UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 2000
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ________________
Commission file number 0-26479
Wolfpack Corporation
(Exact name of registrant as specified in its charter)
Delaware 56-2086188
- -------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17 Glenwood Avenue
Raleigh, North Carolina 27603
- ----------------------- -----
(Address of principal executive offices) (Zip Code)
(919) 831-1351 (Registrant's telephone number, including area code)
--------------
Check whether the Registrant (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, and (2) has been subject to such filing requirements for
the past 90 days. Yes [ ] No [X]
As of September 8, 2000, there were 18,552,570 shares of the registrant's
common stock, par value $0.001 issued and outstanding.
1
WOLFPACK CORPORATION
JUNE 30, 2000 QUARTERLY REPORT ON FORM 10-QSB
TABLE OF CONTENTS
Page Number
Special Note Regarding Forward Looking Information................. 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements............................................... 4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................ 14
Item 3. Quantitative and Qualitative Disclosures About Market Risk......... 18
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.................................................. 18
Item 2. Changes in Securities and Use of Proceeds.......................... 18
Item 3. Defaults Upon Senior Securities.................................... 18
Item 4. Submission of Matters to a Vote of Security Holders................ 18
Item 5. Other Informations................................................. 18
Item 6. Exhibits and Reports on Form 8-K................................... 18
2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
To the extent that the information presented in this Quarterly Report on
Form 10-QSB for the quarter ended June 30, 2000 discusses financial projections,
information or expectations about our products or markets, or otherwise makes
statements about future events, such statements are forward-looking. We are
making these forward-looking statements in reliance on the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Although we
believe that the expectations reflected in these forward-looking statements are
based on reasonable assumptions, there are a number of risks and uncertainties
that could cause actual results to differ materially from such forward-looking
statements. These risks and uncertainties are described, among other places in
this Quarterly Report, in "Management's Discussion and Analysis of Financial
Condition and Results of Operations".
In addition, we disclaim any obligations to update any forward-looking
statements to reflect events or circumstances after the date of this Quarterly
Report. When considering such forward-looking statements, you should keep in
mind the risks referenced above and the other cautionary statements in this
Quarterly Report.
3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Report of Reviewing Independent Accountant.......................... 5
Combined and Consolidated Balance Sheet as of June 30, 2000......... 6
Combined and Consolidated Statements of Operations
for the three months ended June 30, 2000 and 1999................. 7
Combined and Consolidated Statements of Cash Flows
for the three months ended June 30, 2000 and 1999................. 8
Combined and Consolidated Statement of Stockholder Equity........... 9
Notes to Consolidated Financial Statements.......................... 10
4
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Directors of Wolfpack Corporation:
I have reviewed the accompanying consolidated balance sheet of Wolfpack
Corporation as of June 30, 2000, and the related consolidated statements of
operations and of cash flows for the six month periods ended June 30, 2000 and
1999. These financial statements are the responsibility of the Company's
management.
I have conducted my review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, I do not express such an opinion.
Based on my review, I are not aware of any material modifications that should be
made to the accompanying consolidated interim financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.
I previously audited in accordance with generally accepted auditing standards,
the consolidated balance sheet as of December 31, 1999, and the related
consolidated statements of operations, of changes in shareholders' equity and of
cash flows for the year then ended (not presented herein), and in our report
dated March 31, 2000, I expressed an unqualified opinion on those consolidated
financial statements. In my opinion, the accompanying consolidated balance sheet
information as of December 31, 1999, is fairly stated, in all material respects
in relation to the consolidated balance sheet from which it has been derived.
/s/ Thomas Monahan
Certified Public Accountant
Paterson, New Jersey
August 25, 2000
5
WOLFPACK CORPORATION
COMBINED AND CONSOLIDATED BALANCE SHEET
June 30,
December 31, 2000
1999 Unaudited
------------ ----------
Assets
Current assets
Cash and cash equivalents $ 142,996 $ 300,588
Accounts receivable 158,616
Inventory 119,714 184,341
Prepaid expense 22,725
Officer loan receivable 50,375 66,300
--------- ----------
Current assets 313,085 732,570
Property and equipment-net 32,023 97,344
Other assets
Software developed for internal use 493,278
Regulatory license 23,000
Costs of acquiring customer data base 257,720
Goodwill 200
Investments in subsidiary 26,594
Security deposits 5,500 13,400
--------- ----------
Total other assets 5,500 814,192
--------- ----------
Total assets $ 350,608 $1,644,106
========= ==========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 3,580 $ 192,937
Officer loan payable 52,000
----------
3,580 244,937
Stockholders' equity
Preferred stock - authorized 5,000,000 shares, $.001 per share
each. At December 31, 1998 and June 30, 2000 there were -0-
shares outstanding respectively
Common Stock authorized 20,000,000 shares, $0.001 par value
each. At December 31, 1999 and June 30, 2000, there are
5,311,400 and 18,552,570 shares outstanding respectively. 5,311 18,552
Additional paid in capital 584,471 1,663,645
Retained earnings (242,754) (283,028)
--------- ----------
Total stockholders' equity 347,028 1,399,169
--------- ----------
Total liabilities and stockholders' equity $ 350,608 $1,644,106
========= ==========
See accompanying notes to financial statements
6
WOLFPACK CORPORATION
COMBINED AND CONSOLIDATED STATEMENT OF OPERATIONS
Unaudited
For the six For the six
months ended months ended
June 30, June 30,
1999 2000
Unaudited Unaudited
------------ ------------
Revenue $ 316,119 $ 954,522
Costs of goods sold 186,281 449,799
---------- -----------
Gross profit 129,718 504,723
Operations:
General and administrative 214,242 540,078
Non cash consideration legal expense 5,000
Depreciation 4,200 4,924
---------- -----------
Total expenses 223,442 545,002
Income (loss) from operations and before corporate income taxes (93,724) (40,279)
Other income
Interest income 1,388 1,995
Interest expense (2,000)
---------- -----------
Total other income 1,388 (5)
---------- -----------
Net income (loss) $ (92,336) $ (40,274)
========== ===========
Net income (loss) per share-basic $(0.02) $(0.00)
========== ===========
Number of shares outstanding-basic 4,795,000 15,802,570
========== ===========
See accompanying notes to financial statements
7
WOLFPACK CORPORATION
COMBINED AND CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited
For the six For the six
months ended months ended
June 30, 1999 June 30, 2000
-------------- --------------
CASH FLOWS FROM OPERATING Net income (loss) per share ACTIVITIES
Net income (loss) $(92,336) (40,274)
Interest expense 2,000
Non cash payment of legal expenses $ 5,000
Depreciation 4,200 4,924
Adjustments to reconcile net income (loss) to net cash
Accounts receivable (158,616)
Inventory (59,136) (64,627)
Prepaid expenses 28,546 (22,725)
Accounts payable 27,351 189,357
-------- ---------
TOTAL CASH FLOWS FROM OPERATIONS (86,375) (89,961)
CASH FLOWS FROM INVESTING ACTIVITIES
Software developed for internal use (151,063)
Purchase of regulatory license (23,000)
Cost of acquiring customer data base (257,720)
Security deposits (7,900)
Officer loan receivable (15,925)
Investment in subsidiary (26,594)
Purchase of assets (70,245)
---------
TOTAL CASH FLOWS FROM INVESTING ACTIVITIES (552,447)
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of shares of common stock net of offering expenses 244,027 750,000
Officer loan payable 50,000
---------
TOTAL CASH FLOWS FROM FINANCING ACTIVITIES 244,027 800,000
NET INCREASE (DECREASE) IN CASH 152,652 157,592
CASH BALANCE BEGINNING OF PERIOD 132,070 142,996
-------- ---------
CASH BALANCE END OF PERIOD $284,722 $ 300,588
======== =========
See accompanying notes to financial statements
8
WOLFPACK CORPORATION
COMBINED AND CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
Preferred Preferred Common Common Additional Retained
Date stock stock stock paid in capital earnings Total
Issuance of shares
for acquisitions -0- $ -0- 2,000,000 $2,000 $281,165 $283,165
Net Income
Balance 74 74
--------- --------- ---------- ------ -------- --------- ----------
12-31-1998 -0- $ -0- 2,000,000 $2,000 $281,165 $74 $283,239
========= ========= ========== ====== ======== ========= ==========
Balances 1-4-1999 -0- $ -0- 2,000,000 $2,000 $281,165 $74 $283,239
Sale of shares 3,311,400 3,311 338,779 342,090
Offering expenses (35,473) (35,473)
Net loss $(242,828) (242,828)
--------- --------- ---------- ------ -------- --------- ----------
12-31-1999 -0- $ -0- 5,311,400 $5,311 $584,471 (242,754) $347,028
Sale of shares 3,000,000 3,000 747,000 750,000
Issuance of shares
for acquisition 10,241,170 10,241 332,174 342,415
Net loss (40,274) (40,274)
--------- --------- ---------- ------ -------- --------- ----------
6-30-2000 -0- $ -0- 18,552,570 $18,552 $1,663,645 $(283,028) $1,399,169
See accompanying notes to financial statements
9
Note 1 - Basis of Presentation
The accompanying unaudited financial statements of Wolfpack Corporation
(the "Company") reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results of the interim periods presented.
All such adjustments are of a normal recurring nature. The financial statements
should be read in conjunction with the notes to financial statements contained
in the Company's Annual Report on Form 10K for the year ended December 31, 1999.
Note 2 - Commitments and Contingencies
Lease Agreements
On June 26, 1995, Susan H. Coker d/b/a/ Dina Porter entered into a lease
agreement for 4,251 square feet of retail space at The Cameron Village Shopping
Center at 446 Daniel Street, Raleigh, North Carolina with an unrelated party for
a period of 5 years beginning October 1, 1995 and ending September 30, 2000 for
a rental of $4,530 per month. The lease requires a security deposit of $4,530.
As of June 30, 2000, the Company has closed this retail store in Raleigh, North
Carolina.
The Company has entered into an additional lease for 1,200 square feet of
retail space at 400 South Elliot Road, Chapel Hill, North Carolina at a monthly
rent of $2,000.
AAM occupies office space at 17 Glenwood Avenue, Raleigh, North Carolina
27603.
Jetco occupies 13,000 square feet of office and warehouse facilities at
2474 Mnana Drive, Dallas Texas 75220 pursuant to a 3 year lease dated May, 2000
which requires monthly rental of $5,600.
Note 3 - Inventory
Inventory for Dina Porter has been recorded at the lower of cost or market
under the first- in first-out method. At December 31, 1999 and June 30, 2000,
inventory of goods available for sale was $119,714 and $118,334 respectively.
Inventory for Jetco has been recorded at the lower of cost or market. At
December 31, 1999 and June 30, 2000, inventory of goods available for sale was
$-0- and $66,007 respectively.
Note 4 - Property and Equipment
Property and Equipment for the Company consisted of the following at
December 31, 1999:
Accumulated
Asset Depreciation Balance
---------- ------------ ---------
Vehicles $35,139 $12,048 $23,091
10
Furniture and fixtures 6,444 10,115 6,329
Leasehold Improvements 7,358 4,755 2,603
---------- ------------ ---------
Total $58,941 $26,918 $32,023
Property and Equipment for Dina Porter consisted of the following at June 30,
2000:
Accumulated
Asset depreciation Balance
-------- ------------ -------
Vehicles $35,139 $13,805 $21,334
Furniture and fixtures 41,172 $10,937 $30,235
Leasehold Improvements 7,358 5,123 $ 2,235
-------- ---------- --------
Total $83,669 $29,865 $53,804
======== ========== ========
Property and Equipment for Jetco consisted of the following at June 30, 2000:
Accumulated
Asset depreciation Balance
-------- ------------ -------
Office Equipment, Furniture and fixtures $49,001 $ 504 $48,497
Leasehold Improvements 21,244 -0- 21,244
-------- -------- -------
Total $70,245 $ 504 $69,741
======== ======== =======
Note 5 - Income Taxes
11
The Company provides for the tax effects of transactions reported in the
financial statements. The provision if any, consists of taxes currently due plus
deferred taxes related primarily to differences between the basis of assets and
liabilities for financial and income tax reporting. The deferred tax assets and
liabilities, if any, represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled. As of June 30, 2000, the Company had no
material current tax liability, deferred tax assets, or liabilities to impact on
the Company's financial position because the deferred tax asset related to the
Company's net operating loss carry forward and was fully offset by a valuation
allowance.
At June 30, 2000, the Company has net operating loss carry forwards for
income tax purposes of $283,028. These carry forward losses are available to
offset future taxable income, if any, and expire in the year 2010. The Company's
utilization of this carry forward against future taxable income may become
subject to an annual limitation due to a cumulative change in ownership of the
Company of more than 50 percent.
The components of the net deferred tax asset as of June 30, 2000 are as
follows:
Deferred tax asset:
Net operating loss carry forward $ 96,230
Valuation allowance $(96,230)
--------
Net deferred tax asset $ -0-
The Company recognized no income tax benefit from the loss generated for
the period from the date of inception to June 30, 2000. SFAS No. 109 requires
that a valuation allowance be provided if it is more likely than not that some
portion or all of a deferred tax asset will not be realized. The Company's
ability to realize benefit of its deferred tax asset will depend on the
generation of future taxable income. Because the Company has yet to recognize
significant revenue from the sale of its products, the Company believes that a
full valuation allowance should be provided.
The Company recognized no income tax benefit for the loss generated for the
nine months ended June 30, 2000. SFAS No. 109 requires that a valuation
allowance be provided if it is more likely than not that some portion or all of
a deferred tax asset will not be realized. The Company's ability to realize
benefit of its deferred tax asset will depend on the generation of future
taxable income. Because the Company's subsidiary AAM has yet to recognize any
revenue from operations and Dina Porter will be expending greater amounts of
cash to expand operations, increase cash expended for advertising, labor, and
other pre opening expenses to open new stores, the Company believes that a full
valuation allowance should be provided.
Note 6 - Private Placement
12
The Company is conducting an offering of up to 3,000,000 shares of its
Common Stock, par value $.001 per share (the "Shares"), at an offering price of
$.25 per share (the Offering") pursuant to Rule 506 of Regulation D of the
General Rules and Regulations of the Securities and exchange Commission.
As of June 30, 2000, the Company has sold 3,000,000 shares of common stock
for an aggregate consideration of $750,000.
Note 7 - Acquisition of JetCo Communications Corporation
The Company has completed the acquisition of JetCo Communications
Corporation, a Texas corporation, ("JetCo"). The Company has acquired all of the
issued and outstanding capital stock of JetCo, including its subsidiaries, which
do business under the names E-Z Fon Services, Inc. ("E-Z Fon") and E-Z Wireless,
Inc. ("E-Z Wireless"). For the purchase of JetCo's capital stock, JetCo
shareholders received 10,241,170 shares of newly issued common stock of the
Company. As a result, the former JetCo shareholders own approximately 57% of the
capital stock of Wolfpack. William W. Evans, the President of JetCo, received
8,691,170 shares of Wolfpack common stock, approximately 48% of the capital
stock of Wolfpack, giving Mr. Evans effective control over matters submitted to
the shareholders.
The acquisition has been accounted for using the pooling of interest
method. As such, the historical costs of the companies assets and liabilities
have been combined and become the recorded amounts of the combined company's
assets and liabilities for all periods presented. Prior to January 1, 2000, the
assets and liabilities and results of operations for Jetco were nil. The effects
of intercompany transactions on current assets, current liabilities, revenue,
and cost of sales for periods presented and on retained earnings at the
beginning of the periods presented were eliminated to the extent possible.
E-Z Fon provides prepaid local telephone service to approximately 5,000
customers in Texas.
E-Z Wireless is a prepaid cellular phone service provider operating in
Texas and has service agreements in seven other states. JetCo has recently
completed an acquisition of 3,000 customers and distribution channels with
outlets in each major city in Texas.
JetCo is currently licensed to provide phone service in Texas and has
applied for a similar license in 23 additional states.
JetCo has also developed proprietary Integrated Communications Provider
software, which JetCo anticipates will be completed during the second quarter.
The software, along with the anticipated new service agreements will enable E-Z
Fon to provide local phone service, long distance, wireless, paging, Internet
and satellite television services to both prepaid and conventional invoiced
residential customers. JetCo has made enhancements to its software to allow
customers to choose services by the Internet.
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Financial Statements and Notes thereto appearing elsewhere in this Quarterly
Report. Certain statements in this Quarterly Report which are not statements of
historical fact are forward-looking statements. See "Special Note Regarding
Forward-Looking Information" on Page 3.
We were formed on March 16, 1998, under the laws of the State of Delaware
to engage in any lawful act or activity for which corporations may be organized
under the business corporation law of the State of Delaware. Our principal
assets consist of:
. our Dina Porter, Inc. ("Dina Porter") subsidiary;
. our AAM Investment Council, Inc. ("AAM") subsidiary; and
. our JetCo Communications Corporation ("JetCo") subsidiary.
Dina Porter
Dina Porter, a retailer of high quality women's fashion apparel and
accessories, is an operating entity with business operation going back to 1995
and with increased revenue for the years ended December 31, 1998 and 1999.
During this period, we devoted the majority of our efforts to:
. developing our marketing philosophy and market strategy,
. obtaining new customers for our products,
. enhancing our sources for inventory,
. pursuing and finding a management team to continue the process of
completing our marketing goals, and
. obtain sufficient working capital through debt and equity.
These activities were funded by our management and investments from
stockholders.
AAM
Our subsidiary, AAM, intends to act as a financial adviser and provide
investment advisory services to select companies who have portfolios ranging in
size from an ideal number of three to a practical limit of 10 and have clearly
defined investment objectives. AAM is a development stage enterprise with no
activity for the years ended December 31, 1998 and 1999. During this period,
management had devoted the majority of its efforts to developing its marketing
philosophy and market
14
strategy, obtaining new clients for its products, pursuing and finding a
management team to continue the process of completing its marketing goals,
obtain sufficient working capital through loans and equity through private
placement offering. These activities were funded by our management and
investments from stockholders.
JetCo
We completed the acquisition of JetCo Communications Corporation, a Texas
corporation, ("JetCo"). The Company has acquired all of the issued and
outstanding capital stock of JetCo, including its subsidiaries, which do
business under the names E-Z Fon Services, Inc. ("E-Z Fon") and E-Z Wireless,
Inc. ("E-Z Wireless"). For the purchase of JetCo's capital stock, JetCo
shareholders received 10,241,170 shares of newly issued common stock of the
Company. As a result, the former JetCo shareholders own approximately 57% of the
capital stock of Wolfpack. William W. Evans, the President of JetCo, received
8,691,170 shares of Wolfpack common stock, approximately 48% of the capital
stock of Wolfpack, giving Mr. Evans effective control over matters submitted to
the shareholders.
The acquisition has been accounted for using the pooling of interest
method. As such, the historical costs of the companies assets and liabilities
have been combined and become the recorded amounts of the combined company's
assets and liabilities for all periods presented. Prior to January 1, 2000, the
assets and liabilities and results of operations for Jetco were nil. The effects
of intercompany transactions on current assets, current liabilities, revenue,
and cost of sales for periods presented and on retained earnings at the
beginning of the periods presented were eliminated to the extent possible.
E-Z Fon provides prepaid local telephone service to approximately 5,000
customers in Texas. E-Z Wireless is a prepaid cellular phone service provider
operating in Texas and has service agreements in seven other states. JetCo has
recently completed an acquisition of 3,000 customers and distribution channels
with outlets in each major city in Texas. JetCo is currently licensed to provide
phone service in Texas and has applied for a similar license in 23 additional
states.
JetCo has also developed proprietary Integrated Communications Provider
software, which JetCo anticipates will be completed during the second quarter.
The software, along with the anticipated new service agreements will enable E-Z
Fon to provide local phone service, long distance, wireless, paging, Internet
and satellite television services to both prepaid and conventional invoiced
residential customers. JetCo has made enhancements to its software to allow
customers to choose services by the Internet.
For the next 12 months, we plan to focus on expanding the operations of
JetCo. To a lesser extent, we will seek to expand the business of Dina Porter
which includes:
. obtaining new customers for the sale of products through our retail
store by continuing our marketing efforts through direct mail and
plans to build Dina Porter's retail merchandising business by opening
additional stores in the same geographic area and in other locations
in North Carolina,
. enhancing our sources for inventory, and
15
. pursuing and finding a management team to continue the process of
completing its marketing goals and to market limited quantities of
expanded lines of merchandise.
We anticipate that our results of operations may fluctuate for the
foreseeable future due to several factors, including:
. financing of JetCo's desired growth in customer base and distribution;
. whether and when new products are successfully integrated and accepted
by Dina Porter's present clientele and intended targeted market for
new stores;
. continued market acceptance of current products;
. competitive pressures on pricing; and
. changes in the mix of products sold.
Operating results would also be adversely affected by a downturn in the
market in general. Because we continue to increase our operating expenses for
personnel and other general and administrative expenses, our operating results
would be adversely affected if our sales did not correspondingly increase. Our
limited operating history makes accurate prediction of future operating results
difficult or impossible.
Results of Operations
Results of operations for the six months ended June 30, 2000 as compared
to the six months ended June 30, 1999.
For the six months ended June 30, 1999 and 2000, AAM was inactive.
For the six months ended June 30, 1999 and 2000, results of operations for
Dina Porter were as follows:
For the six months ended June 30, 2000, we generated net sales of $386,138
as compared to $316,119 for the six months ended June 30, 1999 representing a
increase of $70,019 or approximately 22.1%. Our cost of goods sold for the six
months ended June 30, 2000 was $221,078 or 57.3% of net sales as compared to
$186,281 or 58.9% of net sales for the six months ended June 30, 1999. Our gross
profit on sales was $165,060 or 42.7% of sales for the six months ended June 30,
2000 as compared to $129,718 or 41.0% for the six months ended June 30, 1999.
General and administrative costs aggregated approximately $226,594, or
58.7% of net sales, for the six months ended June 30, 2000 as compared to
$214,242, or 67.8% of net sales, for the six months ended June 30, 1999
representing an increase of $12,352. This increase is a result of expenses
incurred in connection with the acquisitions and stock offerings, and increased
spending by the Dina Porter operations for advertising, sales help and costs of
handling credit cards.
16
Results of operations for Jetco for the six months ended June 30, 2000
For the six months ended June 30, 1999, Jetco's results of operations were
nil.
For the six months ended June 30, 2000, we generated net sales of $568,384.
Our cost of goods and services sold for the six months ended June 30, 2000 was
$228,721 or 40.2% of net sales. Our gross profit on sales was $339,663 or 59.8%
of sales for the six months ended June 30, 2000.
General and administrative costs aggregated approximately $313,484, or
55.2% of net sales, for the six months ended June 30, 2000. This represents
monies essentially being spent as follows: $15,192 for advertising; $5,748 for
promotion; $228,421 for salaries and payroll taxes and $19,686 for
communications.
Liquidity and Capital Resources
We increased cash by $157,592 from a balance of $142,997 at December 31,
1999 to $300,588 at June 30, 2000 through the process of receiving net cash from
the sale of shares of common stock aggregating $750,000 and an officer loan of
$50,000, which was mostly offset by the negative net cash outflow from
operations of $89,961.
We expended approximately $552,447 as an investment towards the acquisition
of assets for Jetco Jetco including: $151,063 for development for software to
used for the internal operations of Jetco; $23,000 for the purchase of a
regulatory license; $257,720 for the purchase of customer data bases; $7,900 in
security deposits; increasing the officer loan receivable by $15,925; making an
investment in a subsidiary of $26,594 and purchase of fixed assets of $70,245.
Year 2000 Issues
We have completed our assessment of Year 2000 compliance with respect to
our products that are currently being sold to customers and has concluded that
all significant products are compliant. We also believe that JetCo has completed
its assessment of Year 2000 compliance with respect to its products and has
concluded that all significant products are compliant. With respect to other
third parties, we have identified and contacted its significant suppliers to
determine the extent to which we may be vulnerable to such third parties'
failure to address their own year 2000 issues. We did not experience any
material failures as a result of the change to 2000. We, however, intend to
continue to monitor its Year 2000 compliance and Year 2000 compliance of its
significant suppliers.
Based upon our current estimates, additional out-of-pocket costs associated
with its Year 2000 compliance are expected to be immaterial. Such costs do not
include internal management time, which is not expected to be material to our
results of operations or financial condition. We believe that our most
significant risk with respect to Year 2000 issues relates to the performance and
readiness status of third parties. As with all manufacturing and wholesale
companies, a reasonable worst case Year 2000 scenario would be the result of
failures of third parties (including without limitation, governmental entities,
utilities and entities with which we have no direct involvement) that negatively
impact our operations, or events affecting regional, national or global
economies generally. The impact of these failures cannot be
17
estimated at this time; however, we continually reevaluate our contingency plans
to limit, to the extent practicable, the financial impact of these failures on
our results of operations. Any such plans would necessarily be limited to
matters over which we can reasonably control.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
We completed a private placement of 3,000,000 shares of our common stock
raising gross proceeds of $750,000. The private placement was completed in June
2000.
We offered and sold 10,241,170 shares of common stock for the acquisition
of JetCo Communications Corporation, The closing of the acquisition was on June
22, 2000.
Each of the above issuances of securities was exempt from registration
under the 1933 Act by virtue of the exemption under Section 4(2).
ITEM 3. DEFAULTS IN 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.
27 Financial Data Schedule
(b) Reports on Form 8-K.
On July 7, 2000, we filed a Current Report on Form 8-K under Items 1 and 2
disclosing the acquisition of JetCo Communications Corporation. The date of the
Report was June 22, 2000.
18
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
WOLFPACK CORPORATION
Dated: September 8, 2000 By: /s/ PETER L. COKER
Peter L. Coker
President and Chief Financial Officer
19
EXHIBIT INDEX
27 Financial Data Schedule