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, 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 May 11, 2000 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, 2000
INDEX
Page
Number
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets
March 31, 2000 (Unaudited) and December 31, 1999 3
Statements of Operations (Unaudited)
Three months ended March 31, 2000 and 1999 4
Statements of Cash Flows (Unaudited)
Three months ended March 31, 2000 and 1999 5
Notes to Financial Statements (Unaudited) 6
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 March 31, 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.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
LBO CAPITAL CORP.
BALANCE SHEETS
(Unaudited)
March 31, December 31,
2000 1999
----------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and Equivalents $ 16 $ 63
Marketable Securities - Available for Sale 29,716 32,600
-------------- ------------
Total Current Assets 29,732 32,663
Other Assets
Investments 321,000 -0-
-------------- ------------
Total Other Assets 321,000 -0-
------------
TOTAL ASSETS $ 350,732 $ 32,663
============== ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts Payable 2,231 3,250
Accounts Payable - Related Entities 330 300
Notes Payable - Other 825,801 823,201
Accrued Expenses and Taxes 215,930 194,021
-------------- ------------
Total Current Liabilities 1,044,292 1,020,773
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 (18,680) (15,796)
Accumulated Deficit (1,299,184) (1,596,616)
-------------- ------------
Total Stockholders' Deficit (693,560) (988,109)
-------------- ------------
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT $ 350,732 $ 32,663
============== ============
See notes to financial statements.
3
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
LBO CAPITAL CORP.
STATEMENTS OF OPERATIONS
For the Three Months Ended March 31,
2000 1999
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<S> <C> <C>
REVENUES:
Interest Income - Other $ 5,219 $ -0-
EXPENSES:
Professional Services 811 428
Management Fees 810 690
Interest Expense 21,910 12,420
Other Expenses 36 140
------------ -------------
Total Expenses 23,566 13,678
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Income (Loss) Before Income Taxes (18,347) (13,678)
Income Tax Expense (Benefit):
Currently Payable -0- -0-
------------ -------------
Net Income (Loss) $ (18,347) $ (13,678)
============ =============
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>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
LBO CAPITAL CORP.
CASH FLOWS
(Unaudited)
March 31, March 31,
2000 1999
---------------------------------------
<S> <C> <C>
Cash Flows for Operating Activities:
Net Loss $ (18,347) $ (13,678)
----------- ----------
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:
Interest Receivable - Other 15,781 -0-
Accounts Payable (1,020) (1,532)
Accounts Payable - Related Entities 30 60
Accrued Expenses and Taxes 21,910 12,420
----------- ----------
Total Adjustments 36,701 10,948
----------- ----------
Net Cash (Used for) Operations 18,354 (2,730)
Cash (Used for) Investing Activities
Purchase of Investments (21,000)
Marketable Securities Available for Sale -0- -0-
----------- ----------
(21,000) -0-
----------- ----------
Cash Flows from Financing Activities:
Proceeds on Notes Payable 2,600 2,700
----------- ----------
Net Cash Provided by Financing Activities 2,600 2,700
----------- ----------
Net Increase (Decrease) in Cash (46) (30)
Cash and Cash Equivalents:
At Beginning of Period 63 73
----------- ----------
At End of Period $ 16 $ 43
=========== ==========
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, 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 March 31, 2000 and
December 31, 1999, and the results of operations and cash flows for the three
month periods ended March 31, 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 three-month
periods ended March 31, 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. These warrants expire June 13, 2000.
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.
<PAGE>
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 $21,231 in the three-month period ended March
31, 2000 due to the net loss of $18,347 and the decrease in unrealized gain on
investments of $2,884 for the three months ended March 31, 2000.
(b) Results of Operations
---------------------
Registrant's operations for the three months ended March 31, 2000 resulted
in a loss of $18,347. This was due mainly to interest expense of $21,910 and
management fees of $810 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 March 31, 2000
was $.75 per share. Ajay stock is traded over-the-counter. The approximate
market value of the Registrant's 246,667 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 $1.9375 per share at March 31, 2000,
which is $18,680 below cost. These shares could be liquidated to meet cash flow
needs if necessary.
<PAGE>
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, 2000 are filed herewith.
(b) Reports on Form 8-K.
None
<PAGE>
LBO CAPITAL CORP.
FORM 10-Q
For the Quarter Ended March 31, 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.
-----------------
(Registrant)
By \s\Thomas W. Itin
-----------------------------
Thomas W. Itin, President,
Chairman of Board of Directors
Date signed: May 22, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
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<CIK> 0000753557
<NAME> LBO Capital Corp.
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<CURRENCY> US Dollar
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-2000
<PERIOD-START> Jan-01-2000
<PERIOD-END> Mar-31-2000
<EXCHANGE-RATE> 1
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0
0
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<NET-INCOME> (18,347)
<EPS-BASIC> (.00)
<EPS-DILUTED> (.00)
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