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, 2000 33-19107
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LBO Capital Corp.
(Exact name of Registrant as Specified in its Charter)
Colorado 38-2780733
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(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
32751 Middlebelt Road, Suite B
Farmington Hills, MI 48334
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(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 August 11, 2000 a total of 12,100,000 shares, $.0001 par value common
stock, were issued and outstanding.
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LBO CAPITAL CORP.
Form 10-Q Filing of Quarter Ended June 30, 2000
INDEX
Page
Number
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets
June 30, 2000 (Unaudited) and December 31, 1999 3
Statements of Operations (Unaudited)
Three and Six months ended June 30, 2000 and 1999 4
Statements of Cash Flows (Unaudited)
Six months ended June 30, 2000 and 1999 5
Notes to Financial Statements (Unaudited) 6-7
Item 2. Management's Discussion and Analysis of Financial Statements
(Unaudited) 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 8-x
Financial Statements of Ajay Sports, Inc.
as of June 30, 2000 x
Signature Page
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.
2
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<CAPTION>
<S> <C> <C>
LBO CAPITAL CORP.
BALANCE SHEETS
(Unaudited)
June 30, December 31,
2000 1999
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ASSETS
Current Assets:
Cash and Equivalents $ 7 $ 63
Marketable Securities - Available for Sale 21,094 32,600
Interest Receivable -0- 15,780
Note Receivable -0- 300,000
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Total Current Assets 21,101 348,443
Other Assets 321,000 -0-
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Investments
Total Other Assets 321,000 -0-
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TOTAL ASSETS $ 342,101 $ 348,443
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LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts Payable 731 3,250
Accounts Payable - Related Entities 210 300
Notes Payable - Other 828,951 823,201
Accrued Expenses and Taxes 238,876 194,021
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Total Current Liabilities 1,068,768 1,020,772
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 (27,302) (15,796)
Accumulated Deficit (1,323,669) (1,280,837)
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Total Stockholders' Deficit (726,667) (672,330)
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TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT $ 342,101 $ 348,443
============ ============
See notes to financial statements.
3
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<CAPTION>
<S> <C> <C> <C> <C>
LBO CAPITAL CORP.
STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, For the Six Months Ended June 30,
2000 1999 2000 1999
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REVENUES:
Interest Income - Other $ 0 $ 658 $ 5,219 $ 658
EXPENSES:
Professional Services 557 211 1,368 639
Management Fees 930 930 1,740 1,620
Interest Expense 22,946 12,620 44,856 25,040
Other Expenses 51 55 87 195
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Total Expenses 24,485 13,816 48,051 27,494
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Income (Loss) Before Income Taxes (24,485) (13,158) (42,832) (26,836)
Income Tax Expense (Benefit):
Currently Payable -0- -0- -0- -0-
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Net Income (Loss) $ (24,485) $ (13,158) $ (42,832) $ (26,836)
=========== ============= ========== =============
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
=========== ============= ========== =============
See notes to financial statements.
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<CAPTION>
<S> <C> <C>
LBO CAPITAL CORP.
CASH FLOWS
(UNAUDITED)
June 30, June 30,
2000 1999
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Cash Flows for Operating Activities:
Net Loss $ (42,832) $ (26,836)
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Changes in Assets and Liabilities:
(Decrease) Increase in:
Interest Receivable - Other 15,781 (658)
Accounts Payable (2,520) (3,032)
Accounts Payable - Related Entities (90) -0-
Accrued Expenses and Taxes 44,856 25,041
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Total Adjustments 58,026 21,351
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Net Cash (Used for) Operations 15,194 (5,485)
Cash (Used for) Investing Activities
Note Receivable - Other -0- (300,000)
Purchase of Investments (21,000) -0-
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(21,000) (300,000)
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Cash Flows from Financing Activities:
Proceeds on Notes Payable 5,750 305,450
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Net Cash Provided by Financing Activities 5,750 305,450
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Net Increase (Decrease) in Cash (56) (35)
Cash and Cash Equivalents:
At Beginning of Period 63 73
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At End of Period $ 7 $ 38
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Supplemental Disclosures of Cash Flow Information:
Interest Paid $ -0- $ -0-
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See notes to financial statements.
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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, 1999. 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, 2000 and December
31, 1999, and the results of operations and cash flows for the six month periods
ended June 30, 2000 and 1999.
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, 2000 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.
On August 13, 1998, Ajay announced that its board of directors had
authorized the implementation of a 1-for-6 reverse split of the company's common
stock, effective with the commencement of trading on August 14, 1998. The
reverse split was approved by the stockholders of Ajay at the company's annual
meeting on May 29, 1998.
Following the reverse split, holders of Ajay's common stock received one
new share of $.01 par value common stock for every six shares of common stock
currently held. Therefore, the number of Ajay shares held by the Company is
246,667. The reverse split also affected the number and exercise price of the
Company's warrants, such that the Company now holds 33,333 warrants entitling it
to purchase one share of Ajay's common stock at $1.08 per share.
6
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On February 29, 2000, the Registrant converted its note receivable from
Pro Golf International, Inc. ("PGI"), and the interest accrued but unpaid on
such note receivable, into common stock of PGI. The conversion was made at the
rate of $60 per common share, the price at which PGI was raising equity capital
under a Confidential Private Placement Memorandum dated February 4, 2000. The
Registrant had initially made an investment in the subordinated debt of the
Registrant on June 23, 1999, as part of the purchase of PGI by the Registrant's
investee company, Ajay Sports, Inc. on that date, and the Registrant had held
the note from PGI until the time of this conversion into common stock. In
exchange for converting the $300,000 note and $21,000 of interest, the
Registrant received 5,350 shares of PGI's common stock.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
(a) Material Changes in Financial Condition
Working capital decreased by $54,338 in the six-month period ended June
30, 2000 due to the net loss of $42,832 and the decrease in unrealized gain on
investments of $11,506 for the six months ended June 30, 2000.
(b) Results of Operations
Registrant's operations for the six months ended June 30, 2000 resulted in
a loss of $42,832. This was due mainly to interest expense of $44,856 and
management fees of $1,740 offset by interest income of $5,219.
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 nine 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, 2000
was $.281 per share. Ajay stock is traded over-the-counter. The approximate
market value of the Registrant's 246,667 shares was $69,313 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 $1.375 per share at June 30, 2000,
which is $27,302 below cost. These shares could be liquidated to meet cash flow
needs if necessary.
7
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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, 2000 are filed herewith.
(b) Reports on Form 8-K.
On July 12, 2000, the Registrant filed a Form 8-K extending the Class A,
Class B & Class C warrants from July 25, 2000 to July 25, 2001.
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LBO CAPITAL CORP.
FORM 10-Q
For the Quarter Ended June 30, 2000
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.
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(Registrant)
By /s/ Thomas W. Itin
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Thomas W. Itin, President,
Chairman of Board of Directors
Date signed: August 14, 2000
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