U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
Commission File No. 33-55254-39
PERIPHERAL CONNECTIONS, INC.
(Exact name of Small Business Issuer as specified in its charter)
NEVADA 87-0485315
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
176 John Street Toronto, Ontario, Canada M5T1X5
(Address of principal executive offices)
Issuer's telephone number, including area code (416) 593-0859
3303 Don Mills Road, Suite 2603
North York, Ontario, Canada M2J4T6 (416) 490-8500
Former address and telephone number
Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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.
Yes X No
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 14,600,000 shares of $.001 par value
class A common stock outstanding as of April 10, 1998.
Transitional Small Business Disclosure Format (check one): Yes No X
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PERIPHERAL CONNECTIONS, INC.
FORM 10-QSB FOR QUARTER ENDED
March 31, 1998
INDEX
PART I - FINANCIAL INFORMATION Page No.
Item 1 Financial Statements
Balance Sheets as of
March 31, 1998 and December 31, 1997 5
Statements of Operations for the
three month periods ended
March 31, 1998 and 1997 6
Statements of Cash Flows for the
three month periods ended
March 31, 1998 and 1997. 7
Pro forma Balance Sheet 8
Pro forma Statement of Operations 9
Item 2 Management's Discussion and Analysis
and Plan of Operations 10
PART II - OTHER INFORMATION
Item 1 Legal Proceedings 11
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Item 2 Changes in Securities 11
------
Item 3 Defaults Upon Senior Securities 11
------
Item 4 Submission of Matters to a Vote of
Security Holders 11
Item 5 Other Information 11
------
Item 6 Exhibits and Reports on Form 8-K 11
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2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
In the opinion of the management of Peripheral Connections, Inc. (the
Company) the accompanying unaudited financial statements contain all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the financial position as of March 31, 1998, the results of operations for the
three month periods ended March 31, 1998 and 1997, and the cash flows for the
three month periods ended March 31, 1998 and 1997.
While the Company believes that the disclosures presented are adequate
to make the information not misleading, it is suggested that these condensed
financial statements be read in conjunction with the financial statements and
the notes included in the Company's latest annual report on Form 10-KSB.
3
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SMITH & COMPANY
A PROFESSIONAL CORPORATION OF
CERTIFIED PUBLIC ACCOUNTANTS
MEMBERS OF: 10 WEST 100 SOUTH, SUITE 700
AMERICAN INSTITUTE OF SALT LAKE CITY, UTAH 84101
CERTIFIED PUBLIC ACCOUNTANTS TELEPHONE: (801) 575-8297
UTAH ASSOCIATION OF FACSIMILE: (801) 575-8306
CERTIFIED PUBLIC ACCOUNTANTS E-MAIL: [email protected]
- --------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Shareholders
Peripheral Connections, Inc.
The accompanying balance sheet of Peripheral Connections, Inc. as of March 31,
1998, and the related statements of operations, and cash flows for the three
months ended March 31, 1998 and 1997 were not audited by us and, accordingly, we
do not express an opinion on them.
We also express no opinion on the pro forma financial statements.
The balance sheet as of December 31, 1997 was audited by us and we expressed an
unqualified opinion on it in our report dated March 9, 1998, except for Note 8
which was dated April 9, 1998, but we have not performed any auditing procedures
since that date.
/s/ Smith & Company
CERTIFIED PUBLIC ACCOUNTANTS
Salt Lake City, Utah
May 7, 1998
4
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PERIPHERAL CONNECTIONS, INC.
(A Development Stage Company)
Balance Sheets
<TABLE>
<CAPTION>
March 31, Dec. 31,
1998 1997
(Unaudited) (Audited)
----------------- -----------------
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash $ 9,253 $ 10,965
----------------- -----------------
Total Current Assets 9,253 10,965
----------------- -----------------
TOTAL ASSETS $ 9,253 $ 10,965
================= =================
LIABILITIES & EQUITY
CURRENT LIABILITIES
Accounts payable $ 0 $ 0
----------------- -----------------
Total Current Liabilities 0 0
----------------- -----------------
Total Liabilities 0 0
STOCKHOLDERS' EQUITY
Common Stock $0.001 par value
Authorized - 25,000,000 shares
Issued and outstanding 3,850,000 shares 3,850 3,850
Additional paid-in capital 282,150 282,150
Deficit accumulated during the development stage (276,747) (275,035)
----------------- -----------------
Total Stockholders' Equity 9,253 10,965
----------------- -----------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 9,253 $ 10,965
================= =================
</TABLE>
5
<PAGE>
PERIPHERAL CONNECTIONS, INC.
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the
Three Months Ended
March 31,
1998 1997
------------- -------------
<S> <C> <C>
Interest income $ 105 $ 0
Expenses
Administration 1,817 7,765
Net Interest Expense 0 2,331
------------- -------------
1,817 10,096
Net Loss for Period (1,712) (10,096)
Deficit - beginning of Period (275,035) (12,772)
------------- -------------
Deficit - end of Period (276,747) (22,868)
Net Loss per Share .00 (.01)
Average shares outstanding used to
calculate net loss per share 3,850,000 1,000,000
</TABLE>
6
<PAGE>
PERIPHERAL CONNECTIONS, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the
Three Months Ended
March 31,
1998 1997
----------------- -----------------
<S> <C> <C>
Cash flows from Operating Activities $ (1,712) $ (10,096)
Adjustments to reconcile net loss to cash used by
operating activities
Changes in assets and liabilities 0 10,000
----------------- -----------------
Net cash used by operating activities (1,712) (96)
Investing Activities
Loans to related party and accrued interest 0 (38,128)
----------------- -----------------
Net cash used by investing activities 0 (38,128)
----------------- -----------------
Decrease in cash (1,712) (38,224)
Cash - beginning of period 10,965 163,476
----------------- -----------------
Cash - end of period $ 9,253 $ 125,252
================= =================
</TABLE>
7
<PAGE>
PERIPHERAL CONNECTIONS, INC. AND SUBSIDIARY
(A Development Stage Company)
Unaudited Pro Forma Balance Sheet
<TABLE>
<CAPTION>
March 31, 1998
Peripheral Netking Consolidated
------------------ ----------------- -----------------
ASSETS
CURRENT ASSETS
<S> <C> <C> <C>
Cash $ 9,253 $ 25,849 $ 35,102
Accounts receivable 0 14,918 14,918
Inventory 0 278,324 278,324
Prepaid expenses 0 207,268 207,268
------------------ ----------------- -----------------
Total Current Assets 9,253 526,359 535,612
Equipment and software 0 2,352,588 2,352,588
Licenses and brand names 0 4,374,804 4,374,804
------------------ ----------------- -----------------
0 6,727,392 6,727,392
------------------ ----------------- -----------------
TOTAL ASSETS $ 9,253 $ 7,253,751 $ 7,263,004
================== ================= =================
LIABILITIES & EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 0 $ 41,147 $ 41,147
Accrued expenses 0 88,230 88,230
------------------ ----------------- -----------------
Total Current Liabilities 0 129,377 129,377
Loans payable 0 7,266,000 7,266,000
------------------ ----------------- -----------------
Total Liabilities 0 7,395,377 7,395,377
STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock $0.001 par value
Authorized - 25,000,000 shares
Issued and outstanding 3,850,000 shares 3,850 0 13,850*
Additional paid-in capital 282,150 0 272,150
Deficit accumulated during the
development stage (276,747) (141,626) (418,373)
------------------ ----------------- -----------------
Total Stockholders' Equity (Deficit) 9,253 (141,626) (132,373)
------------------ ----------------- -----------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 9,253 $ 7,253,751 $ 7,263,004
================== ================= =================
</TABLE>
* 10,000,000 shares were issued for subsidiary.
8
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PERIPHERAL CONNECTIONS, INC. AND SUBSIDIARY
(A Development Stage Company)
Unaudited Pro Forma Statement of Operations
Three months ended March 31, 1998
<TABLE>
<CAPTION>
Peripheral Netking Consolidated
------------------ ----------------- -----------------
<S> <C> <C> <C>
Sales $ 0 $ 14,656 $ 14,656
Cost of sales 0 20,075 20,075
------------------ ----------------- -----------------
Gross Loss 0 (5,419) (5,419)
Interest income 105 0 105
Expenses
General and administrative 1,817 136,207 138,024
------------------ ----------------- -----------------
1,817 136,207 138,024
Net Loss for Period (1,712) (141,626) (143,338)
Deficit - beginning of Period (275,035) 0 (275,035)
------------------ ----------------- -----------------
Deficit - end of Period (276,747) (141,626) (418,373)
Net Loss per Share .00 .00 (.01)
Average shares outstanding used to
calculate net loss per share 3,850,000 N/A 13,850,000
</TABLE>
9
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION.
The Company has no operational history and has yet to engage in
business of any kind. All risks inherent in a new and inexperienced enterprise
are inherent in the Company's business. The Company intends to continue the
operations of a subsidiary which was acquired on April 9, 1998.
On April 9, 1998, the Company beneficially acquired all of the stock of
Netking Limited, an English private limited company ("Netking") from Tomas
George Wilmot ("Seller"), who beneficially owned all of the stock of Netking.
The title holders of Netking were Local Protectors Limited and SNH Cooper, who
held the shares as nominees for Seller. The purchase price paid for the
purchased stock was 10,000,000 newly issued shares of the common stock of the
Company, which is approximately 68.5% of all of the outstanding stock of the
Company after such issuance. Tomas George Wilmot, individually, is the title
holder of all of the 10,000,000 newly issued shares of the Company. There are no
arrangements or understandings among members of both the former and new control
person or their associates with respect to election of directors or other
matters.
On April 9, 1998, the Company beneficially acquired all of the stock of
Netking from Seller, who beneficially owned all of the stock of Netking. There
are two shares of Netking outstanding. Because English law requires two
shareholders, the Company holds title to one share of stock of Netking and the
Company and Tomas Wilmot, as nominee for the Company, jointly hold title to the
other share. Netking is the beneficial owner of Skynet 2001 Limited (formerly
Keymore Limited), an English private limited company ("Skynet"). Skynet owns
intellectual property pertaining to all aspects of the Skynet 2000 in-vehicle
system. The Skynet 2000 system uses communications and security technology
coupled with proprietary software that provides in- vehicle protection, security
and information services using mobile cellular telecommunications. The Skynet
2000 system provides 24 hour monitoring of vehicle security, personal distress
alarm, and impact sensor and information services, as well as normal cellular
telephone capability. The purchase price paid for the purchased stock was
10,000,000 shares of newly issued common stock of the Company, which is
approximately 68.5% of all of the outstanding stock of the Company after such
issuance. The consideration was determined by arm's length negotiations between
the Company and Seller. Prior to the acquisition, there was no material
relationship between the Seller and the Company or any of its affiliates, any
director or officer of the Company, or any associate of any such director or
officer.
A portion of the business of Skynet and Netking acquired by the Company
constitutes equipment and other physical property previously used in the
business of the Seller. The Company intends to continue to use such equipment
and physical property for the same purposes.
The discussions below highlight certain of the more material changes in
results of operations and changes in financial condition for the fiscal three
month period ended March 31, 1998.
Results of Operations.
During the first quarters of fiscal 1998 the Company incurred expenses
related to general expense and accounting assistance.
Financial Condition.
There were no significant changes to the net financial condition of the
Company in the three month period ended March 31, 1998. Cash decreased by $1,712
mainly as a result of administration expense. The Company continues to believe
it has the support of its major stockholders and that financing is available to
meet all requirements.
10
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PART II
Other Information
Item 1. Legal proceedings: None
Item 2. Changes in Securities: None
Item 3. Defaults Upon Senior
Securities: None
Item 4. Submission of Matters to
a Vote of Security Holders: None
Item 5. Other Information: None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: None
(b) Reports on Form 8-K
A report on Form 8-K was filed on April 21, 1998 which
disclosed the items discussed in Item 2 about the
acquisition of assets and announced the election of
Tomas G. Wilmot as President.
11
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SIGNATURES
In accordance with the requirements of the Securities and Exchange Act,
the registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
PERIPHERAL CONNECTIONS, INC.
Dated: May 13, 1998 /s/ Tomas George Wilmot
Tomas George Wilmot, President
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Peripheral Connections, Inc. March 31, 1998 financial statements and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000894557
<NAME> Peripheral Connections, Inc.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 9,253
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,253
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,253
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 3,850
<OTHER-SE> 5,403
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 105
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,817
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,712)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,712)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,712)
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
