UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
AMEMDMENT NO. 1
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
-------------------
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.)
1041 North Formosa Avenue
Mary Pickford Building, Suite 101
Los Angeles, CA 90048
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(323) 850-2800
- --------------------------------------------------------------------------------
(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 February 4, 2000, the Registrant had outstanding 8,534,257 shares of
common stock, par value $.10 per share.
<PAGE>
COBB RESOURCES CORPORATION
TABLE OF CONTENTS
FORM 10-QSB FOR THE QUARTER ENDED DECEMBER 31, 1999
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets as of
December 31, 1999 and June 30, 1999 F-1
Consolidated Condensed Statements of Operations
for the three months ended December 31, 1999 and 1998 F-2
Consolidated Statements of Operations for the
six months ended December 31, 1999 and 1998 F-3
Consolidated Condensed Statements of Cash Flows
for the three months ended December 31, 1999 and 1998 F-4
Selected Notes to Consolidated Condensed Financial
Statements F-5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations F-6
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K F-9
Signature Page F-10
Exhibit 27 - Financial Data Schedule F-11
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
- ------- ---------------------
<TABLE>
<CAPTION>
COBB RESOURCES CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
DECEMBER 30, JUNE 30,
1999 1999
ASSETS (UNAUDITED) (NOTE)
------ ------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 15,782 $ 70,906
Marketable equity securities, trading 126,878 138,257
Notes receivable 60,000 60,000
Accrued interest receivable 19,249 14,664
------------ ------------
Total current assets 221,909 283,827
Property and equipment, net 6,249 17,243
Non-producing oil and gas properties 133,503 133,503
------------ ------------
Total assets $ 361,661 $ 434,573
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Notes payable and current portion of
long-term debt $ 4,321 $ 7,195
Accounts payable and accrued liabilities 10,000 10,000
------------ ------------
Total current liabilities 14,321 17,195
Long-term debt, net of current portion - 630
------------ ------------
Total liabilities 14,321 17,825
------------ ------------
Commitments and contingencies
Stockholders' equity:
Common Stock, par value $.10; 25,000,000
shares authorized; 8,534,257 shares issued
at December 31, 1999 and June 30, 1999;
8,533,907 and 8,534,257 shares outstanding
at December 31, 1999 and June 30, 1999,
respectively 853,426 853,426
Treasury stock, 350 shares at cost (2,450) -
Additional paid-in capital 6,156,172 6,156,172
Accumulated deficit (6,659,808) (6,592,850)
------------ ------------
Total stockholders' equity 347,340 416,748
------------ ------------
$ 361,661 $434,573
============ ============
</TABLE>
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.
See Selected Notes to Consolidated Condensed Financial Statements.
F-1
<PAGE>
<TABLE>
<CAPTION>
COBB RESOURCES CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
DECEMBER 31,
------------------------
1999 1998
----------- -----------
<S> <C> <C>
Revenues:
Mining royalty income, net $ - $ 16,500
----------- -----------
Costs and expenses:
Property lease expenses - -
Depreciation, depletion and amortization 1,766 2,181
General and administrative 9,028 62,288
----------- -----------
Total costs and expenses 10,794 64,469
----------- -----------
Loss from operations (10,794) (47,969)
----------- -----------
Other income (expenses):
Other income 2,408 27,845
Realized (loss) gain on marketable equity
securities (2,865) 10,370
Unrealized gain on marketable equity
securities 43,084 116,656
Realized gain on sale of equipment 5,953 -
Interest expense (126) (290)
----------- -----------
Total other income 48,454 154,581
----------- -----------
Net income $ 37,660 $ 106,612
=========== ===========
Net income per common share $ 0.00 $ 0.01
=========== ===========
Weighted average number of common shares
and common share equivalents outstanding 8,534,257 8,534,257
=========== ===========
</TABLE>
NOTE: The company's financial statements include no additional element of
comprehensive income. Accordingly, comprehensive income and net income are
identical.
See Selected Notes to Consolidated Condensed Financial Statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
COBB RESOURCES CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
SIX MONTHS ENDED
DECEMBER 31,
------------------------
1999 1998
----------- -----------
<S> <C> <C>
Revenues:
Mining royalty income, net $ - $ 33,000
----------- -----------
Costs and expenses:
Property lease expenses - 6,016
Depreciation, depletion and amortization 3,947 4,362
General and administrative 63,955 124,824
----------- -----------
Total costs and expenses 67,902 135,202
----------- -----------
Loss from operations (67,902) (102,202)
----------- -----------
Other income (expenses):
Other income 5,349 41,171
Realized loss on marketable equity
securities (14,925) (37,016)
Unrealized gain on marketable equity
securities 4,859 56,772
Realized gain on sale of equipment 5,953 -
Interest expense (292) (958)
----------- -----------
Total other income 944 59,969
----------- -----------
Net loss $ (66,958) $ (42,233)
=========== ===========
Net loss per common share $ (0.01) $ (0.00)
=========== ===========
Weighted average number of common shares
and common share equivalents outstanding 8,534,257 8,534,257
=========== ===========
</TABLE>
NOTE: The company's financial statements include no additional elements of
comprehensive income. Accordingly, comprehensive income and net income are
identical.
See Selected Notes to Consolidated Condensed Financial Statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
COBB RESOURCES CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
DECEMBER 31,
--------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(66,958) $(42,233)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities: 4,788 56,551
--------- ---------
Net cash provided by (used in)
operating activities (62,170) 14,318
--------- ---------
Cash flows from investing activities:
Proceeds from sale of equipment 13,000 -
Purchase of property and equipment, net - (34,579)
--------- ---------
Net cash provided by (used in)
investing activities 13,000 (34,579)
--------- ---------
Cash flows from financing activities:
Purchase of treasury stock (2,450) -
Principal payments on notes payable (3,504) (3,677)
--------- ---------
Net cash used in financing
activities (5,954) (3,677)
--------- ---------
Net decrease in cash and cash equivalents (55,124) (23,938)
Cash and cash equivalents at beginning
of period 70,906 179,588
--------- ---------
Cash and cash equivalents at end of
period $ 15,782 $155,650
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest expense $ 292 $ 958
========= =========
</TABLE>
See Selected Notes to Consolidated Condensed Financial Statements.
F-4
<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
(3) SUBSEQUENT EVENT
-----------------
Effective February 3, 2000, three individual and certain entities under
their control (collectively referred to as the "Investors") acquired 88% of the
Company's common stock through a series of transactions as follows:
a) The Investors each acquired 666,666 shares (approximately 7.8%
individually and 23.4% in the aggregate of the Company's common stock from
the Company's most significant stockholder (the "Stockholder").
F-5
<PAGE>
b) The Company sold substantially all of its existing assets, including
mineral interests, cash, equity securities and other assets, to the
Stockholder in exchange for 2,000,000 shares of the Company's common
stock and the Stockholder's assumption of all known and unknown
liabilities of the Company, fixed and contingent, that had accrued up to
February 3, 2000. The aggregate purchase price paid by the Stockholder in
connection with this transaction was approximately $180,000. This
transaction resulted in the Investors each owning a 10.2% interest in the
Company (30.6% in the aggregate).
c) The Company enacted a ten for one reverse stock split that was
effective for stockholders of record on February 17, 2000.
d) The Company acquired certain assets, tangible property and all
other intangible property related to a number of entertainment projects
in exchange for 12,707,000 post split shares, representing an aggregate
purchase price of approximately $11,500,000. The entertainment projects
were acquired from the Investors and/or entities owned by the Investors
for 12,207,000 shares and the Company paid certain fees of the
transaction by issuing 500,000 post split shares to an attorney.
F-6
<PAGE>
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 transitioning to the entertainment
business. 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.
RESTRUCTURING TRANSACTION
--------------------------
Effective February 3, 2000, three individual and certain entities under
their control (collectively referred to as the "Investors") acquired 88% of the
Company's common stock through a series of transactions as follows:
a) The Investors each acquired 666,666 shares (approximately 7.8%
individually and 23.4% in the aggregate of the Company's common stock from
the Company's most significant stockholder (the "Stockholder").
b) The Company sold substantially all of its existing assets, including
mineral interests, cash, equity securities and other assets, to the
Stockholder in exchange for 2,000,000 shares of the Company's common
stock and the Stockholder's assumption of all known and unknown
liabilities of the Company, fixed and contingent, that had accrued up to
February 3, 2000. The aggregate purchase price paid by the Stockholder in
Connection with this transaction was approximately $180,000. This
transaction resulted in the Investors each owning a 10.2% interest in the
Company (30.6% in the aggregate).
c) The Company enacted a ten for one reverse stock split that was
effective for stockholders of record on February 17, 2000. Effective the
same day, the OTCBB trading symbol was changed to FEBF.
d) The Company acquired certain assets, tangible property and all other
intangible property related to a number of entertainment projects in
exchange for 12,707,000 post split shares, representing an aggregate
purchase price of approximately $11,500,000. The entertainment projects
were acquired from the Investors and/or entities owned by the Investors
for 12,207,000 shares and the Company paid certain fees of the transaction
by issuing 500,000 post split shares to an attorney.
F-7
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
----------------------------------
In conjunction with business objectives prior to the "Restructuring
Transaction", the Company had terminated all cost for full-time employees and
operating expenditures were strictly limited.
Cash and cash equivalents decreased from $70,906 to $15,782, a net decrease
of $55,124 for the six months ended December 31, 1999. Such decrease resulted
from the loss on sale of certain marketable equity securities. For the six
months ended December 31, 1999 the Company used $62,170 of cash in operating
activities compared to cash provided by operating activities of $14,318 for the
prior year six months. On a consolidated basis as of December 31, 1999 the
Company had working capital of $207,588 compared to working capital of $266,632
as of June 30, 1999.
The Company plans to remain a public entity operating principally in the
entertainment business based on the "Restructuring Transaction" described above.
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 six months ended December
31, 1999.
GOING CONCERN CONSIDERATIONS
------------------------------
As shown in the financial statements during the six months ended December
31, 1999 and for the year ended June 30, 1999, the Company incurred losses of
$66,958 and $442,044, respectively, and at December 31, 1999 the Company had an
accumulated deficit of $6,659,808 and this fact raises the question of the
Company's ability to continue as a going concern. Company management believes
that the "Restructuring Transaction" described above will improve the Company's
financial position.
RESULTS OF OPERATIONS
- -----------------------
COMPARISON OF THE SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998
- -----------------------------------------------------------------------
The Company reported mining royalty income of $33,000 for the six months
ended December 31, 1998. 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. Other income decreased to $5,349 for the six months
ended December 31, 1999 compared to $41,171 for the six months ended December
31, 1998. The decrease was primarily the result of lease payments from oil and
gas properties received in the six months ended December 31, 1998.
F-8
<PAGE>
Depreciation, depletion and amortization was $3,947 for the six months
ended December 31, 1999 compared to $4,362 for the six months ended December 31,
1998. General and administrative expenses decreased to $63,955 for the six
months ended December 31, 1999 compared to $124,824 for the prior six months.
The decrease was the result of the Company paying lower fees for legal and other
professional services and lower officer compensation in the six months ended
December 31, 1999. General and administrative expenses for the six months ended
December 31, 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 six months ended December 31, 1999 of $14,925 compared to a net loss of
$37,016 in the six months ended December 31, 1998. Such current year losses
resulted from the sale of various common stocks.
The Company had net unrealized gain on marketable equity securities for the
six months ended December 31, 1999 of $4,859 compared to a gain of $56,772 in
the six months ended December 31, 1998.
Primarily reflecting the factors discussed above, the Company reported net
losses of $66,958 for the six months ended December 31, 1999 compared to a net
losses of $42,233 for the six months ended December 31, 1998.
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-9
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
-------------------------------------
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
Report dated February 11, 2000
F-10
<PAGE>
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: February 4, 2000 By: /S/ George Furla
---------------- -----------------------------
George Furla
President
Principal Financial Officer
F-11
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 15782
<SECURITIES> 126878
<RECEIVABLES> 79249
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 221909
<PP&E> 6249
<DEPRECIATION> 0
<TOTAL-ASSETS> 361661
<CURRENT-LIABILITIES> 14321
<BONDS> 0
0
0
<COMMON> 853426
<OTHER-SE> (506086)
<TOTAL-LIABILITY-AND-EQUITY> 347340
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 10794
<OTHER-EXPENSES> (48454)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 37660
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37660
<EPS-BASIC> 0
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</TABLE>
