Securities and Exchange Commission Washington, DC 20549 -------------------------------------- FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2001 Commission File No. 2-91651-D Peacock Financial Corporation Colorado 87-0410039 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
2531 San Jacinto Street San Jacinto, CA 92583 (Address and zip code of principal executive offices) (909) 652-3885 (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 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 [ ] NO Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. Common Stock 99,256,109 Shares Outstanding $0.001 par value as of March 31, 2001 PEACOCK FINANCIAL CORPORATION REPORT ON FORM 10-Q QUARTER ENDED MARCH 31, 2001 TABLE OF CONTENTS - -------------------------------------------------------------------------------- Page Number ------ PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) . CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2001, AND DECEMBER 31, 2000 3 & 4 . CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000 5 - 6 . CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AS OF MARCH 31, 2001 7 - 9 . CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND MARCH 31, 2000 10 & 11 . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 12 ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION 13 - 15 PART II. OTHER INFORMATION AND SIGNATURES 16 2 PEACOCK FINANCIAL CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets ASSETS ------
March 31, December 31, 2001 2000 --------- ------------ CURRENT ASSETS (Unaudited) Cash and cash equivalents 8,927 2,513 Due from related party 75,829 79,765 Prepaid expenses 2,704 Credit line receivable 110,000 - Accounts receivable 27,000 27,000 Notes receivable - related parties 29,887 29,987 Notes receivable 84,957 84,957 ---------- ---------- Total Current Assets 336,600 226,926 ---------- ---------- FIXED ASSETS 166,449 191,530 ---------- ---------- OTHER ASSETS Investments in limited partnerships 1,131,961 1,131,961 Other investments 285,353 394,289 Other assets 7,094 3,500 ---------- ---------- Total Other Assets 1,424,408 1,529,750 ---------- ---------- TOTAL ASSETS $1,927,457 $1,948,206 ========== ==========
3 PEACOCK FINANCIAL CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (Continued) LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------
March 31, December 31, ------------ ------------- 2001 2000 ------------ ------------- (Unaudited) CURRENT LIABILITIES Accounts payable $ 412,195 $ 473,496 Other current liabilities 232,429 238,176 Notes payable - current portion 749,593 848,343 Stock subscription payable 100,000 - Judgments payable 350,000 350,000 ------------ ------------ Total Current Liabilities 1,844,217 1,910,015 ------------ ------------ LONG-TERM DEBT Notes payable - long term 523,175 523,175 ------------ ------------ NET LIABILITIES IN EXCESS OF THE ASSETS OF DISCONTINUED OPERATIONS 291,266 305,055 ------------ ------------ Total Liabilities 2,658,658 2,738,245 ------------ ------------ COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock: 10,000,000 shares authorized at $0.01 par value; 545,300 and 545,300 shares issued and outstanding, respectively 5,453 5,453 Common stock: 250,000,000 shares authorized at $0.001 par value; 99,256,109 and 76,931,751 shares issued and outstanding, respectively 99,256 76,932 Additional paid-in capital 11,683,830 11,390,655 Subscriptions receivable (148,000) (286,056) Treasury stock (9,692) (8,180) Accumulated deficit (12,362,048) (11,968,843) ------------ ------------ Total Stockholders' Equity (731,201) (790,039) ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,927,457 $ 1,948,206 ============ ============
4 PEACOCK FINANCIAL CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited)
March 31, March 31, 2001 2000 ----------- ----------- REVENUES Property management and administration income $ - $ 1,315 Investment banking income 500,000 Other income 7,208 ----------- ----------- Total Revenues 508,523 ----------- ----------- EXPENSES General and administrative 196,839 364,406 Bad debt 138,796 - Depreciation and amortization 11,450 7,674 ----------- ----------- Total Expenses 347,085 372,080 ----------- ----------- INCOME/(LOSS) FROM CONTINUING OPERATIONS (347,085) 136,563 ----------- ----------- OTHER INCOME/(EXPENSES) Interest income 12,641 2,244 Interest expense (30,964) (17,530) Realized gain (loss) on investments (86) 166,216 Unrealized loss on investments (108,850) ----------- ----------- Total Income (Expenses) (127,259) 150,930 ----------- ----------- INCOME/(LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS (474,344) 287,493 INCOME TAXES (800) ----------- ----------- NET INCOME (LOSS) FROM CONTINUING OPERATIONS (474,344) 286,693 INCOME (LOSS) FROM DISCONTINUED OPERATIONS 79,627 (334,064) ----------- ----------- NET INCOME (LOSS) (394,717) (47,371) =========== ==========
5 PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY (Formerly Connectivity and Technology, Inc.) Consolidated Statements of Operations (Continued)
March 31, March 31, 2001 2000 ----------- ----------- OTHER COMPREHENSIVE GAIN (LOSS) Gain (loss) on treasury stock 1,512 - Dividends 5,703 ----------- ----------- NET COMPREHENSIVE INCOME (LOSS) $ (393,205) $ (41,668) =========== =========== BASIS INCOME (LOSS) PER SHARE Continuing operations $ (0.01) $ 0.01 Discontinued operations (0.01) ----------- ----------- Basic Income (Loss) Per Share $ (0.01 $ (0.00) =========== =========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 88,263,488 40,721,916 =========== ===========
6 PEACOCK FINANCIAL CORPORATION AND SUBSIDIARIES Consolidated Statements of Stockholders' Equity
Preferred Stock Common Stock Additional ------------------ ---------------------- Paid-in Subscriptions Accumulated Shares Amount Shares Amount Capital Receivable Deficit -------- -------- ----------- --------- ------------ --------------- ------------- Balance, December 31, 1998 672,300 $ 6,723 20,750,370 $ 20,750 $3,519,882 $ $(2,385,491) Common stock issued for cash 14,008,007 14,008 1,787,118 (443,500) Common stock issued for services 759,571 760 161,040 Common stock issued on conversion of debentures 1,070,560 1,070 58,346 Common stock issued for investments 1,250,000 1,250 123,750 Common stock issued in conversion of preferred stock (2,000) (20) 2,000 2 1,998 Common stock canceled (30,000) (30) (5,779) Cash received on subscriptions receivable 116,445 Accrued dividends (23,172) Dividends paid (165,614) Net income (loss) for the year ended December 31, 1999 (692,737) -------- -------- ----------- --------- ------------ --------------- ------------- Balance, December 31, 1999 670,300 $ 6,703 37,810,508 $37,810 $5,457,569 $ (327,055) (3,078,228) -------- -------- ----------- --------- ------------ --------------- -------------
7 PEACOCK FINANCIAL CORPORATION AND SUBSIDIARIES Consolidated Statements of Stockholders' Equity (Continued)
Preferred Stock Common Stock -------------------- ---------------------- Additional Subscriptions Accumulated Shares Amount Shares Amount Paid-in Capital Receivable Deficit -------- --------- ---------- ---------- --------------- ------------- ----------- Balance, December 31, 1999 670,300 $ 6,703 37,810,508 $37,810 $ 5,457,569 ($327,055) $(3,078,228) Common stock issued for cash 22,330,821 22,331 4,595,865 (158,001) Common stock issued for interest 6,207 6 6,202 Common stock issued in conversion of preferred stock (125,000) (1,250) 125,000 125 1,125 Common stock issued for services 1,282,000 1,282 247,118 Common stock issued for debt 14,577,215 14,578 604,713 Cash received on subscriptions receivable 199,000 Common stock issued for investments 800,000 800 169,200 Unrealized loss on Treasury stock (69,222) Realized loss on Treasury stock (205,065) Accrued dividends (22,812) Stock offering costs (202,325) Net income (loss) for the period ended December 31, 2000 (8,616,328) -------- ------- ---------- ------- ----------- --------- ------------ Balance, December 31, 2000 545,300 $ 5,453 76,931,751 $76,932 $11,390,655 $(286,056) $(11,968,843) ======== ======= ========== ======= =========== ========= ============
8 PEACOCK FINANCIAL CORPORATION AND SUBSIDIARIES Consolidated Statements of Stockholders' Equity (Continued)
Preferred Stock Common Stock Additional ------------------- ------------------- Paid-in Subscriptions Accumulated Shares Amount Shares Amount Capital Receivable Deficit ------- ---------- ---------- ------- ----------- ------------- ----------- Balance December 31, 2000 545,300 $ 5,453 76,931,751 $76,932 $11,390,655 $(286,056) $(11,968,843) Common stock issued for cash (unaudited) 13,807,692 13,807 193,192 Common stock issued for debt (unaudited) 8,516,666 8,517 99,983 Cash received on subscriptions receivable (unaudited) 10,000 Write-off of subscription receivable (unaudited) 128,056 Unrealized gain on Treasury stock (unaudited) 1,512 Net income (loss) for the period ended March 31, 2001 (unaudited) (394,717) ------- ---------- ---------- ------- ----------- --------- ------------ Balance, March 31, 2001 (unaudited) 545,300 $ 5,453 99,256,109 99,256 $11,683,830 $(148,000) $(12,362,048) ======= ========== ========== ======= =========== ========= ============
9 PEACOCK FINANCIAL CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows
For the 3 Months Ended ------------------------------ March 31 March 31 2001 2000 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES Continued Operations: Net income (loss) $(474,344) $ 286,693 Adjustments to reconcile net income (loss) from continuing operations to net cash (used) by operating activities; Depreciation and amortization 11,450 7,674 Bad debt expense 138,796 - Loss on investment 107,424 (166,216) Discontinued Operations: Net income (loss) 79,627 (334,064) Depreciation and amortization 2,410 - Loss on disposition of assets 13,631 - Changes in Operating Assets and Liabilities: (Increase) decrease in accounts and notes receivable (110,000) (665,114) (Increase) decrease in accounts receivable - related parties 4,036 (68,507) (Increase) decrease in other assets 9,382 (281,404) Increase (decrease) in accounts payable (61,301) 128,920 Increase (decrease) in other liabilities 84,503 (151,404) Increase (decrease) in discontinued operation reserve (13,789) --------- ---------- Net Cash Used by Operating Activities (208,175) (1,243,422) --------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments - (675,973) Purchase of property and equipment (2,410) (105,885) --------- ---------- Net Cash Used by Investing Activities (2,410) (781,858) --------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES Due to shareholders - (13,200) Repayment of notes payable - (233,093) Repurchase of stock - (1,610) Cash rec'd on subscriptions receivable 10,000 - Proceeds from stock offerings 206,999 2,342,170 --------- ---------- Net Cash Provided by Financing Activities $ 216,999 $2,094,267 --------- ----------
10 PEACOCK FINANCIAL CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Continued)
For the 3 Months Ended --------------------------------- March 31 March 31 2001 2000 --------- --------- NET INCREASE (DECREASE) IN CASH $ 6,414 $ 68,987 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,513 190,581 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 8,927 $259,568 ======== ======== SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES Common stock issued on conversion of debentures & interest $108,500 $ 20,087 Common stock issued for services $ - $ - Common stock issued for investments $ - $ - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest paid, net of amount capitalized $ 121 $ 12,612 Income taxes paid $ - $ -
11 PEACOCK FINANCIAL CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2001 and DECEMBER 31, 2000 1. The interim financial statements are prepared pursuant to the requirements for reporting on Form 10-QSB. The December 31, 2000 balance sheet data was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles. The interim financial statements and notes thereto should be read in conjunction with the financial statements and footnotes thereto included in the Company's report on Form 10-KSB for the year ended December 31, 2000. In the opinion of management, the interim financial statements reflect all adjustments of a normal recurring nature necessary for a fair statement of the results for the interim periods presented. 2. The Company has formed new subsidiary corporations in the names of: Broadleaf Capital Partners, Inc., Broadleaf Asset Management, Inc., Broadleaf Financial Services, Inc. and Brand Asset Management, Inc. 3. A Certificate of Assumed or Trade Name was filed in the State of Colorado to assume the name change to Broadleaf Capital Partners and is currently operating under said name pending shareholder approval for the legal name change. 4. The Company has entered into a Letter of Intent to acquire Genesis Aviation/Aerospace Modworks, Inc., a twelve-year old Aviation services company with $3.5-4 million in annual revenues. 5. A Joint Venture was entered into between Peacock Financial Corporation and Jugular, Inc., a leader in extreme sports products and worldwide registered trademarks, to form the new entity Jugular Japan. This Joint Venture, along with an Exclusive Japanese Distribution agreement with X-Gear, Inc., will provide a powerful combination to pursue licensing and marketing opportunities for Jugular's trademarks through Jugular Japan in the Japanese market. 12 ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Form 10-QSB contains forward looking statements within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934. The Company's actual results could differ materially from those set forth in the forward looking statements. MANAGEMENT DISCUSSION Peacock Financial Corporation (Company) is a venture capital fund that makes direct investments in and provides management services to businesses that have at least a three-year operating history and can perform with a profit to the bottom line. The Company intends on expanding its investment portfolio through the internal development of its present operations and other business opportunities, as well as the acquisition of additional business ventures. The Company has in the past, and may again in the future, raise capital specifically for the purpose of making an investment that the Company believes is attractive. The Company's current portfolio of investments includes the following: 1. Riverside Park Apartments - The Company formed a limited partnership in June 1992 and acquired two apartment buildings for $3,350,000 to be repaired, developed and managed. During the year ending 1992, the Company reduced its interest to 1% and has remained a general partner with a 1% interest, receiving a property management fee. 2. Canyon Shadows Apartments - The Company acquired a 120-unit apartment complex in April 1995 for $875,000. The Company received a $975,000 loan that converts to a grant from the City of Riverside for the purpose of acquisition and rehabilitation, and in 1996, the Company was awarded $2,200,000 in Federal Tax Credits for the project. In December 1996, the project was sold to a tax credit partnership in which the Company retains a $905,000 capital account, as well as a 1% interest as the general partner, for which it receives a management fee and 80% of the project cash flow. 3. St. Michel, LLC - In 1995, the Company formed a limited liability company to acquire a 63-lot residential subdivision in the San Jacinto Valley, In March 1996, the limited liability company acquired an additional 110-lot subdivision also in the San Jacinto Valley. The Company retains a 50% ownership in the limited liability company. A joint venture to build out these homes was just completed and the Company is expecting the distribution of its profits shortly. 4. Vir-Tek Company - The Company currently owns 49% of Vir-Tek, a minority disabled veteran engineering and contracting firm, formed to take advantage of recently passed federal legislation (H.R. 1568) requiring 3% participation on all programs and projects funded by federal dollars. Vir- Tek provides environmental management, facility and operations management, mapping and information management, engineering services, project management, and waste management. The Company emphasizes teamwork in industrial, and engineering problems. Vir-Tek has served commercial, industrial, and residential construction developers as well as concerns of city, county, and federal agencies. 13 5. iNetPartners, Inc. - Peacock Financial holds a 51 percent interest in iNetPartners, Inc., which focuses on the development of Internet e-commerce applications for both the net and used automotive markets and is currently developing iNetmotors.com, a regionally based automobile e-commerce Website to provide Internet automobile shoppers easy access to dealer inventories with detailed pictures and prices online within the shopper's immediate area. More than 80 percent of pre-owned and new vehicles are purchased within 20 to 35 miles of where the buyer lives or works, and 90 percent of all buyers want to inspect and test-drive the vehicle before purchase. 6. Bio-Friendly Corporation - In May, the Company signed a contract to purchase 625,000 shares of common stock at 40 cents a share of Bio-Friendly Corporation, a fuel technology company, that has a combustion catalyst which dramatically reduces the emissions produced by any system which burns fuel of any kind, while greatly reducing the amount of fuel consumed. 7. San Diego Soccer Development Corporation (SDSDC) - The Company currently owns approximately 1,555,001 shares of SDSDC, the only publicly traded soccer franchise in the United States ANALYSIS OF FINANCIAL CONDITION The first quarter of 2001 marked the continuance of consolidating the Company's previous investments and operations. The Company, with new management, launched its strategy in seeking out business opportunities that will succeed in bringing profits to the bottom line. Management believes that the key to a successful fund is the ability to produce ongoing revenues and profits from operating subsidiaries that will allow for an orderly due diligence process when investing in established companies that have a profitable operating history. Results of Operations - Three months ended March 31, 2001, compared to the three months ended March 31, 2000. The Company is a registered Business Development Corporation under the Investment Act of 1940. As such, the Company acts as a holding company for the purpose of raising capital and investing in real estate through a wholly owned subsidiary and into emerging growth companies that meet certain investment criteria which includes the possibility of taking the targeted company public at a later stage. Revenues. There were no revenues reported for the first three months ended March 31, 2001, as compared to $508,523 for the three months ended March 31, 2000. Expenses. Total expenses for the three months ended March 31, 2001, decreased by $24,995 or 7% to $347,085 from $375,080 for the three months ended March 31, 2000. General and administrative expenses for the three months ended March 31, 2001, decreased by $167,567 or 46% to $196,839 from $364,406 for the three months ended March 31, 2000. This decrease resulted from reduced administrative and operating costs associated with having a new management team in place and cutting out unnecessary expenses. Bad debt expense of $138,796 was primarily due to the write-off of an un-collectable subscription receivable. 14 Changes in Financial Condition, Liquidity and Capital Resource. For the three months ended March 31, 2000, the Company funded its operations and capital requirements partially with its own working capital and partially with proceeds from stock offerings. As of March 31, 2001, the Company had cash of $8,927. 15 SIGNATURES Pursuant to the requirements 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. PEACOCK FINANCIAL CORPORATION May 14, 2001 /s/ Robert A. Braner - -------------- -------------------- Date Robert A. Braner Interim President May 14, 2001 /s/ Lisa L. Martinez - -------------- -------------------- Date Lisa L. Martinez Corporate Secretary 16