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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ending March 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 000-25515
PACIFIC CART SERVICES LTD.
(Exact name of registrant as specified in its charter)
NEVADA APPLIED FOR
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2501 Lansdowne Avenue
Saskatoon, Saskatchewan, Canada S7J 1H3
(Address of principal executive offices)
Registrant's telephone number including area code: (306) 343-5799
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common shares, $0.001 par value
Indicate by check mark whether the registrant (1) 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 (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 [ ] No [ x ], not subject to filing until May 10, 1999.
The number of common shares without par value outstanding on March 31,
2000 was 15,076,250 shares.
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MOEN AND COMPANY
CHARTERED ACCOUNTANTS
PO Box 10129
1400 IBM Tower
701 West Georgia Street Telephone: (604)662-8899
Vancouver, BC V7Y 1C6 Fax: (604)662-8809
INDEPENDENT ACCOUNTANTS' REPORT
To the Directors and Shareholders of
Pacific Cart Services Ltd. (A Nevada Corporation)
(A Development Stage Company)
We have reviewed the accompanying Balance Sheets of Pacific Cart
Services Ltd (A Development Stage Company) as at March 31, 2000 and
March 31, 1999, and the Statements of Income, Retained Earnings
(Deficit), Cash Flows and Shareholders' Equity for the three month
periods then ended. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying financial statements for them
to be in conformity with generally accepted accounting principles.
/s/ Moen and Company
Chartered Accountants
Vancouver, British Columbia, Canada
May 15, 2000
1
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PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company
Balance Sheet
March 31, 2000
(In U.S. Dollars)
(With Comparative Figures at March 31, 2000
ASSETS
2000 1999
Current Assets
Cash $ 33,433 $ 110,842
Loan receivable (Note 10(b)) 81,055 -
Advances for expenses 10,637 -
----------- ----------
125,125 110,842
Long-Term Investment
Deposit on purchase of assets
from Mr. Tube Steak Canada Inc. 598,500 -
Fixed Assets (Note 2(e))
Equipment at cost less
accumulated depreciation 18,734 15,237
----------- ----------
$ 742,359 $ 126,079
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 175 $ -
Management fees payable (Note 3(e)) 50,000 -
Notes payable 168,054 20,000
Due to related parties - 6,511
----------- ----------
218,229 26,511
----------- ----------
Shareholders' Equity
Capital Stock
Authorized:
100,000,000 common shares at
$0.001 par value
Issued and fully paid
15,076,250 common shares at par value
(1999 - 10,033,000 common shares) 15,076 10,033
Additional paid-in capital 1,817,325 476,617
Deferred compensation (332,835) (273,167)
----------- ----------
1,499,566 213,483
Deficit, accumulated during the
development stage (975,436) (113,915)
----------- ----------
524,130 99,568
----------- ----------
$ 742,359 $ 126,079
=========== ==========
Approved on Behalf of the Board
/s/ James Oste, Director
/s/ David Glass, Director
/s/ Robert J. Kinloch, Director
See Accompanying Notes and Independent Accountants' Report.
<PAGE> 4
PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Statement of Income
For the Three Month Period Ended March 31, 2000
(In U.S. Dollars)
(With Comparative Figures for Three Month Period Ended March 31,
1999)
2000 1999
Administration Expenses
Accounting fees $ 2,935 $ -
Amortization of deferred
compensation (note 8) 14,333 14,333
Consulting services 621,978 13,500
Depreciation 1,368 275
Legal expenses 1,883 19,568
Management fees 58,570 11,500
Office expenses 132 1,607
Transfer agent fees 146 900
Travel expenses 7,624 5,449
---------- ----------
Total administration expenses (708,969) (67,132)
---------- ----------
Net Loss for the Period $ (708,969) $ (67,132)
========== ==========
Net Loss Per Common Share
Basic $ 0.05 $ (0.01)
Diluted $ 0.05 $ (0.01)
Average Number of Common Shares Outstanding
Basic 14,262,916 9,449,667
Diluted 14,262,916 9,449,667
PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Statement of Retained Earnings (Deficit)
For the Three Month Period Ended March 31, 2000
(In U.S. Dollars)
(With Comparative Figures for Three Month Period Ended March 31,
1999)
2000 1999
Balance, beginning of period $ (266,467) $ (46,783)
Net Loss for the Period (708,969) (67,132)
---------- ----------
Retained Earnings (Deficit),
December 15, 1998 $ (975,436) $ (113,915)
========== ==========
See Accompanying Notes and Independent Accountants' Report.
3
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PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Statement of Shareholders' Equity
For the Period From Date of Inception on August 27, 1998 to March 31,
2000
(in U.S. Dollars)
Price Number of Additional
Per Common par Paid-in
Share Shares Value Capital
10/05/98 Shares subscribed
by Director for
cash (note 7(b)) $ 0.05 5,000,000 $ 5,000 $ 245,000
10/05/98 Shares subscribed
by Director for
finders' fee
(note 7(a)) $ 0.05 2,000,000 2,000 98,000
12/07/98 Share subscribed by
private placement
for cash $ 0.05 1,283,000 1,283 62,867
Deferred compensation
Deferred compensation
amortization
Net loss for period
---------- -------- -----------
Balance, December 31, 1988 8,283,000 8,283 405,867
02/02/99 Shares subscribed
by Director for
consulting
services $ 0.05 250,000 250 12,250
02/03/99 Shares subscribed by
private placement
for cash $ 0.04 1,500,000 1,500 58,500
06/15/99 Shares subscribed by
stock option
exercised - shares
to be issued $ 0.04 3,000,000 3,000 117,000
Deferred compensation
12/03/99 Shares subscribed by
private placement
for cash $ 0.65 25,250 25 17,226
Deferred compensation
amortization
Net loss for year ended
December 31, 1999
---------- -------- -----------
Balance, December 31,1999 13,058,250 13,058 610,843
Net loss quarter ended March 31, 2000
Deferred compensation amortization
---------- -------- -----------
Balance, March 31, 2000 13,058,250 13,058 610,843
January 2000 share for assets of
Mr. Tube Steak Canada Inc. @ $0.75 798,000 798 597,702
March 8, 2000 shares issued for
consulting fees 1,220,000 1,220 608,780
---------- -------- -----------
15,076,250 15,076 1,817,325
========== ======== ===========
See Accompanying Notes and Independent Accountants' Report.
4-a
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PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Statement of Shareholders' Equity
For the Period From Date of Inception on August 27, 1998 to March 31,
2000
(in U.S. Dollars)
Total Retained Total
Deferred Capital Earnings Shareholders'
Compensation Stock (Deficit) Equity
10/05/98 Shares subscribed
by Director for
cash (note 7(b)) $ 250,000 $ 250,000
10/05/98 Shares subscribed by
Director for finders'
fee (note 7(a)) 100,000 100,000
12/07/98 Share subscribed by
private placement
for cash 64,150 64,150
Deferred compensation (300,000) (300,000) (300,000)
Deferred compensation
amortization 15,000 15,000 15,000
Net loss for the period (46,783) (46,783)
---------- ----------- ---------- ----------
Balance, December 31, 1988 (285,000) 129,150 (46,783) 82,367
02/02/99 Shares subscribed by
Director for consulting
services 12,250 12,500
02/03/99 Shares subscribed by
private placement
for cash 60,000 60,000
06/15/99 Shares subscribed by
stock option
exercised - shares
to be issued (117,000) 3,000 3,000
Deferred compensation (2,500) (2,500) (2,500)
12/03/99 Shares subscribed by
private placement
for cash 17,251 17,251
Deferred compensation
amortization 57,332 57,332 57,332
Net loss for year ended
December 31, 1999 (219,684) (219,684)
---------- ----------- ---------- -----------
Balance, December 31,1999 (347,168) 276,733 (266,467) 10,266
Net loss quarter ended
March 31, 2000 (708,969) (708,969)
Deferred compensation
amortization 14,333 14,333 14,333
---------- ----------- ---------- -----------
Balance, March 31, 2000 (332,835) 291,066 (975,436) (684,370)
January 2000 share for
assets of Mr. Tube Steak
Canada Inc. @ $0.75 598,500 598,500
March 8, 2000 shares issued
for consulting fees 610,000 610,000
---------- ----------- ---------- -----------
$ (332,835) $ 1,499,566 $ (975,436) $ 524,130
========== =========== ========== ===========
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PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Statement of Cash Flows
For the Three Month Period Ended March 31, 2000
(In U.S. Dollars)
(With Comparative Figures for Three Month Period Ended March 31,
1999)
2000 1999
Cash Provided by (Used for)
Operating Activities
Loss for the period $ (708,969) $ (67,132)
Shares issued for consulting services 610,000 10,000
Changes in non-cash working
capital items
Advances for expenses (3,799) -
Accounts payable 27 (750)
Unpaid management fees 50,000 -
Loan receivable (81,055) -
Depreciation 1,368 275
Deferred compensation expenses 14,333 14,333
---------- ---------
(118,095) (43,274)
---------- ---------
Investing Activities
Purchase of equipment - (15,512)
---------- ---------
Financing Activities
Capital stock subscribed for cash - 60,000
Notes payable 107,514 4,075
---------- ---------
107,514 64,075
---------- ---------
Increase (Decrease) in Cash During
the Period (10,581) 5,289
Cash, Beginning of the Period 44,014 105,553
---------- ---------
Cash, End of the Period $ 33,433 $ 110,842
========== =========
See Accompanying Notes and Independent Accountants' Report
5
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PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Notes to Financial Statements
March 31, 2000
(in U.S. Dollars)
Note 1. BUSINESS OPERATIONS
a) The Company date of incorporation and inception was on August 27,
1998 under the Company Act of the State of Nevada, U.S.A. to
pursue opportunities in the business of franchising fast food
distributor systems.
b) The Company is considered to be a development stage enterprise as
its principal operations have not yet commenced and have not yet
produced revenue. The deficit has been accumulated in the
development stage.
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Administration Costs
Administration costs are written off to operations when incurred.
b) Translation of Foreign Currency
The accounts of the Company are translated into U.S. dollars on
the following basis:
- current assets and liabilities at the rate of exchange in
effect at the balance sheet date
- administration expenses at the average rate in effect during
the period
- non-current assets and liabilities at rates prevailing when
the transaction occurred
c) Basis of Presentation
These financial statements are prepared in accordance with United
States Generally Accepted Accounting Principles (GAAP).
d) Net Loss Per Share
Net loss per common share is computed by dividing net loss by the
weighted average number of shares outstanding (including shares
subscribed but unissued) during the period.
e) Fixed Assets / Depreciation
The company depreciates its equipment at 25% per annum on a
straight-line basis.
March 31,
2000 1999
Cost $ 26,662 $ 15,512
Accumulated Depreciation 6,928 275
-------- --------
$ 18,734 $ 15,237
======== ========
See Accompanying Notes and Independent Accountants' Report
6
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PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Notes to Financial Statements
March 31, 2000
(in U.S. Dollars)
Note 3. RELATED PARTY TRANSACTIONS:
a) Management fees
Management fees of $5,857 have been incurred by the Company in
2000 (1999 - $11,500).
b) Expenses paid by directors
Expenses incurred by directors on behalf of the Company comprised
of travel and related costs of $5,345,86.
c) Agreement with Mister Tube Steak Canada Inc.
James Oste is President, Director and a shareholder of Mister Tube
Steak Canada Inc.
d) Note payable to shareholder, James Oste
There is a note payable of $33,553 to James Oste with a due date
of March 15, 2001 and a note for $35,880 payable to Karenco Foods
which is owned by James Oste and his wife.
e) Effective January 1, 2000 remuneration is $150,000 per year for
Robert Kinloch and $100,000 per year for James Oste. The result
of retroactive increased from $22,000 per year and $24,000 per
year respectively has been reflected in these financial statements
for this quarter, in the amount of $50,000, which is included in
current liabilities as management fees payable.
Note 4. INCOME TAXES
The Company has losses that total $315,436 for income tax purposes that
may be carried forward to be applied against future taxable income.
The benefit of a potential reduction in future income taxes has not
been recorded as an asset at March 31, 2000 as it is reduced by a
valuation allowance.
Note 5 AGREEMENT WITH MISTER TUBE STEAK CANADA INC.
By agreement dated January 10, 1999 and signed on January 26, 1999,
between Mister Tube Steak Canada Inc. ("MTS") and Pacific Cart Services
Ltd. ("PCS"), MTS appointed PCS as its exclusive distributor for its
products in California and Washington State. The effective date of the
agreement is February 1, 1999 for an initial period of five years for
the United States, and with respect to all other countries five years
from February 1, 1999 or such date as may be agreed to by the parties
with respect to any additional country. Products purchased by PCS from
MTS represented by equipment and food and dry goods are payable on a
sixty day basis.
See Accompanying Notes and Independent Accountant's Report.
7
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PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Notes to Financial Statements
March 31, 2000
(in U.S. Dollars)
Note 5 AGREEMENT WITH MISTER TUBE STEAK CANADA INC. (cont'd)
MTS will provide product liability insurance in the amount of
$2,000,000 CDN. The term of the agreement is for five years unless
terminated earlier on consent of both parties. The agreement shall
automatically renew for successive two-year periods, commencing on the
fifth anniversary, unless PCS provides 180 days prior written notice to
MTS of its intent not to renew. The agreement provides for
reimbursement to PCS for value of business and goodwill created by PCS
if the agreement is terminated by MTS for other than a default or
breach by PCS. If MTS intends to sell all or any part of its business
PCS shall have a first right of refusal. The agreement is not
assignable as security or otherwise by either party without the prior
consent of the other. James Oste is President, Director and shareholder
of Mister Tube Steak Canada Inc.
Note 6 EMPLOYMENT AGREEMENT
Employment agreements dated March 15, 1999 were entered into by the
Company for a five year period from January 1, 1999 to December 31,
2003, as follows:
i) James Oste to be employed as President, Chief Executive
Officer and Director of the Company, commencing at $24,000
per year, and increased by resolution to $100,000 per year
effective January 1, 2000.
ii) Robert Kinloch, to be employed as Executive Vice-President,
Chief Operating Officer, and Director of the Company
commencing at $22,000 per year and increased by resolution
to $150,000 per year effective January 1, 2000.
iii) for both of the above agreements, subsequent year
compensation is to be negotiated prior to commencement of a
new year. Additional compensation is as follows:
- reimbursement of all out-of-pocket expenses payable or
incurred by the employee in connection with his duties
under the agreement
- all reasonable travelling expenses incurred by the
employee in the course of his duties
- six weeks paid vacation
- club membership not to exceed $1,000
- stock option package to be negotiated during the first
year of employment
See Accompanying Notes and Independent Accountant's Report.
8
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PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Notes to Financial Statements
March 31, 2000
(in U.S. Dollars)
Note 7 COMPENSATION/DEFERRED COMPENSATION
Shares have been issued that give rise to compensation expense. This
compensation except for (d) is amortized over a five year period,
with three months thereof expensed as of March 31, 2000. Details of
compensation expense and deferred compensation are as follows:
Compensation
Deferred Expense
Total Portion Quarter Ended 03/31
Compensation 03/31/00 2000 1999
a) 2,000,000 common shares
issued as a finder's fee
to Robert Kinloch, a
director and officer of
the Company at a price
of $0.05 per share $ 100,000 $ 71,500 $ 4,500 $ 4,500
b) 5,000,000 common shares
subscribed by James Oste,
a director and officer
of the Company at a cash
price of $0.01 per share
for a total of $50,000
giving use to compensation
at $0.04 per share,
or $200,000 200,000 142,500 9,500 9,500
c) 250,000 common shares
issued for consulting
services to David Glass
at a price of $0.05
per share 2,500 1,835 333 333
d) 3,000,000 common shares
exercised on stock
options (Note 11) 117,000 117,000 - -
--------- --------- -------- --------
$ 419,500 $ 332,835 $ 14,333 $ 14,333
========= ========= ======== ========
Note 8. PENSION AND EMPLOYMENT LIABILITIES
The Company does not have any liabilities as at March 31, 2000 for
pension, post-employment benefits or postretirement benefits. The
Company does not have a pension plan.
Note 9. FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash, loan receivable,
advances for expenses, accounts payable and notes payable. It is
management's opinion that the Company is not exposed to significant
interest, currency or credit risks arising from these financial
instruments. The fair value of these financial statements approximates
their carrying values.
See Accompanying Notes and Independent Accountant's Report.
<PAGE> 12
PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Notes to Financial Statements
March 31, 2000
(in U.S. Dollars)
Note 10 SIGNIFICANT TRANSACTIONS DURING CURRENT QUARTER
a) Pursuant to a letter of intent and to the AGM of Mr. Tube Steak
Canada Inc. (MTS) the company has drawn up a formal agreement of
Purchase and Sale between it's wholly owned subsidiary Gretna
Capital Corporation and MTS. In January 2000 the company issued
798,000 shares at a price of $0.75 per share for consideration of
$598,500 with the shares to be held in trust by Bryan and Co.
pending closing of this transaction.
b) In February 2000, the company entered into a formal agreement with
United Keno Hill Mines Ltd. (UKH) to provide that company with
$150,000 CDN, over a six-week period ending March 30, 2000.
$117,500 CDN ($81,055 US) had been advanced by March 31, 2000 and
$32,500 CDN have subsequently advanced on April 12, 2000. The
agreement provides for conversion of the loan to UKH stock at
$0.09 per share; Secondly, that PCS has the right to provide
additional financing up to $4,000,000 CDN, such financing, if
provided, in whole or in part, would also be convertible into UKH
treasury stock at $0.09 per share and if fully exercised would
44,444,000 shares of UKH or approximately 50% of the outstanding
stock of that company.
c) On March 5, 2000, Robert Kinloch replaced James Oste as President
and Chief Executive Officer of the company, retroactive to January
1, 2000. Pursuant to this appointment, Mr. Kinloch was granted a
stock option to purchase 2,000,000 common shares of the company's
stock @ 0.50 per share.
d) The company entered into a consulting agreement with Alan Berkun
of New York City for the provision of services relating to Mergers
and Acquisitions. Pursuant to this agreement, the company issued
1,220,000 treasury shares at a price of $050 per share. The
company filed form S-8 for the stock and issued a letter of
authorization to its transfer agent to issue the shares. The
amount of $610,000 is charged as consulting fees for the current
quarter.
e) The company has the following promissory notes payable as at March
31, 2000 with interest at 9% per annual.
Due Date
Mallard Construction $ 26,988 Payable on demand
Mark Mcmunn $ 14,000 June 10, 2000
Terry Yates $ 14,000 June 10, 2000
Myles Haverluk $ 14,000 June 10, 2000
Mr. Tube Steak Canada Inc. $ 24,633 June 19, 2000
Karenco Foods $ 35,880 March 15,2001
James Oste $ 33,553 March 15, 2001
Rodney D Mancini $ 5,000 July 31, 2000
--------
$168,054
========
See Accompanying Notes and Independent Accountant's Report.
<PAGE> 13
PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Notes to Financial Statements
March 31, 2000
(in U.S. Dollars)
Note 10 SIGNIFICANT TRANSACTIONS DURING CURRENT QUARTER (cont'd)
The interest is to be incurred when the notes payable and interest is
paid on the due date.
f) Basic International Development Corporation of New York represents
that it acts as the American agent for a European based pension
fund. Having secured the Keno agreement, Note 10(b) above, PCS
management entered into a joint venture agreement with Basic
International Development Corporation (Basic), whereby Basic would
provide take-out financing guarantees if PCS could provide bridge
financing to United Keno for working capital and preproduction
costs. At the end of the first quarter PCS was negotiating with
interested parties to secure the necessary bridge loan.
Note 11 CAPITAL STOCK
a) A stock option was exercised on June 15, 1999 for 3,000,000 common
shares at $0.04 per share for proceeds of $120,000. Issuance of
these shares has been authorized and they are disclosed as issued
and fully paid in these financial statements. The shares, however,
are not as yet issued by the transfer agent. Deferred compensation
of $117,000 is recorded in these financial statements.
Amortization of the deferred compensation will commence when these
shares are issued.
b) Reconciliation to shares issued and outstanding as provided by
transfer agent for the company, American Securities Transfer &
Trust Inc. is as follows:
Shares issued and outstanding
per transfer agent 12,076,250 common shares
Subscribed by stock option
exercised on June 15, 1999,
but shares not yet issued 3,000,000 common shares
----------
Total shares subscribed and
paid up as at March 31, 2000 15,076,250 common shares
==========
See Accompanying Notes and Independent Accountants' Report.
11
<PAGE> 14
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS
The primary goal of Pacific Cart Services (PCS or the Company) in
the first quarter of 2000 was to close the previously announced
purchase of the assets of Mr. Tubesteak Canada Inc. (MTS). As of the
close of the first quarter this transaction had yet to be consummated.
Pacific Cart has entered into a definitive agreement with MTS and
stands ready to close immediately. Due to ongoing shareholder and
financial constraints, MTS has been unable to transfer title in a
manner and fashion acceptable to PCS.
While the MTS-PCS transaction in non-arms length as previously
disclosed in the notes to the financial statements of PCS, the Company
is cognizant of a number of shareholders in MTS who are arms-length and
consequently is reticent to close any transaction that would not
withstand independent scrutiny. Accordingly, 798,000 shares remain in
trust with the purchasers lawyer as consideration pending closing. It
is the Company's opinion that no material change has taken place in the
value of the purchased assets and PCS is working with MTS to overcome
the remaining impediments.
In November 1999 the Company made a loan ($5,500.00) to United
Keno Hill Mines Ltd. (UKH), a listed company on the Toronto Stock
Exchange. United Keno is the owner of a production-ready silver mine in
Yukon, Canada. Management of PCS has a long-standing relationship with
board members of UKH. Informal discussions with UKH and several
private investors lead PCS management to the conclusion that it could
raise $150,000.00 and that by providing this relatively small amount of
capital to UKH the Company could secure a valuable option on UKH stock
going forward.
In conjunction with a CCAA filing in Canada by UKH (CCAA is
roughly equivalent to Chapter 11 in the United States) in which it
asked the courts for a protection period from its creditors, Pacific
Cart agreed to lend UKH CDN$150,000.00. This court approved loan was
partially ($122,000.00) covered under the Debtor in Possession (DIP)
financing provisions of the CCAA application. As such, the loan was
granted preferential securitization vis a vis pre-existing creditors.
The Company is confident that, given its title status, the loan is well
secured and expects full repayment with interest in the event no
acceptable arrangement is reached between UKH and its creditors.
The CDN$150,000.00 loan arrangement between PCS to UKH gives PCS
the option to lend a further CDN$4,000,000.00 which is convertible into
Keno stock at C$.09 a share. This represents approximately 44,000,000
shares of UKH or 50% of the now-issued shares. All of the provisions
in the PCS-UKH agreement are subject to regulatory approval in Canada
and no assurance can be given that it would be forthcoming.
This arrangement with United Keno is highly speculative. No
assurance can be given that any initiative will succeed. PCS
management is intimately familiar with the United Keno situation
and believes that its time is not misspent, given the risk-reward
profile of the investment.
<PAGE> 15
The Company has entered into a consulting agreement with Mr. Alan
Berkun of New York. The goal of this agreement was to extend the PCS
network in furtherance of the company's previously stated goal to grow
through Mergers and Acquisitions. The company issued 1,220,000 shares
in consideration of the consulting agreement. These shares were
subsequently the subject of an S-8 registration.
Basic International Development Corporation of New York represents
themselves as the American agent for a European based pension fund.
Having secured the Keno agreement, PCS management entered into a joint
venture agreement with Basic International Development Corporation
(Basic), whereby Basic would provide take-out financing guarantees if
PCS could provide bridge financing to United Keno for working capital
and preproduction costs. At the end of the first quarter PCS was
negotiating with interested parties to secure the necessary bridge
loan.
The Company does not have the capital to operate for the next
twelve months. The Company is seeking debt and equity financing from
various sources in order to meet its capital requirements going
forward. No assurance can be given that this search will prove
successful. If the Company is unable to attract further financing it
may be required to curtail or cease operations.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
EXHIBIT INDEX
Exhibit
No. Description.
27 Financial Data Schedule
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 thereto duly authorized.
Dated this 22nd day of May, 2000.
PACIFIC CART SERVICES LTD.
BY: /s/ Robert Kinloch
Robert Kinloch, President, Chief
Executive Officer and member of the
Board of Directors
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Statement of Financial Condition at March 31, 2000 (Unaudited) and the Statement
of Income for three month period ended March 31, 2000 (Unaudited) and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 33,433
<SECURITIES> 598,500
<RECEIVABLES> 91,692
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 125,125
<PP&E> 25,662
<DEPRECIATION> (6,928)
<TOTAL-ASSETS> 742,359
<CURRENT-LIABILITIES> 168,229
<BONDS> 0
0
0
<COMMON> 1,499,566
<OTHER-SE> (975,436)
<TOTAL-LIABILITY-AND-EQUITY> 524,130
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (708,969)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (708,969)
<INCOME-TAX> 0
<INCOME-CONTINUING> (708,969)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (708,969)
<EPS-BASIC> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
