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 September 30, 2000
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 as specified in its charter)
The Thorsden Group, Ltd.
------------------------
(Former name of small business issuer)
Delaware 33-0611746
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
10542 South Jordan Gateway, Suite 200
South Jordan, Utah 84095
(Address of principal executive offices and Zip Code)
(801) 501-7100
(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 September 30, 2000, there were issued and outstanding 23,959,745 shares of
the Company's Common Stock, par value $.001 per share.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
TABLE OF CONTENTS
Part I. Financial Information................................................3
Item 1. Financial Statements........................................3
Item 2. Management's Discussion and Analysis or Plan of Operation...8
Part II. Other Information...................................................20
Item 2. Changes in Securities and Use of Proceeds..................20
Item 5. Other Matters..............................................20
Item 6. Exhibits and Reports on Form 8-K6..........................21
2
<PAGE>
PART I
ITEM 1--FINANCIAL STATEMENTS
SUNDOG TECHNOLOGIES, INC.
(A Development Stage Company)
<TABLE>
<CAPTION>
September 30 March 31
2000 2000
----------- -----------
<S> <C> <C>
ASSETS
Current Assets
Cash and Cash Equivalents 70,373 489,297
Marketable Securities 1,410 3,360
Accounts Receivable 72,198 --
Prepaid Expenses 19,000 9,512
Inventory 19,603 14,803
----------- -----------
Total Current Assets 182,584 516,972
----------- -----------
Equipment 418,989 339,012
Less: Accumulated Depreciation (222,242) (152,805)
----------- -----------
Equipment, Net 196,747 186,207
----------- -----------
Other Assets
Deposits 16,618 16,618
Investment in Qui Vive -- 920,811
Marketable Securities 16,412,000 --
Intangible Assets, net amortization 45,991 45,270
----------- -----------
Total Other Assets 16,474,609 982,699
----------- -----------
TOTAL ASSETS 16,853,940 1,685,878
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable 1,176,635 206,477
Accrued Liabilities 68,495 73,902
Loan from officer 100,000 --
Deferred Income on Maintenance Contracts 750 1,500
Deferred Tax Liability 11,806,131 --
Current Portion of Capital Leases 9,652 15,555
Net current liabilities of discontinued segment -- 460,449
----------- -----------
Total Current Liabilities 13,161,663 757,883
Capital Lease Obligations, net of current portion 12,108 14,988
Net long-term liabilities of discontinued segment -- 187,658
----------- -----------
Total Liabilities 13,173,771 960,529
Minority interest in discontinued operations -- 1,338,429
Stockholders' Equity
Common Stock 23,960 23,826
Additional paid in Capital 15,109,041 14,147,648
Unearned Compensation (5,113,750) (5,443,750)
Accumulated unrealized loss on investment
securities available for sale (15,875,492) (13,582)
Retained Earnings (Deficit) 9,536,410 (9,327,222)
----------- -----------
Total Stockholders' Equity 9,865,553 (613,080)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 16,853,940 1,685,878
=========== ===========
</TABLE>
SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
SUNDOG TECHNOLOGIES, INC.
(A Development Stage Company)
Unaudited Condensed Consolidated Statements of Operations
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended From Inception
June 11, 1992
Sept 30, 2000 Sept 30, 1999 Sept 30, 2000 Sept 30, 1999 to Sept 30, 2000
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net Revenues 72,133 16,197 29,932 10,508 337,546
Costs and Expenses:
Cost of Sales 3,352 25,700 1,673 14,158 102,343
Research and Development 285,144 1,053,036 144,721 498,091 2,024,389
Marketing, Admin & Sales 1,514,952 1,410,723 746,120 710,971 4,781,960
Recog. of deferred compensation 925,000 -- -- -- 2,432,500
----------- ----------- ----------- ----------- -----------
Operating Costs and Expenses 2,728,448 2,489,459 892,514 1,223,220 9,341,192
----------- ----------- ----------- ----------- -----------
Operating (Loss) (2,656,315) (2,473,262) (862,582) (1,212,712) (9,003,646)
Gain on disposal of segment 21,531,554 -- -- -- 21,531,554
Loss from discontinued operations (3,065,557)
Interest Income 4,299 27,555 190 7,445 110,118
Interest Expense (15,753) (3,778) (14,866) (1,725) (31,839)
Other Expense (152) -- (152) -- (440)
Other Income -- -- -- -- 289
Loss on sale of securities avail for sale -- -- -- -- (4,068)
----------- ----------- ----------- ----------- -----------
Net Income (Loss) 18,863,633 (2,449,485) (877,410) (1,206,992) 9,536,411
=========== =========== =========== =========== ===========
Basic Net Income (Loss) per share 0.79 (0.109) (0.04) (0.054) --
----------- ----------- ----------- ----------- -----------
Weighted average number
Of Shares Outstanding 23,919,201 22,560,234 23,919,201 22,560,234 --
----------- ----------- ----------- ----------- -----------
Diluted Net Income
(Loss) per share 0.76 -- (0.04) -- --
----------- ----------- ----------- ----------- -----------
Weighted average
diluted shares 24,785,451 -- 24,785,451 -- --
----------- ----------- ----------- ----------- -----------
</TABLE>
SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE>
SUNDOG TECHNOLOGIES, INC.
(A Development Stage Company)
Unaudited Condensed Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
30-Sep 30-Sep
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Cash Flows (used by) Operating Activities:
Net (Loss) 18,863,633 (2,449,485) (877,410) (1,206,992)
Adjustments to reconcile net income to
net cash used for operating activities:
Depreciation and Amortization 72,923 42,210 38,136 23,151
Changes in Assets and Liabilities:
Gain on disposal of segment (21,531,554) -- -- --
Compensation from option grants 925,000 -- -- --
Changes is assets and liabilities:
Accounts Receivable (72,198) 46,954 (29,833) 1,498
Prepaid Expenses (9,488) (9,344) 9,793 14,645
Inventory (4,800) -- 2,564 --
Accounts Payable 870,158 13,306 747,644 (13,610)
Accrued Liabilities (6,156) 88,030 8,950 86,820
----------- ----------- ----------- -----------
Net Cash (Used By) Operating Activities (892,482) (2,268,329) (100,156) (1,094,488)
----------- ----------- ----------- -----------
Cash Flows (Used for) Investing Activities:
Additions to Equipment (79,977) (93,289) (8,904) (11,470)
Lease Deposits -- (2,742) -- (1,379)
Patent Costs (4,207) (20,654) (3,569) (10,315)
----------- ----------- ----------- -----------
Net Cash Used for Investing Activities (84,184) (116,685) (12,473) (23,164)
----------- ----------- ----------- -----------
Cash Flows Provided By Financing Activities:
Proceeds from Issuance of Common Stock 466,526 254,834 115,000 60,000
Loan from officer 100,000 -- 50,000 --
Increase in Lease Obligations (8,784) (23,263) (4,555) (11,796)
----------- ----------- ----------- -----------
Net Cash Provided By Financing Activities 557,742 231,571 160,445 48,204
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net Increase/(Decrease) in Cash and Cash Equivalents (418,924) (2,153,443) 47,816 (1,069,448)
----------- ----------- ----------- -----------
Beginning Cash Balance 489,297 2,215,620 22,557 1,131,625
----------- ----------- ----------- -----------
Ending Cash Balance 70,373 62,177 70,373 62,177
=========== =========== =========== ===========
</TABLE>
SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE>
SUNDOG TECHNOLOGIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Note 1 Basis of Presentation
The Company has prepared the accompanying condensed financial statements,
without audit, according to the applicable regulations of the Securities and
Exchange Commission. Certain information and disclosures normally included in
financial statements prepared according to generally accepted accounting
principles have been condensed or omitted. The Company believes that the
following disclosures are adequate and not misleading. These unaudited condensed
financial statements reflect all adjustments (consisting only of normal
recurring adjustments) that, in management's opinion, are necessary to present
fairly the financial position and results of operations of the Company for the
periods presented. It is suggested that these unaudited condensed 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, 2000, as amended.
Note 2 Concentration
The Company is still in the development stage, and its revenues to date are from
fewer than 10 customers.
Note 3 Equity
During the six months ended September 30, 2000, the Company issued 198,263
shares of common stock at an average price of $1.77 per share, as follows:
75,000 were issued for cash, 93,263 were issued in connection with warrant
exercises, and 30,000 were issued in connection with option exercises.
Note 4 Sale of Qui Vive
On March 31, 2000, the Company entered into an Amended and Restated Acquisition
Agreement (the "Acquisition Agreement") with Envision, QV Acquisition Co., and
Rock Mountain Ventures Fund, LP. Pursuant to the Acquisition Agreement, on April
7, 2000, we transferred to Envision all of our interest in QV in exchange for
1,492,000 shares of Envision common stock. These shares are subject to a
contractual covenant prohibiting the sale of such stock in the open market until
after October 7, 2001. We are permitted to sell such shares in large blocks in
privately negotiated transactions. However, because any acquirer must take such
shares subject to the prohibition on sale until after October 7, 2001, we expect
interest in acquiring our Envision shares to be limited and that the purchase
and sale price in any such transaction would be at a significant discount from
current market prices. Even after all contractual restrictions on the sale of
our shares of Envision common stock have expired, such shares may continue to be
"control securities" and may not be resold except pursuant to an effective
registration statement or pursuant to the so-called "leak out" provisions of
Rule 144 promulgated under the Securities Act.
6
<PAGE>
SUNDOG TECHNOLOGIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Note 5 Investment in Envision Development Corporation
On April 7, 2000, Envision's common stock had a market value of $66.25 per share
as quoted by the American Stock Exchange. Due to the following factors, the
value of Envision's common stock has been discounted to a price of $21.63 per
share in order to more accurately reflect the value of the transaction described
in note 4 above.
Sundog contractually agreed to an 18 month lock out on the stock it received.
Therefore, the Envision Development common stock can not be sold in the public
market until after October 7, 2001.
Envision Development common stock has experienced extreme volatility. The quoted
price was $20.50 in January 2000, rising to a high of $72 on May 3, 2000 and
then dropping to $11 by September 30, 2000.
The Company owns a large block of Envision's common stock with its ownership
percentage at approximately 19%.
In addition to the Company owning a large block, the trading volume of Envision
common stock traded is very low.
The Company received minimal registration rights. The Company has been granted
piggy-back rights on only 20 percent of it's holding.
On the day the Company signed the letter of intent to the sale of Qui Vive, the
value of Envision's stock was $21.63 per share.
Taking these factors into consideration, and based upon consultation with
appraisal advisiors, management believes that a $21.63 per share value most
fairly reflects the value of the transaction.
As of September 30, 2000 Envision Development's stock price had dropped to
$11.00 per share. Therefore an appropriate adjustment to the value of the stock
on the Company's balance sheet has been made to reflect the drop in value. As of
the filing date of this quarterly report, the value of Envision's common stock
had dropped to $2.56 per share.
Use of Our Shares of Envision common stock.
In the near-term, we intend to use our shares of Envision common stock to help
fund our operations. In light of the restrictions on resale imposed by the
securities laws and the contractual restriction prohibiting the sale of our
shares of Envision common stock on an exchange until after October 7, 2001, we
do not intend to sell our shares of Envision common stock in the market.
The Company intended to use the Envision common stock as collateral in obtaining
a loan. We would expect to repay such loan with proceeds from the sale of the
Envision common stock when the restriction period has passed. However, to date,
despite having obtained written commitments from various parties to provide
financing using the Envision common stock as collateral, the Company has not
been able to consummate any such transaction, primarily due to the volatility in
the price of the Envision stock and the uncertainties surrounding the Envision
as a company.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with the unaudited
condensed consolidated financial statements and the notes thereto appearing
elsewhere in this Quarterly Report on Form 10-QSB.
OVERVIEW
Sundog Technologies, Inc. ("we," "Sundog" or the "Company") is a Delaware
corporation organized in 1992 for the purpose of seeking and acquiring business
opportunities. Sundog was formerly known as The Thorsden Group, Ltd, and changed
its name to "Sundog Technologies, Inc." in April 1999. In October 1997, we
acquired Arkona, Inc., a Utah corporation ("Arkona"), through a wholly owned
subsidiary corporation. Arkona is continuing its business of developing,
marketing and selling software products for use in portable and distributed
network computing. Unless otherwise required by the context, references to "we,"
"Sundog" or the "Company" in this Report include Sundog and Arkona.
On June 5, 1998, we formed a new subsidiary called, Qui Vive Inc. ("QV"). QV is
engaged in the development of e-mail security software. On April 7, 2000, we
sold our interest in QV to Envision Development Corporation, a Florida
corporation ("Envision") in exchange for 1,492,500 shares of Envision common
stock.
Recent Events
Ensign Acquisition. As discussed in "Item 5. Other Events," on November
9, 2000, the Company issued 3,000,000 shares of its common stock in exchange for
substantially all of the assets of Ensign Information Systems, a Utah-based
developer of hosted business processes applications for the automotive
dealership market ("Ensign"). Ensign's principal product is a non-proprietary,
modular software solution that helps integrate all of a company's critical
business functions, such as finance, accounting, sales, service, portfolio
management and human resources. Ensign's product is offered as a shrink-wrapped
license or as an ASP service, utilizing IBM as the platform provider. The Ensign
solution is integrated with a real-time retail Web presence and an e-business
solution on both fronts--retail and B2B.
We believe that this acquisition brings to Sundog an expanded customer base and
highly skilled technical people that can continue to keep our products on the
cutting edge of technology. We hope to set new standards by offering solutions
that combine the capabilities of both Sundog's Universal Update(TM) product line
and Ensign's back office software to create applications that mobilize the
workforce with the information they need to be more competitive using handheld
devices. We also hope to expand Ensign's ASP model to a broader base of clients
who need to integrate their business but previously could not afford to do so.
Repurchase of Shares. In addition, in order to facilitate the acquisition
of Ensign, the Company re-purchased 987,500 shares of its common stock from
certain key shareholders at the purchase price of $0.01 per share. In addition,
the Company expects key shareholders to re-sell an additional 2,400,000 shares
of Company common stock to the Company at a price of $.01 per share. As a result
of such repurchases, the Ensign acquisition probably will not be dilutive to
existing shareholders.
Results of Operations-- Three Months and Six Months Ended September 30, 2000 and
1999
Revenues for the quarter ended September 30, 2000 were $29,932 compared to
$10,508 for the quarter ended September 30, 1999. Revenues for the six months
ended September 30, 2000 were $72,133 compared to $16,197 for the same period in
1999. The increase in revenue is due to increased sales of Universal Update, the
Company's data base product. Operating expenses totaled $892,514 in the quarter
8
<PAGE>
ended June 30, 2000 compared to $1,223,220 for the same period in 1999.
Operating expenses for the six months ended September 30, 2000 totaled
$2,728,448 compared to $2,489,459 for the same period in 1999. Operating
expenses for the six months ended September 30, 2000 included $285,144 for
research and development, $1,514,952 for selling, general and administrative
expenses and $925,000 for deferred compensation. This compares to $1,053,036,
for research and development expenses, $1,410,723 for selling, general and
administrative expenses and no deferred compensation for the same period in
1999. The increased expenses in 2000 are due primarily to deferred compensation
associated with options granted at an exercise price below fair market value and
costs for the promotion of the Company's data-base product. The Company expects
expenditures to increase in all areas of its business during the next twelve
months as development and promotion of existing and new products continues,
assuming available working capital.
The Company had $190 in interest income during the quarter ended September 30,
2000, compared to $7,445 for the same period in 1999. For the six months ended
September 30, 2000 the Company had $4,299 in interest income as compared to
$27,555 for the same period in 1999. The decrease in interest income is due to
decreased cash balances maintained by the Company in banks. The net loss for the
Quarter ended September 30, 2000 was ($877,410) or $.04 per share, compared to a
loss of ($1,242,493) or ($.06) per share for the same quarter in 1999. The
decrease in the loss was due to a decrease in operating expenses. For the six
months ended September 30, 2000 net income was $18,863,633 or $.76 per share as
compared to a loss of ($2,449,485) or ($.11) per share for the same period in
1999. Net income for the six months ended September 30, 2000 is attributable to
the shares of Envision common stock received in connection with the sale of the
Company's interest in QV on April 7, 2000. The shares of Envision common stock
received by the Company in such transaction are subject to significant resale
restrictions. In addition, the market price for such shares is volatile and has
declined substantially during the last six months.
When options are granted below the market value, the Company records deferred
compensation in the equity section of its balance sheet. As the options vest the
Company recognizes the compensation expense. Deferred compensation for the
quarter ended September 30, 2000 was $62,500 due to 50,000 options granted below
market value. There was no amortization of deferred compensation expense
recognized for options that vested during the quarter due to the fact that no
options vested during the quarter.
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.
Liquidity and Capital Resources
At September 30, 2000, the Company had cash and cash equivalents of $70,373, as
compared to cash and cash equivalents of $489,297 as of March 31, 2000. As of
September 30, 2000 and November 14, 2000, the Company did not have working
capital sufficient to meet its short term obligations.
The Company has attempted to use its shares of Envision common stock as
collateral in obtaining a loan. We would repay such loan with proceeds from the
sale of the Envision common stock when the restriction period has passed. To
date, however, despite having obtained written commitments from various parties
to provide financing using the Envision common stock as collateral, the Company
has been unable to consummate any such transaction, primarily due to the
volatility in the price of the Envision stock and the uncertainties surrounding
Envision as a company. We do not presently believe that we will be able to use
the Envision shares directly or indirectly to obtain any capital, at least until
9
<PAGE>
the restrictions on transfer are terminated in October 2001. The Company expects
its revenues to increase as a result of its acquisition of the assets of Ensign
Information Systems. Nonetheless, it is unlikely that such anticipated increase
in revenues will be sufficient to fund the Company's ongoing operations. The
Company will need to raise additional funds to fund our rapid expansion, to
develop new or enhance existing services or products or to respond to
competitive pressures. The Company cannot provide assurance that additional
financing will be available on terms favorable to it, or at all. If adequate
funds are not available or are not available on acceptable terms, the Company's
ability to fund its marketing and planned product development programs or
otherwise respond to competitive pressures would be limited.
The Company holds marketable securities available for sale at September 30,
2000. 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, Inc. ("EUGS"). At September 29, 2000,
the closing sale price of EUGS common stock, as reported by the over-the-counter
("OTC") electronic bulletin board, was $0.46 per share. Shares traded in the
NASDAQ OTC markets are characterized by volatile changes in price 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 values similar to those shown above.
On April 7, 2000, the Company transferred to Envision all of its interest in QV
in exchange for 1,219,500 shares of common stock of Envision Development
Corporation (AMEX: EDV) delivered at closing and an agreement by Envision to
issue to Sundog another 272,500 shares of Envision common stock within 2
business days of the approval of such issuance by its shareholders. On September
30, 2000, the price of Envision Development shares as quoted on the American
Stock Exchange was $11.00 per share. Shares of Envision Common Stock have
recently been delisted from the American Stock Exchange but are expected to be
traded on the NASDAQ OTC Bulletin Board under the symbol EDVC in near future.
The 1,219,500 shares of Envision common stock we presently own, and the 272,500
shares of Envision common stock we expect to acquire, are subject to a
contractual covenant prohibiting sale of such stock in the open market until
after October 7, 2001. Even after all contractual restrictions on the sale of
our shares of Envision common stock have expired, such shares may continue to be
"control securities" and may not be resold except pursuant to an effective
registration statement or pursuant to the so-called "leak out" provisions of
Rule 144 promulgated under the Securities Act. The recent delisting of shares of
Envision common stock from the American Stock Exchange, the precipitous decline
of the price of the Envision common stock and the low trading volume of such
stock may have an adverse effect on the Company's ability to liquidate its
remaining holdings after all contractual and other restrictions on trading have
been removed.
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, plans relating to the products
and predictions regarding 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,
10
<PAGE>
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 risk factors to
consider are the factors identified in the subsection entitled "Factors That May
Affect Future Results" below.
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 marketing
efforts 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.
Factors That May Affect Future Results.
Our short and long-term success is subject to certain risks, many of which are
substantial in nature. You should consider carefully the following risk factors,
in addition to other information contained in this report as you evaluate the
Company and its business. Any one of these factors could cause actual results of
our operations to differ materially from projected results.
We are in the development stage, meaning that we have had only limited revenues
from sales of products or services.
The Company is in the development stage and has a limited operating history.
There can be no assurance that we will be able to achieve a significant level of
sales or attain profitability. Our operations to this point have been limited to
developing software, making initial sales under contracts with two customers and
obtaining financing for our operations. As a result of the increase in operating
expenses caused by recent hiring of a sales force, operating results may be
adversely affected if significant sales do not materialize in the near-term. We
can provide no assurance that we will be able to generate significant sales in
the near-term or the long-term.
11
<PAGE>
We have incurred substantial losses since our inception, expect to continue to
incur losses and may never be profitable.
We have incurred operating losses each year since our inception in 1992.
However, as of September 30, 2000, the Company had accumulated retained earnings
of approximately $9,865,553 due to the gain of $21,531,555 recognized by the
Company on the sale of Qui Vive. We expect to incur additional losses for the
foreseeable future, and we expect our losses to increase as our research and
development efforts progress. Our operating expenses are expected to increase
because we recently hired a 6 person sales force, a new management team and we
plan to hire additional employees. We do not expect sales revenues to increase
in sufficient amount during the coming fiscal year to offset our operating
expenses, and we can provide no assurance that our revenues will ever be large
enough to offset operating and other expenses. We do not expect to be profitable
in the near future and we may never be profitable.
We may have problems integrating Ensign Information Systems.
On November 9, 2000, the Company purchased substantially all of the assets of
Ensign Information Systems, a Utah-based developer of hosted business processes
applications for the automotive dealership market ("Ensign"). In connection with
the transaction, the Company also entered into employment agreements with
Richard Holland and Blake Nielson, the founders and principal shareholders of
Ensign. We may be unable to integrate Ensign's products and technologies into
our existing business operations. Further, we may be unable to integrate
Ensign's employees with our existing employees and management structure.
We require additional capital to meet our short-term obligations and continue
development of our products.
We do not presently have working capital sufficient to meet our immediate term
obligations. In addition, we will need to raise additional capital to fund our
rapid expansion, to develop new or enhance existing services or products or to
respond to competitive pressures. If additional funds are raised through the
issuance of equity or equity-linked securities, the percentage ownership of our
stockholders would be reduced. In addition, these securities may have rights,
preferences or privileges senior to those of our stockholders. We cannot assure
that additional financing will be available on terms favorable to us, or at all.
If adequate funds are not available or are not available on acceptable terms,
our ability to fund our marketing and planned product development programs or
otherwise respond to competitive pressures would be significantly limited.
Our accountants have included an explanatory paragraph on our financial
statements regarding our status as a "going concern."
Our consolidated financial statements included in our most recent Annual Report
on Form 10-K have been prepared under the assumption that we will continue as a
going concern. Our independent public accountants have issued their report dated
June 12, 2000 that includes an explanatory paragraph stating that our recurring
12
<PAGE>
losses and accumulated deficit, among other things, raise substantial doubt
about our ability to continue as a going concern. Our product line is limited
and it has been necessary to rely upon financing from the sale of our equity
securities and certain assets consisting of marketable securities to sustain
operations. Additional financing may be required if we are to continue as a
going concern.
The market may not accept our software and technologies.
Our software is in the development stage. Our Universal Update(TM) 1.5 program
was first publicly distributed in December 1998 and has produced only limited
sales to date, despite the release and distribution of an enhanced version in
June of 1999. Our Universal Update(TM) 1.6 with support for Linux was first
released on April 17, 2000, and we have no sales as of September 30, 2000. We
can provide no assurance that end-users will be interested in purchasing any of
our existing or future products in the near-term or the longer term.
We face significant competition from remote access software developers.
The market for remote access software is highly competitive. Some of our
competitors have greater financial, technical and marketing resources than we
do. These advantages may enable them to respond more quickly to new or emerging
technologies and changes in customer preferences. These advantages may also
allow them to engage in more extensive research and development, undertake
extensive far-reaching marketing campaigns, adopt more aggressive pricing
policies and make more attractive offers to potential employees and strategic
partners. As a result, we may be unable to obtain a significant market share in
the remote access software business. In addition, competition may result in
price reductions, reduced gross margin and loss of market share. We may not be
able to compete successfully, and competitive pressures may adversely affect our
business, results of operations and financial condition.
We are dependent upon highly qualified personnel, and the loss of such personnel
is a risk to our success.
We are highly dependent upon the efforts of management and technically skilled
personnel, including programmers and engineers, and future performance will
depend in part upon our ability to increase sales, manage growth effectively,
and to retain the services of our management, our technical staff and our sales
staff. Because competition for management, technical and sales personnel is
intense, we may be unable to retain our key employees or attract other highly
qualified employees in the future. The loss of the services of any of our
management, technical or sales team or the failure to attract and retain
additional key employees could have a material adverse effect on our business,
financial condition and results of operations.
We rely on our intellectual property rights, and if we are unable to protect
these rights we may face increased competition and our business may be
materially adversely affected.
We regard our intellectual property as critical to our success, and we rely on
copyright, patent and trade secret protection to protect our proprietary rights
in intellectual property. We are currently pursuing and expect to pursue the
registration of copyrights, patents and trademarks in the United States.
Effective trademark, copyright, trade secret or patent protection may not be
available in every country in which our products are or become available. We
intend to effect appropriate registrations internationally and domestically as
13
<PAGE>
our operations expand, but the United States or foreign jurisdictions may not
afford any protection for our intellectual property. Any of our intellectual
property rights may be challenged, invalidated or circumvented, or the rights
granted thereunder may not provide any competitive advantage. We could also
incur substantial costs in asserting our intellectual property or proprietary
rights against others, including any such rights obtained from third parties,
and/or defending any infringement suits brought against us. Although we enter
into confidentiality and invention agreements with our employees and
consultants, there can be no assurance that such agreements will be honored or
that we will be able to protect effectively our rights to unpatented trade
secrets and know-how. Moreover, there can be no assurance that others will not
independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to our trade secrets and know-how. We may be
required to obtain licenses to certain intellectual property or other
proprietary rights from third parties. Such licenses or proprietary rights may
not be made available under acceptable terms, if at all. If we do not obtain
required licenses or proprietary rights, we could encounter delays in product
development or find that the development or sale of products requiring such
licenses is foreclosed.
The software industry, and in particular, the Internet, are characterized by
rapid development and change. We must develop products and technology that keep
pace with technological change.
The software and Internet markets are recognized for rapid technological
developments, frequent new product introductions and evolving industry
standards. The emerging nature of these technologies, products and services and
their rapid evolution require that we continually improve the performance,
features and reliability of our software, particularly in response to
competitive offerings by other companies. There can be no assurance that we will
successfully respond quickly, cost effectively and sufficiently to these
developments. There may be a time-limited market opportunity for our products,
and there can be no assurance that we will be successful in achieving widespread
acceptance of our products before competitors offer products and services with
features and performance similar to current offerings. In addition, the
widespread adoption of new technologies or standards could require substantial
expenditures to modify or adapt our products and services and which could have a
material adverse effect on our business, financial condition and results of
operations. Furthermore, our new software enhancements may contain design flaws
or other defects that limit their marketability.
There can also be no assurance that research and development and discoveries by
others will not render some or all of our products or potential product
offerings uncompetitive or obsolete. We compete with a number of entities that
are currently developing and producing software products that compete with our
current and proposed products. Many of these competitors have substantially
greater capital resources, research and development capabilities, and production
and marketing resources, capabilities and experience than we have available to
us. These competitors may succeed in developing products that are more effective
or less costly than any products that we may develop, or that gain market
acceptance prior to any of our products, making market penetration more
difficult for us.
Our shares of Envision common stock may not be sold in the market until after
October 7, 2001. Even after such date, they will be "restricted securities" and
subject to certain restrictions.
The 1,219,500 shares of Envision common stock we presently own, and the 272,500
shares of Envision common stock we expect to acquire, are subject to a
contractual covenant prohibiting the sale of such stock in the open market until
after October 7, 2001. We are permitted to sell such shares in large blocks in
14
<PAGE>
privately negotiated transactions. However, because any acquirer must take such
shares subject to the same prohibition on sale until after October 7, 2001, we
would expect interest in acquiring our Envision shares to be limited and that
the purchase and sale price in any such transaction would be at a significant
discount from current market prices.
Even after any contractual restrictions on the sale of our shares of Envision
common stock have expired, such shares will continue to be "control securities"
as that term is defined under the Securities Act, and may not be resold unless
and until such time as the relevant Envision shares are registered under
applicable federal and state securities laws or unless an exemption from
registration is available. After October 7, 2001, the Envision Shares may be
sold in compliance with Rule 144 adopted under the Securities Act. Rule 144
provides, in part, that a person holding control securities for a period of one
year may sell in any three-month period an amount equal to the greater of the
average weekly trading volume of the stock during the four calendar weeks
preceding the sale, or one percent of the issuer's outstanding common stock. As
a result of such restrictions on transferability, we will be unable to quickly
liquidate our Envision shares in the public market at any time. Our Envision
shares may significantly decrease in value before we are able to sell such
shares.
Shares of Envision common stock may be significantly overvalued.
The valuations of companies such as Envision that engage in business over the
Internet have been volatile and, despite such volatility, have generally
increased dramatically over the last few years. Such valuations have been far
out of line with the valuations attributed to companies engaged in other lines
of business and many investment advisors have warned that such valuations are
not warranted and are overinflated. The valuation of our shares of Envision
common stock has suffered a significant correction in the last three months, and
there can be no assurance that the value of such shares will not suffer
additional corrections in the future before such Envision shares can be sold in
compliance with governing contractual covenants and the securities laws.
We may be required to recognize capital gain and pay taxes on the sale of our
Envision shares.
If we sell some or all of our shares of Envision common stock, we will recognize
gain (or loss) for tax purposes on the Envision shares sold in an amount equal
to the difference between the sale price of such shares and our basis in each
such share. Moreover, if, in connection with our sale of any of our shares of
Envision common stock, our board of directors declares a dividend, shareholders
of Sundog entitled to receive such dividend will be required to pay income taxes
at the rate applicable to ordinary gains. To the extent you give any weight to
the value of our shares of Envision common stock in valuing our business or
shares, you should be aware that, because of applicable taxes, the amount of
money we may be able to use or distribute upon eventual disposition of our
shares of Envision common stock will be significantly less than the market price
of such shares.
Although our license terms limit our liability for product liability claims,
there can be no assurance that such a claim will not be brought in the future.
We have not experienced product liability claims to date. However, our products
include programs designed for mission critical applications, creating the risk
that the failure or malfunction of our products may result in serious damage or
loss and open us to a claim for damages. While contract terms limit our
exposure, there can also be no assurance that a court would not rule such
15
<PAGE>
provisions to be invalid or unenforceable, or that changes in the law would
render such terms void or unenforceable. A successful claim could have a
material adverse effect on our operations and finances. Furthermore, the cost of
defending against a claim, even successfully, could be material and could have
an adverse effect on our results of operations and an adverse effect on the
marketing of our products.
There is a limited market for our common stock, and investors may find it
difficult to liquidate their holdings.
Our common stock first began being quoted on the NASDAQ OTC Bulletin Board on
October 23rd, 2000. Since that date, both the price and trading volume of our
common stock have been extremely volatile. Our common stock is held by very few
investors and has a limited trading history. In addition, we are at a very early
stage of development and do not have significant revenues. In light of these
factors, the trading, if any, in our common stock will likely continue to be
extremely limited or non-existent. Consequently, an investor may find it more
difficult to dispose of our securities.
The unpredictability of our quarterly results of operations makes it difficult
to predict our financial performance.
Our quarterly results of operations have varied in the past and are likely to
vary significantly from quarter to quarter. A number of factors are likely to
cause these variations, some of which are outside of our control. These factors
include:
the rate at which customers purchase Sundog's software and the prices
paid for such software;
the amount and timing of capital expenditures and other costs relating
to the expansion of Sundog's business;
the introduction of software products by Sundog or its competitors;
price competition or changes in Internet and computer technology; and
technical difficulties or economic conditions specific to Sundog's
business.
Due to these and other factors, we believe that quarter-to-quarter comparisons
of our operating results may not be meaningful and you should not rely upon them
as an indication of our future performance. Our operating expenses are based on
expected future revenues and are relatively fixed in the short term. If our
revenues are lower than expected, we would incur greater than expected losses.
In addition, during future periods our operating results likely will fall below
the expectations of investors. In this event, the market price of our common
stock likely would decline.
Our founders and a single investor hold a majority of our outstanding shares,
which will allow them to influence the outcome of matters submitted to
stockholders for approval.
Our founders, most of whom are no longer employed by or affiliated with us, and
a single investor own a majority of our issued and outstanding common stock. As
a result, these stockholders have substantial control over matters requiring
approval by our stockholders, such as the election of directors and approval of
significant corporate transactions. In addition, this concentration of ownership
may also have the effect of delaying or preventing a change in control.
16
<PAGE>
Our board may issue preferred stock without shareholder approval, which may
adversely affect the value of our common stock and permit the board to block a
takeover attempt.
Our board of directors has the authority to issue up to 10,000,000 shares of
preferred stock and to determine the rights, preferences, privileges and
restrictions of such shares without further vote or action by our stockholders.
The rights of the holders of common stock will be subject to, and may be
adversely affected by, the rights of the holders of any preferred stock that may
be issued in the future. In addition, the issuance of preferred stock could have
the effect of making it more difficult for third parties to acquire a majority
of our outstanding voting stock.
Obtaining additional capital through the sale of common stock will result in
dilution of shareholder interests.
If additional funds are raised by issuing additional shares of common stock, or
securities such as options or warrants or preferred stock convertible into
common stock, further dilution of the equity ownership of existing holders of
our common stock will result. If adequate funds are not made available to us, we
may be required to delay, scale back or even eliminate one or more of our
product candidates and/or product development programs, and/or obtain funds
through arrangements with collaborative partners or others that may require us
to relinquish rights that we would not otherwise relinquish.
There is a limited public market for our common stock, and our stock price has
been volatile.
The market price of our common stock, like that of the securities of other
software and high technology companies, may be highly volatile. Broad market
fluctuations may adversely affect the market price of our common stock. Our
stock price may be affected by each of the factors described above, as well as:
Announcements by us or competitors concerning technological
innovations, new products or procedures developed by us or our
competitors;
The adoption or amendment of governmental regulations and similar
developments in the United States and foreign countries that affect our
products or markets specifically or our markets generally;
Disputes relating to patents or proprietary rights;
Publicity regarding actual or potential results relating to product
candidates under development by us or a competitor;
Delays in product development;
Slow acceptance of our products in new or existing markets; and
Economic and other external factors, as well as period-to-period
fluctuations in financial results.
17
<PAGE>
Anti-takeover provisions of Delaware Corporate Law and our ability to issue
preferred stock may affect the price of our common stock and allow the Board of
Directors to issue securities that may significantly dilute your ownership and
voting power.
Under our Certificate of Incorporation, as amended, we are authorized to issue
up to 10,000,000 shares of preferred stock. We have not issued any Preferred
stock and there are no present plans to issue any Preferred stock. Our Board of
Directors has the authority to issue the Preferred stock with such voting and
other rights superior to those of our common stock, which could effectively
deter any attempted takeover of the Company. In addition, the Delaware General
Corporation Law prohibits certain mergers, consolidations, sales of assets or
similar transactions between a corporation on the one hand and another company
which is, or is an affiliate of, a beneficial holder of 15% or more of such
corporation's voting power (defined as an "Interested Stockholder") for three
years after the acquisition of the voting power, unless the acquisition of the
voting power was approved beforehand by the corporation's board of directors or
the transaction is approved by a majority of such corporation's shareholders
(excluding the Interested Stockholder). These provisions prohibiting Interested
Stockholder transactions could also preserve management's control of Sundog.
We have not declared any dividends with respect to our common stock.
We have never paid cash dividends on our common stock. We intend to retain
earnings, if any, to finance the operation and expansion of our business and,
therefore, we do not expect to pay cash dividends on Our shares of common stock
in the foreseeable future.
Our common stock may be deemed to be a "low-priced stock" and subject to certain
regulatory action that limits or restricts the market for such stock.
Shares of our common stock may be deemed to be "penny stock," resulting in
increased risks to our investors and certain requirements being imposed on some
brokers who execute transactions in our Common Stock. In general, a penny stock
is a an equity security that:
o Is priced under five dollars;
o Is not traded on a national stock exchange or on NASDAQ (the NASD's
automated quotation systems for actively traded stock);
o May be listed in the "pink sheets" or the NASDAQ OTC Bulletin Board;
and
o Is issued by a company that has less than $5 million dollars in net
tangible assets (if it has been in business less than three years) or
has less than $2 million dollars in net tangible assets (if it has been
in business for at least three years); and
o Is issued by a company that has average revenues of less than $6
million for the past three years.
Our common stock has a trading price of less than five dollars, is not trading
on an exchange or NASDAQ and is issued by a company that has average revenues of
less than $6 million. However, we have been in business for at least three years
and, according to the pro forma balance sheet included in the notes of our most
recent audited financial statements, have more than $2 million dollars in net
tangible assets. Accordingly, we do not believe our common stock is presently a
"penny stock." Nonetheless, because our primary tangible assets include highly
volatile marketable securities, our net tangible assets may be less than $2
million dollars at some date in the future and, unless the common stock is
listed on a stock exchange or has a market price of $5, the common stock will
qualify as penny stock.
18
<PAGE>
At any time the Common Stock qualifies as a penny stock, the following
requirements, among others, will generally apply:
Certain broker-dealers who recommend penny stock to persons
other than established customers and accredited investors
(generally institutions with assets in excess of $5,000,000 or
individuals with a net worth in excess of $1,000,000 or an
annual income exceeding $200,000 or $300,000, jointly with
their spouse) must make a special written suitability
determination for the purchaser and receive the purchaser's
written agreement to a transaction prior to sale.
Prior to executing any transaction involving a penny stock,
certain broker-dealers must deliver to certain purchasers a
disclosure schedule explaining the risks involved in owning
penny stock, the broker-dealer's duties to the customer, a
toll-free telephone number for inquiries about the
broker-dealer's disciplinary history, and the customer's
rights and remedies in case of fraud or abuse in the sale.
In connection with the execution of any transaction involving
a penny stock, certain broker dealers must deliver to certain
purchasers the following:
bid and offer price quotes and volume information;
the broker-dealer's compensation for the trade;
the compensation received by certain salespersons for
the trade;
monthly accounts statements; and
a written statement of your financial situation and
investment goals.
These requirements significantly add to the burden of the broker-dealer and
limit the market for penny stocks. If our common stock is or becomes subject to
the existing rules on penny stocks, the liquidity and market price for our
common stock could be severely affected by limiting the ability of
broker-dealers to sell our common stock and the ability of shareholders to sell
their securities in the secondary market.
19
<PAGE>
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities.
---------------------------------------
During the three months ended September 30, 2000, the Company issued 30,000
shares of common stock in transactions that were not registered under the
Securities Act of 1933, as amended (the "Securities Act"), at an average price
of $0.50 per share upon the exercise of options by two previous employees
The above-described issuances of our shares of common stock were
effected in reliance upon the exemption for sales of securities not involving a
public offering, as set forth in Section 4(2) of the Securities Act, based upon
the following: (a) the investors represented and warranted to the Company that
they were "accredited investors," as defined in Rule 501 of Regulation D
promulgated under the Securities Act and/or had such background, sophistication,
education, and experience in financial and business matters as to be able
(alone, or together with a purchaser representative) to evaluate the merits and
risks of an investment in the securities; (b) there was no public offering or
general solicitation with respect to the offering, and the investors represented
and warranted that they were acquiring the securities for their own account and
not with an intent to distribute such securities; (c) the investors were
provided with any and all other information requested by the investors with
respect to the Company, (d) the investors acknowledged that all securities being
purchased were "restricted securities" for purposes of the Securities Act, and
agreed to transfer such securities only in a transaction registered with the SEC
under the Securities Act or exempt from registration under the Securities Act;
and (e) a legend was placed on the certificates and other documents representing
each such security stating that it was restricted and could only be transferred
if subsequently registered under the Securities Act or transferred in a
transaction exempt from registration under the Securities Act.
ITEM 5. OTHER MATTERS
On November 9, 2000, the Company entered into an Asset Purchase and
Sale Agreement, pursuant to which the Company acquired substantially all of the
equipment, customer relations, contracts and intellectual property of Ensign
Information Systems, a Utah-based developer of hosted business processes
applications for the automotive dealership market. The Company did not acquire
or assume the past accounts payable or accounts receivable of Ensign. In
connection with the transaction, the Company also entered into employment
agreements with Richard Holland and Blake Nielson, the founders and principal
shareholders of Ensign.
As consideration for such assets, the Company issued 3,000,000 shares
of the Company's common stock to Ensign. The price paid for such assets was
determined following extensive arms length negotiations. The Company reached its
determination that such consideration was appropriate for the purchase of the
Ensign assets after evaluating the market value of the Company's common stock,
the liquidity and future prospects of the Company, and the historical
performance of Ensign's product and management team.
The Company will continue to use the equipment and other assets for the
purpose of developing, servicing and operating Ensign's software products, as
Ensign did prior to the acquisition.
20
<PAGE>
Ensign Information Systems maintained its books and prepared its
financial statements on a cash, rather than an accrual, basis. For this reason,
the Company is unable to determine whether Item 7 of Form 8-K and Item 310 of
Regulation S-B (collectively requiring the filing of past audited financial
statements for acquired businesses, if certain threshholds are reached) require
financial statements be filed. If the filing of such statements is required, the
Company intends to file them on or about the date that is seventy-five days
after November 9, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. See the Exhibit Index following the signature page
hereof.
(b) Reports on form 8-K.
On August 9, 2000, the Company filed a Current Report on Form 8-K
reporting (i) that on August 2, 2000, the Company terminated its engagement of
Mantyla McReynolds, a professional corporation, as its independent auditors, and
(ii) that on August 3, 2000, the Company engaged Arthur Andersen LLP as the
Company's independent public accountants for the fiscal year ended March 31,
2001.
On September 28, 2000, the Company filed a Current Report on Form 8-K
reporting that (i) on September 26, 2000, the Company dismissed Arthur Andersen
LLP as its independent auditors, and (ii) on September 27, 2000, the Company
again engaged Mantyla McReynolds, a professional corporation, as its independent
public accountants.
21
<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 on November
14, 2000 by the undersigned thereunto duly authorized.
SUNDOG TECHNOLOGIES, INC.
November 14, 2000 /s/ Alan Rudd
----------------- -------------
Alan Rudd
President and
Chief Executive Officer
November 14, 2000 /s/ Stephen Russo
----------------- ------------------
Stephen Russo
President and
Chief Executive Officer
22
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit
Number Title of Document Location
------- ---------------------------------------------- ---------------------------------------
<S> <C> <C>
2.1 Asset Purchase and Sale Agreement between Filed herewith.
the Company and Ensign Information Systems*
3.1 Certificate of Incorporation Incorporated by reference to
Company's registration statement on
Form 10-SB, File No. 0-24372
3.2 Amendment to Certificate of Incorporation Incorporated by reference to
Definitive Information Statement on
Form 14C, filed with the SEC on May
6, 1998
3.3 Bylaws Incorporated by reference to
Company's registration statement on
Form 10-SB, File No. 0-24372
4.1 Specimen Stock Certificate Incorporated by reference to
Company's registration statement on
Form 10-SB, File No. 0-24372
10.1 Employment Agreement with Richard Filed herewith.
Holland
10.2 Employment Agreement with Blake Filed herewith.
Nielson
27.1 Financial data schedule Filed herewith.
</TABLE>
*The schedules and Exhibits to this Agreement, which itemize the assets
acquired and effect the acquisition, are omitted, as permitted by Item 601 of
Regulation S-B. Such omitted schedules and exhibits will be furnished
supplementally to the Commission upon request.
23
