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 May 30, 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 May 30 1998: 9,242,415
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 $923,463 for the quarter ended
May 28, 1998, with $ 2,960 revenues. The Company in the 6-month period ended
May 30, 1997 had losses of $599,016, with $208,094 in revenues.
Plan of operation
Loss on operations for the Company for the quarter ended May 30, 1997 was
$599,016 as compared to a loss of $923,463 in first 2 quarters of 1998. This is
a 54% 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 2 quarters of 1998 were $ 2960 as compared to $
208,094. 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 May 30, 1998, the Company had a negative working capital of
$586,190 consisting of $155,943 in current assets plus 444,000 in short term
notes receivable and $1,186,133 in current liabilities. The Company had a
negative working capital of $1,154,226 at quarter ended May 30, 1997. This is a
49% decrease in negative working capital compared to May 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 $1,582,658 as of February 28, 1998, and total
liabilities of $1,186,133. Shareholder equity is $396,525, as compared to
$285,762 fiscal quarter ended February 28, 1997.
Cash Flows
The Company had a net loss for the quarters ended May 30, 1998, of $ 923,463.
The cash used in operations toward this loss was $703,899. The largest area of
loss was the result of non-cash transactions to the Company. $186,367 (20%) was
the result of depreciation and amortization expenses. The Company had a $68,985
(7.5%) dollar increase in accrued compensation to its officers and directors.
The cash provided by investing was $82,775. The Company sold approximately
$752,230 worth of its stock under restricted under rule 144 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 May 30, 1998. 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.
Subsequent to the quarter end Robert A. Spigno President/ CEO resigned as
President but held his position as CEO. Karl Elliott President of Technilink
Technology and Manufacturing Inc. (a subsidiary) has accept to fill the
President position of Conectisys
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 May 30, 1998, the
registrant filed the following current reports on Form 8-K:
None
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: July 13, 1998 By /S/ Robert A. Spigno
Robert A. Spigno, CEO
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, July 13, 1998
(Robert A. Spigno) Chief Executive
Officer, and Director
/S/ Richard Dowler Chief Financial Officer July 13, 1998
(Richard Dowler) (Principal Financial
Officer and Principal
Accounting Officer),
and Director
/S/ Patricia A. Spigno Secretary, Treasurer July 13, 1998
(Patricia A. Spigno)