<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
Amendment No. 1
-------------
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2000
Commission file number 1-12850
XDOGS.COM, INC.
(Exact name of small business issuer as specified in its charter)
527 MARQUETTE AVE. SOUTH, 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)
--------------
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, $.01
PAR VALUE PER SHARE (Title of Class)
Indicate by check mark whether the Company (1) 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 X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
<PAGE> 2
Our revenues for our most recent fiscal year were $2,342
The aggregate market value of the Company's common stock held by non-affiliates
of the Company on March 31, 2000 was approximately $21,820,000 computed by
reference to the closing bid price as quoted on that date.
Check whether the Company has filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Securities Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes X No
We have one class of equity securities outstanding: Common Stock, $.01 par value
per share. On March 31, 2000, there were 9,685,104 shares outstanding. As of
June 30, 1998, the date of our reorganization in Bankruptcy, our common shares
were subject to a 54 for 1 reverse split. All references to our shares in this
Registration Statement include the effect of the 54 for 1 reverse split of our
common stock.
<PAGE> 3
XDOGS.COM, INC.
FORM 10-KSB ANNUAL REPORT FOR THE YEAR ENDED MARCH 31, 2000
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
PART I 1
ITEM 1. BUSINESS 1
ITEM 2. PROPERTIES 4
ITEM 3. LEGAL PROCEEDINGS 4
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS 4
PART II 4
ITEM 5. MARKET FOR THE COMPANY'S
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 4
ITEM 6. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 6
ITEM 7. FINANCIAL STATEMENTS 8
ITEM 8. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE 24
PART III 25
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(A) OF THE EXCHANGE ACT 25
ITEM 10. EXECUTIVE COMPENSATION 27
ITEM 11. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT 28
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 28
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K 28
SIGNATURES 29-30
</TABLE>
i
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References in this document to "us," "we," or "the Company" refer to
Xdogs.com, Inc., its predecessor, and its subsidiary.
PART I
ITEM 1. BUSINESS
GENERAL
We had operations as of March 31, 2000. We had filed for protection
under Chapter 11 of the U.S. Bankruptcy Code on November 5, 1997. The Plan of
Reorganization was approved on June 30, 1998; and the Order and Final Decree
closing the Chapter 11 case was issued on September 10, 1998.
HISTORY
Prior to our Bankruptcy reorganization, we had historically marketed,
manufactured and distributed Sled Dogs(TM) brand snow skates and related
accessories. The prototype to the snow skate was developed by Hannes Jacob, a
Swiss citizen.
In March 1994, we completed an initial public offering of 1,750,000
shares of common stock and received net proceeds of $7,101,862.
We were originally incorporated in Colorado under the name Snow Runner
(USA), Inc. in April 1991. In June 1991, our name was changed to Snow Runner
Holdings, Inc. We were the general partner of Snow Runner (USA) Ltd., a Colorado
limited partnership (the "Partnership"). The Partnership was dissolved in August
1992 and our name was changed to Snow Runner (USA) Inc. In late 1993, we
relocated our operations to Minnesota and, in January 1994, changed our name to
SnowRunner, Inc. In November 1994, we changed our name to The Sled Dogs Company.
All assets owned by The Sled Dogs Company were transferred in a full and final
settlement with Norwest Credit, Inc. in March, 1999. In May, 1999, we changed
our state of domicile to Nevada and our name to Xdogs.com, Inc.
PROPOSED BUSINESS
As of March 31, 2000, we had limited operations and should be
considered to have limited operations and to be undercapitalized. It is our
intention to develop into a wholesale distributor and Internet retailer of
outdoor sports and lifestyle apparel.
We provide the North American market access to a unique portfolio of
products not currently available. The Company's distribution relationships are
with European manufacturers of best-in-class outdoor sports and lifestyle
clothing and equipment that are new to the North American market but have
dominant market share in their respective markets. Offering exclusive and unique
product lines differentiates the Company from its competitors and is a key to
its competitive advantage. We
1
<PAGE> 5
will build our brand through traditional wholesale distribution as well as
direct on-line sales to consumers. We are building a dynamic and vibrant on-line
community that builds brand awareness, supports the Company's retail dealers,
and increases the level of consumer interest in the outdoor active lifestyle.
Our activities benefit its manufacturing partners, retail dealers and
Internet based community by:
o Providing manufacturers access to the North American market
through wholesale distribution and via Internet sales and
marketing on www.xdogs.com.
o Increasing retailer sales by attracting customers interested in
unique, "best-in-class" products for the outdoor lifestyle.
o Creating a strong community within the XDOGS.COM website.
o Giving community members access to unique products, technical
information, product reviews, expert advice, testimonials,
outdoor news, schedules for action and outdoor sports, trip
planning and packing checklists for a variety of events.
o Giving visitors a unique and user-friendly shopping experience.
We have formed partnerships with experts in merchandising, e-commerce,
website development, inventory management and fulfillment, wholesale and retail
sales and marketing. These partners are critical to the success of our sales
strategies.
For the period ended March 31, 2000, we entered into several
distribution agreements. All of these agreements are for limited periods and
territories of exclusivity and are subject to performance criteria on our part.
We anticipate that these relationships will lead to substantial revenues in the
next fiscal year.
In September, 1999 we executed a distribution agreement with Berghaus
Limited. Under this agreement, we became their North American distributor.
Berghaus Limited is a manufacturer of outdoor sporting goods, including
performance clothing, footwear, and equipment.
In January, 2000 we executed a distribution agreement with Oxbow, S.A.
Under this agreement, we became their exclusive North American distributor
(excluding the Caribbean basin). Oxbow, S.A. manufacturers of outdoor
sportswear, including footwear, luggage, business bags and pouches.
In February, 2000 we executed a distribution agreement with Metzler
Design Brillenvertrieb GmbH. Under this agreement, we became their exclusive
North American distributor. Metzler Design Brillenvertrieb GmbH. is a
manufacturer of eyewear under the Lumen trademark.
Subsequent to the fiscal year end, in June, 2000, we executed a
distribution agreement with Gaastra International Sportswear, B.V. Under this
agreement, we became their exclusive North American distributor (excluding the
Caribbean basin).Gaastra International Sportswear, B.V. manufacturers of sports
clothing and equipment.
2
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COMPETITION
The operations in which we propose to engage will be extremely
competitive and subject to numerous risks. Selling on the Internet is new and
highly competitive, with many companies having access to the same market. The
profitability of this business is unproven. Further, the barriers to entry are
not substantial. It is expected that most, if not all of our potential
competitors have greater financial resources and longer operating histories than
ours and can be expected to compete within the business which we plan to engage.
We plan to use the Internet to give ourselves the marketing edge to be able to
compete. Although we expect ultimately to be competitive in the markets in which
we compete, there can be no assurance that we will have the necessary resources
to be competitive.
PATENTS, TRADEMARKS, AND PROPRIETARY RIGHTS
As of March 31, 2000, we owned registered trademarks "Extreme Dog" and
"the Extreme Dogs" logo with the U.S. Patent and Trademark Office. We had also
filed for U.S. trademark registration for the trademark "Life Without Limits".
While we are not aware of any conflicting trademark rights owned by other
parties, no assurance can be given that no such rights exist. We disposed of
certain of its registered marks as a result of our settlement agreement with
Norwest Credit, Inc. in 1999.
With respect to our foreign patent and trademark filings, no assurance
can be given that we will secure patent or trademark registrations in all
foreign countries in which applications are now pending or in which applications
are expected to be filed sometime in the future, or that we will maintain all
existing applications or registrations.
EMPLOYEES
As of March 31, 2000, we had fourteen employees, including three
executive and eleven staff members. At that time, our directors and officers
managed our corporate affairs. Since February 1, 1998, Mr. Rodriguez, our
President, had been accruing a monthly salary of $7,000, plus a $500 per month
car allowance. On November 23, 1999, we entered into a five year employment
agreement with Mr. Rodriguez. Under the terms of the agreement, we accrue $5,000
per month in salary for him. He has stock options to acquire up to 550,000
common shares at exercise prices between $1.00 and $3.00 per share within five
years of the date of the grant. Mr. Rodriguez will be entitled to a five percent
fee, payable in stock, on funds raised by him. Otherwise, no officer or director
is paid a salary. Our employees are not represented by any collective bargaining
organization.
RESEARCH AND DEVELOPMENT
Our expenditures for research and development activities amounted to $-0-
in 2000 and 1999.
3
<PAGE> 7
FORWARD-LOOKING STATEMENTS
Forward-looking statements herein are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Certain
important factors could cause results to differ materially from those
anticipated by some statements made herein. You are cautioned that all
forward-looking statements involve risks and uncertainties. Among the factors
that could cause results to differ materially are the following: inability to
control costs or expenses; manufacturing and distribution problems; and lack of
market acceptance of our products.
ITEM 2. PROPERTIES
Our corporate office is located at 527 Marquette Ave. South, Suite
2100, Minneapolis, Minnesota 55402. This office space is leased from an
unaffiliated third party for $6700 per month on a month-to-month lease. We do
not plan to maintain manufacturing facilities. All manufacturing is planned to
be done by third party contractors.
ITEM 3. 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. He has also brought an action for Summary Judgement, which is pending.
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 March 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, and Management is not aware of any contemplated
action against us or such officers or directors.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's shareholders during
the fourth quarter of fiscal year 2000.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Principal Market or Markets
4
<PAGE> 8
Our Common Stock is listed on the NASDAQ Bulletin Board under the
symbol XDGS. Market makers and other dealers provided bid and ask quotations of
our Common Stock.
The table below represents the range of high and low bid quotations of
our Common Stock as reported during the reporting period herein. The following
bid price market quotations represent prices between dealers and do not include
retail markup, markdown, or commissions; hence, they may not represent actual
transactions.
<TABLE>
<CAPTION>
Fiscal Year ended 2000 High Low
---- ---
<S> <C> <C>
First Quarter
Common Shares $4.50 $2.187
Second Quarter
Common Shares $4.375 $2.75
Third Quarter
Common Shares $6.25 $2.062
Fourth Quarter
Common Shares $4.625 $3.125
</TABLE>
<TABLE>
<CAPTION>
Fiscal Year Ended 1999 High Low
---- ---
<S> <C> <C>
First Quarter
Common Shares $0.06 $0.04
Second Quarter
Common Shares $3.00 $0.04
Third Quarter
Common Shares $0.63 $0.13
Fourth Quarter
Common Shares $3.25 $0.34
</TABLE>
5
<PAGE> 9
(b) Approximate Number of Holders of Common Stock
As of March 31, 2000, a total of 9,685,104 shares of our Common Stock
were outstanding and the number of holders of record of our common stock at that
date was approximately 1,000. However, we estimate that it has a significantly
greater number of shareholders because a substantial number of our shares are
held in nominee names by our market makers.
(c) Dividends
Holders of common stock are entitled to receive such dividends as may
be declared by our Board of Directors. No dividends on the common stock were
paid by us during the periods reported herein nor do we anticipate paying
dividends on common stock in the foreseeable future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
As of March 31, 2000, we had limited operations. We were in the process
of implementing our business plan to develop into a seller of action sports hard
goods and related apparel. Our most significant accomplishment for the period
ended March 31, 2000 was our execution of distribution agreements with Berghaus,
Limited, Oxbow, S.A., and Metzler Design Brillenvertrieb, GmbH. We have become
the North American distributor for these companies. We anticipate that these
relationships will begin generating substantial revenues in the next fiscal
year.
The accounting presentation for a reorganized company such as ours is
shown under what is known as "fresh-start accounting." This type of presentation
restates all assets and liabilities to
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<PAGE> 10
reflect their reorganization value, which approximates the applicable fair value
at the date of reorganization. The gain from forgiveness of debt was reflected
on our June 30, 1998 Statement of Operations, and our historical retained
deficit of $14,519,354 was eliminated. Therefore, beginning July 1, 1998, none
of our financial statements reflected any retained earnings or deficit.
With the changes made under "fresh-start accounting," as of March 31,
1999, we had current assets and total assets of $104,252. We had outstanding
liabilities not subject to compromise of $17,150 and liabilities subject to
compromise of $32,438. As of March 31, 2000, we had current assets of $325,332
and total assets of $607,700.
After implementing "fresh-start accounting," we had total sales of
$34,829 for the period ended March 31, 1999. We had net sales of $2,342 for the
period ended March 31, 2000. We had no cost of goods sold during the year ended
March 31, 1999 and had selling, general, and administrative expenses of
$545,739. We had no cost of goods sold during the year ended March 31, 2000 and
had selling, general, and administrative expenses of $6,469,714. This amount
included $3,485,341 in stock-based consulting and compensation expense relating
to stock issued for services and options granted to non-employees and $1,146,343
in distribution right expenses relating to a warrant issued to a distributor. We
had an interest expense of $84,620 during the period ended March 31, 1999 and
interest expense of $300,000 for the year ended March 31, 2000 related to a
beneficial conversion feature (See Note 7 to the Consolidated Financial
Statements). Our net loss during the period ended March 31, 1999, which included
losses from continuing operations and reorganization items was $1,492,349, or a
loss of $0.49 per share. We recorded an extraordinary gain of $402,625 on debt
extinguishment during the period ended March 31, 1999. As a result of this
extraordinary item, we had a net loss of $0.36 per share for the nine months
ended March 31, 1999. We had a net loss for the year ended March 31, 2000, which
only included losses from continuing operations, of $6,463,817, or a loss of
$0.71 per share.
Our plan for the fiscal year ended March 31, 2001 is to continue to
implement our development into a seller of action sports hard goods and related
apparel. We plan to actively develop our relationship with the companies with
whom we have developed contracts during the last fiscal year. While we
anticipate generating substantial revenues during the fiscal year ended March
31, 2001, we still do not expect to be profitable during this period.
LIQUIDITY AND CAPITAL RESOURCES
Our cash and cash equivalents were $282,795 on March 31, 2000, compared
to $86,919 on March 31, 1999. For the year ended March 31, 2000, our operations
increased net cash by $195,876. This increase came primarily from the sale of
securities during the period.
During the nine months ended March 31, 1999, we had no investing
activities. During the twelve months ended March 31, 2000, we used $302,485 in
investing activities, which consisted
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<PAGE> 11
of $106,792 for the purchase of equipment and $195,693 for the acquisition of
distribution rights..
Our financing activities for the period ended March 31, 1999 provided
cash of $777,014, which consisted of proceeds from sales of common stock. We
paid $293,206 in notes payable. Therefore, our net cash provided by financing
activities was $483, 808, which we used for general and administrative expenses,
as well as working capital. Our financing activities for the period ended March
31, 2000 provided cash of $1,838,794.
As of March 31, 2000, we were at the beginning of the development of
our business plan. We plan to raise additional capital during the coming fiscal
year, but did not have any definitive plans as of March 31, 2000. All of our
revenues have been from sources other than Internet sales. We have not yet
generated any revenues as on Internet seller of action sporting goods. Our
ability to generate revenues from operations and to achieve profitability is
dependent upon a number of factors, including acceptance in the U.S. of European
products. Our ability to continue operations is ultimately dependent upon our
ability to obtain additional financing, generate significant revenues, and
attain profitability. Our President, Mr. Rodriguez has agreed to provide funding
for short term cash needs through March, 2001.
FORWARD-LOOKING STATEMENTS CONTAINED IN THIS FORM 10-KSB 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-KSB. 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.
ITEM 7. FINANCIAL STATEMENTS
XDOGS.COM
(FORMERLY THE SLED DOGS COMPANY)
CONSOLIDATED FINANCIAL REPORT
MARCH 31, 2000
8
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\
CONTENTS
<TABLE>
<S> <C>
--------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT 10
--------------------------------------------------------------------------------
FINANCIAL STATEMENTS
Consolidated balance sheets 11
Consolidated statements of operations 12
Consolidated statements of changes in stockholders'
deficit 13
Consolidated statements of cash flows 14 - 15
Notes to consolidated financial statements 16 - 24
--------------------------------------------------------------------------------
</TABLE>
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<PAGE> 13
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
XDogs.Com (Formerly The Sled Dogs Company)
Minneapolis, Minnesota
We have audited the accompanying consolidated balance sheets of XDogs.Com
(formerly The Sled Dogs Company) as of March 31, 2000 and 1999, and the related
consolidated statements of operations, changes in stockholders' deficit, and
cash flows for the year then ended, the nine months ended March 31, 1999, and
the three months ended June 30, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of XDogs.Com
(formerly The Sled Dogs Company) as of March 31, 2000 and 1999, and the
consolidated results of its operations and its cash flows for the year then
ended, the nine months ended March 31, 1999, and the three months ended June 30,
1998, in conformity with generally accepted accounting principles.
On June 30, 1998, the Company emerged from bankruptcy. As discussed in Note 2 to
the consolidated financial statements, the Company accounted for the
reorganization using fresh-start reporting. Thus, the postreorganization
consolidated financial statements are not comparable to the prereorganization
consolidated financial statements.
Minneapolis, Minnesota
June 26, 2000
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<PAGE> 14
XDOGS.COM
(FORMERLY THE SLED DOGS COMPANY)
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 AND 1999
<TABLE>
<CAPTION>
ASSETS 2000 1999
------ ------------ ------------
<S> <C> <C>
Current Assets
Cash $ 282,795 $ 86,919
Prepaid expenses and other assets 42,537 17,333
------------ ------------
TOTAL CURRENT ASSETS 325,332 104,252
------------ ------------
Office Equipment, net of accumulated depreciation of $,5993 98,906 --
------------ ------------
Intangibles, net of accumulated amortization of $12,231 in 2000 183,462 --
------------ ------------
TOTAL ASSETS $ 607,700 $ 104,252
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities Not Subject to Compromise
Accounts payable $ 522,375 $ 17,150
Notes payable, shareholders (Note 7) 300,000 --
Liabilities Subject to Compromise (Note 1) -- 32,438
------------ ------------
TOTAL CURRENT LIABILITIES 822,375 49,588
============ ============
Commitments and Contingencies (Notes 4, 7, 10, and 11)
Stockholders' Deficit (Notes 1, 2, 5 and 9)
Common stock, $0.01 par value; authorized shares--20,000,000;
issued and outstanding shares 2000: 9,685,104; 1999:6,604,625 96,851 66,046
Additional paid-in capital 7,329,290 513,828
Common stock paid for but not issued, 127,575 and 1,020,345 shares
at March 31, 2000 and 1999 respectively 187,725 564,514
Accumulated deficit (7,828,541) (1,089,724)
------------ ------------
(214,675) 54,664
------------ ------------
$ 607,700 $ 104,252
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE> 15
XDOGS.COM
(FORMERLY THE SLED DOGS COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED MARCH 31, 2000 NINE MONTHS ENDED MARCH 31, 1999
AND THREE MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
Reorganized
REORGANIZED Company,
COMPANY, Nine Months Three Months
YEAR ENDED Ended Ended
MARCH 31, March 31, March 31,
2000 2000 2000
------------ ------------ ------------
<S> <C> <C> <C>
Net sales $ 2,342 $ 34,829 $ 10,940
Cost of goods sold -- -- --
------------ ------------ ------------
GROSS MARGIN 2,342 34,829 10,940
OPERATING EXPENSES
Selling, general, and administrative expense 1,838,030 386,463 10,362
Stock based consulting and compensation expense (Notes 5 and 9) 3,485,341 159,276 --
Distribution rights expense (Note 8) 1,146,343 -- --
------------ ------------ ------------
OPERATING EXPENSES 6,469,714 545,739 10,362
------------ ------------ ------------
OPERATING INCOME (LOSS) (6,467,372) (510,910) 578
Other income
Interest expense (Note 7) (300,000) 84,620 --
Other income 28,555 -- --
------------ ------------ ------------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
REORGANIZATION ITEMS AND EXTRAORDINARY ITEMS (6,738,817) (595,530) 578
Reorganization items:
Guaranty fee (Note 5) -- (843,500) --
Legal fees -- (53,319) --
------------ ------------ ------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS (6,738,817) (1,492,349) 578
Extraordinary items:
Extraordinary gain on discharge of prepetition liabilities -- -- 2,564,734
Extraordinary gain on debt extinguishment (Note 8) -- 402,625 --
------------ ------------ ------------
NET INCOME (LOSS) $ (6,738,817) $ (1,089,724) $ 2,565,312
============ ============ ============
Basic and diluted earnings (loss) per common share:
Income (loss) before extraordinary item (0.71) (0.49) --
Extraordinary items -- 0.13 9.90
------------ ------------ ------------
NET INCOME (LOSS) (0.71) (0.36) 9.90
============ ============ ============
Weighted-average number of common shares outstanding 9,445,204 3,042,768 259,038
============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
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XDOGS.COM
(FORMERLY THE SLED DOGS COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
YEAR ENDED MARCH 31, 2000 NINE MONTHS ENDED MARCH 31, 1999
AND THREE MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
Common Stock Additional
------------------------------ Paid-In
Shares Amount Capital
------------ ------------ ------------
<S> <C> <C> <C>
Balance at March 31, 1997 $ 250,244 $ 2,502 $ 13,729,268
Net loss for the year ended March 31, 1998 -- -- --
------------ ------------ ------------
Balance at March 31, 1998 250,244 2,502 13,729,268
Common stock issued, bankruptcy (Note 1) 1,704,613 17,046 50,786
Net income for the three months ended June 30, 1998 -- -- --
Fresh-start accounting, bankruptcy (Note 2) -- -- (13,780,054)
------------ ------------ ------------
Balance at June 30, 1998 1,954,857 19,548 --
Common stock issued for services 3,089,102 30,891 --
Private issuance of common stock in December 1998; January,
February, and March 1999, net of stock issuance
costs of $48,000 974,000 9,740 --
Private issuance of common stock in January 1999 20,000 200 --
Private issuance of common stock in January 1999 16,666 167 --
Common stock issued in connection with debt extinguishment (Note 8) 50,000 500 --
Common stock issued in connection with guaranty fee (Note 5) 500,000 5,000 513,828
Common stock to be issued, net of commissions of $13,901 (Note 5) -- -- --
Net loss for the nine months ended March 31, 1999 -- -- --
------------ ------------ ------------
Balance at March 31, 1999 6,604,625 66,046 513,828
Common stock issued for services (Note 5) 824,500 8,245 2,402,133
Consulting expense recorded with issuance
of options and warrant (Note 9) -- -- 2,220,306
Common stock issued, net of commissions of $60,986 (Note 5) 2,716,263 27,163 1,893,023
Shares redeemed (460,284) (4,603) --
Beneficial conversion feature on shareholder debt (Note 7) -- -- 300,000
Common stock to be issued
Net loss -- -- --
------------ ------------ ------------
$ 9,685,104 $ 96,851 $ 7,329,290
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Total
Common Stock Shareholders'
Discount Paid For, but Accumulated Equity
on Shares Not Issued Deficit (Deficit)
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Balance at March 31, 1997 $ -- $ -- $(14,574,767) $ (842,997)
Net loss for the year ended March 31, 1998 -- -- (2,509,899) (2,509,899)
------------ ------------ ------------ ------------
Balance at March 31, 1998 -- -- (17,084,666) (3,352,896)
Common stock issued, bankruptcy (Note 1) -- -- -- 67,832
Net income for the three months ended June 30, 1998 -- -- 2,565,312 2,565,312
Fresh-start accounting, bankruptcy (Note 2) (739,300) -- 14,519,354 --
------------ ------------ ------------ ------------
Balance at June 30, 1998 (739,300) -- -- (719,752)
Common stock issued for services 128,385 -- -- 159,276
Private issuance of common stock in December 1998; January,
February, and March 1999, net of stock issuance
costs of $48,000 185,760 -- -- 195,500
Private issuance of common stock in January 1999 7,800 -- -- 8,000
Private issuance of common stock in January 1999 8,833 -- -- 9,000
Common stock issued in connection with debt extinguishment (Note 8) 83,850 -- -- 84,350
Common stock issued in connection with guaranty fee (Note 5) 324,672 -- -- 843,500
Common stock to be issued, net of commissions of $13,901 (Note 5) -- 564,514 -- 564,514
Net loss for the nine months ended March 31, 1999 -- -- (1,089,724) (1,089,724)
------------ ------------ ------------ ------------
Balance at March 31, 1999 -- 564,514 (1,089,724) 54,664
Common stock issued for services (Note 5) -- -- -- 2,410,378
Consulting expense recorded with issuance
of options and warrant (Note 9) -- -- -- 2,220,306
Common stock issued, net of commissions of $60,986 (Note 5) -- (564,514) -- 1,355,672
Shares redeemed -- -- -- (4,603)
Beneficial conversion feature on shareholder debt (Note 7) -- -- -- 300,000
Common stock to be issued 187,725 187,725
Net loss -- -- (6,738,817) (6,738,817)
------------ ------------ ------------ ------------
$ -- $ 187,725 $ (7,828,541) $ (214,675)
============ ============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
13
<PAGE> 17
XDOGS.COM
(FORMERLY THE SLED DOGS COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED MARCH 31, 2000 NINE MONTHS ENDED MARCH 31, 1999
AND THREE MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
Reorganized
REORGANIZED Company,
COMPANY, Nine Months Three Months
YEAR ENDED Ended Ended
MARCH 31, March, 31 June 30,
2000 1999 1998
----------- ----------- ------------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net income (loss) $(6,738,817) $(1,089,724) $ 2,565,312
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Extraordinary items -- (402,625) (2,564,734)
Depreciation and amortization 18,224 -- 32,369
Noncash expense related to stock issued (Note 4) 2,410,378 1,002,776 --
Noncash expense related to options and warrants issued (Note 8) 2,220,306
Noncash expense related to beneficial conversion feature (Note 6) 300,000
Changes in operating assets and liabilities:
Prepaid expenses (25,204) (17,333) --
Accounts payable 505,225 17,150 --
Other accrued expenses (32,438) 79,618 (7,374)
----------- ----------- ------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (1,342,326) (410,138) 25,573
----------- ----------- ------------
Cash Flows From Investing Activities
Purchases of equipment (104,899) -- --
Acquisition of distribution rights (195,693) -- --
----------- ----------- ------------
NET CASH USED IN INVESTING ACTIVITIES (300,592) -- --
----------- ----------- ------------
Cash Flows From Financing Activities
Net proceeds from sale of common stock 1,538,794 777,014 --
Proceeds from notes payable to shareholders (Note 6) 300,000 -- --
Payments from notes payable and debtor-in-possession note -- (293,206) --
Cash in excess of bank balance -- -- (18,748)
----------- ----------- ------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 1,838,794 483,808 (18,748)
----------- ----------- ------------
NET INCREASE IN CASH 195,876 73,670 6,825
Cash
Beginning 86,919 13,249 6,424
----------- ----------- ------------
Ending $ 282,795 $ 86,919 $ 13,249
=========== =========== ============
</TABLE>
(Continued)
14
<PAGE> 18
XDOGS.COM
(FORMERLY THE SLED DOGS COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
YEAR ENDED MARCH 31, 2000 NINE MONTHS ENDED MARCH 31, 1999
AND THREE MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
Reorganized
REORGANIZED Company,
COMPANY, Nine Months Three Months
YEAR ENDED Ended Ended
MARCH 31, March 31, June 30,
2000 1999 1998
------------- ------------- --------------
<S> <C> <C> <C>
Supplemental Schedule of Noncash Investing and
Financing Activities (See Note 1 for discussion of noncash
activity related to the reorganization)
Common stock issued relating to prepetition liabilities $ -- $ -- $ 67,832
Equipment surrendered -- -- 150,557
Common stock issued in connection with settlement
of debt (Note 9) -- 84,350 --
============= ============= ==============
</TABLE>
See Notes to Consolidated Financial Statements.
15
<PAGE> 19
XDOGS.COM
(FORMERLY THE SLED DOGS COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 1. REORGANIZATION
On November 4, 1997, XDogs.Com (formerly The Sled Dogs Company) (the Company)
filed voluntary petitions in the United States Bankruptcy Court for the District
of Minnesota for reorganization under Chapter 11 of the Bankruptcy Code. On June
30, 1998, following approval by creditors, the Bankruptcy Court confirmed the
Company's plan of reorganization, and the plan became effective 30 days later.
During the period from November 4, 1997, through June 30, 1998, the Company
operated as debtor-in-possession.
Under the terms of the plan, the allowed claims were being settled as follows:
PRIORITY CLAIMS: Wage and salary claims of the Company's employees totaling
approximately $6,000 were paid in cash.
SECURED DEBT: The Company's approximately $367,000 asset-based line of credit
was exchanged for new debt in the same amount plus the surrender of equipment
with a carrying value of $150,557.
SENIOR NOTEHOLDERS: The holders of $355,000 of senior secured notes received
2.15 shares of common stock for every dollar of debt held by the senior
noteholder. The total number of shares issued was 763,250.
SUBORDINATED DEBENTURES: The holders of $812,500 of subordinated debentures
received 0.92 shares of common stock for every dollar of debt held. The total
number of shares issued was 747,500.
LIABILITIES SUBJECT TO COMPROMISE: As a result of the Chapter 11 proceedings,
all unsecured and undersecured prepetition liabilities were reclassified to
liabilities subject to compromise at March 31, 1998. Substantially all of these
claims were settled in fiscal 1999 in accordance with the Plan of Reorganization
(see Note 1). The liabilities subject to compromise at March 31, 1999, consisted
of the following:
Trade and other miscellaneous claims $ 32,438
UNSECURED CREDITORS: The holders of approximately $727,000 of allowed trade and
other miscellaneous claims received 0.2666 shares of common stock for every
dollar of debt held. The total number of shares issued was 193,863. In addition,
approximately $32,000 in debt was paid in cash. Trade and other miscellaneous
claims of approximately $888,500 were not allowed.
COMMON STOCK: The holders of the Company's existing common stock received, in
exchange for their shares, one share of the new issue of outstanding voting
common stock of the Company for each 54 shares owned at the effective date of
the reorganization.
OPTIONS AND WARRANTS: All existing options and warrants of the Company
authorized, issued, or outstanding on the effective date of the bankruptcy were
canceled.
The Company accounted for the reorganization using fresh-start accounting.
Accordingly, all assets and liabilities are restated to reflect their
reorganization value, which approximated fair value at the date of
reorganization. See Note 2.
16
<PAGE> 20
XDOGS.COM
(FORMERLY THE SLED DOGS COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 2. FRESH-START REPORTING
In accounting for the effects of the reorganization, the Company implemented
Statement of Position 90-7 (SOP 90-7), Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code, issued by the American Institute of
Certified Public Accountants in November 1990. SOP 90-7 is applicable because
pre-reorganization shareholders received less than 50 percent of the Company's
New Common Stock, and reorganization value of the assets of the reorganized
Company was less than the total of all post-petition liabilities and allowed
claims.
Under fresh-start accounting, all assets and liabilities are restated to reflect
their reorganization value, which approximates fair value at the date of
reorganization. In accordance with fresh-start accounting, the gain on
forgiveness of debt resulting from the bankruptcy proceedings was reflected on
the predecessor Company's statement of operations for the three months ended
June 30, 1998. In addition, the retained deficit of the predecessor Company at
June 30, 1998, totaling $14,519,354, was eliminated, and at July 1, 1998, the
reorganized Company's financial statements reflected no beginning retained
earnings or deficit.
The reorganization value of the reorganized Company was determined in
consideration of several factors. Management believes the estimated fair value
of the emerging entity before considering liabilities approximates the amount a
willing buyer would pay for the assets of the entity immediately after the
restructuring. The Company determined that the fair value of the assets at June
30, 1998, approximated carrying value and, therefore, recognized no
reorganization value in excess of amounts allocable to identifiable assets.
As a result of the implementation of fresh-start accounting, the consolidated
financial statements of the Company after consummation of the plan are not
comparable to the Company's consolidated financial statements of prior periods.
The effect of the plan and the implementation of fresh-start accounting on the
Company's consolidated balance sheet as of June 30, 1998, was as follows
(unaudited):
<TABLE>
<CAPTION>
Pre-Fresh-Start Adjustments to Fresh-Start
Balance Sheet, Record Plan Fair Value Balance Sheet,
June 30, 1998 Confirmation Adjustments June 30, 1998
--------------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
Cash $ 13,249 $ -- $ -- $ 13,249
Equipment 150,557 (150,557) --
----------- ----------- ----------- -----------
$ 163,806 $ (150,557) $ -- $ 13,249
=========== =========== =========== ===========
Liabilities $ 3,516,123 $(2,783,122) $ -- $ 733,001
Stockholders' deficit (3,352,317) 2,632,565 -- (719,752)
----------- ----------- ----------- -----------
$ (163,806) $ (150,557) $ -- $ (13,249)
=========== =========== =========== ===========
</TABLE>
17
<PAGE> 21
XDOGS.COM
(FORMERLY THE SLED DOGS COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS: The Company was incorporated in Colorado in 1991 as a
distributor of SnowRunner snow skates. Between 1991 and 1994, the Company was
restructured, and the name of the Company was changed several times, including
such names as SnowRunner (USA) Inc., SnowRunners, Inc., and The Sled Dogs
Company.
As discussed in Note 1, the Company filed for bankruptcy protection in 1997. As
a result of the bankruptcy, the Company was reorganized and in 1999 was renamed
XDogs.Com. The intent of the Company is to develop into a "clicks and mortar"
seller of action sports hard goods and related apparel and to create an Internet
destination site for active outdoor lifestyle enthusiasts.
CONSOLIDATION: The financial statements include the accounts of the Company and
its wholly owned subsidiary, SnowRunner (Properties) Inc., which was established
and incorporated in April 1993. The subsidiary was inactive in fiscal 2000 and
1999.
CASH: The Company maintains deposits at banks which, at times, exceed federally
insured limits. The Company has not experienced any losses in such accounts.
DISCOUNT ON SHARES: Discount on shares represents the amount by which the
liabilities exceeded the fair value of the assets when applying fresh-start
accounting (see Note 2).
INTANGIBLES: Intangibles consist of cash paid for a four year distribution
agreement. The cost is being amortized over the term of the agreement.
ACCOUNTING FOR LONG-LIVES ASSETS: The Company reviews its long-lived assets
periodically to determine if any potential impairment exists. It is the
Company's opinion that no impairment of long-lived assets exists.
DEPRECIATION: The Company depreciates its office equipment using the
straight-line method over a period of five to seven years.
INCOME TAXES: Deferred taxes are provided on an asset and liability method
whereby deferred tax assets are recognized for deductible temporary differences
and operating loss and tax credit carryforwards, and deferred tax liabilities
are recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax
basis. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.
18
<PAGE> 22
XDOGS.COM
(FORMERLY THE SLED DOGS COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME (LOSS) PER SHARE: The Company computes net income (loss) per share based
upon the weighted-average number of common shares outstanding during each year.
As described in Note 9, at March 31, 2000, the Company had stock options
outstanding to purchase 1,476,300 shares of common stock. However, because the
Company incurred a net loss the inclusion of those potential common shares in
the calculation of diluted loss per share would have an antidilutive effect.
Therefore, basic and diluted lass per share amounts are the same. At March 31,
1999 the Company had no common stock equivalents.
USE OF ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
FAIR VALUE: The Company's financial instruments consist of cash and short-term
debt. The current carrying amount of cash approximates fair value. The fair
value of the Company's short-term debt is estimated based on the quoted market
prices for the same or similar issues or on the current rates offered to the
Company for debt of the same remaining maturities with similar collateral
requirements.
NOTE 4. BASIS OF PRESENTATION, LIQUIDITY, AND DEPENDENCE ON SHAREHOLDER
FINANCING
Revenues on the accompanying statements of operations are from sources other
than Internet sales. The Company has not generated any revenues as an Internet
seller of action sporting goods. The Company's ability to generate revenues from
operations and achieve profitability is dependent upon a number of factors,
including acceptance in the United States of the European products. The ability
to sustain future operations is ultimately dependent upon the Company's ability
to obtain additional financing, generate significant revenues and attain
profitability. The President of the Company has agreed to provide funding for
short-term cash needs through March 2001. The Company is currently dependent
upon this shareholder financing.
NOTE 5. COMMON STOCK
STOCK SPLIT: In conjunction with the bankruptcy, the Company effected a 54-for-1
reverse common stock split. The earnings per common share for the nine months
ended March 31, 1999 and three months ended June 30, 1998, have been
retroactively adjusted for this split as if it occurred on April 1, 1997. In
addition, the statement of changes in stockholders' equity has been
retroactively adjusted as if the split occurred on March 31, 1997.
STOCK ISSUED FOR COMPENSATION: During the year ended March 31, 1999, the Company
issued a total of 3,374,102 shares to an officer of the Company in exchange for
compensation of $105,000 and $843,500 for a personal guaranty provided on
certain company debt. The value of the stock issued was recorded at quoted
market price on the date of issuance.
During the year ended March 31, 2000 an additional 150,000 shares were issued to
an officer in exchange for compensation. The value of the stock issued was
recorded at quoted market price on the date of issuance and totaled $492,750.
19
<PAGE> 23
XDOGS.COM
(FORMERLY THE SLED DOGS COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 5. COMMON STOCK (CONTINUED)
In addition, the Company issued 674,500 of additional common shares in the year
ended March 31, 2000 in lieu of cash for various expenses. The expense recorded
was based upon quoted market price of the stock issued and totaled $1,918,628.
PRIVATE PLACEMENT: In June 2000, the Company completed additional private
offerings of common stock. The total number of shares issued in conjunction with
the offerings was 1,532,929, with gross proceeds of approximately $1,030,000
before offering costs and commissions. $564,514 was received prior to March 31,
1999, net of commissions of $60,986.
NOTE 6. INCOME TAXES
At March 31, 2000, the Company has accumulated a net operating loss of
approximately $18,140,000, which may be used to reduce future taxable income
through 2020. A valuation allowance has been recognized to completely reserve
for the deferred tax assets related to the loss carryforwards. The reserve has
been established because of the uncertainty of future taxable income, which is
necessary in order to realize the benefits of the net operating loss
carryforwards. Any tax benefits realized in the future from preconfirmation
operating loss carryforwards will be reported as a direct addition to additional
paid-in capital.
The Company's ability to utilize these carryforwards to offset future taxable
income is subject to restrictions under Section 382 of the Internal Revenue Code
due to certain changes in the equity ownership of the Company.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for tax purposes. Components of the Company's
deferred tax assets are:
<TABLE>
<CAPTION>
March 31
----------------------------
2000 1999
----------- -----------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward $ 7,260,000 $ 4,880,000
Less valuation allowance (7,260,000) (4,880,000)
----------- -----------
Net deferred tax assets $ -- $ --
=========== ===========
</TABLE>
20
<PAGE> 24
XDOGS.COM
(FORMERLY THE SLED DOGS COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. INCOME TAXES (CONTINUED)
Loss carryforwards for tax purposes as of March 31, 2000, have the following
expiration dates:
<TABLE>
<CAPTION>
Expiration Date Amount
--------------- -------------
<S> <C>
2009 $ 530,000
2010 $ 2,970,000
2011 $ 3,210,000
2012 $ 2,990,000
2013 $ 2,500,000
2020 $ 5,940,000
-------------
$ 18,140,000
=============
</TABLE>
Income tax benefit is different from that which would be computed by applying
U.S. federal income tax rate (35 percent) to pretax loss as follows:
<TABLE>
<CAPTION>
March 31 Ended
----------------------------- June 30
2000 1999 1999
---------- --------- --------
<S> <C> <C> <C>
Computed "expected" federal tax benefit
(expense) at statutory rates 2,178,000 381,000 (898,000)
Effect of net operating loss, with no current
benefit (2,178,000) (381,000) --
Benefit of net operating loss carryforward 898,000
---------- --------- --------
Actual tax benefit $ -- $ -- $ --
</TABLE>
NOTE 7. TRANSACTIONS WITH OFFICERS/STOCKHOLDERS
On March 10, 2000 the Company signed a $200,000 note with Mr. Rodriguez, an
officer/stockholder. The note accrues interest at 12 percent and is due in full
September 1, 2000. Accrued interest on the note is payable in stock and will be
valued by the market price of the stock on the date of payment.
On March 14, 2000 the Company signed a $100,000 note with a stockholder. The
note accrues interest at 12 percent and is due in full September 1, 2000.
Accrued interest on the note is payable in stock and will be valued by the
market price of the stock on the date of payment.
Both of these notes allow the note holder to convert, at any time during the
term of the agreement, the note into common stock at $1.50 per share through
June 30, 2000 and $1.00 per share thereafter. Because these notes can be
converted to common stock at a discount from market price a "beneficial
conversion feature" of $300,000 was recorded by the Company. The beneficial
conversion feature was recorded by increasing additional paid in capital and
charging interest expense with no effect on ending stockholders' equity.
21
<PAGE> 25
XDOGS.COM
(FORMERLY THE SLED DOGS COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 8. EXTRAORDINARY ITEM ON DEBT EXTINGUISHMENT
On February 3, 1999, the Company reached an agreement with the bank on certain
indebtedness owing to the bank in the amount of $780,181. The Company exchanged
50,000 shares of common stock and $293,206 in exchange for release of the
amounts owed. The market value of the stock issued as of February 3, 2000, was
$84,350 based on quoted market price. The resulting gain of $402,625 is shown as
an extraordinary item in the accompanying consolidated statement of operations.
There is no tax effect on the gain due to operating loss carryforwards and a
loss for the nine-month period ended March 31, 1999.
NOTE 9. SHAREHOLDERS' EQUITY
OPTIONS--EMPLOYEE GRANTS: The Company has granted nonqualified options for
shares of common stock to certain officers, directors, and employees of the
Company. As permitted under generally accepted accounting principles, these
grants are accounted for following APB Opinion No. 25 and related
interpretations. Accordingly compensation cost has been recognized for those
grants whose exercise price is less than the fair market value of the stock on
the date of grant.
OPTIONS AND WARRANTS--NONEMPLOYEE GRANTS: The Company also grants options to
nonemployees for services and in conjunction with certain agreements. These
grants are accounted for under FASB Statement No. 123 based on the grant date
fair values. Total expense recorded by the Company related to option and grants
to nonemployees totaled approximately $1,074,000. Total expense recorded by the
Company related to a warrant granted in conjunction with a distribution
agreement totaled approximately $1,146,000. The rights granted under the warrant
vested immediately upon issuance so the entire amount of the expense was
recorded during the year ended March 31, 2000.
OPTIONS AND WARRANTS--PRO FORMA INFORMATION: Had compensation cost for all of
the stock-based compensation grants and warrants issued been determined based on
grant date fair values of awards, reported net loss per share would have been
increased to the pro forma amounts shown below.
<TABLE>
<S> <C>
Net loss, as reported $(6,738,816)
Net loss, pro forma (7,666,974)
Net loss per basic and diluted common share, as reported (0.71)
Net loss per basic and diluted common share, pro forma (0.81)
</TABLE>
22
<PAGE> 26
XDOGS.COM
(FORMERLY THE SLED DOGS COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 9. SHAREHOLDERS' EQUITY (CONTINUED)
The above pro forma effects on net loss are not likely to be representative of
the effects on reported net loss for future years because options vest over
several years and additional awards are generally made each year. The fair value
of each option grant is estimated on the date of grant using the Black-Scholes
option pricing model with the following weighted-average assumptions used for
grants in 2000 no dividend yield during the expected life of outstanding
options; risk-free interest rates of 6 percent; and expected lives of 1 to 3
years.
<TABLE>
<CAPTION>
Weighted
Average
Stock Exercise
Warrants Options Price
-------- -------- --------
<S> <C> <C> <C>
Outstanding at beginning of year $ -- $ --
Granted 500,000 976,300 3.28
Exercised -- -- --
Canceled -- -- --
------- --------
Outstanding at end of year 500,000 $976,300
======= ========
Weighted-average fair value of options and warrants
granted during the year $ 3.28
======
</TABLE>
The following table summarizes information about stock options and warrants
outstanding at March 31, 2000:
<TABLE>
<CAPTION>
Options and Warrants
Options and Warrants Outstanding Exercisable
------------------------------------------- -----------------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Range of Number Contractual Exercise Number Exercise
Exercise Prices Outstanding Life Price Exercisable Price
--------------- ----------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
$0.01 - .50 160,300 4.60 $0.15 160,300 $0.15
$1.50 - 2.75 474,000 5.31 2.42 240,000 2.24
$3.00 - 4.00 632,000 2.53 3.51 522,000 3.51
$5.00 - 8.00 210,000 5.11 6.90 -- --
--------- ---- ----- ------- -----
1,476,300 4.02 $3.28 922,300 $2.59
========= ==== ===== ======= =====
</TABLE>
CONVERTIBLE PREFERRED STOCK: The Company's Board of Directors is authorized to
issue 1,000,000 shares of preferred stock, no par value. No stock has been
issued under this authorization.
23
<PAGE> 27
XDOGS.COM
(FORMERLY THE SLED DOGS COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 10. MAJOR SUPPLIER AND DISTRIBUTORSHIPS
The Company's principal product lines are franchised under different major
distributor sales agreements. These agreements expire at varying times through
December 31, 2004. In addition, these agreements require that certain operating
and product pricing policies of the Company comply with provisions contained in
the agreements.
The Company is an authorized distributor for Berghaus International (Berghaus),
and Oxbow S.A (Oxbow). Berghaus and Oxbow manufacture outdoor sporting goods,
including performance clothing, footwear, and equipment. The Company distributes
products for Berghaus and Oxbow throughout most of North America. To acquire
this territory, the Company agreed to make royalty payments to each supplier
based upon a percentage of net sales. There were no royalties paid or are
required to be paid as of March 31, 2000 and 1999.
The Company is the authorized distributor of Lumen Eyeware products for Metzler
Design (Metzler) in the United States, Canada, Mexico and the Caribbean basin.
To acquire this territory the Company agreed to pay Metzler a set percentage
over base for products and guaranteed minimum levels of sales for calendar years
beginning January 1, 2000 through the end of the agreement term. At March 31,
2000 no amounts were required to be accrued as royalties.
NOTE 11. LITIGATION
The Company is a defendant in two lawsuits for claims related to breach of
contract. The amount claimed is unknown in one and approximately $144,000 for
the other. These matters are currently in the early stages of discovery.
Management is not able at this time to predict the ultimate effect these matters
may have on the Company's financial position or results of operations, but they
believe the claims are meritless and will vigorously defend against them.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
24
<PAGE> 28
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT
Our Directors and Executive Officers as of March 31, 2000 are shown
below:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Kent Rodriguez 43 Chairman, President, Director
Robert Corliss 46 Director
Douglas Barton 56 Director
Craig Avery 51 Secretary
</TABLE>
Each Director is serving a term of office which will continue until the next
annual meeting of shareholders and until the election and qualification of his
respective successor.
KENT RODRIGUEZ.
Mr. Rodriguez joined the Company as Chairman, President, and Chief Executive
Officer in January, 1997. Since 1995, he has been the Managing Partner of Weyer
Capital Partners, a Minneapolis-based venture capital corporation. From 1985 to
1995, he was employed by the First National Bank of Elmore, Minnesota in various
capacities. He has a B.A. degree from Carleton College.
25
<PAGE> 29
ROBERT CORLISS
Mr. Corliss has served as a Director of the Company since July, 1997. Since 1993
until September, 1998, he has been the President of Infinity Sports and Leisure
Group of Lebanon, New Jersey, a designer, manufacturer and distributor of
athletic products under the Bike Athletic and Marksman brand names. He was also
President and Chief Executive Officer of Herman's Sporting Goods, Inc. which he
sold in 1993. In September, 1998, he was named Chief Executive officer of The
Athlete's Foot, a chain of retail athletic footwear stores. He has an MBA degree
from the University of Maryland. Mr. Corliss shall devote such time as is
necessary to carry out his responsibilities as an Officer and Director of the
Company.
DOUGLAS BARTON
Mr. Barton has served as a Director of the Company since November, 1998. From
1987 to the present, he has been the President of Douglas Communications, Inc.,
a private promotion, development, and marketing consulting firm. He has a B.S.
degree in Economics/History from the University of Minnesota. Mr. Barton shall
devote such time as is necessary to carry out his responsibilities as a Director
of the Company.
CRAIG AVERY
Mr. Avery has served as Secretary of the Company since August, 1997. For the
past several years, he has been the owner of Craig C. Avery Company, a
Minneapolis-based real estate development and investment company, which has
developed apartments, senior housing, office buildings, and industrial and
residential land subdivisions. Mr. Avery currently serves on the Boards of Call
4 Wireless, Rock Cliff Development, Cash-N-Pawn, and Host Partners. He has a
B.A. and MBA degree in Finance from the University of Minnesota. Mr. Avery shall
devote such time as is necessary to carry out his responsibilities as an Officer
of the Company.
The Board of Directors has established no committees. Members of the
Board of Directors receive no additional compensation for their service on the
Board of Directors.
The Company's Directors will serve in such capacity until the next
annual meeting of the Company's shareholders and until their successors have
been elected and qualified. There are no family relationships among the
Company's officers and directors, nor are there any arrangements or
26
<PAGE> 30
understanding between any of the directors or officers of the Company or any
other person pursuant to which any officer or director was or is to be selected
as an officer or director.
Compliance with Section 16(a) of the Securities Exchange Act of 1934.
Section 16(a) of the Securities Exchange Act of 1934 (the "34 Act")
requires our officers and directors and persons owning more than ten percent of
our Common Stock to file initial reports of ownership and changes in ownership
with the Securities and Exchange Commission ("SEC"). Additionally, Item 405 of
Regulation S-B under the 34 Act requires us to identify in its Form 10-KSB and
proxy statement those individuals for whom one of the above referenced reports
was not filed on a timely basis during the most recent fiscal year or prior
fiscal years. Given these requirements, we have the following report to make
under this section. All of our officers or directors, and all persons owning
more than ten percent of its shares have filed the subject reports, if required,
on a timely basis during the past fiscal year.
ITEM 10. EXECUTIVE COMPENSATION
Only one executive officer accrued compensation and no other executive
officer or director accrued or received compensation in excess of $100,000
during the fiscal year ended March 31, 2000. Compensation does not include minor
business-related and other expenses paid by us for our officers during fiscal
year 2000 or 1999. Such amounts in the aggregate do not exceed $10,000.
Our Chief Executive Officer, Mr. Kent Rodriguez, was paid $15,000 for
the period ended March 31, 2000. He was issued a total of 3,374,102 shares in
1999 in exchange for compensation of $105,000 and a personal guaranty by him of
$843,500 on one of our debts. On November 23, 1999, we entered into a five year
employment agreement with Mr. Rodriguez. Under the terms of the agreement, we
accrue $5,000 per month in salary for him. He has stock options to acquire up to
550,000 common shares at exercise prices between $1.00 and $3.00 per share
within five years of the date of the grant. Mr. Rodriguez will be entitled to a
five percent fee, payable in stock, on funds raised by him.
Mr. Rodriguez accrued compensation of $15,000 for 1999, which included a
salary of $7,000 per month and a $500 per month car allowance. No other
executive officer or director accrued or received compensation for fiscal year
1998.
27
<PAGE> 31
From time to time, we have granted shares of our common stock as
additional compensation to our officers and key employees for their services, as
determined by our Board of Directors. During fiscal year 2000, no shares were
granted to officers or key employees.
As of March 31, 2000, we had no group life, or relocation plans in
effect. Further, we have no pension plans or plans or agreements which provide
compensation on the event of termination of employment or change in control of
our Company. We do have a group health policy through Blue Cross/Blue Shield.
We do not pay members of our Board of Directors any fees for attendance
or similar remuneration, but reimburses them for any out-of-pocket expenses
incurred by them in connection with our business.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding ownership of our
Common Stock as of March 31, 2000 by (i) each person known by us to be the
beneficial owner of more than five percent of our outstanding common stock; (ii)
each director of our Company; and (iii) all executive officers and directors of
our Company as a group. As of March 31, 2000, we had a total of 9,685,104 common
shares issued and outstanding.
<TABLE>
<CAPTION>
Names and Addresses Beneficial Percent
of Beneficial Owner Ownership of Class
<S> <C> <C>
Kent Rodriguez 3,374,102 34.8%
527 Marquette Ave. South
Suite 2100
Minneapolis, MN 55402
Craig Avery 263,000 2.7%
527 Marquette Ave. South
Suite 2100
Minneapolis, MN 55402
Robert Corliss 25,000 .26%
527 Marquette Ave. South
Suite 2100
Minneapolis, MN 55402
Douglas Barton 105,000 1.1%
527 Marquette Ave. South
Suite 2100
Minneapolis, MN 55402
Officers and Directors 3,767,102 38.86%
as a Group (4 persons)
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We issued our Chief Executive Officer, Mr. Kent Rodriguez, a total of
3,374,102 shares in 1999 in exchange for compensation of $105,000 and a personal
guaranty by him of $843,500 on one of our debts.
On March 10, 2000, we signed a promissory note for $200,000 with Mr.
Rodriguez, an officer and stockholder. This note accrues at 12% per annum and is
due September 1, 2000. Accrued interest on the note is payable in stock and will
be valued at the fair market price of the stock on the date of payment.
On March 14, 2000, we signed a promissory note for $100,000 with a
stockholder. This note has the same terms as the preceding note. Both notes
allow the holder to convert into stock at any time during the term of the
agreement at $1.50 per share through June 30, 2000 and $1.00 per share
thereafter.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. See "Exhibit Index" immediately following the signatures
on this report on Form 10-KSB.
(b) Reports on Form 8-K. No report on Form 8-K was filed during the last
quarter of fiscal year 2000.
28
<PAGE> 32
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Company has caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: July 17, 2000 XDOGS.COM, INC.
/s/ Kent Rodriguez
-------------------------------------
Kent Rodriguez, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed by the following persons on behalf of the Company in the
capacities and on the dates indicated.
Signature and Title Date
-------------------- ----
/s/ Kent Rodriguez July 17, 2000
----------------------------
Kent Rodriguez, President,
Chief Executive Officer and
Director (Principal Executive Officer)
29
<PAGE> 33
/s/ Craig Avery July 17, 2000
----------------------------
Craig Avery, Chief Financial Officer, Treasurer and
Secretary (Principal Financial and Accounting Officer)
/s/ Robert Corliss July 17, 2000
----------------------------
Robert Corliss, Director
/s/ Douglas Barton July 17, 2000
----------------------------
Douglas Barton, Director
30
<PAGE> 34
EXHIBIT INDEX TO FORM 10-KSB
For the fiscal year Commission File Number 1-12850
ended March 31, 2000
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C> <C>
3.1 Restated Articles of Incorporation (Incorporated by reference to *
Exhibit 3.1 to Registration Statement on Form SB-2, Registration
No. 33-74240C).
3.2 Restated Bylaws (Incorporated by reference to Exhibit 3.2 to *
Registration Statement on Form SB-2, Registration No.
33-74240C).
3.3 Articles of Incorporation for the State of Nevada (Incorporated *
by reference to Exhibit 3.3 to Form 10-KSB, filed February, 2000).
3.4 Articles of Merger for the Colorado Corporation and the Nevada *
Corporation (Incorporated by reference to Exhibit 3.4 to Form
10-KSB, filed February, 2000)
3.5 Bylaws of the Nevada Corporation (Incorporated by reference to *
Exhibit 3.5 to Form 10-KSB, filed February, 2000).
4.1 Specimen of Common Stock (Incorporated by reference to Exhibit *
4.1 to Registration Statement on Form SB-2, Registration No.
33-74240C).
10.1 Contract of Sale between Hannes Jacob and Allrounder Idea *
Realization, S.A. and Snow Runner (Properties) Inc. dated
September 3, 1993 (Incorporated by reference to Exhibit 10.1 to
Registration Statement on Form SB-2, Registration No.
33-74240C).
10.2 Payment Agreement between Hannes Jacob and Allrounder Idea *
Realization, S.A. and Snow Runner (Properties) Inc. dated
September 3, 1993 (Incorporated by reference to Exhibit 10.2 to
Registration Statement on Form SB-2, Registration No.
33-74240C).
10.3 Termination and Release Agreement between Hannes Jacob and *
Allrounder Idea Realization, S.A. and Snow Runner (Properties)
Inc. dated September 3, 1993 (Incorporated by reference to
</TABLE>
<PAGE> 35
<TABLE>
<S> <C> <C>
Exhibit 10.3 to Registration Statement on Form SB-2,
Registration No. 33-74240C).
10.4 Assignment, Bill of Sale and Agreement between DalBello Sport *
S.R.L. and Snow Runner (USA), Inc. effective September 3, 1993
(Incorporated by reference to Exhibit 10.4 to Registration
Statement on Form SB-2, Registration No. 33-74240C).
10.5 Product Manufacturing Agreement between Snow Runner (USA) Inc. *
and DalBello Sport S.R.L. effective September 3, 1993
(Incorporated by reference to Exhibit 10.5 to Registration
Statement on Form SB-2, Registration No. 33-74240C).
10.6 Product Development Agreement between Snow Runner (USA) Inc. and *
DalBello Sport S.R.L. effective September 3, 1993 (Incorporated
by reference to Exhibit 10.6 to Registration Statement on Form
SB-2, Registration No. 33-74240C).
10.7 Termination and Release Agreement between DalBello Sport S.R.L. *
and Snow Runner (USA) Inc. effective September 3, 1993
(Incorporated by reference to Exhibit 10.7 to Registration
Statement on Form SB-2, Registration No. 33-74240C).
10.8 Termination and Release Agreement between DalBello Sport S.R.L. *
and Snow Runner (Properties) Inc. effective September 3, 1993
(Incorporated by reference to Exhibit 10.8 to Registration
Statement on Form SB-2, Registration No. 33-74240C).
10.9 Inter-company Assignment and Bill of Sale between Snow Runner *
(USA) Inc. and Snow Runner (Properties) Inc. effective September
3, 1993 (Incorporated by reference to Exhibit 10.9 to
Registration Statement on Form SB-2, Registration No.
33-74240C).
10.10 License Agreement between Snow Runner (Properties) Inc. and Snow *
Runner (USA) Inc. effective September 3, 1993 (Incorporated by
reference to Exhibit 10.10 to Registration Statement on Form
SB-2, Registration No. 33-74240C).
10.11 License Agreement between Hannes Jacob and Allrounder *
Realization SA and Snow Runner (USA) Inc. dated June 26, 1992
(Incorporated by reference to Exhibit 10.11 to Registration
Statement on Form SB-2, Registration No. 33-74240C).
10.12 Amended and Restated Distribution Agreement between Snow Runner *
(USA) Inc. and DalBello Sport S.R.L. dated June 26, 1992
(Incorporated by reference to Exhibit 10.12 to Registration
Statement on Form SB-2, Registration No. 33-74240C).
10.13 Stock Purchase Agreement between Snow Runner (USA) Inc. and *
HAIFinance Corp. dated July 25, 1992 (Incorporated by reference
to Exhibit 10.13 to Registration Statement on Form SB-2,
Registration No. 33-74240C).
</TABLE>
<PAGE> 36
<TABLE>
<S> <C> <C>
10.14 Assignment and Assumption Agreement between Snow Runner (USA) *
Ltd. and Snow Runner Holdings, Inc. dated July 23, 1992
(Incorporated by reference to Exhibit 10.14 to Registration
Statement on Form SB-2, Registration No. 33-74240C).
10.15 SnowRunner, Inc. Stock Option Plan effective January 1994 *
(Incorporated by reference to Exhibit 10.15 to Registration
Statement on Form SB-2, Registration No. 33-74240C).
10.16 Lease between the Company and Midtown Commons dated September *
29, 1993 (Incorporated by reference to Exhibit 10.16 to
Registration Statement on Form SB-2, Registration No.
33-74240C).
10.17 Lease between the Company and McCann Developments dated *
September 29, 1993 (Incorporated by reference to Exhibit
10.17 to Registration Statement on Form SB-2, Registration
No. 33-74240C).
10.18 Shareholder Agreement by and among Snow Runner (USA) Inc., Nigel *
Alexander, Steven Clarke, Harbour Settlement, HAIFinance Corp.
dated July 28, 1992 (Incorporated by reference to Exhibit 10.18
to Registration Statement on Form SB-2, Registration No.
33-74240C).
10.19 Reorganization Agreement by and among Snow Runner (USA) Ltd., *
Snow Runner Holdings, Inc., Nigel Alexander, Steven Clarke and
Harbour Settlement dated July 23, 1992 (Incorporated by
reference to Exhibit 10.19 to Registration Statement on Form
SB-2, Registration No. 33-74240C).
10.20 Amendment to Limited Partnership Agreement by and among Snow *
Runner Holdings, Inc., Nigel Alexander, Steven Clarke and
Harbour Settlement dated July 23, 1992 (Incorporated by
reference to Exhibit 10.20 to Registration Statement on Form
SB-2, Registration No. 33-74240C).
10.21 Option Agreement by and between Nigel Alexander and Steven *
Clarke dated July 28, 1992 (Incorporated by reference to Exhibit
10.21 to Registration Statement on Form SB-2, Registration No.
33-74240C).
10.22 Employment Agreement dated January 1, 1994 for John Sundet *
(Incorporated by reference to Exhibit 10.22 to Registration
Statement on Form SB-2, Registration No. 33-74240C).
10.23 Employment Agreement dated January 1, 1994 for Nigel Alexander *
</TABLE>
<PAGE> 37
<TABLE>
<S> <C> <C>
(Incorporated by reference to Exhibit 10.23 to Registration
Statement on Form SB-2, Registration No. 33-74240C).
10.24 Employment Agreement dated January 1, 1994 for Mary Horwath *
(Incorporated by reference to Exhibit 10.24 to Registration
Statement on Form SB-2, Registration No. 33-74240C).
10.25 Employment Agreement dated January 1, 1994 for Steven Clarke *
(Incorporated by reference to Exhibit 10.25 to Registration
Statement on Form SB-2, Registration No. 33-74240C).
10.26 Loan Agreement by and between Snow Runner (USA), Inc. and *
HAIFinance Corp. dated January 7, 1994 (Incorporated by
reference to Exhibit 10.26 to Registration Statement on Form
SB-2, Registration No. 33-74240C).
10.27 Term Note to HAIFinance Corp. dated January 7, 1994 *
(Incorporated by reference to Exhibit 10.27 to Registration
Statement on Form SB-2, Registration No. 33-74240C).
10.28 Existing Loans Note to HAIFinance Corp. dated January 7, 1994 *
(Incorporated by reference to Exhibit 10.28 to Registration
Statement on Form SB-2, Registration No. 33-74240C).
10.29 Bridge Financing Agreement by and between Snow Runner (USA), *
Inc. and HAIFinance Corp. dated January 7, 1994, with
Registration Rights Agreement (Incorporated by reference to
Exhibit 10.29 to Registration Statement on Form SB-2,
Registration No. 33-74240C).
10.30 Security Agreement dated January 7, 1994 made by Snow Runner *
(USA), Inc. to HAIFinance Corp. (Incorporated by reference to
Exhibit 10.30 to Registration Statement on Form SB-2,
Registration No. 33-74240C).
10.31 Subordinated Promissory Note dated September 16, 1993 to Seaton *
Place Nominees, Ltd. (Incorporated by reference to Exhibit 10.31
to Registration Statement on Form SB-2, Registration No.
33-74240C).
10.32 Amended and Restated Shareholders Agreement dated January 7, *
1994 by and among Snow Runner (USA) Inc., Nigel Alexander,
Steven Clarke, Harbour Settlement, HAIFinance Corp.
(Incorporated by reference to Exhibit 10.32 to Registration
Statement on Form SB-2, Registration No. 33-74240C).
10.33 Credit and Security Agreement dated June 30,1995 between the *
Company and Norwest Credit, Inc.
10.34 Revolving Note for $2,000,000 dated June 30, 1995 between the *
Company and Norwest Credit, Inc.
10.35 Patent and Trademark Security Agreement dated June 30, 1995 *
between the Company and Norwest Credit, Inc.
10.36 Consulting Agreement with Douglas Ellenoff dated January 1, 1995. *
</TABLE>
<PAGE> 38
<TABLE>
<S> <C> <C>
10.37 Consulting Agreement with Stephen C. Martin dated January 1, *
1995.
10.38 Market Representative Agreement, dated July 24, 1996, between *
the Company and Japan Business Link, Inc.
10.39 Agency Services Agreement, dated July 26, 1996, between the *
Company and Williams Television Time, Inc.
10.40 Telesales Service Agreement, dated August 12, 1996, between the *
Company and Icon Health & Fitness, Inc.
10.41 Agreement, dated September 18, 1996, between the Company and *
Distribution Systems and Services Corporation
10.42 Agreement with Berghaus Limited (Incorporated by reference to *
Exhibit 10.42 to Form 10-KSB, filed February, 2000).
10.43 Agreement with Oxbow, S.A. dated January 24, 2000 *
10.44 Agreement with Metzler Design Brillenvertrieb GmbH, dated February 6, 2000 *
10.45 Agreement with Gaastra International Sportswear, B.V., dated June 1, 2000 *
13 Portions of 1996 Annual Report to Shareholders *
21 List of Subsidiaries (Incorporated by reference to Exhibit 21 to Registration *
Statement on Form SB-2, Registration No. 33-74240C).
27 Financial data schedule
</TABLE>
----------
* Incorporated by reference to a previously filed exhibit or report.
