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 December 31, 2000
Commission file number 1-12850
XDOGS, INC.
Formerly known as The Sled Dogs Company
---------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
527 MARQUETTE AVENEUE, SUITE 2100
MINNEAPOLIS, MINNESOTA 55402
--------------------------------------
(Address of principal executive offices)
Incorporated under the laws of 84-1168832
the State of Nevada ----------------------------
I.R.S. Identification Number
(612) 359-9020
------------------------------------------------------------
(Small business issuer's telephone number including area code)
-------------------------------------
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 No X
----- -----
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 No X
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 3,673,242 shares of Common
Stock, $.01 par value per share, outstanding as of December 31, 2000.
XDOGS.COM, INC.
FORM 10-QSB QUARTERLY REPORT FOR THE QUARTER ENDED
December 31, 2000
TABLE OF CONTENTS
Page
Part I - Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - December 31, 2000
and March 31, 2000 F-1
Unaudited Statement of Operations for the Three Months
ended December 31, 2000 F-2
Condensed Consolidated Statements of Operations for the
Nine Months ended December 31, 2000 and 1999 F-3
Condensed Consolidated Statements of Cash Flows for the
Nine Months ended December 31, 2000 and 1999 F-4
Notes to Condensed Consolidated Financial Statements -
December 31, 2000 F-5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 2
Part II - Other Information 3
Item 1. Legal Proceedings 3
Signature 4
i
Xdogs, Inc.
(fka The Sled Dogs Company)
Balance Sheet
- ----------------------------------------------------------------------------------------------------------
Unaudited
December March
31, 2000 31, 2000
ASSETS ------------ ------------
- ------
Current Assets:
Cash and cash equivalents $ 2,841 $ 282,795
Accounts Receivable 53,028 0
Inventory 142,813 0
Prepaid Expenses and other assets 0 42,537
------------ ------------
Total Current Assets 198,682 325,332
------------ ------------
Property and equipment 118,746 104,899
Less Accumulated Depreciation (18,963) (5,993)
------------ ------------
Net Property and Equipment 99,783 98,906
Other Assets
Intangibles, net of $85,616 and $12,231
in amortization 110,077 183,462
Total Other Assets 110,077 183,462
------------ ------------
TOTAL ASSETS $ 408,542 $ 607,700
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
LIABILITIES
Accounts Payable $ 434,030 $ 522,375
Notes payable 200,000 0
Notes payable, shareholders 726,000 300,000
Other accrued liabilities 91,267 0
------------ ------------
Total current liabilities 1,451,297 822,375
------------ ------------
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 3,673,242 shares at December 31, 2000
and 1,937,021 shares at March 31, 2000 36,732 19,370
Additional paid-in capital 11,257,819 7,406,771
Common Stock Paid for but not Issued 139,851 187,725
Accumulated deficit (12,477,157 (7,828,541)
------------
TOTAL SHAREHOLDERS' EQUITY (1,042,755) (214,675)
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 408,542 $ 607,700
============ ============
** - 5 to 1 reverse split
See Accompanying Notes To These Unaudited Financial Statements.
F-1
Xdogs, Inc.
(fka The Sled Dogs Company)
Unaudited Statement Of Operations
- ---------------------------------------------------------------------------------
3 Months 3 Months
Ended Ended
December December
31, 2000 31, 1999
-------- --------
Revenue: $ 36,870 $ 0
Cost of goods sold 17,984 0
----------- -----------
Gross profit 18,886 0
----------- -----------
Costs and expenses:
Stock based compensation 841,499 0
General and administrative 305,154 2,783,390
----------- -----------
Total costs and expenses 1,146,653 2,783,390
----------- -----------
(Loss) from operations (1,127,767) (2,783,390)
----------- -----------
Other income (expense):
Interest expense (28,488) 0
Interest income 11 0
Miscellaneous Income 1,150 68
----------- -----------
Total other income (expense) (27,327) 68
----------- -----------
Net (loss) (1,155,094) (2,783,322)
----------- -----------
Basic and diluted earnings (loss) per common share:
Net (Loss) ($ 0.33) ($ 1.43)
=========== ===========
Weighted Average Common Shares Outstanding ** 3,517,964 1,951,021
=========== ===========
** - 5 to 1 reverse split
See Accompanying Notes To These Unaudited Financial Statements.
F-2
Xdogs, Inc.
(fka The Sled Dogs Company)
Unaudited Statement Of Operations
- ---------------------------------------------------------------------------------
9 Months 9 Months
Ended Ended
December December
31, 2000 31, 1999
----------- -----------
Revenue: $ 140,543 $ 0
Cost of goods sold 232,301 0
----------- -----------
Gross profit (91,758) 0
----------- -----------
Costs and expenses:
Stock based compensation 2,935,494 0
General and administrative 1,604,973 3,858,399
----------- -----------
Total costs and expenses 4,540,467 3,858,399
----------- -----------
(Loss) from operations (4,632,225) (3,858,399)
----------- -----------
Other income (expense):
Interest expense (59,358) 0
Interest income 5,082
Miscellaneous Income 1,150 1,360
----------- -----------
Total other income (expense) (53,126) 1,360
----------- -----------
Net (Loss) before extraordinary items (4,685,351) (3,857,039)
----------- -----------
Extraordinary Items
Gain on debt extinquishment 39,811 0
(Loss) from debt settlement (3,076) 0
----------- -----------
Total 36,735 0
----------- -----------
Net (loss) ($4,648,616) ($3,857,039)
=========== ===========
Basic and diluted earnings (loss) per common share:
Net (Loss) before extraordinary items ($ 1.80) ($ 2.09)
=========== ===========
Net (Loss) ($ 1.78) ($ 2.09)
=========== ===========
Weighted Average Common Shares Outstanding 2,605,985 1,845,687
=========== ===========
** - 5 to 1 reverse split
See Accompanying Notes To These Unaudited Financial Statements.
F-3
Xdogs, Inc.
(fka The Sled Dogs Company)
Unaudited Statement Of Cash Flow
- ----------------------------------------------------------------------------------
9 Months 9 Months
Ended Ended
December December
31, 2000 31, 1999
----------- -----------
Cash Flows From Operating Activities:
Net (loss) ($4,648,616) ($3,857,039)
===========
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciaton and amortization 86,355 2,166
Stock issued for services 3,430,187 2,409,362
Stock issued for trade payables 484,426 0
FAS 123 option value 0 669,413
----------- -----------
Decrease in prepaid expenses and other assets 40,274 12,000
(Increase) in accounts receivable (53,028) 0
(Increase) in deposits 0 (13,541)
(Increase) in inventory (142,813) 0
(Increase) in prepititioned liabilities 0 (32,438)
Increase (Decrease) in accounts payable (88,345) 89,825
Increase in other accrued expenses (91,267) 0
----------- -----------
Net Cash Flows From (Used In)Operations (982,827) (720,252)
----------- -----------
Cash Flows From Investing Activities:
Purchase of property and equipment (13,847) (73,017)
----------- -----------
Net Cash Flows (Used In) Investing Activities: (13,847) (73,017)
----------- -----------
Cash Flows From Financing Activities:
Advances from officer/shareholder 426,000 0
Net proceeds from sale of common stock 290,720 810,569
----------- -----------
Net Cash Flows Provided By Financing Activities 716,720 810,569
----------- -----------
Net Increase (Decrease) In Cash and cash equivalents (279,954) 17,300
Cash and cash equivalents at beginning of period 282,795 86,919
----------- -----------
Cash and cash equivalents at end of period $ 2,841 $ 104,219
=========== ===========
Supplementary Disclosure Of Cash Flow Information:
Stock issued for services $ 3,045,280 $ 0
=========== ===========
Stock issued for trade payables $ 489,423 $ 0
=========== ===========
Accounts Payable Converted to Note Payable $ 200,000 $ 0
=========== ===========
Interest Paid $ 4,437 $ 0
=========== ===========
See Accompanying Notes To These Unaudited Financial Statements.
F-4
Xdogs, Inc.
Notes To Unaudited Financial Statements
For The Nine Month Period Ended December 31, 2000
Note 1 - Unaudited Financial Information
- ----------------------------------------
The unaudited financial information included for the three month and nine month
interim period ended December 31, 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 nine month period ended December 31, 2000 are not
necessarily indicative of the results expected for the fiscal year ended March
31, 2001.
Note 2 - Related Party Transactions
- -----------------------------------
Of the 863,000 shares of after split common stock issued for the 3 month period
ended December 31, 2000, 603,000 shares were issued in exchange for services and
severance valued at $710,085.
An officer of the Company loaned the Company $426,000 during the three month
interim period.
Note 3 - Stock Issued for Services
- ----------------------------------
During the three month period ended December 31, 2000 the Company issued an
additional 260,000 shares to consultants valued at $131,414.
Note 4 - Extraordinary Items
- ----------------------------
During the 9 month period ended December 31, 2000 the Company issued 121,000
shares of post split common stock in exchange for $484,423 in trade payables
that resulted in a loss of $3,076 and additional debt reduction amounting to
$39,811 for a total extraordinary item of $36,735.
Note 5 - Financial Statements
- -----------------------------
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.
F-5
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.
On August 22, 2000, we reverse split our shares one for five
As of December 31, 2000, we had current assets of $198,682 and total assets
of $408,542. This compares with current assets of $325,332 and total assets of
$607,700 as of March 31, 2000.
For the three months ended December 31, 2000, we had revenue of $36,870
cost of goods sold of $17,984. We had a net loss from operations of $1,127,767.
We had a loss per share of $0.33.
For the nine months ended December 31, 2000, we had revenue of $140,543 and
cost of goods sold of $232,301. We had a net loss from operations of $4,632,225.
We had a loss for the nine month period of $1.78 per share.
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 Oxbow, Gaastra and
Lumen.
LIQUIDITY AND CAPITAL RESOURCES
Our cash and cash equivalents were $2,841 on December 31, 2000, compared to
$282,795 on March 31, 2000. During the nine months ended December 31, 2000, our
investing activities used $13,847, compared to $73,017 for the nine months ended
December 31, 1999.
We sold $290,720 worth of common shares and borrowed $426,000 from the
Company's Chief Executive Officer during the period to finance our activities.
As of December 31, 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.
2
PART II - OTHER INFORMATION
On November 29, 2000, Berghaus, Ltd., informed the Company it would continue its
distribution upon payment of $120,000.00 in three installment payments. We are
delinquent on the first installment.
ITEM 1 - LEGAL PROCEEDINGS
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. We negotiated a settlement with Mr.
Furst, to pay his $94,000 in installments, and gave Mr. Furst a confession of
judgment for that amount. The Company is in default of this agreement.
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
is not clear. This case was brought in the State Court of Palm Beach County,
Florida. We have brought a motion to dismiss the Millennium Holdings Group,
Inc., action, which is pending.
On or about March 14, 2000, the Company's former Advisor Stephen Carlson, loaned
the Company $100,000. The note called for payment in full on December 31, 2000.
We are in default and Mr. Carlson has initiated legal proceeds to collect the
loan.
Otherwise as of December 31, 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.
3
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: February 13, 2001
By: /s/ Kent Rodriguez
--------------------------------
Kent Rodriguez, Chairman and
Chief Executive Officer
(Principal Executive Officer)
4