<PAGE> 1
=====================================================================
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 June 30, 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 Stock
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 [ x ] No [ x ]
The number of common shares without par value outstanding on June 30,
2000 was 15,076,250 shares.
======================================================================
<PAGE> 2
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 June 30, 2000 and June 30, 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
August 8, 2000
<PAGE> 3
PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Balance Sheet
June 30, 2000
(In U.S. Dollars)
(Unaudited)
(With Comparative Figures at June 30, 1999)
ASSETS
Current Assets 2000 1999
Cash $ 15,256 $ 42,487
Loans receivable (Note 10(b)) 103,664 26,000
Short term investment -- 15,000
Advances for expenses 6,035 --
----------- -----------
124,955 83,487
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 17,366 20,606
----------- -----------
$ 740,821 $ 104,093
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 602 $ 65
Management fees payable (Note 3(e)) 106,330 --
Notes payable (Note 3(e) and 10(e)) 168,054 20,000
Due to related parties -- 7,418
----------- -----------
274,986 27,483
Shareholders' Equity
Capital Stock (Note 14)
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 13,033
Additional paid-in capital 1,817,325 593,617
Deferred compensation (318,502) (375,834)
----------- -----------
1,513,899 230,816
Deficit, accumulated during the
development stage (1,048,064) (154,206)
----------- -----------
465,835 76,610
----------- -----------
$ 740,821 $ 104,093
Approved on Behalf of the Board
"James Oste", Director
"David Glass", Director
"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
(In U.S. Dollars)
(Unaudited)
Cumulative
From Date of
Inception on Six Months Ended Three Months Ended
08/27/98 June 30, June 30,
to 06/30/00 2000 1999 2000 1999
Administration Expenses
Accounting fees $ 10,085 $ 4,685 $ 750 $ 1,750 $ 750
Acquisition administration
fees 5,000
Amortization of deferred
compensation (Note 7) 100,998 28,666 28,666 14,333 14,333
Consulting services 625,358 596,878 13,500 (25,100) --
Depreciation 7,296 2,736 1,906 1,368 1,631
Investor relations 11,491 1,491 -- 1,491 --
Legal expenses 51,501 6,474 19,568 4,591 --
Management fees 171,500 125,000 23,000 66,430 11,500
Merchandise design 1,650 -- 1,650 -- 1,650
Office expenses 11,320 4,761 3,373 4,629 1,766
Transfer agent fees 3,499 803 1,114 657 214
Travel expenses 48,366 10,103 13,896 2,479 8,447
----------- ----------- ---------- ---------- ---------
Total administration
expenses 1,048,064 781,597 107,423 72,628 40,291
----------- ----------- ---------- ---------- ---------
Net Loss for the
Period $(1,048,064) $ (781,597) $ (107,423) (72,628) (40,291)
=========== =========== ========== ========== =========
Net Loss Per Common Share
Basic $ 0.05 $ (0.01) 0.01 (0.01)
Diluted $ 0.05 $ (0.01) 0.01 (0.01)
Average Number of Common
Shares Outstanding
Basic 14,669,583 10,241,333 14,262,916 9,449,667
Diluted 14,669,583 10,241,333 14,262,916 9,449,667
<PAGE> 5
PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Statement of Retained Earnings (Deficit)
(In U.S. Dollars)
(Unaudited)
Cumulative
From Date of
Inception Six Months Ended Three Months Ended
on 08/27/98 June 30, June 30,
to 06/30/00 2000 1999 2000 1999
Balance, beginning
of period $ -- $ (266,467) $ (46,783) $ (975,436) $ (113,915)
Net Loss for
the Period (1,048,064) (781,597) (107,423) (72,628) (40,291)
------------ ------------ ---------- ------------ ----------
Retained Earnings
(Deficit) $ (1,048,064) $ (1,048,064) $ (154,206) $ (1,048,064) $ (154,206)
============ ============ ========== ============ ==========
See Accompanying Notes and Independent Accountants' Report
<PAGE> 6
PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Statement of Cash Flows
(In U.S. Dollars)
(Unaudited)
Six Months Ended Three Months Ended
June 30, June 30,
2000 1999 2000 1999
Cash Provided by (Used for)
Operating Activities
Loss for the period $ (781,597) $ (107,423)$ (72,628)$ (40,291)
Shares issued for consulting
services 609,220 10,000 -- 117,000
Changes in non-cash working
capital items
Advances for expenses 803 -- 4,602 --
Accounts payable 454 (685) 427 65
Unpaid management fees 106,330 -- 56,330 --
Loan receivable (103,664) (26,000) (22,609) (26,000)
Depreciation 2,736 1,906 1,368 1,631
Deferred compensation expenses 28,666 28,666 14,333 (102,667)
(137,052) (93,536) (18,177) (50,262)
---------- ---------- ---------- ----------
Investing Activities
Short term investment -- (15,000) -- (15,000)
Purchase of equipment -- (22,512) -- (7,000)
---------- ---------- ---------- ----------
-- (37,512) -- (22,000)
---------- ---------- ---------- ----------
Financing Activities
Capital stock subscribed
for cash 780 63,000 -- 3,000
Notes payable 107,514 -- --
Due to related parties -- 4,982 -- 907
---------- ---------- ---------- ----------
108,294 67,982 -- 3,907
---------- ---------- ---------- ----------
Increase (Decrease) in Cash
During the Period (28,758) (63,066) (18,177) (68,355)
Cash, Beginning of the Period 44,014 105,553 33,433 110,842
---------- ---------- ---------- ----------
Cash, End of the Period $ 15,256 $ 42,487 $ 15,256 $ 42,487
========== ========== ========== ==========
See Accompanying Notes and Independent Accountants' Report
<PAGE> 7
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 June 30, 2000
(In U.S. Dollars)
(Unaudited)
Price Number of Additional
Per Common par Paid-in
Share Shares Value Capital
Oct 5, 98 Shares subscribed by
Director for cash
(note 7(b)) $ 0.05 5,000,000 $ 5,000 $ 245,000
Oct 5, 98 Shares subscribed
by Director for
finders' fee
(note 7(a)) $ 0.05 2,000,000 2,000 98,000
Dec 7, 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 the period
---------- ------- ---------
Balance, December 31, 1988 8,283,000 8,283 405,867
Feb 2, 99 Shares subscribed
by Director for
consulting services $ 0.05 250,000 250 12,250
Feb 3, 99 Shares subscribed by
private placement
for cash $ 0.04 1,500,000 1,500 58,500
Jun 15 99 Shares subscribed
by stock option
exercised - shares
to be issued $ 0.04 3,000,000 3,000 117,000
Deferred compensation
Dec 3, 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 for six months ended
June 30, 2000
Deferred compensation amortization
---------- ------- ---------
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
---------- ------- ---------
Balance, June 30, 2000 15,076,250 15,076 1,817,325
========== ======= =========
<PAGE> 8
PACIFIC CART SERVICES LTD.
(A Nevada Corporation)
(A Development Stage Company)
Statement of Shareholders' Equity (Cont'd)
For the Period From Date of Inception on August 27, 1998 to June 30, 2000
(In U.S. Dollars)
(Unaudited)
Total Retained Total
Deferred Capital Earnings Shareholders'
Compensation Stock (Deficit) Equity
Oct 5, 98 Shares subscribed by
Director for cash
(note 7(b)) $ 250,000 $ 250,000
Oct 5, 98 Shares subscribed by
Director for finders'
fee (note 7(a)) 100,000 100,000
Dec 7, 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
Feb 2, 99 Shares subscribed
by Director for
consulting services 12,250 12,500
Feb 3, 99 Shares subscribed by
private placement
for cash 60,000 60,000
Jun 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)
Dec 3, 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 for six months
ended June 30, 2000 (781,597) (781,597)
Deferred compensation amortization 28,666 28,666 28,666
-------- ----------- ---------- ----------
(318,502) 305,399 (1,048,064) (742,665)
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
-------- ----------- ---------- ----------
Balance, June 30, 2000 (318,502) 1,513,899 (1,048,064) 465,835
======== =========== ========== ==========
See Accompanying Notes and Independent Accountants' Report
<PAGE> 9
PACIFIC CART SERVICES LTD.
(A NEVADA CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
Notes to the Financial Statements
June 30, 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 ass 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.
<PAGE> 10
PACIFIC CART SERVICES LTD.
(A NEVADA CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
Notes to the Financial Statements
June 30, 2000
(in U.S. Dollars)
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
e) Fixed Assets / Depreciation
The company depreciates its equipment at 20% per annum on a
straight-line basis.
June 30,
2000 1999
Cost $24,662 $22,512
Accumulated Depreciation 7,296 1,906
------- -------
$17,366 $20,606
======= =======
f) Consolidation
The Company has a Canadian wholly-owned subsidiary, Gretna
Capital Corporation ("GRETNA"), which is inactive and has
no assets. The intention is to utilize Gretna for closing
of the acquisition of the business of Mister Tube Steak
Canada Inc. When Gretna is activated the Company will
prepare and disclose consolidated financial statements.
Note 3 RELATED PARTY TRANSACTIONS:
a) Management fees
Management fees of $125,000 have been incurred by the
Company in 2000 (1999 - $23,000).
b) Expenses paid by directors
Expenses incurred by directors on behalf of the Company
comprised of travel and related costs of $10,103.
c) Agreement with Mister Tube Steak Canada Inc. (see Note 5)
James Oste is President, Director and a shareholder of
Mister Tube Steak Canada Inc.
d) Note payable to shareholder, James Oste and related company
(see Note 10(e)) 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.
<PAGE> 11
PACIFIC CART SERVICES LTD.
(A NEVADA CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
Notes to the Financial Statements
June 30, 2000
(in U.S. Dollars)
Note 3 RELATED PARTY TRANSACTIONS (cont.)
e) Effective January 1, 2000 remuneration is $150,000 per year
for Robert Kinloch and $100,000 per year for James Oste.
Management fees unpaid of $106,330 at June 30, 2000 are
payable to the following persons:
Robert Kinloch $ 56,330
James Oste 50,000
-----------
$ 106,330
===========
Note 4 INCOME TAXES
The Company has losses that total $1,048,064 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 June
30, 2000 as it is reduced by a valuation allowance.
Note 5 AGREEMENTS WITH MISTER TUBE STEAK CANADA INC.
a) 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.
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.
<PAGE> 12
PACIFIC CART SERVICES LTD.
(A NEVADA CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
Notes to the Financial Statements
June 30, 2000
(in U.S. Dollars)
Note 5 AGREEMENT WITH MISTER TUBE STEAK CANADA INC. (cont.)
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.
b) Pursuant to a letter of intent and to the AGM of Mister
Tube Steak Canada Inc. (MTS) the company has drawn up a
formal agreement of Purchase and Sale between it's inactive
wholly owned subsidiary Gretna Capital Corporation
("GRETNA") 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.
If the transaction is completed then Gretna will be
activated.
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
<PAGE> 13
PACIFIC CART SERVICES LTD.
(A NEVADA CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
Notes to the Financial Statements
June 30, 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
Expense
Deferred Six Months
Total Portion Ended June 30
Compensation 6/30/00 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 $ 67,000 $ 9,000 $ 9,000
(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 rise
to compensation at $0.04 per
share, or $200,000 200,000 133,000 19,000 19,000
(c) 250,000 common shares
issued for consulting services
to David Glass at a price of
$0.05 per share 2,500 1,502 666 666
(d) 3,000,000 common shares
exercised on stock options
(Note 13) 117,000 117,000 --- ---
--------- --------- -------- --------
$ 419,500 $ 318,502 $ 28,666 $ 28,666
========= ========= ======== ========
Note 8 PENSION AND EMPLOYMENT LIABILITIES
The Company does not have any liabilities as at June 30, 2000
for pension, post-employment benefits or postretirement
benefits. The Company does not have a pension plan.
<PAGE> 14
PACIFIC CART SERVICES LTD.
(A NEVADA CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
Notes to the Financial Statements
June 30, 2000
(in U.S. Dollars)
Note 9 FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash, loan
receivable, advances for expenses, accounts payable, management
fees 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.
Note 10 UNITED KENO HILL MINES LTD.
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 ended March 30, 2000.
$117,500 CDN ($81,055 US) had been advanced by March 31, 2000 and
$32,500 CDN (22,599 US) was advanced during the current quarter
for a total of $103,661 US. 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.
Note 11 CONSULTING AGREEMENT - ALAN BERKUN
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 $0.50 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 less a recovery
of $25,000 for net costs of $585,000 for the current period. (see
subsequent Note 15(a))
<PAGE> 15
PACIFIC CART SERVICES LTD.
(A NEVADA CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
Notes to the Financial Statements
June 30, 2000
(in U.S. Dollars)
Note 12 NOTES PAYABLE
The company has the following promissory notes payable as at June
30, 2000 with interest at 9% per annum.
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
========
The interest is to be incurred when the notes payable and interest
are paid on the due date. The note holders have agreed to extend
the due dates and the extensions are yet to be formalized. (see
Note 15(b))
Note 13 BRIDGE FINANCING
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 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 second quarter PCS was still negotiating
with interested parties to secure the necessary bridge loan.
Note 14 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.
<PAGE> 16
PACIFIC CART SERVICES LTD.
(A NEVADA CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
Notes to the Financial Statements
June 30, 2000
(in U.S. Dollars)
Note 14 CAPITAL STOCK (cont'd)
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 June 30, 2000 15,076,250 common shares
==========
Note 15 SUBSEQUENT EVENTS
a) On July 14, 2000, 400,000 shares were returned to the
treasury from Alan Berkun that were initially issued to him
at a price of $0.50 per share as part of the consideration
issued to him relating to a consulting agreement.
b) The Company is negotiating with note holders that have agreed
to extend the due dates.
Note 16 STOCK OPTION PLANS
The Company has the following stock option plans:
a) Qualified Plan
The plan is for 8,000,000 shares.
The outstanding option granted to June 30, 2000 are as follows:
Final
Number Exercise Exercise
Optionee of Share Price Date
James Oste 1,500,000 par value December 31, 2000
Robert Kinloch 1,500,000 par value December 31, 2000
Robert Kinloch 3,000,000 $ 0.07 December 31, 2003
James Oste 500,000 $ 0.07 December 31, 2003
---------
6,500,000
=========
b) Non-Qualified Plan
The plan is for 4,000,000 shares.
There are no outstanding options granted for this plan as at June
30, 2000.
<PAGE> 17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION.
Results Of Operation
No revenue was recorded in the company for the 6 month period
ended June 30, 2000.
The company intends to continue its efforts to close the
previously disclosed asset purchase from Mr. Tube Steak Canada. We are
satisfied that no material change in value has visited the assets that
are the subject of our purchase agreement. Accordingly, we will
continue to hold the shares issued as consideration in trust pending
receipt of clear title to the asset package. Closing of this previously
announced transaction would give the company an immediate revenue
source however no assurance can be given of closure under the existing
terms.
The company has losses that total $1,048,064.00 for income tax
purposes that may be carried forward to be applied against future
taxable income. The loss is largely attributable to consulting and
management expenses incurred during the 6 months ending June 30, 2000.
It is reasonable to expect the company's loss position to widen in the
short term, absent new revenue and ongoing expenses.
The company retains its investment in United Keno Hill Mines Ltd.
(UKH). The investment takes the form of a loan convertible into the
common stock of UKH mining company listed on the Toronto Stock
Exchange. United Keno has until August 25, 2000 to disclose the results
of its financing efforts by calling a meeting of its creditors and
implementing its plan of arrangement.
The company intends to withhold any decisions relating to
conversion until it has received a full disclosure of the results of
United Keno's financing efforts.
Liquidity And Capital Resources
The company is depleting its limited cash resources. How it goes
about raising new capital is largely dependent on the success of its
existing investments.
Monetizing the company's convertible loan or commencement of
revenue generation through the closure of existing contracts is in tge
company's opinion preferable to further equity dilution at this time.
Whatever form of liquidity is achieved or sought the company does
not at present have the capital to operate for the next 12 month.
Efforts to attract debt and equity financing that are acceptable to the
company are ongoing. If the company is unable to attract further
financing it may be required to curtail or cease operations.
<PAGE> 18
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 21th day of August, 2000.
PACIFIC CART SERVICES LTD.
BY: /s/ Robert Kinloch
Robert Kinloch, President, Chief
Executive Officer and member of the
Board of Directors
