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Previous: ANALYTICAL SURVEYS INC, 10-Q, 1998-05-15 |
Next: MEDIZONE INTERNATIONAL INC, 10-Q, 1998-05-15 |
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended Commission File No.
March 31, 1998 33-19107
- -------------- ------------------
LBO Capital Corp.
(Exact name of Registrant as Specified in its Charter)
Colorado 38-2780733
- ------------------------------- -------------------
(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
7001 Orchard Lake Road, Suite 424
West Bloomfield MI 48322-3608
- --------------------------------------- -----------
(Address of Principal Executive Offices) (Zip Code)
(248) 851-5651
(Registrant's Telephone Number Including Area Code)
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 preceding 12 months (or 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 11, 1998 a total of 12,100,000 shares, $.0001 par value common stock,
were issued and outstanding.
<PAGE>
LBO CAPITAL CORP.
Form 10-Q Filing of Quarter Ended March 31, 1998
INDEX
Page
Number
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets
March 31, 1998 (Unaudited) and December 31, 1997 3
Statements of Operations (Unaudited)
Three months ended March 31, 1998 and 1997 4
Statements of Cash Flows (Unaudited)
Three months ended March 31, 1998 and 1997 5
Notes to Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of Financial
Statements (Unaudited) 6-7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 7
Financial Statements of Ajay Sports, Inc.
as of March 31, 1998 9-x
Signature Page x
Note: No other information is included in answer to any item under Part II as
those other Items are either not applicable, or if applicable, the answer is
negative.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
LBO CAPITAL CORP.
BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
March 31, December 31,
1998 1997
-------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and Equivalents $ 48 $ 43
Marketable Securities - Available for Sale 38,353 24,929
------------ ------------
Total Current Assets 38,401 24,972
TOTAL ASSETS $ 38,401 $ 24,972
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts Payable 2,788 4,202
Accounts Payable - Related Entities 1,780 1,060
Notes Payable - Other 508,561 506,971
Accrued Expenses and Taxes 86,627 73,475
------------ ------------
Total Current Liabilities 599,756 585,708
Stockholders' Equity
Common Stock, $.0001 par value;
Authorized 100,000,000 Shares;
Issued and Outstanding 12,100,000 shares 1,210 1,210
Additional Paid-In Capital 623,094 623,094
Unrealized Gain(Loss) on Available for Sale Securities (10,043) (23,467)
Accumulated Deficit (1,175,615) (1,161,573)
------------ ------------
Total Stockholders' Deficit (561,355) (560,736)
------------ ------------
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT $ 38,401 $ 24,972
============ ============
</TABLE>
See notes to financial statements.
3
<PAGE>
LBO CAPITAL CORP.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
1998 1997
-------------- -------------------
<S> <C> <C>
REVENUES: $ -0- $ -0-
EXPENSES:
Professional Services 140 (1,368)
Management Fees 720 820
Interest Expense 13,151 12,736
Other Expenses 30 83
----------- -------------
Total Expenses 14,041 12,271
----------- -------------
Income (Loss) Before Income Taxes (14,041) (12,271)
Income Tax Expense (Benefit):
Currently Payable -0- -0-
----------- -------------
Net Income (Loss) $ (14,041) $ (12,271)
=========== =============
Net Income (Loss) per Share $ (.00) $ (.00)
=========== =============
Weighted Average Number of Common Shares
Outstanding 12,100,000 12,100,000
=========== =============
See notes to financial statements.
4
</TABLE>
<PAGE>
LBO CAPITAL CORP.
CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
March 31, March 31,
1998 1997
----------------------------------------
<S> <C> <C>
Cash Flows for Operating Activities:
Net Loss $ (14,041) $ (12,271)
----------- -----------
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Changes in Assets and Liabilities:
(Increase) Decrease in:
Prepaid Expenses and Deposits -0- -0-
(Decrease) Increase in:
Accounts Payable (1,415) (2,972)
Accounts Payable - Related Entities 720 (140)
Accrued Expenses and Taxes 13,151 12,736
----------- -----------
Total Adjustments 12,456 9,624
----------- -----------
Net Cash (Used for) Operations (1,585) (2,647)
Cash (Used for) Investing Activities
Marketable Securities Available for Sale -0- -0-
----------- -----------
0 0
Cash Flows from Financing Activities:
Payments on Notes Payable - Related Entity -0- -0-
Proceeds on Notes Payable 1,590 2,650
----------- -----------
Net Cash Provided by Financing Activities 1,590 2,650
----------- -----------
Net Increase (Decrease) in Cash 5 3
Cash and Cash Equivalents:
At Beginning of Period 43 78
----------- -----------
At End of Period $ 48 $ 81
=========== ===========
Supplemental Disclosures of Cash Flow Information:
Interest Paid $ -0- $ -0-
=========== ===========
See notes to financial statements
5
</TABLE>
<PAGE>
LBO CAPITAL CORP
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1. INTERIM FINANCIAL STATEMENTS
The accompanying financial statements of LBO Capital Corp. ("the Company")
have been prepared by the Company without audit by independent accountants,
except for the balance sheet at December 31, 1997. In the opinion of the
Company's management, the financial statements reflect all adjustments necessary
to present fairly the Company's financial position at March 31, 1998 and
December 31, 1997, and the results of operations and cash flows for the three
month periods ended March 31, 1998 and 1997.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These unaudited financial statements
should be read in conjunction with the financial statements and notes thereto
included in the Company's Annual Report 10-K. The results for the three-month
periods ended March 31, 1998 are not necessarily indicative of future financial
results.
NOTE 2. INVESTMENTS.
As previously reported, the Company had acquired 1,880,000 shares of the
restricted common stock of Ajay Sports, Inc. ("Ajay") in April 1989, for
$182,000. Subsequently, this was reduced to 1,480,000 shares. As a result of
recording the Company's equity in net losses of Ajay, the carrying value of this
investment is zero. The Company also obtained 200,000 warrants of Ajay at that
time. Each warrant entitles the Company to purchase one share of Ajay common
stock at $.34. These warrants expire June 13, 1999. On November 9, 1998, in
return for various services rendered on behalf of Ajay, the Board of Ajay agreed
to reduce the Registrant's warrant exercise price to $.18, a rate which is
currently in effect.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
(a) Material Changes in Financial Condition
Working capital decreased by $617 in the three-month period ended March
31, 1998 due to the net loss of $14,041 offset by the increase in unrealized
gain on investments of $13,424 for the three months ended March 31, 1998.
6
<PAGE>
(b) Results of Operations
Registrant's operations for the three months ended March 31, 1998 resulted
in a loss of $14,041. This was due mainly to interest expense of $13,151 and
management fees of $720.
Liquidity and Capital Resources
The Registrant is currently meeting its cash needs from borrowing from a
company. There is no assurance that this will continue in future years. The
Registrant's principal asset is its investment in marketable securities of Ajay,
which it has held for over seven years. These shares are carried at a zero value
on the Registrant's Balance Sheet as a result of recording the Registrant's
equity in net losses of Ajay. The market value of Ajay stock on March 31, 1998
as listed in the NASDAQ Small-Cap Issues was $0.1250 per share. The approximate
market value of the Registrant's 1,480,000 shares was $185,000 on that date. The
Registrant also owns 15,341 shares of Enercorp, Inc. common stock. These shares
are carried at their fair market value of $2.50 per share at March 31, 1998,
which is $10,043 below cost. These shares could be liquidated to meet cash flow
needs if necessary.
Part II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Pursuant to the provisions of Reg. ss. 210.3-09 of Regulation S-X, the
Registrant is required to file separate financial statements of its equity basis
investee Ajay, which financial statements for March 31, 1998 are filed herewith.
(b) Reports on Form 8-K.
None
7
<PAGE>
LBO CAPITAL CORP.
FORM 10-Q
For the Quarter Ended March 31, 1998
Signature Page
SIGNATURES
Pursuant to 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.
LBO CAPITAL CORP.
(Registrant)
By s\Thomas W. Itin
---------------------------
Thomas W. Itin, President,
Chairman of Board of Directors
Date signed: May 14, 1998
8
<PAGE>
Item 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
AJAY SPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
March 31, 1998 December 31,
(Unaudited) 1997
ASSETS ------------------- ----------------
<S> <C> <C>
Current assets:
Cash $ 99 $ 234
Trade accounts receivable, net 5,999 5,060
Inventories 6,765 6,398
Prepaid expenses and other 305 304
Deferred tax benefit 363 363
---------- ----------
Total current assets 13,531 12,359
Fixed assets, net 1,661 1,723
Other assets 261 106
Deferred tax benefit 756 756
Goodwill 1,654 1,670
---------- ----------
Total assets $ 17,863 $ 16,614
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (deficit)
Current liabilities:
Notes payable to affiliates $ 160 $ 160
Notes payable to banks 105 107
Current portion of capital lease 4 4
Accounts payable 4,000 3,204
Accrued expenses 714 684
---------- -----------
Total current liabilities 4,983 4,159
Notes payable to affiliates - long term 4,224 4,212
Notes payable to banks - long term 9,393 9,017
Stockholders' equity:
Preferred stock, 10,000,000 shares authorized,
Series B, $0.01 par value, 12,500 shares outstanding
at liquidation value 1,250 1,250
Series C, $0.01 par value, 296,170 shares
outstanding at stated value 2,962 2,962
Common stock, $.01 par value 100,000,000 shares authorized,
23,274,039 shares outstanding 233 233
Additional paid-in capital 9,313 9,313
Accumulated deficit (14,495) (14,532)
---------- -----------
Total stockholders' equity (deficit) (737) (774)
---------- -----------
Total liabilities and stockholders' equity $ 17,863 $ 16,614
========== ===========
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
AJAY SPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months
Ended March 31,
1998 1997
---------- ----------
<S> <C> <C>
Net sales $ 7,598 $ 7,601
Cost of sales 6,330 6,143
------------ ---------- -
Gross profit 1,268 1,458
Selling, general and 1,028 1,168
administrative expenses ------------ ----------
Operating income 240 290
Non-operating expense:
Interest expense, net 335 278
Other, net (136) 5
------------- -----------
Total non-operating expense 199 283
------------- -----------
Income (loss) before income taxes 41 7
Income tax expense (benefit) - 2
------------- ----------- -
Net income (loss) $ 41 $ 5
============= ===========
Basic and diluted earnings per share * $ 0.00 $ 0.00
============= ===========
Weighted average common shares outstanding 23,274 23,274
============= ===========
* Computed by dividing net income or loss, after reduction for preferred stock dividends,
by the weighted average number of common shares outstanding.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
AJAY SPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS), (UNAUDITED) )
Three Months
Ended March 31,
1998 1997
----------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 41 $ 5
Adjustments to reconcile to net cash flows from
operating activities:
Depreciation and amortization 101 91
Change in assets [(increase)/decrease] and
liabilities [increase/(decrease)]:
Trade accounts receivable, net (939) (1,962)
Inventories (367) 468
Prepaid expenses and other current assets - (236)
Other assets (155) 4
Deferred tax benefits - 2
Accounts payable 796 694
Accrued expenses 25 137
----------- ------------
Net cash used in
operating activities (498) (797)
----------- ------------
Cash flows from investing activities:
Acquisitions of property, plant, equipment (23) (44)
----------- ------------
Net cash used in
investing activities (23) (44)
----------- ------------
Cash flows from financing activities:
Proceeds from notes payable to affiliates 12 -
Net change in bank loan 374 1,049
Dividends - (82)
----------- ------------
Net cash provided by
financing activities 386 967
----------- ------------
Net increase (decrease) in cash (135) 126
Cash at beginning of period 234 64
----------- ------------
Cash at end of period $ 99 $ 190
=========== ============
Supplemental disclosures of cash flow information:
Cash paid for interest $ 286 $ 277
=========== ============
Cash paid for income tax - -
=========== ============
</TABLE>
3
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000753557
<NAME> LBO Capital Corp.
<MULTIPLIER> 1
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Mar-31-1998
<EXCHANGE-RATE> 1
<CASH> 48
<SECURITIES> 38,353
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 38,353
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 38,401
<CURRENT-LIABILITIES> 599,756
<BONDS> 0
0
0
<COMMON> 1,210
<OTHER-SE> (562,564)
<TOTAL-LIABILITY-AND-EQUITY> 38,401
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 890
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,151
<INCOME-PRETAX> (14,041)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,041)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
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