United States
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-QSB

 

ý  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended September 30, 2004

 

Commission File Number: 000-49701

 

PACIFIC VEGAS GLOBAL STRATEGIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

COLORADO

 

84-1159783

(State or Other Jurisdiction of
Incorporation)

 

(IRS Employer Identification No.)

 

 

 

Unit 4112-4113
41/F, Office Tower, Convention Plaza
No. 1, Harbour Road, Wanchai, Hong Kong

(Address of Principal Executive Offices)

 

 

 

(011) (852) 2802-2118

(Registrant’s Telephone Number, Including Area Code)

 

 

 

GOALTIMER INTERNATIONAL, INC.
231 West Jamison Circle 5, Littleton, CO 80002, U.S.A.

(Former Name and Former Address of Principal Executive Offices)

 

99,963,615 shares of Common Stock, with no par value, were issued and outstanding as of the date of September 30, 2004.

 

Transitional Small Business Disclosure Format (check one):  Yes  o    No  ý

 

 



 

TABLE OF CONTENTS

 

PART I

FINANCIAL INFORMATION

 

ITEM 1.

FINANCIAL STATEMENTS

 

 

Condensed Consolidated Statements of Operations

 

 

Condensed Consolidated Balance Sheets

 

 

Condensed Consolidated Statements of Cash Flows

 

 

Notes to Condensed Consolidated Financial Statements

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

 

ITEM 3.

CONTROLS AND PROCEDURES

 

 

 

 

PART II

OTHER INFORMATION

 

ITEM 1.

Legal Proceedings

 

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

ITEM 3.

Defaults upon Senior Securities

 

ITEM 4.

Submission of Matters to a Vote of Security Holders

 

ITEM 5.

Other Information

 

ITEM 6.

Exhibits

 

 

 

 

SIGNATURES

 

CERTIFICATIONS

 

 

2



 

PART I.              FINANCIAL INFORMATION

 

ITEM 1.               FINANCIAL STATEMENTS

 

PACIFIC VEGAS GLOBAL STRATEGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For Three and Nine Months Ended September 30, 2004 and 2003

 

 

 

 

 

3 Months Ended September 30

 

9 Months Ended September 30

 

 

 

Note

 

2004

 

2003

 

2004

 

2003

 

 

 

 

 

(Unaudited)
US$

 

(Unaudited)
US$

 

(Unaudited)
US$

 

(Unaudited)
US$

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Revenue

 

 

 

(270,837

)

426,017

 

(180,720

)

1,395,076

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

 

(285,780

)

(452,552

)

(1,019,973

)

(1,283,582

)

Depreciation

 

 

 

(89,487

)

(89,363

)

(268,365

)

(268,023

)

Provision for impairment loss

 

 

 

(643,864

)

 

(643,864

)

 

 

 

 

 

(1,019,131

)

(541,915

)

(1,932,202

)

(1,551,605

)

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

 

(1,289,968

)

(115,898

)

(2,112,922

)

(156,529

)

Interest income

 

 

 

3,242

 

3,221

 

6,854

 

8,054

 

Loss before income taxes

 

 

 

(1,286,726

)

(112,677

)

(2,106,068

)

(148,475

)

Income tax expenses

 

 

 

 

 

 

 

Net loss

 

 

 

(1,286,726

)

(112,677

)

(2,106,068

)

(148,475

)

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share, Basic

 

4

 

(0.0129

)

(0.0011

)

(0.0211

)

(0.0015

)

Weighted average number of common stock outstanding

 

 

 

99,963,615

 

99,963,615

 

99,963,615

 

99,963,615

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

3



 

PACIFIC VEGAS GLOBAL STRATEGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

As at September 30, 2004 and December 31, 2003

 

 

 

Note

 

September 30, 2004

 

December 31, 2003

 

 

 

 

 

(Unaudited)
US$

 

(Audited)
US$

 

Assets

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

9,943

 

561,046

 

Accounts receivable, net of allowance for doubtful accounts

 

 

 

 

162,406

 

Other current assets

 

 

 

137,270

 

50,916

 

Total Current Assets

 

 

 

147,213

 

774,368

 

Property, plant and equipment - Cost

 

 

 

1,789,738

 

1,788,584

 

Less: Accumulated depreciation

 

 

 

(1,145,874

)

(877,509

)

Less: Provision for impairment loss

 

5

 

(643,864

)

 

Property, plant and equipment - Net

 

6

 

0

 

911,075

 

Deposits

 

 

 

124,203

 

124,203

 

 

 

 

 

124,203

 

1,035,278

 

Total Assets

 

 

 

271,416

 

1,809,646

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

Accounts payable

 

 

 

429,439

 

10,419

 

Accrued expenses

 

 

 

257,918

 

212,211

 

Other payables

 

 

 

74,012

 

74,012

 

Due to a director

 

 

 

103,111

 

 

Total Current Liabilities

 

 

 

864,480

 

296,642

 

Commitments and contingencies

 

8

 

 

 

Shareholders’ Equity

 

 

 

 

 

 

 

Common stock

 

 

 

 

 

 

 

Authorized: 100,000,000 shares of common stock with no par value, as at September 30, 2004 and December 31, 2003

 

 

 

 

 

 

 

Issued and outstanding: 99,963,615 shares of common stock with no par value, as at September 30, 2004 and December 31, 2003

 

 

 

 

 

Additional paid-in capital

 

 

 

2,425,988

 

2,425,988

 

Accumulated loss

 

 

 

(3,019,052

)

(912,984

)

Total Shareholders’ Equity

 

 

 

(593,064

)

1,513,004

 

Total Liabilities and Shareholders’ Equity

 

 

 

271,416

 

1,809,646

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4



 

PACIFIC VEGAS GLOBAL STRATEGIES, INC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

for Nine Months Ended September 30, 2004 and 2003

 

 

 

September 30, 2004

 

September 30, 2003

 

 

 

(Unaudited)
US$

 

(Unaudited)
US$

 

Cash Flows from Operating Activities

 

 

 

 

 

Net loss

 

(2,106,068

)

(148,475

)

Adjustment to reconcile net income to net cash Provided by (used in) operating activities

 

 

 

 

 

Depreciation of property, plant and equipment

 

268,365

 

268,023

 

Provision for impairment loss

 

643,864

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

162,406

 

(1,148,271

)

Other current assets

 

(86,354

)

40,808

 

Deposits

 

 

(10,970

)

Accounts payable

 

419,020

 

626,386

 

Accrued expenses

 

45,707

 

9,674

 

Other payable

 

 

19,658

 

Net cash used in operating activities

 

(653,060

)

(343,167

)

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Purchases of property, plant and equipment

 

(1,154

)

(2,899

)

Net cash used in investing activities

 

(1,154

)

(2,899

)

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Due to a director

 

103,111

 

271,482

 

Net cash provided by financing activities

 

103,111

 

271,482

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

(551,103

)

(74,584

)

Cash and cash equivalents, as at beginning of period

 

561,046

 

124,453

 

Cash and cash equivalents, as at end of period

 

9,943

 

49,869

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

5



 

PACIFIC VEGAS GLOBAL STRATEGIES, INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

for Three and Nine Months Ended September 30, 2004 and 2003

 

1.         ORGANIZATION AND PRINCIPAL ACTIVITIES

 

Pacific Vegas Global Strategies, Inc. (“PVGS”), formerly known as Goaltimer International, Inc., was incorporated in Colorado on December 19, 1990. Prior to the reorganization (as described in Note 2 of the Company’s audited financial statements as at December 31, 2003) with Cyber Technology Group Holdings Limited (“CTGH”) on January 8, 2004, PVGS’s principal business was the development and selling of time and personal management products. The Company had discontinued operations since 1994 and its only activity had been accruing loan interest on notes payable and looking for a merger candidate.

 

Upon completion of the reorganization, the principal business activities of PVGS had been, through its subsidiaries, conducting a sportsbook business from the Commonwealth of Dominica by way of telecommunications and the Internet, until December 6, 2004 when the Board of Directors of PVGS resolved to cease the operations of sportsbook business.

 

Currently, the Company’s only activities are accruing non-operating (general and administrative) expenses and seeking for business restructure.

 

2.         PREPARATION OF INTERIM FINANCIAL STATEMENTS

 

The accompanying unaudited condensed consolidated financial statements as at September 30, 2004 and for the 3-month and 9-month periods ended September 30, 2004 and 2003, have been prepared based upon Securities and Exchange Commission (“SEC”) rules that permit reduced disclosure for interim periods and include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly the financial position, results of operations and cash flows as at September 30, 2004 and for all periods presented.

 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“USA”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto incorporated by reference in the Company’s Form 10-KSB/A for the year ended December 31, 2003 filed on May 27, 2004. The results of operations for the 3-month and 9-month periods ended September 30, 2004 and 2003 are not necessarily indicative of the operating results to be expected for the full year.

 

The condensed consolidated financial statements and accompanying notes are presented in United States dollars and prepared in conformity with accounting principles generally accepted in the USA (“USGAAP”) which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

6



 

3.         RECENTLY ISSUED ACCOUNTING STANDARDS

 

There are no new accounting pronouncements for which adoption is expected to have a material effect on the Company’s condensed consolidated financial statements.

 

4.         LOSS PER SHARE

 

Basic loss per common share is based on the weighted average number of common stock outstanding during each period as restated as a result of the recapitalization, as described in Note 2 of the Company’s audited financial statements as at December 31, 2003.

 

The Company had no potential common stock instruments with a dilutive effect for any period presented, therefore basic and diluted earnings per share are the same. The 60,000,000 shares, in connection with the recapitalization, as described in Note 2 of the December 2003 audited financial statements, were included in the computation of loss per share as if outstanding at the beginning of each period presented.

 

5.         IMPAIRMENT OF LONG-LIVED ASSETS

 

The Company accounts for the impairment and disposition of long-lived assets in accordance with SFAS No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets. In accordance with SFAS No. 144, long-lived assets are reviewed for events or changes in circumstances that indicate that their carrying value may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of the asset to the future undiscounted net cash flows expected to be generated by the asset, and recoverability of assets held for sale is measured by comparing the carrying amount of the assets to their estimated fair market value. In case any assets are considered to be impaired, the impairment is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value.

 

In the third quarter 2004, management determined that property, plant and equipment had been impaired as a result of the significant decline in sportsbook business. As a result, the Company recorded a non-cash provision for impairment loss of US$643,864 related to property, plant and equipment in accordance with the provisions of SFAS 144.

 

7



 

6.         PROPERTY, PLANT AND EQUIPMENT, NET

 

Summary of property, plant and equipment is as follows:

 

 

 

As at September 30, 2004

 

As at December 31, 2003

 

 

 

(Unaudited)
US$

 

(Audited)
US$

 

 

 

 

 

 

 

Network system

 

833,392

 

833,392

 

Telecommunication system

 

56,708

 

56,708

 

Office equipment

 

49,785

 

48,631

 

Leasehold improvement

 

13,652

 

13,652

 

Furniture and fixtures

 

1,301

 

1,301

 

Website development

 

834,900

 

834,900

 

 

 

1,789,738

 

1,788,584

 

Accumulated depreciation

 

(1,145,874

)

(877,509

)

Provision for impairment loss

 

(643,864

)

 

 

 

0

 

911,075

 

 

The estimated useful lives of all property, plant and equipment are 5 years.

 

7.         INCOME TAXES

 

PVGS and its subsidiaries are subject to income taxes on an entity basis on income arising in or derived from the tax jurisdictions in which each entity is domiciled.

 

No provision for withholding or United States federal or state income taxes or tax benefits on the undistributed earnings and/or losses of the PVGS subsidiaries has been provided as the earnings of these subsidiaries, in the opinion of the management, will be reinvested indefinitely. Determination of the amount of unrecognized deferred taxes on these earnings is not practical, however, unrecognized foreign tax credits would be available to reduce a portion of the tax liability.

 

Under the current laws of the British Virgin Islands, PVGS’s subsidiaries are not subject to tax on income or capital gains, and no British Virgin Islands withholding tax will be imposed upon payments of dividends to their stockholders. Subsidiaries are not subject to any tax in Samoa and the Commonwealth of Dominica.

 

8



 

8.         COMMITMENTS

 

As at September 30, 2004 and December 31, 2003, the Company had commitments under non-cancelable operating lease payments in respect of land and buildings as follows:

 

 

 

As at March 31, 2004

 

As at December 31, 2003

 

 

 

(Unaudited)
US$

 

(Audited)
US$

 

 

 

 

 

 

 

2004

 

25,641

 

78,394

 

2005

 

 

4,940

 

 

 

25,641

 

83,334

 

 

Other than the operating lease commitments mentioned above, there were no material outstanding capital commitments.

 

9.         RECLASSIFICATIONS

 

Certain reclassifications have been made to the current year’s interim financial information and to the prior years’ financial statements to conform to the classifications used in the current period.

 

10.  SUBSEQUENT EVENTS

 

On December 6, 2004, the Company determined to cease the operations of sportsbook business. It is expected that, as subsequent events in connection to our cease of sportsbook business, associated cash costs of approximately US$120,000 for severance and related employees benefits and early termination of lease and service contracts will be incurred in the fourth quarter 2004.

 

11.  GOING CONCERN

 

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. However, a substantial doubt has been raised with regard to the ability of the Company to continue as a going concern, since the Company has current liabilities in excess of its current assets. In light of the situation, the Company is seeking for possible arrangements to raise additional capital funds to meet its current liabilities, but there can be no assurance that the Company will be successful in raising such funds. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 

9



 

ITEM 2.               MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

 

The Management’s Discussion and Analysis or Plan of Operations in this report contains a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are based on the management’s current projections or expectations with regard to the future operations of business. Although management believes that the assumptions made and expectations reflected in such forward-looking statements are reasonable, there is no assurance that such assumptions or expectations will prove to be correct and/or accurate, and as a result of certain risks and uncertainties, actual results of operations may differ materially.

 

1.         Revenue

 

The Company’s revenue for the nine months ended September 30, 2004 was generated from the sportsbook operations by Pacific Vegas International Ltd. (“PVI”), the Company’s wholly owned subsidiary incorporated and located in the Commonwealth of Dominica and conducting a business of international sportsbook under the laws of the Commonwealth of Dominica. The Company has no other revenue generating operations.

 

For the three months ended September 30, 2004, the Company recorded a negative revenue (net wager losses) of US$0.27 million from the sportsbook operations, which resulted in our total revenue for the first nine months of 2004 to a negative US$0.18 million (net wager losses), indicating a material adverse change as compared to the same periods of last year when there was a revenue (net wager earnings) of US$0.43 million for the third quarter of 2003 and US$1.40 million for the first three quarters of 2003.

 

Such an adverse change in our operation results was caused mainly due to a change in the way that most small clients place their wagers.

 

For a sportsbook to be profitable, it must be able to maintain sufficient business from small clients. In a sportsbook business most small clients are sports fans with their favorite teams and players and they usually place their wagers based on emotions. Industrial statistics indicate that approximately 96% of sportsbook earnings come from wagers by small clients.

 

Our business is based in the Asian market. Best personalized call center services used to be one of our marketing features, as most Asian clients used to place their wagers by using sportsbook call center services, even when internet-based online wagering has become more popular in western countries. But today internet-based online wagering has unexpectedly become the most popular way of sports wagering in Asia, and most small clients in Asia have unexpectedly changed their way of wagering from phone wagering to internet-based online wagering. We have lost our business from most small clients as our hardware and software systems are not yet ready to accommodate online wagering operations.

 

Our gross wagers for the third quarter of 2004 decreased to US$10.74 million, less than the same period of 2003 by US$6.71 million or 38.45%, and less than the second quarter of 2004, which was the slowest period of the year in sports activities, by US$7.26 million or 40.33%, due to loss of our business from most small clients.

 

10



 

We have not only suffered losing earnings from wagers by small clients, but also experienced more operational difficulties. Without having sufficient business from small clients, it has become more difficult to balance our wager book, therefore resulting in more open positions, which has made our sportsbook operations more vulnerable to larger bettors who usually make wagers based on rational analysis but not on emotions.

 

2.         Expenses

 

Total expenses for the quarterly period ended September 30, 2004 were US$1.02 million, including US$0.29 million for operating expenses (selling, general and administrative expenses), US$0.09 million for depreciation and US$0.64 million for impairment loss on property, plant and equipment.

 

Total expenses for the first three quarters of 2004 were US$1.93 million, including US$1.02 million for operating expenses (selling, general and administrative expenses), US$0.27 million for depreciation and US$0.64 million for impairment loss on property, plant and equipment.

 

Compared to the same periods of last year, our total expenses increased by US$0.48 million or 88.1% for the third quarter this year and increased by US$0.38 million or 24.5% for the first three quarters of this year respectively.

 

3.         Provision for Impairment Loss

 

The Company accounts for the impairment and disposition of long-lived assets in accordance with SFAS No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets, under which long-lived assets are reviewed for events or changes in circumstances that indicate that their carrying value may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of the asset to the future undiscounted net cash flows expected to be generated by the asset, and recoverability of assets held for sale is measured by comparing the carrying amount of the assets to their estimated fair market value. In case any assets are considered to be impaired, the impairment is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value.

 

In light of the increasing net wager losses and highly vulnerable position to further net wager losses in our sportsbook operations, the Company determined at end of the third quarter of 2004 that our property, plant and equipment had been impaired as a result of the significant decline in our sportsbook business, and recorded a non-cash provision for impairment loss of US$643,864 related to property, plant and equipment in accordance with the provisions of SFAS 144.

 

4.         Loss

 

There was a net loss of US$1.29 million for the third quarter of 2004, which resulted in a net loss of US$2.11 million for the first three quarters of 2004.

 

Due to the increasing net losses, our cash and cash equivalents on hand decreased significantly from US$0.56 million as at December 31, 2003 to less than US$0.01 million as at 30 September 2004, our total assets reduced significantly from US$1.81 million as at December 31, 2003 to US$0.27 million as at September 30, 2004, and our shareholders equity dropped significantly from US$1.51 million as at December 31, 2003 to negative US$0.59 million as at 30 September 2004.

 

11



 

5.         Changes in Cash Flows

 

For the nine months ended September 30, 2004, there was a decrease of US$0.55 million in our cash flows primarily due to the negative results of operations for the period.

 

6.         Management’s Plan

 

Our plans and/or statements presented in this section are in nature of forward-looking. Where, in any of such plan and/or statement, we or our management express(es) an expectation or belief as to future results, and such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that such expectation or belief will result or be achieved or accomplished. Factors which could cause actual results to differ materially from those anticipated could be various, including but not limited to general economic, financial and business conditions; competition in the online sports gaming industry; the business abilities and judgment of personnel; the impacts of unusual items resulting from ongoing evaluations of business strategies; and changes in business strategies. For more information about risk factors that could affect our financial results, please review the section of “Additional Cautionary Statements and Risk Factors” in our Annual Report on Form 10-KSB filed on May 27, 2004.

 

On December 6, 2004, our Board of Directors reviewed our current business operations and financial conditions and noted the following factors:

 

(1)  Our operations of sportsbook business had incurred net wager losses for both the third quarter of 2004 and the first nine months of 2004;

 

(2)  Our cash flows are insufficient to support our current operations of sportsbook business and our cash on hand is minimal to pay our expenses;

 

(3)  Our principal shareholder has advised us that he will not continue to loan funds to the Company to maintain our operations of sportsbook business;

 

(4)  Our current operations of sportsbook business have become highly vulnerable due to loss of our business from most small clients, thus increasing the likelihood of incurring continuing losses from operations in the future;

 

(5)  Our efforts to try to recover our business from small clients will require a material amount of capital expenses for systems upgrade and a material amount of marketing expenses for market campaign, and there can be no assurance that our business from small clients will be recovered by such capital expenses and marketing expenses; and

 

(6)  Our ability to raise capital in the equity securities market on terms favorable to us or affordable by us is nearly nil at this time.

 

In light of the foregoing, effective immediately, our Board of Directors has resolved to cease our entire operations of sportsbook business, as an immediate remedial action to prevent further losses. We will further review and re-evaluate our business structure to determine what and how to proceed

 

12



 

in the future. However, there can be no assurance as to when or whether we will be able to restructure and restart our business operations.

 

7.         Costs Associated with Exit or Disposal Activities

 

The Company has determined that in conjunction with our cease of entire operations of sportsbook business, the Company will incur cash costs of approximately US$120,000 related to severance and related benefits for the impacted employees and early termination of lease and service contracts. It is expected that all actions pertaining to the cease of entire operations of sportsbook business will be completed by December 31, 2004. At the present time the Company has not yet been able to make a good faith determination of the exact nature or estimated amounts of other related cash costs which may be incurred for completion of the exit process.

 

13



 

ITEM 3.               CONTROLS AND PROCEDURES

 

(a) Evaluation of Disclosure Controls and Procedures

 

Under the supervision and with the participation of management, the Company’s principal executive officer and principal financial officer have evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-14(c)/15d-14(c) under the Exchange Act) related to the Company as of a date within 90 days prior to the filing date of this report, and concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded,  processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

 

(b) Changes in Internal Controls

 

There were no significant changes made in the Company’s internal controls during the period covered by this report or, to the knowledge of the Company’s principal executive officer and principal financial officer, in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

 

14



 

PART II.          OTHER INFORMATION

 

ITEM 1.               LEGAL PROCEEDINGS

 

None.

 

ITEM 2.               UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 3.               DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4.               SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

None.

 

ITEM 5.               OTHER INFORMATION

 

1.         Cease of Operations

 

On December 6, 2004, our Board of Directors reviewed our current business operations and financial conditions and noted the following factors:

 

(1)  Our operations of sportsbook business had incurred net wager losses for both the third quarter of 2004 and the first nine months of 2004;

 

(2)  Our cash flows are insufficient to support our current operations of sportsbook business and our cash on hand is minimal to pay our expenses;

 

(3)  Our principal shareholder has advised us that he will not continue to loan funds to the Company to maintain our operations of sportsbook business;

 

(4)  Our current operations of sportsbook business have become highly vulnerable due to loss of our business from most small clients, thus increasing the likelihood of incurring continuing losses from operations in the future;

 

(5)  Our efforts to try to recover our business from small clients will require a material amount of capital expenses for systems upgrade and a material amount of marketing expenses for market campaign, and there can be no assurance that our business from small clients will be recovered by such capital expenses and marketing expenses; and

 

(6)  Our ability to raise capital in the equity securities market on terms favorable to us or affordable by us is nearly nil at this time.

 

In light of the foregoing, effective immediately, our Board of Directors has resolved to cease our entire operations of sportsbook business, as an immediate remedial action to prevent further losses.

 

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We will further review and re-evaluate our business structure to determine what and how to proceed in the future. However, there can be no assurance as to when or whether we will be able to restructure and restart our business operations.

 

2.         Impairment of Long-lived Assets

 

The Company accounts for the impairment and disposition of long-lived assets in accordance with SFAS No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets, under which long-lived assets are reviewed for events or changes in circumstances that indicate that their carrying value may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of the asset to the future undiscounted net cash flows expected to be generated by the asset, and recoverability of assets held for sale is measured by comparing the carrying amount of the assets to their estimated fair market value. In case any assets are considered to be impaired, the impairment is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value.

 

In light of the increasing net wager losses and highly vulnerable position to further net wager losses in our sportsbook operations, the Company determined at end of the third quarter of 2004 that our property, plant and equipment had been impaired as a result of the significant decline in our sportsbook business, and recorded a non-cash provision for impairment loss of US$643,864 related to property, plant and equipment in accordance with the provisions of SFAS 144.

 

3.         Costs Associated with Exit or Disposal Activities

 

The Company has determined that in conjunction with our cease of entire operations of sportsbook business, the Company will incur cash costs of approximately US$120,000 related to severance and related benefits for the impacted employees and early termination of lease and service contracts. It is expected that all actions pertaining to the cease of entire operations of sportsbook business will be completed by December 31, 2004. At the present time the Company has not yet been able to make a good faith determination of the exact nature or estimated amounts of other related cash costs which may be incurred for completion of the exit process.

 

ITEM 6.               EXHIBITS

 

(a)  Exhibits:

 

31.1

 

Certification of Chief Executive Officer pursuant to Rule 13(a)-14(a)

31.2

 

Certification of Chief Financial Officer pursuant to Rule 13(a)-14(a)

32.1

 

Certification of Chief Executive Officer pursuant to Rule 13(a)-14(b) and 18 U.S.C. Section 1350

32.2

 

Certification of Chief Financial Officer pursuant to Rule 13(a)-14(b) and 18 U.S.C. Section 1350

 

(b)  Reports on Form 8-K

 

During the quarterly period for which this Form 10-QSB is filed, no reports on Form 8-K were filed by the Company.

 

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SIGNATURES

 

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

PACIFIC VEGAS GLOBAL STRATEGIES, INC.

(Registrant)

 

Dated: December 7, 2004

 

 

/s/ RAYMOND CHOU

 

/s/ RICHARD WANG

 

Raymond Chou

 

Richard Wang

 

Chief Executive Officer

 

Chief Financial Officer

 

 

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