Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB A
[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.
----------------------
(Name of Registrant as specified in its charter)
Sierra Holdings Group, Inc.
---------------------------------------------
(Former Name of Registrant)
Nevada 0-23995 87-0576421
-------- ---------- -----------
(State or other jurisdiction of (Commission File (IRS Employer
incorporation or organization) No.) Identification No.)
202 East Madison Street, Tampa Florida 33602
-------------------------------------------------------------
(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 ( )
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
---------------
CLASS Outstanding at August 31, 2000
---------------------------- ------------------------------
Common stock $.001 Par Value 8,978,066
<PAGE>
INSIDERSTREET.COM, INC.
PART I: FINANCIAL INFORMATION
INSIDERSTREET.COM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JULY 31, 2000
(UNAUDITED)
-----------
ASSETS
------
CURRENT ASSETS
Cash $ 1,004,150
Accounts receivable, net 2,579,144
Inventory 337,622
Note receivable 63,286
Deferred Taxes 58,201
Other current assets 47,553
-----------
Total Current Assets 4,089,956
-----------
PROPERTY & EQUIPMENT - NET 236,207
-----------
OTHER ASSETS
Deferred expense, net 100,000
Patents and trademarks, software, net 241,222
Investments, net 624,375
Deposits 6,115
Goodwill, net 22,840,691
-----------
Total Other Assets 23,812,403
-----------
TOTAL ASSETS $28,138,566
------------ ===========
See accompanying notes to consolidated financial statements
2
<PAGE>
INSIDERSTREET.COM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JULY 31, 2000
(UNAUDITED)
-----------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 5,316,044
Accrued expense 511,281
Loans payable 140,000
Notes payable 677,030
Deferred revenue 911,334
------------
Total Current Liabilities 7,555,689
------------
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value, 50,000,000 shares authorized, 8,888
Additional paid-in capital 27,230,506
Other comprehensive loss (892,800)
Accumulated deficit (962,812)
Less: stock issued for future services (4,800,905)
------------
Total Stockholders' Equity 20,582,877
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 28,138,566
------------------------------------------ ============
See accompanying notes to consolidated financial statements
3
<PAGE>
INSIDERSTREET.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(UNAUDITED)
-----------
<TABLE>
<CAPTION>
For the Three For the Nine
Months Ended July Months Ended July
31, 2000 31, 2000
----------- -----------
<S> <C> <C>
REVENUE $ 361,972 $ 759,379
----------- -----------
COSTS AND OPERATING EXPENSES
Advertising 159,241 186,386
Professional and consulting fees 494,015 1,029,469
Payroll expense 66,871 121,184
Depreciation and amortization 174,612 175,832
Selling, general and administrative 153,961 209,320
----------- -----------
Total Operating Expenses 1,048,700 1,722,191
----------- -----------
LOSS FROM OPERATIONS (686,728) (962,812)
PROVISION FOR INCOME TAXES -- --
----------- -----------
NET LOSS $ (686,728) $ (962,812)
-----------
OTHER COMPREHENSIVE LOSS
Unrealized loss on available-for-sale securities (399,405) (892,800)
----------- -----------
COMPREHENSIVE LOSS $(1,086,133) $(1,855,612)
=========== ===========
Net loss per share - basic and diluted $ (0.10) $ (0.16)
=========== ===========
Weighted average number of shares outstanding - basic and diluted 7,083,180 6,100,468
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE>
INSIDERSTREET.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
-----------
<TABLE>
<CAPTION>
For the Nine Months Ended
July 31, 2000
-----------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (962,812)
Adjustments to reconcile net loss to net cash used in operating activities:
Deferred revenue realized (723,129)
Amortization 173,438
Depreciation 2,393
Stock issued for services 1,224,708
Changes in assets and liabilities:
Accounts receivable (7,000)
Other current assets (500)
Accounts payable and accrued liabilities 52,809
-----------
Net Cash Used In Operating Activities (240,093)
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (26,941)
Increase in deposits (6,115)
Advance to newly acquired subsidiary (95,000)
Cash received from acquisition of subsidiaries 222,299
-----------
Net cash provided by investing activities 94,243
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans and notes 640,000
Proceeds from issuance of common stock 510,000
-----------
Net cash provided by financing activities 1,150,000
-----------
INCREASE IN CASH AND CASH EQUIVALENTS 1,004,150
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD --
-----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 1,004,150
===========
</TABLE>
SUPPLEMENTAL CASH FLOW INFORMATION
Non Cash Investing and Financing Activities:
During the nine months ended July 31, 2000, 1,010,594 shares were issued for
services to consultants. The shares were valued at $6,025,613, of which
$4,800,905 has been deferred.
The Company issued 90,395 shares of common stock having a fair value of $933,780
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 EbizStreet, Inc. and its wholly owned subsidiaries.
The Company issued 750,000 shares of common stock having a final value of
$3,468,750 to acquire E-ViewThis.Com, Inc.
See accompanying notes to consolidated financial statements
5
<PAGE>
INSIDERSTREET.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATE FINANCIAL STATEMENTS
AS OF JULY 31, 2000 - (UNAUDITED)
NOTE 1 BASIS OF PRESENTATION
------ ---------------------
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 INVENTORY
------ ---------
Inventory consists of computer parts held for resale.
NOTE 3 LOANS
------ -----
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.
During the three months ended July 31, 2000, the Company
entered into a note payable of $500,000 from a vendor. The
note accrues interest at 39% per annum, accrued interest and
principal are due in full January 19, 2001. The vendor has the
option to convert the note into 100,000 shares of the
Company's common stock. The note also requires the Company to
place 90,395 shares of common stock in escrow as collateral.
NOTE 4 STOCKHOLDERS' EQUITY
------ --------------------
(A) Issuance of Common Stock for Services
-----------------------------------------
During the three months ended July 31, 2000, 180,000 common
shares were issued for services. The shares were valued at
$2,027,188 using fair value as determined by the quoted
trading prices on the agreement dates. The Company recognized
$252,604 in expenses for the three months ended July 31, 2000.
6
<PAGE>
INSIDERSTREET.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATE FINANCIAL STATEMENTS
AS OF JULY 31, 2000 - (UNAUDITED)
(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.
(C) Issuance of Common Stock for Acquisition
During the three months ended July 31, 2000, 1,365,607 common
shares were issued in an acquisition accounted for under the
purchase method of accounting. The shares were issued to
purchase EbizStreet, Inc. The fair value of the shares issued
was $16,301,251 (See Note 5).
During the three months ended July 31, 2000, 750,000 common
shares were issued in an acquisition accounted for under the
purchase method of accounting. The shares were issued to
purchase E-ViewThis.Com, Inc. The fair value of the shares
issued was $3,468,750 (See Note 5).
(D) Issuance of Common Stock for Advertising Services
During the three months ended July 31, 2000, 575,594 common
shares were issued for advertising services. The shares were
valued at $2,410,300 using the fair value as determined by the
quoted trading price on the agreement date. The Company
recognized $150,644 in advertising expense for the three
months ended July 31, 2000.
NOTE 5 ACQUISITION OF SUBSIDIARIES
------ ---------------------------
(A) Acquisition of E-ViewThis.Com, Inc.
---------------------------------------
On May 5, 2000, the Company acquired 100% of the issued and
outstanding stock of E-ViewThis.Com, Inc. in exchange for
750,000 shares of the Company's common stock. A principal
stockholder of the Company who owned 50% of E-ViewThis.Com
received 375,000 of the issued shares with a fair value of
$1,734,375 determined based on the average quoted trading
price of the Company's common stock during the acquisition
period (See Note 4(c) and Note 6).
The acquisition was accounted for under the purchase method of
accounting, and accordingly the results of operations of
E-ViewThis.Com, Inc., are included in the consolidated
financial statements for the period beginning on May 5, 2000.
The purchase price of $3,468,750 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 $3,468,750. The
allocation is preliminary. The goodwill will be amortized over
five years. Goodwill amortization began in May 2000.
Amortization expense for the nine months ended July 31, 2000
was $173,438.
7
<PAGE>
INSIDERSTREET.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATE FINANCIAL STATEMENTS
AS OF JULY 31, 2000 - (UNAUDITED)
(B) Acquisition of EbizStreet, Inc.
-----------------------------------
On July 27, 2000, the Company acquired 100% of the issued and
outstanding stock of EbizStreet, 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
EbizStreet, 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 $19,545,379. The
allocation is preliminary. The goodwill will be amortized over
five years beginning August 1, 2000.
The following unaudited information reflects the fair market
values of the assets acquired and the liabilities assumed:
Cash, net of overdrafts $ 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 19,545,379
Accounts payable (5,598,093)
Other current liabilities (1,270,620)
Notes Payable (177,030)
------------
$ 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
-------------------
Revenues $ 16,705,223
Costs and expenses 19,877,566
------------
Net loss $ (3,172,343)
------------
Net loss per share - basic and diluted $ (0.49)
8
<PAGE>
INSIDERSTREET.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATE FINANCIAL STATEMENTS
AS OF JULY 31, 2000 - (UNAUDITED)
NOTE 6 RELATED PARTY
------ -------------
During the three months ended July 31, 2000 a principal
stockholder of the Company received 375,000 shares of the
Company's common stock in exchange for his shares of
E-ViewThis.Com, Inc. common stock with a fair value of
$1,734,375 (See Note 5(A)).
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 $1,048,700 and $1,722,191, respectively. We
incurred a loss from operations of $686,728 for the three month period ended
July 31, 2000, as compared to net loss of $962,812 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 $1,086,133 and $1,855,612 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.
10
<PAGE>
Liquidity and Capital Resources
As of July 31, 2000 we had cash of $1,004,150, net accounts receivable of
$2,579,144 and total current assets of $4,089,956. We have property, plant and
equipment (net of depreciation) of $236,207 and various deposits totaling
$6,115. Our largest asset consists of $22,840,691 in goodwill from the
acquisition of EbizStreet and EviewThis, net of $173,438 in amortization during
the period. We also have $624,375 net in investment securities, which consist of
equity securities received from client companies and $241,222 in patents and
trademarks. Our total assets equal $28,138,566.
Our current liabilities total $7,555,689 which consist of accounts payable and
accrued expenses in the amount of $5,827,325, deferred revenues of $911,334
loans payable in the amount of $140,000 and notes payable of $677,030. The
accounts payable and accrued expenses are primarily attributable to our recent
acquisition of EbizStreet and its subsidiaries. The deferred revenue represents
payments received from client companies for investor relation contract 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 an in-theater advertiser 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 $3,468,750.
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.
11
<PAGE>
On July 19, 2000 the Company issued 180,790 restricted shares of common stock to
a vendor. 90,395 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. The Company also entered into a note
payable of $500,000 from the vendor. The Company issued 90,395 shares of common
stock in escrow as collateral. We relied on the exemption provided by Section
4(2) of the Securities Act. The total value of these shares is $1,867,560.
On July 21, 2000 the Company issued a total of 94,154 shares of its restricted
common stock to an investor 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 27, 2000 the Company issued a total of 611,648 shares of its restricted
common stock to the shareholders of HardwareStreet.com, Inc. pursuant to the
terms and conditions of a stock exchange agreement. The total value of these
shares is $7,301,242. We relied on the exemption provided by Section 4(2) of the
Securities Act.
On July 28, 2000 the Company issued 10,000 restricted shares of common stock to
a property leasing company. We relied on the exemption provided by Section 4(2)
of the Securities Act. The total value of these shares is $75,000.
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
<PAGE>
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 4th day of October 2000
