SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: June 30, 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: 33 14707 NY
CBQ, INC.
---------
(Exact name of small business issuer specified in its charter)
Colorado 84 1047159
-------- ----------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
4851 Keller Springs Road Ste 228 Dallas TX 75248
------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (972) 75248
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of August 10, 1999, there
were approximately 26,406,532 shares outstanding.
<PAGE>
I. PART I FINANCIAL INFORMATION
Item 1. Financial Statements
CBQ, Inc.
(Formerly FREEDOM FUNDING, INC.)
(a development stage company)
BALANCE SHEETS
June 30, December 31,
1999 1998
---- ----
(Unaudited) (Audited)
Assets:
Current Assets:
Cash $ 18,378 $ 97,907
Accounts Receivable 40,813 --
Other Current Assets 7,258 4,998
--------- ---------
Total Current Assets $ 66,449 $ 102,905
Equipment, at cost (Net at June 30):
Computers and related Equipment 277,016 68,905
Furniture and fixtures 25,761 5,954
Software 185,923 --
--------- ---------
488,700 74,859
Less accumulated depreciation 193,484 38,960
--------- ---------
295,216 35,899
Other assets (net):
bid4it technology 28,125 37,500
Other investments 1,000 --
Orgaization costs 3,965 667
Goodwill 353,303 48,000
Deposits 300 7,259
--------- ---------
Total Assets $ 745,358 $ 232,230
========= =========
Liabilities and Stockholders' Equity:
Current Liabilities:
Accounts payable $ 211,871 $ 105,918
Accrued royalties 50,000 79,382
Accrued expense, other 21,489 31,203
Deferred revenues 52,121 --
Deposit 2,500 2,500
Officer advances -- 2,575
Sales Tax Payable 7,624 --
--------- ---------
Total Current Liabilities $ 345,605 $ 221,578
========= =========
Long-term liabilities
Notes Payable to Bank 10,322 --
Royalties 79,382 --
Notes to shareholders 92,168 --
Total Long-term liabilities 181,872 --
========= =========
Stockholders' Equity:
Preferred stock, 70,000
Shares issued 70 70
Common stock, 20,275,332
Issued at December 31, 26,406,532
issued at June 30 4,153 2,640
Additional paid-in capital 579,201 209,682
Accumulated deficit (365,543) (201,740)
--------- ---------
Total stockholders' equity (deficit) 217,881 10,652
--------- ---------
Total liabilities and stockholders'
equity (deficit) $ 745,358 $ 232,230
========= =========
See accompanying Notes to Financial Statements
<PAGE>
CBQ, Inc.
(Formerly FREEDOM FUNDING, INC.)
(a development stage company)
STATEMENTS OF OPERATIONS
Three Months Ended June 30
1999 1998
---- ----
Revenues $ 179,676 $ --
Costs and expenses
Costs of revenues 34,772 --
Sales and Marketing -- --
General and Administrative 146,783 --
Depreciation and Amoritization 25,355 --
Interest expense -- --
------------ ------------
206,910 --
Net income (loss) (27,234) --
Net income (loss) per common share * *
Weighted average number of common
shares outstanding 24,363,627 2,075,325
*Less than $.01 per share
Six Months Ended June 30
1999 1998
---- ----
Revenues $ 198,528 $ --
Costs and expenses
Costs of revenues 42,004 --
Sales and Marketing 19,070 --
General and Administrative 252,846 --
Depreciation and Amoritization 46,564 --
Interest expense 1,847 --
------------ ------------
363,331 --
Net income (loss) (163,803) --
Net income (loss) per common share * *
Weighted average number of common
shares outstanding 22,832,044 2,075,325
*Less than $.01 per share
See accompanying Notes to Financial Statements
<PAGE>
CBQ, Inc.
(Formerly FREEDOM FUNDING, INC.)
(a development stage company)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended June 30,
1999 1998
---- ----
OPERATING ACTIVITIES:
Net (loss) (163,803) --
Adjustments necessary to reconcile net loss
to net cash used in operating activities:
Depreciation and amortiziation 46,564 --
Increase in accounts receivable (44,789) --
Increase in other current assets (2,260) --
Decrease in deposits receivable 7,259 --
Increase in accounts payable (28,452) --
Increase in royalties payable 50,000 --
Increase in other accured expenses 1,140 --
Increase in deferred revenues 7,434 --
Decrease in officer advances (2,574)
Increase in sales tax payable 4,102 --
Net cash used in operating activities (125,380) --
INVESTING ACTIVITIES:
Net assets acquired in acquisition of
Reliance technologies, Inc. (261,178) --
Net assets acquired in acquisition of
Priority One Electronic Commerce Corp. (104,026) --
Investment in Global Logistics Partners, LLC (1,000) --
--------- --
Net cash used in investing activities (366,204) --
FINANCING ACTIVITIES:
Restricted common stock issued in
acquisition of Reliance Technologies 261,743 --
Restricted common stock issued in
acquisition of Priority One Electronic
Commerce Corp. 104,026 --
Restricted common stock issued in
acquisition of Global Logistics Partners, LLC 1,000 --
Loans from shareholders 49,516 --
Repayment of notes payables (4,230) --
--------- --
Net cash provided by financing activities 412,055 --
--------- --
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (79,529) --
CASH AND CASH EQUIVALENTS
BEGINNING OF PERIOD 97,907 --
--------- --
END OF PERIOD $ 18,378 --
========= ==
<PAGE>
CBQ, Inc.
(Formerly FREEDOM FUNDING, INC.)
(a development stage company)
Notes to Financial Statements
June 30, 1999
(Unaudited)
Basis of Presentation: In the opinion of management of CBQ, Inc. (CBQI or the
Company), the accompanying consolidated financial statements, which have not
been audited by independent certified public accountants, contain all
adjustments necessary to present fairly the Company's consolidated financial
position, results of its operations and its cash flows for the periods reported.
The consolidated financial statements contain the accounts of the Company and
its subsidiaries. The statement of operations reflects the results of Reliance
Technologies, Inc., and its subsidiaries for the period from March 15, 1999
(date of acquisition) to June 30, 1999; and the results of Priority One
Electronic Commerce Corp. (Priority One) for the period from April 9, 1999 (date
of acquisition) to June 30, 1999. All significant intercompany balances and
transactions have been eliminated. The results of operations for the three and
six months ened June 30, 1999 and 1998 are not necessarily indicative of the
results to be expected for a full year.
Note 1. Organization and Nature of Business. CBQ, Inc. (Formerly Freedom Funding
Inc.) A Colorado corporation, was incorporated September 18, 1986, under the
laws of the State of Delaware, and changed its situs to Colorado in 1989. Since
inception, the Company has been in the development stage. The Company's primary
intended activitiy is to engage in all aspects of review and evaluation of
private companies, partnerships or sole proprietorships for the purpose of
completing mergers or acquisitions with the Company, and to engage in mergers
and acquisition with any or all varieties of private entities. On November 18,
1998, the Company acquired a wholly owned subsidiary, CyberQuest, Inc., which
had recently purchased the assets and business of CyberQuest, Ltd. The Company
on March 15, 1999, acquired all of the outstanding shares of Reliance
Technologies, Inc., a privately held Texas corporation (Reliance), in a tax free
exchange. Reliance was acquired solely for the issuance of 1,000,000 restricted
common shares of the Company. The Company on April 9, 1999, acquired all of the
outstanding shares of Priority One Electronic Commerce Corp., a privately held
Pennsylvania corporation (Priority One), in a tax free exchange. Priority One
was acquired solely for the issuance of 900,000 restricted common shares of the
Company. As a result of these acquisitions, the Company is now a ful service
Internet development company, specializing in developing, implementing and
maintaining creative business Web Sites, Commercial Sites and Database
Development.
CyberQuest has also developed a straight forward method that frees small
business from having to integrate and develop significant amounts of software
and manage the internet site.
<PAGE>
The Company's internet sites, goodstuffcheap, bid4it and shop4it.com allow
clients to place their products and services on the internet quicly and
inexpensively and to begin transacting commerce over the net.
Note 2. A summary of significant accounting policies is currently on file with
the U.S. Securities and Exchange Commission in registrant's previous flings
under the Exchange Act.
Note 3. The loss per share was computed by dividing net loss by the weighted
average number of shares of common stock outstanding during the period.
Note 4. Registrant has not declared or paid dividends on its common shares since
inception.
Note 5. The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10 QSB and do not include
all information and footnotes required by generally accepted accounting
prinicples for complete financial statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This report contains certain forward looking statements with respect to the
Company's operations, financial condition and liquidity. These statements
reflect management's best assessment of a number of risks and uncertainties. The
Company's results could differ materially from the results anticipated in these
forward looking statements as a result of a number of factors described in this
report and other risks described in the Company's other filings with the
Securities and Exchange Commission.
Results of Operations: The Company had no operations until the fourth quarter of
1998, when it acquired CyberQuest, as previously reported. Accordingly, there
were no operations in the first or second quarter of 1998 to compare with the
operations of the corresponding quarter or year to date of the current year. On
March 15, 1999, the Company acuired all of the outstanding shares of Reliance in
a tax free exchange for 1,000,000 shares of common stock. On April 9, 1999, the
Company acquired all of the outstanding shares of Priority One in a tax free
exchange for 900,000 common shares of the Company.
Revenues for the second quarter of 1999 amounted to $179,676, which was
attributed to the income realized from consulting fees and charges for providing
internet commerce services by Reliance and Priority One. Costs of revenues of
$34,772 were incurred by Reliance and Priority One in connection with their
operations. General and administrative expenses of $146,783 included salaries,
the cost of operating offices in Texas and Pennsylvania and legal and
professional fees.
<PAGE>
Revenues for the six months ended June 30, 1999, amounted to $198,528, which was
attributed to the income realized from consulting fees and charges for providing
internet commerce services by Reliance and Priority One. Costs of revenues of
$42,004 were incurred by Reliance and Priority One in connection with their
operations as an internet service provider. Sales and marketing expenses of
$19,070 were incurred by the Comany and its subsidiaries in promoting their
various activities in the area of internet auctions and internet services.
General and administrative expenses amounted to $252,846, which included salary
expenses, the expenses of running the Company's offices in Texas and
Pennsylvania and legal and professional fees.
In connection with the acquisition of Priority One, the Company engaged the
president of that entity, Mr. Sidney Lieberman, as a consultant. Mr. Lieberman,
in accordance with the terms of his consulting agreement, was granted an option
to acquire 100,000 common shares of the Company at the market price therefor on
the date of closing, which was then $3.00 per share. The common shares which the
Company optioned to Mr. Lieberman upon exercise of his option will be registered
under the Securities Act of 1933. Mr. Liberman also serves on the board of
directors for the Company.
On May 11, 1999, the Company acquired 19% of the outstanding interest of Global
Logistics Partners, LLC, a privately held Texas limited liability company (GLP)
in a tax fee exchange. This interest was acquired solely for the issuance of
4,233,200 common shares. Concurrently with the closing, Mr. Richard Williamson
assumed the positions of Chairman of the Board of Directors, CEO and President
of the Company, and GLP assumed day to day operational control of the Company.
After the period of this report, Mr. Williamson resigned and new officers were
appointed, as well as new directors to fill vacancies.
Liquidity: The Company has not generated material cash flows from operating or
investing activities since inception. Operating capital was primarily provided
from inception through 1987 from the proceeds of an initial funding prior to a
public offering and then from the public offering itself. These Company was then
extended credit through a former officer and director, all of which was
subsequently converted to common stock. The Company, during the period at issue,
received proceeds from loans from certain shareholders. During the latter part
of the period covered by this report, the Company acquired its interest in GLP
and GLP agreed to provide managerial support to the Company and to use its best
efforts to perpetuate the business of the Company.
<PAGE>
PART II OTHER INFORMATION
Item 1. Litigation: No material legal proceedings to which the Company (or any
officer or director of the Company, or any affiliate or owner of record or
beneficially of more than five percent of the Common Stock, to management's
knowledge) is a party or to which the property of the Company is subject is
pending and no such material proceeding is known by management of the Company to
be contemplated.
Item 2. Change in Securities: This item is not applicable to the Company for the
period covered by this report.
Item 3. Defaults Upon Senior Securities: This item is not applicable to the
Company for the period covered by this report.
Item 4. Submission of Matters to a Vote of Security Holders: There were no
meetings of security holders during the period covered by this report; thus,
this item is not applicable.
Item 5. Other Information: There is no additional information which the Company
is electing to report under this item at this time.
Item 6. Exhibits and Reports on Form S K: No reports on Form 8 K were filed by
the Company during the period covered by this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized this 13th day of August,
1999.
CBQ Inc.
(Registrant)
By: /s/ Charles Stidham
- -----------------------
Charles Stidham, President
and Chief Executive Officer
By: /s/ Greg Allen
- ------------------
Greg Allen, Chief Financial
and Accounting Officer and Treasurer
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 18,378
<SECURITIES> 0
<RECEIVABLES> 40,813
<ALLOWANCES> 0
<INVENTORY> 0
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<PP&E> 488,700
<DEPRECIATION> 193,484
<TOTAL-ASSETS> 745,358
<CURRENT-LIABILITIES> 345,605
<BONDS> 0
0
70
<COMMON> 4,153
<OTHER-SE> 213,658
<TOTAL-LIABILITY-AND-EQUITY> 745,358
<SALES> 198,528
<TOTAL-REVENUES> 198,528
<CGS> 42,004
<TOTAL-COSTS> 42,004
<OTHER-EXPENSES> 321,327
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,847
<INCOME-PRETAX> 0
<INCOME-TAX> (163,803)
<INCOME-CONTINUING> (163,803)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (168,803)
<EPS-BASIC> (.001)
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