SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
December 31, 2000 3-19107
- --------------------------- ------------------
(For the fiscal year ended) (Commission File No.)
LBO CAPITAL CORP.
(Exact name of Registrant as specified in its charter)
Colorado 38-2780733
- ------------------------ --------------------
(State or other jurisdiction of organization) (I.R.S. Employer
Identification Number)
32751 Middlebelt Road, Suite B
Farmington Hills, MI 48334
- ------------------------------------- ---------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(248) 851-5651
Securities registered pursuant to Section 12 (b) of the Act:
None
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, $.0001 Par Value
(Title of Class)
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 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 December 31, 2000, a total of 12,100,000 shares of common stock,
$.0001 par value, were outstanding and the aggregate market value of the
voting stock held by nonaffiliates of the Registrant was approximately
$116,488 based on the average of the bid and asked prices on that date $.02
as reported by The National Quotation Bureau, Inc.
LBO CAPITAL CORP.
FORM 10-K
PART 1
ITEM 1. BUSINESS
General
LBO Capital Corp. (the "Registrant") was organized under the laws of
the State of Colorado on October 8, 1987. The Registrant was formed based on
the belief of its management that there are business opportunities that, for
one or more reasons, are available for acquisition by the Registrant.
On March 15, 1988, the Registrant completed a public offering of
3,000,000 Units, each Unit consisting of one share of its common stock, one
Callable Class A Warrant, one Callable Class B Warrant and one Callable Class
C Warrant. The Warrants are detachable from the Units and may be traded
separately in the over-the-counter market. Each Class A Warrant entitles the
holder thereof to purchase at a price of $0.50, one share of Common Stock at
any time until February 26, 1989. Each Class B Warrant entitled the holder
thereof to purchase at a price of $0.75 one share of Common Stock at any time
until August 26, 1989. Each Class C Warrant entitled the holder thereof to
purchase at a price of $1.00, one share of Common Stock at any time until
February 26, 1990. The expiration dates of these warrants were subsequently
extended by the Board of Directors to expire on various dates, the latest
being July 25, 2000. A Form 8-K was filed on July 12, 1999 reporting this
extension. The Registrant received net proceeds of approximately $474,300
after payment of all costs of the offering.
Since its inception, the Registrant has directed its activities toward
evaluating potential business opportunities with the goal of acquiring and
continuing one or more business opportunities. The Registrant may acquire an
existing business which may be a corporation, partnership or sole
proprietorship. One form which such a business combination might take would
be an exchange of the Registrant's stock for stock of the acquired business.
However, the Registrant may exchange its common stock to acquire the assets
of this entity, or may purchase a percentage of the entity outright.
The Registrant has evaluated and attempted to acquire a number of
entities to date.
ACQUISITION OF ASSETS
Ajay Sports, Inc.
On April 3, 1989 LBO acquired an aggregate of 1,880,000 shares of the
restricted common stock of Ajay Sports, Inc. ("Ajay") for a total cash
purchase price of $182,000.
In 1991, the Registrant pledged 400,000 shares of Ajay to a bank as
collateral for $300,000 in loans to Hendricks Manufacturing Company. On
July 1, 1991, this bank declared the loan in default and foreclosed on the
shares.
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.
The 246,667 common stock and 33,333 warrants owned by the Registrant
represented 6.7% of the total shares of Ajay common stock outstanding as of
December 31, 2000. The decrease is the result of new shares issued.
Ajay's Common Stock ("AJAY") and Units ("AJAYU") are trading on the
Nasdaq Small Cap and the Warrants ("AJAYW") have been traded over-the-counter
since 1989 and are reported by the National Quotation Service. The following
table sets forth the range of high and low trade prices for the common stock:
HI LOW
----- -----
2000
- -----
First Quarter # 0.75 $ 0.75
Second Quarter $ 0.2812 $ 0.2812
Third Quarter $ 0.260 $ 0.260
Fourth Quarter $ 0.120 $ 0.0937
On June 10, 1993, Thomas W. Itin, President and Chairman of the Board
of Directors of the Registrant, was elected to the positions of Chairman of
the Board of Directors and Chief Executive Officer of Ajay Sports, Inc. It
is felt that the direct intervention by the Registrant's management into the
operations of Ajay would have a positive effect on the Ajay earnings and the
value of the Ajay stock held by the Registrant.
Business Ajay Sports, Inc., through its operating subsidiaries Ajay
Leisure Products, Inc., Palm Springs Golf and Leisure Life, Inc., is a
leading manufacturer and distributor of golf bags, clubs, carts, accessories
and casual living furniture throughout the United States.
Enercorp, Inc.
On November 21, 1994, the Registrant bought 2,667 shares of Enercorp,
Inc. for $8,702. During 1996, the Registrant bought 12,674 additional shares
of Enercorp, Inc. for $39,694.
Enercorp, Inc. is a business development company under the Investment
Company Act of 1940, as amended.
On June 24, 1999, the Registrant completed a private offering of its
common stock through which it raised $420,000 in gross proceeds. The
proceeds from this offering were used to make an investment that was
later converted to a note to Pro Golf International, Inc. ("PGI") to
assist PGI in its purchase of the common stock of the Pro Golf of
America ("PGOA") on June 23, 1999.
The Registrant converted its note into the common stock of PGI to aid
PGI in obtaining long term financing for its operation as of February
29, 2000.
PGI operates through its wholly owned operating subsidiary, Pro Golf of
America. Under its prior ownership, PGOA opened one of America's
second 'off-course' retail golf stores in 1962, virtually inventing the
retail discount golf store concept. The retail success led the company
to begin franchising in 1975. Today, its franchised stores generate
nearly $240 million in golf equipment and apparel sales through the
off-course golf shop distribution channel each year. PGOA collects
initial franchise fees from each new store and ongoing monthly
royalties based on product sale that occurs in franchised stores. Pro
Golf.Com, Inc., a subsidiary of PGI, was formed to acquire the Internet
operations of PGOA and Ajay, and has obtained only limited financing.
The Internet site generates limited sales and is still under
development. During the 2000 fiscal year, this entity will be
assembling its management team, expanding sales and seeking additional
financing and the Registrant believes this opportunity has significant
potential for long-term success.
Competition
The Registrant expects to encounter substantial competition in its
efforts to locate businesses for acquisition. The primary competition for
desirable business acquisitions is expected to come from other small
companies organized and funded for purposes similar to the Registrant, small
venture capital partnerships and corporations, small business investment
companies and wealthy individuals. Should the Registrant elect to engage in
a leveraged buyout acquisition, competition may also be anticipated from
investment bankers. Many of these entities have significantly greater
experience, resources and managerial capabilities than the Registrant and are
therefore in a better position than the Registrant to obtain access to
businesses.
Employees
As of December 31, 2000, the Registrant had no employees.
ITEM 2. PROPERTIES
The Registrant currently uses office space provided by Acrodyne
Corporation, a company whose Chairman and President is also Chairman and
President of the Registrant. The space is used for purposes of
administration and development. While the Registrant does not pay any rent,
it does pay a monthly fee of $150 for the direct operating expenses. The
Registrant believes its current facilities are sufficient for its present
business activity.
ITEM 3. LEGAL PROCEEDINGS
The Registrant is not a present party to any material pending legal
proceedings and no such proceedings were known as of the filing date.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of the Registrant's shareholders
during the fiscal year ended December 31, 2000.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Common Stock
The principal market on which the Registrant's common stock, $.0001 par
value, is traded on the Over-The-Counter market.
Prices for the Common Stock have been reported in the National Daily
Quotation Service "Pink Sheets" published by the National Quotation Bureau
since March 15, 1988. The high and low trade price quotations for the
Registrant's Common Stock during the quarters ended on the dates listed below
is as follows:
Trade Prices
--------------------
HI LOW
1999
----
First Quarter $ .025 $ .025
Second Quarter $ .03 $ .025
Third Quarter $ .03 $ .03
Fourth Quarter $ .03 $ .03
2000
-----
First Quarter $ .0625 $ .0625
Second Quarter $ .0312 $ .0312
Third Quarter $ .0312 $ .0312
Fourth Quarter $ .02 $ .02
On December 31, 2000, the high trade price reported for the Common
Stock was $.02 and the low trade price was $.02.
As of December 31, 2000, the number of record holders of the
Registrant's Common Stock was 265. This figure excludes an undetermined
number of shareholders whose shares are held in "street" or "nominee" name.
The Registrant has never paid a dividend with respect to its Common
Stock and does not intend to pay a dividend in the foreseeable future.
Units
Prices for the Units have been reported in the National Daily Quotation
Service "Pink Sheets" published by the National Quotation Bureau since March
15, 1988. The high and low quotations for the Registrant's Units during the
quarters ended on the dates listed below is as follows:
1999*
*No units traded in 1999.
2000*
*No units were traded in 2000.
Each Unit consists of one share of the Registrant's Common Stock, one
Callable Class A Warrant, one Callable Class B Warrant and one Callable Class
C Warrant.
Warrants
No ask or bid quotations were reported by the National Quotation Bureau, Inc.
since December, 1989.
*Prices are inter-dealer quotations as reported by the National
Quotation Bureau, Inc., New York, New York, without adjustment for
retail mark-up, mark-down or commission and may not necessarily
represent actual transactions.
ITEM 6. SELECTED FINANCIAL DATA
December 31
2000 1999 1998 1997 1996
-----------------------------------------------------
Working Capital $(787,770) $(672,330) $(599,097) $(560,736) $(498,352)
Cash 0 63 73 43 78
Marketable Securities 11,506 32,600 46,023 24,972 28,765
Notes Receivable 0 300,000 0 0 0
Interest Receivable 0 15,780 0 0 0
Investments 321,000 0 0 0 0
Total Assets 332,506 348,443 49,096 24,972 28,843
Total Liabilities 1,120,276 1,020,773 645,193 585,708 527,195
Shareholders' Equity (787,770) (672,330) (599,097) (560,736) (498,352)
December 31
2000 1999 1998 1997 1996
-----------------------------------------------------
Total Operating Revenue $ 5,219 $15,781 $ 0 $ 0 $ 0
Total Operating Exp. 99,5566 75,590 59,454 58,549 52,328
Net income (loss) before
equity loss of
affiliate (94,347) (59,809) (59,454) (58,549) (52,325)
Equity in net loss of
affiliated company 0 0 0 0 0
Net income (loss) (94,347) (59,809) (59,454) (58,549) (52,328)
Net Income (loss)
per common share ( .00) ( .00) ( .00) ( .00) ( .00)
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
Working capital at December 31, 2000 was decreased by $115,440 from the
period ended December 31, 1999. This was mainly caused by a net loss of
$94,374 and a decrease of $4,274 in the market value of securities available
for sale.
On December 2, 1996, the Registrant had a change in its borrowing
arrangements. The Registrant borrowed $325,790 from Dearborn Wheels, Inc. to
repay a note payable to Michigan National Bank. The principal balance as of
December 31, 2000, was $831,526 and the interest due was $286,996. The loan
is at prime plus 2% interest and is secured by all the intangible assets of
the Registrant. Dearborn Wheels, Inc. is held in majority by the
Registrant's President's spouse.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements required to be furnished hereunder are
attached hereto under Item 14.
Supplementary Financial Schedules for which provision is made in
applicable Regulations of the Securities and Exchange Commission, have been
omitted or the required information is not required under the related
instructions, or the information is presented in the Financial Statements and
Notes thereto.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Identification of Directors and Executive Officers
The following table sets forth the name, address, age and position of each
officer and director of the Registrant:
Term
Name and Address Age Position as Director
- ------------------------------------------------------------------------------
Thomas W. Itin 66 President and Since
32751 Middlebelt Rd., Ste. B Chairman of the Inception
Farmington Hills, MI 48334 Board of Directors
Anthony B. Cashen 64 Secretary, Since
RD 2 Box 203 Treasurer and Inception
Ghent, NY 12075 Director
Robert W. Schwartz 56 Director Since
8 Airport Park Road March 28
Latham NY 12110 1991
All directors of the Registrant will hold office until their successors
have been elected and qualified or until their death, resignation or
removal. The bylaws of the Registrant provide that the number on the Board
of Directors shall be determined by resolution of the Board of Directors.
The officers of the Registrant are elected at the annual meeting of the
Board of Directors and hold office until their successors are chosen and
qualified or until their death, resignation or removal.
The Registrant is subject to Section 13(a) of the Securities Exchange
Act of 1934 and is therefore not required to identify or disclose information
concerning its significant employees.
There are no family relationships between any director, executive
officer or person nominated or chosen by the Registrant to become a director
or executive officer.
Below is a summary description of educational and professional
background of each executive officer and director of the Registrant.
Thomas W. Itin. Mr. Itin has served as the Chairman and President of
the Board of Directors of the Registrant since inception. Mr. Itin was
elected Chairman of the Board and President of Ajay Sports, Inc. in June of
1993, and is the largest single stockholder. Mr. Itin has been a director of
Williams Controls, Inc., a publicly held company since its inception in
November 1988. Mr. Itin serves on the Cornell University Council and is
Chairman of the Technology Transfer Committee of the Council. Mr. Itin has
been Chairman, President and Owner of TWI International Inc. since he founded
that entity in 1967. TWI acts as consultant for mergers, acquisitions,
financial structuring, new ventures and asset management. Mr. Itin also is
the owner and principal officer of Acrodyne Corporation since 1962. Mr. Itin
was awarded a Masters of Business Administration degree from New York
University and received a Bachelor of Sciencee degree from Cornell University.
Anthony B. Cashen. Mr. Cashen has served as the Registrant's
Secretary, Treasurer and Director since inception. He has also served as a
director of Ajay Sports, Inc. since 1993. For the past five years and until
his retierment in December 1999, Mr. Cashen has served as managing partner,
then as a Senior Partner of LAI Ward Howell a publicly held management
consulting and executive recruiting firm located in New York City. He
currently serves as a Director of Immucell Corp., and Williams Controls,
Inc., both publicly held companies. Previously, Mr. Cashen has been an
officer and principal of the investment firms A.G. Becker Inc. and Donaldson,
Lufkin and Jenrette, Inc. He received an MBA from the Johnson Graduate
School of Management at Cornell University, and a Bachelor of Science degree
from Cornell University.
Robert W. Schwartz Mr. Schwartz has served as Director of the
Registrant since March 28, 1991. Since 1985 he has been Chairman and
President of Schwartz, Gordon, Heslin & Associates, Inc., a management and
financial consulting firm in Troy, New York. From 1987 until 1991 he was a
Director and Vice President and Treasurer of ESARCO International, Inc., a
publicly held company which licenses and markets all-terrain trucks.
Previously Mr. Schwartz was President and Director of Winsources, Inc., a
telephone equipment supplier, President and Director of Cordian Corporation
of Latham, New York, a telephone equipment manufacturer, and Vice President
of Finance of Garden Way Manufacturing Company, Inc., a manufacturer of
rototillers and outdoor equipment. Mr. Schwartz received a B.S. degree in
industrial and labor relations from Cornell University and did graduate work
at State University of New York at Albany.
ITEM 11. EXECUTIVE COMPENSATION
The Registrant reimburses its directors for expenses incurred by them
in connection with business performed on the Registrant's behalf, including
expenses incurred in attending meetings. In addition, directors receive a
fee of $250 for each Board of Directors meeting attended. No such
reimbursements were made for the period from January 1, 1990 to December 31,
2000. While none of the officers received any salary, such individuals are
reimbursed for all accountable expenses incurred on behalf of the Registrant.
See Item 13 - Certain Business Relationships and Related Transactions
under Acrodyne Corporation for additional information.
The Registrant has no defined benefit and actuarial plan providing for
payments to employees upon retirement. The Registrant also has no plans for
awarding stock options. No other compensation was paid to officers or
directors of the Registrant from January 1, 1990 to December 31, 2000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table contains information as of March 31, 2000 with
respect to beneficial ownership of the Registrant's Common stock by each
person known by the Registrant to be the beneficial owner of more than five
percent thereof, by the executive officers and directors of the Registrant
and by all executive officers and directors of the Registrant as a group:
Common Stock
Beneficially Percent
Owned (1) of Class
------------------------------
Thomas W. Itin 7,717,073(3)(4) 57.2%
Anthony B. Cashen 400,000 (4) 3.3%
Robert W. Schwartz 100,000 (4) .8%
Officers and Directors 8,217,073(3) 61.3%
as a group (3 persons)
James T. Emerson 695,000 5.7%
221 E. Colonial Drive
Orlando, FL 32801
(1) Without giving effect to the exercise of outstanding Warrants
except as noted in footnote 4 below.
(2) These shares are held of record by entities of which Mr. Itin is
either a principal or a beneficiary.
(3) Includes 300,000 shares held by Mr. Itin's wife, Shirley B. Itin,
either as beneficiary or custodian, of which Mr. Itin disclaims
any beneficial ownership.
(4) These shares include warrants granted on June 3, 1992 expiring
December 4, 2000, to purchase one share of common stock per
warrant for $.04. (Thomas W. Itin, 1,000,000, Anthony B. Cashen,
200,000, Robert W. Schwartz, 100,000)
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others
- ------------------------------------------
None of the Registrant's officers and directors devote their full time
to the Registrant's affairs and such persons may be affiliated with other
business entities and enterprises, some of which may be formed for similar
purposes as the Registrant and thus be in direct competition with the
Registrant. Such activities may result in such persons being exposed to
conflicts of interests from time to time. The Registrant has adopted no
conflict of interest policy with respect to such transactions. However, the
officers and directors of the Registrant recognize their fiduciary obligation
to treat the Registrant and its shareholders fairly in any such future
activities.
Certain Business Relationships
- -------------------------------------
In the Registrant's last full fiscal year the Registrant made payments
for property and services in excess of five percent of the Registrant's
consolidated gross revenues to Acrodyne, a company whose Chairman, President
and major stockholder of the Registrant. The Board of Directors of the
Registrant has reviewed and approved the use of Acrodyne and has determined
that the fees charged the Registrant by Acrodyne are as favorable as could be
incurred by any other independent, third party business consultant. It is
anticipated that the Registrant will continue to utilize Acrodyne in the
future. The total sum which the Registrant paid Acrodyne for the year ended
December 31, 2000 was $3,300 for the above mentioned consulting services and
out-of-pocket travel expenses, staff time spent for accounting, record
keeping, and utilities, but did not include fees for services of the
Chairman.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) Financial Statements
The Financial Statements are listed in the "Index to Financial
Statements" filed as part of this Annual Report, on page F-2.
(a) (2) Financial Statement Schedules
Supplementary Financial Schedules for which provision is made in
applicable Regulations of the Securities and Exchange Commission, have been
omitted or the required information is not required under the related
instructions, or the information is presented in the Financial Statements and
Notes thereto.
Pursuant to the provisions of Rule 3-09 of Regulation S-X, the
Registrant is required to file separate audited financial statements of its
equity basis investee, Ajay Sports, Inc. ("Ajay"). Ajay's audited financial
statements for December 31, 2000 are filed within this report.
(a) (3) Exhibits
The Articles of Incorporation and By-Laws of the Corporation are incorporated
by reference to the Registrant's Registration Statement on Form S-18,
effective December 16, 1987. Exhibit 27.0 Financial Data Schedule is filed
herewith.
(b) Reports on Form 8-K.
A Form 8-K was filed on July 12, 1999 regarding the extension of the
expiration date of the Registrant's warrants from July 25, 1999 to July 25,
2000. A Form 8-K was filed on December 1, 1999 to extend the exercise period
of the Registrant's warrants issued to its directors from December 4, 1999 to
December 4, 2000.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereto duly authorized.
LBO CAPITAL CORP.
(Registrant)
By: s\Thomas W. Itin
-------------------------------
Thomas W. Itin, President
& Chief Financial Officer
Date: April 17, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on the (date)
Signature Title
- ------------------------------ -----------------------------------
\s\ Thomas W. Itin Chairman of the Board of Directors,
- ------------------------------ President and Chief Executive Officer
Thomas W. Itin
\s\ Anthony B. Cashdn Secretary, Treasurer and Director
- ------------------------------
Anthony B. Cashen
\s\ Robert W. Schwartz Director
Robert W. Schwartz
LBO CAPITAL CORP.
TABLE OF CONTENTS
Page
-------
Independent Auditor's Report
Financial Statements:
Balance Sheets .................................................. F2
Statements of Operations ........................................ F3
Statements of changes in Stockholders' Deficit................... F4
Statements of Cash Flows ........................................ F5
Notes to Consolidated Financial Statements ..................... F6-F10
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
LBO CAPITAL CORP.
BALANCE SHEETS
December 31, December 31,
2000 1999
------------ -------------
ASSETS
Current Assets:
Cash and Equivalents $ 0 $ 63
Marketable Securities - Available for Sale 1,506 32,600
Interest Receivable -0- 15,780
Note Receivable -0- 300,000
-------- ----------
Total Current Assets 11,506 348,443
Other Assets
Investments 321,000 -0-
-------- ----------
Total Other Assets 321,000 -0-
--------- ----------
TOTAL ASSETS $ 332,506 $ 348,443
=========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts Payable $ 2,608 $ 3,250
Accounts Payable - Related Entities 0 300
Notes Payable - Other 830,701 823,201
Accrued Expenses and Taxes 286,966 194,021
---------- ----------
Total Current Liabilities 1,120,276 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
Securitities- 36,890 -15,796
Accumulated Deficit 1,375,183 -1,280,837
----------- ----------
Total Stockholders' Deficit -787,770 -672,330
---------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT $ 332,506 $ 348,443
========== ==========
The accompanying notes are an integral part of
of this financial statement.
F2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
LBO CAPITAL CORP.
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2000, 1999 and 1998
2000 1999 1998
------------------ -------------- -------------------
REVENUES:
Interest Income - Other $ 5,219 $ 15,781 $ 0
EXPENSES:
Professional Services 3,217 4,243 3,659
Management Fees 3,170 3,300 2,790
Interest Expense 92,945 67,701 52,843
Other Expenses 234 346 162
------------- -------------- --------------
Total Expenses 99,566 75,590 59,454
------------- -------------- --------------
Income (Loss) Before Income Taxes -94,347 -59,810 -59,454
Income Tax Expense (Benefit):
Currently Payable -0- -0- -0-
------------- ------------- --------------
Net Income (Loss) $ -94,347 $ -59,810 $ -59,454
============= ============== ==============
Net Income (Loss) per Share $ (.00) $ (.00) $ (.00)
============= ============== ==============
Weighted Average Number of Common Shares
Outstanding 12,100,000 12,100,000 12,100,000
============= ============== ==============
The accompanying notes are an integral part of
of this financial statement.
F3
PART I. FINANCIAL
INFORMATION
Item 1. Financial
Statements.
LBO CAPITAL CORP.
Statement of Changes in Stockholders' Deficit
For the Years Ended December 31, 2000, 1999 and 1998
Common Stock
Shares Amount Additional Accumulated Other Comprehensive Total
Paid-in-CapitaDeficit Income Stockholders'
Deficit
------------- ----------- ------------------------------------------- ----------
Balances at
December 31, 1997 12,100,000 1,210 623,094 -1,161,573 -23,467 -560,736
Unrealized Gain(Loss) on 21,094 21,094
Securitiesear -59,454 -59,454
Ended December 1998 0 0 0 -599,096
------------- ----------- ------------------------------------------- ----------
Balances at
December 31, 1998 12,100,000 1,210 623,094 -1,221,027 -2,373 -599,096
Unrealized Gain(Loss) on Securities -13,423 -13,423
Net Loss for the Year -59,809 -59,809
Ended December 1999 0 0 0 -672,328
------------- ----------- ------------------------------------------- ----------
Balances at
December 31, 1999 12,100,000 1,210 623,094 -1,280,836 -15,796 -672,328
Unrealized Gain(Loss) on Securities -21,094 -21,094
Net Loss for the Year -94,347 -94,347
Ended December 2000 0 0 0 -787,769
------------- ----------- ------------------------------------------- ----------
Balances at
December 31, 2000 12,100,000 1,210 623,094 -1,375,183 -36,890 -787,769
============= =========== =========================================== ==========
The accompanying notes are an integral part of
this financial statement
F4
F4
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
LBO CAPITAL CORP.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2000, 1999 and 1998
2000 1999 1998
-------------- ---------------- --------------
Cash Flows for Operating Activities:
Net Loss $ -94,347 $ -59,810 $ -59,454
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Changes in Assets and Liabilities:
(Decrease) Increase in:
Interest Receivable - Other 15,780 0
Accounts Payable -641 -421 -440
Accounts Payable - Related Entities -300 -0- -0-
Accrued Expenses and Taxes 92,945 67,702 51,994
-------------- -------------- ------------
Total Adjustments 107,784 67,281 51,554
-------------- -------------- ------------
Net Cash (Used for) Operations 13,437 7,471 -7,900
Cash (Used for) Investing Activities
Note Receivable - Other -0- -300,000 0
Purchase of Investments -21,000 -0- -0-
-------------- -------------- ------------
-21,000 -300,000 0
-------------- -------------- -------------
Cash Flows from Financing Activities:
Proceeds on Notes Payable 7,500 308,300 7,930
Interest Income -15,781
-------------- -------------- --------------
Net Cash Provided by Financing Activities 7,500 292,519 7,930
-------------- -------------- --------------
Net Increase (Decrease) in Cash -63 -10 30
Cash and Cash Equivalents:
At Beginning of Period 63 73 43
-------------- -------------- --------------
At End of Period $ 0 $ 63 $ 73
============== ============== ==============
Supplemental Disclosures of Cash Flow Information:
Interest Paid $ -0- $ -0- $ -0-
============== ============== ==============
The accompanying notes are an integral part of
of this financial statement.
F5
LBO CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS
December 31, 2000, 1999 and 1998
Note 1. Summary of Significant Accounting Policies
Organization and Business
LBO Capital Corp. (the "Company") was incorporated on October 8,
1987 under the laws of the State of Colorado. The Company is engaged
in evaluating and investing in other companies. The Company was
considered to be in the development stage in 1987 and began
operations on March 15, 1988.
Cash Equivalents
The Company considers all highly liquid investments with a maturity
of three months or less cash equivalents.
Equipment and Depreciation
Equipment was stated at cost. Depreciation was computed for
financial reporting purposes on a straight-line basis over an
estimated life of 5 years. Depreciation expense for the years ended
December 31, 2000, 1999 and 1998 was $0, $0 and $0 respectively. At
December 31, 1995, the remaining computer equipment that was
previously leased to an investee was determined to be obsolete and
written off the books of the Company.
Income Taxes
At December 31, 2000, the Company has a net operating loss available
for carryforward totaling approximately $1,116,488. The operating
loss carryforward expires in various amounts by the year ended
December 31, 2020.
Net Loss Per Share
Net loss per share is computed using weighted average shares
outstanding without giving effect to the common stock warrants, as
the effect would be antidilutive.
Note 2. Marketable Securities
The Company's marketable securities available for sale are recorded at
fair market value.
F6
LBO CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS
December 31, 2000, 1999 and 1998
Market Value
------------------------------------------
Investment Per Share Aggregate
2000
-----
Enercorp, Inc. $ 48,397 $0.750 $ 11,505
1999
-----
Enercorp, Inc. $ 48,397 $2.125 $ 32,600
Note 3. Investments
On April 3, 1989, the Company acquired an aggregate of 1,880,000
restricted common shares of Ajay Sports, Inc. ("Ajay") for a total
purchase price of $182,000. As a result of recording the Company's equity
in net losses of Ajay, the carrying value of this investment is zero at
December 31, 2000 and 1999. The Company also obtained 200,000 stock
warrants of Ajay at that time.
In March 1991, the Company pledged 400,000 shares of its Ajay investment
as security for bank loans to an acquisition candidate. On June 1 1991,
the bank declared the loan in default and foreclosed on the shares.
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 stockholders of Ajay at the company's annual meeting on May 29,
1998 approved the reverse split.
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. These warrants expire June 30, 2000.
All of the Ajay shares are pledged as security for a note payable (see
note 4).
The stock of Ajay is traded over-the-counter and is reported by the
National Quotation Service. The following table sets forth the range of
high and low trade prices given quarterly by NASDAQ.
F7
LBO CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS
December 31, 2000, 1999 and 1998
HI LOW
----- -------
2000
-----
First Quarter $ 0.750 $ .750
Second Quarter $ 0.2812 $ .2812
Third Quarter $ 0.260 $ .260
Fourth Quarter $ .120 $ .0937
On May 17, 2000, the registrant received stock in Pro Golf International,
Inc., in exchange for a note receivable held by the registrant. Pro
Golf is a privately-held company and estimates that the fair-market
value of the stock is the same as cost, $321,000.
HI LOW
----- ------
2000
-----
First Quarter $ 0. $ .
Second Quarter $ 0. $ .
Third Quarter $ 0. $ .
Fourth Quarter $ . $ .
Note 4. Note Receivable
On June 22, 1999, the Company loaned $300,000 to Pro Golf International,
Inc. ("PGI"), a subsidiary of Ajay Sports, Inc.
On February 29, 2000, the note was converted to stock in Pro Golf
International.
Note 5. Notes Payable
During 1998, the Company borrowed $308,300 from Dearborn Wheels, Inc. The
proceeds were used to meet current operating needs and the investment in
Pro Golf International.
On December 2, 1996, the Registrant had a change in its borrowing
arrangements. The Registrant borrowed $325,790 from Dearborn Wheels, Inc.
to repay a note payable to Michigan National Bank. The principal balance
as of December 31, 2000, was $833,626; the accrued interest on the note
was $382,834. The balance as of December 31, 1999 was $831,526; the
accrued interest was $286,996. The loan is at prime plus 2% interest and
is secured by all the intangible assets of the Registrant. Dearborn
Wheels, Inc. is held in majority by the Registrant's President's spouse.
This note bears interest of prime plus 2%, matures on September 27, 2000
and is secured by all the assets of the Company.
F8
LBO CAPITAL CORP.
NOTES TO FINANCIAL STATEMENTS
December 31, 2000, 1999 and 1998
Note 6. Capital Stock
The Company completed a public offering on March 15, 1988 consisting of
3,000,000 units at $.20 each. Each unit consisted of one common share, one
callable class A common stock purchase warrant, one callable Class B
common stock purchase warrant and one callable Class C common stock
purchase warrant. Each Class A warrant entitles the warrant holder to
purchase one share of common stock for $.50, each Class B warrant entitles
the warrant holder to purchase one share of common stock for $.75, and
each Class C common stock purchase warrant entitles the warrant holder to
purchase one share of common for $1.00. The Class A, B and C warrants were
originally exercisable within twelve, eighteen and twenty-four months
respectively, from February 26, 1988. All warrants have been extended
until July 25, 2000. As of December 31, 1999, no warrants had been
exercised. The Company has the right to call any or all warrants at a
redemption price of $.0001 per warrant.
On June 3, 1992 the Company issued 3,000,000 shares of its common stock,
valued at $.04 per share (fair market value on that date, per the National
Quotation Bureau, Inc.), to an officer and director in exchange for a
reduction of $120,000 in a note to a related company.
The Company granted to its directors a total of 1,300,000 warrants,
expiring December 4, 2000. Each warrant enables the owner to purchase one
share of common stock for $.04 per share.
Note 7. Management Fees
The Company does not employ any personnel. Per a management fee agreement
with Acrodyne Corporation, a related entity, the Company pays direct labor
costs plus overhead for management services rendered.
Note 8. Cash Flows Disclosure
F9
Interest and income taxes paid for the years ended December 31, 2000, 1999
and 1998 were as follows:
2000 1999 1998
-------- ---------- --------
Interest $ -0- $ -0- $ -0-
======== =========== ===========
Income Taxes $ -0- $ -0- $ -0-
======== =========== ===========
Note 9. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
F10