SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d ) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 0-13066
ProCare Industries, Ltd.
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(Exact name of small business issuer as specified in its charter)
Colorado 84-0932231
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(State or other jurisdiction of ( I.R.S. employer
incorporation or organization) identification number)
1960 White Birch Drive, Vista, CA 92083
- --------------------------------------- --------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 760-599-8559
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of March 31, 2000 there were
approximately 1,785,559 common shares outstanding.
1
<PAGE>
1. PART 1 - FINANCIAL INFORMATION
Item 1. Financial statements
<TABLE>
<CAPTION>
PROCARE INDUSTRIES, LTD.
BALANCE SHEET
March 31, December 31,
2000 1999
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(Unaudited)
<S> <C> <C>
ASSETS
CASH ............................................................. $ 7,688 $14,916
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ADVANCES ......................................................... $21,700 $ -0-
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TOTAL ASSETS ............................................... $29,788 $14,916
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LIABILITIES
ACCOUNTS PAYABLE ................................................. $ 9,282 $ 8,752
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ADVANCES ......................................................... $75,000 $25,000
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COMMITMENTS AND CONTINGENCIES .................................... $ -0- $ -0-
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TOTAL LIABILITIES .......................................... $84,282 $33,752
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STOCKHOLDERS' EQUITY
Preferred stock, $ 1.00 par value, 5,000,000
shares authorized; none issued ................................
Common stock, no par value, 100,000,000
shares authorized: 1,785,559 shares
issued and outstanding at March 31,2000
and December 31, 1999 ........................................ $35,936 $35,936
Additional paid-in capital .................................... $ -0- $ -0-
Accumulated deficit ........................................... ($90,830) ($54,772)
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TOTAL STOCKHOLDERS' EQUITY ................................. ($54,894) ($18,836)
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY ....................................... $29,388 $14,916
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</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
PROCARE INDUSTRIES, LTD.
STATEMENT OF OPERATIONS
(UNAUDITIED)
For the three months ended March 31, 2000, and March 31, 1999, respectively
2000 1999
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<S> <C> <C>
NET SALES ................................................... $ -0- $ -0-
COSTS OF SALES .............................................. $ -0- $ -0-
-------- --------
GROSS PROFIT ................................... $ -0- $ -0-
OPERATING EXPENSES
General and Administrative .......................... $ 36,058 $ -0-
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TOTAL OPERATING EXPENSES .................................... $ 36,058 $ -0-
-------- --------
NET INCOME ON OPERATIONS
BEFORE INCOME TAXES ..................................... ($ 36,058) $ -0-
INCOME TAXES ................................................ $ -0- $ -0-
-------- --------
NET INCOME .................................................. ($ 36,058) $ -0-
======== =======-
INCOME PER AVERAGE COMMON SHARE ............................. ($ 0.02) $ -0-
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
PROCARE INDUSTRIES, LTD.
STATEMENT OF CASH FLOWS
(UNAUDITED)
For the three months ended March 31, 2000 and March 31, 1999, respectively.
2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ................................. ($36,058) $ -0-
INCREASE IN ACCOUNTS PAYABLE ................... $ 530 $ -0-
INCREASE IN ADVANCES TO OFFICER ................ $ 21,700 $ -0-
NET CASH USED IN OPERATING ACTIVITIES .......... $ 57,228 $ -0-
CASH FLOWS FROM INVESTING ACTIVITIES ........... $ -0- $ -0-
INCREASE IN ADVANCES ........................... $ 50,000 $ -0-
NET INCREASE (DECREASE) IN CASH ................ ($ 7,228) $ -0-
CASH, BEGINNING OF PERIOD ...................... $ 14,916 $ -0-
CASH, END OF PERIOD ............................ $ 7,688 $ -0-
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
PROCARE INDUSTRIES, LTD.
Notes to Financial Statements
(Unaudited)
PART I ( continued )
ProCare Industries, Ltd. (the Company) was incorporated under the laws of the
State of Colorado on December 30, 1983 and became a publicly traded company on
the NASDAQ market in 1984. In September 1988 the Company filed a Chapter 11
bankruptcy petition and subsequently dismissed the Chapter 11 action and
liquidated all Company assets in March 1990, when the secured creditors rejected
the Plan of Reorganization submitted by management.
Note 1. The accompanying financial statements have been prepared in accordance
with the instructions to Form 10-Q and do not include all information and
footnotes required by generally accepted accounting principals for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for a fair presentation of
the current financial condition of registrant have been included, and the
disclosures are adequate to make the information presented not misleading. As
discussed in Note 4, the financial statements as of March 31, 1999 have been
prepared as if the changes approved by shareholders were effective January 1,
1999, as to the quasi-reorganization and June 30, 1999 as to the reverse stock
split.
Note 2. The Company had no operations from 1990 through December 31, 1998. The
Company is a development stage business which intends to attempt to acquire a
United States or foreign based corporation which is privately owned and wishes
to become a public company. The anticipated acquisition would likely be through
a "reverse merger" process whereby the owners of the acquired company would take
control of a majority of the voting stock, Board of Directors and management of
the Company.
Note 3. Income taxes have not been provided for in that the registrant has had
no tax liability since inception. Registrant has not declared or paid a dividend
on its common stock since inception.
Note 4. The Stockholders Equity section reflects the approval by shareholders on
July 6, 1999 of: (A) a quasi-reorganization to eliminate the accumulated deficit
and paid in capital which accumulated from inception of the Company through
December 31, 1998 effective January 1, 1999, and (B) a 1 for 100 reverse split
of the common stock, effective July 8, 1999.
Note 5. In July 1999 the Company, through the Board of Directors, entered into
an agreement with Robert Marsik, its President, whereby Mr. Marsik agreed to
serve as President and to continue to fund the expenses of the Company and the
expenses associated with an acquisition, if one occurs, for the next twelve
months or until an acquisition transaction, if earlier, for a contingent fee of
$150,000. The contingent fee shall be payable to Marsik only if an acquisition
or reverse merger occurs, and only if the funds are available. The agreement was
revised in May 2000 to reflect the parties original intentions. As of March 31,
2000 $59,200 of the contingent fee obligation has been advanced to Mr. Marsik in
anticipation of closing the merger pending with FastPoint Communications, Inc.
ITEM 2. Management's Plan of Operation. We have no business operations and we
have no revenue. Since late 1997 we have set out to reestablish the Company as
an operating public company. We have sought to locate and acquire, or be
acquired by, another business. The Company is a public-reporting entity with
common stock listed on the NASD OTC Bulletin Board. As of December 17, 1999 we
signed a Letter of Intent describing our mutual intention that ProCare will
acquire all of the outstanding stock, including business and assets of FastPoint
Communications, Inc. which is a privately-held Delaware corporation based in Los
Angeles, California engaged in business as an internet service provider. The
"reverse merger" is expected to be completed in 2000. In the transaction, a
newly-formed subsidiary of the Company will be merged into FastPoint and we will
exchange shares equal to approximately 88% of our outstanding stock after the
merger for all the FastPoint stock. A vote of our shareholders will not be
required to complete the transaction. Following the planned transaction the
5
<PAGE>
Company would be re-named "FastPoint Communications, Inc." and will be the
parent corporation of FastPoint Communication, Inc., a Delaware corporation,
which would be the operating entity. Upon completion of the transaction the
present management of FastPoint will become management and directors of the
Company, and will implement its business plan in the Internet communications
business. On March 8, 2000 the Company and FastPoint entered into an amended
Letter of Intent which calls for a closing to occur on or about May 31, 2000.
Year 2000 concerns. As the Company has had no operations from 1990 through
December 31, 1999, there are no historical records currently maintained on
computer files and the Company currently owns no computer equipment. Therefore,
the year 2000 concerns that may impact other businesses should have little or no
impact on the Company. However, the year 2000 concerns may have an impact on any
business the Company may acquire in the future and management intends to
research this issue as part of the "due diligence" related to any potential
acquisition. FastPoint Communications has confirmed to the satisfaction of
management that their company and all of its computer systems are year 2000
compliant and that they have experienced no operational problems as of March
31,2000 related to the Y2K problem and they anticipate no future problems
related to the Y2K problem.
Liquidity and Capital Resources : The Company presently has no source of
liquidity or capital, other than the commitment of it's President to continue to
provide needed funds. FastPoint has advanced $75,000 to the Company in
accordance with its obligations under the revised Letter of Intent.
PART II - OTHER INFORMATION
Item 1. Litigation: There is no pending litigation in which the Company is
presently a party to and management is not aware of any litigation which may
arise in the future.
Item 2. Changes in Securities and Use of Proceeds: None.
Item 3. Default Upon Senior Securities: None.
Item 4. Submission of Matters to a Vote of Security Holders: None.
Item 5. Other Information: None.
Item 6. Exhibits and Reports of Form 8-K:
(a) Exhibits.
10.2 Revised Funding Agreement
27 Financial Data Schedule.
(b) Reports on Form 8-K. The following reports on Form 8-K were filed
during the three months ended March 31, 2000.
1. On March 8, 2000 the registrant filed a Report on Form 8-K
reporting under Item 5 the death and replacement of one of its
directors and the appointment of auditors to audit registrant's
1999 financial statements and records.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized this 15th day of May, 2000.
PROCARE INDUSTRIES, LTD.
(Registrant)
By /s/ Robert W. Marsik
-------------------------------------------------------
Robert W. Marsik, President and Chief Executive Officer
7
FUNDING AGREEMENT
THIS AGREEMENT, is effective July __, 1999, and is between ProCare
Industries, Ltd. ("Company") and Robert W. Marsik, President ("Marsik") and is
made with reference to the following agreed facts:
A. The Company is a publicly owned corporation in good standing under
applicable state and federal securities and corporate law. The Company has no
present assets with which to pay its accumulated and ongoing expenses and
obligations.
B. The Company, through its Board of Directors, intends to seek and
consummate a suitable acquisition transaction pursuant to which the Company will
acquire the assets and business of one or more privately-owned businesses, such
that the Company becomes an operating entity, thereby providing the private
business with the structure of a publicly-owned corporation and providing
liquidity and value to the present shareholders of the Company.
C. Marsik has agreed to provide services as an officer of the Company in
seeking and negotiating the terms of an acceptable acquisition transaction for
the Company. Marsik has also agreed to be responsible for, and to pay, the
Company's outstanding and ongoing expenses and liabilities which the Company may
incur from time to time in connection with preparing and filing necessary
reports and other disclosures under applicable federal securities laws, issuing
the Company's securities and documenting and completing and acquisition
transaction which may be approved in the future by the Board of Directors.
NOW, THEREFORE, in consideration of the covenants and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Marsik and the Company agree as
follows:
1. Marsik shall continue to serve as the President and as a director of the
Company until the first to occur of the following: (i) 12 months from the date
of this Agreement, or (ii) the date on which an acquisition transaction approved
by the Board of Directors of the Company is completed. In connection with such
services, Marsik shall report his activities from time to time to the Board of
Directors of the Company and shall take such other action as may be necessary or
appropriate or as shall be assigned by the Board of Directors.
2. Marsik shall advance, on behalf of the Company, payment of all of the
Company's existing and outstanding unpaid liabilities, which total approximately
$9,793 at June 30, 1999 and all other liabilities and obligations of the Company
which shall be incurred during the term of this Agreement and which the Company
shall be unable to satisfy from other sources.
3. At such time as an acquisition transaction which has been approved by
the Board of Directors of the Company and which is deemed by the Board of
Directors to be in the best interests of the Company and all of its shareholders
is completed, the Company shall pay to Mr. Marsik a contingent fee of $150,000,
as his compensation or providing management services through the date of
<PAGE>
completion of the acquisition transaction. If an acquisition transaction
approved by the Board of Directors of the Company is not completed within 12
months from the date of this Agreement, the Company and Mr. Marsik shall
negotiate in good faith new arrangements for future compensation.
4. The parties agree to take such further action and to consider such
additional developments as may be reasonably necessary in order to accomplish
the purposes set forth herein.
Dated effective the date first set forth above.
PROCARE INDUSTRIES, LTD.
By /s/ Allan Bergenfield
------------------------------
Allan Bergenfield, Director
/s/ Robert W. Marsik
--------------------------------
Robert W. Marsik
2
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 7,688
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,688
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 9,282
<BONDS> 0
0
0
<COMMON> 1,785,599
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
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<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (90,500)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
