FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
Commission File No. 000-25989
PEPPERMILL CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 98-0186841
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1819 Clarkson Road, Suite 204, Chesterfield, Missouri 63017
(Address of principal executive offices) (Zip Code)
(636) 530-4532
(Registrant's telephone number, including area code)
Registrant 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 and
has been subject to such filing requirements for the past 90 days.
APPLICABLE ONLY TO CORPORATE ISSUERS:
COMMON STOCK, $.001 par value, 11,239,700 shares outstanding as of
March 31, 2000.
Part I. FINANCIAL INFORMATION
PEPPERMILL CAPITAL CORPORATION
CONDENSED BALANCE SHEETS
MARCH 31, 2000 AND DECEMBER 31, 1999
====================================================================================================================================
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY March 31, 2000 December 31, 1999
====================================================================================================================================
CURRENT LIABILITIES
Accrued liabilities, to related parties (Note 2) $ 11,656 $ --
STOCKHOLDERS' EQUITY (DEFICIENCY)
Common stock, 200,000,000 shares authorized, at $0.001 par value;
11,239,700 shares issued and outstanding 11,240 11,240
Additional paid-in capital 33,291 33,291
Accumulated deficit (56,187) (44,531)
- ------------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity (deficiency) 11,656) --
- ------------------------------------------------------------------------------------------------------------------------------------
$ -- $ --
====================================================================================================================================
See notes to condensed financial statements - unaudited.
1
PEPPERMILL CAPITAL CORPORATION
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2000 AND 1999
====================================================================================================================================
Three Months Ended
March 31
------------------------------------------
2000 1999
====================================================================================================================================
REVENUE $ -- $ --
OPERATING EXPENSES
General and administrative 11,656 1,200
- ------------------------------------------------------------------------------------------------------------------------------------
NET LOSS ($ 11,656) ($ 1,200)
====================================================================================================================================
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 11,239,700 11,239,700
====================================================================================================================================
NET LOSS PER SHARE - BASIC AND DILUTED $ -- --
====================================================================================================================================
See notes to condensed financial statements - unaudited.
1
PEPPERMILL CAPITAL CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2000 AND 1999
====================================================================================================================================
2000 1999
====================================================================================================================================
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($11,656) ($ 1,200)
Adjustment to reconcile net loss to net cash used in operating activities:
Increase in accounts payable and accrued expenses (11,656) (1,116
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities, representing the net decrease
in cash and cash equivalents for the period -- (84)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD -- 1,125
- ------------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ -- $ 1,041
====================================================================================================================================
See notes to condensed financial statements - unaudited.
3
PEPPERMILL CAPITAL CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
================================================================================
NOTE 1. BASIS OF PRESENTATION
================================================================================
Basis of Presentation
The accompanying (unaudited) financial statements of Peppermill
Capital Corporation have been prepared in accordance with generally
accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and, therefore, do not include
all information and footnotes necessary for a complete presentation of
financial position, results of operations and cash flows in conformity
with generally accepted accounting principles.
In the opinion of management, all adjustments considered necessary for
a fair presentation of the results of operations and financial
position have been included and all such adjustments are of a normal
recurring nature. Operations for the quarter ended March 31, 2000, are
not necessarily indicative of the results that can be expected for the
year ended December 31, 2000.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from
these estimates.
The financial data at December 31, 1999 is derived from audited
financial statements which are included in the Company's form 10-KSB
and should be read in conjunction with the audited financial
statements and the notes thereto.
================================================================================
NOTE 2. RELATED PARTY TRANSACTIONS
================================================================================
Varner Technologies, Inc. (90% owner of the Company) paid certain
expenses on behalf of the Company aggregating $11,656, including
accounting and legal expenses.
================================================================================
NOTE 3. NET LOSS PER COMMON SHARE
================================================================================
Basic and diluted net loss per common share was computed by dividing
the net loss by the weighted number of shares of common stock
outstanding during each period.
================================================================================
NOTE 4. GOING CONCERN UNCERTAINTIES
================================================================================
The Company has sustained losses and negative cash flows from
inception and has no working capital available to fund any possible
future expenditures necessary to remain in business. The Company
believes any future capital requirements will be provided by the
majority stockholder.
4
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation
General
Peppermill Capital Corporation, a Nevada corporation, was incorporated on
April 9, 1998. Peppermill has no subsidiaries. On November 22, 1999, Varner
Technologies, Inc. ("Varner") completed the purchase of 10,116,000 shares of
Peppermill Common Stock from several Peppermill shareholders. On November 19,
1999, Peppermill entered into a Letter of Intent with Varner Technologies, Inc.
("Varner"), relating to the merger of Varner into Peppermill. Varner is an
Internet service provider, and is further engaged in the marketing and sale of
long distance telephone services, prepaid telephone cards and other
telecommunications products and services via a network of independent
distributors, pursuant to a multilevel marketing plan, in 49 states of the
United States.
The purchase of the shares of Peppermill's Common Stock by Varner was made
in contemplation of a business combination/merger transaction between the two
entities, whereby it is expected that all outstanding voting and non-voting
Common Stock of Varner will be exchanged for 10,116,000 shares of Peppermill's
Common Stock. The final terms of such business combination/merger by way of a
formal Acquisition Agreement are currently being negotiated and there is no
guarantee such transaction will take place. Peppermill will be required to
provide notice to and seek the consent of its shareholders to any business
combination/merger with Varner.
Peppermill was engaged in the exploration and development of mineral
properties. Peppermill presently has a 100% interest in certain mineral claims
known as the Star Mineral Claims situated 12 miles north of the Village of
Princeton, British Columbia, Canada. The claims area totals approximately 587
acres. Peppermill undertook exploration activities on these mineral claims in
February 1999, in order to maintain the claims in good standing with the Gold
Commission of British Columbia.
Peppermill has no revenue to date from its operations and its ability to
effect its plans for the future will depend on the availability of financing. It
is anticipated that after the merger, management efforts will be focused
primarily on the business of Varner and that at least for the immediate future
little or no effort will be made to develop Peppermill's mining business
further.
Plan of Operation
Peppermill has had no operations during this reporting period
2
Upon the conclusion of any final business combination/merger transaction by
way of a formal Acquisition Agreement between Varner and Peppermill, Peppermill
anticipates that the focus of its business will shift from that of exploring and
developing its mineral claims to that of Varner, namely, providing Internet
Service and engaging in the marketing and sale of long distance telephone
services, prepaid telephone cards and other telecommunications products and
services via a network of independent distributors, pursuant to a multi-level
marketing plan, in 49 states of the United States. There is no guarantee that
such business combination/merger transaction will take place.
Liquidity and Capital Resources
Peppermill had no assets and no liabilities as of March 31, 2000. If
Peppermill is unable to raise additional capital, or if the business
combination/merger transaction with Varner does not take place, it will not be
able to engage in any future operations. No financing has been arranged.
Year 2000 Issue
The Year 2000 issue (i.e. the ability of computer systems to recognize a
date using "00" as the year 2000 rather than 1900) affects all companies and
organizations. As a result of the Company's Year 2000 efforts, no significant
internal problems have occurred to date. The Company has not experienced any
problems with suppliers, vendors, customers, or financial institutions. There
were no significant expenditures related to Year 2000 compliance, and the
Company does not anticipate any further expenses associated with Year 2000.
Safe Harbor Provision of the Private Securities Litigation Act of 1995 and
Forward Looking Statements
The statements contained in this Item 2 (Management's Discussion and
Analysis of Financial Condition and Results of Operations) that are not
historical facts may be forward-looking statements (as such term is defined in
the rules promulgated pursuant to the Securities Exchange Act of 1934) that are
subject to a variety of risks and uncertainties more fully described in
Peppermill's filings with the Securities and Exchange Commission including,
without limitation, those described under "Risk Factors" in Peppermill's Form
10-SB Registration Statement (File No. 000-25989) effective May 6, 1999. The
forward-looking statements are based on the beliefs of Peppermill's management,
as well as assumptions made by, and information currently available to
Peppermill's management. Accordingly, these statements are subject to
significant risks, uncertainties and contingencies which could cause
Peppermill's actual growth, results, performance and business prospects and
opportunities in 2000 and beyond to differ materially from those expressed in,
or implied by, any such forward-looking statements. Wherever possible, words
such as "anticipate," "plan," "expect," "believe," "estimate," and similar
expressions have been used to identify these
3
forward-looking statements, but are not the exclusive means of identifying such
statements. These risks include the chance that the merger with Varner
Technologies, Inc. may not occur or may occur on terms different than
anticipated.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities and Use of Proceeds
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
4
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) The Company has not filed a Current Report during the quarter
covered by this report.
5
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.
Dated: May 19, 2000 PEPPERMILL CAPITAL CORPORATION
By: /s/ Clayton W. Varner
-------------------------------
Clayton W. Varner, President
6