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<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 JUNE 30TH, 1997
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 area 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
Indicate by check mark whether the registrant (1) has filed all reports 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 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 August 1, 1997, the Registrant's had an aggregate of 1,338,997 shares
of its common stock outstanding.
-1-
<PAGE>
PART 1 - FINANCIAL INFORMATION
SIXTH MONTH ENDED JUNE 30th, 1997 AND 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Net sales for the sixth month ending June 30th, 1997 increased $71,000 from
$2,929,284 in 1996 to $3,000,406. Although the increase was not significant,
the company increased its customer base and diversified it's channels of
distribution. Cost of sales decreased $78,000 or 4% from $1,962,538 to
$1,884,334. This was directly related to improving production and quality
control efficiencies.
Gross profit increased $149,000 or 15% from $966,746 to $1,116,072. The
increase was attributed to the Company's higher profit margins in the newly
introduced retail laundry and garment care product line.
Net Income before Taxes increased $117,000 or 61% from $192,996 to $310,168.
Net Income after Taxes increased $51,000 or 41% from $124,000 to $175,000.
Earnings per share increased 45% from .09 in the first half, 1996 to .13 in the
first six months 1997.
Selling expenses increased $37,000 or 13% from $285,000 to $322,000. This was
due to the increase in advertising and the company's increased attendance at
industry trade shows. General and administrative expenses decreased $20,000 or
20% from $98,000 in 1996 to $78,000 in the same period in 1997. This is
attributed to a reduction in computer maintenance, negotiating favorable
insurance and utility rates.
Factor fees and Interest expense decreased $31,000 or 31% from $99,000 to
$68,000. This was due to a one time factor charge that was charged to 1996.
-2-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash position as of June 30, 1997 is $119,967. The Company is
presently negotiating with several banks to secure more favorable financing
arrangements.
The Company's primary lender is The CIT Group/Commercial Services. They provide
factor and asset-based financing for the Company. The Company has recently
improved its borrowing capabilities with The CIT Group.
Management believes that cash on hand and cash from future operations should be
sufficient to cover current operations; however, additional working capital may
be needed for future expansion. There can be no assurance that they will be
able obtain such capital on terms satisfactory to the Company.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is subject to litigation from time to time in the ordinary course of
business. The Company is currently involved in a dispute with Glenneyre Capital
Corporation, Pominandres Financial Corporation and HJS Financial Services, Inc.
("the Plaintiffs"). The lawsuit stems from a financial service agreement dated
July 24, 1995, between the plaintiff's and LBU, Inc.
As part of the financial service agreement stated above 300,000 shares of LBU,
Inc.'s restricted common stock were issued to the Plaintiffs in return for
services and the raising of capital. The restrictions on these shares in
addition to the actual services which LBU, Inc. claims were not performed by the
plaintiff's are disputed. The shares were stopped by LBU, Inc. November 19,
1995 and subsequently 269,000 shares have been canceled by the stock registrant.
The Company believes the action it has taken in the cancellation of 269,000
shares of common stock is appropriate. The Company has since initiated a
counter-suit against the plaintiff's for breach of contract, fraud and other
causes of action. Management believes that the outcome of both lawsuits will be
favorable.
At the present time there are no legal matters that will have a material adverse
affect on the Company's financial condition or results of operations.
-3-
<PAGE>
ITEM 2. CHANGES IN SECURITIES
None
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
-4-
<PAGE>
EXHIBIT INDEX
Financial Statements and documents furnished as part of this registration
statement.
Financial Statements
1. Unaudited Balance Sheet - June 30, 1997.
2. Unaudited Statement of Income and Expenses for the six months ended
June 30, 1997 and 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the form
10-Q report for the quarter ended June 30, 1997 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.
A NEVADA CORPORATION
by
- ------------------------------- -------------------------------
JEFFREY MAYER FRED KING
President/Director Director
-5-
<PAGE>
LBU, INC.
BALANCE SHEET
JUNE 30TH, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
CURRENT ASSETS 1997 1996
---- ----
<S> <C> <C>
Cash $ 119,967 $ 335,552
Accounts Receivable, Net 593,220 302,475
Inventory 889,500 500,658
Deferred tax asset - 23,000
Loans Receivable 13,303 3,303
Interest Receivable 2,640 -
Prepaid Expenses 130,304 12,392
Employee Advances 1,274 1,631
------------ ------------
Total Current Assets $ 1,750,208 $ 1,179,011
============ ============
FIXED ASSETS
Furniture and Fixtures $ 90,938 $ 43,902
Machinery and Equipment 139,619 98,090
Leasehold Improvements 72,905 70,233
------------ ------------
Total Property and Equipment 303,462 212,225
Accumulated Depreciation (77,671) (45,824)
FIXED ASSETS - NET $ 225,791 $ 166,401
============ ============
OTHER ASSETS
Security Deposits $ 47,057 $ 38,782
Other Assets 60,661 -
------------ ------------
Total Other Assets $ 107,718 $ 38,782
TOTAL ASSET $ 2,083,717 $ 1,384,194
============ ============
</TABLE>
6
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
CURRENT LIABILITIES
Accounts Payable $ 524,545 $ 433,613
Accrued Expenses 100,130 155,175
Accrued Taxes 156,344 83,813
Customer Deposits 105,167 53,052
Notes Payable 35,807 100,000
------------ ------------
Total Current Liabilities $ 921,993 $ 825,653
============ ============
LONG TERM LIABILITIES
Lease Payable $ - $ -
Notes Payable 51,090 -
Deferred Tax Liability 11,393 -
------------ ------------
Total Long Term Liabilities $ 62,483 $ -
============ ============
STOCKHOLDERS' EQUITY
Common Stock Authorized
50,000,000 shares $.001 per value
1,338,977 issued outstanding 1,339 1,308
Additional Paid in Capital 1,102,208 715,292
Retained Earnings (Deficit) (4,306) (158,059)
------------ ------------
Total Stockholders' Equity 1,099,241 558,541
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 2,083,717 $ 1,384,194
============ ============
</TABLE>
7
<PAGE>
STATEMENT OF INCOME AND EXPENSES
FOR THE SIX MONTHS ENDED
JUNE 30TH, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Sales $ 3,000,406 $ 2,929,284
Costs of Goods Sold 1,884,334 1,962,538
Gross Profits 1,116,072 966,746
OPERATING EXPENSES
Payroll $ 198,909 $ 201,505
Occupancy 139,237 107,188
Selling & Shipping 321,512 285,020
General & Administrative 77,904 98,321
Factor fees and Interest 75,831 98,711
Depreciation & Amortization 9,465 7,942
----------- -----------
Total Operating Expenses $ 822,858 $ 798,687
----------- -----------
INCOME FROM OPERATIONS $ 293,215 $ 168,060
=========== ===========
OTHER INCOME
Interest $ 4,953 $ 936
Rent 12,000 24,000
Total Other Income 16,953 24,936
----------- -----------
Income before income taxes $ 310,168 192,996
----------- -----------
PROVISION FOR INCOME TAXES
Federal $ 106,964 $ 51,744
State 28,549 17,371
----------- -----------
Total Income Taxes $ 135,513 $ 69,115
NET INCOME $ 174,655 $ 123,881
=========== ===========
RETAINED EARNINGS (DEFICIT)
Beginning $ (178,961) $ (281,940)
----------- -----------
Ending $ (4,307) $ (158,059)
=========== ===========
EARNINGS PER SHARE 0.13 0.09
</TABLE>
8
<PAGE>
LBU, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30TH, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
SALES
Sales $ 3,048,672 $ 3,079,136
Sales Return and Allowances (45,588) (148,462)
Sales Discounts (2,677) (1,390)
------------- ------------
Total Sales $ 3,000,407 $ 2,929,284
============= ============
SCHEDULE OF COST OF GOODS SOLD
Beginning Inventory $ 789,090 $ 575,538
Direct Materials 1,115,468 1,008,921
Factory Supplies and Expenses 12,961 5,179
Display Expenses 22,562 44,594
Freight In 9,214 16,394
Shipping Supplies and Packaging 15,719 35,794
Direct Labor 195,979 145,660
Subcontractors-Sewing 589,407 598,758
Subcontractors-Screen Printing 22,988 9,800
Subcontractors-Packaging 0 15,144
Equipment Rentals 446 7,414
Ending Inventory (889,500) (500,658)
------------- ------------
Costs of Goods Sold $ 1,884,334 $ 1,962,538
============= ============
SCHEDULE OF PAYROLL EXPENSE
Salaries:
Officers $ 76,115 $ 74,501
Office 102,200 96,361
Shipping 117,277 69,564
Sewing 12,132 12,661
Cutting 45,976 42,140
FICA Expense 25,604 23,868
SUI Expense 6,112 8,057
FUI Expense 973 1,570
Hospitalization 5,300 15,145
Workmen Compensation Insurance 3,198 3,298
Portion Allocated to Cost of Sales (195,979) (145,660)
------------- ------------
Total Payroll Expense $ 198,908 $ 201,505
============= ============
</TABLE>
9
<PAGE>
LBU, INC.
SUPPLEMENTARY INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SCHEDULE OF OCCUPANCY EXPENSE 1997 1996
---- ----
<S> <C> <C>
Rent $ 77,742 $ 67,207
Real Estate Taxes 11,884 14,733
Repairs and Maintenance 30,225 3,701
Utilities 19,386 21,547
---------- ----------
Total Occupancy Expense $ 139,237 $ 107,188
========== ==========
SCHEDULE OF SELLING AND SHIPPING EXPENSE
Telephone $ 21,018 $ 16,555
Auto Lease 7,342 747
Travel 8,492 25,815
Entertainment 725 700
Advertising 51,236 32,655
Commissions 130,480 139,381
Trade Shows 59,073 34,247
Freight Out 43,146 39,920
---------- ----------
Total Selling and Shipping Expense $ 321,512 $ 290,020
========== ==========
SCHEDULE OF GENERAL AND ADMINISTRATIVE EXPENSES
Stationery and Office Supplies $ 18,689 $ 16,881
NSF Checks 1,151 1,118
Bank Charges 3,209 1,051
Credit Card Fees 3,871 1,701
Computer Services 5,858 12,975
Professional Fees 41,705 41,117
Licenses and Fees 1,532 10,346
Insurance 9,170 11,360
Miscellaneous 950 1,772
---------- ----------
Total Selling and Shipping Expense $ 86,135 $ 98,321
========== ==========
FACTOR FEES AND INTEREST EXPENSE
Interest $ 2,989 $ 4,057
Factor Fees - CIT 35,700 23,397
Factor Interest - CIT 24,011 64,484
Wire Charges and Other Fees - CIT 4,900 6,773
---------- ----------
Total Factor Fees and Interest Expense $ 67,600 $ 98,711
========== ==========
</TABLE>
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> JUN-30-1997 JUN-30-1996
<CASH> 119,967 335,552
<SECURITIES> 0 0
<RECEIVABLES> 593,220 302,475
<ALLOWANCES> 0 0
<INVENTORY> 889,500 500,658
<CURRENT-ASSETS> 1,750,208 1,179,011
<PP&E> 303,462 212,225
<DEPRECIATION> 77,671 45,824
<TOTAL-ASSETS> 2,083,717 1,384,194
<CURRENT-LIABILITIES> 921,993 825,653
<BONDS> 0 0
0 0
0 0
<COMMON> 1,103,547 716,600
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 2,083,717 1,384,194
<SALES> 3,000,406 2,929,284
<TOTAL-REVENUES> 3,017,359 2,954,220
<CGS> 1,884,334 1,962,538
<TOTAL-COSTS> 1,884,334 1,962,538
<OTHER-EXPENSES> 795,858 730,146
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 27,000 68,541
<INCOME-PRETAX> 310,168 192,996
<INCOME-TAX> 135,513 69,511
<INCOME-CONTINUING> 174,655 123,881
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 174,655 123,881
<EPS-PRIMARY> .13 .09
<EPS-DILUTED> .13 .09
</TABLE>
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