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FORM 10-Q
COMPLETE WITH
EXHIBITS
SECURITIES AND EXCHANGE COMMISSIONS
WASHINGTON, DC 20559
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended MARCH 31, 1997
AND
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 2-41015
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LBU, INC.
(Exact Name of Registrant as specified in its Charter)
formerly New Century Media, Ltd.
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<TABLE>
<S> <C>
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
</TABLE>
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 May 1, 1997, the Registrant's had an aggregate of 1,338,997 shares of
its common stock outstanding.
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PART 1 - FINANCIAL INFORMATION
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Net sales for the three months ending March 31, 1997 increased $247,000 or 26%
from $942,000 in 1996 to $1,189,000. This was due to increased sales in the
accessory market. Cost of sales increased $168,000 or 29% from $579,000 to
$747,000. This was directly due to the cost of developing the product packaging
and catalogs for products in the accessory line.
Gross profit increased $79,000 or 22% from $363,000 to $442,000. The increase
was attributed to the Company's higher profit margins in the new laundry and
garment care product line.
Net Income before Taxes increased $41,000 or 186% from $22,000 to $63,000. Net
Income after Taxes increased $31,000 or 182% form $17,000 to $48,000. Earnings
per share increased 300%, from .01 cent in the first quarter, 1996 to .04 cent
in the first quarter 1997.
Selling expenses increased $22,000 or 18% from $124,000 to $146,000. This was
due to the increase in commissions related to higher sales. General and
administrative expenses increased $6,000 or 3% from $203,000 in the first
quarter in 1996 to $209,000 in the same period in 1997. This is attributed to
increasing customer service personnel to support the Company's growing sales.
Factor fees and Interest expense increased $8,000 or 30% from $23,000 to
$31,000. This was due to higher sales and an increase in the level of borrowings
against factored accounts receivable.
Management believes that sales will continue to maintain its anticipated growth
rate as new products are introduced to the retail, accessory and promotional
markets.
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LIQUIDITY AND CAPITAL RESOURCES
The Company's cash position as of March 31, 1997 is $328,221. 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 accounts receivable financing for the Company.
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.
On March 18, 1997, the Company received a equity investment in the amount of
$375,000 representing 18.67% of the Company's common stock from an investment
group led by John H. Robinson, former Chairman of the Harper Group.
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 in connection with the raising of capital. Currently, the restrictions
on these shares are in dispute in addition to the actual services which LBU,
Inc. claims were not performed by the plaintiff's. The shares were stopped by
LBU, Inc. November 19, 1995 and subsequently 269,000 shares have been canceled
by the 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
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ITEM 2. CHANGES IN SECURITIES
On March 16, 1997, the Company issued 18.67% of its common stock to an
investment group led by John H. Robinson formerly Chairman of the Harper Group.
Mr. Robinson has been voted to the Company's Board of Directors on March 18,
1997.
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
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EXHIBIT INDEX
Financial Statements and documents furnished as part of this registration
statement.
Financial Statements
1. Unaudited Balance Sheet - March 31, 1997.
2. Unaudited Statement of Income and Expenses for the three months Ended
March 31, 1997 and 1996.
3. Unaudited Statement of Cash Flows for the Three Months Ended
March 31, 1997 and 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the form
10-Q report for the quarter ended March 31, 1997 has been signed below by the
following person on behalf of the registrant and in the capacity and on the
data indicated.
Date:
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LBU, INC.
A NEVADA CORPORATION
by
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JEFFREY MAYER FRED KING
President/Director Director
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LBU, INC.
BALANCE SHEET
MARCH 31, 1997 AND 1996
(unaudited)
<TABLE>
<CAPTION>
CURRENT ASSETS 1997 1996
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<S> <C> <C>
Cash $ 328,221 $ 87,247
Accounts Receivable, Net 357,534 170,404
Inventory 694,500 540,100
Deferred tax asset 45,950 23,000
Loans Receivable 13,303 3,303
Interest Receivable 720 -
Prepaid Expenses 6,574 -
Employee Advances 1,850 3,803
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Total Current Assets $ 1,448,652 $ 827,887
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FIXED ASSETS
Furniture and Fixtures $ 59,085 $ 43,902
Machinery and Equipment 131,637 86,168
Leasehold Improvements 72,905 70,233
Total Property and Equipment 263,627 200,303
Accumulated Depreciation (77,658) (41,854)
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FIXED ASSETS - NET $ 185,969 $ 158,449
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OTHER ASSETS
Security Deposits $ 38,782 $ 38,782
Other Assets 70,432
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Total Other Assets $ 109,214 $ 38,782
TOTAL ASSETS $ 1,743,835 $ 1,025,118
========= =========
</TABLE>
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LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
1997 1996
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<S> <C> <C>
CURRENT LIABILITIES
Accounts Payable $ 350,767 $ 369,459
Accrued Expenses 112,884 106,879
Accrued Taxes 80,585 -
Customer Deposits 114,700 92,868
Notes Payable 33,324 -
Lease Payable 2,474
Federal Income Taxes Payable - 10,942
State Income Taxes Payable - 8,639
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Total Current Liabilities $ 694,734 $ 588,787
========= =========
LONG TERM LIABILITIES
Lease Payable $ 9,161 $ 0
Notes Payable 55,568 0
Deferred Tax Liability 11,393 0
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Total Long Term Liabilities $ 76,122 $ 0
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STOCKHOLDERS' EQUITY
Common Stock Authorized
50,000,000 shares $.001 par value
1,338,977 issued and outstanding 1,339 1,308
Additional Paid in Capital 1,102,208 700,292
Retained Earnings (Deficit) (130,568) (265,269)
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Total Stockholder's Equity 972,979 463,331
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TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 1,743,835 $ 1,025,118
========= =========
</TABLE>
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LBU, INC.
STATEMENT OF INCOME AND EXPENSES
FOR THE THREE MONTHS ENDED
MARCH 31, 1997 AND 1996
(unaudited)
<TABLE>
<CAPTION>
1997 1996
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<S> <C> <C>
Sales $ 1,189,383 $ 941,895
Costs of Goods Sold 747,080 578,666
Gross Profit 442,303 363,229
OPERATING EXPENSES
Payroll $ 101,543 $ 95,552
Occupancy 62,257 55,150
Selling & Shipping 145,806 123,580
General & Administrative 45,475 52,790
Factor Fees and Interest 31,357 23,107
Depreciation & Amortization 7,955 3,972
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Total Operating Expenses $ 394,393 $ 354,151
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INCOME FROM OPERATIONS $ 47,910 $ 9,078
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OTHER INCOME
Interest $ 2,655 $ 474
Rent 12,000 12,000
Total Other Income $ 14,655 $ 12,474
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Income before income taxes $ 62,565 $ 21,552
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PROVISION FOR INCOME TAXES
Federal $ 8,540 $ 2,941
State 5,631 1,940
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Total Income Taxes $ 14,171 $ 4,881
NET INCOME $ 48,394 $ 16,671
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RETAINED EATNINGS (DEFICIT)
Beginning $ (178,962) $ (281,940)
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Ending $ (130,568) $ (267,269)
========== ==========
</TABLE>
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LBU, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
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<S> <C> <C>
SALES
Sales $ 1,227,124 $ 986,593
Sales Return and Allowances (36,813) (43,830)
Sales Discounts (929) (868)
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Total Sales $ 1,189,383 $ 941,895
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SCHEDULE OF COST OF GOODS SOLD
Beginning Inventory $ 789,090 $ 575,538
Direct Materials 314,891 315,026
Factory Supplies and Expenses 1,494 1,160
Display Expenses 5,838 3,991
Freight In 13,373 4,689
Shipping Supplies and Packaging 9,515 44,913
Direct Labor 83,081 7,854
Subcontractors-Sewing 209,383 152,850
Subcontractors-Screen Printing 4,580 4,850
Subcontractors-Packaging 6,870 4,099
Equipment Rentals 3,464 3,796
Ending Inventory (694,500) (540,100)
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Costs Of Goods Sold $ 747,080 $ 578,666
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SCHEDULE OF PAYROLL EXPENSE
Salaries:
Officers $ 34,385 $ 34,385
Office 50,468 39,270
Shipping 42,997 15,272
Sewing 6,573 4,747
Cutting 18,342 24,894
FICA Expense 11,686 9,070
SUI Expense 9,478 3,799
FUI Expense 948 704
Hospitalization 4,531 5,360
Workmans Compensation Insurance 5,216 2,964
Portion Allocated to Cost of Sales (83,081) (44,913)
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Total Payroll Expense $ 101,543 $ 95,552
========= ========
</TABLE>
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LBU, INC.
SUPPLEMENTARY INFORMATION
FOR THE THREE MONTHS ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
SCHEDULE OF OCCUPANCY EXPENSE 1997 1996
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<S> <C> <C>
Rent $ 37,540 $ 33,053
Real Estate Taxes 5,987 5,579
Repairs and Maintenance 7,958 5,176
Utilities 10,772 11,342
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Total Occupancy Expense $ 62,257 $ 55,150
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SCHEDULE OF SELLING AND SHIPPING EXPENSE
Telephone $ 9,120 $ 7,077
Auto Lease 3,464 -
Travel 1,852 21,930
Entertainment 3,838 -
Advertising 30,220 6,786
Commissions 65,817 43,650
Trade Shows 16,942 14,253
Freight Out 14,553 29,884
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Total Selling and Shipping Expense $ 145,806 $ 123,580
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SCHEDULE OF GENERAL AND ADMINISTRATIVE EXPENSES
Stationery and Office Supplies $ 13,605 $ 8,537
NSF Checks 1,151 -
Bank Charges 2,554 101
Credit Card Fees 1,178 688
Computer Services 3,493 5,647
Professional Fees 17,653 22,124
Licenses and Fees 1,050 6,100
Insurance 3,972 8,011
Miscellaneous 829 1,582
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Total General and Administrative
Expenses $ 45,475 $ 52,790
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FACTOR FEES AND INTEREST EXPENSE
Interest $ 1,872 $ -
Factor Fees - CIT 12,324 13,212
Factor Interest - CIT 13,280 9,895
Wire Charges and Other Fees - CIT 3,881 -
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Total Factor Fees and Interest Expense $ 31,357 $ 23,107
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</TABLE>
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