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Previous: FIRST FRANKLIN FINANCIAL CORP, 424B2, 1997-11-19 |
Next: GENERAL ELECTRIC CAPITAL CORP, 424B3, 1997-11-19 |
<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 SEPTEMBER 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 November 1, 1997, the Registrant's had an aggregate of 1,338,997 shares
of its common stock outstanding.
<PAGE>
PART 1 - FINANCIAL INFORMATION
NINE MONTH ENDED SEPTEMBER 30th, 1997 AND 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Net sales for the nine months ending September 30th, 1997 increased $96,000 from
$4,229,000 in 1996 to $4,323,000 in 1997. Although the increase was not
significant, the company increased its back log to $3.1 million dollars and
diversified it's channels of distribution in the retail industry. Cost of sales
decreased $77,000 or 3% from $2,918,962 in 1996 to $2,841,632 in 1997. This was
directly related to higher purchasing efficiencies and improving production and
quality control systems.
Gross profit increased $171,554 or 13% from $1,309,718in 1996 to $1,481,272 in
1997. 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 $29,153 or 19% from $151,233 in 1996 to
$180,386 in 1997. Net income after provision of taxes increased $68,634 or 68%
from $100,699 in 1996 to $169,333 in 1997. Earnings per share increased 44% from
.09 in the first nine months 1996 to .13 in the same period 1997.
Selling expenses increased $75,885 or 17% from $441,418 to $517,303. This was
due to the increase in commissions related to higher sales and the company's
increased attendance at industry trade shows. General and administrative
expenses increased $5,310 or 4% from $127,577 in 1996 to $132,887 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 $12,434 or 9% from $134,882 in 1996
to $127,577 in the same period 1997. This was due to a reduction in the factor
rate used by the companies lender the CIT Group.
2
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash position as of September 30, 1997 is $724,821. 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.
The Company entered into two promissory notes totaling $500,000. The notes have
warrants which allows the holder to purchase 40,000 shares of common stock of
the company at the exercised price of $5.00 per share. The warrants expire on
September 19, 1999.
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.
On September 12, 1997 Wolverton Securities Ltd. filed an action against the
company in US District Court for the District of Nevada. The company
subsequently filed an answer and a third party complaint in the same court on
October 24, 1997. Wolverton Securities, Ltd. seeks to have the company free up
170,000 shares of common stock that LBU canceled previously on November 19, 1995
due to its action against Glenneyre Capital Corporation, Pominandres Financial
Corporation and HJS Financial Services, Inc. who the company believes defrauded
the company of said shares through a financial service agreement stated in the
legal proceeding as referred to above. Wolverton Securities Ltd. also seeks
damages in the amount $405,000.
No discovery has commenced to date. The company cannot evaluate the outcome of
this lawsuit at the preset time. Management believes that the outcome of these
actions will be favorable.
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 - September 30, 1997.
2. Unaudited Statement of Income and Expenses for the nine months ended
September 30, 1997 and 1996.
3. Unaudited Statement of Income and Expenses for the Third quarter
ended September 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 September 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
SEPTEMBER 30TH, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 724,821 $ 107,944
Accounts Receivable, Net 280,841 237,752
Inventory 1,659,500 597,658
Deferred tax asset -- 23,000
Loans Receivable 13,303 3,303
Interest Receivable 2,737 --
Prepaid Expenses 130,304 22,385
Employee Advances 8,340 1,631
----------- -----------
Total Current Assets $ 2,819,846 $ 993,673
=========== ===========
FIXED ASSETS
Furniture and Fixtures $ 115,748 $ 43,902
Machinery and Equipment 160,489 109,106
Leasehold Improvements 72,905 70,233
----------- -----------
Total Property and Equipment 349,142 223,241
Accumulated Depreciation (81,565) (49,794)
FIXED ASSETS - NET $ 267,577 $ 173,447
=========== ===========
OTHER ASSETS
Security Deposits $ 47,057 $ 38,782
Other Assets 59,876 --
----------- -----------
Total Other Assets $ 106,933 $ 38,782
TOTAL ASSETS $ 3,194,356 $ 1,205,902
</TABLE>
6
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES
Accounts Payable $ 969,964 $ 425,199
Accrued Expenses 152,015 160,108
Accrued Taxes 31,867 65,234
Customer Deposits 33,506 20,002
Notes Payable 335,807 --
Total Current Liabilities $ 1,523,159 $ 670,543
=========== ===========
LONG TERM LIABILITIES
Notes Payable 565,884 --
Deferred Tax Liability 11,393 --
Total Long Term Liabilities $ 577,277 $ --
===========
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) (9,627) (181,241)
Total Stockholders' Equity 1,093,920 535,359
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 3,194,356 $ 1,205,902
=========== ===========
</TABLE>
7
<PAGE>
STATEMENT OF INCOME AND EXPENSES
FOR THE NINE MONTHS ENDED
SEPTEMBER 30TH, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Sales $4,322,904 $4,228,680
Cost of Goods Sold 2,841,632 2,918,962
Gross Profit 1,481,272 1,309,718
OPERATING EXPENSES
Payroll $ 322,398 $ 285,526
Occupancy 209,892 194,401
Selling & Shipping 517,303 441,418
General & Administrative 132,887 127,577
Factor fees and Interest 122,448 134,882
Depreciation & Amortization 14,144 12,100
Total Operating Expenses $1,319,072 $1,195,904
========= =========
INCOME FROM OPERATIONS $ 162,200 $ 113,814
======= =======
OTHER INCOME
Interest $ 6,186 $ 1,419
Rent 12,000 36,000
--------- ---------
Total Other Income $ 18,186 $ 37,419
INCOME BEFORE INCOME TAXES $ 180,386 $ 151,233
======= =======
PROVISION FOR INCOME TAXES
Federal $ 6,999 $ 46,863
State 4,054 3,671
----- -----
Total Provision For Income Taxes $ 11,053 $ 50,534
====== ======
NET INCOME $ 169,333 $ 100,699
RETAINED EARNINGS (DEFICIT)
Beginning $ (178,961) $ (281,940)
Ending (9,628) (181,241)
EARNINGS PER SHARE 0.13 0.09
</TABLE>
8
<PAGE>
STATEMENT OF INCOME AND EXPENSES
FOR THE THIRD QUARTER ENDED
SEPTEMBER 30TH, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Sales $1,322,000 $1,301,000
Cost of Goods Sold 913,651 956,424
Gross Profit 408,349 344,576
OPERATING EXPENSES
Payroll $ 113,489 $ 100,752
Occupancy 76,147 53,600
Selling & Shipping 231,575 144,486
General & Administrative 61,145 46,138
Factor fees and Interest 52,326 48,271
Depreciation & Amortization 4,679 3,970
Total Operating Expenses 539,361 397,217
======= =======
LOSS FROM OPERATIONS (131,012) (52,641)
========= ========
OTHER INCOME
Interest 1,215 483
Rent - 12,000
--------- ---------
Total Other Income 1,215 12,483
NET LOSS FOR THE PERIOD (129,797) (40,158)
</TABLE>
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