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 March 31, 2005

 

Commission file number:  000-49701

 

PACIFIC VEGAS GLOBAL STRATEGIES, INC.

(Exact name of small business issuer as specified in its charter)

 

COLORADO

 

84-1159783

(State or other jurisdiction of incorporation)

 

(IRS Employer Identification No.)

 

16/F, Winsome House
73 Wyndham Street, Central, Hong Kong
(Address of principal executive offices)

 

(011) (852) 3154-9370
(Issuer’s telephone number, including area code)

 

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES  ý       NO  o

 

99,963,615 shares of Common Stock, with no par value, were issued and outstanding as at the date of March 31, 2005.

 

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 Months Ended March 31, 2005 and 2004

 

 

 

 

 

Three Months Ended March 31

 

 

 

Note

 

2005

 

2004

 

 

 

 

 

(Unaudited)
US$

 

(Unaudited)
US$

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

(256,515

)

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

 

(62,135

)

(353,609

)

Depreciation

 

 

 

 

(89,430

)

 

 

 

 

(62,135

)

(443,039

)

 

 

 

 

 

 

 

 

Operating loss

 

 

 

(62,135

)

(699,554

)

Interest income

 

 

 

 

3,507

 

Loss before income taxes

 

 

 

(62,135

)

(696,047

)

Income tax expense

 

 

 

 

 

Net loss

 

 

 

(62,135

)

(696,047

)

 

 

 

 

 

 

 

 

Loss per share - Basic

 

4

 

(0.001

)

(0.007

)

Weighted average number of common stock outstanding

 

 

 

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 March 31, 2005 and December 31, 2004

 

 

 

Note

 

March 31, 2005

 

December 31, 2004

 

 

 

 

 

(Unaudited)
USD$

 

(Audited)
USD$

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

16,438

 

40,506

 

Total current assets

 

 

 

16,438

 

40,506

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

5

 

 

 

Deposits

 

 

 

 

15,761

 

 

 

 

 

 

15,761

 

Total assets

 

 

 

16,438

 

56,267

 

 

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accrued Expenses

 

 

 

10,595

 

141,607

 

Due to a director

 

 

 

828,063

 

674,745

 

Other payables

 

 

 

74,012

 

74,012

 

Total current liabilities

 

 

 

912,670

 

890,364

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

7

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

Common stock

 

 

 

 

 

 

 

Authorized: 100,000,000 shares of common stock with no par value, as at March 31, 2005 and December 31, 2004

 

 

 

 

 

 

 

Issued and outstanding: 99,963,615 shares of common stock with no par value, as at March 31, 2005 and December 31, 2004

 

 

 

 

 

Additional paid-in capital

 

 

 

2,425,988

 

2,425,988

 

Accumulated losses

 

 

 

(3,322,220

)

(3,260,085

)

Total stockholders’ equity

 

 

 

(896,232

)

(834,097

)

Total liabilities and stockholders’ equity

 

 

 

16,438

 

56,267

 

 

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 Three Months Ended March 31, 2005 and 2004

 

 

 

Three Months Ended March 31

 

 

 

2005

 

2004

 

 

 

(Unaudited)
US$

 

(Unaudited)
US$

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

Net loss

 

(62,135

)

(696,047

)

Adjustment to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation of property, plant and equipment

 

 

89,430

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

 

162,406

 

Deposits

 

15,761

 

 

Other current asset

 

 

21,250

 

Accounts payable

 

 

94,108

 

Accrued expenses

 

(131,012

)

(64,928

)

Net cash used in operating activities

 

(177,386

)

(393,781

)

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Due to a Shareholder

 

153,318

 

34,724

 

Net cash provided by financing activities

 

153,318

 

34,724

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

(24,068

)

(359,057

)

Cash and cash equivalents at beginning of period

 

40,506

 

561,046

 

Cash and cash equivalents at end of period

 

16,438

 

201,989

 

 

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 Months Ended March 31, 2005 and 2004

 

1.             ORGANIZATION AND PRINCIPAL ACTIVITIES

 

Pacific Vegas Global Strategies, Inc. (“PVGS”) was incorporated in Colorado on December 19, 1990. Prior to the reorganization (as described in Note 2 to the Company’s audited financial statements as at December 31, 2004) with Cyber Technology Group Holdings Limited (“CTGH”) on January 8, 2004, the principal business of PVGS 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 seeking for a merger candidate.

 

Upon completion of the reorganization on January 8, 2004, the principal business activities of PVGS had been, through its subsidiaries, conducting an international 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 such business.

 

The Company has been in an inactive or non-operating status since December 6, 2004, with its only activities of accruing non-operating (general and administrative) expenses while contemplating plans for business restructuring and corporate reorganization.

 

2.             PREPARATION OF INTERIM FINANCIAL STATEMENTS

 

The accompanying unaudited condensed consolidated financial statements as at March 31, 2005 and for the 3-month periods ended March 31, 2005 and 2004, 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 March 31, 2005 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 annual report on Form 10-KSB for the fiscal year ended December 31, 2004. The results of operations for the 3-month periods ended March 31, 2005 and 2004 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



 

The Company had a negative stockholders’ equity of US$834,097 and US$896,232 as at December 31, 2004 and March 31, 2005 respectively, and the Company has maintained no revenue-generating operations since December 6, 2004. These conditions have raised a substantial doubt with regard to the ability of the Company to continue as a going concern.

 

The Company has been contemplating plans to try to restructure its business and raise additional capital funds. The Company’s continuation as a going concern will be dependent upon such plans. However, there can be no assurance that the Company will be successful in procuring any of such efforts.

 

The principal shareholder, who is also the sole director of the Company, has undertaken to finance the Company for a “reasonable” period of time for the Company to continue as a going concern, assuming that in such a period of time the Company would be able to restructure its business and restart on a revenue-generating operation and/or raise additional capital funds to support its continuation as a going concern. However, the principal shareholder of the Company retains his right to discontinue such financing at his own discretion in case the Company is unable to accomplish this plan in such a period of time. It is uncertain as for how long or to what extent such a period of time would be “reasonable” to the discretion of the principal shareholder, and there can be no assurance that the financing from the principal shareholder will not be discontinued at any time.

 

In light of the uncertainty regarding the Company’s ability to continue as a going concern during the fiscal year ended December 31, 2004, the Company’s auditors included an explanatory paragraph for this particular matter in their report on the December 31, 2004 consolidated financial statements. The accompanying condensed consolidated financial statements presented herein have been prepared on a going concern basis of accounting and do not reflect any adjustments that might result if the Company was unable to continue as a going concern.

 

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 to the Company’s audited financial statements as at December 31, 2004.

 

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 to the Company’s audited financial statements as at December 31, 2004, were included in the computation of loss per share as if outstanding at the beginning of each period presented.

 

7



 

5.             PROPERTY, PLANT AND EQUIPMENT, NET

 

 

 

As at March 31, 2005

 

As at December 31, 2004

 

 

 

(Unaudited)
US$

 

(Audited)
US$

 

 

 

 

 

 

 

Net work system

 

536,128

 

536,128

 

Telecommunication system

 

36,860

 

36,860

 

Office equipment

 

25,864

 

25,864

 

Leasehold improvement

 

6,056

 

6,056

 

Furniture and fixtures

 

845

 

845

 

Website development

 

540,121

 

540,121

 

 

 

1,145,874

 

1,145,874

 

Accumulated depreciation

 

(1,145,874

)

(1,145,874

)

 

 

 

 

 

At the end of the third quarter 2004, the Company determined that property, plant and equipment had been impaired as a result of the significant decline in its sportsbook business and recorded a non-cash impairment loss of US$643,864 related to property, plant and equipment in accordance with the provision of SFAS 144. The impairment loss establishes a new cost basis for property, plant and equipment. Accordingly the amount has been netted against the original cost.

 

The Company remained its possession of all items of the impaired property, plant and equipment with zero net carrying value on the book.

 

6.             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.

 

Under the current laws of the British Virgin Islands, the Company’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.

 

7.             COMMITMENTS

 

As at March 31, 2005 and December 31, 2004, the Company had commitments under non-cancelable operating leases in respect of land and buildings as follows:

 

 

 

As at March 31, 2005

 

As at December 31, 2004

 

 

 

(Unaudited)
US$

 

(Audited)
US$

 

2005

 

 

4,756

 

2006

 

 

 

 

 

 

4,756

 

 

Other than the operating lease commitments set forth above, there were no material outstanding capital commitments by the Company.

 

8



 

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 the 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, EXPENSES AND NET LOSS

 

There was no active business operated and no revenue and/or other income earned by the Company for the quarterly period ended March 31, 2005.

 

Total expenses for the period were US$62,135, including our expenses for employee salaries, office rentals, professional fees, telecommunications, and miscellaneous administrative expenses.

 

As a result, a net loss of US$62,135 incurred for the period.

 

2.             CASH FLOWS

 

For the quarterly period ended March 31, 2005, there was a cash in-flow of US$153,318 from our principal shareholder as his loans to the Company, and after paying off our current and accrued expenses, there was a decrease of US$24,068 as net change in our cash flows for the period.

 

3.             MANAGEMENT’S PLAN

 

All 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 environment and conditions; competition in the industries or markets related to the Company and its business; the business abilities and judgment of personnel; the impacts of unusual factors resulting from ongoing evaluations of business strategies; and changes in business strategies. It is our advice to review the section of “Additional Cautionary Statements and Risk Factors” in our annual report on Form 10-KSB for the fiscal year 2004, for more information about risk factors that could affect our financial results and positions.

 

Based upon a further review and re-evaluation of our business structure and strategies, management is currently contemplating plans to restructure our business. However, in light of the circumstances as described in section 2.7(1) under Item 6 in our annual report on Form 10-KSB for the fiscal year 2004, management is contemplating no plans for recommencement of the sportsbook business.

 

9



 

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.

 

10



 

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

None.

 

ITEM 6.          EXHIBITS AND REPORTS ON FORM 8-K

 

(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(a) and 18 U.S.C.  Section 1350

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

 

11



 

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: May 12, 2005

 

 

 

 

 

/s/ RAYMOND CHOU

 

/s/ RICHARD WANG

 

Raymond Chou

Richard Wang

Chief Executive Officer

Chief Financial Officer

 

12