<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
-------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ______________________
Commission File Number 0-4395
COBB RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
New Mexico 85-0206160
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
302 East Jackson, West Columbia, Texas 77486
(Address of principal executive offices) (Zip Code)
(409) 345-5666
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 of 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 XXX NO _____
As of May 15, 1998, the Registrant had outstanding 8,534,257 shares of
common stock, par value $.10 per share.
<PAGE> 2
COBB RESOURCES CORPORATION
CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
- Consolidated Interim Statement of Operations 3
- Consolidated Interim Balance Sheet 5
- Consolidated Condensed Interim Statement of
Cash Flows 6
- Selected Notes to Consolidated Interim
Financial Statements 7
Item 2. Management's Discussion and Analysis of 8
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
Signature Page 11
Exhibit 27 - Financial Data Schedule 12
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
COBB RESOURCES CORPORATION
CONSOLIDATED INTERIM STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
1998 1997
----------- -----------
<S> <C> <C>
Revenues:
Mining royalty income, net $ 77,000 $ 77,000
Costs and expenses:
Property lease expenses 3,000 4,000
Depreciation, depletion and
amortization 25,000 16,000
General and administrative 68,000 58,000
----------- -----------
Total costs and expenses 96,000 78,000
----------- -----------
Loss from operations (19,000) (1,000)
----------- -----------
Other income (expense):
Interest and other income 9,000 18,000
Realized gain on marketable equity
securities 122,000 436,000
Unrealized loss on marketable equity
securities (79,000) --
Gain on sale of building -- 27,000
----------- -----------
Total other income (expense) 52,000 481,000
----------- -----------
Net income $ 33,000 $ 480,000
----------- -----------
Net income per common share $ 0.00 $ 0.05
=========== ===========
Weighted average number of common shares
and common share equivalents outstanding 8,534,257 8,534,257
----------- -----------
</TABLE>
See Selected Notes to Consolidated Interim Financial Statements.
3
<PAGE> 4
COBB RESOURCES CORPORATION
CONSOLIDATED INTERIM STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1998 1997
----------- -----------
<S> <C> <C>
Revenues:
Mining royalty income, net $ -- $ --
Costs and expenses:
Property lease expenses -- --
Depreciation, depletion and
amortization 9,000 6,000
General and administrative 49,000 16,000
----------- -----------
Total costs and expenses 58,000 22,000
----------- -----------
Loss from operations (58,000) (22,000)
Other income (expenses):
Interest and other income 5,000 8,000
Realized gain (loss) on marketable
equity securities (34,000) 17,000
Unrealized loss on marketable equity
securities (79,000) --
----------- -----------
Total other income (expense) (108,000) 25,000
----------- -----------
Net income (loss) $ (166,000) $ 3,000
=========== ===========
Net income (loss) per common share $ (0.02) $ 0.00
=========== ===========
Weighted average number of common shares
and common share equivalents outstanding 8,534,257 8,534,257
----------- -----------
</TABLE>
See Selected Notes to Consolidated Interim Financial Statements.
4
<PAGE> 5
COBB RESOURCES CORPORATION
CONSOLIDATED INTERIM BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
1998 1997
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 375,000 $ 447,000
Marketable equity securities, trading 149,000 194,000
Note receivable 12,000 12,000
----------- -----------
Total current assets 536,000 653,000
----------- -----------
Property and equipment, at cost:
Equipment 35,000 34,000
Oil and gas properties 135,000 97,000
----------- -----------
170,000 131,000
Less accumulated depreciation,
depletion and amortization (68,000) (43,000)
----------- -----------
Net property and equipment 102,000 88,000
----------- -----------
Other mineral properties 5,000 5,000
----------- -----------
$ 644,000 $ 746,000
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 27,000 $ 34,000
Accounts payable 4,000 32,000
----------- -----------
Total current liabilities 31,000 66,000
----------- -----------
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $.10; authorized
5,000,000 shares; none issued -- --
Common Stock, par value $.10; authorized 25,000,000 shares; issued and
outstanding 8,534,257 shares at March 31, 1998 and
June 30, 1997 853,000 853,000
Additional paid-in capital 6,156,000 6,156,000
Account receivable from stockholder (331,000) (231,000)
Accumulated deficit (6,059,000) (6,092,000)
Treasury stock, at cost (6,000) (6,000)
----------- -----------
Total stockholders' equity 613,000 680,000
----------- -----------
$ 644,000 $ 746,000
=========== ===========
</TABLE>
See Selected Notes to Consolidated Interim Financial Statements
5
<PAGE> 6
COBB RESOURCES CORPORATION
CONSOLIDATED CONDENSED INTERIM STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
1998 1997
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 33,000 $ 480,000
Adjustments to reconcile net income to
net cash provided by operating activities 42,000 (61,000)
--------- ---------
Net cash provided by operating
activities 75,000 541,000
--------- ---------
Cash flows from investing activities:
Purchase of property and equipment, net (39,000) 48,000
Proceeds from sale of building -- 84,000
Increase in account receivable,
stockholder (101,000) (68,000)
--------- ---------
Net cash provided by (used in)
investing activities (140,000) 64,000
--------- ---------
Cash flows from financing activities:
Principal payments on notes payable (7,000) (100,000)
--------- ---------
Net cash used in financing
activities (7,000) (100,000)
--------- ---------
Net increase (decrease) in cash and
cash equivalents (72,000) 505,000
Cash and cash equivalents at beginning
of period 447,000 49,000
--------- ---------
Cash and cash equivalents at end of
period $ 375,000 $ 554,000
--------- ---------
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Cash paid for interest $ -- $ --
========= =========
Cash paid for income taxes $ -- $ --
========= =========
</TABLE>
See Selected Notes to Consolidated Interim Financial Statements.
6
<PAGE> 7
COBB RESOURCES CORPORATION
SELECTED NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
For a summary of significant accounting principles, see Notes
to Consolidated Financial Statements and Note 1 thereof contained in the
unaudited Annual Report on Form 10-K of Cobb Resources Corporation (the
"Company) for the year ended June 30, 1997, which is incorporated herein by
reference. The Company follows the same accounting policies during interim
periods as it does for annual reporting purposes.
The accompanying consolidated financial statements are
condensed and unaudited and have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission ("SEC"). In the opinion of
management, the unaudited interim financial statements furnished reflect all
adjustments of a normal recurring nature which are necessary to a fair statement
of the results for the interim periods presented. Certain information and note
disclosures normally included in annual financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to SEC rules or regulations; however, the Company believes that
the disclosures made are adequate to make the information presented not
misleading. These financial statements should be read in conjunction with the
unaudited financial statements and the notes thereto included in the Company's
unaudited Form 10-K for the year ended June 30, 1997.
(2) RECLASSIFICATIONS
Accounts receivable from the Company's most significant
stockholder have been reclassified from current assets to stockholders' equity
at March 31, 1998 and June 30, 1997.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with
the Company's unaudited consolidated interim financial statements and related
notes thereto included in this quarterly report and in the unaudited
consolidated Financial Statements and Management's Discussion and Analysis of
Financial Condition and Results of Operations ("MD&A") contained in the
Company's 10-KSB for the year ended June 30, 1997. Certain statements in the
following MD&A are forward looking statements. Words such as "expects",
"anticipates", "estimates" and similar expressions are intended to identify
forward looking statements. Such statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
projected.
OVERVIEW
Cobb Resources Corporations's operations are funded primarily
through internally generated funds from operations and the sale of certain
marketable equity securities. The Company is currently placing renewed emphasis
on its minerals sector and selective oil and gas prospects. Management intends
to continue to hold fixed and administrative expenditures to low levels which
are consistent with the Company's balance sheet financial ratios and anticipated
income.
LIQUIDITY AND CAPITAL RESOURCES
In conjunction with its current business objectives, the
Company has terminated all cost for full-time employees and entered into a
contract for sale of its office building. The sale transaction was completed in
August 1996 with the Company receiving net proceeds of $83,778. The Company
anticipates that for the near term, the Company's operating expenditures will
continue to be strictly limited.
Cash and cash equivalents decreased from $447,000 to $375,000,
a net decrease of $72,000 for the nine months ended March 31, 1998. Such
decrease resulted from the gain on sale of certain marketable equity securities.
For the nine months ended March 31, 1998 the Company used $64,000 of cash for
operating activities compared to cash provided by operating activities of
$473,000 for the prior year nine months. On a consolidated basis as of March 31,
1998 the Company had working capital of $505,000 compared to working capital of
$587,000 as of June 30, 1997.
At present, the Company plans to remain a public entity
operating principally in the minerals and oil and gas business. The Company
holds interests in several small oil and gas prospects and its royalty interest
in the Copper Flat property.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
The Company reported no mining royalty income for the current
and prior year quarter. The royalty income reflects the Company's proportionate
share of the annual minimum royalty payment related to the Copper Flat property.
For additional information concerning the Copper Flat property, see Notes to
8
<PAGE> 9
Consolidated Financial Statements and Note 2 in the Company's Annual Report on
Form 10K. Interest and other income decreased to $5,000 for the quarter ended
March 31, 1998 compared to $8,000 for the previous year quarter.
Depreciation, depletion and amortization was $8,000 and $6,000
for each of the respective quarters ended March 31, 1998 and 1997. General and
administrative expenses increased to $19,000 for the quarter ended March 31,
1998 compared to $16,000 for the prior year quarter. These expenses continue at
relatively low levels primarily as a result of management's efforts to impose
strict limitations on operating expenditures. General and administrative
expenses for the quarters ended March 31, 1998 and 1997 primarily included
limited administrative, legal, consulting and other professional services and
general expenses.
The Company realized a net loss on the sale of marketable
equity securities for the current quarter of $34,000 compared to a net gain of
$17,000 in the prior year quarter. Such current year losses resulted from the
sale of various common stocks.
The Company had net unrealized loss on marketable equity
securities for the current quarter of $79,000 compared to none in the prior year
quarter.
Primarily reflecting the factors discussed above, the Company
reported net losses of $166,000 for the quarter ended March 31, 1998 compared to
a net income of $3,000 for the prior year quarter.
COMPARISON OF THE NINE MONTHS ENDED MARCH 31, 1998 AND 1997
The Company reported mining royalty income for the current
nine months and prior year comparable period of $77,000 and $77,000,
respectively. The royalty income reflects the Company's proportionate share of
the annual minimum royalty payment related to the Copper Flat property. For
additional information concerning the Copper Flat property, see Notes to
Consolidated Financial Statements and Note 2 in the Company's Annual Report on
Form 10K. Interest and other income decreased to $9,000 for the nine months
ended March 31, 1998 compared to $18,000 for the previous nine month period.
There were oil and gas property lease expenses of $3,000
during the current nine months compared to $4,000 for the prior year nine month
period. Depreciation, depletion and amortization was $25,000 and $16,000 for
each of the respective nine months periods ended March 31, 1998 and 1997.
General and administrative expenses increased to $68,000 for the nine months
ended March 31, 1998 compared to $42,000 for the prior year nine month period.
These expenses continue at relatively low levels primarily as a result of
management's efforts to impose strict limitations on operating expenditures.
General and administrative expenses for the nine months ended March 31, 1998 and
1997 primarily included limited administrative, legal, consulting and other
professional services and general expenses.
The Company realized net gains on the sale of marketable
equity securities for the current nine months of $122,000 compared to net gains
of $436,000 in the prior year nine month period. Such prior year gains resulted
from the sale of common stock of Alta Gold Company and the market price
differential paid by Alta Gold Company. During the prior year nine month period,
the Company completed the sale of its office building in Albuquerque, New Mexico
9
<PAGE> 10
which resulted in a net gain on sale of $27,000.
The Company had net unrealized loss on marketable equity
securities for the nine months ended March 31, 1998 of $79,000 with no similar
losses in the prior nine month period.
Primarily reflecting the factors discussed above, the Company
reported net income of $33,000 for the nine months ended March 31, 1998 compared
to a net income of $480,000 for the prior year nine month period.
INFORMATION REGARDING AND FACTORS AFFECTING FORWARD LOOKING
STATEMENTS
The Company is including the following cautionary statement in
this Quarterly Report on Form 10-Q to make applicable and take advantage of the
safe harbor provision of the Private Securities Litigation Reform Act of 1995
for any forward-looking statements made by, or on behalf of the Company.
Forward-looking statements include statements concerning plans, objectives,
goals, strategies, future events or performance and underlying assumptions and
other statements which are other than statements of historical facts. Certain
statements contained herein are forward-looking statements and, accordingly,
involve risks and uncertainties which could cause actual results or outcomes to
differ materially from those expressed in the forward-looking statements. The
Company's expectations, beliefs and projections are expressed in good faith and
are believed by the Company to have a reasonable basis, including without
limitations, management's examination of historical operating trends, data
contained in the Company's records and other data available from third parties,
but there can be no assurance that management's expectation, beliefs or
projections will result, or be achieved, or be accomplished.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COBB RESOURCES CORPORATION
Date: May 15, 1998 By: /S/ CHARLES COBB, IV
------------ --------------------
Charles Cobb, IV
President
Principal Financial Officer
11
<PAGE> 12
EXHIBIT INDEX
27 -- Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1997
<CASH> 375,000
<SECURITIES> 150,000
<RECEIVABLES> 12,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 536,000
<PP&E> 170,000
<DEPRECIATION> 68,000
<TOTAL-ASSETS> 644,000
<CURRENT-LIABILITIES> 31,000
<BONDS> 0
0
0
<COMMON> 853,000
<OTHER-SE> (240,000)
<TOTAL-LIABILITY-AND-EQUITY> 644,000
<SALES> 0
<TOTAL-REVENUES> 208,000
<CGS> 96,000
<TOTAL-COSTS> 79,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 33,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 33,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,000
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
