<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 June 30, 1999 Commission File No. 2-91651-D
Peacock Financial
Corporation
<TABLE>
<S> <C>
Colorado 87-0410039
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
</TABLE>
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 31,200,796 Shares Outstanding
$0.001 par value as of June 30, 1999
<PAGE>
PEACOCK FINANCIAL CORPORATION
REPORT ON FORM 10-Q
QUARTER ENDED JUNE 30, 1999
TABLE OF CONTENTS
_______________________________________________________________________
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<CAPTION>
Page
Number
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<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
. CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1999, AND
DECEMBER 31, 1998 3 & 4
. CONSOLIDATED STATEMENTS OF
OPERATIONS SIX MONTHS ENDED
JUNE 30, 1999 AND 1998 5 & 6
. CONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDERS' EQUITY
AS OF JUNE 30, 1999 7 & 8
. CONSOLIDATED STATEMENTS OF
CASH FLOWS AS OF JUNE 30, 1999
AND JUNE 30, 1998 9 & 10
. NOTES TO 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
</TABLE>
2
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PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Balance Sheets
<TABLE>
<CAPTION>
ASSETS
------
June 30, December 31,
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 63,458 $ -
Notes receivables 36,300 19,300
Accounts receivable 4,750 -
Due from related party 5,295 2,396
----------- -----------
Total Current Assets 109,803 21,696
----------- -----------
FIXED ASSETS, at cost, net of accumulated
depreciation of $83,034 and $80,299,
respectively 1,610 366,780
----------- -----------
OTHER ASSETS
Notes receivable - related parties 473,230 114,000
Developer fees receivable 82,628 154,077
Development costs 1,216,036 1,216,036
Investments in limited partnerships 1,224,292 1,224,292
Other investments 1,000,000 200,000
Licensing rights 30,000 30,000
Other assets 48,151 29,201
----------- -----------
Total Other Assets 4,074,337 2,967,606
----------- -----------
TOTAL ASSETS $ 4,185,750 $ 3,356,082
=========== ===========
</TABLE>
3
<PAGE>
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
June 30, December 31,
--------------------------
1999 1998
----------- ------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 230,956 $ 227,743
Bank overdraft - 4,509
Other current liabilities 241,997 280,982
Lines of credit 2,678 6,365
Notes payable - current portion 434,322 753,060
Note payable to stockholder 29,298 57,058
----------- -----------
Total Current Liabilities 939,251 1,329,717
----------- -----------
LONG-TERM DEBT
Notes payable - long term 734,893 864,501
----------- -----------
Total Liabilities 1,674,144 2,194,218
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock: 10,000,000 shares authorized
at $0.01 par value; 672,300 and 672,300 shares
issued and outstanding, respectively 6,723 6,723
Common stock: 250,000,000 shares authorized at
$0.001 par value; 31,200,796 and 20,750,370
shares issued and outstanding, respectively 31,201 20,750
Additional paid-in capital 4,606,511 3,519,882
Capital reserve (3,666) -
Accumulated deficit (2,129,163) (2,385,491)
----------- -----------
Total Stockholders' Equity 2,511,606 1,161,864
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,185,750 $ 3,356,082
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
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PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Statements of Operations
<TABLE>
<CAPTION>
For 6 Months Ended For 3 Months Ended
------------------------------------------------------
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
--------- ---------- ------------------- --------
<S> <C> <C> <C> <C>
REVENUES
Home building and development sales $ - $ 313,868 $ - $ 80,196
Property management and administration
income 2,370 2,100 1,777 1,200
Investment banking income 600,000 - 400,000 -
Other income 3,824 9,586 3,824 500
-------- ----------- ---------- ----------
Total Revenues 606,194 325,554 405,601 81,896
-------- ----------- ---------- ----------
EXPENSES
Home building and development costs - 401,058 - 76,179
General and administrative 322,901 489,188 157,126 326,934
Depreciation and amortization 2,735 1,878 174 939
-------- ----------- ---------- ----------
Total Expenses 325,636 892,124 157,300 404,052
-------- ----------- ---------- ----------
INCOME (LOSS) FROM CONTINUING OPERATIONS 280,558 (566,570) 248,301 (322,156)
-------- ----------- ---------- ----------
OTHER INCOME (EXPENSE)
Loss on investments (25,000) - (25,000) -
Other income 70,000 - - -
Interest expense (70,275) (48,179) (33,248) (23,735)
Other expense (800) (800) - -
-------- ----------- ---------- ----------
Total Other Income (Expense) (26,075) (48,979) (58,248) (23,735)
-------- ----------- ---------- ----------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 254,483 (615,549) 190,053 (345,891)
INCOME TAXES - - - -
-------- ----------- ---------- ----------
NET INCOME (LOSS) $ 254,483 $ (615,549) $ 190,053 $ (34,891)
========= =========== ========== ==========
</TABLE>
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)
<TABLE>
<CAPTION>
For 6 Months Ended For 3 Months Ended
----------------------------------------------------
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
EARNINGS (LOSS) PER SHARE
Continued operations 0.01 (0.03) 0.01 (0.01)
Discontinued operations 0.00 0.00 0.00 0.00
----------- ----------- ---------- ----------
EARNINGS (LOSS) PER SHARE 0.01 (0.03) 0.01 (0.01)
=========== =========== ========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 29,700,396 20,412,652 30,972,996 27,912,652
=========== =========== ========== ==========
</TABLE>
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>
Additional
Preferred Stock Common Stock Paid-in Accumulated
---------------- --------------------
Shares Amount Shares Amount Capital Deficit
------- ------- ---------- ------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
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
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 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)
======= ======= ========== ======= ========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
7
<PAGE>
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Additional
Preferred Stock Common Stock Paid-in Accumulated
--------------- -------------------
Shares Amount Shares Amount Capital Deficit
------- ------ ---------- ------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Common stock issued
for cash - - 8,365,555 $ 8,366 $ 756,300 -
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 - - 1,250,000 1,250 300,000 -
Peacock International
Corporation - - - - - 1,845
Accrued dividends - - - - (11,586) -
Net income (loss) for
the period ended
June 30, 1999 - - - - - 272,155
------- ------ ---------- ------- ---------- -----------
Balance,
June 30, 1999 672,300 $6,723 31,200,796 $31,201 $4,606,511 $(2,111,491)
======= ====== ========== ======= ========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
8
<PAGE>
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
June 30, June 30,
1999 1998
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 254,483 (615,549)
Adjustments to reconcile net income (loss)
to net cash used by operating activities:
Depreciation and amortization 2,735 1,878
Changes in operating assets and liabilities:
(Increase) decrease in accounts and notes
receivable 29,800 35,390
(Increase) decrease in accounts
receivable - related parties (2,899) (10,016,455)
(Increase) decrease in other assets (6,000) (655)
Increase (decrease) in accounts payable 9,813 (44,601)
Increase (decrease) in other liabilities (34,855) 22,410
--------- ------------
Net Cash Used by Operating Activities 253,077 (10,617,582)
--------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Note receivable (242,930) -
Construction in progress - 374,221
Purchase of property and equipment 363,228 (20,884)
--------- ------------
Net Cash Used by Investing Activities 120,298 353,337
--------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Due to (from) shareholders 5,592 (7,873)
Repayment of notes payable (276,088) (182,330)
Repayment of long-term borrowings (52,963) (9,264)
Stock issued for cash 291,041 10,439,718
--------- ------------
Net Cash Provided by Financing Activities $ (32,418) $ 10,240,251
--------- ------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
9
<PAGE>
PEACOCK FINANCIAL CORPORATION AND SUBSIDIARY
(Formerly Connectivity and Technology, Inc.)
Consolidated Statements of Cash Flows (Continued)
<TABLE>
<CAPTION>
For the 6 Months Ended
June 30, June 30,
1999 1998
--------- ----------
<S> <C> <C>
NET DECREASE IN CASH $(28,109) $ (23,994)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 91,567 14,777
-------- ---------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 63,458 $ (9,217)
======== =========
SUPPLEMENTAL DISCLOSURE OF
NON-CASH ACTIVITIES
Common stock issued for debentures $ 51,565 $ -
Common stock issued for debt $ 600 $ -
Common stock issued for services $300,000 $ 210,200
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Interest paid, net of amount capitalized $ 37,568 $ 22,604
Income taxes paid $ - $ -
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
10
<PAGE>
PEACOCK FINANCIAL CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 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
<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 June 30, 1999, compared to the three
months ended June 30, 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.
The Company expects to raise additional capital for its real estate operations
in the San Jactino 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 June 30, 1999, increased by
$323,705 or 80% to $405,601 from $81,896 for the three months ended June 30,
1998. This increase resulted from fees charged for investment banking services
as well as an increase in property management income and administration
revenues.
Expenses. Total expenses for the three months ended June 30, 1999, decreased by
$246,752 or 61% to $157,300 from $404,052 for the three months ended June 30,
1998. This decrease resulted from lower home building costs. General and
administrative expenses for the three months ended June 30, 1999, decreased by
$169,808 or 52% to $157,126 from $326,934 for the three months June 30, 1998.
This decrease was primarily due to streamling our operations resulting in lower
salaries.
Results of Operations - Six months ended June 30, 1999, compared to the six
months ended June 30, 1998.
In the first two quarters, the Company raised $607,250 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.
Revenues. Revenues for the six months ended June 30, 1999, increased by $280,640
or 47% to $606,194 from $325,554 for the six months ended June 30, 1998. This
increase resulted from fees charged for investment banking services as well as
an increase in property management and administration income.
Expenses. Total expenses for the six months ended June 30, 1999, decreased by
$566,488 or 64% to $325,636 from $892,124 for the six months ended June 30,
1998. This decrease resulted from lower home building development costs. General
and administrative expenses for the six months ended June 30, 1999, decreased by
$166,287 or 34% to $322,901 from $489,188 for the six months ended June 30, 1998
primariy due to streamlining our operations resulting in lower salaries.
12
<PAGE>
Changes in Financial Condition, Liquidity and Capital Resource.
For the six months ended June 30, 1999, the Company funded its operations and
capital requirements partially with its own capital and partially with proceeds
from stock offerings. As of June 30, 1999, the Company had cash of $63,458.
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
July 29, 1999 /s/ Steven R. Peacock
- ----------------------- ----------------------------------------------
Date Steven R. Peacock
President and Chief Executive Officer
July 29, 1999 /s/ Lisa Martinez
- ----------------------- ----------------------------------------------
Date Lisa Martinez
Secretary
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 63,458
<SECURITIES> 0
<RECEIVABLES> 4,120,682
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,184,140
<PP&E> 84,644
<DEPRECIATION> (83,034)
<TOTAL-ASSETS> 4,185,750
<CURRENT-LIABILITIES> 939,251
<BONDS> 734,893
0
6,723
<COMMON> 31,201
<OTHER-SE> 2,473,682
<TOTAL-LIABILITY-AND-EQUITY> 4,185,750
<SALES> 0
<TOTAL-REVENUES> 606,194
<CGS> 0
<TOTAL-COSTS> 277,901
<OTHER-EXPENSES> 3,535
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 70,275
<INCOME-PRETAX> 254,483
<INCOME-TAX> 0
<INCOME-CONTINUING> 254,483
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 254,483
<EPS-BASIC> .01
<EPS-DILUTED> .01
</TABLE>
