Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
(X) Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended June 30, 1999
OR
( ) Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to
-------- -------
Commission File Number 0-24372
- ------------------------------
Sundog Technologies, Inc.
(Name of small business issuer in its charter)
The Thorsden Group, Ltd.
(Former name of small business issuer)
Delaware 33-0611746
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
4505 South Wasatch Blvd., Suite 340
Salt Lake City, Utah 84124
(Address of principal executive offices and Zip Code)
(801) 424-0044
(Registrant's telephone number, including Area Code)
Check whether the registrant: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports) and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
--- ---
As of June 10, 1999, there were issued and outstanding 22,560,234 shares of the
Company's Common Stock, par value $.001 per share.
Transitional Small Business Disclosure Format (check one): Yes No X
----- -----
<PAGE>
<TABLE>
Table of Contents
<CAPTION>
Page No.
<S> <C> <C>
Part I. Financial Information...............................................................................3
1. Financial Statements
Condensed Consolidated Balance Sheet as of June 30, 1999(unaudited) and
March 31, 1999 (audited)..................................................................3
Unaudited Condensed Consolidated Statements of Income for the three and nine months ended
June 30, 1999 and 1998....................................................................4
Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended
June 30, 1999 and 1998...................................................................5
Notes to Unaudited Condensed Consolidated Financial Statements.....................................6
2. Management's Discussion and Analysis or Plan of Operation..........................................7
Part II. Other Information................................................................................15
</TABLE>
Page 2 fo 18
<PAGE>
<TABLE>
PART I
ITEM 1 - FINANCIAL STATEMENTS
Sundog Technologies, Inc.
(A Development Stage Company)
Consolidated Condensed Balance Sheets
<CAPTION>
June 30 March 31
1999 (Unaudited) 1999
----------- -----------
<S> <C> <C>
ASSETS
Current Assets
Cash and Cash Equivalents $ 1,131,625 $ 2,215,620
Marketable Securities 2,280 3,188
Accounts Receivable 5,744 51,200
Prepaid Expenses 49,539 25,550
Intercompany
----------- -----------
Total Current Assets 1,189,188 2,295,557
----------- -----------
Property and Equipment 459,501 380,406
Less: Accumulated Depreciation 68,479 52,146
----------- -----------
Property and Equipment, Net 391,022 328,260
----------- -----------
Other Assets
Deposits 106,968 105,605
Intangible Assets 70,322 59,983
----------- -----------
Total Other Assets 177,290 165,588
----------- -----------
TOTAL ASSETS $ 1,757,500 $ 2,789,406
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 167,664 $ 140,748
Deferred Income on Maintenance Contracts -- --
Equipment Lease Obligations 33,784 38,590
Accrued Liabilities 77,032 75,822
----------- -----------
Total Current Liabilities 278,480 255,160
----------- -----------
Equipment Lease Obligations 22,756 29,416
Other Current Liabilities -- --
Intercompany
----------- -----------
Total Liabilities 301,236 284,576
----------- -----------
Stockholders' Equity
Common Stock 22,560 22,530
Additional paid in Capital 5,752,330 5,557,526
Accumulated (Deficit) (4,303,964) (3,061,472)
Accumulated unrealized loss on investments (14,662) (13,754)
----------- -----------
Total Stockholders' Equity 1,456,264 2,504,830
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,757,500 $ 2,789,406
----------- -----------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page 3 of 18
<PAGE>
Sundog Technologies, Inc.
(A Development Stage Company
Consolidated Condensed Statement of Income (Unaudited)
From Inception
Three Months Ended 6/11/92
6/30/99 6/30/98 to June 30, 1999
----------- ----------- -----------
Net Revenues 5,689 6,250 225,127
Costs and Expenses:
Cost of Sales 11,542 851 63,408
Research and Development 554,946 197,638 2,043,069
Marketing, Admin & Sales 699,751 246,113 2,498,068
Operating Costs and Expenses 1,266,239 444,602 4,604,545
Operating (Loss) (1,260,550) (438,352) (4,379,418)
Interest Income 20,110 7,803 91,474
Interest Expense (2,053) (1,236) (11,937)
Other Expense -- -- (4,356)
Other Income -- 100 270
----------- ----------- -----------
Net (Loss) (1,242,493) (431,685) (4,303,967)
=========== =========== ===========
Net (Loss) per share (0.055) (0.02) (0.19)
Weighted average number
Of Shares Outstanding 22,560,234 20,207,625 22,560,234
----------- ----------- -----------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page 4 of 18
<PAGE>
<TABLE>
Sundog Technologies, Inc.
(A Development Stage Company)
Consolidated Condensed Statement of Cash Flows (Unaudited)
<CAPTION>
CUMULATIVE FROM
THREE MONTHS ENDED INCEPTION
June 30 June 30 June 11, 1992
1999 1998 To June 30, 1999
----------- ----------- -----------
<S> <C> <C> <C>
Cash Flows (used by) Operating Activities:
Net (Loss) (1,242,493) (431,685) (4,303,967)
Adjustments to reconcile net income to
net cash used for operating activities:
Depreciation 19,059 8,779 71,235
Changes in Assets and Liabilities:
Increase Accounts Receivable 45,456 2,063 (5,744)
Prepaid Expenses (23,989) -- (49,539)
Accounts Payable 26,917 26,020 167,665
Deferred Income -- (6,250) --
Accrued Liabilities 1,210 (39,264) 77,032
----------- ----------- -----------
Net Cash (Used By) Operating Activities (1,173,840) (440,337) (4,043,318)
----------- ----------- -----------
Cash Flows (Used for) Investing Activities:
Additions to Equipment (81,821) (1,952) (462,257)
Disposition of Marketable Securities -- 299,322 823,668
Lease Deposits (1,362) -- (106,967)
Patent/Trademark Costs (10,339) (1,277) (70,322)
----------- ----------- -----------
Net Cash Used for Investing Activities (93,522) 296,093 184,122
----------- ----------- -----------
Cash Flows Provided By Financing Activities:
Proceeds from Private Placement of Shares 194,834 150,252 4,933,280
Increase in Lease Obligations (11,467) (4,958) 56,541
Cash Contribution -- 0 1,000
----------- ----------- -----------
Net Cash Provided By Financing Activities 183,367 145,295 4,990,821
----------- ----------- -----------
Net Increase/(Decrease) in Cash and Cash Equivalents (1,083,995) 1,051 1,131,625
----------- ----------- -----------
Beginning Cash Balance 2,215,620 --
----------- ----------- -----------
Ending Cash Balance 1,131,625 1,051 1,131,625
----------- ----------- -----------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page 5 of 18
<PAGE>
Sundog Technologies, Inc.
Notes to Consolidated Financial Statements
Preliminary Note
The Company has prepared the accompanying condensed consolidated financial
statements, without audit, according to the applicable regulations of the
Securities and Exchange Commission. Certain information and disclosures normally
included in those financial statements prepared according to generally accepted
accounting principles have been condensed or omitted. The Company believes that
the following disclosures are adequate to present clear, unequivocal
information. These condensed consolidated financial statements reflect all
adjustments (consisting only of normal recurring adjustments) that, in the
Company's opinion, are necessary to present fairly the financial position and
results of operations of the Company for the periods presented. We suggest that
these condensed consolidated financial statements are read in conjunction with
the consolidated financial statements and the notes thereto included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended March 31, 1999.
Note 1 Concentration
The Company is still in the development stage, and its revenues to date are from
two customers.
Note 2 Intangible Assets
The Company has applied for patent and trademark protection for its proprietary
software and brand names and has expended $53,997 for patent rights and $16,345
for trademark rights. These expenses are primarily for professional services in
connections with the applications. The application for registration of these
patents and trademarks are still in the process of being granted, but recent
communications with the Patent and TradeMark Office suggests a favorable
outcome, although no assurance can be given as to any such outcome. The Company
will begin to amortize these assets upon completion of patent registration or at
the point when the products begin to generate revenue.
Note 3 Subsidiary Company
The Board of Directors created a subsidiary, Qui Vive, Inc., on June 5, 1998,
for the development of a new product. This new entity has required the
restructuring of current management as well as the recruitment of new personnel.
The team members will likely receive equity ownership interests in Qui Vive,
Inc. as part of their compensation for successfully developing the project.
Note 4 Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers cash on
deposit in the bank and other unrestricted investments with original maturities
of three months or less at the time of purchase to be cash equivalents.
Page 6 of 18
<PAGE>
Item 2 MANAGEMENT'S DISCUSSION and Analysis or Plan of Operation
The following discussion should be read in conjunction with the consolidated
financial statements and the notes thereto appearing elsewhere in this Quarterly
Report on Form 10-QSB.
Overview
Sundog Technologies, Inc. ("Sundog" or the "Company") is a Delaware corporation
organized in 1992 for the purpose of seeking and acquiring business
opportunities. The Company was formerly known as The Thorsden Group, Ltd. and
changed its name to Sundog Technologies, Inc. in April 1999. In October 1997,
the Company acquired Arkona, Inc., a Utah corporation ("Arkona"), through a
wholly owned subsidiary corporation in a reverse triangular merger, accounted
for as a purchase. Arkona's predecessor, Arkona LLC, a Utah limited liability
company, was founded in September 1996 and had limited business operations prior
to the acquisition. On June 5, 1998 the Company formed a new subsidiary company,
Qui Vive Inc., in Delaware ("Qui Vive").
The core business of the Company is developing, marketing, and selling software
products for use in portable and distributed network computing and secure e-mail
applications. Business is conducted through its subsidiaries, Arkona and Qui
Vive.
Arkona
During the quarter ended June 30, 1999, Arkona continued rapid enhancement of
its core product Universal Update. Universal Update version 1.5 was released
during Sun Microsystems JavaOne(TM) tradeshow and was delivered to prospects for
evaluation. This release marks a substantial improvement over version1.0 adding
a simplified interface for administrators, new application "adapters" for
accessing a variety of corporate data sources, and documented programming
interfaces making it easier for technology companies to license and embed the
Universal Update technology.
Also in June 1999, Arkona's recently formed professional service group made a
series of new training courses available to customers. This group provides
Arkona's customers with both training and consulting in business process
improvement (BPI), a service used to drive demand for Arkona's software products
and a prerequisite to ensure complete client satisfaction. Additionally, courses
were added covering Knowledge Management best practices, a service closely tied
to BPI. This quarter the professional service group signed additional contracts
with the U.S. Department of Defense, DFAS division, the DC Metro Authority, and
acted as subcontractor for training courses at Intermountain.
Arkona's Solutions
Arkona provides both product and service solutions to its customers to
facilitate enterprise information sharing. Arkona's core software technology,
Universal Update, provides a flexible information brokering technology designed
to facilitate information sharing between disparate business systems. Arkona's
professional service group provides complementary training and consulting,
facilitating both the IT strategy to implement Universal Update and information
and process redesign to facilitate information sharing at the human level.
Page 7 of 18
<PAGE>
Universal Update
Universal Update is an information broker for the extended enterprise. It
facilitates the collection, transformation, and exchange of vital information
between disparate business systems. Rapid setup and easy administration
eliminate costly integration activities and provide a simpler and more pragmatic
approach for sharing data throughout the enterprise.
Unites islands of information.
Universal Update facilitates the collection, transformation, and exchange of
vital information between business systems. It allows companies to share
previously untapped information with employees, partners and customers.
Does away with programming, saving time and money.
Universal Update does away with complex and expensive transaction- and
event-based implementation. Its dynamic architecture allows for rapid setup and
promotes a healthy, adaptive enterprise.
Eliminates barriers to greater business value.
Universal Update's unique, non-event-driven architecture facilitates
opportunistic, non-intrusive data integration. This key difference dissolves
political issues and keeps integration projects from becoming major IT
productions.
Sundog Professional Services
Sundog provides Business Process Improvement (BPI) and related Knowledge
Management services through its Professional Services group. BPI helps managers
identify how their organizations must change to meet the challenges of tomorrow
and provides a road map for implementing that change. It is a rigorous and
structured approach for fundamentally rethinking and redesigning how an
organization meets its objectives. It gives managers the analytical tools and
strategies to question current management assumptions about work practices and
procedures. BPI allows managers to decide if a practice is necessary, and if so,
whether it should be performed in-house or outsourced. It also includes methods
to evaluate best practices and future technology requirements.
Sundog's approach to BPI ensures that clients have the support necessary to
revalidate their missions, set a visionary course for the future, and
reconfigure their operations to create an enterprise that works better and costs
less. To that end, Sundog provides comprehensive methods, tools, advisory
services, and education concerning the disciplines of BPI and Knowledge
Management.
Sundog' Professional Services provide a perfect complement to Universal Update.
While Universal Update is designed to simplify the integration of information
and processes at a technology level, Sundog's Professional Services provides a
roadmap for integration at a business level. Together Universal Update and
Professional Services form a complete business integration package.
Page 8 of 18
<PAGE>
BPI Services include the following:
o Strategic Planning: define the domain, conduct relevant analysis, and
identify major drivers and opportunities for improvement in functional
areas.
o Enterprise Development and Modeling Services: assist clients to develop
functional area dna enterprise level data models that improve leaders'
understanding area of responsibility.
o Functional Process Assessments: utilize BPI techniques and tools to review
and validate the design, development, and implementation of functional
process improvements.
o Functional Architectures: assist client in defining the scope of the
functional area and its functional activities; current and future methods,
management processes, and data structures; objectives, performance
measures, and targets to support recommendations.
o Process and Data Baselines: reviews existing methods, management processes,
and data structures to identify process and data improvements.
o Activity Modeling: provides a clear picture of improvement opportunities
and non-value added processes.
o Activity-Based Analysis and Activity-Based Costing: provides basis for
developing recommendations.
o Business Rule Development: documents the information requirements of
functional activities.
o Evaluation of Alternatives and Selection of Process, Data, and Information
System Improvements.
o Requirements Prototyping: offers solutions for current and future
information management requirements.
Integration of product & services
Sundog's Professional Services provides a perfect complement to Universal
Update. While Universal Update is designed to simplify the integration of
information and processes at a technolgy level, Professional Services provides a
roadmap for integration at the business level. Together Universal Update and
Professional Services from a complete business integration package.
Benefit to Customers
Captures Business Knowledge
Business Process Improvement and its business modeling techniques clearly
document business processes, operating rules, information needs, and resource
requirements-mission critical information that is typically undocumented and
known only to a few domain experts. Once documented in a business model, this
information is used to assess requirements for improvements in enterprise
business processes and information systems, correctly appraise the impact of
change at any point in the business, and evaluate "what if" scenarios.
Page 9 of 18
<PAGE>
Creates a Common Vision
Just as an experienced contractor would never consider building a house without
a blueprint, large IT projects demand a single plan from which everyone works.
Business models developed by Sundog's analysts provide key decision-makers with
an "easy-to understand," graphical blueprint of the business. The models enable
executives, functional managers, IT staff, and engineers to work from a common
plan toward a common objective. This blueprint speeds system implementation,
increases user satisfaction, and helps companies avoid costly technology
mistakes.
Manages Change
Effective business models provide a solid architectural foundation that is
resilient to change. Models are independent of technology. Focusing on "what a
business does" rather than on "the software used" improves technology
evaluations, enables impact analysis, and eliminates non-value-added processes
and systems. This approach more accurately describes the expected behavior of
the current business system and clearly identifies gaps and overlaps in business
functions.
The Arkona Solutions
UNIVERSAL UPDATE(TM)
The Universal Update Client and Server represent Arkona's core technology. These
modules work as embedded components within specific industry solutions.
Customers and solution providers may choose to license the Universal Update
technology for use in their own products, or they can work with Arkona to build
more specific vertical solutions.
ARKONA ONSITE(TM) FIELD SERVICE
Arkona OnSite Field Service was the Company's first industry solution. It used
an earlier iteration of our Universal Update enabling technology which was
custom designed specifically for one customer's field service engineers to gain
access to critical customer, product, and inventory information even when
disconnected at the customer's site. Using this product, these field service
workers gather data from a legacy database and store a replica of the database
in a laptop at the customer's site. They can then access information with the
OnSite product without being connected to a network. Later, when network
connection is conveniently available, stored reports and other information can
be transmitted. The system is useful where telephones or network ports are not
readily available or where wireless networking technologies are not practical or
permitted (such as hospitals). The OnSite product was developed in collaboration
with OEC Medical Systems, Inc. ("OEC"), an unaffiliated customer of Arkona.
Qui Vive
The digital revolution has evolved around a simple notion: that information
should be permanent. Unlike other media formats, digital information (e-mail)
can be stored forever, recovered at will, copied with ease, and shared anywhere.
Unfortunately, these attributes can also give digital information a more
sinister side. E-mail can just as easily be saved, copied, recovered, and
redistributed by anyone at any time with or without consent and frequently
page 10 of 18
<PAGE>
without knowledge. Once an electronic e-mail message has been sent, an author
loses all control of his or her words. According to industry analyst Esther
Dyson, the challenge is not to keep everything secret, but to limit misuse of
such information.?
Qui Vive is developing a solution to these problems, the purpose of which is to
facilitate communication and give content control back to the author. The
project is presently in the design and architecture phase of developing an
enhanced e-mail product. When the first version of the product is launched, we
expect it to give e-mail users the chance to direct:
o how their words will be released,
o who can see them,
o how they can be redistributed, and
o if they can be printed, copied, or saved.
We cannot assure that the safeguards of enhanced e-mail will not be abused or
circumvented by someone with the requisite degree of computer sophistication and
a malicious motive. However, subsequent versions of the product will continue to
raise the bar against potential abuse and compromise of security that is so
easily breached, often accidentally, with current systems.
The Company believes that the level of security embedded in the first
implementation will be sufficient to address the needs of approximately 80% of
the market. Enhancements to increase security and further simplify the product`s
usability will be added over time.
Key Features
The first version of the product is expected to include the following key
features:
Content Restrictions. Authors can decide whether their e-mail messages can
be printed, copied, or saved by the recipient
Forwarding Restrictions. Authors can prohibit recipients from forwarding
their e-mail in whole or in part.
Lifespan Limits. Authors can configure messages to self-destruct after a
predefined period or be accessed only at certain times.
Dynamic Self-Destruction. Authors can set messages to destroy themselves as
they are read.
Persistence Limits. Authors can define the number of times any message can
be viewed
PHASE 1 FUNCTIONALITY
The key features listed above will include the following functionality:
E-mail is created using the sender's existing e-mail software. Currently
being designed as an add-on to existing e-mail software, the enhanced
e-mail will be sent from any Java-enabled e-mail client, including e-mail
products from Netscape, Microsoft, Lotus, and others. Once an e-mail
message has been authored, the user selects appropriate security and
auditing options from a simple, easy-to-use GUI or relies on either the
user-preset or embedded defaults.
The e-mail message is secured. The product's mail server encapsulates and
encrypts the e-mail message. The mail server can reside within a
corporation or with an Internet service provider.
Page 11 of 18
<PAGE>
E-mail recipient is notified. The server notifies the e-mail recipient that
a secured e-mail message has been received. Each notification includes a
hypertext link that quickly takes the recipient to the secured message.
Access is granted using a personal password. Before the recipient can open
a secured e-mail message, the recipient must first be authenticated. This
authentication process will employ industry standard authentication
mechanisms.
Content is controlled through sender-defined options. Even after access has
been granted, secured e-mail continues to be restricted by the
sender-defined options. Recipients cannot forward, save, or manipulate the
original e-mail message in any way forbidden by the sender.
FUTURE FUNCTIONALITY
Subsequent versions of the software will include significant enhancements that
will be announced as the products are released.
How the Customer Benefits
The Company expects this product to be a critical solution, which it believes
may well become the legally required standard of care for a wide variety of
industries, professions, and situations. In fact, the Company believes secured
e-mail should be used in any situation requiring discretion. It is intended as
an ideal solution for:
o Legal communications
o Governmental agencies
o Contract negotiations
o Medical information
o Sensitive human resource information
o Communication of non-public corporate information
o Any information which should not be public
Status of Development
The Company anticipates the product will evolve from its initial implementation,
which, as described above, will represent a level of functionality sufficient to
cover most e-mail users' privacy concerns. However, the Company intends to
implement other designs that eliminate intermediary services, further simplify
the functionality and usability of the product, and simultaneously increase the
level of security in the product.
The ultimate design goal is to meet the most stringent secure messaging
requirements up to and including the standards of the US Department of Defense.
Increasingly rigorous levels of security will be implemented en route to
achieving this final goal. Once the e-mail solution is successfully launched,
implementations beyond e-mail will be designed and marketed. Markets to be
targeted after the initial releases will include, but not necessarily be limited
to: voice mail, pagers, databases, Usenet newsgroups, and web publishing tools.
The Company is currently seeking additional capital to complete and move from
the design and architecture phase of development, including securing all
intellectual property protections available, to completion and marketing the
first product version.
The Company has engaged engineers, marketers and an administration staff to
support the development of the product for delivery to the marketplace. However,
there can be no assurance that the Company will successfully complete the
project, and that the product will include all or substantially all of the
elements described above, or that any of the other risks described herein will
not adversely affect the outcome of the project.
Page 12 of 18
<PAGE>
Results of Operations
Three Months Ended June 30, 1999 and 1998
Revenues for the quarter ended June 30, 1999 were $5,689 (1998: $6,250).
Operating costs and expenses totaled $1,266,239 in the quarter ended December
31, 1998 (1998: $444,602). The 1999 expenses included $554,946 in research and
development expense (1998: $197,638). The increased expenses in 1999 reflect the
addition of personnel primarily to work on the enhanced e-mail product. The
Company expects that research and development expenditures will continue to
increase during the next twelve months as development of existing and new
products continues. We expect that adding new personnel in this area will
increase these expenses by approximately 10% in the next quarter.
The Company had $20,110 in interest income during the quarter ended June 30,
1999 (1998: $7,803). The increase in interest income is due to increased cash
balances maintained in banks following the sale of the Company's common stock in
a private placement. The net loss for the quarter was $1,242,493 (or $.06 per
share) compared to a loss $-431,685 (or $.02 per share) in 1997.
Revenues for the quarter were provided by a P.O. from Abacus Technology
Corporation for work performed Sundog's Professional Services. Sundog is
currently bidding for a number of projects utilizing its core technologies, but
there is no assurance it will be the succeeding bidder on any of such projects.
Expenses for the quarter reflect the cost of people, engineering research, and
marketing and selling efforts, which will form the foundation of future
increased revenue and profitability growth.
The primary marketing focus for the quarter continued to be establishing the
Company's identity in the marketplace and building a secure platform for future
growth, including recruiting the key personnel and business partners required to
build end-user solutions.
The Company has entered into a license agreement with OEC Medical Systems, Inc.
(OEC) to whom the Company has agreed to pay a royalty on revenues generated from
the licensing or use of a software product developed by Arkona in 1997. The
royalty is equal to five percent of net revenues until OEC has recovered
$125,000, the amount paid to Arkona to develop the product. Thereafter, the
royalty is two percent of net revenues thereafter until OEC has been paid
$250,000 and one percent of revenues. No royalties have been paid by the Company
to date under this arrangement.
Liquidity and Capital Resources
At June 30, 1999 the Company had cash and cash equivalents of $1,131,625, as
compared to cash and cash equivalents of $2,215,620 as of March 31, 1999. Cash
was provided during the period through the sale of stock in a private placement.
Capital spending of $81,821 in the 3 months was primarily for computer and
related equipment used in the Company's operations, including product
development and research.
The Company held marketable securities available for sale at June 30, 1999 .
Although the Company does not intend to engage in the business of investing in
or buying and selling securities of other companies, these securities were
received as partial consideration in connection with the sale of the Company's
common stock in October 1997. These marketable securities were 3,000 shares of
common stock of Eurogas Corp. ("EUGS").
Page 13 of 18
<PAGE>
At June 30, 1999 , the sale price of EUGS common stock, as reported by the
over-the-counter ("OTC") electronic bulletin board, was $0.76 per share. Shares
traded in the NASDAQ OTC markets are characterized by price volatility and thin
trading volumes. The relatively low volume of securities traded and the dramatic
effect that sales of even a few shares can have on the market price of such
securities may have an adverse effect on the Company's ability to liquidate its
remaining holdings or to realize the values similar to those shown above.
Management believes that the cash available to the Company from recently
completed and planned sales of marketable securities, proceeds from the sale of
its own securities, and cash provided by operations will be sufficient to meet
the business requirements of the Company for the next twelve months. If the
Company expands its efforts to develop new products, or the projected revenues
do not materialize in the timeframe anticipated, seeking additional funding
through the sale of its securities or through borrowing may be required.
Presently the Company does not have an established bank line of credit or
similar facility. The sale of equity securities will result in immediate and
possibly substantial dilution of existing shareholders.
Year 2000 Issues
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. As a result there is a
risk that certain Company's computer programs or equipment that have
date-sensitive software or embedded technology may recognize a date using "00"
as the year 1900, rather than the year 2000. With the approaching change in the
century, this could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, collect payment or engage in similar
normal business activities or complete ongoing development projects.
The Company relies on computer hardware, software and related technology,
together with data, in the operation of its business. Such technology and data
are used in the Company's internal operations, such as billing and accounting.
The Company is currently investigating the technology and data used in its
operations and has yet to determine whether Year 2000 Issues will affect its
business. Based on its assessment of activities to date, the Company is not
aware of a Year 2000 problem with any of its internal systems. The Company
intends to evaluate its technology and data to determine what, if any, remedial
action may be required to address these issues. This includes seeking and/or
requiring remediation of any Year 2000 Issues that are related to the Company's
customers, suppliers and distributors. There is, however, no assurance that such
third parties will successfully remediate their own Year 2000 Issues over which
the Company has no control.
The Company believes it will substantially complete its evaluation and
remediation prior to the beginning of the year 2000, and that upon substantial
completion of such actions, and assuming that the Company's customers, suppliers
and distributors successfully remediate their own Year 2000 Issues over which
the Company has no control, the Company will have no material business risk from
such issues. The Company has not yet determined the total cost of such an
evaluation and any remediation that may be required to correct problems
identified by this process.
The Company develops its software and designs its products to be Year 2000
compliant. Customers may require the Company to certify that its products are
Year 2000 compliant. If its products were shown to have been the cause of a Year
2000 problem in a customer's system or business, the Company could incur
liabilities for breaching the warranty, if any, that it may give its customers
concerning the status of its products under applicable Year 2000 standards.
Page 14 of 18
<PAGE>
OUTLOOK
Cautionary Statement Regarding Forward-Looking Statements
The Company considers all forward-looking statements contained in this Quarterly
Report to be covered by and to qualify for the safe harbor protection provided
by Section 21E of the Securities Exchange Act of 1934, as amended. Shareholders
and prospective shareholders should understand that several factors govern
whether the results described by any such forward-looking statement will be or
can be achieved. Any one of those factors could cause actual results to differ
materially from those projected in this Report.
The forward-looking statements contained in this report include plans and
objectives of management for future operations, relating to the products and the
economic performance of the Company. Assumptions applicable to the foregoing
involve judgments with respect to, among other things, future economic,
competitive, and market conditions, future business decisions, and the time and
money required to successfully complete development projects, all of which are
difficult or impossible to predict accurately and many of which are beyond the
Company's control. Although the Company believes that the assumptions underlying
the forward-looking statements are reasonable, any of those assumptions could
prove inaccurate. Therefore, we cannot assure that the results contemplated in
any of the forward-looking statements contained herein will be realized. The
impact of actual experience and business developments may cause the Company to
alter its marketing, capital expenditure plans, or other budgets, which may in
turn affect the Company's results of operations. In light of the inherent
uncertainties in forward-looking statements, the inclusion of any such statement
does not guarantee that the objectives or plans of the Company will be achieved.
Among other factors to consider is the possible impact of the following risk
factors on the financial condition and results of operation of the Company.
Development Stage, Accumulated Deficit
The Company is a development stage company and has had only limited revenues
since its inception. There can be no assurance that the Company will be able to
achieve a significant level of sales or attain profitability. The Company's
operations have been limited to developing software, initial sales and fund
raising activities. There can be no assurance that the Company will be able to
grow in the future or attain profitability. As a result, the Company believes
that its prior results of operation are not necessarily meaningful and should
not be relied upon as an indication of future performance. The profit potential
of the Company's business is speculative, and to be successful, the Company
must, among other things, develop and market software that is widely accepted by
business customers at prices that will yield a profit. The Company's software
products are in the development stage. There can be no assurance that the
products of the Company will achieve broad commercial acceptance. The Company's
ability to generate future revenues will depend on a number of factors, many of
which are beyond the Company's control and include, among others, the ability of
the Company to complete its product development activities and to carry on
timely and effective marketing campaigns.
Because of the foregoing factors, among others, the Company is unable to
forecast its revenues or the rate at which it will add new customers with any
degree of accuracy. There can be no assurance that the Company will be able to
increase its sales in accordance with its internal forecasts or to a level that
meets the expectations of investors. There can also be no assurance that the
Company will ever achieve favorable operating results or profitability.
Page 15 of 18
<PAGE>
Part II. Other Information
ITEM 2. CHANGES IN SECURITIES
Unregistered sales of equity securities during quarter (other than in
reliance on Regulation S).
Recent Sales of Unregistered Securities. During the three months ended June 30
1999, the Company issued equity securities that were not registered under the
Securities Act of 1933, as amended (the "Act"). Specifically, the Company issued
124,294 shares of common stock and warrants to purchase 107,627 shares of common
stock. Gross proceeds to the Company of $194,774 were generated by the sale of
these securities. The Company issued such shares without registration under the
Act in reliance on exemptions from registration under the Section 4(2) and/or
3(b), as well as Regulation D promulgated under the Act. The shares of common
stock were (and the shares issueable upon exercise of the warrants will be)
issued as restricted securities and the certificates representing such shares
are or will be stamped with a restrictive legend to prevent any resale without
registration under the Act or compliance with an exemption. In each case, the
purchasers of the securities were accredited investors, as that term is defined
by Rule 501 under the Act, or represented to the Company that they were
sophisticated investors who were experienced in making investments of this type,
either alone or with a purchaser representative, and that they or their
purchaser representatives were otherwise suitable (under state and federal
regulations) and possessed adequate means of providing for their current needs
and personal contingencies and who had no need for liquidity in an investment in
securities such as the Company's common stock, which are subject to certain
risks, including the possible loss of a person's investment in whole or in part.
The Company's common stock is quoted on the over-the-counter ("OTC") Nasdaq
electronic bulletin board under the symbol TRDG. To date there has been only
limited trading activity in the Company's stock.
Page 16 of 18
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule (previously filed)
Page 17 of 18
<PAGE>
Signatures
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 thereunto duly authorized.
Sundog Technologies, Inc.
(Registrant)
/s/ Stephen Russell
Date: February 12, 1999 ----------------------------------------
Stephen Russell, Chief Executive Officer, and
Controller (Principal Financial and Accounting
Officer)
Page 18 of 18
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 1131625
<SECURITIES> 2280
<RECEIVABLES> 5744
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1189188
<PP&E> 459501
<DEPRECIATION> 68479
<TOTAL-ASSETS> 1757500
<CURRENT-LIABILITIES> 278480
<BONDS> 0
0
0
<COMMON> 22560
<OTHER-SE> 1433704
<TOTAL-LIABILITY-AND-EQUITY> 1076702
<SALES> 5689
<TOTAL-REVENUES> 5689
<CGS> 11542
<TOTAL-COSTS> 1266239
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2053
<INCOME-PRETAX> (1242493)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1242493)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1242493)
<EPS-BASIC> (0.055)
<EPS-DILUTED> (0.055)
</TABLE>
