SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarterly Period Ended September 30, 1999
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number 000-04395
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)
Registrant's telephone number, including area code: (409) 345-5666
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant Common Stock, $.10 par value
to Section 12(g) of the Act: (Title of Class)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes [X]
No [ ]
Applicable Only to Corporate Issuers
At November 10, 1999, approximately 8,534,257 shares of common stock, $.10
par value, were outstanding.
Transitional Small Business Disclosure Format (check one); Yes [ ] No [X]
<PAGE>
CONTENTS
--------
PART I - FINANCIAL INFORMATION
- ----------------------------------
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 1999 and June 30, 1999
Consolidated Statements of Operations for the three months
ended September 30, 1999 and 1998
Consolidated Condensed Statements of Cash Flows for the three months
ended September 30, 1999 and 1998
Selected Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II - OTHER INFORMATION
- -------------------------------
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
2
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COBB RESOURCES CORPORATION
TABLE OF CONTENTS
FORM 10-QSB FOR THE QUARTER ENDED SEPTEMBER 30, 1999
PAGE
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets as of
September 30, 1999 and June 30, 1999 . . . . . . F-1
Consolidated Condensed Statements of Operations
for the three months ended September 30, 1999
and 1998 . . . . . . . . . . . . . . . . . . . . F-2
Consolidated Condensed Statements of Cash Flows
for the three months ended September 30, 1999
and 1998 . . . . . . . . . . . . . . . . . . . . F-3
Selected Notes to Consolidated Condensed Financial
Statements . . . . . . . . . . . . . . . . . . . F-4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . F-5
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . F-8
Signature Page . . . . . . . . . . . . . . . . . . F-9
Exhibit 27 - Financial Data Schedule . . . . . . . F-10
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
- ------- ---------------------
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COBB RESOURCES CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
SEPTEMBER 30, JUNE 30,
1999 1999
ASSETS (UNAUDITED) (NOTE)
- --------------------------------------------- --------------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . $ 22,097 $ 70,906
Marketable equity securities, trading . . . 80,639 138,257
Notes receivable. . . . . . . . . . . . . . 60,000 60,000
Accrued interest receivable . . . . . . . . 16,922 14,664
--------------- ------------
Total current assets. . . . . . . . . . . 179,658 283,827
Property and equipment, net . . . . . . . . . 15,062 17,243
Non-producing oil and gas properties. . . . . 133,503 133,503
--------------- ------------
Total assets. . . . . . . . . . . . . . $ 328,223 $ 434,573
=============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ---------------------------------------------
Current liabilities:
Notes payable and current portion of
long-term debt. . . . . . . . . . . . . . $ 6,093 $ 7,195
Accounts payable and accrued liabilities. . 10,000 10,000
--------------- ------------
Total current liabilities . . . . . . . . 16,093 17,195
Long-term debt, net of current portion. . . . - 630
--------------- ------------
Total liabilities . . . . . . . . . . . 16,093 17,825
--------------- ------------
Commitments and contingencies
Stockholders' equity:
Common Stock, par value $.10; authorized
25,000,000 shares; issued and outstanding
8,534,257 shares at September 30, 1999
and June 30, 1999 . . . . . . . . . . . . 853,426 853,426
Additional paid-in capital. . . . . . . . . 6,156,172 6,156,172
Accumulated deficit . . . . . . . . . . . . (6,697,468) (6,592,850)
--------------- ------------
Total stockholders' equity . . . . . . . 312,130 416,748
--------------- ------------
$ 328,223 $ 434,573
=============== ============
<FN>
NOTE: The balance sheet at June 30, 1999 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
</TABLE>
See Selected Notes to Consolidated Condensed Financial Statements.
F-1
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COBB RESOURCES CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
SEPTEMBER 30,
------------------------
1999 1998
----------- -----------
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Revenues:
Mining royalty income, net . . . . . . . $ - $ 16,500
----------- -----------
Costs and expenses:
Property lease expenses. . . . . . . . . - 7,869
Depreciation, depletion and amortization 2,181 2,181
General and administrative . . . . . . . 54,927 60,683
----------- -----------
Total costs and expenses . . . . . . . 57,108 70,733
----------- -----------
Loss from operations . . . . . . . . (57,108) (54,233)
----------- -----------
Other income (expenses):
Interest and other income. . . . . . . . 2,941 13,326
Realized loss on marketable equity
securities . . . . . . . . . . . . . . (12,060) (47,386)
Unrealized loss on marketable equity
securities . . . . . . . . . . . . . . (38,225) (59,884)
Interest expense . . . . . . . . . . . . (166) (668)
----------- -----------
Total other expense. . . . . . . . . . (47,510) (94,612)
----------- -----------
Net loss . . . . . . . . . . . . . . . $ (104,618) $ (148,845)
=========== ===========
Net loss per common share. . . . . . . . . $ (0.01) $ (0.02)
=========== ===========
Weighted average number of common shares
and common share equivalents outstanding 8,534,257 8,534,257
=========== ===========
<FN>
NOTE: The company's financial statements include no additional element of
comprehensive income. Accordingly, comprehensive income and net income are
identical.
</TABLE>
See Selected Notes to Consolidated Condensed Financial Statements.
F-2
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<TABLE>
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COBB RESOURCES CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
SEPTEMBER 30,
----------------------
1999 1998
---------- ----------
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Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . $(104,618) $(148,845)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:. . . . . . . . . . . . . 57,541 164,927
---------- ----------
Net cash provided by (used in)
operating activities . . . . . . . . . . . (47,077) 16,082
---------- ----------
Cash flows from investing activities:
Purchase of property and equipment, net. . . . . - (29,833)
---------- ----------
Net cash used in investing activities. . . . - (29,833)
---------- ----------
Cash flows from financing activities:
Principal payments on notes payable. . . . . . . (1,732) (2,060)
---------- ----------
Net cash used in financing
activities . . . . . . . . . . . . . . . . (1,732) (2,060)
---------- ----------
Net decrease in cash and cash equivalents. . . . . (48,809) (15,811)
Cash and cash equivalents at beginning
of period. . . . . . . . . . . . . . . . . . . . 70,906 179,588
---------- ----------
Cash and cash equivalents at end of
period . . . . . . . . . . . . . . . . . . . . . $ 22,097 $ 163,777
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest expense . . . . . . . . . . $ 166 $ 668
========== ==========
</TABLE>
See Selected Notes to Consolidated Condensed Financial Statements.
F-3
<PAGE>
COBB RESOURCES CORPORATION
SELECTED NOTES TO CONSOLIDATED CONDENSED 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, 1998, 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, 1999.
(2) COMPREHENSIVE INCOME
---------------------
Effective July 1, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 130, Reporting Comprehensive Income, which
requires a Company to display an amount representing comprehensive income as
part of the Company's basic financial statements. Comprehensive income includes
such amounts as unrealized gains or losses on certain investment securities and
certain foreign currency translation adjustments. The Company's financial
statements include none of the additional elements that affect comprehensive
income. Accordingly, comprehensive income and net income are identical
F-4
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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-K for the year
ended June 30, 1998. 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. 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 $70,906 to $22,097 a net decrease
of $48,809 for the three months ended September 30, 1999. Such decrease
resulted from the loss on sale of certain marketable equity securities. For the
three months ended September 30, 1999 the Company used $47,077 of cash in
operating activities compared to cash provided by operating activities of
$16,082 for the prior year three months. On a consolidated basis as of
September 30, 1999 the Company had working capital of $163,565 compared to
working capital of $266,632 as of June 30, 1999.
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 non-producing oil and gas prospects and its royalty
interest in the Copper Flat property.
In April 1999, the operator of the copper flat property filed for
reorganization under Chapter 11 of the Federal Bankruptcy Code. As a result of
this reorganization, the Company fully reserved $60,000 of royalties receivable
recognized by the Company during the year ended June 30, 1999. In addition, the
Company did not recognize any royalty income for the three months ended
September 30, 1999.
F-5
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GOING CONCERN CONSIDERATIONS
------------------------------
As shown in the financial statements during the three months ended
September 30, 1999 and for the year ended June 30, 1999, the Company incurred
losses of $104,618 and $442,044, respectively, and at September 30, 1999 the
Company had an accumulated deficit of $6,697,468 and this fact raises the
question of the Company's ability to continue as a going concern. The Company's
continuation as a going concern is dependent upon its ability to generate
sufficient cash flow to meet its obligations on a timely basis, and ultimately
to attain profitability.
In addition, as described in "Liquidity and Capital Resources", the
Company's primary source of income, copper royalties, has become questionable
because the company paying the royalties, Alta Gold Company, filed for
reorganization under Chapter 11 of the Federal Bankruptcy Code in April 1999.
RESULTS OF OPERATIONS
- -----------------------
COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
- --------------------------------------------------------------------------
The Company reported mining royalty income of $16,500 for the 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
Consolidated Financial Statements and Note 2 in the Company's Annual Report on
Form 10K. Interest and other income decreased to $2,941 for the quarter ended
September 30, 1999 compared to $13,326 for the previous year quarter. The
decrease was primarily the result of lease payments from oil and gas properties
received in the quarter ended September 30, 1998.
Depreciation, depletion and amortization was $2,181 for each of the
quarters ended September 30, 1999 and 1998. General and administrative expenses
decreased to $54,927 for the quarter ended September 30, 1999 compared to
$60,683 for the prior year quarter. The decrease was the result of the
Company paying greater fees for legal and other professional services and higher
officer compensation in the quarter ended September 30, 1998. General and
administrative expenses for the quarters ended September 30, 1999 and 1998
primarily included administrative, legal, consulting and other professional
services, officer compensation and general expenses.
The Company realized a net loss on the sale of marketable equity securities
for the current quarter of $12,060 compared to a net loss of $47,386 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 $38,225 compared to a loss of $59,884 in the prior year
quarter.
Primarily reflecting the factors discussed above, the Company reported net
losses of $104,618 for the quarter ended September 30, 1999 compared to a net
income of $148,845 for the quarter ended September 30, 1998.
F-6
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IMPACT OF YEAR 2000
----------------------
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the Company's
computer programs that have time sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculation causing disruption of business activities.
Based on ongoing assessments, the Company believes that no significant
modifications of existing computer software will be required. The Company
believes that for applications in which computer systems are utilized, such
computer systems will function properly with respect to dates in the year 2000.
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.
F-7
<PAGE>
PART II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -- 27.1 Financial Data Schedule
(b) Reports on Form 8-K -- None
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on November 10,
1999.
COBB RESOURCES CORPORATION
By: /s/ Charles Cobb IV
--------------------------
Charles Cobb, IV
Director, President and
Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.
COBB RESOURCES CORPORATION
November 10, 1999 By: /s/ Charles Cobb IV
--------------------------
Charles Cobb, IV
Director, President and
Chief Accounting Officer
<PAGE>
<TABLE> <S> <C>
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 22097
<SECURITIES> 80639
<RECEIVABLES> 76922
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 179658
<PP&E> 177127
<DEPRECIATION> 28562
<TOTAL-ASSETS> 328223
<CURRENT-LIABILITIES> 16093
<BONDS> 0
0
0
<COMMON> 853426
<OTHER-SE> (541296)
<TOTAL-LIABILITY-AND-EQUITY> 328223
<SALES> 0
<TOTAL-REVENUES> 2941
<CGS> 0
<TOTAL-COSTS> 107393
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 166
<INCOME-PRETAX> (104618)
<INCOME-TAX> 0
<INCOME-CONTINUING> (104618)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> (104618)
<EPS-BASIC> (.01)
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</TABLE>
