Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 14 OR 15(D) OF THE EXCHANGE
ACT
For the transition period from__________ to ___________
INSIDERSTREET.COM INC.
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(Name of Registrant as specified in its charter)
Sierra Holdings Group, Inc.
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(Former Name of Registrant)
<TABLE>
<CAPTION>
Nevada 0-23995 87-0576421
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<S> <C> <C>
(State or other jurisdiction of (Commission File (IRS Employer
incorporation or organization) No.) Identification No.)
</TABLE>
202 East Madison Street, Tampa Florida 33602
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(Address and telephone number of principal executive offices)
Check whether the issuer has (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months, (or such
shorter period that the Registrant was required to file such report(s), and (2)
has been subject to such filing requirements for the past 90 days.
Yes (X) No ( )
<PAGE>
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: August 31, 2000
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CLASS Outstanding at August 31, 2000
--------------------------------- ------------------------------
Common stock $.001 Par Value 9,308,539
INSIDERSTREET.COM, INC.
PART I: FINANCIAL INFORMATION PAGE
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Consolidated Balance Sheet as of 3
July 31, 2000 (Unaudited)
Consolidated Statements of Operations and Comprehensive
Loss for the Three and Nine months ended July 31, 2000
(Unaudited) 4
Consolidated Statement of Cash Flows for the Nine Months
Ended July 31, 2000 5
Notes to Consolidated Financial Statements
(Unaudited) as of July 31, 2000 7-9
Management Discussion and Analysis of Financial
Condition and Results of Operations 10-11
<PAGE>
Part 1 Financial Information
Item 1. Financial Information
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors of:
Insiderstreet.com, Inc.
We have reviewed the accompanying consolidated balance sheet, statements of
operations and comprehensive loss, and cash flows of Insiderstreet.com, Inc. and
subsidiaries as of July 31, 2000, and for the three month and nine month periods
then ended. These consolidated financial statements are the responsibility of
the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
WEINBERG & COMPANY, P.A.
BOCA RATON, FL
SEPTEMBER 20, 2000
2
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INSIDERSTREET.COM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JULY 31, 2000
(UNAUDITED)
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3
ASSETS
CURRENT ASSETS
Cash $ 504,150
Accounts receivable, net 2,579,144
Inventory 337,622
Note receivable 63,286
Deferred Taxes 58,201
Other current assets 47,553
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Total Current Assets 3,589,956
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PROPERTY & EQUIPMENT - NET 236,207
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OTHER ASSETS
Deferred expense, net 100,000
Patents and trademarks, software, net 241,222
Investments, net 624,375
Deposits 6,115
Goodwill 20,479,386
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Total Other Assets 21,451,098
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TOTAL ASSETS $25,277,261
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See accompanying notes to consolidated financial statements
3
<PAGE>
CONSOLIDATED BALANCE SHEET
JULY 31, 2000
(UNAUDITED)
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 5,307,710
Accrued expense 511,281
Loans payable 140,000
Notes payable 177,030
Deferred revenue 911,334
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Total Current Liabilities 7,047,355
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STOCKHOLDERS' EQUITY
Common stock, $0.001 par value, 50,000,000 shares authorized, 8,978
Additional paid-in capital 28,445,672
Other comprehensive loss (892,800)
Accumulated deficit (4,544,530)
Less: stock issued for future services (4,787,414)
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Total Stockholders' Equity 18,229,906
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 25,277,261
============
See accompanying notes to consolidated financial statements
4
<PAGE>
INSIDERSTREET.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(UNAUDITED)
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<TABLE>
<CAPTION>
For the Three For the Nine
Months Ended July Months Ended July
31, 2000 31, 2000
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$ 361,972 $ 759,379
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<S> <C> <C>
COSTS AND OPERATING EXPENSES
Advertising 8,597 35,742
Professional and consulting fees 4,483,149 5,018,603
Payroll expense 66,871 121,184
Selling, general and administrative 71,801 128,380
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Total Operating Expenses 4,630,418 5,303,909
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LOSS FROM OPERATIONS (4,268,446) (4,544,530)
PROVISION FOR INCOME TAXES -- --
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NET LOSS $(4,268,446) $(4,544,530)
OTHER COMPREHENSIVE LOSS
Unrealized loss on available-for-sale securities (399,405) (892,800)
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COMPREHENSIVE LOSS $(4,667,851) $(5,437,330)
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Net loss per share - basic and diluted $ (0.65) $ (0.76)
=========== ===========
Weighted average number of shares outstanding - basic and diluted 6,593,868 6,014,392
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE>
INSIDERSTREET.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JULY 31, 2000 - (UNAUDITED)
<TABLE>
<CAPTION>
For the Nine Months Ended
July 31, 2000
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(4,544,530)
Adjustments to reconcile net loss to net cash used in operating activities:
Deferred revenue realized (723,129)
Depreciation 2,393
Stock issued to consultants for services 4,988,197
Changes in assets and liabilities:
Accounts receivable (7,000)
Other current assets (500)
Accounts payable and accrued liabilities 44,475
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Net Cash Used In Operating Activities (240,094)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (26,940)
Increase in deposits (6,115)
Advance to newly acquired subsidiary (95,000)
Cash received from acquisition of subsidiaries 222,299
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Net cash provided by investing activities 94,244
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans and notes 140,000
Proceeds from issuance of common stock 510,000
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Net cash provided by financing activities 650,000
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INCREASE IN CASH AND CASH EQUIVALENTS 504,150
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD --
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CASH AND CASH EQUIVALENTS - END OF PERIOD $ 504,150
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SUPPLEMENTAL CASH FLOW INFORMATION
Non Cash Investing and Financing Activities:
During the nine months ended July 31, 2000, 1,760,294 shares were issued
for services to consultants. The shares were valued at $9,775,611, of
which $4,787,414 has been deferred.
The Company issued 180,790 shares of common stock having a fair value of
$1,867,787 to satisfy the debt to a vendor of a subsidiary company.
The Company issued 1,365,607 shares of common stock having a fair value
of $16,301,251 to acquire E-Biz, Inc. and its wholly owned subsidiaries.
See accompanying notes to consolidated financial statements
6
<PAGE>
INSIDERSTREET.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JULY 31, 2000 - (UNAUDITED)
NOTE 1 BASIS OF PRESENTATION
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The accompanying unaudited interim consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles and the rules and regulations
of the Securities and Exchange Commission for interim
financial information. Accordingly, they do not include all
the information and footnotes necessary for a comprehensive
presentation of financial position and results of operations.
It is management's opinion, however, that all adjustments
(consisting of normal recurring adjustments) have been made
which are necessary for a fair financial statements
presentation. The results for the interim period are not
necessarily indicative of the results to be expected for the
year.
Insiderstreet.com FL was acquired by Insiderstreet.com Inc ,a
Nevada corporation, F/K/A Sierra Holdings Group, Inc. (an
inactive public shell) in a transaction accounted for as a
recapitalization of Insiderstreet.com FL. Insiderstreet.com FL
began business in November 1999 and had no prior period of
operations.
For further information, refer to the financial statements and
footnotes included in the Company's Form 10-KSB filed on
December 15, 1999.
NOTE 2 LOANS
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During the three months ended July 31, 2000, the Company
received a loan from a stockholder. The loan of $37,500 is
non-interest bearing and due on demand.
NOTE 3 STOCKHOLDERS' EQUITY
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(A) Issuance of Common Stock for Services
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During the three months ended July 31, 2000, 1,505,594 common
shares were issued for services to consultants. The shares
were valued at $4,473,405 using fair value as determined by
the quoted trading prices on the agreement dates.
(B) Issuance of Common Stock for Cash
-------------------------------------
During the three months ended July 31, 2000, 94,154 common
shares were issued for cash in the amount of $500,000.
7
<PAGE>
INSIDERSTREET.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JULY 31, 2000 - (UNAUDITED)
(C) Issuance of Common Stock for Merger
---------------------------------------
During the three months ended July 31, 2000, 1,365,607 common
shares were issued in a merger accounted for under the
purchase method of accounting. The shares were issued to
E-Biz, Inc., a wholly-owned subsidiary of the Company. The
fair value of the shares issued was $16,301,251. (See Note 4)
(D) Issuance of Common Stock for Debt settlement
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During the three months ended July 31, 2000, 180,790 common
shares were issued to satisfy the debt with a vendor of
HardwareStreet.com, Inc. , a wholly-owned subsidiary of E-Biz,
Inc. The fair value of the shares issued was $1,867,787.
NOTE 4 ACQUISITION OF SUBSIDIARIES
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On July 27, 2000, the Company acquired 100% of the issued and
outstanding stock of E-Biz, Inc., in exchange for 1,365,607
shares of the Company's common stock and 319,280 contingent
shares held in escrow to be distributed contingent on meeting
certain stipulated revenue criteria.
The acquisition was accounted for under the purchase method of
accounting, and accordingly the results of operations of
E-Biz, Inc. and subsidiaries will be included in the
consolidated financial statements for the period beginning on
August 1, 2000.
The purchase price of $16,301,251 was determined based on the
average quoted trading price of the Company's common stock
during the acquisition period resulting in an allocation of
the excess of the fair market value over book value of the net
assets acquired to goodwill in the amount of $20,479,386. The
allocation is preliminary. The goodwill will be amortized over
five years beginning August 1, 2000.
8
<PAGE>
INSIDERSTREET.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JULY 31, 2000 - (UNAUDITED)
The following unaudited information reflects the fair market
values of the assets acquired and the liabilities assumed:
Cash $ 170,428
Accounts receivable 2,572,144
Inventory 337,622
Other current assets 168,540
Property and equipment 211,659
Other assets 341,222
Goodwill 20,479,386
Accounts payable (5,598,093)
Other current liabilities (2,204,627)
Notes Payable (177,030)
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$ 16,301,251
==============
The table below reflects unaudited pro forma combined results
of the Company as if the acquisition had taken place on
November 1, 1999:
For the Nine Months Ended
July 31, 2000
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Revenues $ 16,705,223
Costs and expenses 25,218,663
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Net loss $ (8,513,440)
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Net loss per share - basic and diluted $ (1.42)
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General
Until the recent acquisition (July 2000) of EbizStreet, Inc. we were primarily
an Internet marketing company and financial content provider, providing
proactive professional marketing services to both micro and small cap public
companies ("Clients") that were seeking to gain exposure among potential
investors , analysts and others within the investment community. We will
continue to allow subscribers to read information about a variety of Clients,
create technical charts, track stock portfolios and read feature stories from
financial analysts. We will continue to provide these clients with e-mail
marketing, banner advertising services and other investor relations tools.
Access to our web site is free. Revenues have been generated from fee-based
services offered for cash and/or common stock of our Clients. When we receive
Common Stock of a Client for services, such payment is typically in addition to
(not in lieu of) cash payment for services. Our client list is comprised
primarily of Clients lacking the resources to perform the marketing functions
necessary to promote their profiles to the investment community.
With the acquisition of all of the issued and outstanding stock of Ebizstreet,
Inc. our focus has changed significantly. Ebizstreet is a value-added reseller
of computer hardware and software to business. Through its subsidiaries,
HardwareStreet.com, Inc. and AMS Systems, Inc., Ebizstreet markets information
technology products and services primarily to business, government, educational,
institutional, consumer and home office users throughout the United States.
Ebizstreet sells a broad range of multi-brand microcomputer products, including
hardware and peripherals, software, networking/communication products and
accessories through sales account managers, telesales and the Internet on its
two websites; www.hardwarestreet.com and www.softwarestreet .com.
Results of Operations
Revenues for the Three and Nine months Ended July 31, 2000
Revenues for the three and nine month period ended July 31, 2000 were $361,972
and $759,359 while expenses totaled $4,630,418 and $5,303,909 respectively. We
incurred a loss from operations of $4,268,446 for the three month period ended
July 31, 2000, as compared to net loss of $4,544,530 for the nine months ended
July 31, 2000, . A significant portion of this loss is attributable to a
non-cash expense attributable to the issuance of our common stock for consulting
and professional fees. We recorded a comprehensive loss from the unrealized loss
on available for sale securities of $399,405 and $892,800 which resulted in a
comprehensive loss of $4,667,851 and $5,437,330 for the three and nine month
period ended July 31, 2000. The foregoing financial disclosure does not reflect
the acquisition by the Company of its subsidiary, EbizStreet, Inc. which
occurred on July 27, 2000. Investors are urged to review Note 4 to our financial
statements and to examine the pro forma combined results of operation.
Liquidity and Capital Resources
As of July 31, 2000 we had cash of $504,150, accounts receivable of $2,579,144
and total current assets of $3,589,956. We have property, plant and equipment
(net of depreciation) of $236,207 and various deposits totaling $6,115. Our
largest asset consists of $20,479,386 in goodwill from the acquisition of
EbizStreet. We also have $624,375 in investment securities which consist of
equity securities received from client companies and $241,222 in patents and
trademarks. Our total assets equal $25,277,261.
10
<PAGE>
Our current liabilities total $7,047,355 which consist primarily of accounts
payable in the amount of $5,307,710, deferred revenues of $911,344 loans payable
in the amount of $140,000 and notes payable of $177,030. The accounts payable
are primarily attributable to our recent acquisition of Ebizstreet and its
subsidiaries. The deferred revenues represents payments received from client
companies for investor relation contracts services to be rendered in the future.
Part 11 Other Information
Item 1. Legal Proceedings
We have been named as a Defendant in an action filed In the Court of
Queen's Bench of Alberta Judicial District of Calgary, Alberta by Douglas Hurd.
The action alleges wrongful termination of employment and seeks approximately
$110,000 in damages. The Company has retained local counsel and intends to
vigorously defend this action.
Item 2. Change in Securities
On May 31, 2000 the company issued 575,594 shares of its restricted
common stock to Theater Radio Network, Inc. in consideration for advertising and
promoting web site traffic pursuant to the terms and conditions of an
advertising agreement. We relied on the exemption provided by Section 4(2) of
the Securities Act. The total value of these shares is $2,410,300.
On June 5, 2000 the Company issued a total of 750,000 shares of its
restricted common stock to the shareholders of Eviewthis.com pursuant to the
terms and conditions of a stock exchange agreement. We relied on the exemption
provided by Section 4(2) of the Securities Act.
The total value of these shares is $3,750,000
On July 11, 2000 the Company issued a total of 170,000 shares of its
common stock to various consultants. The shares were issued pursuant to a
consulting Service Plan and Registered on Form S-8. The total value of these
shares is $1,952,188.
On July 21, 2000 the Company issued a total of 94,154 shares of its
restricted common stock to Robert Frankovich in exchange for his payment to the
Company of $500,000 for our common stock. The shares were issued pursuant to an
exemption from registration afforded by Regulation D.
On July 27, 2000 the Company issued a total of 753,959 shares of its
restricted common stock to the shareholders of AMS Systems, Inc. pursuant to the
terms and conditions of a stock exchange agreement. We relied on the exemption
provided by Section 4(2) of the Securities Act.
The total value of these shares is $9,000,009.
On July 28, 2000 the company issued 10,000 restricted shares of common
stock to Huckaby Properties. We relied on the exemption provided by Section 4(2)
of the Securities Act. The total value of these shares is $75,000.
On August 2, 2000 the company issued 180,790 restricted shares of
common stock to CNET Networks, Inc. The shares were issued pursuant to a
settlement agreement entered into by the company. The settlement agreement was
in connection with the acquisition of Hardware Street.com Inc. We relied on the
exemption provided by Section 4(2) of the Securities Act. The total value of
these shares is $1,867,787.
<PAGE>
On July 27, 2000 the Company issued a total of 611,648 shares of its
restricted common stock to the shareholders of Hardware Street.com Inc. pursuant
to the terms and conditions of a stock exchange agreement. We relied on the
exemption provided by Section 4(2) of the Securities Act. The total value of
these shares is $7,301,242.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-k
(a) Exhibits.
27 Financial Data Schedule
(b) Reports on Form 8-K
On June 7, 2000 we filed a report on Form 8-k indicating that pursuant
to a meeting of the Company's Board of Directors, the Company dismissed its
principal accountant Jones, Jensen and Company, L.L.C. and retained its current
accounting firm; Weinberg & Co.
On July 11, 2000 we filed a report of Form 8-k reporting on the
acquisition of EbizStreet.com Inc.
None
12
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
InsiderStreet.com Inc.
/s/ Raymond Miller
BY: Raymond Miller, president
Dated: This 20th day of September 2000
13