Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB/A
(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
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Commission File Number 0-24372
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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
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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
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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 Company is engaged in the
development of sundog's e-mail security software product and Internet
application more fully described below. QV is wholly owned by Sundog, however
the Company has granted options to key personnel of QV as an incentive to
further the development work on the QV products. If all options allocated are
granted and subsequently exercised in full, the options granted to the QV
development team will result in the team's ownership of approximately 45% of the
issued and outstanding common stock of QV and reduce the ownership of Sundog
proportionately.)
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>
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 Health Care.
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.
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time with or without consent and frequently 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.
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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 three-six 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>
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 SUDG. To date there has been only
limited trading activity in the Company's stock.
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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/ Jerral R. Pulley
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Date: August 16, 1999 Jerral R. Pulley
Chairman of the Board
