pebblebeach10qsb.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-QSB/A

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2006

[ ] TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT

For the transition period from ________to ____________

Commission file number __________________________


Pebble Beach Enterprises, INC.
a Nevada corporation

1200 Truxtun Avenue #130
Bakersfield, CA 93301
(661) 327-0067


Common Stock, $0.001 par value to be registered under Section 12(g) of The Securities Exchange Act of 1934

I.R.S. Employer I.D. # 87-0733770

Check whether the issuer (1) 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 [ ]

Number of shares of common stock of Pebble Beach Enterprises Inc. outstanding as of September 30, 2006: 40,000,000
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [x ] No [ ]

Transitional Small Business Disclosure Format (Check One): Yes [ ] No [X]

 

 
PEBBLE BEACH ENTERPRISES, INC.
BALANCE SHEETS
September 30,2006 and December 31,2005
(unaudited)
 

               
 
    
9/30/06
    
12/31/05
  
ASSETS
          
               
Cash
 
$
3,281
  
$
19,507
  
Accounts receivable
    8,106        
Prepaid state taxes
    
200
     -  
Inventory - mineral rights held for sale 
   
3,013
    
-
  
 
              
    Total current assets 
  
$
14,600
  
$
19,507
  
 
              
               
LIABILITIES & STOCKHOLDERS’ EQUITY
              
   
              
Income tax payable
  $ -  
$
1,990
  
 
              
    Total current liabilities 
     -    
1,990
  
  
              
Commitments 
    
-
    
-
  
               
               
STOCKHOLDERS’ EQUITY
             
Common stock, $.001 par value, 75,000,000 shares
             
  authorized, 40,000,000 shares issued and outstanding    
    
40,000
     40,000  
Additional paid-in capital    
    
(21,117
)
  
(24,609
)
Retained earnings (deficit)  
    
(4,283
)
  
2,126
  
 
              
    TOTAL STOCKHOLDERS’ EQUITY
   
14,600
    
17,517
  
 
              
    TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY
    $
14,600
  
$
19,507
  
 
              
 
 
 
 
 


PEBBLE BEACH ENTERPRISES, INC.
STATEMENTS OF OPERATIONS
Three and Nine Months Ended September 30, 2006 and 2005
(unaudited)


 
 
    
Three Months 
    
Nine Months
  
     
2005
    
2006
    
2005
    
2006
  
 
    
 
    
 
    
--------
        
Sales
  
$
11,035
  
$
-
  
$
18,325
  
$
611,581
  
Cost of sales
    
-
    
-
    
-
    
512,623
  
Gross profit
    
11,035
    
-
    
18,325
    
98,958
  
                           
General &
                         
Administrative expenses
    
5,209
    
52,816
    
23,798
    
62,360
  
Interest expense
    
-
    
-
    
-
    
6,242
  
Net income(loss) before
                          
income tax expense
    
5,826
    
(52,816
)
  
(5,473
)
  
30,356
  
                           
Income tax
                        
recovery(expense)
    
-
    
7,499
    
(936
)
  
(7,500
)
Net income (loss)
 
$
5,826
  
$
(45,317
)
$
(6,409
)
$
22,856
  
                           
Basic and diluted net
                          
income(loss)per share
  
$
0.00
  
$
(0.00
)
$
(0.00
)
$
0.00
  
                           
Weighted average
                          
shares outstanding
    
40,000,000
    
40,000,000
    
40,000,000
     40,000,000   
                           

 

 


PEBBLE BEACH ENTERPRISES, INC.
STATEMENTS OF CASH FLOWS
Six Months Ended September 30, 2006 and September 30, 2005
(unaudited)
 
 
               
   
    
2006
    2005  
 
    
 
        
CASH FLOWS FROM OPERATING ACTIVITIES
              
Net income (loss)
 
$
(6,409
)
$
22,856
  
Adjustments to reconcile net income(loss)
              
    to cash provided by (used in) operating
              
    activities:
              
Imputed rent
    
3,492
    
3,496
  
Changes in:
              
Accounts receivable
    
(8,106
)
    
        Accrued expenses
    
-
    
6,242
 
Mineral right held for sale
    
(3,013
)
  
-
  
Land held for sale
    
-
    
290,953
  
Prepaid state taxes
   
(200
)
  
-
  
Income taxes payable
    
(1,990
)
  
7,500
  
NET CASH PROVIDED BY (USED IN)
          
OPERATING ACTIVITIES
    
(16,226
)
  
331,047
  
 
    
 
        
NET FLOWS FROM FINANCING ACTIVITIES
              
Proceeds from loan from related party
    
2,000
    
-
  
Payments on loan from related party
    
(2,000
)
  
(310,000
)
     
          
    
        
 
NET CASH USED IN FINANCING ACTIVITIES
    
-
    
(310,000
)
 
    
 
        
NET CHANGE IN CASH
    
(16,226
)
  
21,047
  
    Cash balance, beginning of the period
    
19,507
    
19,037
  
               
    Cash balance, ending of the period
  
$
3,281
  
$
40,084
  
     
              
Supplemental disclosures:
              
Taxes paid
  
$
-
  
$
800
  
Interest paid
            
NONCASH FINANCING ACTIVITIES:
              
Forgiveness of interest payable to
            
Related party
    
-
   
8,790
  
 


PEBBLE BEACH ENTERPRISES, INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited interim financial statements of Pebble Beach enterprises, Inc., have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in PBE's Form 10-SB12G/A. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosure
contained in the audited financial statements for fiscal year 2005, as reported in the Form 10-SB12G/A, have been omitted.


NOTE 2 - REVENUE RECOGNITION

PBE recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered, the sales price is fixed or determinable, and collectibility is reasonably assured. This typically occurs when the services have been performed.

In 2006, PBE developed a new revenue stream. PBE is contacted by land developers to assist in the acquisition of mineral rights or surface waivers. PBE performs research for the developers and charges a fee for its services. The transactions related to this revenue stream are recorded under the net method, primarily due to PBE not having risk of loss.

2. Management Discussion and Analysis

Liquidity and Cash Requirements. As of September 30, 2006 our cash on hand was $3,281. We anticipate our administrative and other non-real estate investment operational expenses over the next twelve months to be approximately $25,000, including approximately $10,000 in accounting and audit expenses. We arrive at a projected cash requirement of $25,000 over the next year based on the assumptions that a) we will continue to receive our office space rent-free; b) our expenses will be limited to administrative cost; and c) that our auditors’ costs will be relatively stable.

In terms of our real estate investment operational expenses, we rely principally on Adavco, Inc., a corporation controlled by our sole Director Annette Davis, to loan us money in order to purchase or upgrade real estate. Adavco is a real estate development company which has constructed apartment buildings and custom homes, among other development projects, since its founding in 1982. It had 2005 sales of $150,000,000. We would be unable to continue operations without loans from Adavco, at least for the next 5-10 transactions. Adavco receives no compensation from us for their loans, outside of 5% annual interest on all monies loaned. We have a verbal agreement with Adavco to continue to receive loans from them as necessary, which we believe to be reliable because the management of Adavco consists of our sole Director and her husband.

Industry Trends. As population in our geographic area of concentration grows, and speculation increases, real estate prices have been increasing rapidly over the past seven years. There is concern among some that prices will begin to rise far less rapidly or even decrease over the next several years, as the high prices cause excessive building of residential and other structures. We do believe prices will rise less rapidly in the future, but do not believe prices will decrease in our area of California. In any event, if prices did decrease, we would enter into more joint venture profit sharing agreements with owners of undeveloped land, which would expose us to less risk since we would not own the land.

How We Make Our Money and Results of Operations. The business model for our first area of operation involves buying a developed piece of land, with or without a structure already built on it, and selling it at a premium.

To date, we have completed three such transactions. The first two transactions were two finished lots of land of approximately ½ acre each, located in the Western Rosedale neighborhood of Bakersfield, California, with no structures built on them, which we purchased together on August 30, 2004 for $290,953, each from Calle Cerca Investments. Our market research indicated that each of these lots were likely $10,000 - $15,000 undervalued due to the scarcity of such lots in this area of the city of Bakersfield, California. We contacted a local broker, Steve Lantz, who had many clients in need of finished, vacant lots, and on January 16, 2005, we sold one of the two lots for $159,000 to a local couple, and we sold the other lot for $165,000 on February 17, 2005 to Gracie Land Company. Total gross profit was $30,500 after paying a commission of $3,500 to the broker Steve Lantz.

The third transaction, began on February 24, 2005, when we purchased a house on a finished lot of approximately 8,000 square feet for $200,655. We sold this house through a real estate broker on March 31, 2005 for $287,500, for a total gross profit of $86,845.
 
We do not compensate our officers or directors, nor do we pay out commissions to our officers and directors on our transactions. However, each of our three officers, when acting as consultants on any of our transactions, will invoice us for their time and services and we do pay those consulting invoices. The three corporations are: JD Consulting, controlled by our Secretary Jennifer Davis, which charges $250 per hour; Select Research, controlled by our President Aaron J. Hashim, which charges $200 per hour; and HML & Company, controlled by Lesa Hashim, our Vice-President and Treasurer, which charges $200 per hour. For example, when escrow closed on the sale of the house on March 31, 2005, we paid $45,000 in consultation fees to three corporations controlled by members of our management, leaving approximately $40,000 of the original $86,845 profit in our account. However, we were not invoiced, and did not pay, consultation fees on the sale of either of the two finished lots, which were our other two transactions we have completed to date.

Currently we are not purchasing any property due to the extreme market conditions that are occurring at this time. We feel it is much wiser to put this portion of our business plan on hold until prices come down in the overall real estate market. If and when the market does recover, we will initially focus on properties where the owner is in financial trouble and needs to sell the property at a discount. We feel this is the only way to approach the Real Estate Market with current conditions persisting the way they are.

The business model for our second area of operation, purchasing undeveloped land, brings in revenue in a similar fashion. After we complete due diligence, then purchase the land, and upgrade it, we will re-sell it to a developer, retaining the profit on the sale.

We have not conducted any transactions under this second area of operations to date.

The business model for our third area of operation, consulting work and joint ventures, involves two different revenue streams, one for consulting and one for joint ventures. When we consult for third parties who have already purchased the land, we charge $90 - $300 per hour to help facilitate the various issues needed for due diligence and upgrading the land, including securing mineral rights, surface rights, identifying zoning issues, helping to supply a study map and a tract map, contacting construction vendors to improve the site through grading, installing sewer hookups, etc. We were recently contacted by Lenox Homes and Jack Turman who owns a development company to do some mineral rights research for them. Initially we do not expect this to be a large revenue stream but we are hopeful that over time we can establish some lasting relationships.

The business model for our fourth area of operation is our newest. It involves record retrieval and recordation of documents at the Hall of Records and Superior Court for Kern County. It’s a high margin business that, once developed, can be very lucrative. We are currently in talks to become the sole Kern County representative for several potential customers. The record retrieval market potential is huge, as there are numerous companies across the United States that promote themselves to attorneys and other professionals as able to retrieve records in any county in the United States. By having our offices centrally located (adjacent to the various court houses and County Hall of Records), we have a significantly larger profit margin on work provided because there is virtually no traveling time or expense. By contrast most of our competitors are small operations that work out of their house, thus incurring travel expenses as well as time constraints.

 


Activity during the 3rd quarter:

We were contacted by Jack Turman, a large developer here in Bakersfield, California to help him in his negotiations with EOG Resources and Occidental Petroleum. The subject property is approximately 40 acres, of which EOG Resources owns the mineral rights to and is the lessor on a lease with Occidental Petroleum. Mr. Turman contracted with us to help him negotiate a deal between himself and the oil companies. We contacted both companies on behalf of Mr. Turman and negotiated a drill island along with a fee of $1500.00 per acre for the rights to develop the surface on 29 of the 40 acres. Mr. Turman was pleased with the transaction; we anticipate handling more of Mr. Turman’s oil issues on future projects.

Also, we recently completed some oil consulting work for Lenox Homes. Mr. Turman has a relationship with Lenox Homes and referred us to them so that we could help Lenox Homes with their oil issues on a 10-acre piece of property. We were required to locate the 7 mineral owners and obtain Surface Waiver deeds from each of them. We were able to locate all 7 and get the deeds signed. Lenox Homes was particularly impressed that we were even able to locate one of the individuals living in Germany. Recently, we also agreed to process an annexation into the City of Bakersfield for Lenox Homes on some of their property. We have already started this process for our new client and feel that it will be wrapped up some time in 2007. We are encouraged by the new relationship that has developed with Lenox Homes. We feel that this relationship is a great growth area for our business in the future, and we are excited by how things are progressing.

We are also pleased to announce that we have received our first orders from 2 new clients in the record retrieval business. Pacific Corporate & Title and Unisearch Corporation have both sent us orders during the month of September. Though initially we do not see this operation as a big revenue producer for Pebble Beach Enterprises, we are hopeful that we will receive more orders from these established companies in the future. We also expect that establishing good relationships with each of these companies will lead to referrals.

For the 3rd quarter we had a gross income of $11,035.00 and a net income of $5,825.00. The revenue is primarily from the oil and gas consulting services that were provided to Lenox Homes and Jack Turman. We have had great success with our new customers and have already received requests for our consulting services on other projects of theirs. The record retrieval division received its first 2 orders at the end of this quarter. For each order we charge a $15.00 fee. Since we have no overhead for supplying this service it all transfers directly to the bottom line. We are optimistic that the customers and volume of orders will increase. It is our goal that by the end of 2007 we will process 20 of these requests per day. We believe that we can achieve this through word of mouth as well as advertising in the BRB Publication book. This book is made up of vendors in the various Counties throughout the United States. The book is purchased by companies that are in the record retrieval business and in need of qualified vendors in the counties that they serve. The book is the single best resource for getting your name out to the industry. If by the end of 2007 we can process 20 orders per day at $15.00 each, that would be a gross profit of $300.00 per day or $6,000.00 per month.

We have now had activity in 2 of our 4 above mentioned revenue streams, in the latest quarter: record retrieval, for which we’ve done two projects this quarter and has produced $30.00 in net income; 2) mineral rights retrieval and consulting services for which we’ve done 2 major projects this quarter resulting in gross income of $11,035.00 and net income of $5,825.00.


Marketing. With respect to finding property to purchase, we rely on direct marketing, through letters and phone calls to property owners directly, inquiring if they are interested in selling their land. Members of our management team have even been known to find land that is prime for development, locate the land owner, and knock on his/her door.

Our third area of operation, as it relates to consulting, has not been marketed yet, but we intend to start marketing within the next 12 months, as our time and cash flow allow. Our marketing activities will include but not be limited to attending farmers’ conferences and builder conferences to solicit potential clients.

Advertising for all three areas of operation would involve research into the mailing addresses of potential clients, printing costs for promotional mailers, and postage costs. Costs for these activities are estimated $6,000-10,000 per mailing, and therefore an annual budget of $36,000-60,000. However, there are no advertising campaigns at this time. Our current strategy of slowly and methodically doing one transaction after another is working, and building our “self-sufficiency”, which we define as no longer needing Adavco’s help in purchasing property. We will conduct an advertising campaign when we
a) become self-sufficient, b) become profitable, c) our current strategy fails us, requiring emergency advertising in order to drum up new business, or d) reach a point in our operations where we are able to handle more transactions at the same time.

Potential Future Business Models. We may consider expanding operations in the future, as time and money allow, by targeting large builders and offering to develop and acquire land for them, and/or targeting large farmers that have excess land, which they want to develop. We anticipate this future model moving forward in the fall of 2007, contingent on our current success. 
 
 
 
 
Description of Property.

Our principal office is a dedicated office building at 1200 Truxtun Ave., Suite 130, in Bakersfield, California.

We do not own real estate at the current time.

Plant and Significant Equipment. We do not expect any purchase of any plant or significant equipment assets in the next 12 months.

Number of Employees. Our current number of employees is zero. We do not expect a significant change in the number of employees in the next 12 months.

Security Ownership of Certain Beneficial Owners and Management.

We have only one class of securities - our Common Stock.

The following represents the security ownership of the only person who owns more than five percent of our outstanding Common Stock:
 
Annette Davis  
38,054,331 shares 
95.1% of common stock
 
Financing Plans. We will continue to rely on loans from Adavco, Inc. to complete brokerage transactions. At this time, there is nothing signed by Adavco Inc. to guarantee that such funds will be made available.
 
OFF BALANCE SHEET ARRANGEMENTS
 
We have no off balance sheet arrangements.
 
Item 3. Controls and Procedures.
 
It is Management’s responsibility for establishing and maintaining adequate internal control over financial reporting for Pebble Beach Enterprises. It is the President’s ultimate responsibility to ensure the Company maintains disclosure controls and procedures designed to provide reasonable assurance that material information, both financial and non-financial, and other information required under the securities laws to be disclosed is identified and communicated to senior management on a timely basis. The Company’s disclosure controls and procedures include mandatory communication of material events, management review of monthly, quarterly and annual results and an established system of internal controls.
 
As of September 30 2006, management of the Company, including the President, conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures with respect to the information generated for use in this Quarterly Report. Based upon and as of the date of that evaluation, the President and Treasurer have concluded the Company’s disclosure controls were effective to provide reasonable assurance that information required to be disclosed in the reports that the Company files or submits under the relevant securities laws is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. There have been no changes in the Company’s internal control over financial reporting during the period ended March 31, 2006, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
 
It should be noted that while the Company’s management, including the President, believes the Company’s disclosure controls and procedures provide a reasonable level of assurance, they do not expect that the Company’s disclosure controls and procedures or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance the objectives of the control system are met. Further, the design of a control system must reflect the fact there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to errors or fraud may occur and not be detected.
 
 
 
 
Other Information
 
Item 4. Exhibits
 
Index of Exhibits
 
1.  
 
2.  
 
3.  
 
4.  
 

 
 

 
SIGNATURES
 
 
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
Pebble Beach Enterprises, INC
(Registrant)
 
 

     
  Pebble Beach Enterprises, INC
 
 		  
 		  
 
Date: July 24, 2007 By:   /s/ Aaron Hashim