U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the quarterly period ended February 28, 1998.
[ ] Transition report under section 13 or 15(d) of the
Securities Exchange Act of 1934
[no fee required]
Commission File Number 33-3560D
CONECTISYS CORP.
(Name of small business issuer in its charter)
Colorado 84-1017107
(state or other jurisdiction (I.R.S.
Employer
Incorporation or Organization) Identification
No.)
7260 Spigno Place
91350
Agua Dulce, California
(Address of principal
(Zip Code)
executive offices
Issuer's telephone number: (805) 268-0305
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
None
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(b) 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.
[X]Yes[ ]No
Common Stock, issued and outstanding as of February 28 1998: 8,815,152
PART I
Item 1. Financial Statements
Financial statements are unaudited and included herein
beginning on page F1 Exhibit 99 and are incorporated herein
by this reference.
Item 2. Management's Discussion and Analysis or Plan of Operation
Results of operations
The Company realized a net loss on operations of $436,944 for the quarter ended
February 28, 1998, with $ 0 revenues. The Company in the 3-month period ended
February 28, 1998 had losses of $310,344, with $66,092 in revenues.
Plan of operation
Loss on operations for the Company for the quarter ended February 28 1997 was
$310,344 as compared to a loss of $436,944 in first quarter
1998. This is a 41% increase in losses from the prior year
in the same period. The Company will, over the next 12
months, rely on the revenues from its subsidiaries,
collection of notes receivables and additional funding
through the sale of common stock or loans colateralized
through common stock. Revenues in fiscal 1997 were $380,642
as compared to $111,163 in year ended November 30, 1996.
The $380,642 in revenue is a 242% increase over revenues
obtained in the same period in 1996. Revenues in the first
quarter of 1998 were $ 0 as compared to $ 66,092.
Development for the subsidiaries' products will be ongoing
throughout the year with no expected purchase of significant
equipment or plants at this time. There is no expected
significant change in the number of employees at this time.
The Company in the first quarter of 1998 shipped its first
product to Consolidated Edison, Steam Division, a new
customer to PrimeLink. The Company is working diligently on
this account.
Liquidity and capital Resources
As of February 28, 1998, the Company had a negative working capital of
$659,254, consisting of $10,052 in current assets plus
627,500 in short term notes receivable and $1,296,806 in
current liabilities. The Company had a negative working
capital of $1,012,400 at quarter ended February 28, 1997.
This is a decrease in negative working capital compared to
February 28, 1997. The Company is dependent on achieving
profitable operations through its acquisitions and the
collection of outstanding receivables to continue as a going
concern.
The Company had total assets of $1,717,510 as of February
28, 1998, and total liabilities of $1,296,805. Shareholder equity is
$420,705, as compared to $554,436 fiscal quarter ended February 28, 1997.
Cash Flows
The Company had a net loss for the quarter ended February
28, 1997, of $ 436,944. The cash used in operations toward
this loss was $246,346. The largest area of loss was the
result of non-cash transactions to the Company. $91,515
(20%) was the result of depreciation and amortization
expenses. The Company had a $69,832 (15%) dollar increase
in accrued compensation to its officers and directors. The
cash provided by investing was $279,374. The Company sold
approximately $25,000 worth of its stock under Regulation S
to finance a portion of its losses.
Management's plans for correcting these deficiencies include
the future sales of the licensed products and to raise
capital through the issuance of common stock to assist in
providing to the company the liquidity necessary to retire
the outstanding debt and meet operating expenses. In the
longer term, the Company plans to achieve profitability
through operations of the subsidiaries, however there are no
assurances that profitability will be achieved.
Effect of inflation
Inflation did not have any significant effect on the
operations of the company during the quarter ended February
28, 1997. Further, inflation is not expected to have any
significant effect on future operations of the Company.
The Financial Accounting Standards Board (FASB) Impact
Statement of FASB standards No. 121 "Accounting for the
impairment of long lived assets and for long lived assets to
be disposed of" (SFAS No. 121) is effective for financial
statements for fiscal years beginning after December 15,
1995. The new standard establishes new guidelines regarding
when impairment losses on long lived assets, which include
plant and equipment, certain identifiable intangible assets
and goodwill, should be recognized and how impairment losses
should be measured. The Company does not expect adoption to
have a material effect on its financial position or result
of operations. SFAS No 123 "Accounting for stock based
compensation" (SFAS No 123), issued by the FASB, is
effective for specific transactions entered into after
December 15, 1995, while the disclosure requirements of SFAS
No 123 are effective for financial statements for fiscal
years beginning no later than December 15, 1995. The new
standard establishes a fair value method of accounting for
stock based compensation plans and for transactions in which
an entity acquires goods and services from non-employees in
exchange for equity instruments. At the present time, the
Company has not determined if it will change its accounting
policy for stock based compensation or only provides the
required financial statement disclosures. As such, the
impact on the Company's financial position and results of
operation is currently unknown
On March 3, 1997, FASB issued Statement of Financial
Accounting Standards No. 128, Earnings per Share (SFAS 128).
This pronouncement provides a different method of
calculating earnings per share than is currently used in
accordance with APB 15, Earnings per Share. SFAS 128
provides for the calculation of Basic and Diluted earning
per share. Basic earnings per share includes no dilution
and is computed by dividing income available to common share
holders by the weighted average number of common shares
outstanding for the period. Diluted earnings per share
reflect the potential dilution of securities that could
share in the earning of the entity, similar to fully diluted
earnings per share. This pronouncement is effective for
fiscal years and interim periods ending after December 15,
1997; early adoption is not permitted. The Company has not
determined the effect, if any, of adoption on its EPS
computation(s).
PART II
Other Information
Item 1. Legal Proceedings
There are two legal proceedings to which the Company is a
party. The first case, Securities and Exchange Commission
(Plaintiff) Vs. Andrew S. Pitt, Conectisys Corp., Devon
Investments Advisors, Inc., B & M Capital Corp., Mike Zaman,
and Smith Benton & Hughes, Inc. (Defendants) Civil Case # 96-
4164. The Case Alleges that a fraudulent scheme was
orchestrated and directed by the defendants to engage in the
sale and distribution of unregistered shares of Conectisys
by creating the appearance of an active trading market for
the stock of Conectisys and artificially inflating the price
of its shares. In the suit the SEC seeks permanent
injunctions from violating securities laws. The SEC does
not seek any civil penalties from the Company. The courts
having conducted a trial if this matter without a jury and
taken it under submission, found for the plaintiff as
follows: against Conectisys on the claim that the defendant
violated section 5(a), 5(c), 17(a). Conectisys was NOT found
to have violated section 10(b), 10(b-5), or 15(c). The
Plaintiff was ordered to file proposed findings of fact and
conclusions of law. The Plaintiff has filed subsequent to
the year ended November 30, 1997, with its conclusions and
findings, and is requesting that the Company disgorge
alleged profits plus interest totaling $1,013,514.60. The
Company has filed objections to their claims. After the
court settles the findings and conclusions, the court will
enter further orders with respect remedy or remedies to be
granted to the plaintiff.
The second case was brought by Clamar Capital Corp. (the
"Plaintiff ") against Smith Benton & Hughes; Michael Zaman;
Claudia Zaman; Andrew Pitt and Conectisys Corp.
(collectively the "Defendants"). The case was brought
before the District Court of Arapahoe, State of Colorado,
case No. 97-CV-1442, Division 3. The Plaintiff did not
specify an amount of damages that it seeks from the
defendants.
Item 5. Other Information
In March 1998, the Company issued Robert Spigno a related
party 60,000 shares of Preferred Class A Stock to reduce a
portion of outstanding compensation due.
On April 12, 1998 the Company authorized the issuance of
1,200,000 shares of Common stock under Regulation S of the
Securities Act of 1933 (the Act) to non-US persons as
defined in the Act.
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
27.0 Financial Data Schedule
99.0 Financial statements
(b) During the Registrant's fiscal quarter ended
February 28, 1998, the registrant filed the following
current reports on Form 8-K:
8-K Filed December 17, 1997
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Registrant has duly
caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONECTISYS CORPORATION
Date: April 27, 1998 By /S/ Robert A.
Spigno
Robert A. Spigno,
President
Pursuant to the requirements of the Securities Exchange
Act of 1934, this Report has been signed below by the
following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
Signature Title Date
/S/ Robert A. Spigno Chairman of the Board, April 27,
(Robert A. Spigno) Chief Executive 1998
Officer, President and
Director
/S/ Richard Dowler Chief Financial Officer April 27, 1998
(Richard Dowler) (Principal Financial
Officer and Principal
Accounting Officer),
and Director
/S/ Patricia A. Spigno Secretary, Treasurer April 27, 1998
(Patricia A. Spigno)