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, 1999                                                     33-19107
---------------------------                                ---------------------
(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                     (I.R.S. Employer Identification
 of organization)                                 Number)

7001 Orchard Lake Road, Suite 424
West Bloomfield, MI                                                     48322
---------------------------------------          -------------------------------
(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, 1999, 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 $.03 as reported by The
National Quotation Bureau, Inc.

<PAGE>

                                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.

<PAGE>

      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, 1999. 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
                         ------     ------
      1999

      ----
      First Quarter     $ 1.063     $ .688
      Second Quarter    $ 3.000     $ .688
      Third Quarter     $ 2.063     $ .813
      Fourth Quarter    $  .938     $ .500

      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.

<PAGE>

     On June 22, 1999,  the Company loaned  $300,000 to Pro Golf  International,
Inc.  ("PGI"),  a  subsidiary  of Ajay  Sports,  Inc.  The Company  received two
promissory  notes  that is  subordinated  to PGI's  primary  lender.  The unpaid
principal  balance will bear an interest rate of 10% and will be due and payable
in full on July 22, 2000. The balance ,including interest,  at December 31, 1999
was  $315,781.  The proceeds were used to purchase all the  outstanding  capital
stock of Pro Golf of America,  Inc., franchiser of Pro Golf Discount retail golf
stores.  Ajay  owns over 80% of the  stock of Pro Golf  International,  with the
remaining shares held by a group of investors.

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, 1999, 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.

<PAGE>

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, 1999.

                                     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
                               ----          -----
      1998

      ----
      First Quarter          $ .035          $ .03
      Second Quarter         $ .03           $ .25
      Third Quarter          $ .03           $ .02
      Fourth Quarter         $ .03           $ .02

      1999

      ----

      First Quarter          $ .025          $ .025
      Second Quarter         $ .03           $ .025
      Third Quarter          $ .03           $ .03
      Fourth Quarter         $ .03           $ .03

      On December 31, 1999,  the high trade price  reported for the Common Stock
was $.03 and the low trade price was $.03.

      As of December 31, 1999, 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.

<PAGE>

      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:

                                   Trade Price

                                   -----------
                                HI             LOW
                               ----           -----
      1998

      ----
      First Quarter           $ .035          $ .03
      Second Quarter          $ .03           $ .025
      Third Quarter           $ .03           $ .02
      Fourth Quarter          $ .03           $ .02

      1999*

      -----

*No units traded in 1999.

      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.

<PAGE>

ITEM 6.     SELECTED FINANCIAL DATA
                                   December 31

                     1999         1998         1997          1996          1995
--------------------------------------------------------------------------------
Working Capital   $(672,330)   $(599,097)   $(560,736)  $(498,352)    $(427,094)
Cash                     63           73           43          78            78
Marketable
Securities           32,600       46,023       24,972      28,765         8,000
Notes Receivable    300,000            0            0           0             0
 Interest Receivable 15,780            0            0           0             0
Total Assets        348,443       49,096       24,972      28,843         8,251

Total Liabilities 1,020,773      645,193      585,708     527,195       435,345
Shareholders'
Equity             (672,330)    (599,097)    (560,736)   (498,352)     (427,094)


                                   December 31

                    1999          1998           1997         1996         1995
--------------------------------------------------------------------------------
Total Operating

Revenue             $15,781        $0            $0          $0              $0
Total Operating
 Exp.                75,590    59,454         8,549      52,328          35,173
Net income (loss)
before equity loss
of affiliate        (59,809)  (59,454)      (58,549)    (52,325)        (35,173)
Equity in net loss
of affiliated
company                   0         0             0           0               0
Net income (loss)   (59,809)  (59,454)      (58,549)    (52,328)        (35,173)
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, 1999 was  decreased  by $73,232 from the
period ended December 31, 1998. This was mainly caused by a net loss of $59,809,
a decrease of $13,423 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, 1999,  was $823,201 and the interest due was $194,021.  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.

<PAGE>

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                65          President and           Since
7001 Orchard Lake Rd.                     Chairman of the         Inception
West Bloomfield, MI  48322                Board of Directors

Anthony B. Cashen             63          Secretary,              Since
RD 2 Box 203                              Treasurer and           Inception
Ghent, NY 12075                           Director

Robert W. Schwartz            55          Director                Since
120 DeFreest Drive                                                March 28,
Troy, NY  12180                                                   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. <PAGE>

      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, 1999. While none of the
officers   received  any  salary,   such  individuals  are  reimbursed  for  all
accountable expenses incurred on behalf of the Registrant.

<PAGE>

      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, 1999.

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 (2)(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)


<PAGE>

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, 1999 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, 1999 are filed within this report.

<PAGE>

(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.

<PAGE>

                                   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 14,  2000


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,
---------------------                     Chief Executive Officer and President
Thomas W. Itin


 \s\Anthony B. Cashen                     Secretary, Treasurer and Director
---------------------
Anthony B. Cashen

 \s\Robert W. Schwartz                    Director
-----------------------
Robert W. Schwartz

<PAGE>

                                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

<PAGE>

                          INDEPENDENT AUDITOR'S REPORT

 To the Board of Directors and Stockholders
 of LBO Capital Corp

We have  audited the  accompanying  balance  sheet of LBO Capital  Corp.,  as of
December  31,  1999,  and the  related  statements  of  operations,  changes  in
stockholders'  deficit,  and cash flows for the year ended  December  31,  1999.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audit.  The financial  statements of LBO Capital Corp. as of December 31,
1998 and 1997 were audited by other  auditors whose reports dated March 23, 1999
and March 24, 1998 expressed an unqualified opinion on those statements.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audits to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of LBO Capital  Corp.  as of
December 31, 1999,  and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

/S/ J L Stephan Co, PC
-----------------------
J L Stephan Co, PC

Traverse City, Michigan
March 30, 2000

                                       F1

<PAGE>
<TABLE>
<CAPTION>

                                LBO CAPITAL CORP.
                                 BALANCE SHEETS

                        As of December 31, 1999 and 1998

                                                          1999                1998
                                                    ----------------------------------------
<S>                                                  <C>                      <C>
                                     ASSETS

Current Assets:
    Cash and Equivalents                             $            63          $          73
    Marketable Securities - Available for Sale                32,600                 46,023
    Interest Receivable                                       15,780                      0
    Notes Receivable                                         300,000                      0
                                                       --------------           ------------

       Total Current Assets                                  348,443                 46,096
                                                       --------------           ------------
TOTAL ASSETS                                         $       348,443          $      46,096
                                                       ==============           ============


                      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
Accounts Payable                                                       3,250          3,763
    Accounts Payable - Related Entities                          300                    210
    Notes Payable - Other                                    823,201                514,901
    Accrued Expenses and Taxes                               194,021                126,319
                                                       --------------           ------------
       Total Current Liabilities                           1,020,773                645,193

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   (15,796)                (2,373)
    Accumulated Deficit                                   (1,280,836)            (1,221,027)
                                                       --------------           ------------

       Total Stockholders' Deficit                          (672,330)              (599,097)
                                                       --------------           ------------

TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT            $       348,443          $      46,096
                                                       ==============           ============

                The         accompanying  notes are an integral  part of of this
                            financial statement.

                                       F2

</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                                 LBO CAPITAL CORP.
                                             STATEMENTS OF OPERATIONS
                                For the Years Ended December 31, 1999, 1998, and 1997



                                                            1999                 1998                    1997
                                                        --------------   ----------------------      --------------

<S>                                                     <C>                 <C>                      <C>

REVENUES:                                               $      15,781        $          -0-          $          -0-
                                                          ------------         -------------         --------------

EXPENSES:
     Professional Services                                      4,243                 3,659                  3,820
     Management Fees                                            3,300                 2,790                  2,900
     Interest Expense                                          67,701                52,843                 52,735
     Other Expenses                                               346                   162                   (906)
                                                          ------------         -------------         --------------

             Total Expenses                                    75,590                59,454                 58,549
                                                          ------------         -------------         --------------

Income (Loss) Before Income Taxes                             (59,809)              (59,454)               (58,549)

Income Tax Expense (Benefit):
     Currently Payable                                            -0-                   -0-                    -0-
                                                          ------------         -------------         --------------

      Net Income (Loss)                                 $     (59,809)       $      (59,454)       $       (58,549)
                                                          ============         =============         ==============

       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 intergral
                                         part of this financial statement
                                                      F3

</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                              STATEMENTS OF CHANGES

                                                     IN  STOCKHOLDERS'   DEFICIT
                                                     For   the    Years    Ended
                            December 31, 1999, 1998,

                                    and 1997

                                                                          Additional                                       Total
                                                    Common Stock           Paid-In       Accumulated      Other        Stockholders'
                                          ----------------------------                                    Comprehensive
                                          Shares               Amount      Capital         Deficit        Income        Deficit
                                          ---------          ---------   -----------     ------------   -----------    -----------

<S>                                       <C>            <C>            <C>           <C>                <C>          <C>

Balances at

             December 31, 1996            12,100,000     $   1,210      $   623,094   $   (1,103,024)    $(19,632)    $  (498,352)
Unrealized Gain (Loss) on Securities                                                                       (3,835)
Net Loss for the Year
             Ended December 31, 1997              -0-           -0-              -0-         (58,549)                     (62,384)
                                          -----------     ----------     -----------      -----------   -----------   ------------

Balances at

             December 31, 1997            12,100,000     $   1,210      $   623,094   $   (1,161,573)    $(23,467)    $  (560,736)
Unrealized Gain (Loss) on Securities                                                                       21,094
Net Loss for the Year
             Ended December 31, 1998              -0-           -0-              -0-         (59,454)                     (38,361)
                                          -----------     ----------     -----------      ------------  -----------    -----------

Balances at

             December 31, 1998            12,100,000     $   1,210       $  623,094   $   (1,221,027)     $(2,373)    $  (599,097)

Unrealized Gain (Loss) on Securities                                                                      (13,423)
Net Loss for the Year
             Ended December 31, 1999              -0-           -0-              -0-         (59,809)                     (73,232)
                                          -----------     ---------      -----------     ------------   -----------      ----------

Balances at

             December 31, 1999            12,100,000     $    1,210      $  623,094   $   (1,280,836)    $(15,796)     $ (672,330)
                                          ===========    ==========      ===========     ============    ==========      ==========


                                                           The accompanying notes are an integral
                                                              part of this financial statement

                                                                              F4

</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                                                     LBO CAPITAL CORP.
                                                                 STATEMENTS OF CASH FLOWS
                                                  For the Years Ended December 31, 1999, 1998, and 1997



                                                        1999                       1998                          1997
                                                  ------------------------------------------------------------------------
<S>                                                 <C>                        <C>                        <C>
Cash Flows for Operating Activities:
Net Loss                                           $       (59,809)            $      (59,454)             $      (58,549)
                                                     --------------              -------------               -------------
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-                         -0-
  (Decrease) Increase in:
    Accounts Payable                                          (423)                      (440)                        499
    Accrued Expenses and Taxes                              67,702                     51,994                      52,836
                                                     --------------              -------------               -------------

        Total Adjustments                                   67,279                     51,554                      53,335
                                                     --------------              -------------               -------------


Net Cash (Used for) Operations                               7,470                     (7,900)                     (5,214)
                                                     --------------              -------------               -------------


Cash (Used for) Investing Activities

  Investment                                              (300,000)                       -0-                         -0-
                                                     --------------              -------------               -------------
                                                          (300,000)                         0                         -0-

Cash provided by (used for) Financing Activities:

  Proceeds from Notes - Other                              308,300                      7,930                       5,180
  Interest Income                                          (15,781)                       -0-                         -0-
                                                     --------------              -------------               -------------

       Net Cash Provided by Financing Activities           292,519                      7,930                       5,180
                                                     --------------              -------------               -------------

Net Increase (Decrease) in Cash                                (11)                        30                         (35)

Cash and Cash Equivalents:
  At Beginning of Period                                        73                         43                          78
                                                     --------------              -------------               -------------

  At End of Period                                 $            63             $           73            $             43
                                                     ==============              =============               =============








                                                 The accompanying notes are an integral part of
                                                             this financial statement
                                                                              F5

</TABLE>

<PAGE>

                                LBO CAPITAL CORP.
                          NOTES TO FINANCIAL STATEMENTS

                        December 31, 1999, 1998 and 1997



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, 1999, 1998 and 1997 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, 1999, the Company has a net operating loss available
            for carryforward totaling  approximately  $1,023,141.  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.

<PAGE>

                                LBO CAPITAL CORP.
                          NOTES TO FINANCIAL STATEMENTS

                        December 31, 1999, 1998 and 1997




                                             Market Value

                          ----------------------------------------------------
                          Investment           Per Share             Aggregate
      1999

      ----
      Enercorp, Inc.       $48,397              $2.125                $32,600

      1998

      ----
      Enercorp, Inc.       $ 48,397             $3.000                $46,023



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,  1999 and 1998.  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.

<PAGE>

                                LBO CAPITAL CORP.
                          NOTES TO FINANCIAL STATEMENTS

                        December 31, 1999, 1998 and 1997


                                 HI          LOW
                                ----        -----
            1999

            First Quarter     $  1.063    $ .688
            Second Quarter    $  3.000    $ .688
            Third Quarter     $  2.063    $ .813
            Fourth Quarter    $   .938    $ .500


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. The Company received two
      promissory notes that is subordinated to PGI's primary lender.  The unpaid
      principal  balance  will bear an interest  rate of 10% and will be due and
      payable in full on July 22,  2000.  The balance  ,including  interest,  at
      December 31, 1999 was $315,781. The proceeds were used to purchase all the
      outstanding capital stock of Pro Golf of America,  Inc., franchiser of Pro
      Golf Discount  retail golf stores.  Ajay owns over 80% of the stock of Pro
      Golf  International,  with  the  remaining  shares  held  by  a  group  of
      investors.

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,  1998,  was  $514,901.  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.

<PAGE>

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

      Interest and income taxes paid for the years ended December 31, 1999, 1998
      and 1997 were as follows:

                          1999                1998              1997
                        --------          ----------        -----------

      Interest         $      -0-         $      -0-        $       -0-
                       ==========         ==========        ===========

      Income Taxes     $      -0-         $      -0-        $       -0-
                       ==========         ==========        ===========


<PAGE>

                                LBO CAPITAL CORP.
                          NOTES TO FINANCIAL STATEMENTS

                        December 31, 1999, 1998 and 1997




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.