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                       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

For the Year End                                          Commission File Number
December 31, 2001                                               0-24094
                                    LBP, INC.
             (Exact Name of Registrant as Specified in its Charter)

         Delaware                                               13-3764357
State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                            Identification Number)

                  200 Mamaroneck Avenue, White Plains, NY 10601
               (Address of principal executive offices) (Zip Code)

        Registrant's Telephone Number including Area Code: (914) 421-2545
        Securities Registered pursuant to Section 12(b) of the Act: None
           Securities Registered pursuant to Section 12(g) of the Act:
                                  Common Stock
                                (Title of Class)

Check mark indicates 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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

In accordance with Delaware General Corporation Law, since the filing of the
Company's Certificate of Dissolution on June 29, 2001, the Company's Common
Stock is no longer treated as being outstanding. On October 15, 2001, the
Company's stock transfer books were closed, and the Company discontinued
recording transfers of shares of its Common Stock.

Documents Incorporated by Reference None.

A copy of this Annual Report on Form 10-K as filed by the Corporation with the
Securities and Exchange Commission is available upon request, without charge, by
writing to:

TREASURER
LBP, Inc.
200 Mamaroneck Avenue
White Plains, NY 10601

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<PAGE>

THE COMPANY

      The Company was incorporated under the laws of Delaware on February 16,
1994. The Company's principal executive and administrative offices are located
at 200 Mamaroneck Avenue, White Plains, New York 10601; telephone number (914)
421-2545.

      On April 19, 1994, the Board of Directors of Drew Industries Incorporated
("Drew"), the parent company of the Company at that time, approved a plan to
transfer the stock of its subsidiary, Leslie-Locke, Inc. ("Leslie- Locke,"
subsequently known as Prime Acquisition Corp.), to the Company and to distribute
the Common Stock of the Company to Drew's stockholders on a one-for-one basis
(the "Spin-off"). The transfer of the stock of Leslie- Locke to the Company was
effective May 10, 1994, and the Spin-off was effective July 29, 1994. Following
the Spin-off, the Company was a stand-alone company, the Common Stock of which
was traded on the OTC-Bulletin Board (symbol: LBPI).

      Pursuant to a Shared Services Agreement, following the Spin-off, Drew and
the Company share certain administrative functions and employee services, such
as management overview and planning, acquisition searches, tax preparation,
financial reporting, coordination of the independent audit, stockholder
relations, and regulatory matters. Drew is reimbursed by the Company for such
services. Effective January 2, 2002, the agreement was renewed on a
month-to-month basis until liquidation of the Company is complete. For the
fiscal year ended December 31, 2001, the cost of such services to the Company
was $94,000. See Item 1. "BUSINESS".

FORWARD LOOKING STATEMENTS AND RISK FACTORS

      This report contains certain statements, including the Company's long-term
plans, which could be construed to be forward looking statements and are made
pursuant to the safe harbor provisions of the Securities Litigation Reform Act
of 1995. These forward-looking statements reflect the Company's current views,
at the time such statements were made, with respect to future events, financial
performances and funds which may be available for distribution to stockholders.
Forward-looking statements are not guarantees of future performance; they are
subject to risks and uncertainties. The Company does not undertake to update
forward-looking statements to reflect circumstances or events that occur after
the date the forward-looking statements are made.

      The Company has identified certain risk factors which could cause actual
plans and results to differ substantially from those included in the forward
looking statements. These factors include certain contingent indemnification
obligations and contingencies as described in Note 3 of Notes to Consolidated
Financial Statements, anticipated liquidation costs, the timing and amount of
future liquidating distributions, and interest rates on cash and cash
equivalents.

REPORTING

      Based on prior "no-action" letters issued by the SEC staff relating to
similar factual circumstances, and in reliance on SEC Release No. 34-9660 and
advice from the SEC Staff, the Company will no longer file periodic reports with
the SEC commencing with the fiscal year beginning January 1, 2002. However, the
Company will file reports on Form 8-K to disclose any material events relating
to its winding up and liquidation, and, upon completion of the liquidation, the
Company will file a final report on Form 8-K and a Form 15 to terminate the
Company's registration and reporting obligations.


                                       -2-

<PAGE>

Item 1. BUSINESS

Recent Events - Liquidation of the Company

      On November 12, 1997, the Company announced that its Board of Directors
was considering strategic alternatives for the Company's long-range business
plans. In this connection, the Company retained Harris Williams & Co. to assist
in evaluating, and possibly disposing of, all or certain of the three major
operating divisions of the Company's sole operating subsidiary, Leslie-Locke, a
manufacturer and marketer of a wide variety of specialty building products for
the professional and do-it-yourself remodeling and residential construction
industry.

      The Board's decision was motivated by the Company's desire to achieve
greater per share value for its stockholders. Although Leslie-Locke's operating
management was optimistic about the growth opportunities available to
Leslie-Locke, Management of the Company and the Board of Directors believed that
the goal of increased per share return to its stockholders was unlikely to be
realized in the near future, and that growth opportunities for Leslie-Locke
could best be realized by a significantly larger company in a better position
than the Company to compete in the changing industry. In connection with its
decision concerning Leslie-Locke, the Board of Directors adopted resolutions
regarding the Company's intent that, subsequent to the sale of its assets,
Leslie- Locke would acquire an operating company and would be engaged in a
business other than that of investing, reinvesting or trading in securities, as
soon as reasonably possible.

      Pursuant to an Asset Purchase Agreement dated May 26, 1998 (the
"Agreement"), Leslie-Locke sold substantially all of its net assets, including
its owned and leased real property, to LL Building Products, Inc., a newly-
formed Delaware subsidiary of Building Materials Corporation of America, d/b/a
GAF Materials Corporation (the "Sale Transaction"). The purchase price was
approximately $44 million in cash. The Sale Transaction was consummated on June
18, 1998, as of May 31, 1998. Immediately after the closing of the Sale
Transaction, the name of Leslie-Locke was changed to Prime Acquisition Corp.
("Prime"), and the name of the Company was changed from Leslie Building
Products, Inc. to LBP, Inc. From this point throughout this Annual Report,
Leslie-Locke is referred to as Prime, unless the context otherwise requires.

      As a result of the Sale Transaction, after payment of outstanding debt,
closing costs and income taxes, the Company (including Prime ) had net proceeds
of approximately $28 million. In accordance with the terms of the Sale
Transaction, approximately $25 million of the net proceeds was deposited in
escrow for two years, of which approximately $21 million could be released from
escrow and used by the Company at any time to acquire other businesses, for
certain investments, and for certain other permitted payments. The escrow
terminated in June 2000 without the assertion of any claim, and the entire
escrow fund was returned to Prime.

      The net proceeds from the sale were initially invested primarily in liquid
U.S. Treasury money market accounts. The Company's Board of Directors continued
to reaffirm the previously adopted resolutions regarding the Company's intent
that Prime be engaged in a business other than that of investing, reinvesting or
trading in securities, as soon as reasonably possible. Accordingly, Management
of the Company actively sought a suitable acquisition candidate for Prime.

      In order for the Company to enhance stockholder value while efforts to
acquire a business continued, the Company made certain investments intended to
be short-term. In the third quarter of 1998, the Company realized a gain of
$463,000 from a short-term securities transaction. In February 2000, the Company
realized a loss of $509,000 from the sale of securities purchased in September
1999. In December 1998, the Company utilized $20 million of the funds held in
escrow to purchase, and re-deposit in escrow, 800,000 registered shares of 10.5%
Cumulative Convertible Preferred Stock of Impac Mortgage Holdings, Inc. ("IMH"),
convertible, at $4.72 per common share, into 4,237,288 shares, representing 15%,
of the freely-tradeable common stock of IMH. IMH is a publicly-owned specialty
finance company, which, together with its subsidiaries and related companies,
operates three businesses:


                                       -3-

<PAGE>

(1) the Long-Term Investment Operations, (2) the Mortgage Operations, and (3)
the Warehouse Lending Operations. IMH is organized as a real estate investment
trust ("REIT") for federal income tax purposes, which generally allows it to
pass through earnings to stockholders without federal income tax at the
corporate level. In February and April 2001, the Company sold its investment in
IMH preferred stock for a small gain.

      The Company did not register as an investment company, initially relying
on the exemption provided by Rule 3a-2, promulgated under the Investment Company
Act of 1940, as amended (the "'40 Act"). The Company believed that it was not an
investment company for the following reasons: (i) the Company had a bona fide
intent to be engaged in a business other than that of investing, reinvesting,
owning, holding or trading in securities as soon as reasonably possible; (ii)
the Company made short-term investments solely to enhance stockholder value
while the Company engaged in efforts to invest its assets in a non-investment
company business; (iii) the Company did not in any way hold itself out to be
engaged, nor did it propose to be engaged, primarily in the business of
investing, reinvesting or trading in securities; (iv) the Company's failure to
consummate the acquisition of a non-investment company business had been due to
factors beyond the Company's control, principally the lack of candidates with
which to consummate an acquisition transaction on terms acceptable to the
Company and in the best interests of its stockholders; and (v) the Company's
officers and employees continued in good faith their efforts to identify a
suitable acquisition on acceptable terms, and thereby to engage in and operate a
non-investment company business.

      Despite Management's efforts, the Company could not identify a suitable
operating business to acquire on acceptable terms. Accordingly, in March 2000,
the Company filed an application with the Securities and Exchange Commission
("SEC") for an order pursuant to Section 3(b)(2) of the '40 Act declaring that
the Company is not an investment company. Alternatively, the Company requested a
Section 6(c) exemption from all provisions of the '40 Act. The application was
revised in May, June and July 2000 in response to comments from the SEC Staff.
Thereafter, in November 2000, the SEC Staff confirmed to the Company that
neither a Section 3(b)(2) order nor a Section 6(c) exemption could be granted
under the then-current facts and circumstances of the Company's application.
Although the Company continued to discuss with the SEC Staff the manner in which
to respond to their concerns, it became apparent that the Company would be
required to sell the IMH preferred stock before the SEC Staff would act
favorably on the Company's application. Because sale of the IMH preferred stock
would not have been advantageous to the Company under then prevailing market
conditions, the Company could not continue as an active Company without
registering as an investment company under the '40 Act.

      As an investment company, the Company would have been required, among
other things, to restructure its operations, capital structure, management, and
Board of Directors, and the Company's ability to acquire an operating business
would have been severely restricted. As a result, the Company's Board of
Directors determined that it would not be in the best interests of the Company's
stockholders for the Company to register as an investment company pursuant to
the '40 Act. On November 17, 2000, the Company issued a press release reporting
that the Board of Directors was considering either a plan of liquidation or a
plan to take the Company private. On January 11, 2001, the Board of Directors
adopted a Plan of Complete Liquidation, Dissolution and Termination of Existence
(the "Plan"), subject to stockholder approval to be solicited at the Annual
Meeting of Stockholders on May 16, 2001. The Board believed that the Plan
represented the most prudent way for the Company to discharge its known
liabilities, and to provide for contingent and unknown liabilities, and that
distribution to the stockholders of the Company's net assets would return the
greatest value to the Company's stockholders as compared to other alternatives.
On May 16, 2001, the Company's stockholders overwhelmingly approved the Plan.
The Company filed its Certificate of Dissolution with the Delaware Secretary of
State on June 29, 2001 (the "Dissolution Date").

      Based on prior "no-action" letters issued by the SEC Staff relating to
substantially similar factual circumstances, the Company has been advised that
it is not required to register under the '40 Act or file periodic financial
reports on forms mandated by the '40 Act during the period of liquidation, so
long as it engages in transactions which are merely incidental to its
dissolution.


                                       -4-

<PAGE>

      In February and April 2001, the Company sold its $20 million investment in
IMH preferred stock. From the acquisition of the Impac preferred stock in
December 1998 until its sale in 2001, the Company received an aggregate of $4.3
million in quarterly cash dividends, and realized a small gain on the sale.

      Pursuant to the Plan, the Company has liquidated all of its non-cash
assets. After payment of all claims, obligations and expenses owing to the
Company's creditors, cash distributions of the proceeds from the sale of the
Company's non-cash assets and cash on hand will be made to holders of the
Company's Common Stock on a pro rata basis. If deemed necessary, appropriate or
desirable by the Board of Directors, distributions could be made to one or more
liquidating trusts established for the benefit of stockholders, subject to
claims of creditors.

      On July 2, 2001, the Company filed with the Delaware Court of Chancery a
Petition for Determination Pursuant to Section 280(c)(3) of the Delaware General
Corporation Law to determine the amount of the interim liquidation distribution
that the Company could make to its stockholders. Commencing July 25, 2001, the
Company complied with the dissolution procedures set forth in Section 280 of the
Delaware General Corporation Law, including mailing and publishing notices of
dissolution and permitting the notice response period to expire. LL Building
Products, Inc. filed a contingent claim seeking a reserve of $4,000,000 for
indemnification of potential third party claims pursuant to the environmental
indemnification given in connection with the asset sale. The indemnification
relates to properties occupied by Leslie-Locke several years prior to the sale.
No claims have been asserted by third parties, and no claims have been asserted
by LL Building Products, Inc. for indemnification; no such claims have been
threatened, and none are anticipated by the Company.

      On October 1, 2001, the Delaware Court of Chancery issued an Order
authorizing the Company to make an interim liquidation distribution of $25.5
million (the "Interim Distribution") and to maintain, subject to further Court
Order, $4,000,000 to account for any claims under the environmental
indemnification given in connection with the sale of Leslie-Locke. On October
23, 2001, immediately prior to the payment of the Interim Distribution, Prime
was merged with and into the Company, with the Company as the surviving
corporation.

      Pursuant to the Company's request, at the close of business on October 15,
2001, the Company's stock transfer books were closed, and the Company
discontinued recording transfers of shares of its Common Stock. On October 25,
2001, the Company paid the Interim Distribution in the aggregate amount of $25.5
million, representing $5.10 per share, to stockholders of record on October 15,
2001. The Company's remaining assets consist of cash and cash equivalents of
approximately $4.3 million. The Company's remaining liabilities consist
primarily of legal and accounting fees incurred in connection with dissolution,
directors' fees, transfer agent fees, and services fees to Drew. Subsequent to
the Interim Distribution, net operating expenses are expected to exceed interest
income earned on the remaining cash of $4.3 million.

      Subject to the approval of the Delaware Court of Chancery, the Company
anticipates making a distribution to stockholders of the remaining assets (after
payment of expenses) as soon as practicable in the amount of approximately $3.8
million, representing approximately $0.76 per share. Pursuant to the Company's
request, the NASDAQ delisted and ceased trading in the Company's Common Stock as
of the close of business on October 26, 2001. After the Dissolution Date, the
Company's existence under Delaware law continues only for the limited purpose of
winding up its affairs and discharging or making provision for the discharge of
any liabilities. In accordance with the Delaware General Corporation Law, after
the Dissolution Date, the Company's Common Stock is no longer treated as being
outstanding.

Employees

      The Company has no full-time employees. Pursuant to the Shared Services
Agreement, certain employees of Drew had performed administrative functions and
employee services such as management overview and planning, tax preparation,
financial reporting, coordination of the independent audit, stockholder
relations, and regulatory


                                       -5-

<PAGE>

matters. Currently, Drew employees are engaged solely in completing the
liquidation of the Company. The Company reimburses Drew for the fair market
value of such services. See "THE COMPANY."

Item 2. PROPERTIES

      The Company has no owned or leased properties, and reimburses Drew for use
of a portion of Drew's offices.

Item 3. LEGAL PROCEEDINGS

      In fiscal 1990, the operations of White Metal Rolling and Stamping Corp.
("White Metal"), Leslie-Locke's ladder manufacturing subsidiary were
discontinued. All manufacturing operations of White Metal ceased as of January
31, 1991 On September 30, 1994, White Metal filed a voluntary petition seeking
liquidation under the provisions of chapter 7 of the United States Bankruptcy
Code. At the time of filing, the liabilities of White Metal were primarily
product liability claims, and related costs, resulting from its discontinued
ladder manufacturing business. White Metal was not included in the sale of
Leslie-Locke's assets. On October 30, 2000, the Trustee filed a Distribution
Report with the Bankruptcy Court certifying distributions with respect to all
claims filed before October 22, 1994, and on December 18, 2000, the Trustee
filed a Final Report with the Bankruptcy Court. On December 27, 2001 the
Bankruptcy Court issued an Order of Final Decree closing the White Metal chapter
7 case. See Note C of Notes to Consolidated Financial Statements.

      In a limited number of cases, the Company and Prime have been named as
defendants in personal injury cases based on allegations of White Metal's
negligence in the manufacture of ladders. Neither the Company nor Prime has been
held liable in any such case. Because neither the Company nor Prime engaged in
the manufacture or marketing of ladders, and because the Company and Prime
maintained separate and distinct corporate entities, businesses, manufacturing
facilities and operations from White Metal, and did not assume White Metal's
liabilities or succeed to its business, the Company and Prime disclaim any
liability for the obligations of White Metal. There can be no assurance that in
the future any claim brought against White Metal which is also asserted against
the Company or Prime, will not result in liability. However, the Company intends
to vigorously oppose and defend any White Metal claim asserted against them. On
October 23, 2001, Prime was merged with and into the Company. See Item 1. --
"BUSINESS -- Recent Events -- Liquidation of the Company".

      On January 23, 2001, a holder of 100 shares of the Company's Common Stock
commenced a proceeding against the Company and its directors purporting to be
both a class action and a derivative action on behalf of the Company, Bragger
vs. Abrams, et al., Case No. 01 Civ. 0249, United States District Court,
Southern District of New York. The Complaint alleged that the directors caused
the Company and its stockholders to sustain losses because the directors
allegedly violated the '40 Act by not causing the Company to become a registered
investment company and to comply with the regulatory requirements of the '40
Act, and because the defendants caused the Company to make certain allegedly
improper investments, including its investment in the IMH preferred stock, in
violation of their duty.

      On March 14, 2001, the Company and its directors served Plaintiff with a
motion to dismiss the Complaint on grounds that Plaintiff failed to state a
claim entitling Plaintiff to any relief. On March 22, 2001, Plaintiff
voluntarily withdrew the Complaint, terminating the action without any liability
of the Company or its directors. The Company's insurer reimbursed the Company
for all expenses related to the action.

      See item 1. "BUSINESS -- Recent Events -- Liquidation of the Company" for
a description of the Company's Petition for Determination filed with the
Delaware Court of Chancery in connection with the Interim Distribution.


                                       -6-

<PAGE>

      Neither the Company nor Prime is a party to any legal proceedings which,
in the opinion of Management, could have a material adverse effect on the
Company or its consolidated financial position.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      None.

                                     PART II

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Per Share Market Price Information

      At the Company's request, the Company's transfer agent, Mellon Investor
Services LLC, closed its stock transfer books and discontinued recording
transfers of the Common Stock at the close of business on October 15, 2001. At
the Company's request, the NASDAQ delisted and ceased trading of the Company's
Common Stock as of the close of business on October 26, 2001. "Due bills"
(symbol: LBPIZ), representing the final liquidating distribution of
approximately $3.8 million, or approximately $0.76 per share, are outstanding
for the benefit of stockholders of record on October 15, 2001. The Company does
not maintain records with respect to transfers or transferees of the due bills.

      The table below sets forth, for the periods indicated, the range of high
and low closing prices per share for the Common Stock as reported by the
National Association of Securities Dealers. The prices set forth below represent
quotations between dealers, without adjustment for retail mark up, mark down or
commissions, and do not necessarily represent actual transactions.

               Calendar 2001                                     High        Low
                                                                -----      -----
Quarter ended March 31                                           5.18       3.62
Quarter ended June 30                                            5.55       5.40
Quarter ended September 30                                       5.55       5.41
October 1 - October 26                                           5.75       5.55

               Calendar 2000                                     High        Low
                                                                -----      -----
Quarter ended March 31                                          $3.63      $3.19
Quarter ended June 30                                           $3.44      $3.13
Quarter ended September 30                                      $3.48      $3.25
Quarter ended December 31                                       $3.75      $3.25

Dividend Information

      Except for a dividend of $0.18 per share paid on December 12, 2000 to
holders of record of the Common Stock on November 27, 2000, the Company has not
paid any cash dividends on its Common Stock.


                                       -7-

<PAGE>

Liquidating Distribution

      On October 25, 2001, the Company paid the Interim Distribution in the
aggregate amount of $25.5 million, representing $5.10 per share, to stockholders
of record on October 15, 2001. See Item 1. "BUSINESS -- Liquidation of the
Company."

Item 6. SELECTED FINANCIAL DATA

      As a result of the approval of the Plan by stockholders, the Company has
adopted the liquidation basis of accounting for all periods subsequent to May
15, 2001. Under the liquidation basis of accounting, assets are stated at their
estimated net realizable value and estimated costs of liquidating the Company
are provided, to the extent that they are reasonably determinable. Anticipated
investment income on the Company's cash and cash equivalents is not accrued.

      The following selected financial data, which reflects operating and
balance sheet information for periods prior to the adoption of liquidation
accounting, should be read in conjunction with the consolidated going concern
financial statements and related notes thereto included herein (in thousands,
except per share amounts):

<TABLE>
<CAPTION>

                                              January 1               Year Ended December 31,
                                              to May 15,   --------------------------------------------
                                                 2001        2000        1999        1998        1997
-------------------------------------------------------------------------------------------------------
<S>                                            <C>         <C>         <C>         <C>         <C>
Operating Data:
   Income (loss) from continuing
     operations before income taxes            $    423    $  2,093    $  1,337    $    671    $   (663)
   Provision for income taxes                                   144         691         518         295
                                               --------    --------    --------    --------    --------
   Income (loss) from continuing operations         279       1,402         819         376        (663)
   Discontinued operations                                      177       3,514      14,354         942
                                               --------    --------    --------    --------    --------
           Net income                          $    279    $  1,579    $  4,333    $ 14,730    $    279
                                               ========    ========    ========    ========    ========

   Net income (loss) per common share:
    Basic:
      Continuing operations                    $    .06    $    .28    $    .17    $    .08    $   (.14)
      Discontinued operations                                   .04         .71        2.96         .20
                                               --------    --------    --------    --------    --------
           Net income                          $    .06    $    .32    $    .88    $   3.04    $    .06
                                               ========    ========    ========    ========    ========

   Diluted:
         Continuing operations                 $    .06    $    .28    $    .17    $    .08    $   (.14)
         Discontinued operations                                .04         .71        2.93         .20
                                               --------    --------    --------    --------    --------
           Net income                          $    .06    $    .32    $    .88    $   3.01    $    .06
                                               ========    ========    ========    ========    ========

Balance Sheet Data (at end of period):
   Total Assets(a)                                         $ 29,562    $ 29,106    $ 33,117    $ 12,927
   Stockholders' Equity(a)                                 $ 28,879    $ 28,058    $ 23,365    $  8,885
</TABLE>

-----------
(a)   On June 18, 1998, effective as of May 31, 1998, Prime sold substantially
      all its net assets and business for approximately $44 million in cash.
      Prime was the sole operating subsidiary of the Company, and the Company
      and its subsidiaries do not now conduct any operations.


                                       -8-

<PAGE>

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

LIQUIDATION OF THE COMPANY

      On June 18, 1998, effective as of May 31, 1998, Prime Acquisition Corp.
("Prime"), the Company's wholly- owned subsidiary at the time, sold
substantially all its net assets and business for approximately $44 million in
cash. Prime realized an after-tax gain of $12.6 million from the sale, and after
payment of its outstanding debt, closing costs and income taxes, Prime had cash
and investments of approximately $28 million. In connection with its decision
concerning the sale of Prime, the Board of Directors adopted resolutions
regarding the Company's intent that, subsequent to the sale of its assets, Prime
would acquire an operating company and would be engaged in a business other than
that of investing, reinvesting or trading in securities, as soon as reasonably
possible.

      Subsequent to the June 1998 sale of Prime's assets and business, the
Company made certain short-term investments in order to enhance stockholder
value while efforts to acquire an operating company continued. The Company did
not register as an investment company, initially relying on (and in compliance
with) the exemption provided by Rule 3(a)(2), promulgated under the Investment
Company Act of 1940, as amended (the "40 Act").

      In March 2000, the Company filed an application with the Securities and
Exchange Commission ("SEC") for an order pursuant to Section 3(b)(2) of the
Investment Company Act of 1940, as amended (the '40 Act) declaring that the
Company is not an investment company. Alternatively, the Company requested a
Section 6(c) exemption from certain provisions of the '40 Act. The application
was amended in May, June and July 2000. Thereafter, the SEC advised the Company
that neither a Section 3(b)(2) order nor a Section 6(c) exemption could be
granted under the facts and circumstances of the Company's application. The
Company continued through November 9, 2000 to discuss with the SEC the manner in
which to respond to the SEC's concerns, but was unable to obtain a 3(b)(2) order
or a 6(c) exemption.

      As an investment company, the Company would be required to restructure its
operations, management and Board of Directors. On November 16, 2000, the
Company's Board of Directors determined that it was not in the best interest of
the Company's stockholders for the Company to register as an investment company
pursuant to the '40 Act. On January 11, 2001, the Board of Directors adopted a
Plan of Complete Liquidation, Dissolution and Termination of Existence (the
"Plan"), which was approved by stockholders at the annual meeting of
stockholders on May 16, 2001.

      On May 16, 2001, the Board of Directors determined that an interim
liquidation distribution in the amount of approximately $27,500,000, equivalent
to $5.50 per share (the "Interim Distribution") would be made to stockholders
subject to approval of the Court of Chancery of the State of Delaware. On July
2, 2001, the Company petitioned the Delaware Court of Chancery seeking an order
authorizing the Interim Distribution. A preliminary hearing was held on July 23,
2001. On August 3, 2001, the Company mailed and published Notices of Dissolution
in accordance with the requirements of Section 280 of the Delaware General
Corporation Law. Any person asserting a claim against the Company was required
to present such claim on or before September 24, 2001.

      Notices published in compliance with the Delaware liquidation procedures
resulted in one contingent claim for a reserve of $4 million relating to an
existing environmental indemnification obligation undertaken by the Company in
connection with the sale of its business on June 18, 1998. Because the claimant
did not assert any loss and because the Company believes that the contingency is
extremely remote, on or after June 18, 2002 the Company will, unless an
agreement is reached with the claimant, request the Chancery Court to determine
the appropriate amount and duration of the reserve.


                                       -9-

<PAGE>

      Pursuant to the Company's request, at the close of business on October 15,
2001, the Company's stock transfer books were closed, and the Company
discontinued recording transfers of shares of its Common Stock. Pursuant to the
Company's request, the NASDAQ delisted and ceased trading in the Company's
Common Stock as of the close of business on October 26, 2001.

      On October 25, 2001, consistent with an order of the Delaware Chancery
Court, the Company made its initial liquidating distribution in the amount of
$5.10 per share, to holders of record of the Company's Common Stock on October
15, 2001. The order of the Delaware Chancery Court requires the Company to
maintain, subject to further court order, $4 million to account for any claims
under the environmental indemnification given in connection with the sale of its
business in June 1998. The distribution of $5.10 per share is considered a
return of capital and is subject to capital gains or loss tax. One or more
future liquidating distributions will be made to holders of the Company's Common
Stock as of the October 15, 2001 record date in accordance with Delaware law.
The Company's remaining assets consist of cash and cash equivalents of
approximately $4.3 million. Subject to the approval of the Delaware Court of
Chancery, the Company anticipates making a distribution to stockholders of the
remaining assets (after payment of expenses) as soon as practicable in the
amount of approximately $3.8 million, representing approximately $.76 per share.

      As a result of the approval of the Plan, the Company has adopted the
liquidation basis of accounting for all periods subsequent to May 15, 2001
which, among other things, requires that assets and liabilities be stated at
their estimated net realizable value and that estimated costs of liquidating the
Company be provided to the extent that they are reasonably determinable.
Anticipated investment income on the Company's cash and cash equivalents is not
accrued. At December 31, 2001, the Company had net assets in liquidation of $3.8
million, consisting of cash and cash equivalents of $4.3 million, less accrued
expenses and other liabilities including liquidation costs, aggregating
approximately $.5 million.

      Pursuant to the Plan, subject to the payment or provision for payment of
all contingent claims, obligations and expenses, future cash distributions of
the available cash will be made to holders of the Company's Common Stock on a
pro rata basis. The amount of future cash distributions to stockholders depends
on anticipated liquidation costs, the timing and amount of future liquidating
distributions, interest rates on cash and cash equivalents, and the extent of
future claims against the Company, if any.

      Based on prior "no-action" letters issued by the SEC staff relating to
similar factual circumstances, and in reliance on SEC Release No. 34-9660 and
advice from the SEC Staff, the Company will not file periodic reports with the
SEC commencing with the fiscal year beginning January 1, 2002. However, the
Company will file reports on Form 8-K to disclose any material events relating
to its winding up and liquidation, and, upon completion of the liquidation, the
Company will file a final report on Form 8-K and a Form 15 to terminate the
Company's registration and reporting obligations.

Contingent Liabilities

      In connection with the June 1998 sale of Prime's assets, Prime agreed to
indemnify the buyer as follows: (i) for up to $4 million of losses incurred by
the buyer during the two years following the closing resulting from breaches of
representations and warranties made by Prime, (ii) for up to $4 million of
losses incurred by the buyer during the four years following the closing
resulting from certain environmental matters, and (iii) for losses incurred by
the buyer resulting from liabilities of Prime not assumed by the buyer. In
connection with Prime's indemnification obligations, Prime deposited in escrow
an aggregate of $25.4 million for a period of two years following the closing.


                                      -10-

<PAGE>

During the escrow period, no claims were asserted by the buyer, and on June 20,
2000 the entire escrow fund was released to Prime.

      In fiscal 1990, the Company discontinued the operations of White Metal
Rolling and Stamping Corp. ("White Metal"), the Company's ladder manufacturing
subsidiary. All manufacturing operations of White Metal ceased as of January 31,
1991 and substantially all of its remaining assets have since been liquidated.

      On September 30, 1994, White Metal filed a voluntary petition seeking
liquidation under the provisions of chapter 7 of the United States Bankruptcy
Code. The liabilities of White Metal were primarily product liability claims,
and related costs, resulting from its discontinued ladder manufacturing
business. While the Company was named as a defendant in certain actions
commenced in connection with these claims, the Company has not been held
responsible, and the Company disclaims any liability for the obligations of
White Metal. There can be no assurance that in the future any claim brought
against White Metal which is also asserted against the Company, will not result
in liability. However, the Company intends to vigorously defend any White Metal
claim asserted against it. On October 30, 2000, the chapter 7 trustee filed a
Distribution Report with the Bankruptcy Court certifying distributions with
respect to all claims filed before October 22, 1994, and on December 18, 2000,
the trustee filed a Final Report with the Bankruptcy Court. On December 27, 2001
the Bankruptcy Court issued an Order of Final Decree closing the White Metal
chapter 7 case.

RESULTS OF OPERATIONS (GOING CONCERN BASIS)

      Prime was the sole operating subsidiary of the Company, and the Company
and its subsidiaries do not now conduct any operations. The net proceeds of the
sale of Prime's assets have been invested in certain common and preferred stocks
as well as in liquid U.S. Treasury money market accounts. The Company's income
consists primarily of dividend income from these investments.

      On December 22, 1998, Prime acquired, at a cost of $20 million, 800,000
shares of 10.5 percent Cumulative Convertible Preferred Stock, having a
liquidation preference of $25 per share, of Impac Mortgage Holdings, Inc.,
("Impac"). The shares were convertible into Common Stock of Impac (symbol "IMH")
at $4.72 per share, or an aggregate of 4,237,288 shares, representing
approximately 15 percent of IMH common stock. In addition, Prime was entitled to
receive as a dividend each quarter, in cash or Impac common stock, the higher of
10.5 percent per annum or the dividend paid to common stockholders calculated on
the shares of common stock into which the preferred stock is convertible. The
Company recorded this investment at cost of $20,157,000.

      Between February 21 and April 30, 2001, the Company sold its investment in
the Preferred Stock of Impac for $20.25 million, resulting in a small gain, plus
accrued interest through the date of sale. From the acquisition of the Impac
Preferred Stock in December 1998 until its sale in 2001, the Company received an
aggregate of $4.3 million in quarterly cash dividends. The Company obtained a
fairness opinion in connection with the sale.

      At December 31, 1999 the Company owned 90,530 shares of the common stock
of The North Face, Inc. which had been written down to its market value of
$368,000 at December 31, 1999. The original cost of these shares, considered to
be trading securities, was $1.1 million. These shares were sold in February 2000
for $590,000, resulting in a gain of $222,000 in the first quarter of 2000.

      For the period ended May 15, 2001, general and administrative expenses
included approximately $131,000 of expenses relating to the liquidation of the
Company as well as $85,000 relating to a shareholder action that was
subsequently terminated without liability to the Company or its directors. The
shareholder action costs were later


                                      -11-

<PAGE>

reimbursed by insurance. For the year ended December 31, 2000, general and
administrative expenses included approximately $86,000 incurred in conducting
due diligence relating to possible acquisitions. Most of these expenses were
related to an acquisition target which subsequently accepted a higher offer. In
addition, for the year ended December 31, 2000, the Company incurred expenses of
approximately $240,000 in connection with an application made to the Securities
and Exchange Commission as described above.

Federal Income Taxes

      As a result of changes in the ownership of the Company's Common Stock, the
Company was a Personal Holding Company for Federal income tax purposes in 2000.
As a result, in order to avoid double taxation on the Company, on November 16,
2000, the Board of Directors declared a special dividend of $.18 per share,
payable on December 12, 2000, to stockholders of record at the close of business
on November 27, 2000.

INFLATION

      Future changes from current levels of inflation may be expected to impact
the investment income earned by the Company on its temporary investments.

FORWARD LOOKING STATEMENTS AND RISK FACTORS

      This report contains certain statements, including the Company's long-term
plans, which could be construed to be forward looking statements and are made
pursuant to the safe harbor provisions of the Securities Litigation Reform Act
of 1995. These forward-looking statements reflect the Company's current views,
at the time such statements were made, with respect to future events, financial
performance and funds which may be available for distribution to stockholders.
Forward-looking statements are not guarantees of future performance; they are
subject to risks and uncertainties. The Company does not undertake to update
forward-looking statements to reflect circumstances or events that occur after
the date the forward-looking statements are made.

      The Company has identified certain risk factors which could cause actual
plans and results to differ substantially from those included in the
forward-looking statements. These factors include certain contingent
indemnification obligations and contingencies as described in Note 3 of Notes to
Consolidated Financial Statements, anticipated liquidation costs, the timing and
amount of future liquidating distributions, and interest rates on cash and cash
equivalents.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

      The Company is exposed to market risk in the normal course of its
investing activities. The Company does not have significant exposure to
fluctuations in interest rates because it has only a modest amount of temporary
investments in money market funds and no debt. The Company does not undertake
any specific actions to cover its exposure to interest rate risk.

                                      -12-

<PAGE>

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      The Consolidated Financial Statements and Schedule of the Company and its
subsidiaries pursuant to this Item and Item 14 of this Report are set forth in
the Index to Consolidated Financial Statements included herein.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

      Not applicable.

                                    PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      The following tables set forth certain information with respect to the
Directors and Executive Officers of the Company as of December 31, 2001.

<TABLE>
<CAPTION>
Name                      Position
----                      --------
<S>                       <C>
Leigh J. Abrams           President, Chief Executive Officer and Director of the Company since
  (Age 59)                July 1994.
Edward W. Rose, III       Chairman of the Board of Directors of the Company since July 1994.
  (Age 60)
James F. Gero             Director since July 1994.
  (Age 56)
Marshall B. Payne         Director since July 1994.
  (Age 44)
Fredric M. Zinn           Chief Financial Officer of the Company since July 1994.
  (Age 50)
Harvey J. Kaplan          Secretary and Treasurer of the Company since July 1994.
  (Age 67)
</TABLE>

      LEIGH J. ABRAMS, for more than the past five years has also been
President, Chief Executive Officer and a Director of Drew. Since April 2001, Mr.
Abrams has been a Director of Impac Mortgage Holding, Inc. See Item 1.
"BUSINESS."

      EDWARD W. ROSE, III, for more than the past five years, has been President
and principal stockholder of Cardinal Investment Company, Inc., an investment
firm. Mr. Rose also serves as a director of the following public companies:
Osprey Holding, Inc., previously engaged in selling computer software for
hospitals; Liberte Investors, Inc., engaged in real estate loans and
investments; and ACE Cash Express, Inc., engaged in check cashing services. Mr.
Rose is also Chairman of the Board of Drew.

      JAMES F. GERO, since March 1992, has been Chairman and Chief Executive
Officer of Sierra Technologies, Inc., a manufacturer of defense systems
technologies, and a director of its affiliates. Mr. Gero also serves as a
director of Orthofix International, N.V., a publicly-owned international
supplier of orthopedic devices for bone fixation and stimulation. Mr. Gero is
also a Director of Drew.


                                      -13-

<PAGE>

      MARSHALL B. PAYNE, for more than the past five years, has been Vice
President of Cardinal Investment Company, Inc., an investment firm. Mr. Payne
also serves as a director of the following public companies: Osprey Holding,
Inc., previously engaged in selling computer software for hospitals; and ACE
Cash Express, Inc., engaged in check cashing services; and Restoration Hardware,
Inc., a specialty retailer of home furnishings.

      FREDRIC M. ZINN, a certified public accountant, for more than the past
five years, has also been Chief Financial Officer of Drew, and Executive Vice
President of Drew since February 2001.

      HARVEY J. KAPLAN, a certified public accountant, for more than the past
five years, has also been Secretary and Treasurer of Drew.

      Continuation in Office

      At the Company's request, the incumbent directors have agreed to serve
until liquidation of the Company is completed, which is anticipated to be in
2003. The Company does not intend to call a meeting of stockholders, or solicit
proxies, to elect directors.

Item 11. EXECUTIVE COMPENSATION

      Each of the Company's executive officers is an officer of Drew and is
compensated by Drew. The Company does not compensate its executive officers,
except for incentive compensation paid to the Company's Chief Executive Officer.
However, pursuant to the Shared Services Agreement, the Company pays Drew a fee
(the "Shared Services Fee") for the services rendered by such persons. The
Company paid Drew $94,000 for the services rendered to the Company during the
year ended December 31, 2001. See "THE COMPANY."


                                      -14-
<PAGE>

      Summary Compensation

      The following table sets forth the annual and long-term cash and noncash
compensation for each of the last three calendar years, awarded to or earned by
Leigh J. Abrams, President and Chief Executive Officer and a director of the
Company:

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                                                  Long-term
                                      Annual Compensation                        Compensation
                                      -------------------                        ------------
Name and                                                                        Number of Stock
Principal          Calendar                                Other Annual             Options           All Other
Position             Year      Salary      Bonus(1)        Compensation             Awarded         Compensation
--------             ----      ------      --------        ------------             -------         ------------
<S>                  <C>            <C>    <C>                        <C>                  <C>                  <C>
Leigh J. Abrams      2001           0      $ 9,647                    0                    0                    0
President and        2000           0      $49,214                    0                    0                    0
Chief Executive      1999           0      $95,475                    0                    0                    0
Officer
</TABLE>

---------------

(1) Pursuant to an agreement, Leigh J. Abrams, President and Chief Executive
Officer of the Company, is entitled to receive an incentive bonus equal to 2
1/2% of the Company's annual income before income taxes and extraordinary items,
subject to certain adjustments. The incentive compensation paid to Mr. Abrams
for 1999 is net of $20,000, allocated by Mr. Abrams to other Drew employees who
rendered services to the Company. The incentive compensation agreement
terminated on May 15, 2001 in connection with the adoption of the Plan of
Liquidation.

Compensation of Directors

      Edward W. Rose, III, Chairman of the Board of Directors, receives an
annual director's fee of $24,000, payable $2,000 per month, plus $1,000 for
attendance at each meeting of the Board of Directors and $500 for attendance at
each Committee meeting. James F. Gero and Marshall B. Payne each receive an
annual director's fee of $9,000, payable $750 per month, plus $500 for
attendance at each meeting of the Board of Directors and $500 for attendance at
each Committee meeting.

Compensation Committee Interlocks and Insider Participation

      No executive officer of the Company serves on the Compensation Committee,
and there are no "interlocks," as defined by the Securities and Exchange
Commission.


                                      -15-

<PAGE>

                     REPORT OF THE COMPENSATION COMMITTEE

Compensation policy

      The Compensation Committee of the Board of Directors (the "Committee")
consists of two non-employee directors, Edward W. Rose, III and James F. Gero.
The Committee has the responsibility of developing the policies which govern
compensation for executive officers, and making recommendations to the Board of
Directors regarding compensation of executive officers in accordance with such
policies. The Company does not compensate its executive officers, each of whom
is an officer of Drew, except for incentive compensation paid to the Company's
Chief Executive Officer. However, pursuant to the Shared Services Agreement, the
Company pays Drew the Shared Services Fee. See "THE COMPANY;" Item 11.
"EXECUTIVE COMPENSATION."

      During 2001, the Company's executive compensation policy was designed to
enable the Company to motivate and retain senior management during the Company's
liquidation by providing fair and equitable compensation. The compensation
policy aligns executive and stockholder interests. The only component of the
Company's executive compensation was performance-related incentive compensation,
which terminated on May 15, 2001 in connection with adoption of the Plan of
Liquidation.

Compensation of the Chief Executive Officer of the Company in 2001

      Pursuant to an agreement, Leigh J. Abrams, President and Chief Executive
Officer of the Company, is entitled to receive an incentive bonus equal to 2
1/2% of the Company's annual income, before income taxes and extraordinary
items, in excess of $125,000. For 2001, Mr. Abrams received incentive
compensation in the amount of $9,647. The incentive compensation agreement with
Mr. Abrams terminated on May 15, 2001 in connection with adoption of the Plan of
Liquidation.

Stock Options

      No stock options were granted in 2001.

Conclusion

      The Company's Executive compensation had been linked directly to the
Company's results.

                                          COMPENSATION COMMITTEE
                                          Edward W. Rose, III
                                          James F. Gero


                                      -16-

<PAGE>

Indemnification

      The Company's Certificate of Incorporation (the "Certificate") provides
for indemnification of directors and officers to the full extent permitted under
Delaware Law. Delaware Law provides that a corporation has the power to
indemnify a director, officer, employee or agent of the corporation and certain
other persons serving at the request of the corporation in related capacities
against amounts paid and expenses incurred in connection with an action or
proceeding to which he is or is threatened to be made a party by reason of such
position, if such person shall have acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the
corporation, provided that no indemnification shall be made with respect to any
matter as to which such person shall have been adjudged not to be entitled to
indemnification under such law.

      The Certificate also provides for indemnification of directors and
officers of the Company against liabilities and expenses in connection with any
legal proceedings to which they may be made a party or with which they may
become involved or threatened by reason of having been an officer or director of
the Company or of any other entity at the request of the Company. The
Certificate generally provides that a director or officer of the Company (i)
shall be indemnified by the Company for all expenses of such legal proceedings
unless he has been adjudicated not to have acted in good faith in the reasonable
belief that his action was in or not opposed to the best interest of the
Company, and (ii) shall be indemnified by the Company for the expenses,
judgments, fines and amounts paid in settlement and compromise of such
proceedings. Indemnification will be made to cover costs of settlements and
compromises if the Board of Directors determines by a majority vote of a quorum
consisting of disinterested directors (or, if such quorum is not obtainable, by
a majority of the disinterested directors of the Company), that such settlement
or compromise is proper in the circumstances.

      The Certificate permits the payment by the Company of expenses incurred in
defending a civil or criminal action in advance of its final disposition,
subject to receipt of an undertaking by the indemnified person to repay such
payment if it is ultimately determined that such person is not entitled to
indemnification under the Certificate. No advance may be made if the Board of
Directors determines, by a majority vote of a quorum consisting of disinterested
directors (or, if such quorum is not obtainable, by a majority of the
disinterested directors of the Company), that such person did not act in good
faith in the reasonable belief that his action was in or not opposed to the best
interest of the Company.

      The Certificate provides that no director shall be liable to the Company
or its stockholders for monetary damages for breach of his fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for unauthorized distributions and certain insiders' loans, or (iv)
for any transaction from which the director derived an improper personal
benefit.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Principal Holders of Voting Securities

      Set forth below is information with respect to each person known to the
Company on the Dissolution Date to be the beneficial owner of more than five
percent of any class of the Company's voting securities, which consists of
Common Stock only (including options):


                                      -17-

<PAGE>

     Name and Address              Amount and Nature of         Approximate
    of Beneficial Owner            Beneficial Ownership       Percent of Class
    -------------------            --------------------       ----------------

   Edward W. Rose, III (1)           1,738,925(2)(3)                34.8%
   500 Crescent Court
   Dallas, Texas 75201

-------------------

(1)   The person named has sole voting and investment power with respect to such
      shares.

(2)   See "VOTING SECURITIES-Security Ownership of Management."

(3)   Pursuant to Rules 13-1(f)(l)-(2) of Regulation 13-D of the General Rules
      and Regulations under the Securities Exchange Act of 1934, as amended (the
      "Exchange Act") on August 8, 1994, the above-named person, together with
      certain other persons and entities, jointly filed a single Schedule 13-D
      Statement (as amended) with respect to the securities listed in the
      foregoing table. Such persons made the single, joint filing because they
      may be deemed to constitute a "group" within the meaning of Section
      13(d)(3) of the Exchange Act, although neither the fact of the filing nor
      anything contained therein shall be deemed to be an admission by such
      persons that a group exists.

      To the knowledge of the Company, other than persons acting as nominees or
custodians for various stock brokerage firms and banks, which persons do not
have beneficial ownership of the Common Stock, no other person owns of record or
beneficially more than five percent of the voting securities of the Company.

      See Item 1. "BUSINESS - Recent Events - Liquidation of the Company" with
respect to the delisting and cessation of trading of the Common Stock.


                                      -18-

<PAGE>

Security Ownership of Management

      Set forth below is information with respect to beneficial ownership on the
Dissolution Date of the Common Stock (including options) by each Director and
nominee and by all Directors, nominees and Executive Officers of the Company as
a group.

<TABLE>
<CAPTION>

          Name and Address                              Amount and Nature of     Approximate
         of Beneficial Owner                            Beneficial Ownership   Percent of Class
         -------------------                            --------------------   ----------------
<S>                                                         <C>                      <C>
       Leigh J. Abrams (1)                                    109,579(2)              2.2%
         200 Mamaroneck Avenue
         White Plains, New York 10601

       Edward W. Rose, III (1)                              1,738,925(3)             34.8%
         500 Crescent Court
         Dallas, Texas 75201

       James F. Gero (1)                                      136,900(4)              2.7%
         11900 North Anna Cade Road
         Rockwall, Texas 75087


       Marshall B. Payne (1)                                  158,850(5)              3.2%
         500 Crescent Court
         Dallas, Texas 75201

       All Directors and Executive Officers as a group
       (6 persons including the above-named)                2,188,954(6)             43.7%
</TABLE>

----------

(1)   Pursuant to Rules 13-1(f)(1)-(2) of Regulation 13-D of the General Rules
      and Regulations under the Exchange Act, on August 8, 1994, the persons
      indicated, together with certain other persons, jointly filed a single
      Schedule 13-D Statement (as amended) with respect to the securities listed
      in the foregoing table. Such persons made the single, joint filing because
      they may be deemed to constitute a "group" within the meaning of Section
      13(d)(3) of the Exchange Act, although neither the fact of the filing nor
      anything contained therein shall be deemed to be an admission by such
      persons that a group exists.

(2)   Mr. Abrams has sole voting and investment power with respect to the shares
      owned by him. Includes 2,001 shares of Common Stock held by Mr. Abrams as
      Custodian under the New York Uniform Gifts to Minors Act for the benefit
      of his daughter. Mr. Abrams disclaims any beneficial interest in the
      shares held as Custodian.

(3)   Mr. Rose has sole voting and investment power with respect to the shares
      owned by him. Includes 42,000 shares owned by each of Cardinal Investment
      Company, Inc. Pension Plan and Cardinal Investment Company, Inc. Profit
      Sharing Plan, of each of which Mr. Rose is Trustee. Mr. Rose has the power
      to vote and dispose of such shares. Mr. Rose's wife has sole voting and
      investment power with respect to 300 shares owned by her of record. Mr.
      Rose disclaims any beneficial interest in such shares.

(4)   Mr. Gero shares voting and investment power with respect to such shares
      with his wife.


                                      -19-

<PAGE>

(5)   Mr. Payne has sole voting and investment power with respect to 155,100 of
      such shares. In addition, Mr. Payne has beneficial ownership of 3,750
      shares representing a 25% interest in 15,000 shares held by Scout
      Ventures, a general partnership.

Compliance with Section 16(a) of the Exchange Act

      Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who beneficially own more than ten percent
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
greater than ten- percent shareholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.

      Based on its review of the copies of such forms received by it, the
Company believes that during 2001 all such filing requirements applicable to its
officers and directors (the Company not being aware of any ten-percent holder
other than Edward W. Rose, III, a director) were complied with.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

      None.


                                      -20-

<PAGE>

                          REPORT OF THE AUDIT COMMITTEE

      The Audit Committee of the Board of Directors (the "Committee') is
responsible for providing independent, objective oversight of the Company's
accounting functions and internal controls.

      The Committee is composed of two independent directors and functions
pursuant to a written charter adopted by the Board of Directors on May 17, 2000.
The members of the Committee are Edward W. Rose, HI and James F. Gero. The
Committee held four meetings during the year ended December 31, 2001. The
Committee recommends to the Board of Directors, subject to stockholder
ratification, the selection of the Company's independent accountants.

      Management is responsible for the Company's internal controls and the
financial reporting process. The independent accountants are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with generally accepted auditing standards and to issue
a report thereon.

      The Committee has met and held discussions with management and the
independent accountants, KPMG LLP. Management represented to the Committee that
the Company's consolidated financial statements were prepared in accordance with
generally accepted accounting principles, and the Committee has reviewed and
discussed the consolidated financial statements with management and the
independent accountants. The Committee discussed with the independent
accountants matters required to be discussed by Statement on Auditing Standards
No. 61 (Communication with Audit Committees).

      The Company's independent accountants also provided to the Committee the
written disclosures required by Independence Standards Board Standard No. I
(Independence Discussions with Audit Committees, and the Committee discussed
with the independent accountants that firm's independence.

      The Committee considered whether non-audit services provided by KPMG LLP
are compatible with maintaining the independence of KPMG LLP. The Committee
concluded that non-audit services provided by KPMG LLP during the year ended
December 31, 2001 were compatible with KPMG LLPs independence.

      The aggregate fees billed for professional services rendered by KPMG LLP
for the audit of the Company's annual financial statements for the year ended
December 31, 2001, and the reviews of the condensed financial statements
included in the Company's quarterly Reports on Form 10-Q for the year ended
December 31, 2001, was $68,000. KPMG LLP also billed an aggregate of $20,375 for
tax services during the year ended December 31, 2001.

      Based on the Committee's discussion with management and the independent
accountants and the Committee's review of the representation of management and
the report of the independent accountants to the Committee, the Committee
recommended that the Board of Directors include the. audited consolidated
financial statements in the Company's Annual Report on Form 10-K for the year
ended December 31, 2001 filed with the Securities and Exchange Commission.

                                                     AUDIT COMMITTEE
                                                   Edward W. Rose, III
                                                      James F. Gero


                                      -21-

<PAGE>

                                                                    PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES and REPORTS ON FORM 8 K

      (a) Documents Filed

            (1)   Financial Statements. See " Index to Consolidated Financial
                  Statements."

            (2)   Schedule. See " Index to Consolidated Financial Statements."

            (3)   Exhibits. See "List of Exhibits" at the end of this report
                  incorporated herein by reference.

      (b) Reports on Form 8-K

                  None


                                      -22-

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Date: March 27, 2002                   LBP, INC.


                                        By:   /s/ Leigh J. Abrams
                                           -------------------------------
                                             Leigh J. Abrams, President

Pursuant to the requirements of the Securities and Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on behalf of
the Registrant and in the capacities and dates indicated.

      Each person whose signature appears below hereby authorizes Leigh J.
Abrams and Harvey J. Kaplan, or either of them, to file one or more amendments
to the Annual Report on Form 10-K which amendments may make such changes in such
Report as either of them deems appropriate, and each such person hereby appoints
Leigh J. Abrams and Harvey J. Kaplan, or either of them, as attorneys-in-fact to
execute in the name and on behalf of each such person individually, and in each
capacity stated below, such amendments to such Report.

<TABLE>
<CAPTION>
Date                                  Signature                                              Title
----                                  ---------                                              -----
<S>                                   <C>                                                    <C>
March 27, 2002                        By:   /s/Leigh J. Abrams                               Director, President and Chief
                                         ---------------------------------------             Executive Officer
                                            (Leigh J. Abrams)                                Secretary and Treasurer

March 27, 2002                        By:   /s/Harvey J. Kaplan
                                         ---------------------------------------
                                            (Harvey J. Kaplan)

March 27, 2002                       By: /s/ Fredric M. Zinn                                Chief Financial Officer
                                         ---------------------------------------
                                            (Fredric M. Zinn)

March 27, 2002                        By: /s/ John F. Cupak                                  Controller
                                         ---------------------------------------
                                            (John F. Cupak)

March 27, 2002                        By: /s/ Edward W. Rose, III                            Director
                                         ---------------------------------------
                                            (Edward W. Rose, III)

March 27, 2002                        By: /s/ James F. Gero                                  Director
                                         ---------------------------------------
                                            (James F. Gero)

March 27, 2002                        By: /s/ Marshall B. Payne                              Director
                                         ---------------------------------------
                                            (Marshall B. Payne)
</TABLE>


                                      -23-

<PAGE>

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements

      Independent Auditors' Report

      Consolidated statement of net assets in liquidation as of December 31,
      2001.

      Consolidated statement of changes in net assets in liquidation for the
      period May 16, 2001 to December 31, 2001.

      Notes to consolidated financial statements (liquidation basis).

      Consolidated statements of operations for the period January 1, 2001 to
      May 15, 2001 and for the years ended December 31, 2000 and December 31,
      1999.

      Consolidated balance sheet at December 31, 2000.

      Consolidated statements of cash flow for the period January 1, 2001 to May
      15, 2001 and for the years ended December 31, 2000 and December 31, 1999.

      Consolidated statements of stockholders' equity for the period January 1,
      2001 to May 15, 2001 and for the years ended December 31, 2000 and
      December 31, 1999.

      Notes to consolidated financial statements (going concern basis).

Consolidated Financial Statement Schedules for the period January 1, 2001 to May
15, 2001 and for the years ended December 31, 2000 and 1999

      Schedule II - Valuation and Qualifying Accounts

      Schedules other than that listed above are omitted as they are not
applicable or the information required is included in the consolidated financial
statements and notes thereto.


                                      -24-

<PAGE>

                          Independent Auditors' Report

The Board of Directors
LBP, Inc.:

We have audited the accompanying consolidated balance sheet of LBP, Inc. and
subsidiaries as of December 31, 2000 and the related consolidated statements of
operations, stockholders' equity and cash flows for the period January 1, 2001
to May 15, 2001 and for each of the years in the two-year period ended December
31, 2000. In addition, we have audited the consolidated statement of net assets
in liquidation as of December 31, 2001 and the related consolidated statement of
changes in net assets in liquidation for the period from May 16, 2001 to
December 31, 2001. In connection with our audits of the consolidated financial
statements, we have also audited the financial statement schedule as listed in
the accompanying index. These consolidated financial statements and the
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and the financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit 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.

As described in Note 1 to the consolidated financial statements, the
stockholders of LBP, Inc. approved a plan of liquidation on May 15, 2001, and
the Company commenced liquidation shortly thereafter. As a result, the Company
has changed its basis of accounting for periods subsequent to May 15, 2001 from
the going-concern basis to a liquidation basis.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of LBP, Inc. and
subsidiaries as of December 31, 2000, the results of their operations and their
cash flows for each of the years in the two years then ended and for the period
January 1, 2001 to May 15, 2001, their net assets in liquidation as of December
31, 2001 and the changes in net assets in liquidation for the period from May
16, 2001 to December 31, 2001 in conformity with accounting principles generally
accepted in the United States of America applied on the bases described in the
preceding paragraph. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.


                                                KPMG

March 27, 2002


                                      -25-

<PAGE>

                                    LBP, INC.
               CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION
                             AS OF DECEMBER 31, 2001
                               (Liquidation Basis)

(In thousands, except per share amounts)

ASSETS

   Cash and cash equivalents ........................................    $4,326
   Prepaid expenses and other current assets ........................        19
                                                                         ------
      Total Assets ..................................................     4,345
                                                                         ------

LIABILITIES

   Accrued expenses and other liabilities including liquidation costs       567
                                                                         ------
      Total Liabilities .............................................       567
                                                                         ------

Net assets in liquidation ...........................................    $3,778
                                                                         ======

Number of common shares outstanding .................................     5,004
                                                                         ======

Net assets in liquidation per share .................................    $  .76
                                                                         ======

The accompanying notes are an integral part of these consolidated financial
statements.


                                      -26-

<PAGE>

                                    LBP, INC.
         CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
                FOR THE PERIOD MAY 16, 2001 TO DECEMBER 31, 2001
                               (Liquidation Basis)

(In thousands)

<TABLE>
<S>                                                                                        <C>
Shareholders' equity at May 15, 2001 (going concern basis) ..........................      $ 29,184

Adjustments to reflect change to liquidation basis of accounting (note 1) ...........          (443)
                                                                                           --------

Net assets in liquidation at May 15, 2001 ...........................................        28,741

Changes in estimated liquidation values of assets and liabilities ...................           260

Interest and dividend income ........................................................           454

Provision for income tax ............................................................          (162)

Liquidating dividend paid October 25, 2001 to shareholders of record October 15, 2001       (25,515)
                                                                                           --------

Net assets in liquidation at December 31, 2001 ......................................      $  3,778
                                                                                           ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                      -27-

<PAGE>

                                    LBP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               (Liquidation Basis)

(1) LIQUIDATION OF THE COMPANY

      On June 18, 1998, effective as of May 31, 1998, Prime Acquisition Corp.
("Prime"), the Company's wholly- owned subsidiary at the time, sold
substantially all its net assets and business for approximately $44 million in
cash. Prime realized an after-tax gain of $12.6 million from the sale, and after
payment of its outstanding debt, closing costs and income taxes, Prime had cash
and investments of approximately $28 million. In connection with its decision
concerning the sale of Prime, the Board of Directors adopted resolutions
regarding the Company's intent that, subsequent to the sale of its assets, Prime
would acquire an operating company and would be engaged in a business other than
that of investing, reinvesting or trading in securities, as soon as reasonably
possible.

      Subsequent to the June 1998 sale of Prime's assets and business, the
Company made certain short-term investments in order to enhance stockholder
value while efforts to acquire an operating company continued. The Company did
not register as an investment company, initially relying on (and in compliance
with) the exemption provided by Rule 3(a)(2), promulgated under the Investment
Company Act of 1940, as amended (the "40 Act").

      In March 2000, the Company filed an application with the Securities and
Exchange Commission ("SEC") for an order pursuant to Section 3(b)(2) of the
Investment Company Act of 1940, as amended (the '40 Act) declaring that the
Company is not an investment company. Alternatively, the Company requested a
Section 6(c) exemption from certain provisions of the '40 Act. The application
was amended in May, June and July 2000. Thereafter, the SEC advised the Company
that neither a Section 3(b)(2) order nor a Section 6(c) exemption could be
granted under the facts and circumstances of the Company's application. The
Company continued through November 9, 2000 to discuss with the SEC the manner in
which to respond to the SEC's concerns, but was unable to obtain a 3(b)(2) order
or a 6(c) exemption.

      As an investment company, the Company would be required to restructure its
operations, management and Board of Directors. On November 16, 2000, the
Company's Board of Directors determined that it was not in the best interest of
the Company's stockholders for the Company to register as an investment company
pursuant to the '40 Act. On January 11, 2001, the Board of Directors adopted a
Plan of Complete Liquidation, Dissolution and Termination of Existence (the
"Plan"), which was approved by stockholders at the annual meeting of
stockholders on May 16, 2001.

      On May 16, 2001, the Board of Directors determined that an interim
liquidation distribution in the amount of approximately $27,500,000, equivalent
to $5.50 per share (the "Interim Distribution") would be made to stockholders
subject to approval of the Court of Chancery of the State of Delaware. On July
2, 2001, the Company petitioned the Delaware Court of Chancery seeking an order
authorizing the Interim Distribution. A preliminary hearing was held on July 23,
2001. On August 3, 2001, the Company mailed and published Notices of Dissolution
in accordance with the requirements of Section 280 of the Delaware General
Corporation Law. Any person asserting a claim against the Company was required
to present such claim on or before September 24, 2001.

      Notices published in compliance with the Delaware liquidation procedures
resulted in one contingent claim for a reserve of $4 million relating to an
existing environmental indemnification obligation undertaken by the Company in
connection with the sale of its business on June 18, 1998. Because the claimant
did not assert any loss


                                      -28-

<PAGE>

                                    LBP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                               (Liquidation Basis)

and because the Company believes that the contingency is extremely remote, on or
after June 18, 2002, the Company will, unless an agreement is reached with the
claimant, request the Chancery Court to determine the appropriate amount and
duration of the reserve.

      Pursuant to the Company's request, at the close of business on October 15,
2001, the Company's stock transfer books were closed, and the Company
discontinued recording transfers of shares of its Common Stock. Pursuant to the
Company's request, the NASDAQ delisted and ceased trading in the Company's
Common Stock as of the close of business on October 26, 2001.

      On October 25, 2001, consistent with an order of the Delaware Chancery
Court, the Company made its initial liquidating distribution in the amount of
$5.10 per share, to holders of record of the Company's Common Stock on October
15, 2001. The order of the Delaware Chancery Court requires the Company to
maintain, subject to further court order, $4 million to account for any claims
under the environmental indemnification given in connection with the sale of its
business in June 1998. The distribution of $5.10 per share is generally
considered a return of capital and is subject to capital gains or loss tax. One
or more future liquidating distributions will be made to holders of the
Company's Common Stock as of the October 15, 2001 record date in accordance with
Delaware law. The Company's remaining assets consist of cash and cash
equivalents of approximately $4.3 million. Subject to the approval of the
Delaware Court of Chancery, the Company anticipates making a distribution to
stockholders of the remaining assets (after payment of expenses) as soon as
practicable in the amount of approximately $3.8 million, representing
approximately $.76 per share.

      Pursuant to the Plan, subject to the payment or provision for payment of
all contingent claims, obligations and expenses, future cash distributions of
the available cash will be made to holders of the Company's Common Stock on a
pro rata basis. The amount of future cash distributions to stockholders depends
on anticipated liquidation costs, the timing and amount of future liquidating
distributions, interest rates on cash and cash equivalents, and the extent of
future claims against the Company, if any.

      Because the claimant did not assert any loss and because the Company
believes that the contingency is extremely remote, the Company will, unless an
agreement is reached with the claimant, request the Chancery Court to determine
the appropriate amount and duration of the reserve.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

      As a result of the approval of the Plan by stockholders, the Company has
adopted the liquidation basis of accounting for all periods subsequent to May
15, 2001. Under the liquidation basis of accounting, assets are stated at their
estimated net realizable value and estimated costs of liquidating the Company
are provided, to the extent that they are reasonably determinable. The Company's
remaining liabilities, which have been accrued, consist primarily of legal and
accounting fees incurred in connection with the dissolution, directors' fees,
transfer agent fees, and service fees to Drew. Anticipated investment income on
the Company's cash and cash equivalents is not accrued.


                                      -29-

<PAGE>

                                    LBP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                               (Liquidation Basis)

      The valuation of assets and liabilities necessarily requires many
estimates and assumptions, and there are substantial uncertainties in carrying
out the provisions of the Plan. The actual amount of any liquidating
distributions will depend upon a variety of factors not presently determinable.
The valuations presented in the accompanying Statement of Net Assets in
Liquidation represent estimates, based on present facts and circumstances, of
the estimated liabilities and estimated costs of liquidation.

      Based on prior "no-action" letters issued by the SEC staff relating to
similar factual circumstances, and in reliance on SEC Release No. 34-9660 and
advice from the SEC Staff, the Company will not file periodic reports with the
SEC commencing with the fiscal year beginning January 1, 2002. However, the
Company will file reports on Form 8-K to disclose any material events relating
to its winding up and liquidation, and, upon completion of the liquidation, the
Company will file a final report on Form 8-K and a Form 15 to terminate the
Company's registration and reporting obligations.

Cash and Equivalents

      The Company considers all highly liquid investments with a maturity of
three months or less at the time of purchase to be cash equivalents.
Investments, which consist of government-backed money market funds are recorded
at cost which approximates market value.

Income Taxes

      The Company and its subsidiaries file separate Federal and state income
tax returns. The Company's subsidiaries generally file separate state income tax
returns on the same basis as the Federal income tax returns.

Use of Estimates

      Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates.

(3) CONTINGENCIES

      In connection with the June 1998 sale of Prime's assets, Prime agreed to
indemnify the buyer as follows: (i) for up to $4 million of losses incurred by
the buyer during the two years following the closing resulting from breaches of
representations and warranties made by Prime, (ii) for up to $4 million of
losses incurred by the buyer during the four years following the closing
resulting from certain environmental matters, and (iii) for losses incurred by
the buyer resulting from liabilities of Prime not assumed by the buyer. In
connection with Prime's indemnification obligations, Prime deposited in escrow
an aggregate of $25.4 million for a period of two years following the closing.
During the escrow period, no claims were asserted by the buyers and, on June 20,
2000 the entire escrow fund was released to Prime.


                                      -30-

<PAGE>

                                    LBP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                               (Liquidation Basis)

(4) STOCKHOLDERS' EQUITY

Dividends and Distributions

      The Company declared a partial liquidating distribution on its Common
Stock of $5.10 per share on October 2, 2001 which was paid on October 25, 2001
to stockholders of record at the close of business on October 15, 2001.

(5) SHARED SERVICES AGREEMENT

      Pursuant to a Shared Services Agreement with Drew Industries Incorporated,
the Parent of the Company until the Company was spun off in July 1994, the
Company has incurred management fees for certain administrative services of
$50,000 from May 15, to December 31, 2001, and has accrued an additional $59,000
at December 31, 2001 for anticipated costs in subsequent periods.


                                      -31-

<PAGE>

                                    LBP, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                              (Going Concern Basis)

<TABLE>
<CAPTION>
                                                               January 1  Year Ended December 31,
                                                               to May 15, -----------------------
                                                                 2001        2000        1999
                                                                ------      ------      ------
<S>                                                             <C>         <C>         <C>
(In thousands, except per share amounts)

Continuing Operations:
   Investment income                                            $  827      $2,907      $1,861
   General and administrative expenses                             404         814         368
                                                                ------      ------      ------
       Operating income                                            423       2,093       1,493
   Imputed interest expense                                         --          --         156
                                                                ------      ------      ------

     Income from continuing operations before income taxes         423       2,093       1,337
Provision for income taxes                                         144         691         518
                                                                ------      ------      ------

   Income from continuing operations                               279       1,402         819

   Income from discontinued operations                              --         177       3,514
                                                                ------      ------      ------

   Net income                                                   $  279      $1,579      $4,333
                                                                ======      ======      ======
Net income per common share:
   Basic and Diluted:
       Continuing operations                                    $  .06      $  .28      $  .17
       Discontinued operations                                      --         .04         .71
                                                                ------      ------      ------
         Net Income                                             $  .06      $  .32      $  .88
                                                                ======      ======      ======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                      -32-

<PAGE>

                                    LBP, INC.
                           CONSOLIDATED BALANCE SHEET
                              (Going Concern Basis)

<TABLE>
<CAPTION>
                                                                              December 31,
                                                                                  2000
                                                                                  ----
(In thousands, except shares and per share amounts)
<S>                                                                           <C>
ASSETS
Current assets
   Cash and equivalents                                                       $       8,776
   Investment in securities
                                                                                     20,157
   Prepaid expenses and other current assets                                            629
                                                                              -------------

          Total assets                                                        $      29,562
                                                                              =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
   Accounts payable, accrued expenses and other current liabilities           $         159
   Discontinued operations                                                              524
                                                                              -------------
          Total liabilities                                                             683
                                                                              -------------

Commitments and Contingencies

Stockholders' equity
   Common stock, par value $.01 per share: authorized 20,000,000 shares;
     issued 5,085,390 shares                                                             51
   Paid-in capital                                                                   20,867
   Retained earnings                                                                  8,225
                                                                              -------------
                                                                                     29,143
   Treasury stock at cost -- 89,000 shares                                             (264)
                                                                              -------------
          Total stockholders' equity                                                 28,879
                                                                              -------------

          Total liabilities and stockholders' equity                          $      29,562
                                                                              =============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                      -33-

<PAGE>

                                    LBP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (Going Concern Basis)

<TABLE>
<CAPTION>
                                                                    January 1,      Year Ended December 31,
                                                                    to May 15,      -----------------------
                                                                       2001           2000           1999
                                                                     --------       --------       --------
(In thousands)
<S>                                                                  <C>            <C>            <C>
Cash flows from operating activities:
  Income from continuing operations                                  $    279       $  1,402       $    819
  Adjustments to reconcile income from continuing operations
    to cash flows from operating activities:
      Deferred taxes                                                       --            251           (186)
      Mark to market investment in trading securities                      --             --            731
      Gain on sale of investments                                         (93)          (222)            --
      Imputed interest                                                     --             --            156
      Changes in prepaid expenses and other assets                        442            154           (765)
      Changes in accounts payable, accrued expenses and other
        current liabilities                                              (114)             6           (557)
                                                                     --------       --------       --------
        Net cash flows provided by operating activities
          of continuing operations                                        514          1,591            198
                                                                     --------       --------       --------
Cash flows from discontinued operations:
  Income from discontinued operations                                      --            177          3,514
  Change in unliquidated net liabilities and assets                        68           (150)        (8,524)
                                                                     --------       --------       --------
     Net cash provided by (used for) discontinued operations               68             27         (5,010)
                                                                     --------       --------       --------

Cash flows from investing activities:
  Investment in securities                                                 --             --         (1,203)
  Proceeds from sales of trading securities                            20,250            590             --
                                                                     --------       --------       --------
     Net cash flows provided by (used for) investing activities        20,250            590         (1,203)
                                                                     --------       --------       --------

Cash flows from financing activities:
  Employee purchases of common stock                                       26            141            360
  Dividends paid                                                                        (899)            --
                                                                     --------       --------       --------
     Net cash flows provided (used for) by financing activities            26           (758)           360
                                                                     --------       --------       --------

Net increase (decrease) in cash                                        20,858          1,450         (5,655)
                                                                        8,776          7,326         12,981
                                                                     --------       --------       --------
Cash and equivalents at beginning of period
Cash and equivalents at end of period                                $ 29,634       $  8,776       $  7,326
                                                                     ========       ========       ========

Supplemental disclosure of cash flows information:
  Net cash paid (received) during the period for:
    Income taxes                                                     $     94       $   (182)      $  6,178
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                      -34-

<PAGE>

                                    LBP, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                              (Going Concern Basis)

<TABLE>
<CAPTION>
                                                                                                    Retained       Total
                                                         Common        Treasury        Paid-in      Earnings    Stockholders'
                                                          Stock          Stock         Capital      (Deficit)      Equity
-----------------------------------------------------------------------------------------------------------------------------
(In thousands, except shares and per share amounts)
<S>                                                      <C>            <C>            <C>           <C>           <C>
Balance - December 31, 1998                              $     48       $   (264)      $ 20,369      $  3,212      $ 23,365
   Net income                                                                                           4,333         4,333
   Exercise of employee stock options
       159,000 shares                                           2                           358                         360
                                                         --------       --------       --------      --------      --------
Balance - December 31, 1999                                    50           (264)        20,727         7,545        28,058
   Net income                                                                                           1,579         1,579
   Dividends paid ($.18 per share)                                                                       (899)         (899)
   Exercise of employee stock options
       59,000 shares                                            1                           140                         141
                                                         --------       --------       --------      --------      --------
Balance - December 31, 2000                                    51           (264)        20,867         8,225        28,879
   Net income                                                                                             279           279
   Exercise of employee stock options
       7,500 shares                                                                          26                          26
                                                         --------       --------       --------      --------      --------
Balance-May 15, 2001                                     $     51       $   (264)      $ 20,893      $  8,504      $ 29,184
                                                         ========       ========       ========      ========      ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                      -35-

<PAGE>

                                    LBP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              (Going Concern Basis)

(A) INVESTMENT IN SECURITIES

      On December 22, 1998, Prime acquired, at a cost of $20 million, 800,000
shares of 10.5 percent Cumulative Convertible Preferred Stock, having a
liquidation preference of $25 per share, of Impac Mortgage Holdings, Inc.,
("Impac"). The shares were convertible into Common Stock of Impac (symbol "IMH")
at $4.72 per share, or an aggregate of 4,237,288 shares, representing
approximately 15 percent of IMH common stock. In addition, Prime was entitled to
receive as a dividend each quarter, in cash or Impac common stock, the higher of
10.5 percent per annum or the dividend paid to common stockholders calculated on
the shares of common stock into which the preferred stock is convertible. The
Company recorded this investment at cost of $20,157,000.

      Between February 21 and April 30, 2001, the Company sold its investment in
the Preferred Stock of Impac for $20.25 million, resulting in a small gain, plus
accrued interest through the date of sale. The Company obtained a fairness
opinion in connection with the sale.

      The Company owned 90,530 shares of the common shares of The North Face,
Inc. which had been written down to its market value of $368,000 at December 31,
1999. The original cost of these shares, considered to be trading securities,
was $1.1 million. These shares were sold in February 2000 for $590,000,
resulting in a gain of $222,000 in the first quarter of 2000.

(B) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Consolidated Financial Statements include the accounts of LBP, Inc. and its
wholly-owned subsidiaries. All significant intercompany balances and
transactions have been eliminated.

Cash and Equivalents

      The Company considers all highly liquid investments with a maturity of
three months or less at the time of purchase to be cash equivalents.
Investments, which consist of government-backed money market funds are recorded
at cost which approximates market value.

Income Taxes

      The Company and its subsidiaries file separate Federal and state income
tax returns. The Company's subsidiaries generally file separate state income tax
returns on the same basis as the Federal income tax returns.

Use of Estimates

      Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates.


                                      -36-

<PAGE>

                                    LBP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                              (Going Concern Basis)

(C) DISCONTINUED OPERATIONS

White Metal

      In fiscal 1990, the Company discontinued the operations of White Metal
Rolling and Stamping Corp. ("White Metal"), the Company's ladder manufacturing
subsidiary. All manufacturing operations of White Metal ceased as of January 31,
1991 and substantially all of its remaining assets have since been liquidated.

      On September 30, 1994, White Metal filed a voluntary petition seeking
liquidation under the provisions of chapter 7 of the United States Bankruptcy
Code. The liabilities of White Metal were primarily product liability claims,
and related costs, resulting from its discontinued ladder manufacturing
business. While the Company was named as a defendant in certain actions
commenced in connection with these claims, the Company has not been held
responsible, and the Company disclaims any liability for the obligations of
White Metal. There can be no assurance that in the future any claim brought
against White Metal which is also asserted against the Company, will not result
in liability. However, the Company intends to vigorously defend any White Metal
claim asserted against it. On October 30, 2000, the chapter 7 trustee filed a
Distribution report with the Bankruptcy Court certifying distribution with
respect to all claims filed before October 22, 1994 and December 18, 2000, and
on December 18, 2000, the trustee filed a Final Report with the Bankruptcy
Court.

      On May 7, 1996, the Company and its subsidiary, Prime, were served with a
summons and complaint in an adversary proceeding commenced by the chapter 7
trustee of White Metal, alleging claims aggregating $10.6 million (the
"Adversary Proceeding"). The Company's former parent company, and one of its
subsidiaries were also served in the Adversary Proceeding. Pursuant to a Consent
Order Settling and Compromising Claims, dated January 27, 2000 (the
"Settlement"), by and among the trustee, on behalf of White Metal, the Company,
Prime, LBP's former parent and its subsidiary, and Sears Roebuck & Co., Inc.
("Sears"), White Metal's largest creditor, the parties agreed to settle the
Adversary Proceeding in consideration for payment by the defendants to White
Metal's estate in the aggregate amount of $672,000, of which $485,500 was paid
by Prime. The defendants, the trustee and Sears agreed to release each other,
and their respective affiliates. In connection with the Settlement, the
Adversary Proceeding was terminated.

Prime Acquisition Corp.

      On June 18, 1998, effective as of May 31, 1998, Prime sold substantially
all its net assets and business for approximately $44 million in cash. Prime
realized an after-tax gain of $12.6 million from the sale, and after payment of
its outstanding debt, closing costs and income taxes, Prime had cash and
investments of approximately $28 million.

      Prime agreed to indemnify the buyer as follows: (i) for up to $4 million
of losses incurred by the buyer during the two years following the closing
resulting from breaches of representations and warranties made by Prime, (ii)
for up to $4 million of losses incurred by the buyer during the four years
following the closing resulting from certain environmental matters, and (iii)
for losses incurred by the buyer resulting from liabilities of Prime not assumed
by the buyer. In connection with Prime's indemnification obligations, Prime
deposited in escrow an aggregate of $25.4 million for a period of two years
following the closing. During the escrow period, no claims were asserted by the
buyer and, on June 20, 2000 the entire escrow fund was released to Prime.


                                      -37-

<PAGE>

                                    LBP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                              (Going Concern Basis)

      Prime was the sole operating subsidiary of the Company, and the Company
and its subsidiaries do not now conduct any operations. On October 23, 2001,
Prime was merged with and into the Company with the Company as the surviving
corporation. The Company will continue to incur expenses associated with the
management of its assets, its financial reporting obligations, and other
administrative functions.

      The sale did not include the assets and liabilities of White Metal.

(D) INCOME TAXES

      Income tax provision (benefit) in the Consolidated Statements of
Operations is as follows (in thousands):

<TABLE>
<CAPTION>

                                           January 1     Year Ended December 31,
                                           to May 15,    -----------------------
                                             2001          2000           1999
                                             ----          ----           ----
<S>                                        <C>           <C>            <C>
Continuing operations
 Current:
   Federal ..........................      $    144      $    439       $    704
 Deferred:
   Federal ..........................            --           252           (186)
                                           --------      --------       --------
                                           $    144      $    691       $    518
                                           ========      ========       ========

Discontinued operations .............      $     --      $   (177)      $   (107)
                                           ========      ========       ========
</TABLE>

      The provision for income taxes differs from the amount computed by
applying the Federal statutory rate (34%) to income before income taxes for the
following reasons (in thousands):

<TABLE>
<CAPTION>

                                                January 1      Year Ended December 31,
                                                to May 15,     -----------------------
                                                   2001          2000           1999
                                                   ----          ----           ----
<S>                                              <C>           <C>            <C>
Continuing operations:
 Income tax at Federal statutory rate .....      $    144      $    712       $    455
 Non-deductible expenses ..................            --            --             53
                                                 --------      --------       --------
 Other ....................................            --           (21)           (21)
                                                 --------      --------       --------
  Provision for income taxes ..............      $    144      $    691       $    518
                                                 ========      ========       ========
</TABLE>

      The tax effects of temporary differences from continuing operations that
give rise to significant portions of the deferred tax assets at December 31,
1999 are $251,000 relating to allowance for trading securities. There are no
deferred tax assets or liabilities from continuing operations at December 31,
2000 or May 15, 2001.

      At December 31, 2000, the Company's receivable for income taxes was
$80,000 which is included in prepaid expenses and other current assets in the
Consolidated Balance Sheet.


                                      -38-

<PAGE>

                                    LBP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                              (Going Concern Basis)

      As a result of changes in the ownership of the Company's Common Stock, the
Company was a Personal Holding Company for Federal income tax purposes in 2000.
Therefore, in order to avoid double taxation on the Company, on November 16,
2000, the Board of Directors declared a special dividend of $.18 per share,
payable on December 12, 2000, to stockholders of record at the close of business
on November 27, 2000.

(E) STOCKHOLDERS' EQUITY

      At December 31, 2000, there were 1,000,000 shares of Par Value $5 Per
Share Preferred Stock authorized, of which no shares were outstanding.

Employee Stock Option Plan

      The Company had an Employee Stock Option Plan (the "Stock Option Plan")
pursuant to which the Company may have granted officers, directors and key
employees of LBP and Prime options to purchase LBP Common Stock. The Stock
Option Plan provided for the grant of stock options that qualify as incentive
stock options ("ISOs") under Section 422 of the Code and non-qualified stock
options ("NQSOs"). As a result of the plan of liquidation and dissolution
adopted by the stockholders, no additional options will be granted.

      Under the Stock Option Plan, since 1994 LBP's Stock Option Plan Committee
had been authorized to grant options to purchase up to an aggregate of 300,000
shares of LBP's Common Stock. The Committee determined the period for which each
stock option may be exercisable, but in no event could a stock option have been
exercisable more than 10 years from the date of grant thereof. The number of
shares available under the Stock Option Plan, and the exercise price of options
granted under the Stock Option Plan, were subject to adjustments that may be
made by the Committee to reflect stock splits, stock dividends,
recapitalization, mergers, or other major corporate action.

      The exercise price for options granted under the Stock Option Plan was
determined by the Committee in its sole discretion; provided, however, in the
case of an ISO granted to an optionee, the exercise price was required to be at
least equal to 100% of the fair market value of the shares subject to such
option on the date of grant. The exercise price could have been paid in cash or
in shares of LBP Common Stock. Options granted under the Stock Option Plan
became exercisable in annual installments determined by the Committee and
accelerated vesting was subject to performance criteria.


                                      -39-

<PAGE>

                                    LBP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                              (Going Concern Basis)

      Transactions in stock options under this plan are summarized as follows:

<TABLE>
<CAPTION>

                                                        Number         Option Price
                                                      of Shares
-----------------------------------------------------------------------------------
<S>                                                     <C>            <C>
Outstanding at December 31, 1998                         210,883       $1.55-$3.21
    Granted                                                7,500       $3.64
    Exercised                                           (159,000)      $1.66-$2.26
    Canceled                                                (383)      $2.31
                                                       ---------
Outstanding at December 31, 1999                          59,000       $1.55-$3.64
    Granted                                                7,500       $3.48
    Exercised                                            (59,000)      $1.55-$3.64
                                                       ---------
Outstanding at December 31, 2000                           7,500       $3.48
    Exercised                                              7,500       $3.48
                                                       ---------
Outstanding at May 15, 2001                                   --
                                                       =========
Exercisable at May 15, 2001                                   --
                                                       =========
Options available for grant at May 15, 2001                   --
                                                       =========
</TABLE>

      Stock options generally expired in five years from the date they were
granted; options vested over service periods that ranged from zero to five
years.

      The Company adopted the disclosure-only option under SFAS No.123,
Accounting for Stock-Based Compensation as of December 31, 1996. The fair value
of each option grant is estimated on the date of grant using the Black-Scholes
option-pricing model. The weighted average assumptions used for grants included
no dividend yields, risk-free interest rates of 5.0%, and 6.0%; assumed expected
volatilities of 25.9%, and 28.0% and expected lives of 5 and 5 years; for 2000
and 1999 respectively. The number of shares available for granting options were
73,500 shares and, 81,000 shares at December 31, 2000 and, 1999, respectively.

      If compensation cost for the Company's Stock Option Plan had been
recognized in the income statement based upon the fair market method, income
from continuing operations would have been reduced to the pro forma amounts
indicated below:

<TABLE>
<CAPTION>
                                                             Year  Ended December 31,
                                                             ------------------------
                                                               2000           1999
                                                               ----           ----
<S>                                                          <C>            <C>
Income from continuing operations (in thousands):
   As reported                                               $   1,579      $     819
   Pro forma                                                 $   1,591      $     806
Earnings per share from continuing operations (basic)
   As reported                                               $     .32      $     .17
   Pro forma                                                 $     .32      $     .16
Earnings per share from continuing operations (diluted)
   As reported                                               $     .32      $     .17
   Pro forma                                                 $     .32      $     .16
</TABLE>


                                      -40-

<PAGE>

                                    LBP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                              (Going Concern Basis)

Common Stock and Shares Outstanding

      The following reconciliation details the denominator used in the
computation of basic and diluted earnings per share:

<TABLE>
<CAPTION>
                                                                  Year Ended December 31,
                                                    May 15,       -----------------------
                                                     2001           2000           1999
                                                     ----           ----           ----
<S>                                                <C>            <C>            <C>
Weighted average shares outstanding for basic
    earnings per share                             5,002,484      4,946,467      4,921,313
Common stock equivalents pertaining to stock
    options                                               --         10,510         17,992
                                                   ---------      ---------      ---------
Total for diluted shares                           5,002,484      4,956,977      4,939,305
                                                   =========      =========      =========
</TABLE>

Dividends and Distributions

      The Company declared a dividend on its Common Stock of $.18 per share on
November 17, 2000 which was paid on December 12, 2000 to stockholders of record
at the close of business on November 27, 2000.

(F) SHARED SERVICES AGREEMENT

      Pursuant to a Shared Services Agreement with Drew Industries Incorporated,
the Parent of the Company until the Company was spun off in July 1994, the
Company has incurred management fees for certain administrative services of
$44,000 from January 1 to May 15, 2001, $194,000 in 2000 and $144,000 in 1999.


                                      -41-

<PAGE>

                                    LBP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                              (Going Concern Basis)

(G) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

      Interim unaudited financial information follows (in thousands, except per
share amounts):

<TABLE>
<CAPTION>
                                               First         Second        Third         Fourth
                                              Quarter       Quarter       Quarter       Quarter         Year
                                              --------      --------      --------      --------      --------
<S>                                           <C>           <C>           <C>           <C>           <C>
Period Ended May 15, 2001
     Net income                               $    160      $    119                                  $    279
     Income per basic common share            $    .03      $    .02                                  $    .06
     Income per diluted common share          $    .03      $    .02                                  $    .06

Year Ended December 31, 2000
     Income from continuing operations        $    415      $    325      $    346      $    316      $  1,402
     Income from discontinued operations            --            --            --           177           177
     Net income                                    415           325           346           493         1,579
     Income per basic common share:
       Continuing operations                  $    .08      $    .07      $    .07      $    .06      $    .28
       Discontinued operations                      --            --            --           .04           .04
       Net income per share                        .08           .07           .07           .10           .32
     Income per diluted common share:
       Continuing operations                  $    .08      $    .07      $    .07      $    .06      $    .28
       Discontinued operations                                    --            --           .04           .04
       Net income per share                        .08           .07           .07           .10           .32
</TABLE>


                                      -42-

<PAGE>

                                    LBP, INC.
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)

<TABLE>
<CAPTION>
COLUMN A                                          COLUMN B                   COLUMN C                COLUMN D          COLUMN E
--------                                          --------        ---------------------------        --------          --------
                                                                            Additions
                                                                 ----------------------------
                                                 Balance At       Charged To       Charged To                         Balance At
                                                 Beginning        Costs and          Other                               End
                                                 Of Period         Expenses         Accounts        Deductions         Of Period
                -----------------------------------------------------------------------------------------------------------------
<S>                                             <C>               <C>               <C>             <C>                <C>
PERIOD JANUARY 1, 2001 - MAY 15. 2001
  Reserve for liquidation losses -
    disposal of businesses                      $      323                                                             $     323

YEAR ENDED DECEMBER 31, 2000:
  Reserve for liquidation losses -
    disposal of businesses                      $      895                                          $    572(a)        $     323

YEAR ENDED DECEMBER 31, 1999:
  Reserve for liquidation losses -                                $(3,270)(b)
    disposal of businesses                      $    4,009            156                                              $     895
</TABLE>

(a)   Represents settlement with trustee of White Metal Rolling and Stamping
      Corp. and costs thereof.

(b)   Represents reduction in reserve for losses on disposal of White Metal
      Rolling and Stamping Corp., as described in Note C of Notes to
      Consolidated Financial Statements.


                                      -43-

<PAGE>

                                  EXHIBIT INDEX

Exhibit            Description                                   Sequentially
Number                                                           Numbered Page
--------------------------------------------------------------------------------

3.                 Articles of Incorporation and By laws.
3.1                Leslie Building Products, Inc.
                   Certificate of Incorporation, as amended.
3.2                Leslie Building Products, Inc. By laws.

      Exhibits 3.1 and 3.2 are incorporated by reference to the Exhibits bearing
the same numbers indicated on the Registration Statement of Leslie Building
Products, Inc. on Form 10 (Registration No. 0-24094).

10.   Material Contracts.

10.1  Plan and Agreement of Distribution between the Registrant and Drew
      Industries Incorporated, dated July 29, 1994.

10.3  Shared Services Agreement between the Registrant and Drew Industries
      Incorporated, dated July 29, 1994.

10.4  Tax Matters Agreement between the Registrant and Drew Industries
      Incorporated, dated July 29, 1994.

10.5  1994 Stock Option Plan of the Registrant and Subsidiaries, dated July 29,
      1994.

10.42 Asset Purchase Agreement, dated May 26, 1998, by and between Leslie-Locke,
      Inc., now known as Prime Acquisition Corp. ("Seller") and BMCA Key
      Acquisition Corp., now known as LL Building Products, Inc. ("Buyer").

10.43 First Escrow Agreement, dated June 18, 1998, by and among Seller, Buyer
      and The Chase Manhattan Bank ("Escrow Agent").

10.44 Second Escrow Agreement, dated June 18, 1998, by and among Seller, Buyer
      and the Escrow Agent.

10.45 Net Proceeds Escrow Agreement, dated June 18, 1998, by and among Seller,
      Buyer and the Escrow Agent.

10.46 Parent Guaranty Agreement, dated June 18, 1998, by and between Registrant
      and Buyer.

10.47 Stock Purchase Agreement, dated December 22, 1998, relating to purchase of
      800,000 of Series B 10.5% Cumulative Convertible Preferred Stock of Impac
      Mortgage Holdings, Inc. (the "Impac Preferred Stock").

10.48 Articles Supplementary of the Impac Preferred Stock.

10.49 Sale and Transfer Agreement, dated February 20, 2001, between Prime and
      Impac Funding Corp. relating to the sale of 200,000 shares of the Impac
      Preferred Stock.

10.50 Securities Purchase Agreement, dated February 21, 2001, between Prime and
      HBK Master Fund, L.P. relating to the sale of 400,000 shares of the Impac
      Preferred Stock.

10.51 Plan of Complete Liquidation, Dissolution and Termination of Existence.

10.52 Audit Committee Charter.


                                      -44-

<PAGE>

      Exhibits 10.1-10.5 are incorporated by reference to the Exhibits bearing
the same numbers indicated on Post-Effective Amendment No. 1 on Form 10/A, dated
August 30, 1994, to the Registration Statement of Leslie Building Products, Inc.
on Form 10 (Registration No. 0-24094).

      Exhibits 10.42 to 10.46 are incorporated by reference to exhibits bearing
numbers 1 through 5 included in the Company's Current Report on Form 8-K, dated
July 2, 1998.

      Exhibits 10.47 and 10.48 are incorporated by reference to exhibits bearing
numbers 1 and 2 included in the Company's Current Report on Form 8-K, dated
December 28, 1998, as amended.

      Exhibits 1051 and 10.52 are incorporated by reference to Exhibits A and B,
respectively to the Company's Proxy Statement dated April 11, 2001.

      Exhibits 10.51 and 10.52 are incorporated by reference to Exhibits A and
B, respectively, to the Company's Proxy Statement dated April 11, 2001.

21.     Subsidiaries
        Exhibit 21 is filed herewith.
23.     Consent of Independent Auditors.
        Exhibit 23 is filed herewith.
24.     Powers of Attorney.

      Powers of Attorney of persons signing this Report are included as part of
this Report.


                                      -45-