<PAGE>
U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission File No. 0-23995
SIERRA HOLDINGS GROUP, INC.
------------------------
(Name of Small Business Issuer in its Charter)
NEVADA 87-0576421
------ ----------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
5445 South Highland Drive
Salt Lake City, Utah 84117
---------------------------
(Address of Principal Executive Offices)
Issuer's Telephone Number: (801) 278-2805
N/A
---
(Former Name or Former Address, if changed since last Report)
Securities Registered under Section 12(b) of the Exchange Act: None
Name of Each Exchange on Which Registered: None
Securities Registered under Section 12(g) of the Exchange Act: $0.001 par
value common stock
Check whether the Issuer (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 Company was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
Check if there is no disclosure of delinquent files in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of Company's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ ]
State Issuer's revenues for its most recent fiscal year: October 31, 1998 -
$0.
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date
within the past 60 days.
December 31, 1998 - $18.39. There are approximately 18,397 shares of
common voting stock of the Company held by non-affiliates. During the past
two years there has been no "established public market" for shares of common
voting stock of the Company, so the Company has arbitrarily valued these
shares based on $0.001 par value per share.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)
Not Applicable.
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the Issuer's
classes of common equity, as of the latest practicable date:
December 31, 1998
9,326,744
DOCUMENTS INCORPORATED BY REFERENCE
A description of "Documents Incorporated by Reference" is contained
in Item 13 of this report.
Transitional Small Business Issuer Format Yes X No ___
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PART I
Item 1. Description of Business.
------------------------
Business Development.
- ---------------------
For a description of the business development of Sierra Holdings
Group, Inc. (the "Company"), from inception through the third quarter of the
October 31, 1998, fiscal year, see its Registration Statement on Form 10-SB,
as amended, and its quarterly reports on Form 10-QSB for the quarterly periods
ended April 30, 1998, and July 31, 1998, which have previously been filed with
the Securities and Exchange Commission and are incorporated herein by this
reference. See Part III, Item 13 of this Report.
Business.
- ---------
The Company has never engaged in any substantive business
operations. To the extent that it intends to continue to seek the
acquisition of assets, property or business that may benefit itself and
its stockholders, the Company is essentially a "blank check" company. Because
the Company has virtually no assets, conducts no business and has no
employees, management anticipates that any such acquisition would require it
to issue shares of its common stock as the sole consideration for the
acquisition; such an issuance would almost certainly result in a change in
control of the Company. This may also result in substantial dilution of the
shares of current stockholders. The Company's Board of Directors shall make
the final determination whether to complete any such acquisition; the approval
of stockholders will not be sought unless required by applicable laws, rules
and regulations, the Company's Articles of Incorporation or Bylaws, or
contract. Even if stockholder approval is sought, Steven D. Moulton, the
Company's President, beneficially owns approximately 57% of the outstanding
shares of common stock of the Company, and could approve any acquisition,
reorganization or merger he deemed acceptable. The Company makes no assurance
that any future enterprise will be profitable or successful.
The Company is not currently engaging in any substantive business
activity and has no plans to engage in any such activity in the foreseeable
future. In its present form, the Company may be deemed to be a vehicle to
acquire or merge with a business or company. The Company does not intend to
restrict its search to any particular business or industry, and the areas in
which it will seek out acquisitions, reorganizations or mergers may include,
but will not be limited to, the fields of high technology, manufacturing,
natural resources, service, research and development, communications,
transportation, insurance, brokerage, finance and all medically related
fields, among others. The Company recognizes that because of its total lack
of resources, the number of suitable potential business ventures which may be
available to it will be extremely limited, and may be restricted to entities
who desire to avoid what these entities may deem to be the adverse factors
related to an initial public offering ("IPO"). The most prevalent of these
factors include substantial time requirements, legal and accounting costs, the
inability to obtain an underwriter who is willing to publicly offer and sell
shares, the lack of or the inability to obtain the required financial
statements for such an undertaking, limitations on the amount of dilution
public investors will suffer to the benefit of the stockholders of any such
entities, along with other conditions or requirements imposed by various
federal and state securities laws, rules and regulations. Any of these types
of entities, regardless of their prospects, would require the Company to issue
a substantial number of shares of its common stock to complete any such
acquisition, reorganization or merger, usually amounting to between 80 and 95
percent of the outstanding shares of the Company following the completion of
any such transaction; accordingly, investments in any such private entity, if
available, would be much more favorable than any investment in the Company.
Although the Company has not communicated with any other entity with
respect to any potential merger or acquisition transaction, management has
determined to file the above-referenced Registration Statement on Form 10-SB,
as amended, on a voluntary basis. In order to have stock quotations for its
common stock on the National Association of Securities Dealers' Automated
Quotation System ("Nasdaq"), an issuer must have such securities registered
under the 1934 Act. The Securities and Exchange Commission has also recently
determined that issuers must have securities registered under the 1934 Act in
order to have quotations for such securities published on the OTC Bulletin
Board of the NASD. Upon the effective date of the Company's Registration
Statement on Form 10-SB, as amended, which took place on or about June 5,
1998, the Company's common stock became registered for purposes of the 1934
Act. Management believes that this will make the Company more desirable for
entities that may be interested in engaging in a merger or acquisition
transaction.
Management intends to consider a number of factors prior to making
any decision as to whether to participate in any specific business endeavor,
none of which may be determinative or provide any assurance of success. These
may include, but will not be limited to an analysis of the quality of the
entity's management personnel; the anticipated acceptability of any new
products or marketing concepts; the merit of technological changes; its
present financial condition, projected growth potential and available
technical, financial and managerial resources; its working capital, history of
operations and future prospects; the nature of its present and expected
competition; the quality and experience of its management services and the
depth of its management; its potential for further research, development or
exploration; risk factors specifically related to its business operations; its
potential for growth, expansion and profit; the perceived public recognition
or acceptance of its products, services, trademarks and name identification;
and numerous other factors which are difficult, if not impossible, to properly
analyze without referring to any objective criteria.
Regardless, the results of operations of any specific entity may not
necessarily be indicative of what may occur in the future, by reason of
changing market strategies, plant or product expansion, changes in product
emphasis, future management personnel and changes in innumerable other
factors. Further, in the case of a new business venture or one that is in a
research and development mode, the risks will be substantial, and there will
be no objective criteria to examine the effectiveness or the abilities of its
management or its business objectives. Also, a firm market for its products
or services may yet need to be established, and with no past track record, the
profitability of any such entity will be unproven and cannot be predicted with
any certainty.
Management will attempt to meet personally with management and key
personnel of the entity sponsoring any business opportunity afforded to the
Company, visit and inspect material facilities, obtain independent analysis or
verification of information provided and gathered, check references of
management and key personnel and conduct other reasonably prudent measures
calculated to ensure a reasonably thorough review of any particular business
opportunity; however, since the Company has extremely limited current assets
and cash reserves, these activities may be limited, and if undertaken, the
cost and expense thereof will be advanced by management, and may further
dilute the interest of the stockholders of the Company.
The Company is unable to predict the time as to when and if it may
actually participate in any specific business endeavor. The Company
anticipates that proposed business ventures will be made available to it
through personal contacts of directors, executive officers and principal
stockholders, professional advisors, broker dealers in securities, venture
capital personnel, members of the financial community and others who may
present unsolicited proposals. In certain cases, the Company may agree to pay
a finder's fee or to otherwise compensate the persons who submit a potential
business endeavor in which the Company eventually participates. Such persons
may include the Company's directors, executive officers, beneficial owners or
their affiliates. In this event, such fees may become a factor in
negotiations regarding a potential acquisition and, accordingly, may present a
conflict of interest for such individuals.
Although the Company has not identified any potential acquisition
target, the possibility exists that the Company may acquire or merge with a
business or company in which the Company's executive officers, directors,
beneficial owners or their affiliates may have an ownership interest. Current
Company policy does not prohibit such transactions. Because no such
transaction is currently contemplated, it is impossible to estimate the
potential pecuniary benefits to these persons.
Although it currently has no plans to do so, depending on the nature
and extent of services rendered, the Company may compensate members of
management in the future for services that they may perform for the Company.
Because the Company currently has extremely limited resources, and is unlikely
to have any significant resources until it has completed a merger or
acquisition, management expects that any such compensation would take the form
of an issuance of the Company's stock to these persons; this would have the
effect of further diluting the holdings of the Company's other stockholders.
However, due to the minimal amount of time devoted to management by any person
other than Mr. Moulton, there are no preliminary agreements or understandings
with respect to management compensation.
Further, substantial fees are often paid in connection with the
completion of these types of acquisitions, reorganizations or mergers, ranging
from a small amount to as much as $250,000. These fees are usually divided
among promoters or founders, after deduction of legal, accounting and other
related expenses, and it is not unusual for a portion of these fees to be paid
to members of management or to principal stockholders as consideration for
their agreement to retire a portion of the shares of common stock owned by
them. It is not anticipated that any such opportunity will be afforded to
other stockholders. Such fees may become a factor in negotiations regarding
any potential acquisition by the Company and, accordingly, may present a
conflict of interest for such individuals.
Involvement in Other "Blank Check" Companies.
- ---------------------------------------------
From 1984 to 1990, Steven D. Moulton, a director and the
Secretary/Treasurer of the Company, served as a director and executive officer
of several publicly-held development stage companies including Safron, Inc.
(director and Vice President); Sagitta Ventures (director and President);
Jasmine Investments (director and President); Java, Inc. (Secretary/Treasurer
and director); and Onyx Holdings Corporation (director and President). From
1991 to 1994, Mr. Moulton was a director and President of Omni International
Corporation, which is currently known as "Beachport Entertainment
Corporation." Since 1995, he has served as director and executive officer of
the Company (director and Secretary/Treasurer) and Wasatch International
Corporation (formerly "Java, Inc.")(director and President). Mr. Moulton
resigned from his positions with Wasatch International Corporation in July,
1996. Mr. Moulton was the President and a director of Icon Systems, Inc.
("Icon") from its inception to July 31, 1991. In addition, Mr. Moulton was
its Secretary/Treasurer and a director from October, 1995, until his
resignation on December 24, 1998. Each of these companies may be deemed to
have been a "blind pool" or "blank check" company at these times.
Safron, Inc., a Utah corporation, sold 3,000,000 units of its
securities at a price of $0.10 per unit, pursuant to a Registration Statement
on Form S-18 that was filed with the Securities and Exchange Commission with
an effective date of July 17, 1985. A total of $300,000 was raised under this
offering for the purpose of acquiring or participating in a then-unidentified
business opportunity. Mr. Moulton resigned his position with Safron, Inc. in
November, 1987.
Sagitta Ventures, Inc., a Utah corporation, filed a Registration
Statement on Form S-18, effective date April 30, 1987, with the Securities and
Exchange Commission. This Registration Statement provided for the sale of
12,000,000 units at a price of $0.02 per unit. The offering was closed on
July 8, 1987, after 7,479,500 units were sold for an aggregate price of
$149,590. Sagitta acquired all of the issued and outstanding common stock of
Onyx Holding Corporation, with the proceeds from its offering, and
subsequently distributed the Onyx shares as a partial liquidating dividend to
its stockholders. Mr. Moulton was the President and a director of Onyx from
July 10, 1987 through May 1, 1989.
On August 19, 1987, Jasmine Investments completed the sale of
2,338,390 units to the public pursuant to a Registration Statement on Form
S-18, at a price of $0.10 per share. A total of $233,839 was raised under
this offering. After Mr. Moulton's resignation, Jasmine consummated a merger
transaction and became known as "Audioventures Corporation."
Java, Inc. sold 1,320,350 shares of its common stock at $0.10 per
share pursuant to a Registration Statement on Form S-18, which became
effective on April 22, 1986. On November 7, 1986, the stockholders of Java
approved the acquisition of Quazon Communications, Inc., an Illinois
corporation, which was engaged in the business of manufacturing and marketing
computer terminals. Mr. Moulton resigned his position as Secretary/Treasurer
on November 7, 1986, and resigned from the Board of Directors in August, 1987.
Mr. Moulton resigned his positions with Omni International
Corporation before its securities offering and had no involvement therein.
In addition to the Company, Michelle Wheeler and Jeff Taylor were
also involved as directors, executive officers and/or five percent
stockholders of Icon until their resignations on December 24, 1998. During
their involvement with Icon, it may be deemed to have been a "blank check"
company.
"Year 2000".
- -----------
Because the Company is not presently engaged in any substantial
business operations, management does not believe that computer problems
associated with the change of year to the year 2000 will have any material
effect on its operations. However, the possibility exists that the Company
may merge with or acquire a business that will be negatively affected by the
"Year 2000" problem. The effect of such problem or the Company in the future
can not be predicted with any accuracy until such time as the Company
identifies a merger or acquisition target.
Principal Products or Services and their Markets.
- -------------------------------------------------
The extremely limited business operations of the Company,
as now contemplated, involve those of a "blank check" company. The only
activity to be conducted by the Company is to seek out and investigate the
acquisition of any viable business opportunity by purchase and exchange for
securities of the Company or pursuant to a reorganization or merger through
which securities of the Company will be issued or exchanged.
Distribution Methods of the Products or Services.
- -------------------------------------------------
Management will seek out and investigate business opportunities
through every reasonably available fashion, including personal contacts,
professionals, securities broker dealers, venture capital personnel, members
of the financial community and others who may present unsolicited proposals;
the Company may also advertise its availability as a vehicle to bring a
company to the public market through a "reverse" reorganization or merger.
Status of any Publicly Announced New Product or Service.
- --------------------------------------------------------
None; not applicable.
Competition.
- ------------
There are literally thousands of "blank check" companies engaged in
endeavors similar to those engaged in by the Company; many of these companies
have substantial current assets and cash reserves. Competitors also include
thousands of other publicly-held companies whose business operations have
proven unsuccessful, and whose only viable business opportunity is that of
providing a publicly-held vehicle through which a private entity may have
access to the public capital markets. There is no reasonable way to predict
the competitive position of the Company or any other entity in these
endeavors; however, the Company, having virtually no assets or cash reserves,
will no doubt be at a competitive disadvantage in competing with entities
which have recently completed IPO's, have significant cash resources and have
operating histories when compared with the complete lack of any substantive
operations by the Company.
Sources and Availability of Raw Materials.
- ------------------------------------------
None; not applicable.
Dependence on One or a Few Major Customers.
- -------------------------------------------
None; not applicable.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or
Labor Contracts.
- ----------------
None; not applicable.
Governmental Approval of Principal Products or Services.
- --------------------------------------------------------
On the effectiveness of the Company's Registration Statement on Form
10-SB, which occurred on or about June 5, 1998, the Company became
subject to Regulation 14A regarding proxy solicitations promulgated by the
Securities and Exchange Commission under the 1934 Act. Section 14(a)
of the 1934 Act requires all companies with securities registered pursuant to
Section 12(g) thereof to comply with the rules and regulations of the
Securities and Exchange Commission regarding proxy solicitations as outlined
in Regulation 14A. Matters submitted to stockholders of the Company at a
special or annual meeting thereof or pursuant to a written consent shall
require the Company to provide its stockholders with the information outlined
in Schedules 14A or 14C of Regulation 14; preliminary copies of this
information must be submitted to the Securities and Exchange Commission at
least 10 days prior to the date that definitive copies of this information are
forwarded to stockholders.
Management intends to conduct a full evaluation of the worthiness of
any business proposal presented to it; nonetheless, it believes this process
may provide additional time within which to evaluate any business proposal
presented to it, and may eliminate proposals from entities not willing to
undergo the public and agency scrutiny involved in providing and filing
information required under Regulation 14. Management recognizes that this
filing process may deter other potential business venturers by reason of their
inability to predict the timeliness of their potential acquisition,
reorganization or merger due to the uncertainty related to the time involved
in reviewing Regulation 14A filings by the Securities and Exchange Commission;
however, acquisitions or reorganizations not requiring stockholder approval
may be completed by management, in its sole discretion, with the submission by
management of an Information Statement pursuant to Regulation 14C outlining
any remedial proposals attendant to any such acquisition or reorganization,
including changing the name of the Company or increasing or decreasing the
number of authorized or outstanding shares of the Company's common stock.
Costs associated with filings required by the Company under Section
12(g) of the 1934 Act and Regulation 14A of the Securities and Exchange
Commission will have to be advanced by management, the Company's principal
stockholders or any potential business venturer, and may further dilute the
interest of the public stockholders. In the case of a merger requiring prior
stockholder approval and the submission of financial statements of the Company
and other party or parties to the merger, legal and accounting costs will be
significantly higher, even though the adoption, ratification and the approval
of any such merger will be virtually assured if recommended by Steven D.
Moulton, the principal stockholder of the Company.
Effects of Existing or Probable Governmental Regulations.
- ---------------------------------------------------------
Since the Company was initially incorporated, federal and state
securities laws, rules and regulations have made the participation in or the
conducting of an IPO substantially easier for certain small and developmental
stage companies, reducing the time constraints previously involved, the legal
and accounting costs and the financial periods required to be included in the
financial statements. Rule 504 of Regulation D of the Securities and Exchange
Commission no longer requires the filing of a Registration Statement with any
state or territory as a condition to its use; however, this Rule is no longer
available to "blank check" companies. Accordingly, because the Company is
presently deemed to be a "blank check" company, this method of raising funds
is foreclosed to it. Rule 504 is also not available to "reporting issuers,"
which the Company became on the effectiveness of its Registration Statement on
Form 10-SB, as amended.
The integrated disclosure system for small business issuers adopted
by the Securities and Exchange Commission in Release No. 34-30968 and
effective as of August 13, 1992, substantially modified the information and
financial requirements of a "Small Business Issuer," defined to be an issuer
that has revenues of less than $25 million; is a U.S. or Canadian issuer;
is not an investment company; and if a majority owned subsidiary, the parent
is also a small business issuer; provided, however, that an entity is not a
small business issuer if it has a public float (the aggregate market value of
the issuer's outstanding securities held by non-affiliates) of $25 million or
more.
A number of state securities commissions have adopted the use of
Form U-7 for SCOR, which also substantially simplifies the registration
process for IPO's; Form U-7 is primarily used in connection with offerings
conducted pursuant to Rule 504 of the Securities and Exchange Commission, but
is not limited to this use. To the extent that Rule 504 and the use of SCOR
are unavailable to the Company due to its status as a "blank check"
company, the use of Form U-7 will also be unavailable in this regard.
The Securities and Exchange Commission, state securities commissions
and the North American Securities Administrators Association, Inc., ("NASAA")
have expressed an interest in adopting policies that will streamline the
registration process and make it easier for a small business issuer to have
access to the public capital markets. The present laws, rules and regulations
designed to promote availability for the small business issuer to these
capital markets and similar laws, rules and regulations that may be adopted in
the future will substantially limit the demand for "blank check" companies
like the Company, and may make the use of these companies obsolete.
Cost and Effect of Compliance with Environmental Laws.
- ------------------------------------------------------
None; not applicable. However, environmental laws, rules and
regulations may have an adverse effect on any business venture viewed by the
Company as an attractive acquisition, reorganization or merger candidate, and
these factors may further limit the number of potential candidates available
to the Company for acquisition, reorganization or merger.
Research and Development Expenses.
- ----------------------------------
None; not applicable.
Number of Employees.
- --------------------
None.
Item 2. Description of Property.
------------------------
Other than cash in the amount of approximately $1,156 at October 31,
1998, the Company has no appreciable assets, property or business. The
Company rents office space from a non-affiliated individual for $50 per month,
which is paid in one $300 payment every six months. Other than this
arrangement, there are no preliminary agreements or understandings with
respect to any office facility. Because the Company has no business, its
activities have been limited to keeping itself in good standing in the State
of Utah and, recently, in the State of Nevada, and with preparing its
Registration Statement on Form 10-SB, as amended, the accompanying financial
statements and the Company's periodic reports under the 1934 Act. These
activities have consumed an insignificant amount of management's time.
Item 3. Legal Proceedings.
------------------
The Company is not a party to any pending legal proceeding. No
federal, state or local governmental agency is presently contemplating any
proceeding against the Company. No director, executive officer or affiliate
of the Company or owner of record or beneficially of more than five percent of
the Company's common stock is a party adverse to the Company or has a
material interest adverse to the Company in any proceeding.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year covered by this Report.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
---------------------------------------------------------
Market Information
- ------------------
There has never been any established "public market" for shares of
common stock of the Company. The Company intends to submit for listing on the
OTC Bulletin Board of the National Association of Securities Dealers, Inc.
(the "NASD"); however, management does not expect any public market to develop
unless and until the Company completes an acquisition or merger. In any
event, no assurance can be given that any market for the Company's common
stock will develop or be maintained. If a public market ever develops in the
future, the sale of "unregistered" and "restricted" shares of common stock
pursuant to Rule 144 of the Securities and Exchange Commission by the
stockholders named under the caption "Recent Sales of Unregistered
Securities," below, may have a substantial adverse impact on any such public
market.
There are no outstanding options, warrants or calls to purchase any
of the authorized securities of the Company.
The sales of an aggregate of 9,010,002 "unregistered" and
"restricted" post-split shares of common stock to the persons named under the
caption "Recent Sales of Unregistered Securities," below, were the only sales
of any securities of the Company during the past three years. Future sales of
any of these securities or any securities of the Company issued in any
acquisition, reorganization or merger may have a future adverse effect on any
"public market" that may develop in the common stock of the Company. See the
caption "Recent Sales of Unregistered Securities" of this Report.
Holders.
- --------
The number of record holders of the Company's securities as of the
date of this Report is approximately 191.
Dividends.
- ----------
The Company has not declared any cash dividends with respect to its
common stock or its preferred stock, and does not intend to declare dividends
in the foreseeable future. The future dividend policy of the Company cannot
be ascertained with any certainty, and if and until the Company completes any
acquisition, reorganization or merger, no such policy will be formulated.
There are no material restrictions limiting, or that are likely to limit, the
Company's ability to pay dividends on its securities.
Recent Sales of Unregistered Securities.
- ----------------------------------------
Date Number of Aggregate
Name Acquired Shares Consideration
---- -------- --------- -------------
Michelle Wheeler 2/26/98 2,000,000(1) Services
2/27/96 334(1) Services
Jeff Taylor 2/26/98 2,000,000(1) Services
2/27/96 334(1) Services
Steven D. Moulton 2/26/98 2,000,000(1) Services
2/26/98 3,000,000 $10,000
Wasatch Consulting 2/27/96 7,667 Services
B. W. Blackstone, Ltd.2/27/96 1,667 Services(2)
(1) These shares were valued at fair market value of $0.003 per
share.
(2) B.W. Blackstone, Ltd., is the "doing business as" name of an
individual who is not affiliate of the Company, and who assisted the Company
with its court-ordered stockholder meeting in 1996. B.W. Blackstone is not
affiliated with any director, executive officer or principal stockholder of
the Company. See the heading "Business Development" of this Registration
Statement.
Item 6. Management's Discussion and Analysis or Plan of Operation.
----------------------------------------------------------
Plan of Operation.
- ------------------
The Company has not engaged in any material operations or had any
revenues from operations during the last two fiscal years. The Company's plan
of operation for the next 12 months is to continue to seek the acquisition of
assets, property or business that may benefit the Company and its
stockholders. Because the Company has virtually no resources, management
anticipates that to achieve any such acquisition, the Company will be required
to issue shares of its common stock as the sole consideration for such
acquisition.
Upon the effectiveness of its Registration Statement on Form 10-SB,
as amended, on or about June 5, 1998, the Company became subject to the
periodic reporting obligations of Section 13 of the 1934 Act. This Section
requires the Company to file (i) an annual report on Form 10-KSB with the
Securities and Exchange Commission within 90 days of the close of each fiscal
year (Reg. Sections 240.13a-1 and 249.310b); (ii) a quarterly report on Form
10-QSB within 45 days of the end of each of the first three quarters of its
fiscal year (Reg. Sections 240.13a-13 and 249.308b); and (iii) a current
report on Form 8-K within 15 days of the occurrence of certain material events
(e.g., changes in accountants, acquisitions or dispositions of a substantial
amount of assets not in the ordinary course of business) (Reg. Sections
240.13a-11 and 249.308). In addition, annual reports on Form 10-KSB must be
accompanied by audited financial statements as of the end of the issuer's most
recent fiscal year. These reporting requirements may deter potential
reorganization candidates that are not willing to undergo the public and
agency scrutiny resulting therefrom.
During the next 12 months, the Company's only foreseeable cash
requirements will relate to maintaining the Company in good standing;
making the requisite filings with the Securities and Exchange Commission or
the payment of expenses associated with reviewing or investigating any
potential business venture; paying its monthly office rental of $50 and the
monthly salary of Steven D. Moulton ($750 per month); and principal and
interest on the $10,000 loan from a stockholder in the event that such
stockholder makes demand therefor. Management believes that its cash on hand
of $1,156 as of October 31, 1998, will be insufficient to meet these expenses
for the next 12 months; and additional funding will likely have to be advanced
by management or principal stockholders as loans to the Company. Because the
Company has not identified any such venture as of the date of this
Registration Statement, it is impossible to predict the amount of any such
loan. However, any such loan will not exceed $25,000 and will be on terms no
less favorable to the Company than would be available from a commercial lender
in an arm's length transaction. Management does not intend to raise any
required funds through any private placement of "unregistered" and
"restricted" securities or any public offering of its common stock. Nor does
the Company intend to undertake any offering of its securities under
Regulation S of the Securities and Exchange Commission. As of the date of
this Report, the Company has not begun seeking any acquisition and there are
no plans, proposals, arrangements or understandings with respect to the sale
or issuance of additional securities by the Company prior to the location of
any acquisition or merger candidate.
Because the Company is not currently making any offering of its
securities, and does not anticipate making any such offering in the
foreseeable future, management does not believe that Rule 419 promulgated by
the Securities and Exchange Commission under the Securities Act of 1933, as
amended, concerning offerings by blank check companies, will have any effect
on the Company or any activities in which it may engage in the foreseeable
future.
Results of Operations.
- ----------------------
Revenues for the fiscal years ended October 31, 1998 and 1997, were
$0 and $0, respectively.
The Company had a net loss of $40,345 (a loss of $0.00 per share)
during the fiscal year ended October 31, 1998, and a net loss of $114 (a loss
of $0.00 per share), for the fiscal year ended October 31, 1997.
Liquidity.
- ----------
The Independent Auditors' Report, dated November 24, 1998,
accompanying the Company's audited financial statements for the period ended
October 31, 1998 and 1997, express substantial doubt as to the Company's
ability to continue as a going concern. This is due to the fact that the
Company is a development stage company with no significant operating results
to date.
Item 7. Financial Statements.
---------------------
Financial Statements for the years ended
October 31, 1998, and 1997
Independent Auditors' Report
Balance Sheet - October 31, 1998
Statements of Operations for the Years Ended
October 31, 1998 and 1997, and from Inception
on December 26, 1986, through October 31, 1998
Statements of Stockholders' Equity (Deficit),
from Inception on December 26, 1986, through
October 31, 1998
Statements of Cash Flows for the Years Ended
October 31, 1998 and 1997, and from Inception
on December 26, 1986, through October 31, 1998
Notes to Financial Statements
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
- ---------------------
None; not applicable.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
- --------------------------------------------------
Identification of Directors and Executive Officers
- --------------------------------------------------
The following table sets forth the names of all current directors
and executive officers of the Company. These persons will serve until the
next annual meeting of the stockholders (held in May of each year) or until
their successors are elected or appointed and qualified, or their prior
resignation or termination.
<TABLE>
<CAPTION>
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
- ---- ---- ----------- --------------
<S> <C> <C> <C>
Steven D. Moulton President 11/97 *
Secretary/ 2/96 11/97
Treasurer 2/96 11/97
Director 2/96 *
Jeff Taylor Vice President 2/96 *
Director 2/96 *
Michelle Wheeler President 2/96 11/97
Secretary/ 11/97 *
Treasurer 11/97 *
Director 2/96 *
</TABLE>
* These persons presently serve in the capacities
indicated.
Business Experience.
- --------------------
Steven D. Moulton, Director and President. Mr. Moulton is
36 years of age. He graduated from Olympus High School in Salt Lake City,
Utah in 1980. From 1984 to 1990, he served as a director and executive
officer of several publicly-held development stage companies including Safron,
Inc. (director and Vice President); Sagitta Ventures (director and President);
Jasmine Investments (director and President); Java, Inc. (Secretary/Treasurer
and director); and Onyx Holdings Corporation (director and President). From
1991 to 1994, Mr. Moulton was a director and President of Omni International
Corporation, which is currently known as "Beachport Entertainment
Corporation." From 1995 until his resignation on December 24, 1998, he served
as director and Secretary/Treasurer of Icon Systems, Inc. Since 1996, he has
served as director and executive officer of the Company (director and
Secretary/Treasurer and later as President) and Wasatch International
Corporation (director and President). Mr. Moulton resigned from his positions
with Wasatch International Corporation in July, 1996. With the exception of
Icon, Sagitta Ventures, Omni International Corporation and Wasatch
International Corporation, none of these companies was subject to the
reporting requirements of the Securities and Exchange Commission. Mr. Moulton
owned and operated a Chem-Dry carpet cleaning franchise from 1991 to 1995.
Jeff Taylor, Director and Vice President. Mr. Taylor is 32 years of
age. He graduated from Hiram Johnson High School in Sacramento, California,
in 1983. From 1988 to 1991, he was employed as an auto painter at Fabrication
Specialties in Sacramento. In 1991, Mr. Taylor moved his family to Utah. Mr.
Taylor has an A.S. degree from Utah Valley State College and is currently
enrolled in the College of Nursing at the University of Utah. He plans to
pursue a masters degree in Nurse Anesthesia. From 1996, until his resignation
on December 24, 1998, Mr. Taylor served as Vice President of Icon Systems,
Inc.
Michelle Wheeler, Director and Secretary/Treasurer. Ms. Wheeler,
age 31, is a 1991 graduate of the University of Utah, where she received a
B.S. degree in Communications. From July, 1991 through January, 1994, she was
a reservation agent for Delta Airlines in Salt Lake City, Utah. Since then,
she has been a homemaker. Ms. Wheeler has NASD series 6 and 63 licenses.
From 1996, until her resignation on December 24, 1998, Ms. Wheeler served as
President of Icon Systems, Inc.
Significant Employees.
- ----------------------
The Company has no employees who are not executive officers, but who
are expected to make a significant contribution to the Company's business. It
is expected that current members of management and the Board of Directors will
be the only persons whose activities will be material to the Company's
operations. Members of management are the only persons who may be deemed to
be promoters of the Company.
Family Relationships.
- ---------------------
There are no family relationships between any directors or executive
officers of the Company, either by blood or by marriage.
Involvement in Certain Legal Proceedings.
- -----------------------------------------
During the past five years, no present or former director, executive
officer or person nominated to become a director or an executive officer of
the Company:
(1) was a general partner or executive officer of any business
against which any bankruptcy petition was filed, either at the time of the
bankruptcy or two years prior to that time;
(2) was convicted in a criminal proceeding or named subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(3) was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities or banking
activities; or
(4) was found by a court of competent jurisdiction (in a civil
action), the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated a federal or state securities or
commodities law, and the judgment has not been reversed, suspended or vacated.
Compliance with Section 16(a) of the Exchange Act
- -------------------------------------------------
Each of the Company's directors and executive officers filed a Form
3 Initial Statement of Beneficial Ownership of Securities with the Commission
on or about May 19, 1998.
Item 10. Executive Compensation.
-----------------------
Cash Compensation
- -----------------
The following table sets forth the aggregate compensation paid by
the Company for services rendered during the periods indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Secur-
ities All
Name and Year or Other Rest- Under- LTIP Other
Principal Period Salary Bonus Annual rictedlying Pay- Comp-
Position Ended ($) ($) Compen-Stock Optionsouts ensat'n
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Steven D.
Moulton 10/31/96 0 0 0 0 0 0 0
President, 10/31/97 0 0 0 0 0 0 0
Director 10/31/98 5250 0 0 2000000(2) 0 0 0
Jeff Taylor 10/31/96 0 0 0 0 0 0 0
V.President 10/31/97 0 0 0 334(1) 0 0 0
Director 10/31/98 0 0 0 2000000(2) 0 0 0
Michelle
Wheeler 10/31/96 0 0 0 0 0 0 0
Secretary/
Treasurer 10/31/97 0 0 0 334(1) 0 0 0
Director 10/31/98 0 0 0 2000000(2) 0 0 0
(1) In February, 1996, 8,334 post-split "unregistered and
"restricted" shares of the Company's common stock were issued to
these persons in consideration for services rendered: 7,667
shares to Wasatch Consulting Group, Inc.; and, 334 shares to each
Michelle Wheeler and Jeff Taylor. These shares have been
arbitrarily valued at par value per share.
(2) In February, 1998, 2,000,000 post-split "unregistered" and
"restricted" shares of the Company's common stock were
issued to each of these persons in consideration of
services rendered. These shares have been arbitrarily valued at
$0.003 per share.
</TABLE>
Except as stated below, no cash compensation, deferred compensation
or long-term incentive plan awards were issued or granted to the Company's
management during the fiscal years ended October 31, 1998 and 1997. Further,
no member of the Company's management has been granted any option or stock
appreciation right; accordingly, no tables relating to such items have been
included within this Item. From February through April, 1998, Steven D.
Moulton received a salary of $500 per month for his services and President of
the Company. This compensation was increased to $750 per month, starting in
May, 1998; Mr. Moulton and the Company have not entered into any written
agreement with respect to Mr. Moulton's services or the compensation that he
receives therefor.
There are no plans whereby the Company would issue any of its
securities to management, promoters, their affiliates or associates in
consideration of services rendered or otherwise.
Compensation of Directors.
- --------------------------
In March, 1998, Michelle Wheeler and Jeff Taylor were compensated
$100 each for their participation in a meeting of the Company's Board of
Directors. However, there are no standard arrangements pursuant to which the
Company's directors are compensated for any services provided as director. No
additional amounts are payable to the Company's directors for committee
participation or special assignments.
Although Ms. Wheeler and Mr. Taylor were compensated $100 each in
March, 1998, for participation in a Board of Directors meeting, there are no
arrangements pursuant to which any of the Company's directors was compensated
during the Company's last completed fiscal year for any service provided as
director.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements.
- -------------
There are no employment contracts, compensatory plans or
arrangements, including payments to be received from the Company, with respect
to any director or executive officer of the Company which would in any way
result in payments to any such person because of his or her resignation,
retirement or other termination of employment with the Company or its
subsidiaries, any change in control of the Company, or a change in the
person's responsibilities following a change in control of the Company.
Nor are there any agreements or understandings for any director or
executive officer to resign at the request of another person; none of the
Company's directors or executive officers is acting on behalf of or will act
at the direction of any other person.
Bonuses and Deferred Compensation
- ---------------------------------
None.
Compensation Pursuant to Plans
- ------------------------------
None.
Pension Table
- -------------
None; not applicable.
Other Compensation
- ------------------
None.
Termination of Employment and Change of Control Arrangements
- ------------------------------------------------------------
None.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
---------------------------------------------------------------
Security Ownership of Certain Beneficial Owners.
- ------------------------------------------------
The following table sets forth the share holdings of those persons
who own more than five percent of the Company's common stock as of October 31,
1998. Each of these persons has sole investment and sole voting power over
the shares indicated.
<TABLE>
<CAPTION>
Number Percentage
Name and Address of Shares Beneficially Owned of Class
- ---------------- ---------------------------- --------
<S> <C> <C>
Steven D. Moulton 5,307,679(1) 57%
4848 S. Highland Dr., #353
Salt Lake City, Utah 84117
Jeff Taylor 2,000,334 21%
1879 Siggard Drive
Salt Lake City, Utah 84106
Michelle Wheeler 2,000,334 21%
4817 S. Fortuna Way
Salt Lake City, Utah 84127
--------- -----
TOTALS 9,308,347 99%
</TABLE>
(1) Steven D. Moulton is the President, director and 9% shareholder of
Wasatch Consulting Group, which is the record holder of 7,667 shares of the
Company's common stock. These shares have been added to the ownership totals
for Mr. Moulton. Wasatch Consulting is a business consultant specializing is
mergers and acquisitions consulting. It assisted the Company with its court-
ordered stockholder meeting in 1996, and has also rendered consulting services
to Icon Systems, Inc. There are no preliminary understandings or agreements
between the Company and Wasatch Consulting with respect to consulting services
to be rendered in the future.
Security Ownership of Management.
- ---------------------------------
The following table sets forth the share holdings of the Company's
directors and executive officers as of October 31, 1998. Each of these
persons has sole investment and sole voting power over the shares indicated.
<TABLE>
<CAPTION>
Number Percentage
Name and Address of Shares Beneficially Owned of Class
- ---------------- ---------------------------- ----------
<S> <C> <C>
Steven D. Moulton 5,307,679(1) 57%
4848 S. Highland Dr., #353
Salt Lake City, Utah 84117
Jeff Taylor 2,000,334 21%
1879 Siggard Drive
Salt Lake City, Utah 84106
Michelle Wheeler 2,000,334 21%
4817 S. Fortuna Way
Salt Lake City, Utah 84127
--------- -----
All directors and executive
officers as a group (3) 9,308,347 99%
</TABLE>
(1) Steven D. Moulton is the President, director and 9% shareholder of
Wasatch Consulting Group, which is the record holder of 7,667 shares of the
Company's common stock. These shares have been added to the ownership totals
for Mr. Moulton.
Changes in Control.
- -------------------
There are no present arrangements or pledges of the Company's
securities which may result in a change in control of the Company.
Item 12. Certain Relationships and Related Transactions.
-----------------------------------------------
Transactions with Management and Others.
- ----------------------------------------
There have been no material transactions, series of similar
transactions, currently proposed transactions, or series of similar
transactions, to which the Company or any of its subsidiaries was or is to be
a party, in which the amount involved exceeded $60,000 and in which any
director or executive officer, or any security holder who is known to the
Company to own of record or beneficially more than five percent of the
Company's common stock, or any member of the immediate family of any of the
foregoing persons, had a material interest. However, each of the current
directors and executive officers has received "unregistered" and "restricted"
shares of the Company's common stock in consideration of services rendered.
Steven D. Moulton has received an aggregate of 5,300,012 "unregistered" and
"restricted" post-split shares in consideration of services rendered and the
sum of $10,000. See the caption "Executive Compensation" of this Report. In
addition, Wasatch Consulting Group, Inc., which may be deemed to be an
affiliate of Mr. Moulton, has loaned the Company the sum of $10,000. This
loan, which is not evidenced by any promissory note or other writing, is
payable on demand and bears interest at the rate of 12% per year. The purpose
of the loan was to fund the Company's operating expenses for the 12 months
following the date of the loan, including payment of legal and accounting fees
incurred in connection with the preparation of the Company's Registration
Statement on Form 10-SB, as amended, and the reports that are to be filed
under the 1934 Act, and payment of Mr. Moulton's salary and office
rental.
Certain Business Relationships.
- -------------------------------
There have been no material transactions, series of similar
transactions, currently proposed transactions, or series of similar
transactions, to which the Company or any of its subsidiaries was or is to be
a party, in which the amount involved exceeded $60,000 and in which any
director or executive officer, or any security holder who is known to the
Company to own of record or beneficially more than five percent of the
Company's common stock, or any member of the immediate family of any of the
foregoing persons, had a material interest. However, see the caption
"Transactions with Management and Others" of this Report.
Indebtedness of Management.
- ---------------------------
There have been no material transactions, series of similar
transactions, currently proposed transactions, or series of similar
transactions, to which the Company or any of its subsidiaries was or is to be
a party, in which the amount involved exceeded $60,000 and in which any
director or executive officer, or any security holder who is known to the
Company to own of record or beneficially more than five percent of the
Company's common stock, or any member of the immediate family of any of the
foregoing persons, had a material interest. However, see the caption
"Transactions with Management and Others" of this Report.
Parents of the Issuer.
- ----------------------
The Company has no parents, except to the extent that Mr. Moulton
may be deemed to be a parent by virtue of his stock holdings. See the caption
"Security Ownership of Certain Beneficial Owners and Management" of this
Report.
Transactions with Promoters.
- ----------------------------
There have been no material transactions, series of similar
transactions, currently proposed transactions, or series of similar
transactions, to which the Company or any of its subsidiaries was or is to be
a party, in which the amount involved exceeded $60,000 and in which any
promoter or founder, or any member of the immediate family of any of the
foregoing persons, had a material interest. However, see the caption
"Transactions with Management and Others" of this Report.
Item 13. Exhibits and Reports on Form 8-K.
---------------------------------
Reports on Form 8-K
None during the past two years.
Exhibits*
(i)
Where Incorporated
in this Report
--------------
Registration Statement on Form 10-SB, Part I
filed April 6, 1998**
Registration Statement on Form 10-SB-A1, Part I
filed August 17, 1998**
Registration Statement on Form 10-SB-A2, Part I
filed October 20, 1998**
Quarterly Report on Form 10-QSB for the Part I
quarterly period ended April 30, 1998,
filed July 20, 1998
Quarterly Report on Form 10-QSB for the Part I
quarterly period ended July 31, 1998,
filed September 1, 1998
Quarterly Report on Form 10-QSB-A1 Part I
for the quarterly period ended July 31,
1998, filed October 20, 1998
(ii)
Exhibit
Number Description
- ------ -----------
27 Financial Data Schedule
* Summaries of all exhibits contained within this
Report are modified in their entirety by reference
to these Exhibits.
** These documents and related exhibits have been
previously filed with the Securities and Exchange
Commission and are incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this Report
to be signed on its behalf by the undersigned, thereunto duly authorized.
SIERRA HOLDINGS GROUP, INC.
Date: 1-26-99 By /s/ Steven D. Moulton
-------------- --------------------------------------
Steven D. Moulton, Director and
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, this Report has been signed below by the following persons on
behalf of the Company and in the capacities and on the dates indicated:
SIERRA HOLDINGS GROUP, INC.
Date: 1-26-99 By /s/ Steven D. Moulton
------------- ------------------------------------
Steven D. Moulton, Director and
President
Date: 1-26-99 By /s/ Jeff Taylor
------------- ------------------------------------
Jeff Taylor, Director and Vice
President
Date: 1-26-99 By /s/ Michelle Wheeler
-------------- -------------------------------------
Michelle Wheeler, Director and
Secretary/Treasurer
<PAGE>
SIERRA HOLDINGS GROUP, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
October 31, 1998 and 1997
<PAGE>
INDEPENDENT AUDITORS REPORT
The Board of Directors
Sierra Holdings Group, Inc.
Salt Lake City, Utah
We have audited the accompanying balance sheets of Sierra Holdings Group, Inc.
(a development stage company) as of October 31, 1998 and the related
statements of operations, stockholders equity (deficit), and cash flows for
the years ended October 31, 1998 and 1997 and for the period from inception on
December 26, 1986 through October 31, 1998. These financial statements are
the responsibility of the Company s management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Sierra Holdings Group, Inc.
(a development stage company) as of October 31, 1998 and the results of its
operations and its cash flows for the years ended October 31, 1998 and 1997
and from inception on December 26, 1986 through October 31, 1998, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company is a development stage company with no
significant operating results to date, which raises substantial doubt about
its ability to continue as a going concern. Management's plans with regard to
these matters are also described in Note 3. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
/S/Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
November 24, 1998
<TABLE>
SIERRA HOLDINGS GROUP, INC.
(A Development Stage Company)
Balance Sheet
<CAPTION>
ASSETS
October 31,
1998
<S> <C>
CURRENT ASSETS
Cash $ 1,156
Total Current Assets 1,156
TOTAL ASSETS $ 1,156
LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 615
Shareholder loan payable (Note 2) 10,000
Accrued interest payable 575
Total Liabilities 11,190
STOCKHOLDERS EQUITY (DEFICIT)
Common stock: 100,000,000 shares
authorized of $0.001 par value,
9,326,744 shares issued and outstanding 9,327
Capital in excess of par value 78,950
Deficit accumulated during the development stage (98,311)
Total Stockholders Equity (Deficit) (10,034)
TOTAL LIABILITIES, AND STOCKHOLDERS EQUITY (DEFICIT) $ 1,156
</TABLE>
<TABLE>
SIERRA HOLDINGS GROUP, INC.
(A Development Stage Company)
Statements of Operations
<CAPTION>
From
Inception on
December 26,
For the Years Ended 1986 Through
October 31, October 31,
1998 1997 1998
<S> <C> <C> <C>
REVENUES $ - $ - $ -
EXPENSES 40,345 114 98,311
NET LOSS $ (40,345) $ (114) $ (98,311)
BASIC LOSS PER SHARE $ (0.00) $ (0.00)
WEIGHTED AVERAGE NUMBER
OF SHARES 6,268,234 18,132
</TABLE>
<TABLE>
SIERRA HOLDINGS GROUP, INC.
(A Development Stage Company)
Statements of Stockholders Equity (Deficit)
<CAPTION>
Deficit
Accumulated
Capital in During the
Common Stock Excess of Development
Shares Amount Par Value Stage
<S> <C> <C> <C> <C>
Balance at inception
on December 26, 1986 - $ - $ - $ -
Shares issued for cash
at $7.50 per share 667 1 4,999 -
Partial liquidating
dividend - April 17, 1987 - - (2,484) -
Net loss for the year ended
October 31, 1987 - - - (910)
Balance, October 31, 1987 667 1 2,515 (910)
Net loss for the year ended
October 31, 1988 - - - (1,701)
Balance, October 31, 1988 667 1 2,515 (2,611)
Net income for the year ended
October 31, 1989 - - - 251
Balance, October 31, 1989 667 1 2,515 (2,360)
Contribution and
cancellation of shares
by officers of the Company (465) - - -
Shares issued for services
valued at $3.00 per share 1,697 2 5,088 -
Expenses paid on behalf
of the Company by a
shareholder - - 304 -
Net loss for the year ended
October 31, 1990 - - - (5,650)
Balance, October 31, 1990 1,899 3 7,907 (8,010)
Net loss for the year ended
October 31, 1991 - - - (100)
Balance, October 31, 1991 1,899 $ 3 $ 7,907 $ (8,110)
Shares issued for services
valued at $3.00 per share 2,900 3 8,697 -
Shares issued in
acquisition of Nature
Talks Corp. valued at
$3.00 per share 3,333 3 9,997 -
Net loss for the year ended
October 31, 1992 - - - (19,275)
Balance, October 31, 1992 8,132 9 26,601 (27,385)
Net loss for the year ended
October 31, 1993 - - - (100)
Balance, October 31, 1993 8,132 9 26,601 (27,485)
Net loss for the year ended
October 31, 1994 - - - (100)
Balance, October 31, 1994 8,132 9 26,601 (27,585)
Net loss for the year ended
October 31, 1995 - - - (107)
Balance, October 31, 1995 8,132 9 26,601 (27,692)
Shares issued for services
valued at $3.00 per share 10,000 10 29,990 -
Expenses paid on behalf of
the company by a
shareholder - - 667 -
Net loss for the year ended
October 31, 1996 - - - (30,160)
Balance, October 31, 1996 18,132 19 57,258 (57,852)
Net loss for the year ended
October 31, 1997 - - - (114)
Balance, October 31, 1997 18,132 19 57,258 (57,966)
Issuance of fractional
shares for 1-for-300
reverse stock split 7,375 7 (7) -
Shares issued for cash
at $0.01 per share 300,000 300 2,700 -
Issuance of fractional
shares for 1-for-10
reverse stock split 1,237 1 (1) -
Shares issued for
services valued at
$0.003 per share 6,000,000 6,000 12,000 -
Shares issued for cash
at approximately
$0.003 per share 3,000,000 3,000 7,000 -
Net loss for the year
ended October 31, 1998 - - - (40,345)
Balance, October 31,
1998 9,326,744 $ 9,327 $ 78,950 $(98,311)
</TABLE>
<TABLE>
SIERRA HOLDINGS GROUP, INC.
(A Development Stage Company)
Statements of Cash Flows
<CAPTION>
From
Inception on
December 26,
For the Years Ended 1986 Through
October 31, October 31,
1998 1997 1998
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss $ (40,345) $ (114) $ (98,311)
Adjustments to reconcile net loss to
net cash (used) by operating activities:
Depreciation and amortization - - 3,496
Stock issued for services 18,000 - 71,790
Changes in assets and liabilities:
(Increase) in organization costs - - (1,065)
Increase in accounts payable 126 14 615
Increase in accrued interest payable 375 - 575
Increase in taxes payable - 100 -
Net Cash (Used) by
Operating Activities (21,844) - (22,900)
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of equipment - - (4,887)
Net Cash (Used) by
Investing Activities - - (4,887)
CASH FLOWS FROM FINANCING
ACTIVITIES
Disbursement of partial liquidating
dividend - - (2,484)
Capital contributed by stockholders - - 971
Non-cash sale of video cassettes - - (369)
Issuance of common stock 13,000 - 18,000
Proceeds of loan from shareholder 10,000 - 12,825
Net Cash Provided by
Financing Activities $ 23,000 $ - $ 28,943
NET INCREASE IN CASH $ 1,156 $ - $ 1,156
CASH AT BEGINNING OF PERIOD - - -
CASH AND END OF PERIOD $ 1,156 $ - $ 1,156
Cash Payments For:
Income taxes $ - $ - $ -
Interest $ - $ - $ -
Non-Cash Financing Activities:
Exchange of video cassettes in lieu
of note payable $ - $ - $ 369
</TABLE>
SIERRA HOLDINGS GROUP, INC.
(A Development Stage Company)
Notes to the Financial Statements
October 31, 1998 and 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The financial statements presented are those of Sierra Holdings
Group, Inc. (formerly Sierra International, Inc.) The Company was
incorporated as Celebrity Videos, Inc. under the laws of the State
of Utah on December 26, 1986. On April 17, 1987, the Company was
spun off of Loki Holding Corporation (formerly Dynamic Video,
Inc.) in a partial liquidating dividend. On July 18, 1990, the
Company changed its name to Vegas Gaming Services, Inc. On April
15, 1992, the Company changed its name to Nature Talks Corporation.
At a meeting on November 18, 1997, the shareholders approved a
proposal to reverse stock split the outstanding common shares at a
rate of 1 share for every 300 shares outstanding, with no
stockholders holdings to be reduced below 50 shares as a result of
such reverse split. All references to shares outstanding and loss
per share have been retroactively restated to reflect the reverse
stock split. On November 26, 1997, the Company changed its name to
Sierra International, Inc.
At a meeting on February 9, 1998, the shareholders approved a
proposal to reverse stock split the outstanding common shares at a
rate of 1 share for every 10 shares outstanding, with no
stockholders holdings to be reduced below 50 shares as a result of
such reverse split. All references to shares outstanding and
earnings per share have been retroactively restated to reflect the
reverse stock split.
On February 13, 1998, Sierra International, Inc. merged with Sierra
Holdings Group, Inc. changing the Company s state of incorporation
from Utah to Nevada and its name to Sierra Holdings Group, Inc.
(SHG). Accordingly, SHG became the continuing entity for accounting
purposes, and the transaction was accounted for as a
recapitalization of the Company with no adjustment to the basis of
the Company s assets or liabilities assumed by SHG. For legal
purposes, SHG was the surviving entity.
b. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has adopted an October 31 year
end.
c. Basic Loss Per Share
The computations of basic loss per share of common stock are based
on the weighted average number of shares issued and outstanding
during the period of the financial statements.
d. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statement and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
e. Cash Equivalents
The Company considers all highly liquid investments with a maturity
of three months or less when purchased to be cash equivalents.
NOTE 2 - RELATED PARTY TRANSACTIONS
A shareholder loaned the Company $10,000 to cover operating
expenses. The note payable is unsecured, due on demand and accrues
interest at 12% annually. Accrued interest payable at October 31,
1998 was $575.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of
liabilities in the normal course of business. However, the Company
does not have significant cash or other material assets, nor does it
have an established source of revenues sufficient to cover its
operating costs and to allow it to continue as a going concern. It
is the intent of the Company to seek a merger with an existing,
operating company. In the interim, shareholders of the Company have
committed to meeting its minimal operating expenses.
NOTE 4 - ISSUANCE OF STOCK
During the year ended October 31, 1987, the Company issued 667
shares of common stock for $5,000 cash.
During the year ended October 31, 1990, shareholders of the Company
contributed 465 shares of common stock back to the Company. In
addition, 1,697 shares of common stock were issued for services
valued at an average price of $3.00 per share.
During the year ended October 31, 1992, the Company issued 2,900
shares of common stock for services valued at an average price of
$3.00 per share. In addition, the Company issued 3,333 shares of
common stock in the acquisition of Nature Talks Corporation.
During the year ended October 31, 1996, the Company issued 10,000
shares of common stock for services valued at $3.00 per share.
During the four months ended February 28, 1998, the Company issued
7,375 fractional shares of common stock as a result of the 300-to-1
reverse stock split. The Company also issued 300,000 post reverse stock
split shares of common stock for $3,000 cash. In addition,
the Company issued 1,237 fractional shares of common stock as a
result of the 10-to-1 reverse stock split. Finally, 6,000,000 post-
split shares of common stock were issued for services valued at
$18,000 and 3,000,000 post-split shares of common stock were issued
for $10,000 cash.
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<NAME> Sierra Holdings Group, Inc.
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