bags
for the accessory, retail and promotional markets.
In February 1995, the Company entered into a plan of reorganization with LBU,
Inc. (a Delaware corporation) (LBU-Delaware) whereby the shareholders of LBU-
Delaware would obtain controlling interest of New Century Media, Ltd., in a
transaction accounted for as a reverse acquisition. New Century Media, Ltd.
ultimately changed its name to LBU, Inc. on March 31, 1995.
Inventories: Inventories are valued at the lower of cost or market, with
------------
cost being determined by the first-in, first-out (FIFO) method.
Fixed Assets: Property and equipment are stated at cost. Depreciation of
-------------
furniture, fixtures and equipment is provided using the straight-line method
over the estimated useful lives of the assets. Leasehold improvements are
amortized over the term of the lease on straight-line basis.
Cash and Cash Equivalents: For the purposes of the statement of cash
--------------------------
flows, the Company considers all highly liquid debt instruments purchased with
an original maturity of three months or less to be cash equivalent.
Income Taxes: Income taxes are provided for the tax effects of
-------------
transactions reported in the financial statements and consist of taxes currently
due plus deferred taxes related primarily to differences between the accelerate
depreciation methods, the reserve method for bad debt and the uniform
capitalization rules under IRS Code Section 263A for financial and income tax
reporting. The deferred taxes represent the future tax return consequences of
those differences, which would be either be taxable or deductible when the
assets and liabilities are recovered or settled. Effective March 31, 1995, LBU-
Delaware became a taxable entity due to the successful reorganization.
Previously, its earnings and losses were included in the personal tax returns of
the stockholders, and the company did not record an income tax provision.
Estimates: The preparation of financial statements in conformity with
----------
generally accepted accounting principles requires management to make estimates
and assumptions that affect the
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reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Stockholders Equity: In August 1995, the company declared a 20 for 1
--------------------
reverse stock split on the then issued and outstanding common shares. All
outstanding share amounts included in the accompanying financial statements have
been retroactively adjusted to reflect the 20 for 1 reverse stock split. The
result of this action reduced the previous 24,550,000 shares of common stock to
1,227,500 shares.
In July, 1995 the company entered into a financial services agreement with
Glenneyre Capital Corp. (GCC), Poimandres Financial Corp. (PFC) and Bristel
Media Ltd. (BML) (a group of financial consultants. The agreement required GCC,
PFC and BML to provide certain professional services relating to raising of
capital to the Company in exchange for 300,000 shares of the Company's common
stock. The agreement specified that such services were assigned value of
$60,000. However, the Company had recorded the issuance of the 300,000 shares
based upon the then market value of its common stock, $540,000, resulting in a
charge to additional paid in capital for the current period.
Note 2 - Accounts Receivable and Factoring Arrangements.
- --------------------------------------------------------
The Company entered into a factoring arrangement with a factor whereby the
factor will make advances to the Company on approved accounts receivable
balances. Interest of 2% per annum above the prime rate will be charged on
outstanding advances. The factor has a lien against all assigned receivables.
In addition, the Company's president/principal shareholder and his wife, who is
also an officer of the Company, have personally guaranteed factor advances under
this agreement.
The factor will also charge a commission of 1 1/8% on the gross face amount of
all accounts factored during each calendar month. The minimum commission on
each invoice is $5.00. Further, a fee will be charged for each new customer,
for any customer that has not had any activity with the factor for at least 18
months and other miscellaneous activity.
Note 3 - Commitments and Contingencies
- --------------------------------------
In August, 1993, LBU-Delaware entered into employment agreement with the
president/principal shareholder. These agreements provide for payments of
approximately $148,999 per year, and escalated periodically to approximately
$163,000 per year, and run through 1996.
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The Company entered into a ten year lease agreement for its new facilities in
Carlstadt, New Jersey. The rent commencement date is July 1, 1995. At the
time, the Company incurred incidental non-recurring costs due to the relocation
of approximately $100,000. Rent paid during the year ended December 31, 1995
amounted to $99,105. The minimum future rental payments under the non-
cancelable operating leases ad of December 31, 1996 are:
<TABLE>
<CAPTION>
Year ending
December 31. Amount
------------ ------
<S> <C>
1996 $134,414
1997 138,821
1998 143,228
1999 148,369
2000 154,245
2001 and thereafter 766,083
</TABLE>
The company is currently involved in a dispute with Glenneyre Capital
Corporation, Poimandres Financial Corporation and HJS Financial Services, Inc.
("the plaintiff's"). The lawsuit stems from a financial services agreement
dated July 24, 1995, between the plaintiff's and LBU, Inc., regarding the
Company's issuance of 300,000 shares of common stock, which was issued to the
Plaintiffs in return for services in connection with the raising of capital.
Currently, 204,000 share have been confiscated and canceled by the Company due
to the plaintiff's non-performance of services relative to the contract.
Management believes the lawsuit is without merit, and that the outcome of the
claim will not have a material impact on the Company's financial position.
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 9-MOS YEAR 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995 DEC-31-1996 DEC-31-1996
<PERIOD-START> JAN-01-1995 JAN-01-1995 JAN-01-1996 JAN-01-1996
<PERIOD-END> SEP-03-1995 DEC-31-1995 MAR-31-1996 JUN-10-1996
<CASH> 15,484 69,555 87,247 335,552
<SECURITIES> 0 0 0 0
<RECEIVABLES> 240,471 176,487 255,396 387,467
<ALLOWANCES> 41,300 34,992 84,992 84,992
<INVENTORY> 558,870 575,538 540,100 500,658
<CURRENT-ASSETS> 800,969 766,724 827,887 1,178,011
<PP&E> 186,552 186,552 200,303 216,521
<DEPRECIATION> 33,301 37,882 41,854 50,120
<TOTAL-ASSETS> 993,002 954,176 588,787 821,953
<CURRENT-LIABILITIES> 567,035 534,517 588,787 821,953
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 1,228 1,311 1,311 1,346
<OTHER-SE> 577,279 702,236 702,236 717,201
<TOTAL-LIABILITY-AND-EQUITY> 993,002 954,176 1,025,118 1,383,194
<SALES> 3,332,196 3,827,995 941,895 2,929,285
<TOTAL-REVENUES> 3,332,196 3,839,018 954,370 2,954,221
<CGS> 1,996,030 2,245,633 578,666 1,962,538
<TOTAL-COSTS> 587,098 668,672 182,702 389,507
<OTHER-EXPENSES> 594,178 846,491 171,449 307,768
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 41,570 54,578 11,934 98,711
<INCOME-PRETAX> 143,320 12,621 21,553 192,996
<INCOME-TAX> 0 (8,300) 4,881 69,115
<INCOME-CONTINUING> 143,320 23,644 21,553 192,996
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 (19,932) 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 143,320 12,012 16,672 123,881
<EPS-PRIMARY> .12 .001 .012 .09
<EPS-DILUTED> .12 .001 .012 .09
</TABLE>
