SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the year ended February 29, 2000 Commission File No. 000-29477
PLAYANDWIN, INC.
(Exact name of registrant as specified in its charter)
Nevada 88-039116
(State of organization) (I.R.S. Employer Identification No.)
7050 Weston Rd., Vaughn, Ontario, Canada L4L 8G7
(Address of principal executive offices)
Registrant's telephone number, including area code (905) 850-3940
Securities registered under Section 12(g) of the Exchange Act:
Common stock, $0.001 par value
per share
Check whether the issuer (1) filed all reports required to be
file by Section 13 or 15(d) of the Exchange Act during the past
12 months and (2) has been subject to such filing requirements
for the past 90 days. Yes X
Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B not contained in this form, and no
disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendments to this Form 10-KSB. [ X ]
Issuer's Revenue during the year ended February 29, 2000: $0
Aggregate market value of the voting and non-voting common equity
held by non-affiliates based on the price of $2 per share (the
selling or average bid and asked price) as of June 1, 2000:
$14,805,714
DOCUMENTS INCORPORATED BY REFERENCE:
The Company's Form 10-SB/A, filed on May 31, 2000, and the
exhibits attached thereto, are incorporated by reference.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Background
Playandwin, Inc. (the "Company") is a Nevada corporation formed
on June 9, 1995. Its principal place of business is located at
7050 Weston Rd., Vaughn, Ontario, Canada L4L 8G7. The Company was
originally incorporated under the name Cambridge Funding Group,
Inc. The Company changed its name to Agriceuticals Technologies,
Inc. on October 2, 1998. Then, on July 13, 1999, the Company
once again changed its name to Playandwin, Inc.
In October, 1999, the Company's wholly-owned Ontario subsidiary,
Playandwin Canada, Inc. (PWIN Canada), acquired all of the issued
and outstanding securities of Lynx Gaming Corp., and 5% of the
issued and outstanding equity of P.E.S.T. Creative Gaming Corp.
(P.E.S.T.) for securities convertible into common shares of the
Company. Lynx is the owner of the other 95% of P.E.S.T. The
The Company's business is the development, marketing, promotion
and sale of a pari-mutuel bingo-type wager game known as
"RACINGO". As in Bingo, the object is to form a winning pattern
out of numbers randomly placed on a grid. In RACINGO, the winning
numbers are selected by the outcome of one or more horse or
greyhound races. RACINGO combines the ease of Bingo and
excitement of horse races with lottery-size jackpots.
Preliminary Notes
The financial statements are prepared in accordance with US GAAP
and dollar amounts are presented in US dollars.
Enforceability of Civil Liabilities Against Foreign Persons:
Pursuant to Rule 405 of Regulation S-K, the Company is not a
"foreign private issuer" since it was incorporated in and remains
validly constituted under the laws of the State of Nevada.
Subsidiaries
Playandwin Canada, Inc. ("PWIN Canada" - incorporated in Ontario,
Canada) - 100% owned by the Company;
Lynx Gaming Corp. ("Lynx" - incorporated in Ontario, Canada) -
100% owned by PWIN Canada;(see Acquisition Section)
P.E.S.T. Creative Gaming Corp. ("P.E.S.T." - incorporated in
Ontario, Canada) - 95% owned by Lynx Gaming Corp. and 5%
owned by PWIN Canada;(see Acquisition Section)
Acquisitions of Lynx and PEST
On August 30, 1999, effective October 1, 1999,PWIN Canada entered
into a Share Exchange Agreement with Lynx Gaming Corp. (Lynx),
then a privately held corporation. Lynx, along with its own
operations, is a minority-joint venture partner in Racingo
Investments Ltd. (RIL) which is developing a horse-racing based
game involving grid betting known as Racingo (see "Racingo Rules"
- On- and Off-Track Betting License Agreement).
In accordance with the agreement, PWIN Canada i) exchanged
3,429,118 Class B nonvoting common shares ("Exchangeable
Shares") for 6,858,236 shares of Lynx's common stock; ii)
exchanged 368,857 warrants to purchase 368,857 of
Exchangeable Shares at $1.16 per share, for a period of six
months after October 1, 2000, for 737,714 warrants to
purchase 737,714 shares of Lynx's common stock at $0.58 per
share
Exchangeable Shares. The Exchangeable shares to be issued
by the PWIN Canada pursuant to the Agreement shall be
subject to the following terms:
(a) each Exchangeable Share may be exchanged at the
request of its holder for one common share of PWIN,
provided that in the event of a consolidation, split or
other reorganization of the capital stock of the PWIN
Canada or of PWIN, the number of PWIN common shares
issuable for each one Exchangeable Share shall be
adjusted accordingly;
(b) Of the Exchangeable Shares received by a Lynx
Shareholder on the Closing Date:
(i) none may be exchanged during the period
ending on and including the day of the first
anniversary of the Closing Date;
(ii) up to one-third (1/3) may be exchanged after
said first anniversary;
(iii) an additional one-third (1/3) may be
exchanged after the second anniversary of the
Closing Date; and
(iv) all Exchangeable Shares may be exchanged
after the third anniversary of the Closing
Date.
(c) Each Exchangeable Share may be exchanged at the
request of the PWIN Canada at any time during the
period ending on and including the day of the fifth
anniversary of the Closing Date, and shall be exchanged
upon: (i) the occurrence of a take over bid for all of
the issued and outstanding shares of PWIN; or (ii) the
day of the fifth anniversary of the Closing Date. All
Exchangeable Shares shall be automatically exchanged on
the fifth anniversary of the Closing Date.
Exchangeable Warrants. Each Exchangeable Warrant to be
issued by the PWIN Canada pursuant to this Agreement shall
entitle its holder to acquire one Exchangeable Share at a
price of $1.16. No Exchangeable Warrant may be exercised on
or before the day of the first anniversary of the Closing
Date. The Exchangeable Warrants shall expire eighteen (18)
months after the Closing Date.
On September 27, 1999, effective October 1, 1999, PWIN Canada
entered into a Share Exchange Agreement to acquire the remaining
5% of P.E.S.T., the registered owner of the Canadian Racingo
Rights, World Racingo Rights and Copyright Assets.
In accordance with the agreement, PWIN Canada i) exchanged
57,144 Exchangeable Shares, for 114,288 shares of PEST's
common stock; and i) exchanged 28,571 warrants to purchase
28,571 Exchangeable Shares at $1.16 per share, for 28,571
warrants to purchase 28,571 shares of PEST's common stock at
$0.58 per share.
Exchangeable Shares. The Exchangeable Shares to be issued by
the PWIN Canada pursuant to this Agreement shall be subject
to the following terms:
(a) each Exchangeable Share may be exchanged at the
request of its holder for one common share of PWIN,
provided that in the event of a consolidation, split or
other reorganization of the capital stock of the PWIN
Canada or of PWIN, the number of PWIN common shares
issuable for each one Exchangeable Share shall be
adjusted accordingly;
(b) Of the Exchangeable Shares received by a Lynx
Shareholder on the Closing Date:
(i) none may be exchanged during the period
ending on and including the day of the first
anniversary of the Closing Date;
(ii) up to one-third (1/3) may be exchanged after
said first anniversary;
(iii) an additional one-third (1/3) may be
exchanged after the second anniversary of the
Closing Date; and
(iv) all Exchangeable Shares may be exchanged
after the third anniversary of the Closing
Date.
(c) Each Exchangeable Share may be exchanged at the
request of the PWIN Canada at any time during the
period ending on and including the day of the fifth
anniversary of the Closing Date, and shall be exchanged
upon: (i) the occurrence of a take over bid for all of
the issued and outstanding shares of PWIN; or (ii) the
day of the fifth anniversary of the Closing Date. All
Exchangeable Shares shall be automatically exchanged on
the fifth anniversary of the Closing Date.
Exchangeable Warrants. Each Exchangeable Warrant to be
issued by PWIN Canada pursuant to this Agreement shall
entitle its holder to acquire one Exchangeable Share at a
price of $1.16. No Exchangeable Warrant may be exercised on
or before the day of the first anniversary of the Closing
Date. The Exchangeable Warrants shall expire eighteen (18)
months after the Closing Date.
On October 7, 1999, P.E.S.T. signed a Master License Agreement to
grant to RIL the exclusive license to use, utilize, develop,
advertise, market, promote, sell, distribute and exploit in any
way, the Racingo Patent, U.S. Racingo Rights, Canadian Racingo
Rights, World Racingo Rights, Copyright Assets and the
Documentation. In consideration for the license rights and
assets, RIL must pay a a one-time license fee of $1,000 to each
of the grantors of the licenses. All license fees shall be
satisfied by the issuance of shares from RIL in the following
proportions:
Winning Games, Inc. - 500 common shares; 450 Class A Shares; 450
Class B Shares; and 375 Class C Shares
P.E.S.T. - 100 common shares; 125 Class A Shares; 175 Class B
Shares; and 250 Class C Shares
PacCanUs Inc. - 400 common shares, 425 Class A Shares; 375 Class
B Shares; and 375 Class C Shares
Dividends will be distributed by the Company to the shareholders
of the Company in the following manner:
(a) Class A Shares will have dividend rights only to income
earned by the Company from the various license agreements, or
from any other revenues from licenses granted to Playandwin Inc.
or its affiliates;
(b) Class B Shares will have dividend rights only to income
earned by the Corporation from any North American licensing or
active business other than income from the various license
agreements or from any other revenue from licence granted to
Playandwin Inc. or its affiliates;
(c) Class C Shares will have dividend rights to all income
streams earned by the Corporation from any licencing or active
business outside North America or any other income streams not
allocated herein to the Class A Shares or the Class B Shares; and
(d) No dividends will be issued for the Common Shares.
Racingo Investments Ltd.
RIL obtained U.S. Patent No. 5,518,239 dated May 21, 1996 for a
racing lottery sweepstakes game called "RACINGO". This patent was
later assigned to Winning Games Inc., an Illinois company.
Winning Games Inc. applied for a trademark over "RACINGO" in the
U.S., application no. 75/331,278. the Company has a ten percent
ownership of the voting common stock.
On October 7, 1999, the Company signed a Letter of Agreement with
RIL in conjunction with an Internet License Agreement. This gave
the Company first right of refusal on any licensing of RACINGO in
any venue other than the Internet, including but not limited to
(i) lotteries; (ii) Indian gaming - i.e. establishments located
on Indian/Native/First Nations reserves or operated by
individuals duly exempted from local restrictions on gaming by
virtue of their status as Indians/Natives/First Nations; or (iii)
bingo halls. This right of first refusal will last until March 1,
2002. In order for the Company to exercise its rights, the
Company must respond to and match any bona fide offer made to
RACINGO by a third party within 60 days of RACINGO's receipt of
such an offer.
All rights in and to RACINGO are owned by Winning Games Inc.,
PacCanUs Inc. and P.E.S.T. These rights have been licensed to
RIL, a Delaware corporation owned by the three companies. RIL has
granted to the Company exclusive licenses to certain applications
of RACINGO. These licenses do not cover RACINGO on cruise ships,
Indian/First Nations betting establishments, in-flight betting
establishments owned and operated by airlines, bingo halls, and
in-home betting facilities provided through cable television.
However, RIL has granted to the Company a right of first refusal
on any licensing of RACINGO for lotteries, Indian/First Nations
betting establishments, and bingo halls.
The Company is filing this registration statement on a voluntary
basis, pursuant to section 12(g) of the Securities Exchange Act
of 1934 (the "Exchange Act"), in order to ensure that public
information is readily accessible to all shareholders and
potential investors, and to increase the Company's access to
financial markets, and to permit the Company's common stock to be
quoted on the OTC-BB.
PacCanUs Inc.
The Company recently entered into a consulting agreement with
PacCanUs, Inc. ("Newco") Under the terms of the agreement, Newco
will provide the following:
Newco shall provide service, information and advice to PWIN
in the following areas:
(1) to help PWIN secure a formal deal with Autotote Inc.
("Autotote");
(2) to help PWIN prepare and follow through a critical path to
ensure the above-noted arrangements with Autotote are acted on on
a timely basis;
(3) to prepare presentations in multi-media format necessary to
sell the RACINGO Concept to potential buyers including
racetracks;
(4) to help PWIN in choosing and recruiting the appropriate
personnel necessary to successfully launch RACINGO; and
(5) to act as the strategic adviser to PWIN's Creative Review
Board for any marketing, advertising concepts brought forward to
promote the game in venues controlled by PWIN under the RACINGO
Licenses.
In consideration for the services provided by Newco, the Company
will pay Newco a fee each month based on the following:
(1) $350.00 per hour;
(2) $2,400.00 per day;
(3) $21,000.00 per month;
PacCanUs Inc. is a holding company whose operating companies are
in the business of developing and executing communications needs
to clients in both Canada and the US.
Vickers and Benson Advertising
Vickers & Benson is one of the few full-service, integrated
communications companies left that is still 100% Canadian-owned.
With annual billings of over $213 million, we consistently rank
as one of the top-ten agencies in Canada. Our motto is to make
our clients rich and our mothers proud. Which is something we do
regularly, including our breakthrough work for mbanx (the times
are a changin' - a la Bob Dylan) and Bank of Montreal (can a bank
change?)
MaxxMedia Media Buying Services
MaxxMedia provides complete Media Management Services to all V&B
clients. In addition, we serve many of our own clients, based
largely on our reputation for exceptional media analysis. Our
work is supported by access to all the major media research and
audience measurement databases for the Canadian and U.S. Markets.
In addition, we have also invested heavily in some of the most
sophisticated media analysis, planning and buying software
programs available.
Warwick & Associates - Public Relations
Warwick & Associates was established in 1979 to provide public
relations, event management and promotion services to private and
public sector clients. We have served as advisors to governments
on highly sensitive issues, planned and implemented successful
public interest campaigns and provided our clients with crisis
communications and media training. We have also developed and
executed media relations and publicity programs and profile-
building programs for senior executives and industry leaders at
both the national and grassroots levels.
Vickers and Benson Account Planning
At Vickers and Benson, we believe it is essential to have the
customer - or their representative, a creative planner - involved
in every stage of the creative process. Accordingly we have built
one of the largest planning groups in the country. Our sole
mission is to continuously improve the effectiveness of our
clients' marketing communication, through the rigorous analysis
of all available data from tracking study awareness and imagery
to transactions and profitability.
The Company's business is subject to the following risk factors:
RELIANCE ON KEY PERSONNEL. The Company places particular reliance
on certain key advisors, directors, and the president, whose
involvement would be considered material to the Company.
COMPETITION. Though the lottery-sized payouts are new and
exciting to the horseracing industry, the game Racingo itself
will compete with other forms of betting currently offered at the
racetracks.
FUTURE FINANCING. The future success of the Company may depend on
financing and the relationship not being secured with a tote
company.
REGULATION. Although the Company will be subject to regulation
under the Securities Exchange Act of 1934, management believes
the Company will not be subject to regulation under the
Investment Company Act of 1940, insofar as the Company will not
be engaged in the business of investing or trading in securities.
The Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the
Company under the Investment Company Act of 1940 and,
consequently, any violation of such Act would subject the Company
to material adverse consequences.
The Company does not at present have any governmental permits,
licenses or the like. It is probable that the Company will
acquire gaming licenses in the future.
LIMITED OPERATING HISTORY. The Company has not generated any
revenues since its inception and has a limited operating history.
There can be no assurances that the Company will operate at a
profit. There can be no assurances that the growth strategies
identified by management will be successful, or, if they are
successful, that they will have a positive effect on the earnings
of the Company.
SPECULATIVE NATURE OF COMPANY'S PROPOSED OPERATIONS. The success
of the Company's operations may be dependent upon management
together with numerous other factors beyond the Company's
control.
ITEM 2. DESCRIPTION OF PROPERTY.
The Company's offices are located at 7050 Weston Rd., Vaughn,
Ontario, Canada L4L 8G7. The Company will occupy this office
space (1857 sq. ft.) beginning February 1, 2000 for a three year
period. Under the terms of the agreement, the Company will pay
$7.42/square foot for the first year; $7.75/square foot for
the second year; and $8.09/square foot for the third year. Since
the Company does not invest or plan to invest in any
investments or interests in real estate, real estate mortgages,
or securities of or interests in person primarily engaged
in real estate activities, it does not have any policies instituted
with respect to the aforementioned investments or interests, etc.
Since the company is incorporated in Nevada, it is required to
maintain a resident office in that state in which corporate
documents are available. The resident office is located at is One
East First Street, Reno, Nevada 89501. No activities take place
in the resident office. All other activities have been
consolidated to the facility described above.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such action by
or against the Company has been threatened.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No such matters were submitted during the fourth quarter of the
Company's fiscal year ending February 29, 2000.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's common stock is quoted on the over-the-counter
market in the United States under the symbol PWIN. The stock was
listed previously under the symbol ATTI. The quotations reflect
inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions.
<TABLE>
<S> <C> <C>
Qtr. Ended Low/Bid High/Ask
As of July 31, 2.50 2.62
1999
Aug. 30, 1999 2.25 2.93
Nov. 30, 1999 2.00 2.75
February 29, 2.37 2.62
2000
May 31, 2000 1.62 2.50
</TABLE>
Source: America Online.
The Company's common stock is considered a "penny stock" under
the Commission rules.
Effective August 11, 1993, the Securities and Exchange Commission
adopted Rule 15g-9, which established the definition of a "penny
stock," for purposes relevant to the Company, as any equity
security that has a market price of less than $5.00 per share or
with an exercise price of less than $5.00 per share, subject to
certain exceptions. For any transaction involving a penny stock,
unless exempt, the rules require: (i) that a broker or dealer
approve a person's account for transactions in penny stocks; and
(ii) the broker or dealer receive from the investor a written
agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve
a person's account for transactions in penny stocks, the broker
or dealer must (i) obtain financial information and investment
experience and objectives of the person; and (ii) make a
reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient
knowledge and experience in financial matters to be capable of
evaluating the risks of transactions in penny stocks. The broker
or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prepared by the Commission relating
to the penny stock market, which, in highlight form, (i) sets
forth the basis on which the broker or dealer made the
suitability determination; and (ii) that the broker or dealer
received a signed, written agreement from the investor prior to
the transaction. Disclosure also has to be made about the risks
of investing in penny stocks in both public offerings and in
secondary trading, and about commissions payable to both the
broker-dealer and the registered representative, current
quotations for the securities and the rights and remedies
available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in
the account and information on the limited market in penny
stocks.
The National Association of Securities Dealers, Inc. (the
"NASD"), which administers NASDAQ, has recently made changes in
the criteria for initial listing on the NASDAQ Small Cap market
and for continued listing. For initial listing, a company must
have net tangible assets of $4 million, market capitalization of
$50 million or net income of $750,000 in the most recently
completed fiscal year or in two of the last three fiscal years.
For initial listing, the common stock must also have a minimum
bid price of $4 per share. In order to continue to be included on
NASDAQ, a company must maintain $2,000,000 in net tangible assets
and a $1,000,000 market value of its publicly-traded securities.
In addition, continued inclusion requires two market-makers and a
minimum bid price of $1.00 per share.
Approximate Number of Equity Security Holders
At February 29, 2000, there were approximately 10 active holders of
record of the Company's common stock. The Company believes that many
additional holders of the Company's common stock are unidentified
because there are approximately 4,834,500 shares held by brokers in
nominee accounts or "street name".
Dividends
The Registrant has not paid any dividends to date, and has no
plans to do so in the immediate future.
Recent Sales of Unregistered Securities.
With respect to the issuances and transfers made, the Registrant
relied on Section 4(2) of the Securities Act of 1933, as amended.
No advertising or general solicitation was employed in offering
the shares. The securities were offered for investment only and
not for the purpose of resale or distribution, and the transfer
thereof was appropriately restricted.
On April 16, 1998, the Company issued 57,142 shares of its common
stock for consideration of $53,432.
On October 20, 1999, the Company issued 50,000 shares of its
common stock for consideration of $75,000.
On November 11, 1999, the Company issued 50,000 shares of its
common stock for consideration of $75,000.
On January 20, 2000, Penguin exercised 20,000 shares of the
80,000 options granted to Penguin. (see Item 11; Note 1, below)
On February 3, 2000, penguin exercised 18,750 shares of the 80,000
options granted to Penguin (see Item 11, Note 1, below)
On February 20, 2000 Penguin exercised 11,250 shares of the 80,000
options granted to Penguin (see Item 11; Note 1, below)
In general, under Rule 144 adopted pursuant to the Securities Act
of 1933, a person (or persons whose shares are aggregated) who
has satisfied a one year holding period, under certain
circumstances, may sell within any three-month period a number of
shares which does not exceed the greater of one percent of the
then outstanding Common Stock or the average weekly trading
volume during the four calendar weeks prior to such sale. Rule
144 also permits, under certain circumstances, the sale of shares
without any quantity limitation by a person who has satisfied a
two-year holding period and who is not, and has not been for the
preceding three months, an affiliate of the Company.
ITEM 6. MANAGEMENT'S PLAN OF OPERATION
NOTE REGARDING PROJECTIONS AND FORWARD LOOKING STATEMENTS
This registration statement contains statements that are forward-
looking statements within the meaning of the federal securities
laws. These include statements about our expectations, beliefs,
intentions or strategies for the future, which we indicate by
words or phrases such as "anticipate," "expect," "intend,"
"plan," "will," "believe" and similar language. These statements
involve known and unknown risks, including those resulting from
economic and market conditions, the regulatory environment in
which we operate, competitive activities, and other business
conditions, and are subject to uncertainties and assumptions set
forth elsewhere in this registration statement. Our actual
results may differ materially from results anticipated in these
forward-looking statements. We base our forward-looking
statements on information currently available to us, and we
assume no obligation to update these statements.
Plan of Operation
The Company's Plan of Operation has not changed since the filing
of its amended Form 10-SB. The description of the current plan of
operation is incorporated by reference to Section 2 of that amended
Form 10-SB filed with the SEC on May 31, 2000.
Management's Discussion and Analysis of Financial Conditions
Results of Operations - Comparison February 29, 2000 and February
28, 1999
For the years ended February 29, 2000 and February 28, 1999,
General land Administrative expenses ("G&A") consisted primarily
of professional fees, write-off of trademark expenditures and
amounts due from a related company, and other general corporate
expenses. G&A for the year ended 2000 was approximately $547,000,
which was a $360,000 increase over 1999, which was approximately
$187,000. The primary reasons for the increase was i) an
approximate $130,000 write-off of legal fees related to trademark
activities previously capitalized, because the costs were deemed
not to have benefits in future years; ii) a $180,000 increase in
professional fees for costs incurred to become a reporting
company and consultants hired to assist in the implementation and
development of the Company's operations; and iii) a $44,000 write-
off of the loan to a related company due to its insolvency.
Liquidity and Capital Resources
Historically the Company has not incurred any revenues. The
current years operating cash flow deficit of approximately
$296,000 was funded by a $84,000 convertible promissory note and
$250,000 received from the issuance of the Company's common
stock.
The Company has certain cash requirements to initiate its
business plan. Management has estimated these requirements to be,
as follows: i) begin the operations of the Racingo Land Based
estimated to be approximately $3,000,000 U.S.; ii) begin the
operations of the Fantasy Racingo based operations estimated to
be approximately $550,000 U.S.; and iii) general and
administrative costs estimated to be approximately $700,000 U.S.
The company must also arrange for insurance for guaranteed
jackpots. Management has been in discussion with an insurance
carrier and has an estimated cost of $50,000 per $1 million
guaranteed.
The Company estimates that the above requirements will be expended
during the fiscal year 2001.
As of the date of this Form 10-KSB, the Company has entered into a
non-exclusive "best efforts basis" private placement of its
equity securities with an investment banking firm, Private
Capital Group, Inc., Clearwater, Florida, to raise the required
funds under the commitments. Private Capital Group, Inc.
specializes in facilitating growth capital for emerging
companies.
Employees
The Company's only employees at the present time are its
president and the 5 members of the Advisory Board, who will
devote as much time as the Board of Directors determine is
necessary to carry out the affairs of the Company.
Subsequent Events
On May 24, 2000, the Company entered a Racingo Tote Services And
Software License Agreement with Autotote Systems, Inc. This
agreement is to replace the Non-Binding Memorandum of
Understanding dated February 7, 2000. Under the terms of the
Agreement, Autotote has granted the Company an exclusive five (5)
year license (the "Racingo Software License"), renewable for an
additional five (5) years upon mutual agreement, to use the
Racingo Software with respect to the use, conduct, delivery,
sale, distribution or exploitation of Racingo under the On- and
Off-Track Racingo License and the On-Line Racingo License. The
Company will grant Autotote an exclusive license (the "Racingo
License"), for the term of this Agreement, to use the
intellectual property rights and know-how identified under the
terms "Racingo", "Racingo Copyrights", "Racingo Patent" and
"Racingo Trademarks". In consideration for these terms,
5.1 Where Autotote is the Tote Supplier. The Company shall pay
to Autotote a fee equal to the greater of:
(a) 23% of the Company's Take-Out from all racing tracks for
which Autotote is the Tote Supplier; or
(b) 1.25% of the Racingo Wager from all racing tracks for which
Autotote is the Tote Supplier.
5.2 Where Autotote is not the Tote Supplier. The Company shall
pay to Autotote a fee equal to 5% of the Company's Take-Out from
all racing tracks for which Autotote is not the Tote Supplier.
5.3 Transaction / Interface Fees. The Company acknowledges that
Autotote shall be entitled to charge each racing track its
standard transaction or interface fee of 0.125% of the Racingo
Wager for that track, whether or not Autotote is the Tote
Supplier for that track.
On March 30, 2000, the Company issued 175,000 shares of its
common stock for a consideration of $306,250 pursuant to Rule 504
of Regulation D to one investor.
On March 31, 2000, the Company issued 2,857 shares of its common
stock for services rendered. The shares were valued at $5,000
which was the current market value of the Company's common stock
on the date of issuance.
ITEM 7. FINANCIAL STATEMENTS.
The financial statements and supplemental data required by this
Item 7 follow the index of financial statements appearing at Item
13 of this Form 10-KSB.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
1. i. The Company's principal accountant was
dismissed on December 31, 1999
ii. The principal accountant's report on the financial
statements for the past two years was modified as to uncertainty
that the Company will continue as a going concern.
iii. The decision to change accountants was approved by the board
of directors.
iv. A. There were no disagreements with the former
accountant on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure,
which, if not resolved to the former accountants satisfaction,
would have caused it to make reference to the subject matter of
the disagreement(s) in connection with its report.
2. A new accountant has been engaged as the principal
accountant to audit the issuer's financial statements. The new
accountant is Merdinger, Fruchter, Rosen & Corso, P.C. and was
engaged as of December 31, 1999. Neither the Company nor anyone
acting on its behalf consulted the new accountant regarding:
ii. the application of accounting principles to a specific
completed or contemplated transaction, or the type of audit
opinion that might be rendered on the small business issuer's
financial statements, as part of the process of deciding as to
the accounting, auditing or financial reporting issue, or
iii. any matter that was the subject of a disagreement or event
identified in response to paragraph 1(iv) of this Item.
3. The Company has provided the former accountant with a copy
of the disclosures it is making in response to this Item. The
Company has requested the former accountant to furnish a letter
addressed to the Commission stating that it agrees with the
statements made by the Company. The Company has filed the letter
as an exhibit to the registration statement containing this
disclosure.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS
The members of the Board of Directors of the Company serve until
the next annual meeting of the stockholders, or until their
successors have been elected. The officers serve at the pleasure
of the Board of Directors.
There are no agreements for any officer or director to resign at
the request of any other person, and none of the officers or
directors named below are acting on behalf of, or at the
direction of, any other person.
Information as to the directors and executive officers of the
Company is as follows:
<TABLE>
<S> <C> <C>
Name Age Position
Stewart Garner 34 President/Secretary/T
reasurer/Director
Douglas McFadden 67 Director
</TABLE>
The biographies of Messrs. Garner and McFadden are included in
the Company's Amended Form 10-SB, and is incorporated by
reference to section 5 of that document. The biographies of the
members of the Advisory Board are also included in the Company's
Amended Form 10-SB and is also incorporated by reference to
section 5 of that document.
ITEM 10. EXECUTIVE COMPENSATION
The President of Playandwin, Inc. is entitled to a salary of
US$4,000 per month, Effective September 1, 1999, which has been
deferred until such a time that the Company will generate
revenue. The Company does not at present have a compensation
plan for officers and directors.
Summary Compensation Table
Annual compensation Long term compensation
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Awards Payout
s
Name and Year Salary Bonus( Other Restric Securit LTIP All
Position ($) 1) ($) Annua ted ies Payout oth
l Stock underly s ($) er
Comp. Awards ing Com
($) ($) options p.
/ SARs ($)
(#)
Stewart Garner, 2000 $24,000
President and
Director
</TABLE>
Option /SAR Grant in Last Fiscal Year
Individual Grants
<TABLE>
<S> <C> <C> <C> <C>
Name Number of Percent of total Exercise or base Expiration
securities options / SARs price ($/sh) Date
underlying granted to
options / SARs employees in
Granted (#) last fiscal year
Stephen 250,000 $2.00/sh 11/200
Peskoff, 4
Advisory Board
Andrew 75,000 $2.00/sh 10/2004
DeFrancesco,
Advisory Board
Douglas 75,000 $2.00/sh 11/2004
McFadden,
Director
Adam Hawkins, 75,000 $2.00/sh 11/2004
Lottery Advisor
</TABLE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth each person known to the Company,
as of June 1, 2000, to be a beneficial owner of five percent
(5%) or more of the Company's common stock, by the Company's
directors individually, and by all of the Company's directors and
executive officers as a group. Except as noted, each person has
sole voting and investment power with respect to the shares
shown.
Beneficial Owners:
<TABLE>
<S> <C> <C> <C>
Title of Name/Address Shares Percentage
Class of Owner Beneficially Ownership
Owned
Common Randy J. McDowell 525,000 7.09%
100 N. Wallace #232
Las Vegas, NV 89129
Common William L. Thompson 1,375,000 18.57%
RR #7 Woodstock
Ontario, Canada
N4S 7W2
Common Douglas McFadden 75,000 1.01%
26 Benson Ave.
Suite 202
Richmond, Ontario
L4C 4E6
Common Total Ownership of 75,000 1.01%
Officers and
Directors (1
individual - Stock
Option see Note 1)
</TABLE>
Members of Advisory Board Stock Options (if exercised)
<TABLE>
<S> <C> <C> <C>
Title of Name/Address of Owner Shares Percentage
Class Beneficially Ownership
Owned
Common Stephen Peskoff 250,000 3.16%
c/o Underhill Investment
Corp.
1001 Nineteenth Street
N.
10th Floor
Arlington, VA 22209
Common Andrew DeFrancesco 75,000 0.95%
225 Richmond Street West
Suite 403
Toronto, Ontario M5V-1W2
Common Douglas McFadden 75,000 0.95%
26 Benson Ave.
Suite 202
Richmond, Ontario L4C
4E6
Common Adam Hawkins 75,000 0.95%
140 Eastbourne Ave.
Toronto, Ontario M5P-2G6
Common Total Ownership by 475,000 6.01%
Members of Advisory
Board Stock Options
(4 Members)
</TABLE>
Effect to Beneficial Owners (if Options are exercised)
<TABLE>
<S> <C> <C> <C>
Title of Name/Address of Owner Shares Percentage
Class Beneficially Ownership
Owned
Common Randy J. McDowell 525,000 6.64%
100 N. Wallace #232
Las Vegas, NV 89129
Common William L. Thompson 1,375,000 17.39%
RR #7 Woodstock
Ontario, Canada N4S 7W2
Common Total Ownership over 5% 1,900,000 24.03%
and Officers and
Directors
</TABLE>
Effect to Beneficial Owners (If Exchangeable Shares and Warrants
are Exercised)
<TABLE>
<S> <C> <C> <C>
Title of Name/Address Shares Percentage
Class of Owner Beneficially Ownership
Owned
Common Stewart Garner 552,500(Note 2) 4.90%
142 Collingwood St.
Barrie, Ontario
L4M 5M3
Common Consular Investment 1,320,006(Note 2) 11.70%
Corp.
53 Standish Ave.
Torontao, Ontario
M4W 3B2
Common Randy J. McDowell 525,000 4.65%
100 N. Wallace #232
Las Vegas, NV 89129
Common William L. Thompson 1,375,000 12.18%
R.R. #7 Woodstock,
Ontario, Canada
N4S 7W2
Common Total ownership 3,772,506 33.43%
over 5%
</TABLE>
Note 1: The Company currently has a Stock Option Agreement
("Agreement") with Penguin Petrolium Products Limited
("Penguin"), dated December 15, 1999. Under the terms of the
Agreement, Penguin has the option to purchase 80,000 shares of
the Company's common stock at $2.00 per shares, of which 50,000
shares are exercisable until 5:00 PM (EST) Monday, January 17,
2000, which have been exercised in January, 2000. The remaining
30,000 shares are exercisable on the 2nd anniversary of the date
of the Agreement.
Four members of the Advisory Board are entitled to stock options
for a total amount of 475,000 shares at a purchase price of $2.00
per share. Three of the four may be exercised prior to November
28, 2004, with the fourth expiring in October 5, 2004.
Note 2: A Canada Exchangeable Share enables the holder to receive
one share of the Company's common stock for no consideration. The
Exchangeable Shares are convertible into shares of the Company's
common stock in three installments of 1,162,087 shares on each of
October 1, 2000, October 1, 2001 and October 1, 2002. However the
Company can call the Exchangeable Shares on the earlier of
October 1, 2004 or the occurrence of a take over bid for all of
the issued and outstanding stock of the Company. In aggregate
the Company has committed to issue 3,486,262 shares of its common
stock if the issued Exchangeable shares are converted and 397,428
shares of its common stock if the warrants are exercised.
Currently the exchangeable shares and warrants are non-voting.
Upon exercise, the shareholders will receive voting Class A
Common Stock.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
P.E.S.T. Creative Gaming Corporation is owned by Lynx Gaming
Corp. and the Company's wholly-owned Ontario subsidiary,
Playandwin Canada Inc. Lynx Gaming Corp. is a wholly-owned
subsidiary of Playandwin Canada Inc.
Andrew DeFrancesco, a member of the Advisory Board, is the
current President and Chairman of the Board for Internet Sports
Network, Inc.
Douglas McFadden is also the Director of Marketing for Internet
Sports Network, Inc.
ITEM 13. FINANCIAL STATEMENTS AND EXHIBITS.
FINANCIAL STATEMENTS
Reports of Independent Auditor, Merdinger, Fruchter,
Rosen & Corso, P.C. dated June 7, 2000.
Consolidated Balance Sheet as of February 29, 2000 and
February 28, 1999
Consolidated Statement of Operations for the years then
ended and for the period from April 22, 1996
(inception) to February 29, 2000
Consolidated Statement of Stockholders' Equity for the
years then ended and for the period from April 22,
1996 (inception) to February 29, 2000
Consolidated Statement of Cash Flows for the years then
ended and for the period from April 22, 1996
(inception) to February 29, 2000
Notes to Consolidated Financial Statements
INDEPENDENT AUDITORS' REPORT
To the Board of Directors' and Shareholders' of
Playandwin, Inc.
We have audited the accompanying consolidated balance sheets of
Playandwin, Inc. (formerly Agriceuticals Technologies, Inc.) and
Subsidiaries (A Development Stage Company), as of February 29,
2000 and February 28, 1999, and the related consolidated
statements of operations, stockholders' equity (deficiency) and
cash flows for the years then ended and for the period from April
22, 1996 (inception) to February 29, 2000. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Playandwin, Inc. and Subsidiaries, as of
February 29, 2000 and February 28, 1999 and the consolidated
results of their operations and their cash flows for the years
then ended and for the period from April 22, 1996 (inception) to
February 29, 2000 in conformity with generally accepted
accounting principles.
The accompanying consolidated financial statements have been
prepared assuming the Company will continue as a going concern.
As described in Note 1 to the financial statements, the Company
has suffered recurring losses from operations and has no
established source of revenue. This raises substantial doubt
about its ability to continue as a going concern. Management's
plans in regards to these matters are also described in Note 1.
These consolidated financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
MERDINGER, FRUCHTER, ROSEN & CORSO,
P.C.
Certified Public Accountants
Los Angeles, California
June 7, 2000
PLAYANDWIN, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<S> <C> <C>
February 29, February 28,
2000 1999
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 9,555 $ -
Prepaid expenses and other current assets 431,778 -
Due from related company - 43,840
Total Current Assets 441,333 43,840
INVESTMENT 1,036 -
FURNITURE AND EQUIPMENT, net 12,365 8,113
INTELLECTUAL PROPERTY 39,766 123,132
TOTAL ASSETS $ 494,500 $ 175,085
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY)
CURRENT LIABILITIES
Book overdraft $ - $ 8,743
Accounts payable and accrued expenses 216,035 150,009
Loans payable - stockholders 31,391 31,391
Convertible note payable 84,238 -
Total Current Liabilities 331,664 190,143
COMMITMENTS AND CONTINCENCIES (Note 8) - -
STOCKHOLDERS' EQUITY (DEFICIENCY)
Common stock, par value $0.001;
Class A - 50,000,000 shares authorized;
7,225,000 and 3,486,260 shares
issued and outstanding 7,225 3,487
Class B - 3,486,260 shares authorized,
issued and outstanding 3,487 -
Additional paid-in capital 1,302,375 575,406
Accumulated foreign currency translation (4,782) 4,606
adjustment
Deficit accumulated during the development (1,145,469 (598,557)
stage )
Total Stockholders' Equity (Deficiency) 162,836 (15,058)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIENCY) $ 494,500 $ 175,085
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
- 2 -
PLAYANDWIN, INC. AND SUBSIDARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<S> <C> <C> <C>
April 22, 1996
Year ended Year ended (Inception) to
February 29, February 28, February 29,
2000 1999 2000
REVENUES $ - $ - $ -
GENERAL AND ADMINISTRATIVE EXPENSES 546,912 186,517 1,145,469
LOSS FROM OPERATIONS BEFORE INCOME (546,912) (186,517) (1,145,469)
TAXES
PROVISION FOR INCOME TAXES - - -
NET LOSS (546,912) (186,517 (1,145,469)
OTHER COMPREHENSIVE LOSS, net of
tax
Foreign currency translation (9,388) (4,950) (4,782)
adjustment
COMPREHENSIVE LOSS $ (556,300) $ (191,467) $ (1,150,251)
LOSS PER COMMON SHARE - basic and $ (0.08) $ (0.05) $ (0.23)
diluted
WEIGHTED AVERAGE NUMBER OF COMMON
SHARE OUTSTANDING - basic and 7,118,979 3,486,260 5,032,774
diluted
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
- 3 -
PLAYANDWIN, INC. AND SUBSIDAIRIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FEBRUARY 29, 2000 AND FEBRUARY 28, 1999
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulated Deficit
Common Stock Foreign Accumulated Total
Additional Currency During Stockholders'
the
Class A Class B Paid-in Translation Development Equity
Shares Amount Shares Amount Capital Adjustment Stage (Deficiency)
Balance at - $ - - $ - $ - $ - $ - $ -
April 22, 1996
Shares issued -
for cash
04/22/96 at 440,000 440 - - 1,654 - - 2,094
$0.005 per
share
04/22/96 at 25,000 25 - - 159 - - 184
$0.007 per
share
06/24/96 at 1,540,006 1,540 - - 24,834 - - 26,374
$0.017 per
share
08/06/96 at 45,000 45 - - 6,501 - - 6,546
$0.145 per
share
12/31/96 at 168,750 169 - - 49,388 - - 49,557
$0.294 per
share
12/31/96 at 720,000 720 - - 23,192 - - 23,912
$0.033 per
share
01/17/97 at 25,000 25 - - 7,441 - - 7,466
$0.299 per
share
Foreign - - - - - 2,216 - 2,216
currency
translation
adjustment
Net loss - - - - - - (103,485) (103,485)
Balance at 2,963,756 2,964 - - 113,169 2,216 (103,485) 14,864
February 28,
1997
Shares issued
for cash
03/26/97 at 10,000 10 - - 4,850 - - 4,860
$0.486 per
share
04/01/97at 2,500 3 - - 691 - - 694
$0.278 per
share
04/04/97 at 5,000 5 - - 3,466 - - 3,471
$0.694 per
share
04/06/97 at 3,000 3 - - 2,079 - - 2,082
$0.694 per
share
04/20/97 at 5,000 5 - - 689 - - 694
$0.139 per
share
05/15/97 at 439,862 440 - - 397,087 - - 397,527
$0.904 per
share
Foreign - - - - - 7,340 - 7,340
currency
translation
adjustment
Net loss - - - - - - (308,555) (308,555)
Balance at 3,429,118 $3,430 - $ - $ 522,031 $ 9,556 $ (412,040) $ 122,977
February 28,
1998
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
- 4 -
PLAYANDWIN, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FEBRUARY 29, 2000 AND FEBRUARY 28, 1999
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulated Deficit
Foreign Accumulated Total
Common Stock Additional Currency During the Stockholders'
Class A Class B Paid-in Translation Development Equity
Shares Amount Shares Amount Capital Adjustment Stage (Deficiency)
Balance at 3,429,118 $3,430 - $ - $ 522,031 $ 9,556 $ (412,040) $122,977
February 28,
1998
Shares - -
issued for
Cash
04/16/98 at 57,142 57 - - 53,375 - - 53,432
$0.935 per
share
Foreign - - - - - (4,950) - (4,950)
currency
translation
adjustment
Net loss - - - - - - (186,517) (186,517)
Balance at 3,486,260 3,487 - - 575,406 4,606 (598,557) (15,058)
February 28,
1999
Issuance of (3,486,260) (3,487) 3,486,260 3,487 - - - -
Class B
Common Stock
Issuance of 7,075,000 7,075 - - ( 7,485) - - (410)
shares of
acquisition
of
Playandwin
Shares
issued for
cash
10/20/99 at 50,000 50 - - 74,950 - - 75,000
$1.50 per
share
01/17/99 at 50,000 50 - - 74,950 - - 75,000
$1.50 per
share
01/20/00 at 20,000 20 - - 39,980 - - 40,000
$2.00 per
share
02/03/00 at 18,750 19 - - 37,481 - - 37,500
$2.00 per
share
02/20/00 at 11,250 11 - - 22,489 - - 22,500
$2.00 per
share
Issuance of - - - - 484,604 - - 484,604
options for
services
Foreign - - - - - (9,388) - (9,388)
currency
translation
adjustment
Net loss - - - - - - (546,912) (546,912)
Balance at 7,225,000 7,225 $3,486,260 $ 3,487 $ 1,302,375 $ (4,782) $(1,145,469) $ 162,836
February 29,
2000
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
- 5 -
PLAYANDWIN, INC. AND SUBSIDIAIRES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<S> <C> <C> <C>
April 22, 1996
Year Ended Year Ended (Inception) to
February 29, February 28, February 29,
2000 1999 2000
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss $ (546,912) $ (186,517) $(1,145,469)
Adjustments to reconcile net
loss to net cash used
in operating activities
Depreciation and amortization 82,837 2,767 89,231
Write-off of due from related 43,840 - 43,840
company
Write-off of intellectual 86,620 - 86,620
property
Changes in assets and
liabilities
Prepaid expenses and other (27,869) 11,227 (30,101)
current assets
Accounts payable and accrued 65,706 86,687 215,715
expenses
NET CASH USED IN OPERATING (295,778) (85,836) (740,164)
ACTIVITIES
CASH FLOWS FROM INVESTING
ACTIVITIES
Advances to related company - - (56,944)
Repayments from related company - 13,104 13,104
Investment (1,036) - (1,036)
Purchase of furniture and (6,484) - (18,759)
equipment
Purchase of intellectual (3,254) (16,218) (126,386)
property
NET CASH USED IN INVESTING (10,774) (3,114) (190,021)
ACTIVITIES
CASH FLOWS FROM FINANCING
ACTIVITIES
Increase (decrease) in book (8,743) 8,743 -
overdraft
Proceeds from loans payable - - 31,391 31,391
stockholders
Proceeds from convertible note 84,238 - 84,238
payable
Issuance of common stock for 250,000 53,432 828,893
cash
NET CASH PROVIDED BY FINANCING
ACTIVITIES 325,495 93,566 944,522
CHANGE IN FOREIGN CURRENCY
TRANSLATION
ADJUSTMENT (9,388) (4,950) (4,782)
NET CHANGE IN CASH AND CASH
EQUIVALENTS 9,555 (344) 9,555
CASH AND CASH EQUIVALENTS,
beginning
of period - 334 -
CASH AND CASH EQUIVALENTS, end of $ 9,555 $ - $ 9,555
period
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW
INFORMATION
Cash Paid During the Period for
Interest $ - $ - $ -
Income taxes $ - $ - $ -
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
- 6 -
PLAYANDWIN, INC. AND SUBSIDIAIRES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FEBRUARY 29, 2000 AND FEBRUARY 28, 1999
NON-CASH INVESTING AND FINANCING TRANSACTIONS
For the year ended February 29, 2000, the Company granted an
option to purchase 80,000 shares of the Company's common stock in
return for consulting services rendered. The option was valued at
$75,540.
For the year ended February 29, 2000, the Company granted to four
members of the advisory board options to purchase an aggregate
amount of 475,000 shares of the Company's common stock in return
for services rendered. The options were valued at $409,064.
The accompanying notes are an integral part of these consolidated
financial statements.
- 7 -
PLAYANDWIN, INC. AND SUBSIDIAIRES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000 AND FEBRUARY 28, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Playandwin, Inc. (the "Company") (formerly
Agriceuticals Technologies, Inc.) is currently a
development stage company under the provisions of
Statement of Financial Accounting Standards ("SFAS")
No. 7. The Company was incorporated under the laws of
the State of Nevada on April 22, 1996. On July 13,
1999, the Company changed its name to Playandwin, Inc.
It is management's objective to operate the Company in
the development, promotion and sale of para-mutual
wager games.
Subsidiaries
In September 1999, the Company formed Playandwin
Canada, Inc. ("PWINC") an Ontario, Canada corporation.
PWINC was formed to acquire and be the parent for the
Company's acquisition of Lynx Gaming Corporation
("LYNX"), see Note 2 - Acquisitions for further
details.
Basis of Consolidation
The consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries PWINC,
LYNX and LYNX's wholly owned subsidiary P.E.S.T.
Creative Gaming Corporation ("PEST"). Accordingly, all
references herein to the Company include the
consolidated results of its subsidiaries. All
significant inter-company accounts and transactions
have been eliminated in consolidation.
Basis of Presentation
As reflected in the accompanying financial statements,
the Company has had recurring losses from operations, a
negative cash flow from operations and no established
source of revenues. These matters raise substantial
doubt about the Company's ability to continue as a
going concern.
In view of the matters described in the preceding
paragraph, recoverability of a major portion of the
recorded asset amounts shown in the accompanying
consolidated balance sheet is dependent upon continued
operations of the Company, which, in turn, is dependent
upon the Company's ability to continue to raise capital
and generate positive cash flows from operations. The
consolidated financial statements do not include any
adjustments relating to the recoverability and
classification of recorded asset amounts or amounts and
classifications of liabilities that might be necessary
should the Company be unable to continue its existence.
- 8 -
PLAYANDWIN, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000 AND FEBRUARY 28, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basis of Presentation (Continued)
Management plans to take the following steps that it
believes will be sufficient to provide the Company with
the ability to continue in existence:
The Company is continuing to develop its business
plan, which they expect to implement and begin
operations in the third calendar quarter of 2000.
However, Management does not expect the Company to
generate net income or positive cash flow for its
fiscal year ended February 28, 2001.
Management expects to fund any negative cash flows
or capital expenditures from a private placement
in the amount of $6,000,000 or other sales of the
Company's securities as may be deemed appropriate
by the Company's Board of Directors.
Use of Estimates in the Preparation of Financial
Statements
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that
affect the reported amount of assets and liabilities
and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported
amounts of revenues and expenses during the reported
period. Actual results could differ from those
estimates.
Fair Value of Financial Instruments
The Company measures its financial assets and
liabilities in accordance with generally accepted
accounting principles. For certain of the Company's
financial instruments, including cash and cash
equivalents, accounts payable and accrued expenses, the
carrying amounts approximate fair value due to their
short maturities. The amounts owed for loans payable -
stockholders and convertible note payable also
approximate fair value because the interest rates and
terms are substantially the same as market.
Cash and Cash Equivalents
The Company considers all highly liquid investments
purchased with original maturities of three months or
less to be cash equivalents.
Concentration of Credit Risk
From time to time the Company places its cash in what
it believes to be credit-worthy financial institutions.
However, cash balances may exceed FDIC insured levels
at various times during the year.
Investment
The investment in Racingo Investments Ltd. ("RIL") is
recorded at cost. The Company owns a 10% equity
investment in RIL and as of February 29, 2000, RIL is
inactive.
- 9 -
PLAYANDWIN, INC. AND SUBSIDARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000 AND FEBRUARY 28, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Furniture and Equipment
Furniture and equipment are stated at cost.
Depreciation and amortization is computed using the
declining balance method over the useful lives of the
five years.
Intellectual Property
Intellectual property is recorded at cost and includes
all costs to register trademarks, which includes legal
fees and registration costs. These costs will be
amortized over twenty years, which represents the life
of the registered trademarks. Also, the Company has
granted a certain third party a 50% beneficial
ownership in the Company registered trademarks.
Impairment of Long-Lived Assets
In accordance with SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of", long-lived assets to be
held and used are analyzed for impairment whenever
events or changes in circumstances indicate that the
related carrying amounts may not be recoverable. When
required, impairment losses on assets to be held and
used are recognized based on the fair value of the
assets and long-lived assets to be disposed of are
reported at the lower of carrying amount or fair
value less cost to sell.
Translation of Foreign Currency
The Company translates the foreign currency financial
statements of its subsidiaries in accordance with the
requirements of SFAS No. 52, "Foreign Currency
Translation". Assets and liabilities are translated at
current exchange rates, and related revenues and
expenses are translated at average exchange rates in
effect during the period. Resulting translation
adjustments are recorded as a separate component in
stockholders' equity. Foreign currency transaction
gains and losses are included in determining net
income.
Advertising Costs
Advertising costs are expensed as incurred.
Advertising expense includes costs related to promoting
RACINGO amounted to approximately $15,000 for the year
ended February 29, 2000 and $26,000 for the year ended
February 28, 1999.
- 10 -
PLAYANDWIN, INC. AND SUBSIDARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000 AND FEBRUARY 28, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
The Company accounts for income taxes pursuant to SFAS
No. 109, "Accounting for Income Taxes". Deferred taxes
are provided on a liability method whereby deferred tax
assets are recognized for deductible temporary
differences, and deferred tax liabilities are
recognized for taxable temporary differences.
Temporary differences are the differences between the
reported amounts of assets and liabilities and their
tax bases. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management,
it is more likely than not that some portion of all of
the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects
of changes in tax laws and rates on the date of
enactment.
Net Loss Per Common Share
The Company calculates net loss per share based on SFAS
No. 128, "Earnings Per Share". Basic loss per share is
computed by dividing net loss attributable to common
stockholders by the weighted average number of common
shares outstanding. Diluted loss per share is computed
similar to basic loss per share except that the
denominator is increased to include the number of
additional common shares that would have been
outstanding if the potential common shares had been
issued and if the additional common shares were
dilutive. At February 29, 2000 and February 28, 1999,
the weighted average shares outstanding would have been
increased by 872,428 and 397,428 shares of the
Company's common stock if the issued and exercisable
stock options and warrants would have been dilutive.
Comprehensive Income
In June 1998, the FASB issued SFAS No. 131, "Reporting
Comprehensive Income." SFAS No. 130 establishes
standards for the reporting and display of
comprehensive income and its components in the
financial statements.
Impact of Year 2000 Issue
During the year ended February 29, 2000, the Company
conducted an assessment of issues related to the Year
2000 and determined that it was necessary to modify or
replace portions of its software in order to ensure
that its computer systems will properly utilize dates
beyond December 31, 1999. The Company completed Year
2000 systems modifications and conversions in 1999.
Costs associated with becoming Year 2000 compliant were
not material. At this time, the Company cannot
determine the impact the Year 2000 will have on its key
customers or suppliers. If the Company's customers or
suppliers don't convert their systems to become Year
2000 compliant, the Company may be adversely impacted.
The Company is addressing these risks in order to
reduce the impact on the Company.
- 11 -
PLAYANDWIN, INC. AND SUBSIDARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000 AND FEBRUARY 28, 1999
NOTE 2 - ACQUISITIONS
PEST
On April 30, 1997 LYNX completed a merger with PEST by
issuing 4,520,012 shares of LYNX's common stock for all
of the outstanding common stock of PEST. Each share of
PEST's common stock was exchanged for 2 shares of
LYNX's common stock.
The merger was accounted for as a pooling of interests
and, accordingly, all prior period consolidated
financial statements of the Company have been restated
to include the results of operations, financial
position and cash flows of PEST. Information concerning
common stock, stock options and warrants and per share
data have been restated on an equivalent share basis.
The Consolidated financial statements as of February
28, 1997 and for the year then ended include the
Company's previous February 28 fiscal year amounts and
PEST's February 28 fiscal year amounts.
LYNX
On October 1, 1999, PWINC entered into a share exchange
agreement to acquire 100% of the outstanding common
stock of LYNX. In accordance with the agreement, the
stockholders of LYNX received (i) 3,486,260 warrants,
which enable the holders to receive 3,486,260 shares of
the Company's common stock, for 6,972,520 shares of
LYNX's common stock; (ii) exchanged 397,428 warrants to
purchase 397,428 shares of the Company's common stock
at $1.16 per share, exercisable until March 31, 2001,
for 794,856 warrants to purchase 794,856 shares of the
LYNX's common stock at $0.58 per share.
The 3,486,261 warrants which are convertible, at no
cost to the holder, into shares of the Company's
common stock in three instalments of 1,162,087
shares on each of October 1, 2000, October 1, 2001
and October 1, 2002. However, these warrants can be
called by the Company on the earlier of October 1, 2004
or the occurrence of a take-over bid for all of the
issued and outstanding stock of the Company.
As a result of this transaction, the operations of the
LYNX will constitute 100% of the operations of the
Company. Accordingly, the transaction has been treated
for accounting purposes as a reverse takeover of the
Company and therefore, the historical continuing
financial statements represent a continuation of the
legal subsidiary, PWINC, not Playandwin, the legal
parent. In accounting for this transaction:
- 12 -
PLAYANDWIN, INC. AND SUBSIDARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000 AND FEBRUARY 28, 1999
NOTE 2 - ACQUISITIONS (Continued)
LYNX (Continued)
(i) LYNX is deemed to be the purchaser and parent company for
accounting purposes. Accordingly, its net assets will be
included in the consolidated balance sheet at their
historical book values;
(ii) Control of the net assets and business of Playandwin was
acquired effective October 1, 1999, the effective date. This
transaction has been accounted for as a purchase of the assets
and liabilities of Playandwin by LYNX. Since Playandwin had no
assets, liabilities or operations prior to the merger, no excess
cost over fair value of net assets acquired will be recorded.
NOTE 3 - DUE FROM RELATED COMPANY
Advances to a related company are non-interest bearing,
unsecured and due on demand. The related company is
controlled by one of the stockholders of the Company.
NOTE 4 - INVESTMENT
Master License Agreement
On October 7, 1999, PEST entered into a twenty-year
master agreement with Racingo Investments Ltd. ("RIL")
(a Delaware corporation) to license its Canadian and
world rights of Racingo copyright assets. Racingo is a
concept developed by PEST for a pari-mutual bingo-type
wager game and lottery. PEST has developed the concept
and obtained patents and trademarks in Canada and
Europe. PEST received a one-time fee of $1,000 for the
license. Also in conjunction with the agreement, PEST
purchased 100 common shares, 125 class A shares, 175
class B shares and 250 class C shares of RIL for
$1,036. The shares received by PEST constitute a 10%
equity investment in the voting shares of RIL. PEST
will receive the following distributions i) 12.5% of
the net income derived from the licensee's North
American Land based agreement; ii) 17.5% of the net
income derived from the licensee's North American Land
based operations other than the Internet License
agreement and North American Land Based agreements, see
"License Agreements" below; iii)25% of all other net
income derived from the licensee.
License Agreements
Also, on October 7, 1999, the Company simultaneously
entered into two individual ten-year license agreements
with RIL (North American Land Based and Internet
License Agreements) to use the Racingo products and
trademarks to facilitate both wagering on the Internet,
World-wide, and North American on-and off-track. Also,
the two agreements provide the Company first right of
refusal on any licensing of Racingo in any venue other
than the Internet and North America on-and off-track
betting. This right of first refusal will last until
March 1, 2002. If the Company wants to exercise its
rights, it must respond to and match any bona fide
offer made to licensor by a third party within 60 days
of licensor's receipt of such an offer.
- 13 -
PLAYANDWIN, INC. AND SUBSIDARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000 AND FEBRUARY 28, 1999
NOTE 5 - FURNITURE AND EQUIPMENT
<TABLE>
<S> <C> <C>
February 29, February
28,
2000 1999
Computer $ 2,622 $ 2,622
Furniture 16,137 9,101
18,759 11,723
Less accumulated 6,394 3,610
depreciation
$ 12,365 $ 8,113
</TABLE>
NOTE 6 - LOANS PAYABLE - STOCKHOLDERS
As of February 29, 2000 and February 28, 1999, the
Company had three loans payable to stockholders
consisting of an aggregate amount of $31,391 for both
years. The loans payable are non-interest bearing,
unsecured and due on demand.
NOTE 7 - CONVERTIBLE NOTE PAYABLE
The Company borrowed $84,238, which accrued interest at
the rate of 8.0% per annum. The principal and accrued
interest is due on or before March 1, 2001. Also, the
note is convertible at a rate of $1.50 per share (the
market value of the Company's common stock at the date
of the note) of the Company's common stock, at the
holder's request, at any time prior to maturity.
NOTE 8 - COMMITMENTS AND CONTIGENCIES
Development Agreement
In 2000, the Company entered into an agreement to have
a company ("Developer") create the related software,
applications and systems for the Fantasy Racingo. Two
members of the Company's advisory board own the
Developer. The Company is obligated to payout in
installments an aggregate of $380,500 upon the
completion of certain milestones. As of February 29,
2000, the Company has paid $25,000 upon the execution
of the agreement. Upon completion of the related
system, the Developer will retain the rights to the
system, and the Company is obligated to pay an annual
royalty to the Developer of 20% of net revenues, gross
revenue less payments to third parties, generated from
advertising, sponsorship or other net revenues
generated by the Company from Fantasy Racningo or the
Company's website. Said payments are to be paid
quarterly within thirty days of each quarter end. Also,
the Developer is obligated to pay an annual royalty to
the Company of 20% of net revenues, gross revenues less
payments to third parties, generated from the
Developer's advertising and sponsorship of Fantasy
Racingo.
- 14 -
PLAYANDWIN, INC. AND SUBSIDARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000 AND FEBRUARY 28, 1999
NOTE 8 - COMMITMENTS AND CONTIGENCIES (Continued)
Marketing Agreement
On December 1, 1999, the Company entered into an
agreement with PacCanUs, Inc. ("PCU"). PCU is to
provide management services relating to the agreement
negotiated with Autotote, Inc., prepare presentations
necessary to sell Racingo, recruit personnel, act as a
strategic advisor to the Company's Creative Review
Board for any marketing. These services are to be
provided for a one-year period beginning on December
1, 1999. For the above-mentioned services, the Company
is to pay a rate of any of the following: i)$350 per
hour worked; $2,400 per day worked or $21,000 per
month. The Company has elected to pay the $21,000 per
month. As of February 29, 2000, the Company has accrued
and expensed three months of services, or $63,000.
Operating leases
The Company's future minimum annual aggregate
rental payments, for office space, required under
operating leases that have initial or remaining non-
cancelable lease terms in excess of one year are as
follows:
Year Ending February 28,
2000 $ 12,900
2001 14,700
2002 15,400
$ 43,000
Rent expense under operating leases for the years
ended February 29, 2000 and February 28, 1999 was
approximately $17,900 and $19,300, respectively.
Litigation
The Company is involved with certain legal proceedings
and claims, which arise in the normal course of
business. Management does not believe that the outcome
of these matters will have a material adverse effect on
the Company's consolidated financial position or
results of their operations.
NOTE 9 - COMMON STOCK AND WARRANTS
Class A Common Stock
Since inception through February 28, 1999, the Company
has, through private placements, sold units, consisting
of one share of the Company's common stock and a
warrant to purchase one share of the Company's common
stock at $1.16 per share, which are exercisable through
March 31, 2001. In aggregate the Company has issued
6,972,520 shares of its common stock and 397,428
warrants for a total of $578,893.
Class B Common Stock
In connection with the Company's acquisition of LYNX,
the Board of Directors authorized 3,486,260 shares of
common stock designated as Class B nonvoting
exchangeable shares. Each share is exchangeable into
one share of the Company's Class A common stock at no
cost to the holder. The shares become exercisable in
three installments of 1,743,130 over a three-year
period on each of October 1, 2000, 2001 and 2002. Each
Exchangeable share may be exchanged at the request of
the Company at any time prior to October 1, 2004 the
exchangeable shares shall be exchanged upon: (i) the
occurrence of a take over bid for all of the issued and
outstanding shares of the Company; or (ii) October 1,
2004.
The following table summarizes the stock warrants
issued as of February 29, 2000:
<TABLE>
<S> <C> <C>
Exercise
Warrants Price
Outstanding April 22, - -
1996
Issued 136,175 $ 1.16
Outstanding, February 136,175 $ 1.16
28, 1997
Issued 232,682 $ 1.16
Outstanding, February 368,857 $ 1.16
28, 1998
Issued 28,571 $ 1.16
Outstanding, February 397,428 $ 1.16
29, 2000 and February
28, 1999
</TABLE>
The exercisable warrants have a remaining weighted
average contractual life of 1.08 years as of February
29, 2000.
Stock Options - Consulting Agreement
The Company has a Stock Option Agreement with Penguin
Petroleum Limited ("Penquin"), dated December 15, 1999.
Under the terms of the agreement, Penguin has the
option to purchase 80,000 shares of the Company's
common stock in return for consulting services for 2
years. 50,000 of those shares were exercisable until
January 17, 2000 and were exercised in January 2000,
with the remaining 30,000 shares exercisable on or
before December 15, 2001, at a price of $2.00 per
share. In accordance with SFAS No. 123, "Accounting for
Stock-Based Compensation," the fair value of these
options was estimated at $75,540 (the contract value
will be expensed pro-rata over the life of the
contract) using the Black-Scholes option-pricing model
with the following valuations and weighted-average
assumptions:
- 15 -
PLAYANDWIN, INC. AND SUBSIDARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000 AND FEBRUARY 28, 1999
NOTE 9 - COMMON STOCK AND WARRANTS (Continued)
Stock Options - Consulting Agreement (Continued)
i) 50,000 shares were valued at $32,655, with dividend yields
of 0%, expected volatility of 136%, risk-free interest rate of
5.5% and an expected life of 1 month;
ii) 30,000 shares were valued at $42,885, with dividend yields
of 0%; expected volatility of 136%, risk-free interest rates of
6.1% and an expected life of 1 year.
Stock Options - Board Advisors
Four members of the advisory board were granted stock
options for an aggregate amount of 475,000 shares at a
purchase price of $2.00 per share. The options are
exercisable upon grant and will expire five years after
grant. In accordance with SFAS No. 123, "Accounting for
Stock-Based Compensation," the fair value of these
options was estimated at $409,064 (the contract value
will be expensed pro-rata over the life of the
contract) using the Black-Scholes option-pricing model
with the following valuations and weighted-average
assumptions:
i) 75,000 shares were granted on October 20, 1999 and valued at
$84,703, with dividend yields of 0%, expected volatility of 136%,
risk-free interest rates of 6.03% and an expected life of 1 year;
ii) 325,000 shares were granted on November 8, 1999 and valued
at $217,018, with dividend yields of 0%, expected volatility of
136%, risk-free interest rates of 6.03% and an expected life of 1
year;
iii) 75,000 shares were granted on December 4, 1999 and valued at
$107,343, with dividend yields of 0%, expected volatility of
136%, risk-free interest rates of 6.03% and an expected life of 1
year.
The following table summarizes the stock options issued
as of February 29, 2000:
<TABLE>
<S> <C> <C>
Exercise
Options Price
Outstanding April 22, - -
1996
Issued - $ -
Outstanding, February - $ -
28, 1997
Issued - $ -
Outstanding, February - $ -
28, 1998
Issued - $ -
Outstanding, February - $ -
28, 1999
Issued 555,000 $ 2.00
Exercised (80,000) $ 2.00
Outstanding, February 475,000 $ 2.00
29, 2000
</TABLE>
The per unit weighted-average fair value of stock
options granted was $0.88 on the date of grant. As of
February 29, 2000, the outstanding stock options have a
weighted average remaining contractual life of 4.65
years.
-16 -
PLAYANDWIN, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 - INCOME TAXES
The components of the provision for income taxes is as
follows:
<TABLE>
<S> <C> <C>
Februar Februar
y 29, y28,
2000 1999
Current Tax Expense
U.S. Federal $ - $ -
State and Local - -
Total Current - -
Deferred Tax Expense
U.S. Federal - -
State and Local - -
Total Deferred -
Total Tax Provision from Continuing $ - $ -
Operations
Februar Februar
y 29, y28,
2000 1999
Federal Income Taxes Rate 34.0% 34.3
0%
Effect of Valuation Allowance (34.0 (34.
)% 0)%
Effective Income Tax Rate - -
Deferred tax assets and liabilities reflect the net
effect of temporary differences between the carrying
amount of assets and liabilities for financial reporting
purposes and amounts used for income tax purposes.
Significant components of the Company's deferred tax
assets and liabilities are as follows:
</TABLE>
<TABLE>
<S> <C> <C>
February February
29, 28,
2000 19
99
Deferred tax assets
Loss carryforwards $ 389,000 $ 204,000
Less: valuation (389,000 (204,000)
allowance )
Net deferred tax assets $ - $ -
</TABLE>
At February 29, 2000, the Company has provided a
valuation allowance for the deferred tax asset since
management has not been able to determine whether the
asset is realizable. The net change in the valuation
allowance for the years ended February 29, 2000 and
February 28, 1999 increased by $185,000 and $64,000,
respectively. Net operating loss carryforwards expire
starting in 2004.
- 17 -
PLAYANDWIN, INC. AND SUBSIDARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000 AND FEBRUARY 28, 1999
NOTE 11- SUBSEQUENT EVENTS
Software License Agreement
On May 24, 2000, the Company entered into a licensing
agreement (Racingo Tote Services And Software License
Agreement) with Autotote Systems, Inc. This agreement
replaces the Non-Binding Memorandum of Understanding
dated February 7, 2000. Under the terms of the
Agreement, Autotote has granted the Company an
exclusive five year license (the "Racingo Software
License"), renewable for an additional five years upon
mutual agreement, to use the Racingo Software with
respect to the use, conduct, delivery, sale,
distribution or exploitation of Racingo under the On-
and Off-Track Racingo License and the On-Line Racingo
License, owned by the Company, see Note - 4
Investments. The Company will grant Autotote an
exclusive license (the "Racingo License"), for the
term of this Agreement, to use the intellectual
property rights and know-how identified under the terms
"Racingo", "Racingo Copyrights", "Racingo Patent" and
"Racingo Trademarks".
In consideration for these terms, where Autotote is the
Tote Supplier the Company shall pay to Autotote a fee
equal to the greater of:
(a) 23% of the Company's take-out from all racing tracks for
which Autotote is the Tote Supplier;
(b) 1.25% of the Racingo Wager from all racing tracks for
Autotote is the Tote Supplier.
For racing tracks where Autotote is not the Tote
Supplier, the Company shall pay to Autotote a fee equal
to 5% of the Company's take-out.
Also, the Company acknowledges that Autotote shall be
entitled to charge each racing track its standard
transaction or interface fee of 0.125% of the Racingo
Wager for that track, whether or not Autotote is the
Tote Supplier for that track.
Sale of Company's Common Stock
On March 30, 2000, the Company issued 175,000 shares of
its common stock for $306,250 pursuant to Rule 504 of
Regulation D to one investor.
On March 31, 2000, the Company issued 2,857 shares of
its common stock for service rendered. The shares were
valued at $5,000, which was the current market value of
the Company's common stock on the date of issuance.
- 18 -
EXHIBITS
2.1 Share Exchange Agreement with Lynx Gaming Corp (incorporated
by reference to the amended Form 10-SB filed on May 31, 2000)
2.2 Share Exchange Agreement with P.E.S.T. Creative Gaming Corp.
(incorporated by reference to the amended Form 10-SB filed on
May 31, 2000)
3.1 Articles of Incorporation (incorporated by
reference to the amended Form 10-SB filed on May
31, 2000)
3.2 By-Laws (incorporated by reference to the amended
Form 10-SB filed on May 31, 2000)
10.1 Master License Agreement (incorporated by reference to the
amended Form 10-SB filed on May 31, 2000)
10.2 Internet License Agreement (incorporated by reference to the
amended Form 10-SB filed on May 31, 2000)
10.3 Letter of Agreement (incorporated by reference to the
amended Form 10-SB filed on May 31, 2000)
10.4 On- and Off-Track Betting License Agreement (incorporated by
reference to the amended Form 10-SB filed on May 31, 2000)
10.5 Software Development Agreement (incorporated by reference to
the amended Form 10-SB filed on May 31, 2000)
10.6 Memorandum of Understanding (incorporated by reference to
the amended Form 10-SB filed on May 31, 2000)
10.7 Stock Option Agreement - Penguin Petrolium Products Limited
(incorporated by reference to the amended Form 10-SB filed on May
31, 2000)
10.8 Stock Option Agreement - Stephen Peskoff (incorporated by
reference to the amended Form 10-SB filed on May 31, 2000)
10.9 Stock Option Agreement - Andrew DeFrancesco (incorporated by
reference to the amended Form 10-SB filed on May 31, 2000)
10.10 Stock Option Agreement - Douglas McFadden (incorporated
by reference to the amended Form 10-SB filed on May 31, 2000)
10.11 Stock Option Agreement - Adam Hawkins (incorporated by
reference to the amended Form 10-SB filed on May 31, 2000)
10.12 The Racingo Tote Services And Software License
Agreement (incorporated by reference to the amended Form 10-SB
filed on May 31, 2000)
10.13 Market Development Consulting Services Agreement
16. Letter re change in certifying accountant
(incorporated by reference to the amended Form 10-
SB filed on May 31, 2000)
22. Subsidiaries of the registrant
Playandwin Canada, Inc. ("PWIN Canada" -
incorporated in Ontario, Canada) - 100% owned by
the Company;
Lynx Gaming Corp. ("Lynx" - incorporated in
Ontario, Canada) - 100% owned by PWIN Canada;
P.E.S.T. Creative Gaming Corp. ("P.E.S.T." -
incorporated in Ontario, Canada) - 95% owned by
Lynx Gaming Corp. and 5% owned by PWIN Canada;
Racingo Investments Ltd. ("RIL" - incorporated in
Delaware) - owned equally by P.E.S.T. Winning
Games Inc. and PacCanUs Inc.
d) Financial Data Schedule
