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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended: December 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ________ to __________
Commission File No. 000-25301
SIERRA RESOURCE GROUP, INC.
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(Exact Name of Small Business Issuer as Specified in its Charter)
NEVADA 88-0413922
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6767 W. Tropicana Avenue, Suite 207
Las Vegas, Nevada 89103
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(Address of principal executive offices) (Zip code)
Issuer's telephone number: (702) 248-1027
Securities to be registered pursuant to Section 12(b) of the Act:
none
Securities to be registered pursuant to Section 12(g) of the Act:
$.001 Common Stock
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(Title of Class)
Check whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [ ] No [ ]
Check if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part II of this Form 10-K or any amendments to this
Form 10-K. [X]
As of December 31, 1999, there were 1,860,000 shares of the Registrant's
Common Stock, $.001 par value, outstanding.
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The aggregate market value of shares of Common Stock held by non-affiliates
of the Registrant is $-0-.
State the Registrant's revenues for the December 31, 1999 fiscal year:
$-0-.
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TABLE OF CONTENTS
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Page
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Item 1. Description of Business. . . . . . . . . . . . . . . . . . . 4
Item 2. Description of Property. . . . . . . . . . . . . . . . . . . 15
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . 15
Item 4. Submission of Matter to Vote of
Security Holders . . . . . . . . . . . . . . . . . . . . . . 16
Item 5. Market for Common Registrant Equity and
Related Stockholder Matter . . . . . . . . . . . . . . . . . 16
Item 6. Management's Discussion and Analysis
or Plan of Operation . . . . . . . . . . . . . . . . . . . . 19
Item 7. Financial Statements . . . . . . . . . . . . . . . . . . . . 20
Item 8. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 32
Item 9. Directors, Executive Officers, Promoters
and Control Persons; Compliance with
Section 16(a) of the Exchange Act. . . . . . . . . . . . . . 32
Item 10. Executive Compensation . . . . . . . . . . . . . . . . . . . 33
Item 11. Security Ownership of Certain
Beneficial Owners and Management . . . . . . . . . . . . . . 34
Item 12. Certain Relationships and
Related Transactions . . . . . . . . . . . . . . . . . . . . 35
Item 13. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 36
Signature. . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
3.
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Item 1. Description of Business.
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Introduction
Sierra Resource Group, Inc. (the "Company") was incorporated on December
21, 1992, under the laws of the State of Nevada. The Company has been in the
developmental stage since inception and has no operations to date. Other than
issuing shares to its original shareholders, the Company never commenced any
operational activities. As such, the Company can be defined as a "shell"
company, whose sole purpose at this time is to locate and consummate a merger or
acquisition with a private entity. The Board of Directors of the Company has
elected to commence implementation of the Company's principal business purpose
described below. The proposed business activities described herein may classify
the Company as a "blank check" company.
The Company became a reporting company on a voluntary basis because the
primary attraction of the Company as a merger partner or acquisition vehicle
will be its status as a public company. Any business combination or transaction
will likely result in a significant issuance of shares and substantial dilution
to present stockholders of the Company.
In addition, the Company became a reporting company to enhance investor
protection and to provide information if a trading market commences. On December
11, 1997, the National Association of Securities Dealers, Inc. (NASD) announced
that its Board of Governors had approved a series of proposed changes for the
Over The Counter ("OTC") Bulletin Board and the OTC market. The principal
changes, which was approved by the Securities and Exchange Commission on or
about January 5, 1999, allows only those companies that report their current
financial information to the Securities and Exchange Commission, banking, or
insurance regulators to be quoted on the OTC Bulletin Board.
Risk Factors
The Company's business is subject to numerous risk factors, including the
following:
1. No Operating History or Revenue and Minimal Assets. The Company has had no
operating history nor any revenues or earnings from operations. The Company
has no significant assets or financial resources. The Company will, in all
likelihood, sustain operating expenses without corresponding revenues, at
least until the consummation of a business combination. This may result in
the Company incurring a net operating loss which will increase continuously
until the Company can consummate a business combination with a profitable
business opportunity. There is no assurance that the Company can identify
such a business opportunity and consummate such a business combination.
4.
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2. The Company's Proposed Operations is Speculative. The success of the
Company's proposed plan of operation will depend to a great extent on the
operations, financial condition and management of the identified business
opportunity. While management intends to seek business combination(s) with
entities having established operating histories, there can be no assurance
that the Company will be successful in locating candidates meeting such
criteria. In the event the Company completes a business combination, of
which there can be no assurance, the success of the Company's operations
may be dependent upon management of the successor firm or venture partner
firm and numerous other factors beyond the Company's control.
3. Scarcity of and Competition for Business Opportunities and Combinations.
The Company is and will continue to be an insignificant participant in the
business of seeking mergers with, joint ventures with and acquisitions of
small private and public entities. A large number of established and
well-financed entities, including venture capital firms, are active in
mergers and acquisitions of companies which may be desirable target
candidates for the Company. Nearly all such entities have significantly
greater financial resources, technical expertise and managerial
capabilities than the Company and, consequently, the Company will be at a
competitive disadvantage in identifying possible business opportunities and
successfully completing a business combination. Moreover, the Company will
also compete in seeking merger or acquisition candidates with numerous
other small public companies.
4. The Company has No Agreement for a Business Combination or Other
Transaction - No Standards for Business Combination. The Company has no
arrangement, agreement or understanding with respect to engaging in a
merger with, joint venture with or acquisition of, a private or public
entity. There can be no assurance the Company will be successful in
identifying and evaluating suitable business opportunities or in concluding
a business combination. Management has not identified any particular
industry or specific business within an industry for evaluation by the
Company. There is no assurance the Company will be able to negotiate a
business combination on terms favorable to the Company. The Company has not
established a specific length of operating history or a specified level of
earnings, assets, net worth or other criteria which it will require a
target business opportunity to have achieved, and without which the Company
would not consider a business combination in any form with such business
opportunity. Accordingly, the Company may enter into a business combination
with a business opportunity having no significant operating history,
losses, limited or no potential for earnings, limited assets, negative net
worth or other negative characteristics.
5.
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5. Continued Management Control, Limited Time Availability. While seeking a
business combination, management anticipates devoting up to ten hours per
month to the business of the Company. None of the Company's officers has
entered into a written employment agreement with the Company and none is
expected to do so in the foreseeable future. The Company has not obtained
key man life insurance on any of its officers or directors. Notwithstanding
the combined limited experience and time commitment of management, loss of
the services of any of these individuals would adversely affect development
of the Company's business and its likelihood of continuing operations.
6. There May Be Conflicts of Interest. Officers and directors of the Company
may in the future participate in business ventures which could be deemed to
compete directly with the Company. Additional conflicts of interest and
non-arms length transactions may also arise in the future in the event the
Company's officers or directors are involved in the management of any firm
with which the Company transacts business. Management has adopted a policy
that the Company will not seek a merger with, or acquisition of, any entity
in which management serve as officers, directors or partners, or in which
they or their family members own or hold any ownership interest.
7. Reporting Requirements May Delay or Preclude Acquisitions. Sections 13 and
5(d) of the Securities Exchange Act of 1934 (the "1934 Act"), require
companies subject thereto to provide certain information about significant
acquisitions, including certified financial statements for the company
acquired, covering one, two, or three years, depending on the relative size
of the acquisition. The time and additional costs that may be incurred by
some target entities to prepare such statements may significantly delay or
essentially preclude consummation of an otherwise desirable acquisition by
the Company. Acquisition prospects that do not have or are unable to obtain
the required audited statements may not be appropriate for acquisition so
long as the reporting requirements of the 1934 Act are applicable.
8. Lack of Market Research or Marketing Organization. The Company has neither
conducted, nor have others made available to it, results of market research
indicating that market demand exists for the transactions contemplated by
the Company. Moreover, the Company does not have, and does not plan to
establish, a marketing organization. Even in the event demand is identified
for a merger or acquisition contemplated by the Company, there is no
assurance the Company will be successful in completing any such business
combination.
9. Lack of Diversification. The Company's proposed operations, even if
successful, will in all likelihood result in the
6.
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Company engaging in a business combination with a business opportunity.
Consequently, the Company's activities may be limited to those engaged in
by business opportunities which the Company merges with or acquires. The
Company's inability to diversify its activities into a number of areas may
subject the Company to economic fluctuations within a particular business
or industry and therefore increase the risks associated with the Company's
operations.
10. Regulation. Although the Company will be subject to regulation under the
1934 Act, management believes the Company will not be subject to regulation
under the Investment Company Act of 1940, insofar as the Company will not
be engaged in the business of investing or trading in securities. In the
event the Company engages in business combinations which result in the
Company holding passive investment interests in a number of entities, the
Company could be subject to regulation under the Investment Company Act of
1940. In such event, the Company would be required to register as an
investment company and could be expected to incur significant registration
and compliance costs. The Company has obtained no formal determination from
the Securities and Exchange Commission as to the status of the Company
under the Investment Company Act of 1940 and, consequently, any violation
of such Act would subject the Company to material adverse consequences.
11. Probable Change in Control and Management. A business combination involving
the issuance of the Company's Common Shares will, in all likelihood, result
in shareholders of a private company obtaining a controlling interest in
the Company. Any such business combination may require management of the
Company to sell or transfer all or a portion of the Company's Common Shares
held by them, or resign as members of the Board of Directors of the
Company. The resulting change in control of the Company could result in
removal of one or more present officers and directors of the Company and a
corresponding reduction in or elimination of their participation in the
future affairs of the Company. 12. Reduction of Percentage Share Ownership
Following Business Combination. The Company's primary plan of operation is
based upon a business combination with a private concern which, in all
likelihood, would result in the Company issuing securities to shareholders
of any such private company. The issuance of previously authorized and
unissued Common Shares of the Company would result in reduction in
percentage of shares owned by present and prospective shareholders of the
Company and may result in a change in control or management of the Company.
13. Disadvantages of Blank Check Offering. The Company may enter into a
business combination with an entity that desires to establish a public
trading market for its shares. A business opportunity may attempt to avoid
what it deems to
7.
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be adverse consequences of undertaking its own public offering by seeking a
business combination with the Company. Such consequences may include, but
are not limited to, time delays of the registration process, significant
expenses to be incurred in such an offering, loss of voting control to
public shareholders and the inability or unwillingness to comply with
various federal and state laws enacted for the protection of investors.
14. Taxation. Federal and state tax consequences will, in all likelihood, be
major considerations in any business combination the Company may undertake.
Currently, such transactions may be structured so as to result in tax-free
treatment to both companies, pursuant to various federal and state tax
provisions. The Company intends to structure any business combination so as
to minimize the federal and state tax consequences to both the Company and
the target entity; however, there can be no assurance that such business
combination will meet the statutory requirements of a tax-free
reorganization or that the parties will obtain the intended tax-free
treatment upon a transfer of stock or assets. A non-qualifying
reorganization could result in the imposition of both federal and state
taxes which may have an adverse effect on both parties to the transaction.
15. Requirement of Audited Financial Statements May Disqualify Business
Opportunities. Management of the Company believes that any potential
business opportunity must provide audited financial statements for review,
for the protection of all parties to the business combination. One or more
attractive business opportunities may choose to forego the possibility of a
business combination with the Company, rather than incur the expenses
associated with preparing audited financial statements.
16. Dilution. Any merger or acquisition effected by the Company can be expected
to have a significant dilutive effect on the percentage of shares held by
the Company's then shareholders.
17. No Trading Market. There is no trading market for the Company's common
stock at present, and there has been no trading market to date. There is no
assurance that a trading market will ever develop or, if such market does
develop, that it will continue. A request has been made to a broker-dealer
to make application to the NASD Regulation, Inc. to have the Company's
securities traded on the OTC Bulletin Board or published in print and
electronic media, or either, in the National Quotation Bureau LLC "Pink
Sheet."
18. Required Year 2000 Compliance After January 1, 2000. The Year 2000 issue
affected virtually all companies and organizations. A business combination
may result in the Company disclosing certain Year 2000 matters. Many
existing
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computer programs used only two digits to identify a year in the date
field. These programs were designed and developed without considering the
impact of the change in the century.
19. Disclosure by Public Companies Regarding the Year 2000 Issue After January
1, 2000. Any business combination may require special Year 2000
disclosures. Management of the Company believes that any potential business
opportunity may require a disclosure that the target company must undertake
remedial action to address the Year 2000 issue. The disclosure of the
potential costs and uncertainties will depend on a number of factors,
including its software and hardware and the nature of its industry. The
Company may be required to review whether it needs to disclose future
anticipated costs, problems and uncertainties associates with any remedial
Year 2000 consequences, particularly in its filings with the Securities and
Exchange Commission. The Company may have to disclose this information in
the Securities and Exchange Commission filings because (i) the form or
report may require the disclosure, or (ii) in addition to the information
that the Company is specifically required to disclose, the disclosure rules
require disclosure of any additional material information necessary to make
the required disclosure not misleading.
If the Company determines that it is required to make a Year 2000
disclosure, applicable rules or regulations must be followed. As part of
this disclosure, the following topics will be addressed:
o the target company's general plans to address any Year 2000 remedial
action issues relating to its business, its operations (including
operating systems) and, if material, its relationships with customers,
suppliers, and other constituents; and its timetable for carrying out
those plans; and
o the total dollar amount that the target company estimates will be
spent to remediate its Year 2000 problems, if such amount is expected
to be material to the target company's business, operations or
financial condition, and any material impact these expenditures are
expected to have on the target company's results of operations,
liquidity and capital resources.
Plan of Operation
The Company intends to seek to acquire assets or shares of an entity
actively engaged in business which generates revenues in exchange for its
securities. The Company has no particular acquisitions in mind and has not
entered into any negotiations regarding such an acquisition. None of the
Company's officers, directors, promoters or affiliates have engaged in any
preliminary contact or discussions with any representative of any other company
regarding the possibility of
9.
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an acquisition or merger between the Company and such other company as of the
date of this registration statement.
General Business Plan
The Company's purpose is to seek, investigate and, if such investigation
warrants, acquire an interest in business opportunities presented to it by
persons or firms who or which desire to seek the advantages of a company who has
complied with the 1934 Act. The Company will not restrict its search to any
specific business, industry, or geographical location and the Company may
participate in a business venture of virtually any kind or nature. This
discussion of the proposed business is purposefully general and is not meant to
be restrictive of the Company's virtually unlimited discretion to search for and
enter into potential business opportunities. Management anticipates that it may
be able to participate in only one potential business venture because the
Company has nominal assets and limited financial resources. This lack of
diversification should be considered a substantial risk to shareholders of the
Company because it will not permit the Company to offset potential losses from
one venture against gains from another.
The Company may seek a business opportunity with entities which have
recently commenced operations, or which wish to utilize the public marketplace
in order to raise additional capital in order to expand into new products or
markets, to develop a new product or service, or for other corporate purposes.
The Company may acquire assets and establish wholly owned subsidiaries in
various businesses or acquire existing businesses as subsidiaries.
The Company anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. Due to general
economic conditions, rapid technological advances being made in some industries
and shortages of available capital, management believes that there are numerous
firms seeking the benefits of an Issuer who has complied with the 1934 Act. Such
benefits may include facilitating or improving the terms on which additional
equity financing may be sought, providing liquidity for incentive stock options
or similar benefits to key employees, providing liquidity (subject to
restrictions of applicable statutes), for all shareholders and other factors.
Potentially, available business opportunities may occur in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
extremely difficult and complex.
The Company has, and will continue to have, no capital with which to
provide the owners of business opportunities with any significant cash or other
assets. However, management believes the Company will be able to offer owners of
acquisition candidates the opportunity to acquire a controlling ownership
interest in an Issuer who has complied with the 1934 Act without
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incurring the cost and time required to conduct an initial public offering. The
owners of the business opportunities will, however, incur significant legal and
accounting costs in connection with acquisition of a business opportunity,
including the costs of preparing Form 8-K's, 10-K's or 10-KSB's, agreements and
related reports and documents. The 1934 Act, specifically requires that any
merger or acquisition candidate comply with all applicable reporting
requirements, which include providing audited financial statements to be
included within the numerous filings relevant to complying with the 1934 Act.
Nevertheless, the officers and directors of the Company have not conducted
market research and are not aware of statistical data which would support the
benefits of a merger or acquisition transaction for the owners of a business
opportunity.
The Company has made no determination as to whether or not it will file
periodic reports in the event its obligation to file such reports is suspended
under the 1934 Act. Paul W. Andre, an officer and director of the Company, has
agreed to provide the necessary funds, without interest, for the Company to
comply with the 1934 Act reporting requirements, provided that he is an officer
and director of the Company when the obligation is incurred.
The analysis of new business opportunities will be undertaken by, or under
the supervision of, the officers and directors of the Company, none of whom is a
professional business analyst. Management intends to concentrate on identifying
preliminary prospective business opportunities which may be brought to its
attention through present associations of the Company's officers and directors,
or by the Company's shareholders. In analyzing prospective business
opportunities, management will consider such matters as the available technical,
financial and managerial resources; working capital and other financial
requirements; history of operations, if any; prospects for the future; nature of
present and expected competition; the quality and experience of management
services which may be available and the depth of that management; the potential
for further research, development, or exploration; specific risk factors not now
foreseeable but which then may be anticipated to impact the proposed activities
of the Company; the potential for growth or expansion; the potential for profit;
the public recognition of acceptance of products, services, or trades; name
identification; and other relevant factors. Officers and directors of the
Company expect to meet personally with management and key personnel of the
business opportunity as part of their investigation. To the extent possible, the
Company intends to utilize written reports and personal investigation to
evaluate the above factors. The Company will not acquire or merge with any
company for which audited financial statements cannot be obtained within a
reasonable period of time after closing of the proposed transaction.
Management of the Company, while not especially experienced in matters
relating to the new business of the Company,
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will rely upon their own efforts in accomplishing the business purposes of the
Company. It is not anticipated that any outside consultants or advisors will be
utilized by the Company to effectuate its business purposes described herein.
However, if the Company does retain such an outside consultant or advisor, any
cash fee by such party will need to be paid by the prospective merger
acquisition candidate, as the Company has no cash assets with which to pay such
obligation. There have been no contracts or agreements with any outside
consultants and none are anticipated in the future.
The Company will not restrict its search for any specific kind of firms,
but may acquire a venture which is in its preliminary or development stage,
which is already in operation, or in essentially any stage of its corporate
life. It is impossible to predict at this time the status of any business in
which the Company may become engaged, in that such business may need to seek
additional capital, may desire to have its shares publicly traded, or may seek
other advantages which the Company may offer. However, the Company does not
intend to obtain funds in one or more private placements to finance the
operation of any acquired business opportunity until such time as the Company
has successfully consummated such a merger or acquisition.
It is anticipated that the Company will incur nominal expenses in the
implementation of its business plan described herein. Because the Company has no
capital with which to pay these anticipated expenses, present management of the
Company will pay these charges with their personal funds, as interest free loans
to the Company or as capital contributions. However, if loans, the only
opportunity which management has to have these loans repaid will be from a
prospective merger or acquisition candidate. Management has agreed among
themselves that the repayment of any loans made on behalf of the Company will
not impede, or be made conditional in any manner, to consummation of a proposed
transaction.
The Company has no plans, proposals, arrangements, or understanding with
respect to the sale or issuance of additional securities prior to the location
of an acquisition or merger candidate.
Acquisition of Opportunities
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with another corporation or entity. It may also
acquire stock or assets of an existing business. On the consummation of a
transaction, it is probable that the present management and shareholders of the
Company will no longer be in control of the Company. In addition, the Company's
directors may, as part of the terms of the acquisition transaction, resign and
be replaced by new directors without a vote of the Company's shareholders or may
sell their stock in the Company. Any terms
12.
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of sale of the shares presently held by officers and/or directors of the Company
will be also afforded to all other shareholders of the Company on similar terms
and conditions. Any and all such sales will only be made in compliance with the
securities laws of the United States and any applicable state.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of its transaction, the Company may agree to register all or
a part of such securities immediately after the transaction is consummated or at
specified times thereafter. If such registration occurs, of which there can be
no assurance, it will be undertaken by the surviving entity after the Company
has successfully consummated a merger or acquisition and the Company is no
longer considered a "shell" company. The issuance of substantial additional
securities and their potential sale into any trading market which may develop in
the Company's securities may have a depressive effect on the value of the
Company's securities in the future, if such a market develops, of which there is
no assurance.
While the actual terms of a transaction to which the Company may be a party
cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a so-called "tax-free" reorganization under
Sections 368(a)(1) or 351 of the Internal Revenue Code (the "Code"). In order to
obtain tax-free treatment under the Code, it may be necessary for the owners of
the acquired business to own 80% or more of the voting stock of the surviving
entity. In such event, the shareholders of the Company, would retain less than
20% of the issued and outstanding shares of the surviving entity, which would
result in significant dilution in the equity of such shareholders.
As part of the Company's investigation, officers and directors of the
Company will meet personally with management and key personnel, may visit and
inspect material facilities, obtain independent analysis of verification of
certain information provided, check references of management and key personnel,
and take other reasonable investigative measures, to the extent of the Company's
limited financial resources and management expertise. The manner in which the
Company participates in an opportunity will depend on the nature of the
opportunity, the respective needs and desires of the Company and other parties,
the management of the opportunity and the relative negotiation strength of the
Company and such other management.
With respect to any merger or acquisition, negotiations with target company
management is expected to focus on the percentage of the Company which the
target company shareholders would acquire in exchange for all of their
shareholdings in the target company. Depending upon, among other things, the
target
13.
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company's assets and liabilities, the Company's shareholders will in all
likelihood hold a substantially lesser percentage ownership interest in the
Company following any merger or acquisition. The percentage ownership may be
subject to significant reduction in the event the Company acquires a target
company with substantial assets. Any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on the percentage
of shares held by the Company's then shareholders.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements. Although the terms
of such agreements cannot be predicted, generally such agreements will require
some specific representations and warranties by all of the parties thereto, will
specify certain events of default, will detail the terms of closing and the
conditions which must be satisfied by each of the parties prior to and after
such closing, will outline the manner of bearing costs, including costs
associated with the Company's attorneys and accountants, will set forth remedies
on default and will include miscellaneous other terms.
As stated hereinabove, the Company will not acquire or merge with any
entity which cannot provide independent audited financial statements within a
reasonable period of time after closing of the proposed transaction. The Company
is subject to all of the reporting requirements included in the 1934 Act.
Included in these requirements is the affirmative duty of the Company to file
independent audited financial statements as part of its Form 8-K to be filed
with the Securities and Exchange Commission upon consummation of a merger or
acquisition, as well as the Company's audited financial statements included in
its annual report on Form 10-K (or 10-KSB, as applicable). If such audited
financial statements are not available at closing, or within time parameters
necessary to insure the Company's compliance with the requirements of the 1934
Act, or if the audited financial statements provided do not conform to the
representations made by the candidate to be acquired in the closing documents,
the closing documents will provide that the proposed transaction will be
voidable, at the discretion of the present management of the Company. If such
transaction is voided, the agreement will also contain a provision providing for
the acquisition entity to reimburse the Company for all costs associated with
the proposed transaction.
Competition
The Company will remain an insignificant participant among the firms which
engage in the acquisition of business opportunities. There are many established
venture capital and financial concerns which have significantly greater
financial and personnel resources and technical expertise than the Company. In
view of the Company's combined extremely limited financial resources and limited
management availability, the Company will continue to be at a significant
competitive disadvantage compared to the Company's competitors.
14.
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Investment Company Act of 1940
Although the Company will be subject to regulation under the Securities Act
of 1933, as amended, and the 1934 Act, management believes the Company will not
be subject to regulation under the Investment Company Act of 1940 insofar as the
Company will not be engaged in the business of investing or trading in
securities. In the event the Company engages in business combinations which
result in the Company holding passive investment interests in a number of
entities, the Company could be subject to regulation under the Investment
Company Act of 1940. In such event, the Company would be required to register as
an investment company and could be expected to incur significant registration
and compliance costs. The Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the Company under the
Investment Company Act of 1940 and, consequently, any violation of such Act
would subject the Company to material adverse consequences.
Employees
The Company has no full time or part-time employees.
None of the officers and directors anticipates devoting more than ten (10%)
percent of his or her time to Company activities. The Company's President and
Secretary have agreed to allocate a portion of said time to the activities of
the Company, without compensation. These officers anticipate that the business
plan of the Company can be implemented by their devoting minimal time per month
to the business affairs of the Company and, consequently, conflicts of interest
may arise with respect to the limited time commitment by such officers.
Item 2. Description of Property.
-----------------------
The Company has no properties and at this time has no agreements to acquire
any properties.
The Company presently occupies office space supplied by Paul W. Andre at
6767 W. Tropicana Avenue, Suite 207, Las Vegas, Nevada 89103. This space is
provided to the Company on a rent free basis, and it is anticipated that this
arrangement will remain until such time as the Company successfully consummates
a merger or acquisition. Management believes that this arrangement will meet the
Company's needs for the foreseeable future.
Item 3. Legal Proceedings.
-----------------
There is no litigation pending or threatened by or against the Company.
15.
<PAGE> 16
Item 4. Submission of Matter to Vote of Security Holders.
------------------------------------------------
There has been no matters submitted to the Company's security holders.
Item 5. Market for Common Company Equity and Related Stockholder Matter.
----------------------------------------------------------------
(a) Market Price. The Company's Common Stock is not quoted at the present
time.
There is no trading market for the Company's Common Stock at present and
there has been no trading market to date. There is no assurance that a trading
market will ever develop or, if such a market does develop, that it will
continue. The Company has requested a broker-dealer to make application to the
NASD Regulation, Inc. to have the Company's securities traded on the OTC
Bulletin Board Systems or published, in print and electronic media, or either,
in the National Quotation Bureau LLC "Pink Sheets."
The Securities and Exchange Commission adopted Rule 15g-9, which
established the definition of a "penny stock," for purposes relevant to the
Company, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks; and (ii) the broker or dealer receive from the
investor a written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve a person's
account for transactions in penny stocks, the broker or dealer must (i) obtain
financial information and investment experience and objectives of the person;
and (ii) make a reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, prior to
any transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form, (i)
sets forth the basis on which the broker or dealer made the suitability
determination; and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure also has to be
made about the risks of investing in penny stock in both public offering and in
secondary trading, and about commissions payable to both the broker-dealer and
the registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks.
16.
<PAGE> 17
For the initial listing in the NASDAQ SmallCap market, a company must have
net tangible assets of $4 million or market capitalization of $50 million or a
net income (in the latest fiscal year or two of the last fiscal years) of
$750,000, a public float of 1,000,000 shares with a market value of $5 million.
The minimum bid price must be $4.00 and there must be 3 market makers. In
addition, there must be 300 shareholders holding 100 shares or more, and the
company must have an operating history of at least one year or a market
capitalization of $50 million.
For continued listing in the NASDAQ SmallCap market, a company must have
net tangible assets of $2 million or market capitalization of $35 million or a
net income (in the latest fiscal year or two of the last fiscal years) of
$500,000, a public float of 500,000 shares with a market value of $1 million.
The minimum bid price must be $1.00 and there must be 2 market makers. In
addition, there must be 300 shareholders holding 100 shares or more.
Management intends to strongly consider undertaking a transaction with any
merger or acquisition candidate which will allow the Company's securities to be
traded without the aforesaid limitations. However, there can be no assurances
that, upon a successful merger or acquisition, the Company will qualify its
securities for listing on NASDAQ or some other national exchange, or be able to
maintain the maintenance criteria necessary to insure continued listing. The
failure of the Company to qualify its securities or to meet the relevant
maintenance criteria after such qualification in the future may result in the
discontinuance of the inclusion of the Company's securities on a national
exchange. In such events, trading, if any, in the Company's securities may then
continue in the non-NASDAQ over-the-counter market. As a result, a shareholder
may find it more difficult to dispose of, or to obtain accurate quotations as to
the market value of, the Company's securities.
(b) Holders.
There are thirty five (35) holders of the Company's Common Stock. On
December 31, 1992, the Company issued 1,860,000, as adjusted for a forward stock
split of its Common Shares for cash. All of the issued and outstanding shares of
the Company's Common Stock were issued in accordance with the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended.
As of the date of this registration statement, all of the issued and
outstanding shares of the Company's Common Stock held by non-affiliates are
eligible for sale under Rule 144 promulgated under the Securities Act of 1933,
as amended, subject to certain limitations included in said Rule. In general,
under Rule 144, a person (or persons whose shares are aggregated), who has
satisfied a one year holding period, under certain circum-
17.
<PAGE> 18
stances, may sell within any three-month period a number of shares which does
not exceed the greater of one percent of the then outstanding Common Stock or
the average weekly trading volume during the four calendar weeks prior to such
sale. Rule 144 also permits, under certain circumstances, the sale of shares
without any quantity limitation by a person who has satisfied a two-year holding
period and who is not, and has not been for the preceding three months, an
affiliate of the Company.
In summary, Rule 144 applies to affiliates (that is, control persons) and
nonaffiliates when they resell restricted securities (those purchased from the
issuer or an affiliate of the issuer in nonpublic transactions). Nonaffiliates
reselling restricted securities, as well as affiliates selling restricted or
nonrestricted securities, are not considered to be engaged in a distribution
and, therefore, are not deemed to be underwriters as defined in Section 2(11),
if six conditions are met:
(1) Current public information must be available about the issuer unless
sales are limited to those made by nonaffiliates after two years.
(2) When restricted securities are sold, generally there must be a
one-year holding period.
(3) When either restricted or nonrestricted securities are sold by an
affiliate after one year, there are limitations on the amount of
securities that may be sold; when restricted securities are sold by
non-affiliates between the first and second years, there are identical
limitations; after two years, there are no volume limitations for
resales by non-affiliates.
(4) Except for sales of restricted securities made by nonaffiliates after
two years, all sales must be made in brokers' transactions as defined
in Section 4(4) of the Securities Act of 1933, as amended, or a
transaction directly with a "market maker" as that term is defined in
Section 3(a)(38) of the 1934 Act.
(5) Except for sales of restricted securities made by nonaffiliates after
two years, a notice of proposed sale must be filed for all sales in
excess of 500 shares or with an aggregate sales price in excess of
$10,000.
(6) There must be a bona fide intention to sell within a reasonable time
after the filing of the notice referred to in (5) above.
(c) Dividends.
The Company has not paid any dividends to date, and has no plans to do so
in the immediate future.
18.
<PAGE> 19
Item 6. Management's Discussion and Analysis or Plan of Operation
---------------------------------------------------------
The Company has not commenced business activities and has no assets or
operations. The Company is dependent upon its officers to meet any de minimis
costs which may occur.
Paul W. Andre, an officer and director of the Company, has agreed to
provide the necessary funds, without interest, for the Company to comply with
the Securities Exchange Act of 1934, as amended, provided that he is an officer
and director of the Company when the obligation is incurred. All advances are
interest-free.
In addition, since the Company has had no operating history nor any
revenues or earnings from operations, with no significant assets or financial
resources, the Company will in all likelihood sustain operating expenses without
corresponding revenues, at least until the consummation of a business
combination. This may result in the Company incurring a net operating loss which
will increase continuously until the Company can consummate a business
combination with a profitable business opportunity. There is assurance that the
Company can identify such a business opportunity and consummate such a business
combination.
19.
<PAGE> 20
Item 7. Financial Statements.
--------------------
TABLE OF CONTENTS
PAGE #
------
INDEPENDENT AUDITORS REPORT 21
-------------------------------------------------------------------
ASSETS 22
-------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY 23
-------------------------------------------------------------------
STATEMENT OF OPERATIONS 24
-------------------------------------------------------------------
STATEMENT OF STOCKHOLDERS' EQUITY 25
-------------------------------------------------------------------
STATEMENT OF CASH FLOWS 26
-------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 27-31
-------------------------------------------------------------------
20.
<PAGE> 21
[LETTERHEAD OF BARRY L. FRIEDMAN, P.C.]
INDEPENDENT AUDITORS' REPORT
Board of Directors January 21, 2000
Sierra Resource Group, Inc.
Las Vegas, Nevada
I have audited the accompanying Balance Sheets of Sierra Resource Group,
Inc. (A Development Stage Company), as of December 31, 1999, December 31, 1998,
and December 31, 1997, and the related statement of stockholder's equity for
December 31, 1999, December 31, 1998, and December 31, 1997 and the statements
of operations and cash flows for the three years ended December 31, 1999,
December 31, 1998, and December 31, 1997 and the period December 21, 1992
(inception) to December 31, 1999. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Sierra Resource Group, Inc.
(A Development Stage Company), as of December 31, 1999, December 31, 1998, and
December 31, 1997, and the related statement of stockholder's equity for
December 31, 1999, December 31, 1998, and December 31, 1997 and the statements
of operations and cash flows for the three years ended December 31, 1999,
December 31, 1998, and December 31, 1997 and the period December 21, 1992
(inception) to December 31, 1999, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note #5 to the
financial statements, the Company has suffered recurring losses from operations
and has no established source of revenue. This raises substantial doubt about
its ability to continue as a going concern. Management's plan in regard to these
matters is described in Note #5. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ BARRY L. FRIEDMAN
- ---------------------------
Barry L. Friedman
Certified Public Accountant
1582 Tulita Drive
Las Vegas, NV 89123
Phone: (702) 361-8414
21.
<PAGE> 22
SIERRA RESOURCE GROUP, INC.
(A Development Stage Company)
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
December December December
31, 1999 31, 1998 31, 1997
---------------- --------------- --------------
<S> <C> <C> <C>
CURRENT ASSETS $ 0 $ 0 $ 0
-------------- ------------- --------------
TOTAL CURRENT ASSETS $ 0 $ 0 $ 0
-------------- ------------- --------------
OTHER ASSETS $ 0 $ 0 $ 0
-------------- ------------- --------------
TOTAL OTHER ASSETS $ 0 $ 0 $ 0
-------------- ------------- --------------
TOTAL ASSETS $ 0 $ 0 $ 0
-------------- ------------- --------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
22.
<PAGE> 23
SIERRA RESOURCE GROUP, INC.
(A Development Stage Company)
BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December December December
31, 1999 31, 1998 31, 1997
-------- -------- --------
<S> <C> <C> <C>
CURRENT LIABILITIES
Officers Advances (Note #5) ........ $ 23,118 $ 450 $ 0
-------- ------- -------
TOTAL CURRENT LIABILITIES .......... $ 23,118 $ 450 $ 0
-------- ------- -------
STOCKHOLDERS' EQUITY (Note #4)
Common stock
No Par value
Authorized 25,000 shares
Issued and outstanding at
December 31, 1997 -
1,860 shares ....................... $ 1,860
Common Stock
$.001 par value
Authorized 25,000,000 shares
Issued and outstanding at
December 31, 1998 -
1,860,000 shares ................... $ 1,860
December 31, 1999 -
1,860,000 shares ................... $ 1,860
Additional Paid In Capital ......... 0 0 0
Deficit Accumulated during
The development stage .............. -24,978 -2,310 -2,100
-------- ------- -------
TOTAL STOCKHOLDERS' EQUITY .............. $-23,118 $ -450 $-1,860
-------- ------- -------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY .................... $ 0 $ 0 $ 0
-------- ------- -------
</TABLE>
The accompanying notes are an integral part of these financial statements.
23.
<PAGE> 24
SIERRA RESOURCE GROUP, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Year Year Year Dec.21, 1992
Ended Ended Ended (Inception)
Dec. 31, Dec. 31, Dec. 31, to Dec. 31,
1999 1998 1997 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INCOME
Revenue ................ $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ----------
EXPENSES
General, Selling and
Administrative ......... $ 22,668 $ 450 $ 0 $ 24,978
---------- ---------- ---------- ----------
TOTAL EXPENSE . $ 22,668 $ 450 $ 0 $ 24,978
---------- ---------- ---------- ----------
NET PROFIT/LOSS (-) .... $ -22,668 $ -450 $ 0 $ -24,978
---------- ---------- ---------- ----------
Net Profit/Loss (-)
Per weighted share
(Note 1) $ ............. -.0122 $ -.0002 $ NIL $ -.0134
---------- ---------- ---------- ----------
Weighted average
Number of common
Shares outstanding ..... 1,860,000 1,860,000 1,860,000 1,860,000
---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
24.
<PAGE> 25
SIERRA RESOURCE GROUP, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDER EQUITY
<TABLE>
<CAPTION>
Additional Accumu-
Common Stock paid-in lated
Shares Amount Capital Deficit
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Balance,
December 31, 1996 ....... 1,860 $ 1,860 $ 0 $ -1,860
Net loss year ended
December 31, 1997 ....... 0
---------- ---------- ---------- --------
Balance,
December 31, 1997 ....... 1,860 $ 1,860 $ 0 $ -1,860
December 18, 1998
Changed from no par
Value to $.001 .......... -1,858 +1,858
December 18, 1998
Forward stock split
100:1 ................... 1,858,140 +1,858 -1,858
Net loss year ended
December 31, 1998 ....... -450
---------- ---------- ---------- --------
Balance,
December 31, 1998 ....... 1,860,000 $ 1,860 $ 0 $ -2,310
Net loss year ended
December 31, 1999 ....... -22,668
---------- ---------- ---------- --------
Balance,
December 31, 1999 ....... 1,860,000 $ 1,860 $ 0 $-24,978
---------- ---------- ---------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
25.
<PAGE> 26
SIERRA RESOURCE GROUP, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year Year Year Dec.21,1992
Ended Ended Ended (Inception)
Dec. 31, Dec. 31, Dec. 31, to Dec.31,
1999 1998 1997 1999
--------- ------ ------- ---------
<S> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net Loss .................. $ -22,668 $ -450 $ 0 $ -24,978
Adjustment to
Reconcile net loss
To net cash provided
by operating
Activities
Changes in assets and
Liabilities
Officers Advances .............. $ +22,668 $ +450 0 $ +23,118
--------- ------ ------- ---------
NET CASH USED IN
OPERATING ACTIVITIES ........... $ 0 $ 0 $ 0 $ -1,860
CASH FLOWS FROM
INVESTING ACTIVITIES ........... 0 0 0 0
CASH FLOWS FROM
FINANCING ACTIVITIES
Issuance of Common
Stock for Cash ............ 0 0 0 $ +1,860
------- ------- ------- ---------
Net Increase (decrease) ........ $ 0 $ 0 $ 0 $ 0
Cash,
Beginning of period ............ 0 0 0 0
------- ------- ------- ---------
Cash, End of Period ............ $ 0 $ 0 $ 0 $ 0
------- ------- ------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
26.
<PAGE> 27
SIERRA RESOURCE GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999, December 31, 1998, and December 31, 1997
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized December 21, 1992, under the laws of the State of
Nevada as Sierra Resource Group, Inc. The Company currently has no
operations and in accordance with SFAS #7, is considered a development
company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Method
The Company records income and expenses on the accrual method.
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 statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ
from those estimates.
Cash and equivalents
The Company maintains a cash balance in a non-interest-bearing bank
that currently does not exceed federally insured limits. For the
purpose of the statements of cash flows, all highly liquid investments
with the maturity of three months or less are considered to be cash
equivalents. There are no cash equivalents as of December 31, 1999.
27.
<PAGE> 28
SIERRA RESOURCE GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999, December 31, 1998, and December 31, 1997
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
Income taxes are provided for using the liability method of accounting
in accordance with Statement of Financial Accounting Standards No. 109
(SFAS #109) "Accounting for Income Taxes". A deferred tax asset or
liability is recorded for all temporary difference between financial
and tax reporting. Deferred tax expense (benefit) results from the net
change during the year of deferred tax assets and liabilities.
Loss Per Share
Net loss per share is provided in accordance with Statement of
Financial Accounting Standards No. 128 (SFAS #128) "Earnings Per
Share". Basic loss per share is computed by dividing losses available
to common stockholders by the weighted average number of common shares
outstanding during the period. Diluted loss per share reflects per
share amounts that would have resulted if dilative common stock
equivalents had been converted to common stock. As of December 31,
1998, the Company had no dilative common stock equivalents such as
stock options.
Year End
The Company has selected December 31st as its year-end.
28.
<PAGE> 29
SIERRA RESOURCE GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999, December 31, 1998, and December 31, 1997
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Year 2000 Disclosure
The year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year.
Computer programs that have time sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could
result in a system failure or miscalculations causing disruption of
normal business activities. Since the Company currently has no
operating business and does not use any computers, and since it has no
customers, suppliers or other constituents, there are no material Year
2000 concerns.
NOTE 3 - INCOME TAXES
There is no provision for income taxes for the period ended December 31,
1999, due to the net loss and no state income tax in Nevada, the state of
the Company's domicile and operations. The Company's total deferred tax
asset as of December 31, 1999, is as follows:
Net operation loss carry forward $ 24,978
Valuation allowance $ 24,978
Net deferred tax asset $ 0
The federal net operating loss carry forward will expire from 2016 to 2019.
This carry forward may be limited upon the consummation of a business
combination under IRC Section 381.
29.
<PAGE> 30
SIERRA RESOURCE GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999, December 31, 1998, and December 31, 1997
NOTE 4 - STOCKHOLDERS' EQUITY
Common Stock
The authorized common stock of Sierra Resource Group, Inc. consists of
25,000,000 shares with a par value of $0.001 per share.
Preferred Stock
Sierra Resource Group, Inc. has no preferred stock.
On December 24, 1992, the Company issued 1,860 shares of its no par value
common stock in consideration of $1,860 in cash.
On December 18, 1998, the State of Nevada approved the Company's restated
Articles of Incorporation, which increased its capitalization from 2,500
common shares to 25,000,000 common shares. The no par value was changed to
$0.001.
On December 18, 1998, the Company forward split its common stock 1,000:1,
thus increasing the number of outstanding common stock shares from 1,860
shares to 1,860,000.
NOTE 5 - 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. Until that time, the stockholders/officers and
or directors have committed to advancing the operating costs of the Company
interest free.
30.
<PAGE> 31
SIERRA RESOURCE GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999, December 31, 1998, and December 31, 1997
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. An
officer of the corporation provides office services without charge. Such
costs are immaterial to the financial statements and accordingly, have not
been reflected therein. The officers and directors of the Company are
involved in other business activities and may, in the future, become
involved in other business opportunities. If a specific business
opportunity becomes available, such persons may face a conflict in
selecting between the Company and their other business interests. The
Company has not formulated a policy for the resolution of such conflicts.
NOTE 7 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional
shares of common stock.
31.
<PAGE> 32
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
--------------------------------------------------------------
The Company has not changed accountants since its formation and there are
no disagreements with the findings of said accountants.
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act.
------------------------------------------------------------------------
The members of the Board of Directors of the Company serve until the next
annual meeting of the stockholders, or until their successors have been elected.
The officers serve at the pleasure of the Board of Directors. Information as to
the directors and executive officers of the Company is as follows:
Name Ages Position
---- ---- --------
Sandra J. Andre 45 President and Director
1035 Vista Del Carros
Apartment 204
Corona, California 91720
Paul W. Andre 57 Secretary, Treasurer
4132 South Rainbow Blvd. and Director
Unit 502
Las Vegas, Nevada 89103
Suzette M. Encarnacion 32 Director
608 Idaho Avenue, #3
Santa Monica, CA 90403
The principal occupation and business experience during the last five years for
each of the present directors and executive officers of the Company are as
follows:
Sandra J. Andre
Sandra J. Andre has been a major shareholder of the Issuer since 1992 and
has been President and a director of the Issuer since 1998. From 1990 to
1995 , she was the Vice-President and Chief Financial Officer of Plitt
Amusement Company, Inc. From 1995 to 1996 , she was the Chief Financial
Officer of Lottery Enterprises, Inc., a manufacturer of instant lottery
tickets and debit card dispensing technology. From 1996 to the present, she
has been the Chief Financial Officer of Young Minds, Inc., a computer
software company.
Paul W. Andre
Paul W. Andre has been a major shareholder of the Issuer since 1992 and has
been Secretary/Treasurer and a director of the Issuer since 1998. From 1989
to 1996, he was President of Andre and Associates, Inc., a financial
consulting group. From 1996 to the present, he has been President of Savoy
Financial Group, Inc., a corporate consulting organization. He is the
spouse of Sandra J. Andre, President of the Issuer.
Suzette M. Encarnacion
Suzette M. Encarnacion has been a major shareholder of the Issuer since
1992 and has been a director of the Issuer since 1998. From 1990 to 1993,
she was the controller of Plitt Amusement Company, Inc. From 1994 to the
present, she has been employed by Industrial Bank as a loan officer and
underwriter for business and commercial loans.
32.
<PAGE> 33
The officers and directors may be deemed parents and promoters of the
Company as those terms are defined by the Securities Act of 1933, as amended.
All directors hold office until the next annual stockholders' meeting or until
their death, resignation, retirement, removal, disqualification, or until their
successors have been elected and qualified. Officers of the Company serve at the
will of the Board of Directors.
There are no agreements or understandings for any officer or director of
the Company to resign at the request of another person and none of the officers
or directors are acting on behalf of or will act at the direction of any other
person.
The Company has checked the box provided on the cover page of this Form to
indicate that there is no disclosure in this form of reporting person
delinquencies in response to Item 405 of Regulation S-B.
Item 10. Executive Compensation.
----------------------
None of the Company's officers and/or directors receive any compensation
for their respective services rendered unto the Company, nor have they received
such compensation in the past. They all have agreed to act without compensation
until authorized by the Board of Directors, which is not expected to occur until
the Company has generated revenues from operations after consummation of a
merger or acquisition. As of the date of this report statement, the Company has
no funds available to pay directors. Further, none of the directors are accruing
any compensation pursuant to any agreement with the Company.
It is possible that, after the Company successfully consummates a merger or
acquisition with an unaffiliated entity, that entity may desire to employ or
retain one or a number of members of the Company's management for the purposes
of providing services to the surviving entity, or otherwise provide other
compensation to such persons. However, the Company has adopted a policy whereby
the offer of any post-transaction remuneration to members of management will not
be a consideration in the Company's decision to undertake any proposed
transaction. Each member of management has agreed to disclose to the Company's
Board of Directors any discussions concerning possible compensation to be paid
to them by any entity which proposes to undertake a transaction with the Company
and further, to abstain from voting on such transaction. Therefore, as a
practical matter, if each member of the Company's Board of Directors is offered
compensation in any form from any prospective merger or acquisition candidate,
the proposed transaction will not be approved by the Company's Board of
Directors as a result of the inability of the Board to affirmatively approve
such a transaction.
33.
<PAGE> 34
It is possible that persons associated with management may refer a
prospective merger or acquisition candidate to the Company. In the event the
Company consummates a transaction with any entity referred by associates of
management, it is possible that such an associate will be compensated for their
referral in the form of a finder's fee. It is anticipated that this fee will be
either in the form of restricted common stock issued by the Company as part of
the terms of the proposed transaction, or will be in the form of cash
consideration. However, if such compensation is in the form of cash, such
payment will be tendered by the acquisition or merger candidate, because the
Company has insufficient cash available. The amount of such finder's fee cannot
be determined as of the date of this registration statement, but is expected to
be comparable to consideration normally paid in like transactions. No member of
management of the Company will receive any finders fee, either directly or
indirectly, as a result of their respective efforts to implement the Company's
business plan outlined herein.
No retirement, pension, profit sharing, stock option or insurance programs
or other similar programs have been adopted by the Company for the benefit of
its employees.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
---------------------------------------------------------------
(a) Security Ownership of Certain Beneficial Owners.
The following table sets forth the security and beneficial ownership for
each class of equity securities of the Company for any person who is known to be
the beneficial owner of more than five percent of the Company.
Name and Amount and
Address of Nature of
Beneficial Beneficial Percent
Title of Class Owner Owner of Class
- --------------------------------------------------------------------------------
Common Sandra J. Andre 360,000 19.4%
1035 Vista Del Carro
Apartment 204
Corona, CA 91720
Common Paul W. Andre 750,000 40.3%
4132 South Rainbow Blvd.
Unit 502
Las Vegas, NV 89103
Common Suzette M. Encarnacion 200,000 10.7%
608 Idaho Avenue, #3
Santa Monica, CA 90403
34.
<PAGE> 35
Common All Officers and 1,310,000 70.4%
Directors as a Group
(three [3] individuals)
The total of the Company's outstanding Common Shares are held by 35
persons.
(b) Security Ownership of Management.
The following table sets forth the ownership for each class of equity
securities of the Company owned beneficially and of record by all directors and
officers of the Company.
Name and Amount and
Address of Nature of
Beneficial Beneficial Percent
Title of Class Owner Owner of Class
- --------------------------------------------------------------------------------
Common Sandra J. Andre 360,000 19.4%
1035 Vista Del Carro
Apartment 204
Corona, CA 91720
Common Paul W. Andre 750,000 40.3%
4132 South Rainbow Blvd.
Unit 502
Las Vegas, NV 89103
Common Suzette M. Encarnacion 200,000 10.7%
608 Idaho Avenue, #3
Santa Monica, CA 90403
Common All Officers and 1,310,000 70.4%
Directors as a Group
(three [3] individuals)
Item 12. Certain Relationships and Related Transactions.
----------------------------------------------
There have been no related party transactions, or any other transactions or
relationships required to be disclosed pursuant to Item 404 of Regulation S-B.
Paul W. Andre has agreed to provide the necessary funds, without interest,
for the Company to comply with the 1934 Act provided that he is an officer and
director of the Company when the obligation is incurred. All advances will be
interest-free.
35.
<PAGE> 36
Item 13. Exhibits and Reports on Form 8-K.
--------------------------------
There are no reports on Form 8-K incorporated herein by reference.
The following documents are filed as part of this report:
23.1 Consent of Barry L. Friedman.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Company has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: February 3, 2000 SIERRA RESOURCE GROUP, INC.
By: /s/ Sandra J. Andre
-------------------------------
Sandra J. Andre
President
36.
<PAGE> 1
EXHIBIT 23.1
[LETTERHEAD OF BARRY L. FRIEDMAN, P.C.]
To Whom It May Concern: January 21, 2000
The firm of Barry L. Friedman, P.C., Certified Public Accountant consents to the
inclusion of their report of January 21, 2000, on the Financial Statements of
Sierra Resource Group, Inc., as of December 31, 1999, in any filings that are
necessary now or in the near future with the U.S. Securities and Exchange
Commission.
Very truly yours,
/s/ BARRY L. FRIEDMAN
- ---------------------------
Barry L. Friedman
Certified Public Accountant
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 23,118
0
0
<COMMON> 2,100,000
<OTHER-SE> (23,118)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (22,668)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (22,668)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (22,668)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
