Enterprises Inc. will remain in place and commented: "The decision to not proceed with the proposed merger will free up additional time for PCIE management to vigorously pursue the stated strategic goals of PCIE. We feel this is a very positive move."

Graval stated that the merger, as originally contemplated, would have provided PCIE with a "brand identity" vehicle to enter the action sports market as well as immediate cash flows which were then sorely needed by PCIE; but, Graval continued: "The current overall financial situation for PCIE and Third Rail dictates that this proposed merger should be cancelled.

"For PCIE to complete this merger would add an additional $1.2 million in debt to the balance sheet of PCIE and would have required an additional cash outlay of approximately $2.5 million on the part of PCIE. While Third Rail is perfectly positioned to provide 'brand identity' for PCIE to enter the action sports market, a detailed analysis led me to believe the overall cost to complete the merger was simply too great."

Anthony Broughton, chief financial officer of Pacific International Enterprises commented: "One of our primary goals at PCIE is to reduce long term debt and enhance the cash flows for the company. While Third Rail is a fine company, this merger simply did not meet the objectives of PCIE's current management to reduce long term debt and enhance immediate cash flows to justify the cost associated with the merger."

Graval concluded: "PCIE is an evolving research and development company that is now manufacturing and bringing its first products to the marketplace. PCIE needs to focus on its snowboard binding and in-line skate business and commit its human and financial resources to the successful introduction of those products."

The cancellation of the proposed merger is not expected to have any adverse effect on the operations of either company. No orders will be effected or lost by either company. No customer relationships will be in jeopardy. The cancellation of the proposed merger is with the mutual consent of both PCIE and Third Rail.