SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 2054
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1997 Commission File Number 0-29644
--------------
SIERRA-ROCKIES CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0300193
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2 North Cascade Avenue, Suite 330, Colorado Springs, Colorado 80903
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (719) 520-1800
----------------------------
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) Yes ___
of the Securities Exchange Act of 1934 during the pre-
ceding 12 months (or for such shorter period that the No _X_
registrant was required to file such reports), and (2)
has been subject to such filing requirements for the
past 90 days.
Indicate the number of shares outstanding of each
of the issuer's classes of common stock, as of the latest
practicable date.
Number of shares outstanding
Class at May 7, 1997
- ------------------------------------- ----------------------------
Common stock, $.001 par value shares 17,243,048
<PAGE>
FORM 10-Q
1st QUARTER
INDEX
-----
PAGE
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements -
Balance Sheets - March 31, 1997 (Unaudited) and
December 31, 1996 3
Statements of Operations - Three months ended
March 31, 1997 and 1996 (Unaudited). 4
Statement of Cash Flows - Three months ended
March 31, 1997 and March 31, 1996 (Unaudited) 5
Notes to Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis (Unaudited) 8
PART II - OTHER INFORMATION
Items 1 through 6. 8
SIGNATURES 9
- The accompanying financial statements are not
covered by an independent certified public
accountant's report.
-2-
<PAGE>
SIERRA ROCKIES CORP
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED BALANCE SHEET
FORM 10-QSB MARCH 31, 1997
MAR 31
--------------
<S> <C>
CASH & CASH EQUIVALENTS 0
A/R - AFFILIATE 80,541
COSTS IN EXCESS OF BILLINGS
ON UNCOMPLETED CONTRACTS 39,811
--------------
TOTAL CURRENT ASSETS 120,352
LAND 2,150,000
PROPERTY & EQUIP, NET 6,347
CONSTRUCTION IN PROGRESS 13,186
DEFERRED FINANCING POINTS, NET 27,635
N/R-FORMER OFFICER 1,000,000
N/R - RELATED PARTY 476,266
ALLOWANCE FOR N/R (1,476,266)
--------------
TOTAL ASSETS 2,317,520
==============
A/P - TRADE (387,963)
DUE TO RELATED PARTY (238,092))
BILLINGS IN EXCESS COSTS
ON UNCOMPLETED CONTRACTS (20,015)
N/P-RELATED PARTY (491,838)
NOTES PAYABLE (690,960)
--------------
TOTAL CURRENT LIABILITIES (1,828,868)
CONVERTIBLE DEBENTURES (20,000)
COMMON STOCK (17,146)
APIC (5,404,010)
DEFERRED GAIN-RELATED PARTY (784,232)
COSTS IN EXCESS-COMMON CTRL 116,533
RETAINED DEFICIT 5,383,663
CURRENT LOSS 236,540
--------------
TOTAL LIABILITIES & EQUITY (2,317,520)
==============
</TABLE>
-3-
<PAGE>
SIERRA-ROCKIES CORPORATION
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FORM 10-QSB MARCH 31, 1997
Three months ended March 31,
1997 1996
-----------------------------
<S> <C> <C>
CONSTRUCTION CONTRACT REVENUES EARNED .......... 37,393 0
COST OF CONSTRUCTION REVENUES EARNED ........... 30,033 0
-------------------------
GROSS PROFIT ................................... 7,360 0
MANAGEMENT FEES ................................ 120,000 0
G&A EXPENSES ................................... 60,295 34,607
-------------------------
(LOSS) FROM OPERATIONS ......................... (172,935) (34,607)
INTEREST EXPENSE ............................... 66,311 43,931
OTHER INCOME (EXPENSES) ........................ 2,706 17,038
-------------------------
LOSS BEFORE TAXES .............................. (236,540) (61,500)
PROVISION FOR INCOME TAXES ..................... 0 0
-------------------------
NET LOSS ....................................... (236,540) (61,500)
=========================
</TABLE>
-4-
<PAGE>
SIERRA ROCKIES CORPORATION
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FORM 10-QSB MARCH 31, 1997
Three months ended March 31,
1997 1996
---------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES .............................. (22,787) 303
--------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property & equip .................................... (962) 0
--------------------
Net cash provided by investing (962) 0
--------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Debt refinancing costs ......................................... (36,846)
Advances from affiliate ........................................ 60,595
--------------------
Net cash provided from financing 23,749 0
--------------------
INCREASE (DECREASE) IN CASH ....................................... 0 303
CASH AT BEGINNING OF PERIOD ....................................... 0 0
CASH AT END OF PERIOD ............................................. 0 303
====================
</TABLE>
-5-
<PAGE>
SIERRA ROCKIES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 1997
Note A: Basis of presentation
---------------------
The financial statements presented herein have been prepared by the Company in
accordance with the accounting policies in its annual 10-KSB report dated
December 31, 1996 and should be read in conjunction with the notes thereto.
The condensed consolidated statement of cash flows presented in the annual
10-KSB report dated December 31, 1996 was presented in accordance with Statement
of Financial Accounting Standard No. 95 "Statement of Cash Flows", using the
direct method versus the indirect method which management chose to present in
the interim financial statements for the three months ended March 31, 1997.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary to provide a fair presentation of
operating results for the interim period presented have been made. The results
of operations for the periods presented are not necessarily indicative of the
results to be expected for the year.
Interim financial data presented herein are unaudited.
Note B: Income taxes
------------
The Company records its income taxes in accordance with Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes". Income tax benefit
due to continuing net operating losses during the quarter ended March 31, 1997
were offset by an increase to the valuation allowance, bringing the net deferred
tax asset balance to $0.
Note C: Related party transactions
--------------------------
Construction sales to Eclipse Corporation ("Eclipse"), an affiliate, for the
three months ended March 31, 1997 totalled $37,393. Accounts receivable due from
Eclipse were $80,541 at March 31, 1997. Throughout the period, advances of
approximately $60,000 were received from Innercircle Group, Inc. ("IGI"), a
corporation that provides management services to the Company. Total management
fees incurred and payable to IGI for the three months ended March 31, 1997
totalled $120,000.
Note D: Notes payable
-------------
The Company entered into a promissory note, face value of $690,960 with an
unrelated party, bearing interest at 15.5%, with interest payments of $8,924.90,
commencing February 14, 1997, due monthly, and principal and any unpaid interest
due February 14, 1998. This note replaced four notes payable to various
shareholders and affiliates totalling $662,000. Proceeds from the note, paid off
the related party notes and all accrued interest due as of date of
extinquishment.
Note E: Going concern
-------------
As shown in the accompanying financial statements, the Company has incurred
recurring losses from operations and has a deficit in working capital. As a
result, the Company has experienced severe liquidity problems and has been
forced to restructure a portion of its long-term debt. These factors raise
substantial doubt about its ability to continue as a going concern.
-6-
<PAGE>
Management is working with its primary lenders to monitor the status of its
indebtedness and further restructuring of its long-term debt is expected. In
addition, management has commenced operations in the hospitality segment and is
currently evaluating plans to reduce staffing and other costs. Management is
also planning to commence collection efforts on certain related party notes
receivable.
There can be no assurance that management will be successful in its efforts to
restructure debt, reduce costs, operate profitably, or collect amounts due. If
the Company is unsuccessful in its efforts, it may be necessary to undertake
such other actions as may be appropriate to preserve asset value. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
-7-
<PAGE>
SIERRA-ROCKIES CORPORATION
--------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
(Unaudited)
GENERAL:
- --------
The Company's financial condition and results of operations are directly
affected by the following transactions.
On the 26th day of February, 1997, the Company's subsidiary, Sierra Hospitality
Services, Inc., entered into a contract with Nayan Patel for the acquisition of
the University Inn located in Laramie, Wyoming. The University Inn consists of a
39-unit motor hotel. Under the contract, the Company is to pay $800,000 in cash
and notes, and assume existing obligations.
The Company's construction subsidiary, Sierra-Rockies Development Corporation,
contributed $(13,224) to corporate operations during the quarter ending March
31, 1997. The construction subsidiary is a company specializing in the
installation of manufactured houses.
The Company is in the process of securing a height variance with respect to its
Wandering Star Hotel & Casino project located in Cripple Creek, Colorado.
FINANCIAL CONDITION
- -------------------
The Company restructured and consolidated a series of promissory notes secured
by deeds of trust upon the Wandering Star Hotel & Casino project located in
Cripple Creek, Colorado. This restructuring effectively extended the maturity
date of obligations upon the project to February, 1998.
RESULT OF OPERATIONS:
- ---------------------
The Company incurred net (losses)/profits of $(236,540), and $(61,500) for the
three months ended March 31, 1997 and 1996, respectively.
PART II - OTHER INFORMATION
Item 1 Through 5 - No response required.
Item 6 - Exhibits and reports on Form 8-K.
(a) Exhibits
27 Financial Data Schedule.
(b) Reports on Form 8-K
- A Form 8-K was filed April 21, 1997 regarding a change in Registrant's
certifying accountant.
-8-
<PAGE>
SIGNATURE
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.
SIERRA-ROCKIES CORPORATION
--------------------------
(Registrant)
DATE: 8/27/97 BY: /s/ Kenneth M. Cahill
--------------- -------------------------------------
KENNETH M. CAHILL, PRESIDENT
DATE: 8/27/97 BY: /s/ J. Royce Renfrow
------------ -------------------------------------
J. ROYCE RENFROW, SECRETARY
DATE: 8/27/97 BY: /s/ James A. Humpal
------------ -------------------------------------
JAMES A. HUMPAL, TREASURER
Principal Financial Officer
-9-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM SIERRA-ROCKIES
CORPORATION AND IT SUBSIDIARIES UNAUDITED
BALANCE SHEET AS OF MARCH 31, 1997 AND THE
RELATED STATEMENT OF INCOME FOR THE NINE
MONTHS THEN ENDED AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 80,541
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 120,352
<PP&E> 6,347
<DEPRECIATION> 348
<TOTAL-ASSETS> 2,317,520
<CURRENT-LIABILITIES> 1,828,868
<BONDS> 0
0
0
<COMMON> 5,421,156
<OTHER-SE> (4,952,504)
<TOTAL-LIABILITY-AND-EQUITY> 468,652
<SALES> 37,393
<TOTAL-REVENUES> 37,393
<CGS> 30,033
<TOTAL-COSTS> 210,328
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 56,311
<INCOME-PRETAX> (236,540)
<INCOME-TAX> 0
<INCOME-CONTINUING> (236,540)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (236,540)
<EPS-PRIMARY> .00<F1>
<EPS-DILUTED> .00<F1>
<FN>
<F1> Less than $.01 per share.
</FN>
</TABLE>
