SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 2000
Commission file number 1-12850
XDOGS, INC.
Formerly known as The Sled Dogs Company
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(Exact name of small business issuer as specified in its charter)
527 MARQUETTE AVENEUE, SUITE 2100
MINNEAPOLIS, MINNESOTA 55402
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(Address of principal executive offices)
Incorporated under the laws of 84-1168832
the State of Nevada ----------------------------
I.R.S. Identification Number
(612) 359-9020
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(Small business issuer's telephone number including area code)
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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 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 X No
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Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15 (d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 2,708,063 shares of Common
Stock, $.01 par value per share, outstanding as of September 30, 2000.
XDOGS.COM, INC.
FORM 10-QSB QUARTERLY REPORT FOR THE QUARTER ENDED
September 30, 2000
TABLE OF CONTENTS
Page
Part I - Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
September 30, 2000 and March 31, 2000 3
Condensed Consolidated Statements of Operations
fot the Three Months ended September 30, 2000 and 1999 4
Condensed Consolidated Statements of Operations
for the Six Months ended September 30, 2000 and 1999 5
Condensed Consolidated Statements of Cash Flows
for the Six Months ended September 30, 2000 and 1999 6
Notes to Condensed Consolidated Financial Statements -
September 30, 2000 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II - Other Information 9
Item 1. Legal Proceedings 9
Item 6. Exhibits and Reports on Form 8-K 9
Signature 10
2
Xdogs, Inc.
(fka The Sled Dogs Company)
Balance Sheet
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Unaudited
September March
30, 2000 31, 2000
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ASSETS
- ------
Current Assets:
Cash and cash equivalents $ 5,354 $ 282,795
Accounts Receivable 34,270 0
Inventory 158,453 0
Prepaid Expenses and other assets 2,263 42,537
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Total Current Assets 200,340 325,332
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Property and equipment 118,746 104,899
Less Accumulated Depreciation (17,667) (5,993)
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Net Property and Equipment 101,079 98,906
Other Assets
Intangibles, net of $61,153 and $12,231 in amortization 134,540 183,462
Total Other Assets 134,540 183,462
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TOTAL ASSETS $ 435,959 $ 607,700
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
LIABILITIES
Accounts Payable $ 395,637 $ 522,375
Notes payable 200,000 0
Notes payable, shareholders 650,010 300,000
Other accrued liabilities 56,433 0
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Total current liabilities 1,302,080 822,375
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SHAREHOLDERS' EQUITY:
Convertible preferred stock, Series A, par value $.10 per share;
Authorized 1,000,000 Shares; Issued
and outstanding -0- 0 0
Common Stock, $.01 Par Value; **
Authorized 20,000,000 Shares; Issued
and outstanding 2,708,063 shares at September 30, 1999
and 1,937,021 shares at March 31, 2000 27,081 19,370
Additional paid-in capital 10,425,862 7,406,771
Common Stock Paid for but not Issued 0 187,725
Accumulated deficit (11,319,064) (7,828,541)
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TOTAL SHAREHOLDERS' EQUITY (866,121) (214,675)
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 435,959 $ 607,700
============ ============
** - 5 to 1 reverse split
See Accompanying Notes To These Unaudited Financial Statements.
3
Xdogs, Inc.
(fka The Sled Dogs Company)
Unaudited Statement Of Operations
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3 Months 3 Months
Ended Ended
September September
30, 2000 30, 1999
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Revenue: $ 7,163 $ 0
Cost of goods sold 108,154 0
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Gross profit (100,991) 0
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Costs and expenses:
Stock based compensation 2,093,995 137,596
General and administrative 691,462 211,165
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Total costs and expenses 2,785,457 348,761
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(Loss) from operations (2,886,448) (348,761)
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Other income (expense):
Interest expense (30,870) 0
Interest income 863 68
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Total other income (expense) (30,007) 68
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Net (loss) before extraordinary items (2,916,455) (348,693)
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Extraordinary Items
Gain on debt extinquishment 39,811 0
(Loss) from debt settlement (3,076) 0
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Total 36,735 0
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Net (loss) ($2,879,720) ($ 348,693)
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Basic and diluted earnings (loss) per common share:
Net (Loss) before extraordinary items ($ 1.17) ($ 0.19)
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Net (Loss) ($ 1.15) ($ 0.19)
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Weighted Average Common Shares Outstanding ** 2,493,845 1,793,021
=========== ===========
** - 5 to 1 reverse split
See Accompanying Notes To These Unaudited Financial Statements.
4
Xdogs, Inc.
(fka The Sled Dogs Company)
Unaudited Statement Of Operations
- --------------------------------------------------------------------------------
6 Months 6 Months
Ended Ended
September September
30, 2000 30, 1999
----------- -----------
Revenue: $ 103,674 $ 0
Cost of goods sold 214,317 0
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Gross profit (110,643) 0
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Costs and expenses:
Stock based compensation 2,203,781 654,950
General and administrative 1,187,034 420,059
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Total costs and expenses 3,390,815 1,075,009
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(Loss) from operations (3,501,458) (1,075,009)
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Other income (expense):
Interest expense (30,870) 0
Interest income 5,071 1,360
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Total other income (expense) (25,799) 1,360
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Net (Loss) before extraordinary items (3,527,257) (1,073,649)
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Extraordinary Items
Gain on debt extinquishment 39,811 0
(Loss) from debt settlement (3,076) 0
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Total 36,735 0
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Net (loss) ($3,490,522) ($1,073,649)
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Basic and diluted earnings (loss) per common share:
Net (Loss) before extraordinary items ($ 1.57) ($ 0.61)
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Net (Loss) ($ 1.56) ($ 0.61)
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Weighted Average Common Shares Outstanding 2,239,814 1,772,021
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** - 5 to 1 reverse split
See Accompanying Notes To These Unaudited Financial Statements.
5
Xdogs, Inc.
(fka The Sled Dogs Company)
Unaudited Statement Of Cash Flow
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6 Months 6 Months
Ended Ended
September September
30, 2000 30, 1999
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Cash Flows From Operating Activities:
Net (loss) ($3,490,522) ($1,073,649)
=========== ===========
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciaton and amortization 60,596 654
Stock issued for services 2,203,781 329,187
Stock issued for trade payables 484,426 0
FAS 123 option value 0 325,763
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Decrease in prepaid expenses and other assets 40,274 4,000
(Increase) in accounts receivable (34,270) 0
(Increase) in deposits 0 (13,541)
(Increase) in inventory (158,453) 0
(Increase) in prepititioned liabilities 0 (32,438)
Increase (Decrease) in accounts payable 13,429 11,355
Increase in other accrued expenses 56,433 0
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Net Cash Flows From (Used In)Operations (824,306) (448,669)
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Cash Flows From Investing Activities:
Purchase of property and equipment (13,847) (14,144)
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Net Cash Flows (Used In) Investing Activities: (13,847) (14,144)
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Cash Flows From Financing Activities:
Advances from officer/shareholder 350,010 0
Net proceeds from sale of common stock 150,869 537,969
Net Cash Flows Provided By Financing Activities 500,879 537,969
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Net Increase (Decrease) In Cash and cash equivalents (337,274) 75,156
Cash and cash equivalents at beginning of period 282,795 86,919
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Cash and cash equivalents at end of period ($ 54,479) $ 162,075
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Supplementary Disclosure Of Cash Flow Information:
Stock issued for services $ 2,203,781 $ 0
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Stock issued for trade payables $ 489,423 $ 0
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Accounts Payable Converted to Note Payable $ 200,000 $ 0
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Interest Paid $ 4,437 $ 0
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See Accompanying Notes To These Unaudited Financial Statements.
6
Xdogs.Com, Inc.
Notes To Unaudited Financial Statements
For The Six Month Period Ended September 30, 2000
- -------------------------------------------------
Note 1 - Unaudited Financial Information
The unaudited financial information included for the three month interim period
ended September 30, 2000 were taken from the books and records without audit.
However, such information reflects all adjustments (consisting only of normal
recurring adjustments, which are of the opinion of management, necessary to
reflect properly the results of interim period presented). The results of
operations for the three month period ended September 30, 2000 are not
necessarily indicative of the results expected for the fiscal year ended March
31, 2001.
Note 2 - Financial Statements
Management has elected to omit substantially all footnotes relating to the
condensed financial statements of the Company included in the report. For a
complete set of footnotes, reference is made to the Company's Report on Form
10K-SB for the year ended March 31, 2000 as filed with the Securities and
Exchange Commission and the audited financial statements included therein
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PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
References in this document to "us," "we," or "the Company" refer to Xdogs,
Inc., its predecessor, and its subsidiary.
The following information should be read in conjunction with the
consolidated condensed financial statements and the notes thereto included in
Item 1 of this Quarterly Report, and the financial statements and the notes
thereto and Management's Discussion and Analysis of Financial Condition and
Results of Operations contained our Company's Annual Report on Form 10-KSB for
the year ended March 31, 2000.
RESULTS OF OPERATIONS
On November 5, 1997 we filed for protection under Chapter 11 of the United
States Bankruptcy Code. We changed our fiscal year end to March 31, effective
March 31, 1997. We emerged from Bankruptcy as of June 30, 1998.
As of September 30, 2000, we had current assets of $200,340 and total
assets of $435,959. This compares with current assets of $325,332 and total
assets of $607,700 as of March 31, 2000.
For the three months ended September 30, 2000, we had revenue of $7,163
cost of goods sold of $108,154. We had a net loss from operations of $2,886,448.
We had a loss per share of $1.15.
For the six months ended September 30, 2000, we had revenue of $103,674 and
cost of goods sold of $214,317. We had a net loss from operations of $3,490,522.
We had a basic loss for the six month period per share of $1.56.
Our plan for the fiscal year ended March 31, 2001 is to implement our plan
to develop into a wholesale distributor of action sports hard goods and related
apparel. We plan to actively develop our relationships with Berghaus Limited,
Oxbow, Gaastra and Lumen. While we anticipate generating substantial revenues
under our agreement with Berghaus Limited during the fiscal year ended March 31,
2001, we do not expect to be profitable during this period.
8
LIQUIDITY AND CAPITAL RESOURCES
Our cash and cash equivalents were $200,340 on September 30, 2000, compared
to $162,075 on September 30, 1999. During the fiscal quarter ended September 30,
2000, our investing activities used $13,847, compared to $14,144 for the fiscal
quarter ended September 30, 1999.
We sold $150,869 worth of common shares and borrowed $350,000 from the
Company's Chief Executive Officer during the period to finance our activities.
As of September 30, 2000, we were essentially insolvent and working toward a
reorganization of our operations.
FORWARD-LOOKING STATEMENTS CONTAINED IN THIS FORM 10-QSB ARE MADE PURSUANT TO
THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995. ALL FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES. CERTAIN
IMPORTANT FACTORS COULD CAUSE RESULTS TO DIFFER MATERIALLY FROM THOSE
ANTICIPATED BY SOME STATEMENTS MADE IN THIS FORM 10-QSB. AMONG THE FACTORS THAT
COULD CAUSE RESULTS TO DIFFER MATERIALLY ARE THE FOLLOWING: LACK OF AVAILABILITY
OF FINANCING; INABILITY TO CONTROL COSTS OR EXPENSES; MANUFACTURING AND
DISTRIBUTION PROBLEMS; AND LACK OF MARKET ACCEPTANCE OF THE COMPANY'S PRODUCTS.
REFERENCE IS ALSO MADE TO THE RISK FACTORS CONTAINED IN THE COMPANY'S
REGISTRATION STATEMENT ON FORM S-3 (NO. 33-80875), WHICH ARE INCORPORATED HEREIN
BY REFERENCE.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
We are involved in two litigation matters, neither of which, in the opinion of
our management, has any merit. The first matter is Henry Furst v. Xdogs.com,
which is a breach of contract case brought in U.S. District Court for the
District of Minnesota by Mr. Furst. He is seeking approximately $144,000 in
damages. The second matter is Millennium Holdings Group, Inc. and G. David
Gordon v. Xdogs.com, Inc. and Kent Rodriguez, which is a case for breach of
contract, slander and lost opportunity damages. The specific amount of damages
requested are not clear. This case was brought in the State Court of Palm Beach
County, Florida. We have brought a motion to dismiss Millennium Holdings Group,
Inc., which is pending. We plan to vigorously defend both matters.
Otherwise as of September 30, 2000, neither we, nor any of our officers or
directors, in their capacities as such were the subject of any material, pending
or threatened legal proceeding, and Management is not aware of any contemplated
action against us or such officers or directors.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
b. No reports on Form 8-K
9
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
XDOGS.COM, INC.
Dated: November 20, 2000
By: /s/ Kent Rodriguez
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Kent Rodriguez, Chairman and
Chief Executive Officer
(Principal Executive Officer)
10