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 September 30, 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
September 30, 2000.


<PAGE>


Part I. FINANCIAL INFORMATION

Item 1. Financial Statements


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 shares of  Peppermill's  Common
Stock. The final terms of this business combination/merger have been negotiated,
and are contained in a formal Acquisition Agreement,  which was executed on June
2, 2000. In connection therewith,  Peppermill filed a Registration  Statement on
Form S-4 with the  Securities  and Exchange  Commission on July 7, 2000,  and is
currently  in the process of revising the content and  disclosures  made in said
Registration  Statement  pursuant to comments received from the SEC, in order to
achieve the effectiveness of said Registration  Statement.  Notwithstanding  the
execution of the formal Acquisition Agreement and the filing of the Registration
Statement on Form S-4 (or any amendment thereto), there is no guarantee that any
business  combination or merger  transaction  will take place.  Peppermill shall
provide  notice  to and  shall  seek  the  consent  of its  shareholders  to the
contemplated business  combination/merger  with Varner upon the effectiveness of
the S-4 Registration Statement.

Peppermill  originally  planned to explore and develop mineral rights to certain
mineral claims in the Princeton  area of British  Columbia,  Canada.  Peppermill
currently has no planned  operations or assets. It is anticipated that after the
merger,  management  efforts will be focused primarily on the business of Varner
and no effort will be made to develop Peppermill's mining business.

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.


                                       2
<PAGE>


Plan of Operation

Peppermill has had no operations during this reporting period

Upon the conclusion of any final business combination/merger transaction 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.  Notwithstanding the execution of the Acquisition Agreement,  the
filing of the Registration  Statement on Form S-4 or the filing of any revisions
to said  Registration  Statement,  there  is no  guarantee  that  such  business
combination/merger transaction will take place.

Liquidity and Capital Resources

Peppermill  had no assets and accrued  liabilities of $27,951.00 as of September
30,  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.

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, and those described in Peppermill's
Form S-4 registration  Statement,  as filed with the Commission on July 7, 2000.
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 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.


                                       3
<PAGE>


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
<PAGE>


Item 6. Exhibits and Reports on Form 8-K

     (a)  Exhibits

          (i)  Registration  Statement on Form S-4 and all Exhibits thereto,  as
               filed  with  the  Commission  on July 7,  2000  (incorporated  by
               reference).

          (ii) Acquisition  Agreement  dated  June 2,  2000,  as filed  with the
               Commission as an Exhibit to the Company's  Registration Statement
               on Form S-4 (incorporated by reference).

     (b)  The Company has not filed a Current Report during the quarter  covered
          by this report.


                                       5
<PAGE>




PEPPERMILL CAPITAL CORPORATION
CONDENSED BALANCE SHEETS
SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                          (Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY                   September 30, 2000   December 31, 1999
---------------------------------------------------------------------------------------------

<S>                                                          <C>                <C>
CURRENT LIABILITIES
     Accrued liabilities, to related parties (Note 2)        $ 27,951           $     --
                                                             --------           --------

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                                      (72,482)           (44,531)
                                                             --------           --------
         Total stockholders' equity (deficiency)              (27,951)                --
                                                             --------           --------
                                                             $     --           $     --
                                                             --------           --------
</TABLE>


            See notes to condensed financial statements - unaudited.


<PAGE>


PEPPERMILL CAPITAL CORPORATION
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                    Three Months Ended                       Nine months Ended
                                                       September 30                             September 30
                                              ----------------------------------------------------------------------
                                                   2000                1999               2000              1999
--------------------------------------------------------------------------------------------------------------------

<S>                                           <C>                 <C>                 <C>                <C>
REVENUE                                       $         --        $         --        $         --       $         --

OPERATING EXPENSES
     General and administrative                     15,730                 558              27,951             17,800
---------------------------------------------------------------------------------------------------------------------
NET LOSS                                     ($     15,730)      ($        558)      ($     27,951)     ($     17,800)
---------------------------------------------------------------------------------------------------------------------

WEIGHTED AVERAGE NUMBER OF
     SHARES OUTSTANDING                         11,239,700          11,239,700          11,239,700         11,239,700
---------------------------------------------------------------------------------------------------------------------

NET LOSS PER SHARE - BASIC AND DILUTED        $         --        $         --        $         --       $         --
---------------------------------------------------------------------------------------------------------------------
</TABLE>


            See notes to condensed financial statements - unaudited.


<PAGE>


PEPPERMILL CAPITAL CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                          Nine months Ended September 30
                                                                          ------------------------------
                                                                           2000                     1999
--------------------------------------------------------------------------------------------------------

<S>                                                                        <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                               ( $ 15,730)       ( $ 17,800)
    Adjustment to reconcile net loss to net cash used in
       operating activities:
       Decrease in note receivable                                                --             15,000
       Increase in accounts payable and accrued expenses                      15,730              3,245
-------------------------------------------------------------------------------------------------------
          Net cash provided by operating activities, representing the
              net increase in cash and cash equivalents for the period            --                445

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                                   --              1,125
-------------------------------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS - END OF PERIOD                                    $    --           $  1,570
-------------------------------------------------------------------------------------------------------
</TABLE>


            See notes to condensed financial statements - unaudited.


<PAGE>


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 period ended  September 30, 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. BUSINESS COMBINATION/MERGER

     On November 22, 1999, in a private transaction,  Varner Technologies,  Inc.
     (Varner)  purchased  approximately 90% of the Company's  outstanding common
     stock.  The  final  terms of this  business  combination/merger  have  been
     negotiated,  and are contained in a formal Acquisition Agreement, which was
     executed  on June 2,  2000.  This  merger is  contingent  upon and will not
     become effective until such time as the Company  completes the registration
     of the  underlying  stock.  In  connection  therewith,  the Company filed a
     Registration  Statement  on Form  S-4  with  the  Securities  and  Exchange
     Commission on July 7, 2000, and is currently in the process of revising the
     content and disclosures  made in said  Registration  Statement  pursuant to
     comments  received from the SEC, in order to achieve the  effectiveness  of
     said Registration Statement.

NOTE 3. RELATED PARTY TRANSACTIONS

     Varner Technologies, Inc. (90% owner of the Company) paid certain legal and
     accounting  expenses  on  behalf of the  Company  aggregating  $15,730  and
     $27,951 for the three and nine month  periods  ended  September  30,  2000,
     respectively. NOTE 1.

<PAGE>


NOTE 4. 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 5. 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.


<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.

Dated: November 14, 2000                PEPPERMILL CAPITAL CORPORATION


                                        By: /s/ Clayton W. Varner
                                            ----------------------------------
                                            Clayton W. Varner, President and
                                             Chief Financial Officer