SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-Q
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD COMMISSION FILE NO. 2-91651-D
ENDED MARCH 31, 1999
PEACOCK FINANCIAL
CORPORATION
COLORADO 87-0410039
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
248 E. MAIN STREET
SAN JACINTO, CA 92583
(ADDRESS AND ZIP CODE OF PRINCIPAL EXECUTIVE OFFICES)
(909) 487-8911
(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 29,055,796 SHARES OUTSTANDING
$0.001 PAR VALUE AS OF MARCH 31, 1999
PEACOCK FINANCIAL CORPORATION
REPORT ON FORM 10-Q
QUARTER ENDED MARCH 31, 1999
TABLE OF CONTENTS
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Page
Number
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
- CONDENSED CONSOLIDATED
BALANCE SHEETS AS OF
MARCH 31, 1999, AND DECEMBER 31, 1998 3 & 4
- CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS THREE MONTHS ENDED
MARCH 31, 1999 AND 1998 5 & 6
- CONDENSED CONSOLIDATED STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY
AS OF MARCH 31, 1999 7 & 8
- CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS AS OF MARCH 31, 1999
AND MARCH 31, 1998 9 & 10
- NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
ITEM 2. NOTES TO THE FINANCIAL STATEMENTS
ITEM 3. MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
PART II. OTHER INFORMATION AND SIGNATURES
2
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Balance Sheets
ASSETS
March 31, December 31,
1999 1998
---------- ------------
CURRENT ASSETS
Cash and cash equivalents 91,567 -
Notes receivable 36,300 19,300
Accounts receivable 650 -
Due from related party 2,396 2,396
---------- ----------
Total Current Assets 130,913 21,696
---------- ----------
FIXED ASSETS, at cost, net of accumulated
depreciation of $82,860 and $80,299,
respectively 364,839 366,780
---------- ----------
OTHER ASSETS
Construction-in-process (1,902) -
Notes receivable 230,300 114,000
Developer fees receivable 116,528 154,077
Development costs 1,216,036 1,216,036
Investments in limited partnerships 1,224,292 1,224,292
Other investments 700,000 200,000
Licensing rights 30,000 30,000
Other assets 42,151 29,201
---------- ----------
Total Other Assets 3,557,405 2,967,606
---------- ----------
TOTAL ASSETS $4,053,157 $3,356,082
---------- ----------
---------- ----------
The accompanying notes are an integral part of
these consolidated financial statements.
3
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
1999 1998
---------- ------------
CURRENT LIABILITIES
Accounts payable $ 221,143 $ 227,743
Bank overdraft - 4,509
Other current liabilities 275,009 280,982
Lines of credit 4,521 6,365
Notes payable - current portion 710,410 753,060
Note payable to stockholder 23,706 57,058
---------- ----------
Total Current Liabilities 1,234,789 1,329,717
---------- ----------
LONG-TERM DEBT
Notes payable - long term 787,856 864,501
---------- ----------
Total Liabilities 2,022,645 2,194,218
---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock: 10,000,000 shares authorized at $0.01
par value; 672,300 and -0- shares issued and
outstanding, respectively 6,723 6,723
Common stock: 250,000,000 shares authorized at
$0.001 par value; 29,055,796 and 20,750,370 shares
issued and outstanding, respectively 29,056 20,750
Additional paid-in capital 4,313,949 3,519,882
Accumulated deficit (2,319,216) (2,385,491)
---------- ----------
Total Stockholders' Equity 2,030,512 1,161,864
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,053,157 $3,356,082
---------- ----------
---------- ----------
The accompanying notes are an integral part of
these consolidated financial statements.
4
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Statements of Operations
March 31, March 31,
1999 1998
-------- ---------
REVENUES
Home building and development sales $ - $ 233,672
Property management and administration
income 593 900
Investment banking income 200,000 9,086
-------- ---------
Total Revenues 200,593 243,658
-------- ---------
EXPENSES
Home building and development costs - 324,879
General and administrative 165,775 162,255
Depreciation and amortization 2,561 939
-------- ---------
Total Expenses 168,336 488,073
-------- ---------
INCOME/(LOSS) FROM CONTINUING OPERATIONS 32,257 (244,415)
-------- ---------
OTHER INCOME/(EXPENSES)
Other income 70,000 -
Interest expense (37,027) (24,444)
Other expense (800) (800)
-------- ---------
Total Other Expenses 32,173 (25,244)
-------- ---------
INCOME/(LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES 64,430 (269,659)
INCOME TAXES - -
-------- ---------
NET INCOME (LOSS) FROM CONTINUING OPERATIONS 64,430 (269,659)
NET INCOME (LOSS) $ 64,430 $(269,659)
-------- ---------
-------- ---------
The accompanying notes are an integral part of
these consolidated financial statements.
5
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Statements of Operations (Continued)
March 31, March 31,
1999 1998
----------- -----------
EARNINGS (LOSS) PER SHARE
Continued operations $ 0.01 $ (0.02)
Discontinued operations 0.00 0.00
----------- -----------
EARNINGS (LOSS) PER SHARE $ 0.01 $ (0.02)
----------- -----------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 25,896,706 12,365,464
----------- -----------
----------- -----------
The accompanying notes are an integral part of
these consolidated financial statements.
6
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Statements of Stockholders' Equity
Preferred Stock Common Stock Additional
----------------- -------------------- Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit
------- ------ ---------- ------- ---------- -----------
Balance,
December 31, 1996 672,300 6,723 10,695,295 10,695 2,215,474 (1,074,064)
Common stock issued
for cash - - 422,002 422 59,618 -
Common stock issued
for services - - 646,500 647 83,459 -
Accrued dividends - - - - (23,172) -
Net income for the
year ended
December 31, 1997 - - - - - 222,009
------- ------ ---------- ------- ---------- -----------
Balance,
December 31, 1997 672,300 $6,723 11,763,797 $11,764 $2,335,379 $ (852,055)
------- ------ ---------- ------- ---------- -----------
Common stock
issued for cash - - 1,609,413 1,609 217,456 -
Common stock issued
for services - - 3,108,040 3,108 599,967 -
Common stock issued on
conversion of debentures - - 1,559,834 1,560 104,033 -
Common stock issued for
investments and
licensing rights - - 2,420,000 2,420 257,580 -
Common stock issued under
failed financing package - - 289,286 289 28,639 -
Accrued dividends - - - - (23,172) -
Net income (loss) for
the year ended
December 31, 1998 - - - - - (1,533,436)
------- ------ ---------- ------- ---------- -----------
Balance,
December 31, 1998 672,300 $6,723 20,750,370 $20,750 $3,519,882 $(2,385,491)
------- ------ ---------- ------- ---------- -----------
------- ------ ---------- ------- ---------- -----------
The accompanying notes are an integral part of
these consolidated financial statements.
7
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Statements of Stockholders' Equity (Continued)
Preferred Stock Common Stock Additional
----------------- -------------------- Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit
------- ------ ---------- ------- ---------- -----------
Common stock issued
for cash - - 5,470,555 $ 5,471 $ 457,945 -
Common stock issued
for services - - 8,571 9 600 -
Common stock issued on
conversion of debentures - - 826,300 826 41,315 -
Common stock issued
for investments and
licensing rights - - 2,000,000 2,000 300,000 -
Peacock International
Corporation - - - - - 1,845
Accrued dividends - - - - (5,793) -
Net income (loss) for
the period ended
March 31, 1999 - - - - - 64,430
------- ------ ---------- ------- ---------- -----------
Balance,
March 31, 1999 672,300 $ 6,723 29,055,796 $29,056 $4,313,949 $(2,319,216)
------- ------ ---------- ------- ---------- -----------
------- ------ ---------- ------- ---------- -----------
The accompanying notes are an integral part of
these consolidated financial statements.
8
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Statements of Cash Flows
March 31, March 31,
1999 1998
--------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 64,430 $ (269,659)
Adjustments to reconcile net income (loss) to net
cash (used) by operating activities:
Depreciation and amortization 2,561 939
Changes in operating assets and liabilities:
(Increase) decrease in accounts and notes
receivable 19,899 4,623
(Increase) decrease in accounts
receivable - related parties - -
(Increase) decrease in other assets (12,950) -
Increase (decrease) in accounts payable (6,600) (74,259)
Increase (decrease) in other liabilities (7,817) 8,783
--------- ------------
Net Cash Used by Operating Activities 59,523 (329,573)
--------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Note receivable (116,300) (10,000,000)
Construction in progress 1,902 374,397
Purchase of property and equipment 1,941 -
-------- ------------
Net Cash Used by Investing Activities (112,457) (9,625,603)
--------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Due to shareholders (33,352) (5,383)
Repayment of notes payable (42,650) (228,221)
Proceeds from long-term borrowings (76,645) (415)
Proceeds from stock offerings 802,373 10,187,560
--------- -------------
Net Cash Provided by Financing Activities $ 649,726 $ 9,953,541
--------- -------------
The accompanying notes are an integral part of
these consolidated financial statements.
9
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Statements of Cash Flows (Continued)
March 31, March 31,
1999 1998
--------- ---------
NET INCREASE IN CASH $ 96,076 $ (1,635)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD (4,509) 14,777
-------- --------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 91,567 $ 13,142
-------- --------
-------- --------
SUPPLEMENTAL DISCLOSURE OF
NON-CASH ACTIVITIES
Common stock issued on conversion of debentures $ 51,565 $ -
Common stock issued for services $ 600 $ -
Common stock issued for investments $300,000 $ -
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Interest paid, net of amount capitalized $ 13,953 $ 11,253
Income taxes paid $ - $ -
The accompanying notes are an integral part of
these consolidated financial statements.
10
PEACOCK FINANCIAL CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 1999
1. The interim financial statements are prepared pursuant to the
requirements for reporting on Form 10-QSB. The December 31, 1998, 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, 1998. 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.
11
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.
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1999, COMPARED TO THE
THREE MONTHS ENDED MARCH 31, 1998.
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.
In the first quarter, the Company raised $506,250 in capital which was used for
working capital, debt reduction and investments. Its primary investment was into
Solutions Media, Inc., an internet company focused on the development of an
interface technology for the convergence of all forms of media into High
Definition Television.
The Company expects to raise additional capital for its real estate operations
in the San Jacinto Valley, (California) where a $3 billion recreational
reservoir is nearing completion and to continue to seek out investment
opportunities in high tech emerging growth companies.
REVENUES. Revenues for the three months ended March 31, 1999, decreased by
$43,065 or 18% to $200,593 from $243,658 for the three months ended March 31,
1998. This decrease resulted from decrease in home building.
EXPENSES. Total expenses for the three months ended March 31, 1999, decreased by
$319,737 or 66% to $168,336 from $488,073 for the three months ended March 31,
1998. This decrease resulted from lower home building development costs. General
and administrative expenses for the three months ended March 31, 1999, increased
by $3,520 or 3% to $165,775 from $162,255 for the three months March 31, 1998.
CHANGES IN FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCE.
For the three months ended March 31, 1999, 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, 1999, the Company had cash of
$91,567.
12
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, 1999 /s/ Steven R. Peacock
- -------------------- -----------------------------
Date Steven R. Peacock
President and Chief Executive Officer
May 14, 1999 /s/ Lisa Martinez
- -------------------- -----------------------------
Date Lisa Martinez
Secretary
13