Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

August 14, 2001

10-Q: Quarterly report pursuant to Section 13 or 15(d)

Published on August 14, 2001


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 June 30, 2001 Commission File No. 2-91651-D

Peacock Financial
Corporation


Colorado 87-0410039
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)


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.
[X] 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 118,993,091 Shares Outstanding
$0.001 par value as of June 30, 2001

PEACOCK FINANCIAL CORPORATION
REPORT ON FORM 10-Q

QUARTER ENDED JUNE 30, 2001


TABLE OF CONTENTS
- --------------------------------------------------------------------------------

Page
Number
------

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

. CONSOLIDATED BALANCE SHEETS AS OF
JUNE 30, 2001, AND DECEMBER 31, 2000 3 & 4

. CONSOLIDATED STATEMENTS OF
OPERATIONS FOR THE THREE AND
SIX MONTHS ENDED JUNE 30, 2001 & 2000 5 & 6

. CONSOLIDATED STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY
AS OF JUNE 30, 2001 7 - 9

. CONSOLIDATED STATEMENTS
OF CASH FLOWS FOR THE SIX MONTHS
ENDED JUNE 30, 2001 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
------

June 30, December 31,
---------------------------
2001 2000
----- ----
CURRENT ASSETS (Unaudited)

Cash and cash equivalent - 2,513
Due from related party 6,871 79,765
Prepaid expenses 2,704
Credit line receivable 119,722 -
Other receivables 233,094 27,000
Notes receivable - related parties 29,862 29,987
Notes receivable 84,957 84,957
---------- ----------

Total Current Assets 474,506 226,926
---------- ----------

FIXED ASSETS 154,999 191,530
---------- ----------

OTHER ASSETS

Investments in limited partnerships 1,131,961 1,131,961
Other investments 1,528 394,289
Other assets 5,565 3,500
---------- ----------

Total Other Assets 1,139,054 1,529,750
---------- ----------

TOTAL ASSETS $1,768,559 $1,948,206
========== ==========

3

PEACOCK FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets (Continued)


LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------




June 30, December 31,
---------------------------
2001 2000
---- ----

CURRENT LIABILITIES
Accounts payable $ 429,086 $ 473,496
Bank overdraft 1,430 -
Other current liabilities 247,888 238,176
Notes payable - current portion 1,018,986 848,343
Judgments payable 188,000 350,000
------------ ------------

Total Current Liabilities 1,885,390 1,910,015
------------ ------------

LONG-TERM DEBT

Notes payable - long term 500,000 523,175
------------ ------------

NET LIABILITIES IN EXCESS OF THE ASSETS
OF DISCONTINUED OPERATIONS 230,759 305,055
------------ ------------

Total Liabilities 2,616,149 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; 118,993,091 and 76,931,751 shares
issued and outstanding, respectively 118,993 76,932
Additional paid-in capital 11,888,197 11,390,655
Subscriptions receivable (200,501) (286,056)
Treasury stock (9,252) (8,180)
Accumulated deficit (12,650,480) (11,968,843)
------------ ------------

Total Stockholders' Equity (847,590) (790,039)
------------ ------------


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,768,559 $ 1,948,206
============ ============


4

PEACOCK FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)



For 6 Months Ended For 3 Months Ended
----------------------- ---------------------
June 30, June 30, June 30, June 30,
2001 2000 2001 2000
--------- ---------- --------- ---------

REVENUES

Property management and administration income $ - $ 1,525 $ - $ 210
Investment banking income - 779,961 279,961
Development income 220,713 - 220,713 -
Gain on investment 38,750 - 38,750
Other income 720 164,779 720 157,571
--------- ---------- -------- ---------

Total Revenues 221,433 985,015 221,433 476,492
--------- ---------- -------- ---------

EXPENSES

General and administrative 317,982 1,221,458 121,143 857,052
Bad debt 219,198 - 80,402 -
Depreciation and amortization 15,208 14,578 3,758 6,904
--------- ---------- -------- ---------

Total Expenses 552,388 1,236,036 205,303 863,956
--------- ---------- -------- ---------

INCOME/(LOSS) FROM CONTINUING OPERATIONS (330,955) (251,021) 16,130 (387,464)
--------- ---------- -------- ---------
OTHER INCOME/(EXPENSES)

Interest income 25,429 7,625 12,788 5,381
Interest expense (63,947) (39,515) (32,983) (21,985)
Realized gain (loss) on investments (86) - - (166,216)
Unrealized gain (loss) on investments (392,675) (283,825) -
--------- ---------- -------- ---------
Total Income (Expenses) (431,279) (31,890) (304,020) (182,820)
--------- ---------- -------- ---------
INCOME/(LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES
AND DISCONTINUED OPERATIONS (762,234) (282,911) (287,890) (570,284)

INCOME TAXES (1,600) (800)
--------- ---------- -------- ---------

NET INCOME (LOSS) FROM CONTINUING OPERATIONS (762,234) (284,511) (287,890) (571,084)

NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS 79,525 (1,025,406) (102) (691,342)
--------- ---------- -------- ---------

NET INCOME (LOSS) (682,709) (1,309,917) (287,992) (1,262,426)
--------- ---------- -------- ----------


5

PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Statements of Operations (Continued)


For 6 Months Ended For 3 Months Ended
------------------------- -------------------------
June 30, June 30, June 30, June 30,
2001 2000 2001 2000
-------- -------- -------- --------

OTHER COMPREHENSIVE GAIN (LOSS)

Gain (loss) on treasury stock 1,072 - (440) -

NET COMPREHENSIVE INCOME (LOSS) $ (681,637) $(1,309,917) $ (288,432) $(1,262,546)
============ =========== ============ ===========
BASIC INCOME (LOSS) PER SHARE

Continuing operations $ (0.01) $ (0.01) $ (0.02) $ (0.01)
Discontinued operations 0.00 (0.02) (0.00) (0.01)

BASIC INCOME (LOSS) PER SHARE $ (0.01) $ (0.03) $ (0.02) $ (0.02)
------------ ----------- ----------- -----------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 111,692,037 48,150,404 104,546,945 46,830,296
=========== =========== =========== ===========


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
------------------------- ------------------------ Paid-in Subscriptions Accumulated
Shares Amount Shares Amount 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) 29,281,674 29,282 263,455 (52,500)

Common stock issued
for debt (unaudited) 12,114,416 12,114 228,765

Common stock issued
for interest (unaudited) 665,250 665 5,322

Cash received on
subscriptions receivable
(unaudited) 10,000

Write-off of subscription receivable
(unaudited) 128,056

Unrealized gain on Treasury stock
(unaudited) 1,070

Net income (loss) for the
period ended June 30, 2001 (unaudited) (682,707)
---------- ---------- ----------- ---------- ----------- ------------- ------------

Balance,
June 30, 2001 (unaudited) 545,300 $ 5,453 118,993,091 118,993 $11,888,197 $ (200,500) $(12,650,480)
========== ========== =========== ========== =========== ============= ============


9

PEACOCK FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows




For the 6 Months Ended
-------------------------
June 30 June 30
2001 2000
--------- -----------

CASH FLOWS FROM OPERATING ACTIVITIES
Continued Operations:
Net income (loss) $(762,234) $ (284,511)
Adjustments to reconcile net income (loss) from
continuing operations to net cash (used) by operating
activities;
Depreciation and amortization 15,208 14,578
Bad debt expense 219,198 -
Loss on investments 392,761 (38,750)
Discontinued Operations:
Net income (loss) 79,525 (1,025,406)
Depreciation and amortization 12,512 -
Loss on disposition of assets - -
Changes in Operating Assets and Liabilities:
(Increase) decrease in accounts and notes
receivable (325,816) (833,702)
(Increase) decrease in accounts
receivable - related parties (18,124) (169,740)
(Increase) decrease in other assets 639 (272,371)
Increase (decrease) in accounts payable (44,410) 226,253
Increase (decrease) in other liabilities (134,315) (52,617)
Increase (decrease) in discontinued
operation reserve (74,296) -
--------- -----------

Net Cash Used by Operating Activities (639,352) (2,436,266)
--------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of investments (701,790)
Purchase of property and equipment (2,410) (243,563)
--------- -----------

Net Cash Used by Investing Activities (2,410) (945,353)
--------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES

Due to shareholders - (25,398)
Cash received on debentures 384,750 -
Repayment of notes payable - (260,741)
Repurchase of stock - (307,090)
Cash rec'd on subscriptions receivable 10,000 -
Proceeds from stock offerings 244,499 4,066,146
--------- -----------

Net Cash Provided by Financing Activities $ 639,249 $ 3,472,917
--------- -----------


10

PEACOCK FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)





For the 6 Months Ended
-----------------------
June 30 June 30
2001 2000
--------- ----------

NET INCREASE (DECREASE) IN CASH $(2,513) $ 91,298

CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 2,513 190,581
---------- --------

CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ - $281,879
========== ========

SUPPLEMENTAL DISCLOSURE OF
NON-CASH ACTIVITIES

Common stock issued on conversion of debentures & interest $ 246,866 $ 26,497
Common stock issued for investments $ - $150,000


SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION

Interest paid, net of amount capitalized $ 156 $ 18,893
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 State of Nevada,
under the names of: Broadleaf Capital Partners, Inc., Broadleaf Asset
Management, Inc., Broadleaf Financial Services, Inc. and Brand Asset
Management, Inc. The Company has also changed the name of Broadleaf Asset
Management, Inc. to Broadleaf Aerospace Systems, 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, Inc. and the Company
is currently operating under said name.

4. The Company has completed its internal due diligence and is awaiting final
closure pending an independent audit and contingencies, to acquire Genesis
Aviation/Aerospace Modworks, Inc., a twelve-year old Aviation services
company reporting $3.2 million in annual revenues for its operating year
2000.

5. A Joint Venture was entered into between Peacock Financial Corporation and
Jugular, Inc., a stated leader in extreme sports products with worldwide
registered trademarks, to form two new entities; Jugular Japan and Jugular
Europe. These Joint Ventures, along with an Exclusive Japanese Distribution
agreement with X-Gear, Inc., is intended to provide a strong venture to
pursue licensing and marketing opportunities for Jugular's trademarks
throughout Japan and Europe.

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 one-year operating history, the original founding management, with
minimum annual revenues of $1.5 million. The Company intends to expand on its
investment strategy and 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 maintaining operations
and 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. Management is currently
assessing its general partnership position and the Company has received no
revenues to-date for the operating year 2000.

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 has booked the distribution
of its profits in the second quarter of 2001.

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. Company management is assessing the
validity of its ownership position.

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 developed
iNet4Cars.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.
Inet4Cars ceased operations in operating year 2000. It is management's
intention to re-launch the website in the future under more favorable e-
commerce market conditions.

6. Bio-Friendly Corporation - In May 2000, 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 Bio-Friendly states, dramatically reduces the emissions produced by
any system which burns fuel of any kind, while greatly reducing the amount
of fuel consumed. Company management is currently assessing the validity
of the contract and Bio-Friendly Corporation.

7. San Diego Soccer Development Corporation (SDSDC) - The Company currently
owns approximately 1,555,001 shares of SDSDC. SDSDC recently ceased
operations; Company management is currently assessing its position in
SDSDC.


ANALYSIS OF FINANCIAL CONDITION

The second quarter of 2001 marked the continuance of assessing and consolidating
the Company's previous investments and operations. The Company, with new
management, launched its strategy in seeking business opportunities that can
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
an ongoing revenue stream and operating history.

Results of Operations - Three months ended June 30, 2001, compared to the three
months ended June 30, 2000.

Revenues. Revenues for the three months ended June 30, 2001, decreased by
$255,059 or 54% to $221,433 from $476,492 for the three months ended June 30,
2000. This decrease resulted from a decrease in fees charged for investment
banking services.

Expenses. Total expenses for the three months ended June 30, 2001, decreased by
$658,653 or 77% to $205,303 from $863,956 for the three months ended June 30,
2000. General and administrative expenses for the three months ended June 30,
2001, decreased by $735,909 or 86% to $121,143 from $857,052 for the three
months ended June 30, 2000. This decrease resulted from reduced administrative
and operating costs.

14

Results of Operations - Six months ended June 30, 2001, compared to the six
months ended June 30, 2000.

Revenues. There were revenues of $221,433 reported for the first six months
ended June 30, 2001, as compared to $985,015 for the six months ended June 30,
2000. The decrease was primarily due to a decrease in fees charged for
investment banking services.

Expenses. Total expenses for the six months ended June 30, 2001, decreased by
$683,648 or 56% to $552,388 from $1,236,036 for the six months ended June 30,
2000. General and administrative expenses for the six months ended June 30,
2001, decreased by $903,476 or 74% to $317,982 from $1,221,458 for the six
months ended June 30, 2000. This decrease resulted from reduced administrative
and operating costs. Bad debt expense of $219,198 was primarily due to the
write-off of an un-collectable receivable.


Changes in Financial Condition, Liquidity and Capital Resource.

For the six months ended June 30, 2001, the Company funded its operations and
capital requirements partially with its own working capital and partially with
proceeds from stock offerings. As of June 30, 2001, the Company had an overdraft
of $1,430.

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



August 14, 2001 /s/ Robert A. Braner
- ---------------- --------------------
Date Robert A. Braner
Interim President



August 14, 2001 /s/ Lisa L. Martinez
- ---------------- --------------------
Date Lisa L. Martinez
Corporate Secretary

16