<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------------------------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997 COMMISSION FILE NO. 2-91651-D
PEACOCK FINANCIAL
CORPORATION
COLORADO 87-0410039
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
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 10,695,295 SHARES OUTSTANDING
$0.001 PAR VALUE AS OF MARCH 31, 1997
<PAGE>
PEACOCK FINANCIAL CORPORATION
REPORT ON FORM 10-Q
QUARTER ENDED MARCH 31, 1997
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Page
Number
------
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
- CONDENSED CONSOLIDATED
BALANCE SHEETS AS OF
MARCH 31, 1997, AND DECEMBER 31, 1996 3 & 4
- CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS THREE MONTHS ENDED
MARCH 31, 1997 AND 1996 5 & 6
- CONDENSED CONSOLIDATED STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY
AS OF MARCH 31, 1997 7 - 9
- CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS AS OF MARCH 31, 1997
AND MARCH 31, 1996 10 & 11
- NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
ITEM 2. NOTES TO THE FINANCIAL STATEMENTS 12
ITEM 3. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION 13
PART II. OTHER INFORMATION AND SIGNATURES 14
2
<PAGE>
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Balance Sheets
<TABLE>
<CAPTION>
ASSETS
------
March 31, December 31,
1997 1996
---------- ----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 2,923 $ 90,987
Receivables - related parties 18,152 11,744
Total Current Assets 21,075 102,731
---------- ----------
FIXED ASSETS, at cost, net of accumulated
depreciation of $147,717 and $151,186,
respectively 402,280 371,649
---------- ----------
NET ASSETS OF DISCONTINUED OPERATIONS 532,006 683,190
---------- ----------
OTHER ASSETS
Construction-in-process 455,304 484,424
Notes receivable - related parties 125,990 140,171
Developer fees receivable 282,000 294,000
Development costs 1,223,436 1,216,036
Investments in limited partnerships 1,224,292 1,224,292
Other assets 4,079 5,201
---------- ----------
Total Other Assets 3,315,101 3,364,124
---------- ----------
TOTAL ASSETS $4,270,462 $4,521,694
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
3
<PAGE>
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
March 31, December 31,
1997 1996
---------- ----------
CURRENT LIABILITIES
Accounts payable $ 305,266 $ 295,881
Other current liabilities 358,421 336,014
Lines of credit 70,520 76,006
Notes payable - current portion 395,132 797,100
Note payable to stockholder 29,792 27,914
---------- ----------
Total Current Liabilities 1,159,131 1,532,915
---------- ----------
LONG-TERM DEBT
Notes payable - long term 2,190,578 1,829,951
---------- ----------
Total Liabilities 3,349,709 3,362,866
---------- ----------
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; 10,695,295 and
10,695,295 shares issued and outstanding,
respectively 10,695 10,695
Additional paid-in capital 2,215,474 2,215,474
Accumulated deficit (1,312,139) (1,074,064)
---------- ----------
Total Stockholders' Equity 920,753 1,158,828
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $4,270,462 $4,521,694
---------- ----------
---------- ----------
The accompanying notes are an integral part of these consolidated
financial statements.
4
<PAGE>
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Statements of Operations
March 31, March 31,
1997 1996
---------- ----------
REVENUES
Home building and development sales $ 704,288 $ -
Property management and administration
income 1,967 66,552
Commissions income 4,814 26,205
Other income 2,127 14,807
---------- ----------
Total Revenues 713,196 107,564
---------- ----------
EXPENSES
Home building and development costs 698,150 -
General and administrative 184,867 151,016
Depreciation and amortization 200 2,457
---------- ----------
Total Expenses 883,217 153,473
---------- ----------
LOSS FROM CONTINUING OPERATIONS 170,021 45,909
---------- ----------
OTHER INCOME (EXPENSE)
Interest income - 1,000
Interest expense (4,867) (13,516)
Other expense (1,600) -
---------- ----------
Total Other Income (Expense) (6,467) (12,516)
---------- ----------
LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 176,488 58,425
INCOME TAXES - -
---------- ----------
NET LOSS FROM CONTINUING OPERATIONS 176,488 58,425
DISCONTINUED OPERATIONS
Loss from operations of discontinued segment 61,587 59,289
---------- ----------
Total Discontinued Operations 61,587 59,289
---------- ----------
NET LOSS $ 238,075 $ 117,714
---------- ----------
---------- ----------
The accompanying notes are an integral part of these consolidated
financial statements.
5
<PAGE>
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Statements of Operations (Continued)
March 31, March 31,
1997 1996
---------- ----------
LOSS PER SHARE
Continued operations $ 0.01 $ 0.01
Discontinued operations 0.01 0.01
---------- ----------
LOSS PER SHARE $ 0.02 $ 0.02
---------- ----------
---------- ----------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 10,695,295 9,942,700
---------- ----------
---------- ----------
The accompanying notes are an integral part of these consolidated
financial statements.
6
<PAGE>
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Preferred Stock Common Stock Additional
----------------- ------------------------- Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit
------ -------- ----------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, March
31, 1994 - $ - 2,136,304 $2,136 $1,910,998 $(345,718)
Stock issued for
services - - 848,696 849 7,638 -
Accrued dividends - - - - (10,200) -
Class B stock issued
for debt - - 184,900 185 369,800 -
Class B stock issued
for cash - - 16,250 16 32,299 -
Stock offering costs
charged to paid-in
capital - - - - (69,080) -
Net loss for the year
ended March 31,
1995 - - - - - (321,864)
---------- ---------- ---------- ---------- ---------- -----------
Balance, March
31, 1995 - - 3,186,150 3,186 2,241,455 (667,582)
Class A stock issued
for services - - 20,000 20 19,980 -
Class B stock issued
for cash - - 50,000 50 99,950 -
Accrued dividends - - - - (34.496) -
Net loss for the period
from April 1, 1995 to
December 31, 1995 - - - - - (547,285)
---------- ---------- ---------- ---------- ---------- -----------
Balance, December 31,
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
7
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1995 - $ - 3,256,150 $ 3,256 $2,326,899 $(1,214,867)
---------- ---------- ---------- ---------- ---------- -----------
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
8
<PAGE>
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Preferred Stock Common Stock Additional
---------------------- --------------------------- Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit
------ -------- ----------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1995 - $- 3,256,150 $3,256 $2,326,899 $(1,214,867)
Common stock issued
to acquire Connectivity
and Technology, Inc. - - 5,183,850 5,184 (5,184) -
Conversion of Class B
common stock to
preferred stock 672,300 6,723 (672,300) (672) (6,051) -
Common stock
issued for cash - - 2,700,095 2,700 154,269 -
Common stock issued
for service - - 227,500 227 36,773 -
Deferred stock costs
charged to paid-in
capital - - - - (265,810) -
Accrued dividends - - - - (25,422) -
Net income for the year
ended December
31, 1996 - - - - - 140,803
---------- ---------- ---------- ---------- ---------- -----------
Balance, December
31, 1996 672,300 6,723 10,695,295 10,695 2,215,474 (1,074,064)
Net Loss for the
period ended
March 31, 1997 (238,075)
---------- ---------- ---------- ---------- ---------- -----------
Balance March
31, 1997 672,300 $6,723 10,695,295 $10,695 $2,215,474 $(1,312,139)
---------- ---------- ---------- ---------- ---------- -----------
---------- ---------- ---------- ---------- ---------- -----------
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
9
<PAGE>
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Statements of Cash Flows
March 31, March 31,
1997 1996
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(238,075) $(117,714)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization 200 478
Discontinued operations 151,185 868,461
Changes in operating assets and liabilities:
(Increase) decrease in accounts and notes
receivable 12,000 (110,000)
(Increase) decrease in accounts
receivable - related parties 7,772 7,494
(Increase) decrease in other assets (6,278) (194,966)
Increase (decrease) in accounts payable 9,385 (42,283)
Increase (decrease) in other liabilities 16,921 56,755
---------- ----------
Net Cash Used by Operating Activities (46,890) 468,225
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Construction in progress 29,120 -
Purchase of property and equipment (30,831) 1,188
---------- ----------
Net Cash Used by Investing Activities (1,711) 1,188
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Due to shareholders 1,878 -
Repayment of notes payable (401,968) (28,058)
Proceeds from long-term borrowings 360,627 (742,010)
Proceeds from stock offerings - 101,956
---------- ----------
Net Cash Provided by Financing Activities $ (39,463) $ (668,112)
---------- ----------
The accompanying notes are an integral part of these consolidated
financial statements.
10
<PAGE>
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Statements of Cash Flows (Continued)
March 31, March 31,
1997 1996
---------- ----------
(12 Months) (9 Months)
NET INCREASE IN CASH $ (88,064) $ (198,699)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 90,987 267,593
---------- ----------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 2,923 $ 68,894
---------- ----------
---------- ----------
SUPPLEMENTAL DISCLOSURE OF
NON-CASH ACTIVITIES
Common stock issued for debt $ - $ -
Common stock issued for services $ - $ -
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Interest paid, net of amount capitalized $ 2,173 $ 13,516
Income taxes paid $ - $ -
The accompanying notes are an integral part of these consolidated
financial statements.
11
<PAGE>
PEACOCK FINANCIAL CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 1997
1. The interim financial statements are prepared pursuant to the requirements
for reporting on Form 10-QSB. The December 31, 1996, 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, 1996.
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.
12
<PAGE>
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, 1997, COMPARED TO THE THREE
MONTHS ENDED MARCH 31, 1996.
The Company is engaged in construction and real estate development. The
Company's most recent developments are near the Eastside Reservoir, a $3 billion
project under construction in Central Riverside County which will be the largest
freshwater lake in Southern California.
REVENUES. Revenues for the three months ended March 31, 1997, increased by
$605,632 or 563% to $713,196 from $107,564 for the three months ended March 31,
1997. This increase resulted from increase in home building offset partially by
decrease in property management and administration revenues.
EXPENSES. Total expenses for the three months ended March 31, 1997, increased
by $729,744 or 475% to $883,217 from $153,473 for the three months ended March
31, 1997. This increase resulted from higher general and administrative expenses
and home building development costs. General and administrative expenses for the
three months ended March 31, 1997, increased by $33,851 or 22% to $184,867 from
$151,016 for the three months March 31, 1997.
CHANGES IN FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCE.
For the three months ended March 31, 1997, the Company funded its operations and
capital requirements partially with its own working capital and partially with
loans from related parties. As of March 31, 1997, the Company had cash of
$2,923.
Net cash generated from the operating activities decreased to $46,890 compared
to increase of $468,225 for the three months ended March 31, 1997 and 1996
respectively. The decrease resulted mainly from operations.
Net cash used in financing activities decreased by $39,463 compared to decrease
of $668,112 for the three months ended March 31, 1997 and 1996 respectively.
At March 31, 1997 and 1996 the Company had $2,190,578 and $1,867,009 of
long-term debt respectively.
The Company is in the process to raise a three-year $10,000,000 loan for real
estate development as well as for working capital.
13
<PAGE>
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
- ------------------ --------------------------------------------
Date Steven R. Peacock
President and Chief Executive Officer
- ------------------ --------------------------------------------
Date Joy M. Hunt
Secretary/Treasurer
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,923
<SECURITIES> 0
<RECEIVABLES> 18,152
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 21,075
<PP&E> 402,280
<DEPRECIATION> 147,717
<TOTAL-ASSETS> 4,270,462
<CURRENT-LIABILITIES> 1,159,131
<BONDS> 2,190,578
0
6,723
<COMMON> 10,695
<OTHER-SE> 903,335
<TOTAL-LIABILITY-AND-EQUITY> 4,270,462
<SALES> 704,288
<TOTAL-REVENUES> 713,196
<CGS> 698,150
<TOTAL-COSTS> 883,217
<OTHER-EXPENSES> 1,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,867
<INCOME-PRETAX> (176,488)
<INCOME-TAX> 0
<INCOME-CONTINUING> (176,488)
<DISCONTINUED> (61,587)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (238,076)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
