UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(b) OR (g) OF THE SECURITIES ACT OF 1934
PACIFIC SPORTS ENTERPRISES, INC.
(Exact name of small business issuer in its charter)
NEVADA 33-0925319
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer Identification No.)
2164 N. Glassell Street, Orange California 92865
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (714) 637-1697
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001
TABLE OF CONTENTS Page
PART I
DESCRIPTION OF BUSINESS 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS 2
DESCRIPTION OF PROPERTY 8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 8
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS 8
EXECUTIVE COMPENSATION 9
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 10
DESCRIPTION OF SECURITIES 10
PART II
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY 10
AND OTHER STOCKHOLDER MATTERS
LEGAL PROCEEDINGS 10
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING 10
RECENT SALES OF UNREGISTERED SECURITIES 10
INDEMNIFICATION OF DIRECTORS AND OFFICERS 11
FINANCIAL STATEMENTS 11
PART III
INDEX TO EXHIBITS 18
SIGNATURES 18
1
<PAGE>
PART I
Item 1. DESCRIPTION OF BUSINESS.
The Company has not engaged in any operations other than organizational matters.
Pacific Sports Enterprises, Inc.., a Nevada corporation (the "Company") was
incorporated on September 28, 1998, and was formed specifically to be a "clean
public shell" and for the purpose of either merging with or acquiring an
operating company with operating history and assets.
The primary activity of the Company will involve seeking merger or acquisition
candidates with whom it can either merge or acquire. The Company has not
selected any company for acquisition or merger and does not intend to limit
potential acquisition candidates to any particular field or industry, but does
retain the right to limit acquisition or merger candidates, if it so chooses, to
a particular field or industry. The Company's plans are in the conceptual stage
only.
The executive offices of the Company are located at 2164 N. Glassell Street,
Orange California 92865. Its telephone number is (714) 637-1697.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
Plan of Operation - General
The Company was organized for the purpose of creating a corporate vehicle to
seek, investigate and, if such investigation warrants, acquire an interest in
one or more business opportunities presented to it by persons or firms who or
which desire to seek perceived advantages of a publicly held corporation. At
this time, the Company has no plan, proposal, agreement, understanding or
arrangement to acquire or merge with any specific business or company, and the
Company has not identified any specific business or company for investigation
and evaluation. No member of Management or promoter of the Company has had any
material discussions with any other company with respect to any acquisition of
that company. Of the 1,000,000 outstanding shares of the Company's Common Stock,
200,000 shares are currently freely tradable under the Rule 144 exemption
promulgated under the Securities Act of 1933. See Item 8 "Description of
Securities." The Company will not restrict its search to any specific business,
industry or geographical location, and the Company may participate in a business
venture of virtually any kind or nature. The discussion of the proposed business
under this caption and throughout is purposefully general and is not meant to be
restrictive of the Company's virtually unlimited discretion to search for and
enter into potential business opportunities.
The Company intends to obtain funds in one or more private placements to finance
the operation of any acquired business. Persons purchasing securities in these
placements and other shareholders will likely not have the opportunity to
participate in the decision relating to any acquisition. The Company's proposed
business is sometimes referred to as a "blind pool" because any investors will
entrust their investment monies to the Company's management before they have a
chance to analyze any ultimate use to which their money may be put.
Consequently, the Company's potential success is heavily dependent on the
Company's management, which will have virtually unlimited discretion in
searching for and entering into a business opportunity. None of the officers and
directors of the Company has had any experience in the proposed business of the
Company. There can be no assurance that the Company has had any experience in
the proposed business of the Company. There can be no assurance that the Company
will be able to raise any funds in private placement. In any private placement,
management may purchase shares on the same terms as offered in the private
placement. (See "Item 5, Directors, Executive Officers, Promoters and Control
2
<PAGE>
Persons").
Management anticipates that it will only participate in one potential business
venture. This lack of diversification should be considered a substantial risk in
Investments in the Company because it will not permit the Company to offset
potential losses from one venture against gains from another.
The Company may seek a business opportunity with a firm that only recently
commenced operations, or a developing company in need of additional funds for
expansion into new products or markets, or an established company seeking a
public vehicle. In some instances, a business opportunity may involve the
acquisition or merger with a corporation which does not need substantial
additional cash but which desires to establish a public trading market for its
common stock. The Company may purchase assets and establish wholly owned
subsidiaries in various business or purchase existing businesses as
subsidiaries.
The Company anticipates that the selection of a business opportunity in which to
participate will be complex and extremely risky. Because of general economic
conditions, rapid technological advances being made in some industries, and
shortages of available capital, management believes that there are numerous
firms seeking the benefits of a publicly traded corporation. Such perceived
benefits of a publicly traded corporation may include facilitating or improving
the terms on which additional equity financing may be sought, providing
liquidity for the principals of a business, creating a means for providing
incentive stock options or similar benefits to key employees, providing
liquidity (subject to restrictions of applicable statues) for all shareholders,
and other factors. Potentially available business opportunities may occur in
many different industries and at various stages of development, all of which
will make the task of comparative investigation and analysis of such business
opportunities extremely difficult and complex.
As is customary in the industry, the Company may pay a finder's fee for locating
an acquisition prospect. If any such fee is paid, it will be approved by the
Company's Board of Directors and will be in accordance with the industry
standards. Such fees are customarily between 1% and 5% of the size of the
transaction, based upon a sliding scale of the amount involved. Such fees are
typically in the range of 5% on a $1,000,000 transaction ratably down to 1% in a
$4,000,000 transaction. Management had adopted a policy that such a finder's fee
or real estate brokerage fee could, in certain circumstances, be paid to any
employee, officer, director or 5% shareholder of the Company, if such person
plays a material role in bringing a transaction to the Company.
As part of any transaction, the acquired company may require that Management or
other stockholders of the Company sell all or a portion of their shares to the
acquired company, or to the principals of the acquired company. It is
anticipated that the sales price of such shares will be lower than the current
market price or anticipated market price of the Company's Common Stock at such a
time. The Company's funds are not expected to be used for purposes of any stock
purchase from insiders. The Company shareholders will not be provided the
opportunity to approve or consent to such sale. The opportunity to sell all or a
portion of their shares in connection with an acquisition may influence
management's decision to enter into a specific transaction. However, management
believes that since the anticipated sales price will potentially be less than
market value, that the potential of a stock sale will be a material factor in
their decision to enter a specific transaction.
3
<PAGE>
The above description of potential sales of management stock is not based upon
any corporate bylaw, shareholder or board resolution, or contract or agreement.
No other payments of cash or property are expected to be received by Management
in connection with any acquisition. The Company has not formulated any policy
regarding the use of consultants or outside advisors, but does not anticipate
that it will use the services of such persons.
The Company has, and will continue to have, insufficient capital with which to
provide the owners of business opportunities with any significant cash or other
assets. However, management believes the Company will offer owners of business
opportunities the opportunity to acquire a controlling ownership interest in a
public company at substantially less cost than is required to conduct an initial
public offering. The owners of the business opportunities will, however, incur
significant post-merger or acquisition registration costs in the event they wish
to register a portion of their shares for subsequent sale. The Company will also
incur significant legal and accounting costs in connection with the acquisition
of a business opportunity including the costs of preparing post-effective
amendments, Forms 8-K, agreements and related reports and documents. However,
the officers and directors of the Company have not conducted market research and
are not aware of statistical data which would support the perceived benefits of
a merger or acquisition transaction for the owners of a business opportunity.
The Company does not intend to make any loans to any prospective merger or
acquisition candidates or unaffiliated third parties.
Sources of Opportunities
The Company anticipates that business opportunities for possible acquisition
will be referred by various sources, including its officers and directors,
professional advisers, securities broker-dealers, venture capitalists, members
of the financial community, and others who may present unsolicited proposals.
The Company will seek a potential business opportunity from all known sources,
but will rely principally on personal contacts of its officers and directors as
well as indirect associations between them and other business and professional
people. It is not presently anticipated that the Company will engage
professional firms specializing in business acquisitions or reorganizations.
The officers and directors of the Company are currently employed in other
positions and will devote only a portion of their time (not more than a couple
hours per week) to the business affairs of the Company, until such time as an
acquisition has been determined to be highly favorable, at which time they
expect to spend full time in investigating and closing any acquisition. In
addition, in the face of competing demands for their time, the officers and
directors may grant priority to their full-time positions rather than to the
Company.
Evaluation of Opportunities
The analysis of new business opportunities will be undertaken by or under the
supervision of the officers and directors of the Company. Management intends to
concentrate on identifying prospective business opportunities that may be
brought to its attention through present associations with management.
In analyzing prospective business opportunities, management will consider such
matters as the available technical, financial and managerial resources; working
capital and other financial requirements; history of operation, if any;
prospects for the future; present and expected competition; the quality and
4
<PAGE>
experience of management services which may be available and the depth of that
management; the potential for further research, development or exploration;
specific risk factors not now foreseeable but which then may be anticipated to
impact the proposed activities of the Company; the potential for growth or
expansion; the potential for profit; the perceived public recognition or
acceptance of products, services or trades; name identification; and other
relevant factors. Officers and directors of each Company will meet personally
with management and key personnel of the firm sponsoring the business
opportunity as part of their investigation. To the extent possible, the Company
intends to utilize written reports and personal investigation to evaluate the
above factors. The Company will not acquire or merge with any company for which
audited financial statements cannot be obtained.
It may be anticipated that any opportunity in which the Company participates
will present certain risks. Many of these risks cannot be adequately identified
prior to selection of the specific opportunity, and the Company's shareholders
must, therefore, depend on the ability of management to identify and evaluate
such risk. In the case of some of the opportunities available to the Company, it
may be anticipated that the promoters thereof have been unable to develop a
going concern or that such business is in its development stage in that it has
not generated significant revenues from its principal business activities prior
to the Company's participation. There is a risk, even after the Company's
participation in the activity and the related expenditure of the Company's
funds, that the combined enterprises will still be unable to become a going
concern or advance beyond the development stage. Many of the opportunities may
involve new and untested products, processes, or market strategies that may not
succeed. The Company and, therefore, its shareholders will assume such risks.
The Company will not restrict its search for any specific kind of business, but
may acquire a venture which is in its preliminary or development stage, which is
already in operation, or in essentially any stage of its corporate life. It is
currently impossible to predict the status of any business in which the Company
may become engaged, in that such business may need additional capital, may
merely desire to have its shares publicly traded, or may seek other perceived
advantages which the Company may offer.
Acquisition of Opportunities
In implementing a structure for a particular business acquisition, the Company
may become a party to a merger, consolidation, reorganization, joint venture,
franchise or licensing agreement with another corporation or entity. It may also
purchase stock or assets of an existing business. On the consummation of a
transaction, it is possible that the present management and shareholders of the
Company will not be in control of the Company. In addition, a majority or all of
the Company's officers and directors may, as part of the terms of the
acquisition transaction, resign and be replaced by new officers and directors
without a vote of the Company's shareholders.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance on exemptions from registration under applicable Federal and
state securities laws. In some circumstances, however, as a negotiated element
of this transaction, the Company may agree to register such securities either at
the time the transaction is consummated, under certain conditions or at
specified time thereafter. The issuance of substantial additional securities and
their potential sale into any trading market in the Company's Common Stock may
have a depressive effect on such market. While the actual terms of a transaction
to which the Company may be a party cannot be predicted, it may be expected that
the parties to the business transaction will find it desirable to avoid the
5
<PAGE>
creation of a taxable event and thereby structure the acquisition in a so called
"tax free" reorganization under Sections 368(a)(1) or 351 of the Internal
Revenue Code of 1986, as amended (the "Code"). In order to obtain tax-free
treatment under the Code, it may be necessary for the owners of the acquired
business to own 80% or more of the voting stock of the surviving entity. In such
event, the shareholders of the Company, including past and current investors,
would retain less than 20% of the issued and outstanding shares of the surviving
entity, which could result in significant dilution in the equity of such
shareholders.
As part of the Company's investigation, officers and directors of the Company
will meet personally with management and key personnel, may visit and inspect
material facilities, obtain independent analysis or verification of certain
information provided, check reference of management and key personnel, and take
other reasonable investigative measures, to the extent of the Company's limited
financial resources and management expertise. The manner in which each Company
participates in an opportunity will depend on the nature of the opportunity, the
respective needs and desires of the Company and other parties, the management of
the opportunity, and the relative negotiating strength of the Company and such
other management.
With respect to any mergers or acquisitions, negotiations with target company
management will be expected to focus on the percentage of the Company which
target company shareholders would acquire in exchange for their shareholdings in
the target company. Depending upon, among other things, the target company's
assets and liabilities, the Company's shareholders will in all likelihood hold a
lesser percentage ownership interest in the Company following any merger or
acquisition. The percentage ownership may be subject to significant reduction in
the event that the Company acquires a target company with substantial assets.
Any merger or acquisition effected by the Company can be expected to have a
significant dilative effect on the percentage of shares held by the Company's
then shareholders, including past and current investors.
The Company will not have sufficient funds (unless it is able to raise funds in
a private placement) to undertake any significant development, marketing and
manufacturing of any products which may be acquired. Accordingly, following the
acquisition of any such product, the Company will, in all likelihood, be
required to either seek debt or equity financing or obtain funding from third
parties, in exchange for which the Company would probably be required to give up
a substantial portion of its interest in any acquired product. There is no
assurance that the Company will be able either to obtain additional financing or
interest third parties in providing funding for the further development,
marketing and manufacturing of any products acquired.
It is anticipated that the investigation of specific business opportunities and
the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and
attention and substantial costs for accountants, attorneys and others. If a
decision were made not to participate in a specific business opportunity the
costs therefore incurred in the related investigation would not be recoverable.
Furthermore, even if an agreement is reached for the participation in a specific
business opportunity, the failure to consummate that transaction may result in
the loss of the Company of the related costs incurred.
Management believes that the Company may be able to benefit from the use of
"leverage" in the acquisition of a business opportunity. Leveraging a
transaction involves the acquisition of a business through incurring significant
indebtedness for a large percentage of the purchase price for that business.
6
<PAGE>
Through a leveraged transaction, the Company would be required to use less of
its available funds for acquiring the business opportunity and, therefore, could
commit those funds to the operations of the business opportunity, to acquisition
of other business opportunities or to other activities. The borrowing involved
in a leveraged transaction will ordinarily be secured by the assets of the
business opportunity to be acquired. If the business opportunity acquired is not
able to generate sufficient revenues to make payments on the debt incurred by
the Company to acquire that business opportunity, the lender would be able to
exercise the remedies provided by law or by contract. These leveraging
techniques, while reducing the amount of funds that the Company must commit to
acquiring a business opportunity, may correspondingly increase the risk of loss
to the Company. No assurance can be given as to the terms or the availability of
financing for any acquisition by the Company. During periods when interest rates
are relatively high, the benefits of leveraging are not as great as during
periods of lower interest rates because the investment in the business
opportunity held on a leveraged basis will only be profitable if it generates
sufficient revenues to cover the related debt and other costs of the financing.
Lenders from which the Company may obtain funds for purposes of a leveraged
buy-out may impose restrictions on the future borrowing, distribution, and
operating policies of the Company. It is not possible at this time to predict
the restrictions, if any, which lenders may impose or the impact thereof on the
Company.
Competition
The Company is an insignificant participant among firms which engage in business
combinations with, or financing of, development stage enterprises. There are
many established management and financial consulting companies and venture
capital firms which have significantly greater financial and personnel
resources, technical expertise and experience than the Company. In view of the
Company's limited financial resources and management availability, the Company
will continue to be at a significant competitive disadvantage vis-a-vis the
Company's competitors.
Regulation and Taxation
The Investment Company Act of 1940 defines an "investment company" as an issuer
that is or holds itself out as being engaged primarily in the business of
investments, reinvestments or trading of securities. While the Company does not
intend to engage in such activities, the Company could become subject to
regulation under the Investment Company Act of 1940 in the event the Company
obtains or continues to hold a minority interest in a number of development
stage enterprises. The Company could be expected to incur significant
registration and compliance costs if required to register under the Investment
Company Act of 1940. Accordingly, management will continue to review the
Company's activities from time to time with a view toward reducing the
likelihood that the Company could be classified as an "investment company." The
Company intends to structure a merger or acquisition in such a manner as to
minimize Federal and state tax consequences to the Company and to any target
company.
Employees
The Company's only employees at the present time is its President and director,
who will devote as much time as the Board of Directors determine is necessary to
carry out the affairs of the Company. (See "Item 5, Directors, Executive
Officers, Promoters and Control Persons").
7
<PAGE>
Item 3. DESCRIPTION OF PROPERTY.
The company has a working agreement with the Company president to use 600 square
feet of office space, telephones and secretarial services supplied on a gratis
basis.
Item 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information relating to the beneficial ownership
of Company common stock by those persons beneficially holding more than 5% of
the Company capital stock, by the Company's directors and executive officers,
and by all of the Company's directors and executive officers as a group, as of
September 30, 2000.
<TABLE>
<CAPTION>
Percentage of
Name of Number of outstanding
Stockholder Shares Owned Common Shares
<S> <C> <C>
ASI Acquisition Corp
Beneficial owner
Karen Fowler 800,000 80%
All officers and
directors as a group 800,000 80%
</TABLE>
The address of Ms. Fowler is care of the Company.
Item 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
Directors and Executive Officers.
The members of the Board of Directors of the Company serve until the next annual
meeting of stockholders, or until their successors have been elected. The
officers serve at the pleasure of the Board of Directors. Information as to the
directors and executive officers of the Company is as follows.
JOHN VILAGI - President, Director
John Vilagi has been President and Director since the organization of the
Company. Mr. Vilagi has been active as a business consultant for the last nine
years in widely diverse operational and financial positions centering on interim
crisis management and turnaround projects. He has been retained by major banks,
United States Trustees, and state court receivers to manage troubled businesses
as well as analyzing business for continued viability. Mr. Vilagi has also been
retained to develop financial plans and budgets, as well as to perform due
diligence for firms specializing in mergers and acquisitions. Prior to starting
his own consulting business he was international budget director for a major
Swiss company with 23 international divisions responsible for developing
standard accounting procedures as well as long and short term planning within
all divisions. Mr. Vilagi sits on the Board of several private companies located
in the United States and the United Kingdom. Mr. Vilagi earned a BA degree in
Economics and Political Science from Hofstra University, New York and graduated
with honors.
8
<PAGE>
KAREN FOWLER - Secretary, Director
Ms. Fowler has been Secretary and Director of the Company since the organization
of the Company. Ms. Fowler has been Secretary and partner in the Charleston
Group, a private investment banking and consulting firm. For the past eight
years. Ms. Fowler has been involved in merger, acquisition, reorganization,
liquidation and public offering transactions. She has assisted in more than
thirty transactions including I.P.O.'s and private placements. Ms. Fowler has
been active in several civic organizations and is director of a scholarship
fund. Ms. Fowler lives in Orange, California with her two sons.
Conflicts of Interest
Certain conflicts of interest now exist and will continue to exist between the
Company and its officers and directors due to the fact that each has other
business interests to which he devotes his primary attention. Each officer and
director may continue to do so notwithstanding the fact that management time
should be devoted to the business of the Company.
Certain conflicts of interest may exist between the Company and its management,
and conflicts may develop in the future. The Company has not established
policies or procedures for the resolution of current or potential conflicts of
interests between the Company, its officers and directors or affiliated
entities. There can be no assurance that management will resolve all conflicts
of interest in favor of the Company, and failure by management to conduct the
Company's business in the Company's best interest may result in liability to the
management. The officers and directors are accountable to the Company as
fiduciaries, which means that they are required to exercise good faith and
integrity in handling the Company's affairs. Shareholders who believe that the
Company has been harmed by failure of an officer or director to appropriately
resolve any conflict of interest may, subject to applicable rule of civil
procedure, be able to bring a class action or derivative suit to enforce their
rights and the Company's rights.
The Company has no arrangement, understanding or intention to enter into any
transaction for participating in any business opportunity with any officer,
director, or principal shareholder or with any firm or business organization
with which such persons are affiliated, whether by reason of stock ownership,
position as an officer or director, or otherwise.
Item 6. EXECUTIVE COMPENSATION.
No compensation is paid or anticipated to be paid by the Company. It is possible
that upon an acquisition some compensation may be paid to management. On
acquisition of a business opportunity, current management may resign and be
replaced by persons associated with the business opportunity acquired,
particularly if the Company participates in a business opportunity by effecting
a reorganization, merger or consolidation. If any member of current management
remains after effecting a business opportunity acquisition, that member's time
commitment will likely be adjusted based on the nature and method of the
acquisition and location of the business which cannot be predicted. Compensation
of management will be determined by the new board of directors, and shareholders
of the Company will not have the opportunity to vote on or approve such
compensation.
Directors currently receive no compensation for their duties as directors.
9
<PAGE>
Item 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In connection with organizing the Company, on April 23, 1998, persons consisting
of its officers, directors, and other individuals were issued a total of
1,000,000 shares of Common Stock at a value of $.001 per share. This results in
a total of 1,000,000 shares outstanding. Under Rule 405 promulgated under the
Securities Act of 1933, Mr. Vilagi and Ms. Fowler may be deemed to be a promoter
of the Company. No other persons are known to Management that would be deemed to
be promoters.
Item 8. DESCRIPTION OF SECURITIES.
Each shareholder of Common Stock, either in person or by proxy, may cast one
vote per share of Common Stock held on all matters to be voted on. The presence,
in person or by proxy, of the holders of a majority of the total number of
shares entitled to vote constitutes a quorum for the transaction of business.
Assuming that a quorum is present, the affirmative vote of a majority of the
shares of the Company present in person or represented by proxy is required. The
Company's articles do not provide for cumulative voting or preemptive rights.
There are no outstanding options or warrants of any kind for the Company's
stock.
PART II
Item 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER STOCKHOLDER MATTERS.
The Company's Common Stock is not currently traded. The Company has plans to
make application to trade its stock on the NQB Pink Sheets. The Company is
currently interviewing NASD member broker dealer's to file the Company's 15c2-11
Disclosure Statement. No decision has been made and the disclosure statement has
not been filed.
As of September 30, 2000, there were 26 stockholders of record.
No dividends have been declared on the Company's stock. Nor does the Company
foresee any dividends being declared in the near future.
Item 2. LEGAL PROCEEDINGS.
Not Applicable.
Item 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING.
Not Applicable.
Item 4. RECENT SALES OF UNREGISTERED SECURITIES.
There have been no sales of the Company's securities. As noted above, in
connection with organizing the Company, on April 23, 1998, persons consisting of
its officers, directors, and other individuals were issued a total of 1,000,000
shares of Common Stock at a value of $.001 per share, resulting in a total of
1,000,000 shares outstanding.
10
<PAGE>
Item 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to the Nevada Corporation Act, under most circumstances the Company's
officers and directors may not be held liable to the Company or its shareholders
for errors in judgement or other acts or omissions in the conduct of the
Company's business unless such errors in judgement, acts or omissions constitute
fraud, gross negligence or malfeasance. These provisions do not limit or
eliminate the rights of the Company or any shareholder to seek non-monetary
relief such as an injunction or rescission in the event of a breach of a
director's duty of care.
The Company's By-laws require the Company to indemnify and advance expenses to
any person who incurs liability or expense by reason of such person acting as a
director of the Corporation, to the fullest extent allowed by the Nevada
Corporation Act. This indemnification is mandatory with respect to directors in
all circumstances in which indemnification is permitted by the Nevada
Corporation Act. In addition, the Company may, in its sole discretion, indemnify
and advance expenses, to the fullest extent allowed by the Nevada Corporation
Act, to any person who incurs liability or expense by reason of such person
acting as an officer, employee or agent of the Company.
PART F/S
FINANCIAL STATEMENTS
The consolidated financial statements of the Company required to be included in
Part F/S are set forth below.
Pacific Sports Enterprises, Inc.
(A Development Stage Company)
INDEPENDENT AUDITOR'S REPORT
SEPTEMBER 30, 2000,
SEPTEMBER 30, 1999
AND
SEPTEMBER 30, 1998
CONTENTS
Page
...........................................................................F - 1
Balance Sheets
September 30, 2000, 1999 and 1998................................ F - 2
Statements of Operations for the
Years Ended September 30, 2000, 1999 and 1998.................... F - 3
Statement of Stockholders' Equity for the
Years Ended September 30, 2000, 1999 and 1998.................... F - 4
Statements of Cash Flows for the
Years Ended September 30, 2000, 1999 and 1998.....................F - 5
Notes to Financial Statements............................................. F - 6
11
<PAGE>
F - 1
John I. Moyers CPA
324 North San Dimas Avenue
San Dimas, CA 91773
INDEPENDENT AUDITOR'S REPORT
Pacific Sports Enterprises, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheets of Pacific Sports Enterprises,
Inc.(a development stage company) as of September 30, 2000, 1999 and 1998,and
the related statements of operations, stockholders' equity, and cash flows for
the three years ended September 30, 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 financial statements referred to above present fairly, in
all material respects, the financial position of Pacific Sports Enterprises,
Inc.(a development stage company) as of September 30, 2000, 1999 and 1998, and
the results of its operations and its cash flows for the three years ended
September 30, 1999 in conformity with generally accepted accounting principles.
Respectfully submitted
John I. Moyers CPA
/S/ John I. Moyers CPA
Certified Public Accountants
San Dimas, California
October 31, 2000
12
<PAGE>
F - 2
Pacific Sports Enterprises, Inc.
(A Development Stage Company)
Balance Sheet
As of September 30, 1998, 1999 and 2000
ASSETS
<TABLE>
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
Other Assets
Organization Costs $ - $ - $ -
Less Accumulated Amortization - - -
Total Other Assets - - -
Total Assets - - -
LIABILITIES
Liabilities
Accounts Payable $ 970 $ 485 $ -
Total Liabilities 970 485 -
Stockholders Equity
Common Stock, Par Value $ .001
1,000,000 Shares issued,
Authorized, and Outstanding
at September 30, 2000, 1999, and 1998 1,000 1,000 1,000
Paid In Capital - - -
Accumulated Deficit (1,970) (1,485) (1,000)
Total Stockholder's Equity (970) (485) -
Commitments - - -
Total Liabilities and Stockholder's Equity $ - $ - $ -
</TABLE>
See accompanying notes and independent auditor's report.
13
<PAGE>
F-3
Pacific Sports Enterprises, Inc.
(A Development Stage Company)
Statement of Operations
For the Years Ended September 30, 1998, 1999 and 2000
<TABLE>
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
Revenue - - -
Expenses
Misc Expenses 485 485 1,000
Amortization - - -
485 485 1,000
Net Profit (Loss) 485) (485) (1,000)
Net Loss Per Common Share (0.000) (0.000) (0.001)
Weighted Average Shares Oustanding 1,000,000 1,000,000 1,000,000
</TABLE>
See accompanying notes and independent auditor's report.
14
<PAGE>
F-4
Pacific Sports Enterprises, Inc.
(A Development Stage Company)
Statement of Stockholder's Equity
For the Years Ended September 30, 1998, 1999 and 2000
Common Stock Issued
<TABLE>
<CAPTION>
Total Total
Accumulated Stockholder's
Shares Common Stock Deficit Equity
<S> <C> <C> <C> <C>
Balances, at September 28, 1998 1,000,000 $1,000 $0 $ 1,000
Net Profit (Loss) (1,000) (1,000)
Balances, at September 30, 1998 1,000,000 1,000 (1,000) -
Additions To Capital 0
Net Profit (Loss) (485) (485)
Balances, at September 30, 1999 1,000,000 1,000 (1,485) (485)
Net Profit (Loss) (485) (485)
Balances, at September 30, 2000 1,000,000 $ 1,000 (1,970) $ (970)
</TABLE>
See accompanying notes and independent auditor's report.
15
<PAGE>
F-5
Pacific Sports Enterprises, Inc.
(A Development Stage Company)
Statement of Cashflows
For the Years Ended September 30, 1998, 1999 and 2000
<TABLE>
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net Loss $ (485) $ (485) $ (1,000)
Non Cash Items Included In Net Income - - -
Amortization
Net Cash Provided By Operating Activities (485) (485) (1,000)
Net Change In Cash
Cash At Beginning of the Year - - -
Cash at End of the Year - - -
Supplemental Cash Flow Information
Interest Paid - - -
Income Taxes - - -
</TABLE>
See accompanying notes and independent auditor's report.
16
<PAGE>
F-6
PACIFIC SPORTS ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1999 AND 1998
NOTE 1- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Pacific Sports Enterprises, Inc.is
presented to assist in understanding the Company's financial statements. The
accounting policies conform to generally accepted accounting principles and have
been consistently applied in the preparation of the financial statements.
Organization and Basis of Presentation
The Company was incorporated under the laws of the State of Nevada on September
28, 1998. The Company ceased all operating activities during the period from
September 28, 1998 to October 20, 2000 and was considered dormant. Since October
20, 2000, the Company is in the development stage, and has not commenced planned
principal operations.
Nature of Business
The company has no products or services as of September 30, 2000. The Company
was organized as a vehicle to seek merger or acquisition candidates. The Company
intends to acquire interests in various business opportunities, which in the
opinion of management will provide a profit to the Company
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents to the extent the funds are not being held for investment
purposes.
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles required management to make estimates and assumptions that
affect the reported amounts 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 reporting period.
Actual results could differ from those estimates.
17
<PAGE>
NOTE 2 - INCOME TAXES
As of September 30, 2000, the Company had a net operating loss carryforward for
income tax reporting purposes of approximately $1,000 that may be offset against
future taxable income through 2011. Current tax laws limit the amount of loss
available to be offset against future income when a substantial change in
ownership occurs. Therefore, the amount available to offset future taxable
income will be limited. No tax benefit has been reported in the financial
statements, because the Company believes there is a 50% or greater chance the
carryforwards will expire unused. Accordingly, the potential tax benefits of the
loss carryforwards are offset by a valuation allowance of the same amount.
NOTE 3 - DEVELOPMENT STAGE COMPANY
The Company has not begun principal operations and as is common with a
development stage company, then Company has had recurring losses during its
development stage.
F-7
NOTE 4 - COMMITMENTS
As of September 30, 2000, all activities of the Company have been conducted by
corporate officers from either their homes or business offices. Currently, there
are no outstanding debts owed by the Company for the use of these facilities and
there are no commitments for future use of the facilities.
PART III
Item 1. Index to Exhibits.
Exhibit 1. Articles of Incorporation.
Exhibit 2. Bylaws.
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereto duly authorized. Date October 20, 2000
By: /s/ John Vilagi, President
18
<PAGE>
