10-Q: Quarterly report pursuant to Section 13 or 15(d)
Published on November 12, 1999
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1999 Commission File No. 2-91651-D
PEACOCK FINANCIAL
CORPORATION
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.
PEACOCK FINANCIAL CORPORATION
REPORT ON FORM 10Q
QUARTER ENDED SEPTEMBER 30, 1999
TABLE OF CONTENTS
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Page
Number
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
* CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1999, AND
DECEMBER 31, 1998 3 & 4
* CONSOLIDATED STATEMENTS OF
OPERATIONS THREE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998 5 & 6
* CONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDERS' EQUITY
AS OF SEPTEMBER 30, 1999 7 & 8
* CONSOLIDATED STATEMENTS OF
CASH FLOWS AS OF SEPTEMBER 30,
1999 AND SEPTEMBER 30, 1998 9 & 10
* NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS 11
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 12, 13 & 14
PART II. OTHER INFORMATION AND SIGNATURES 15
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PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Balance Sheets
ASSETS
The accompanying notes are an integral part of these consolidated
financial statements.
Page 3
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY
The accompanying notes are an integral part of these consolidated
financial statements.
Page 4
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Statements of Operations
The accompanying notes are an integral part of these consolidated
financial statements.
Page 5
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Statements of Operations (Continued)
The accompanying notes are an integral part of these consolidated
financial statements.
Page 6
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Statements of Stockholders' Equity
The accompanying notes are an integral part of these consolidated
financial statements.
Page 7
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Statements of Stockholders' Equity (Continued)
The accompanying notes are an integral part of these consolidated
financial statements.
Page 8
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Statements of Cash Flows
The accompanying notes are an integral part of these consolidated
financial statements.
Page 9
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Statements of Cash Flows (Continued)
The accompanying notes are an integral part of these consolidated
financial statements.
Page 10
PEACOCK FINANCIAL CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
1. The interim financial statements area 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 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.
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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 1993 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 diversified company that makes
direct investments in and provides management services to emerging businesses.
The Company intends to continue expanding through the internal development of
its present operations and as well as the acquisition of additional business
ventures. Since filing with the SEC to become a Business Development Corporation
in September of 1998, the Company has formed two new affiliate operating
companies with substantial ownership positions in each, and has made significant
investments in three emerging growth companies.
CURRENT OPERATING COMPANIES CONSIST OF THE FOLLOWING:
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Peacock Real Estate Development Corporation (PDC): is a wholly owned subsidiary
with a 23 year operating history of successful real estate development in
California and Oregon. Through a broad corporate background and network of
affiliates, PDC has the capability of designing, building and managing any real
estate project in the continental United States. Current holdings are focused in
the San Jacinto Valley, CA, where the Company controls approximately 450
residential lots, 30 acres of commercially zoned property, and 11 acres zoned
for senior apartments. Most of these assets are in the master planned community
of Rancho San Jacinto, developed by PDC.
Vir-Tek Company (VTC): was formed as a partnership between Mr. Virgil Woolfolk
and Peacock Financial Corporation. Mr. Woolfolk controls 51% of VTC, and the
Company 49%. This partnership was formed to take advantage of recent federal
legislation allocating 3% of all federally funded projects to Disabled Veteran
Business Enterprises (DVBE) under which VTC qualifies. VTC is currently
obtaining the necessary accreditation while pursuing strategic alliances with a
variety of major companies that contract with governmental agencies. These
companies are highly experienced in engineering, environmental assessments and
construction, and have extensive track records in governmental contracting.
DOTCOM Ventures, LLC (DCV): was formed for the purpose of pursuing revenue and
equity opportunities in the Internet and E-commerce industry, while assisting
the Company in the identification and development of Internet related
investments. The Company owns 51% of DCV. DCV has a talented team experienced in
the successful launch of multiple Internet and technology start-up companies.
DCV currently has three contracts with companies to design new websites. DCV
also will assist the Company with website upgrades and marketing materials.
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CURRENT EMERGING GROWTH INVESTMENT HOLDINGS CONSIST OF THE FOLLOWING:
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Solutions Media, Inc (SMI): and its Spinrecords.Com, is a development stage
company that licenses, develops, and markets musical recordings for direct file
transfer, or "downloading", to consumers over the Internet through the new
innovative technology commonly referred to as MP3. SMI has stated its intention
to file with the SEC for an Initial Public Offering and has retained the firm of
Brobek, Phleger & Harrison as SEC counsel. The Company currently owns 800,000
shares of common stock in SMI and intends on distributing 300,000 shares to its
stockholders prior to the Public Offering.
San Diego Soccer Development Corporation (SDSDC): was founded to develop, own
and run a professional soccer team in San Diego, CA, with the ultimate goal of
becoming a major league soccer franchise. SDSDC operates as the San Diego
"FLASH" soccer club and competes in the A-League in America's Division II
professional league. SDSDC recently filed a Form 10-SB with the SEC. SDSDC stock
is expected to be trading on the OTC-BB exchange before the end of 1999. Recent
press releases include an application with the world Indoor Soccer League to
play the 2000 indoor season under the "FLASH" logo. SDSDC has acquired a 75%
ownership position in the Riverside Soccer Development Corporation, a Division
III soccer club, and will serve as a farm team for the "FLASH". The Company
currently owns 500,000 common shares of SDSDC. The Company's CEO is a member of
the SDSDC Board of Directors.
San Francisco Soccer Development Corporation (SFSDC): was founded for the same
purpose as SDSDC in San Francisco. SFSDC operates as the San Francisco "SEALS"
and competes in the A-League. The Company currently owns 200,000 shares of SFDSC
common stock, with an option to purchase an additional 200,000 shares at fifty
cents ($0.50) per share. The Company expects SFSDC to file a Form 10SB with the
SEC in the year 2000.
IPO/Emerging Growth, LLC: is an investment vehicle formed and managed by Mr.
Michael Brette of Capital Asset Management. Mr. Brette is also a Director of the
Company. IPO/Emerging Growth, LLC was formed to raise capital to acquire
positions in emerging growth companies and to take them public through the
Company in what is known as a "spin-off" process. The Company holds an
investment position in IPO/Emerging Growth, LLC, currently valued at
$100,000.00.
ANALYSIS OF FINANCIAL CONDITION
Management believes that the key to a successful Business Development
Corporation is the ability to produce ongoing revenues and profits from
operating subsidiaries which will allow for an orderly due diligence process
when investing in start-up and emerging growth companies.
The Company has formed three operating subsidiaries which are strategically
positioned to produce both revenues and profits in the near future. These
subsidiaries contain key personnel and have niche opportunities which have
matured to the point of producing cash flow and bottom line profits to the
Company.
The Company's investments are about to mature with Solutions Media, Inc.
expected to file its IPO soon and San Diego Soccer Development Corporation
expected to be trading its stock on the OTC-BB exchange before year end.
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It is management's belief that these two investments are substantially
undervalued and that the Solutions Media, Inc. investment could produce a
"windfall" profit to the company.
Results of Operations - Three months ended September 30, 1999, compared to the
three months ended September 30, 1998.
Revenues. Revenues for the three months ended September 30, 1999, decreased by
$128,759 or 89% to $16,682 from $145,441 for the three months ended September
30, 1998. This decrease resulted from reduction in home building.
Expenses. Total expenses for the three months ended September 30, 1999,
decreased by $390,360 or 73% to $144,053 from $534,413 for the three months
ended September 30, 1998. This decrease resulted from lower home building
development costs. General and administrative expenses for the three months
ended September 30, 1999 decreased by $249,877 or 64% to $144,053 from $393,930
for the three months ended September 30, 1998, primarily due to the streamlining
of our operations resulting in lower salaries.
Results of Operations - Nine months ended September 30, 1999, compared to the
nine months ended September 30, 1998
Revenues. Revenues for the nine months ended September 30, 1999, increased by
$151,881 or 25% to $622,876 from $470,995 for the nine months ended September
30, 1998. This increase resulted from fees charged for investment banking
services as well as an increase in administrative income.
Expenses. Total expenses for the nine months ended September 30, 1999,
decreased by $956,918 or 67% to $469,689 from $1,426,607 for the nine months
ended September 30, 1998. This decrease resulted from lower home building
development costs. General and administrative expenses for the nine months ended
September 30, 1999, decreased by $416,234 or 48% to $466,954 from $883,188 for
the nine months ended September 30, 1998, primarily due to the streamlining of
our operations resulting in lower salaries.
Changes in Financial Condition, Liquidity and Capital Resource.
For the nine months ended September 30, 1999, the Company funded its operations
and capital requirements partially with its own capital and partially with
proceeds from stock offerings. As of September 30, 1999, the Company had cash of
$59,701.
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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
Registrant
November 12, 1999 /s/ Steven R. Peacock
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Date Steven R. Peacock
President and Chief Executive Officer
November 12, 1999 /s/ Lisa Martinez
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Date Lisa Martinez
Secretary
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