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Previous: OPPENHEIMER VARIABLE ACCOUNT FUNDS, 497, 1998-08-03 |
Next: MEDIZONE INTERNATIONAL INC, 8-K/A, 1998-08-03 |
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.
June 30, 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 July 28, 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 June 30, 1998
INDEX
Page
Number
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets
June 30, 1998 (Unaudited) and December 31, 1997 3
Statements of Operations (Unaudited)
Six months ended June 30, 1998 and 1997 4
Statements of Cash Flows (Unaudited)
Six months ended June 30, 1998 and 1997 5
Notes to Financial Statements (Unaudited) 6
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 8
Financial Statements of Ajay Sports, Inc.
as of June 30, 1998 9-x
Signature Page x
Note: No other information is included in answer to any item under Part 11 as
those other Items are either not applicable, or if applicable, the answer is
negative.
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
LBO CAPITAL CORP.
BALANCE SHEETS
(Unaudited)
June 30, December 31,
1998 1997
-------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and Equivalents $ 35 $ 43
Marketable Securities - Available for Sale 69,994 24,929
------------ ------------
Total Current Assets 70,029 24,972
TOTAL ASSETS $ 70,029 $ 24,972
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts Payable $ 731 4,202
Accounts Payable - Related Entities 210 1,060
Notes Payable - Other 512,451 506,971
Accrued Expenses and Taxes 100,001 73,475
------------ ------------
Total Current Liabilities 613,393 585,708
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 21,597 (23,467)
Accumulated Deficit (1,189,265) (1,161,573)
------------ ------------
Total Stockholders' Deficit (543,364) (560,736)
------------ ------------
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT $ 70,029 $ 24,972
============ ============
</TABLE>
See notes to financial statements.
3
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
LBO CAPITAL CORP.
STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, For the Six Months Ended June 30,
1998 1997 1998 1997
------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
REVENUES: $ -0- $ -0- $ -0- $ -0-
EXPENSES:
Professional Services (459) 1,305 (319) (63)
Management Fees 690 810 1,410 1,630
Interest Expense 13,374 13,189 26,525 25,925
Recovery of Bad Debt -0- (810) -0- (810)
Other Expenses 45 (441) 75 (358)
----------- ------------- ----------- --------------
Total Expenses 13,650 14,054 27,691 26,325
----------- ------------- ----------- --------------
Income (Loss) Before Income Taxes (13,650) (14,054) (27,691) (26,325)
Income Tax Expense (Benefit):
Currently Payable -0- -0- -0- -0-
----------- ------------- ----------- --------------
Net Income (Loss) $ (13,650) $ (14,054) $ (27,691) $ (26,325)
=========== ============= =========== ==============
Net Income (Loss) per Share $ (.00) $ (.00) $ (.00) $ (.00)
=========== ============= =========== ==============
Weighted Average Number of Common Shares
Outstanding 12,100,000 12,100,000 12,100,000 12,100,000
=========== ============= =========== ==============
</TABLE>
See notes to financial statements.
4
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
LBO CAPITAL CORP.
CASH FLOWS
(Unaudited)
June 30, June 30,
1998 1997
------------------ ------------------
<S> <C> <C>
Cash Flows for Operating Activities:
Net Loss $ (27,691) $ (26,325)
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Changes in Assets and Liabilities:
(Decrease) Increase in:
Accounts Payable (3,472) (2,972)
Accounts Payable - Related Entities (850) (750)
Accrued Expenses and Taxes 26,525 25,925
----------- -----------
Total Adjustments 22,203 22,203
----------- -----------
Net Cash (Used for) Operations (5,488) (4,122)
Cash (Used for) Investing Activities
Marketable Securities Available for Sale -0- -0-
----------- -----------
-0- -0-
Cash Flows from Financing Activities:
Proceeds on Notes Payable 5,480 4,450
----------- -----------
Net Cash Provided by Financing Activities 5,480 4,450
----------- -----------
Net Increase (Decrease) in Cash (8) 328
Cash and Cash Equivalents:
At Beginning of Period 43 78
----------- -----------
At End of Period $ 35 $ 406
=========== ===========
Supplemental Disclosures of Cash Flow Information:
Interest Paid $ -0- $ -0-
=========== ===========
</TABLE>
See notes to financial statements.
5
<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 June 30, 1998 and December
31, 1997, and the results of operations and cash flows for the six month periods
ended June 30, 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 six-month
periods ended June 30, 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 $.18. These warrants expire June 13, 1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
(a) Material Changes in Financial Condition
Working capital increased by $17,372 in the six-month period ended June
30, 1998 due to the net loss of $27,691 and an increase in unrealized gain on
investments of $45,063 for the six months ended June 30, 1998.
6
<PAGE>
(b) Results of Operations
Registrant's operations for the six months ended June 30, 1998 resulted in
a loss of $27,691. This was due mainly to interest expense of $26,524.
Liquidity and Capital Resources
The Registrant is currently meeting its cash needs from borrowing from an
affiliate 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 eight 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 June 30, 1998 as listed in the NASDAQ Small-Cap Issues was
$0.15625 per share. The approximate market value of the Registrant's 1,480,000
shares was $231,250 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 $4.5625 per share at June 30, 1998, which is $69,994. 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 June 30, 1998 are filed herewith.
(b) Reports on Form 8-K.
None
7
<PAGE>
LBO CAPITAL CORP.
FORM 10-Q
For the Quarter Ended June 30, 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: July 31, 1998
8
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
AJAY SPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
June 30, 1998 December 31,
(Unaudited) 1997
<S> <C> <C>
ASSETS - -
Current assets:
Cash and cash equivalents $ 66 $ 234
Trade accounts receivable, net 6,249 5,060
Inventories 5,759 6,398
Prepaid expenses and other current assets 372 304
Deferred tax benefit 363 363
---------- ---------
Total current assets 12,809 12,359
Fixed assets, net 1,627 1,723
Other assets 290 106
Deferred tax benefit 756 756
Goodwill 1,643 1,670
---------- ---------
Total assets $ 17,125 $ 16,614
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Notes payable to affiliates $ 160 $ 160
Notes payable to bank - 107
Current portion of capital lease 4 4
Accounts payable 2,528 3,204
Accrued expenses 572 684
---------- ---------
Total current liabilities 3,264 4,159
Notes payable to affiliates - long term 512 4,212
Notes payable to banks - long term 8,961 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, $10.00 par value, 296,170 shares
outstanding at stated value 2,962 2,962
Series D, $0.01 par value, 6,000,000 shares 60 -
Common stock, $.01 par value 100,000,000 shares authorized,
23,274,039 shares outstanding 233 233
Additional paid-in capital 14,253 9,313
Accumulated deficit (14,370) (14,532)
---------- ---------
Total stockholders' equity (deficit) 4,388 (774)
---------- ---------
Total liabilities and stockholders' equity $ 17,125 $ 16,614
========== =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AJAY SPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
------------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Net sales $ 8,991 $ 9,584 $ 16,589 $ 17,185
Cost of sales 7,335 7,965 13,665 14,108
------------- ------------ ------------ ------------
Gross profit 1,656 1,619 2,924 3,077
Selling, general and 1,178 1,294 2,206 2,462
administrative expenses ------------- ------------ ------------ ------------
Operating income 478 325 718 615
Non-operating expense:
Interest expense, net 315 438 650 716
Other, net 38 15 (98) 20
------------- ------------ ------------ ------------
Total non-operating expense 353 453 552 736
------------- ------------ ------------ ------------
Income (loss) before income taxes 125 (128) 166 (121)
------------- ------------ ------------ ------------
Net income (loss) $ 125 $ (126) $ 166 $ (121)
============= ============= ============ =============
Basic and diluted earnings per share* $ 0.00 $ (0.01) $ 0.00 $ (0.01)
============= ============= ============ =============
Weighted average common shares outstanding 23,274 23,274 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>
<PAGE>
<TABLE>
<CAPTION>
AJAY SPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS), (UNAUDITED)
Six Months
Ended June 30,
1998 1997
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 166 $ (121)
Adjustments to reconcile net cash flows from
operating activities:
Depreciation and amortization 181 188
Change in assets [(increase)/decrease] and
liabilities [increase/(decrease)]:
Trade accounts receivable, net (1,189) (2,590)
Inventories 639 952
Prepaid expenses and other current assets (68) (346)
Other assets (171) 89
Accounts payable (676) (213)
Accrued expenses (112) 97
------------- ------------
Net cash used in
operating activities (1,230) (1,944)
------------- ------------
Cash flows from investing activities:
Acquisitions of property, plant, equipment (75) (99)
------------- ------------
Net cash used in
investing activities (75) (99)
------------- ------------
Cash flows from financing activities:
Net increase (decrease) in bank loan (163) 1,371
Net increase in investment by affiliates 1,300 1,105
Dividends paid - (82)
------------- ------------
Net cash provided by
financing activities 1,137 2,394
------------- ------------
Net increase (decrease) in cash (168) 351
Cash at beginning of period 234 64
------------- ------------
Cash at end of period $ 66 $ 415
============= ============
Supplemental disclosures of cash flow information:
Cash paid for interest $ 633 $ 656
============= ===========
Cash paid for income tax -- --
============= ===========
</TABLE>
<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 35
<SECURITIES> 69,994
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 70,029
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 70,029
<CURRENT-LIABILITIES> 613,393
<BONDS> 0
0
0
<COMMON> 1,210
<OTHER-SE> (544,574)
<TOTAL-LIABILITY-AND-EQUITY> 70,029
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,166
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,525
<INCOME-PRETAX> (27,691)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (27,691)
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
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