<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1998
Commission file number 1-12850
XDOGS.COM, INC.
Formerly known as The Sled Dogs Company
(Exact name of small business issuer as specified in its charter)
80 SOUTH EIGHTH STREET, SUITE 3660
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: 1,954,857 shares of Common
Stock, $.01 par value per share, outstanding as of September 30, 1998. All
references to our shares include the effect of a prior 54 for 1 reverse split of
our common stock.
<PAGE> 2
XDOGS.COM,INC.
FORM 10-QSB QUARTERLY REPORT FOR THE QUARTER ENDED
September 30, 1998
TABLE OF CONTENTS
Part I - Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - September 30, 1998 and March 31, 1998
Condensed Consolidated Statements of Operations for the Six Months
ended September 30, 1998 and 1997
Condensed Consolidated Statements of Cash Flows for the Six Months
ended September 30, 1998 and 1997
Notes to Condensed Consolidated Financial Statements - September 30,
1998
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Part II - Other Information
Item 1. Legal Proceedings
Item 3. Defaults on Senior Securities
Item 6. Exhibits and Reports on Form 8-K
<PAGE> 3
Xdogs.com, Inc.
(fka The Sled Dogs Company)
Balance Sheet
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Unaudited
September March
30, 1998 31, 1998
------------ ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 10,652 $ 6,424
Other Receivables 5,500 0
------------ ------------
Total Current Assets 16,152 6,424
------------ ------------
Property and equipment 0 521,933
Less Accumulated Depreciation 0 (339,008)
------------ ------------
Net Property and Equipment 0 182,925
------------ ------------
TOTAL ASSETS $ 16,152 $ 189,349
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Bank Overdraft $ 0 $ 18,748
Other accrued liabilities 49,879 7,374
Debtor-in-possession note payable 328,000 328,000
------------ ------------
Total current liabilities 377,879 354,122
Liabilities Subject to Compromise 405,001 3,188,123
------------ ------------
TOTAL LIABILITIES 782,880 3,542,245
------------ ------------
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 1,954,857 shares at
September 30, 1998, and 250,244 shares
at March 31, 1998 19,548 2,502
Additional paid-in capital 0 13,729,268
Accumulated deficit (173,031) (17,084,666)
Common Stock Paid for but not Issued 126,055 0
Discount on Shares Issued (739,300) 0
TOTAL SHAREHOLDERS' EQUITY (766,728) (3,352,896)
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 16,152 $ 189,349
============ ============
</TABLE>
* restated to reflect 54 to 1 reverse split and recapitalization
See Accompanying Notes To These Unaudited Financial Statements.
<PAGE> 4
Xdogs.com, Inc.
(fka The Sled Dogs Company)
Unaudited Statement Of Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
3 Months 3 Months
Ended Ended
September September
30, 1998 30, 1997
--------- ---------
<S> <C> <C>
Revenue: $ 547 $ 10,355
Cost of goods sold 0 90,079
--------- ---------
Gross margin 547 (79,724)
--------- ---------
Costs and expenses:
General and administrative 173,578 332,624
Sales and marketing 0 61,439
Research and development 0 10,391
--------- ---------
Total costs and expenses 173,578 404,454
--------- ---------
(Loss) From Operations (173,031) (484,178)
Other income (expense)
Interest expense 0 (48,807)
Interest income 0 0
--------- ---------
Total other income (expense) 0 (48,807)
--------- ---------
Net (Loss) (173,031) (532,985)
========= =========
Basic (Loss) Per Common Share $ (0.21) $ (2.13)
========= =========
Weighted Average Common Shares Outstanding* 818,448 250,244
========= =========
</TABLE>
* restated to reflect 54 to 1 reverse split
See Accompanying Notes To These Unaudited Financial Statements.
<PAGE> 5
Xdogs.com, Inc.
(fka The Sled Dogs Company)
Unaudited Statement Of Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
6 Months 6 Months
Ended Ended
September September
30, 1998 30, 1997
----------- -----------
<S> <C> <C>
Revenue: $ 11,487 $ 65,563
Cost of goods sold 0 63,644
----------- -----------
Gross margin 11,487 1,919
----------- -----------
Costs and expenses:
General and administrative 183,940 751,663
Sales and marketing 0 69,370
Research and development 0 27,050
----------- -----------
Total costs and expenses 183,940 848,083
----------- -----------
Income (Loss) from operations (172,453) (846,164)
Other income (expense)
Interest expense 0 (87,146)
Interest income 0 35
----------- -----------
Total other income (expense) 0 (87,111)
----------- -----------
Income (Loss) before extraordinary item (172,453) (933,275)
Extraordinary gain on prepetitioned liabilities 2,564,734 0
----------- -----------
Net Income (Loss) $ 2,392,281 $ (933,275)
=========== ===========
Basic and diluted income (loss) per common share:
Income (loss) before extraordinary items (0.21) (3.73)
Extraordinary item 3.13 0.00
----------- -----------
Net income (loss) $ 2.92 $ (3.73)
=========== ===========
Weighted Average Common Shares Outstanding* 818,448 250,244
=========== ===========
</TABLE>
* restated to reflect 54 to 1 reverse split
See Accompanying Notes To These Unaudited Financial Statements.
<PAGE> 6
Xdogs.com, Inc.
(fka The Sled Dogs Company)
Unaudited Statement Of Cash Flow
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
6 Months 6 Months
Ended Ended
September September
30, 1998 30, 1997
----------- -----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income (Loss) $ 2,392,281 $ (933,275)
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Extraordinary item (2,564,734) 0
Depreciaton and amortization 32,369 105,170
(Increase) Decrease in accounts receivable $ (5,500) 151,511
Decrease in inventories 0 16,090
Decrease in prepaid expenses 0 21,527
(Decrease) in accounts payable 0 (2,640)
Increase (Decrease) in other accrued expenses 42,505 (241,825)
----------- -----------
Net Cash Flows (Used In) Operations (103,079) (883,442)
----------- -----------
Cash Flows From Investing Activities:
Purchase of property and equipment 0 (41,645)
Acquisition of patents and trademarks 0 (6,307)
Sale of Assets 0 0
----------- -----------
Net Cash Flows (Used In) Investing Activities: 0 (47,952)
----------- -----------
Cash Flows From Financing Activities:
Cash in Excess of Bank Balance (18,748) 0
Net proceeds from sale of common stock 126,055 0
Net proceeds from convertible subordinated debt 0 861,250
Net proceeds from short term notes 0 150,000
Net proceeds from warrants issued 0 56
Payments on line of credit 0 (83,579)
----------- -----------
Net Cash Flows Provided By Financing 107,307 927,727
----------- -----------
Net Increase (Decrease) In Cash and cash equivalents 4,228 (3,667)
Cash and cash equivalents at beginning of period 6,424 11,542
----------- -----------
Cash and cash equivalents at end of period $ 10,652 $ 7,875
=========== ===========
Supplementary Disclosure Of Cash Flow Information:
Interest Paid $ 0 $ 53,361
=========== ===========
</TABLE>
See Accompanying Notes To These Unaudited Financial Statements.
<PAGE> 7
Xdogs.Com, Inc.
(fka The Sled Dogs Company)
Notes To Unaudited Financial Statements
For The Six Month Period Ended September 30, 1998
Note 1 - Unaudited Financial Information
The unaudited financial information included for the three and six month interim
period ended September 30, 1998 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 six month period ended September 30, 1998 are not necessarily
indicative of the results expected for the fiscal year ended March 31, 1999.
Note 2 - Bankruptcy Protection
On November 4, 1997, Xdogs.Com, Inc. (fka The Sled Dogs 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 affective 30 days later. During the
period from November 4, 1997, through June 30, 1998, the Company operated as a
debtor in possession.
Note 3 - Extraordinary Item
On June 30, 1998 the Company incurred an Extraordinary gain of $2,564,734 on the
discharge of prepetition liabilities.
Note 4 - Financial Statements
Management has elected to omit substantially all footnotes relating to the
condensed financial statements of the Company included in the report. For a
complete set of footnotes, reference is made to the Company's Report on Form
10K-SB for the year ended March 31, 1998 as filed with the Securities and
Exchange Commission and the audited financial statements included therein
<PAGE> 8
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.com,
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, 1998.
RESULTS OF OPERATIONS
On November 5, 1997 we filed for protection under Chapter 11 of the
United States Bankruptcy Code. This filing permitted us to obtain Debtor In
Possession (DIP) financing from Norwest Business Credit, Inc. (Norwest). We
obtained $150,000 in DIP financing from Norwest on November 12, 1997. These
funds allowed us to implement a direct-sales program that is targeted at our
former primary market of aggressive in-line skaters, at significantly lower
prices than in past years. We changed our fiscal year end to March 31, effective
March 31, 1997. We emerged from Bankruptcy as of June 30, 1998.
As of September 30, 1998, we had current assets and total assets of
$16,152. This compares with current assets of $6,424 and total assets of
$189,349 as of March 31, 1998. We had outstanding liabilities subject to
compromise of $405,001, which was significantly lower than liabilities subject
to compromise of $3,188,123 as of March 31, 1998.
For the three months ended September 30, 1998, we had total revenue of
$547. We had no cost of goods sold because of previous write downs of inventory.
We had a net loss from operations of $173,031.We had a loss per share of $0.21.
For the six months ended September 30, 1998, we had revenue of $11,487.
We had no cost of goods sold because of previous write downs of inventory. We
had a net loss from operations of $172,453. The compromise of claims under our
reorganization gave us an extraordinary gain of $2,564,734. We had a basic loss
for the six month period per share of $0.21 before the extraordinary gain. With
the extraordinary gain, we showed a per share gain of $2.92.
Our plan for the fiscal year ended March 31, 1999 is to continue the
restructuring of our operations, focus on developing our e-commerce presence,
and finalize our business plan.
LIQUIDITY AND CAPITAL RESOURCES
Our cash and cash equivalents were $10,652 on September 30, 1998,
compared to a negative $7,875 on September 30, 1997. During the fiscal quarter
ended September 30, 1998, our investing activities used no cash.
<PAGE> 9
We sold $126,055 worth of common shares during the period to finance
our activities. As of September 30, 1998, we were essentially insolvent and
working toward a reorganization of our operations.
FORWARD-LOOKING STATEMENTS CONTAINED IN THIS FORM 10-QSB ARE MADE PURSUANT TO
THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995. ALL FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES. CERTAIN
IMPORTANT FACTORS COULD CAUSE RESULTS TO DIFFER MATERIALLY FROM THOSE
ANTICIPATED BY SOME STATEMENTS MADE IN THIS FORM 10-QSB. AMONG THE FACTORS THAT
COULD CAUSE RESULTS TO DIFFER MATERIALLY ARE THE FOLLOWING: LACK OF AVAILABILITY
OF FINANCING; INABILITY TO CONTROL COSTS OR EXPENSES; MANUFACTURING AND
DISTRIBUTION PROBLEMS; AND LACK OF MARKET ACCEPTANCE OF THE COMPANY'S PRODUCTS.
REFERENCE IS ALSO MADE TO THE RISK FACTORS CONTAINED IN THE COMPANY'S
REGISTRATION STATEMENT ON FORM S-3 (NO. 33-80875), WHICH ARE INCORPORATED HEREIN
BY REFERENCE.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
On November 5, 1997, The Sled Dogs Company filed for protection under Chapter 11
of the United States Bankruptcy Code.
This Bankruptcy Case entitled In re: The Sled Dogs Company, United States
Bankruptcy Court File Number 97-47641 RLK. The matter is on file at the United
States Courthouse in Minneapolis, MN. We emerged from Bankruptcy as of June 30,
1998.
ITEM 3 - DEFAULTS ON SENIOR SECURITIES
The Legal Proceedings described in Item 1 constituted a default on the $355,000
in Senior Secured Notes sold by us in 1997. The amount in default includes the
principal amount of the of the senior secured notes plus accrued interest in the
amount of $18,717.
The Legal Proceedings described in Item 1 constituted a default on the $812,500
in Convertible Subordinated Debentures sold by us in 1997. The amount in default
includes the principal amount of the debentures plus accrued interest in the
amount of $57,515.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
27 Financial Data Schedule
b. No reports on Form 8-K
<PAGE> 10
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 18, 2000
/s/ Kent Rodriguez
----------------------------------
Kent Rodriguez, Chairman and Chief
Executive Officer
(Principal Executive Officer)
<PAGE> 11
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 10,652
<SECURITIES> 0
<RECEIVABLES> 5,500
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,152
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,152
<CURRENT-LIABILITIES> 377,879
<BONDS> 0
0
0
<COMMON> 19,548
<OTHER-SE> (786,276)
<TOTAL-LIABILITY-AND-EQUITY> 16,152
<SALES> 11,487
<TOTAL-REVENUES> 11,487
<CGS> 0
<TOTAL-COSTS> 183,940
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (172,453)
<INCOME-TAX> 0
<INCOME-CONTINUING> (172,453)
<DISCONTINUED> 0
<EXTRAORDINARY> 2,564,734
<CHANGES> 0
<NET-INCOME> 2,392,281
<EPS-BASIC> 2.920
<EPS-DILUTED> 2.920
</TABLE>
