United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000
Or
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from to
Commission file number: 33-55254-08
silverzipper.com, Inc.
(Exact name of registrant as specified in its charter)
NEVADA 87-0434286
(State or other jurisdiction (IRS Employer
of incorporation) Identification Number)
81 HOLLY HILL LANE, GREENWICH, CONNECTICUT 06830
(Address of principal executive offices) (Zip code)
(203) 661-5959
(Registrant's telephone number, including area code)
Not Applicable
(Former name or address, if changed since last report)
Indicate by check mark 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 for such 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 [X] NO [ ]
The number of shares of Class A Common Stock, $.001 par value, outstanding at
May 15, 2000 was 5,715,570.
<PAGE>
silverzipper.com, Inc.
Index
PART 1 - Financial Information
ITEM 1. Financial Statements
Consolidated Balance Sheets - March 31, 2000 and December 31, 1999.
Consolidated Statements of Operations - March 31, 2000 and March 31, 1999.
Consolidated Statements of Cash Flows - March 31, 2000 and March 31,
1999.
Notes To Consolidated Interim Financial Statements - March 31, 2000.
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
PART II - Other Information
ITEM 6. Exhibits
SIGNATURES
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements
silverzipper.com, Inc. (formerly Saber Capital, Inc.) and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<S> <C> <C>
March 31, December 31,
2000 1999
---------------- -------------------
ASSETS
CURRENT ASSETS:
Cash $ 226,427 $ 136,107
Accounts receivable, net 424,693 19,319
Note receivable, net 37,722 -
Inventory 578,484 722,261
Prepaid expenses and other current assets 27,694 9,500
---------------- -------------------
Total current assets 1,295,020 887,187
---------------- -------------------
PROPERTY AND EQUIPMENT, NET 101,496 31,298
---------------- -------------------
OTHER ASSETS
Intangible assets, net 5,823,034 -
Trademark & Organization 151,687 -
Deposits and Other Assets 16,529 21,124
---------------- -------------------
5,991,250 21,124
---------------- -------------------
$ 7,387,766 $ 939,609
================ ===================
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIAILITIES
Accounts payable $ 839,269 615,004
Due to factor 2,050,431 1,485,208
Accrued expenses 253,469 233,606
Notes payable - 87,500
---------------- ------------------
Total current liabilities 3,143,169 2,421,318
---------------- ------------------
LONG-TERM LIABILITIES
Notes payable-Stockholders 555,901 152,047
---------------- ------------------
Total liabilities 3,699,070 2,573,365
---------------- ------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Class A Common Stock, $0.001 par value;
Authorized - 100,000,000 shares
Issued and outstanding 4,040,316 shares at
December 31, 1999 and 5,941,949 shares
at March 31, 2000 5,942 4,040
Additional paid-in capital 14,534,775 5,981,674
Retained earnings/(deficit) (10,852,020) (7,619,470)
---------------- -----------------
Total Stockholders' Equity/(Deficit) 3,688,697 (1,633,756)
---------------- -----------------
$ 7,387,766 $ 939,609
================ =================
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
silverzipper.com, Inc. (formerly Saber Capital, Inc.) and Subsidiaries
Consolidated Statements of Operations
<TABLE>
<S> <C> <C>
March 31,
---------
2000 1999
----------- ----------
Sales, net $ 541,133 $ 315,665
Cost of goods sold 368,975 540,015
----------- ----------
Gross Profit 172,158 (224,350)
Operating expenses 482,380 487,560
Provision for asset revaluations 100,000 -
----------- ----------
582,380 487,560
----------- ----------
Operating Income/(Loss) (410,222) (711,909)
Interest expense, net 77,362 118,331
----------- ----------
Earnings/(Loss) Before Income Taxes (487,584) (830,240)
Provision for income taxes - -
----------- ----------
Net Income/(Loss) $ (487,584) $ (830,240)
=========== ==========
Income/(loss) per share-basic and diluted $ (0.15) $ (0.44)
=========== ==========
Weighted Average Number of Shares Outstanding 3,201,068 1,870,000
=========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
silverzipper.com, Inc. (formerly Saber Capital, Inc.) and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<S> <C> <C>
March 31,
---------
2000 1999
------------ ------------
Cash Flows From Operating Activities:
Net Income/(Loss) $ (487,584) $ (830,240)
Adjustments to reconcile net income/(loss) to
cash used by operating activities:
Depreciation and amortization 6,182 -
Provision for asset revaluations - -
Decrease/(increase) in:
Accounts receivable, net (405,374) 77,406
Inventory 143,777 536,057
Prepaid expenses and other current assets (55,916) (10,0001)
Increase/(Decrease) in:
Accounts payable 224,265 (10,799)
Accrued expenses 19,863 (43,773)
------------ ------------
Net cash provided by/(used in) operating activities (554,787) (281,350)
------------ ------------
Cash Flows From Investing Activities:
Purchase of property and equipment 70,198 -
Expenses deferred - -
------------ ------------
Net cash used in investing activities 70,198 -
------------ ------------
Cash Flows From Financing Activities:
Proceeds from private placement of common stock,
net of offering costs 457,686 -
Merger expenses 32,000 -
Proceeds from private placement of promissory notes - -
Increase in accoutns payable-Factor 565,223 211,09
Repayment of acquitison note payable (130,000) -
Net repayment of notes paybable stockholders - (20,000)
Acquisition of Serac (400,000) -
Advances from investors 200,000 -
Repayment of investor advances (150,000) -
------------ ------------
Net cash provided by financing activities 574,909 191,097
------------ -----------
Net increase/(decrease) in cash 90,320 (90,253)
Cash at the beginning of the period 136,107 93,081
------------ -----------
Cash at the end of the period $ 226,427 $ 2,828
============ ===========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest $ 77,362 $ 118,331
============ ===========
See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
silverzipper.com, Inc. (formerly Saber Capital, Inc.) and Subsidiary,
Notes To Consolidated Interim Financial Statements
(Unaudited)
1. The Company
silverzipper.com, Inc. (a Nevada Corporation) (the "Company" or
"silverzipper") designs, arranges for the manufacture and markets a range of
skiwear and snowboard apparel for wholesale distribution throughout the united
States and Canada.
The Company was organized in 1998 as American Sports Group, Inc. ("ASG") ,
a Delaware Corporation, by certain stockholders of Robern Skiwear, Inc.
("Robern"). In 1999, ASG acquired the outstanding shares of common stock of
Robern, in a transaction accounted for in a manner similar to a pooling of
interests. In June 1999, ASG changed its name to silverzipper.com, Inc. ("SZIP")
On July 27, 1999, Saber Capital, Inc. (a Nevada corporation) (the
"Company"), pursuant to a Stock Exchange Agreement, issued 1,470,000 of its
authorized and unissued shares of common stock in exchange for 100% of the
issued and outstanding common stock of silverzipper.com, Inc., a Delaware
corporation ("silverzipper Delaware"). The transaction has been accounted for as
a reverse acquisition in a manner similar to pooling of interest. In connection
with the acquisition of Saber Capital , Inc. , SZIP paid a brokerage fee of
$225,000 which was charged to selling, general and Administrative expense. In
addition , the Company issued 244,236 shares of common stock having a value of
$352,000 as finders fees. On August 30, 1999, the Board of directors of the
Company amended its Articles of Incorporation to change the name of the Company
to silverzipper.com, Inc. (a Nevada corporation).
For purposes of these financial statements, the Company and its wholly
owned subsidiaries, silverzipper Delaware and Robern, are combined for all
periods.
Acquisition of Greekcentral.com, Inc.
On March 2, 2000, silverzipper.com, Inc., a Nevada Corporation
("silverzipper"), Silverzipper Internet, Inc., a Florida corporation
("Silverzipper Internet"), and a wholly owned subsidiary of silverzipper, and
GreekCentral.com, Inc., a Florida corporation ("GreekCentral.com"), entered into
an Asset Purchase Agreement and consummated the acquisition of substantially all
of the assets of GreekCentral.com by Silverzipper Internet. The primary asset
acquired by Silvezipper Internet was the greekcentral.com website, including the
URL and related intellectual property.
The GreekCentral.com website is a well-recognized online community and
portal for college life. With a focus on fraternity and sorority affiliation,
GreekCentral.com provides news, music, games, academics, shopping and
interaction. silverzipper.com believes that by focusing on a niche target group
and utilizing grassroots marketing efforts, Greekcentral has effectively
penetrated this audience and maintains increased loyalty from these users, as
evidenced by Greekcentral's long user session lengths and high repeat traffic.
silverzipper.com plans to operate GreekCentral.com in its current form, and take
advantage of joint marketing and traffic driving opportunities for the
GreekCentral.com and silverzipper.com websites. In addition, the team from
Greekcentral will be responsible for building, maintaining and marketing the
silverzipper.com website which is scheduled to debut in Fall of 2000.
The purchase price of the assets purchased by Silverzipper Internet was
550,000 shares of restricted common stock of silverzipper, which shares of
common stock were delivered to GreekCentral.com at the March 2, 2000 closing.
The purchase price was subject to a working capital determination based on a
specific formula. There was not an adjustment made to the purchase price at the
closing due to the working capital determination. The purchase price also
provides GreekCentral.com a protective feature which guarantees a $5.00 per
share value of the silverzipper common stock provided as consideration for the
GreekCentral.com assets when the common stock becomes freely tradable either by
a valid registration of the common stock or via Rule 144 of the Securities Act
of 1933, as amended. In the event the market value of the silverzipper common
stock is not $5.00 on the day the common stock is available for resale, then
silverzipper shall issue additional shares of common stock which are necessary
to make up any shortfall to the then holders of the common stock. Silverzipper
is under no obligation to register the common stock issued to GreekCentral.com.
silverzipper has entered into three year employment agreements with Adam P.
Runsdorf and Brett Jaffy. Mr. Runsdorf will be appointed as a director of
silverzipper in connection with this transaction.
Acquisition of Serac Sports, Ltd.
On or about March 21, 2000, silverzipper acquired, through a wholly owned
subsidiary, all of the outstanding capital stock of Serac Sports, Ltd.
("Serac"). Serac is a well regarded skiing and outdoor clothing company based in
Calgary, British Columbia, Canada, with the majority of its sales in the United
States. Serac's early product focus was ski apparel. Later product
diversification resulted in the introduction of cycling and running
"cross-training apparel." Serac now designs, sources and distributes outdoor
apparel and accessories for major growth sports markets currently serving the
recreational outdoor and ski/snowboard markets in North American from its
Greenwich, Connecticut and Calgary Alberta locations. Serac has also introduced
its products into Europe through a Distribution Agreement with Elho Munich.
Serac is a licensee of the W.L. Gore Company and currently supplies apparel
using Gore fabrics to ski resorts and other industries across North America.
The purchase price for the Serac capital stock acquired by silverzipper is
the sum of $3,000,000 consisting of $400,000 in cash and $2,600,000 in
silverzipper common stock valued, in accordance with the agreement, at $4.17 per
share. By the terms of the agreement, the silverzipper common stock is not
transferable before March 1, 2001 and additional restrictions may apply to
persons who are "affiliates" of Serac. In addition, silverzipper will have to
provide funding for the payment of certain loans due to former officers and
directors of Serac in the aggregate amount of approximately U.S.$ 268,401. As
part of the closing, silverzipper became obligated for the payment due by Serac
to its commercial factor. silverzipper believes that Serac's receivables and
inventory are sufficient to cover that liability.
2. Basis of Presentation
The accompanying consolidated financial statements have been prepared by
the Company without audit. In the opinion of management, all adjustments
(consisting of only normal recurring adjustments) necessary to present
fairly the financial position, results of operations, for the periods
indicated have been made. The results of operations for the periods ended
March 31, 2000 and 1999 are not necessarily indicative of the operating
results for the full fiscal years.
3. Due to Factor
The Company has an ongoing financing agreement with a lender providing for
a line of credit with maximum borrowings thereunder determined at the sole
discretion of the lender. Borrowings under the line of credit may be by
cash advances, letter of credit and payment due on presentation of
documents. Interest is payable on the outstanding cash advance balance at
the rate of 3% over the prime rate. At March 31,1999, the prime rate was
8.5%
4. Income Taxes
The Company accounts for income taxes using the liability method. Deferred
income taxes are measured by applying enacted statutory rates to net
operating loss carryforward. Deferred tax assets are reduced , if
necessary, by a valuation allowance for any tax benefits which are not
expected to be realized.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Three Month Period Ended March 31, 2000 and 1999
Net sales for the three months ended March 31, 2000 were $514,133 as
compared with net sales of $315,665 for the three months ended March 31, 1999,
an increase of $225,468, or 42%. The increase in net sales was primarily due to
the company's sale of additional in- season reorders. Given the demographics of
the end-user of the Company's products, management has determined that a shift
from its traditional selling focus to an internet retailing model will
significantly enhance its growth opportunities. Further, management believes
that by diversifying through the acquisition of other companies in the sports
apparel and accessories business that are not winter related, will serve to
"weather-proof" the Company.
Cost of sales for the three months ended March 31,2000 was $368,975, or 68%
of sales as compared with cost of sales for the three months ended March 31,
1999 of $540,015 (171% of sales). This was due to the stronger demand for in -
season reorders and the Company's ability to make those sales profitably as
opposed to selling inventory at below cost "closeouts."
Operating expenses during the 2000 quarter were $482,380 (89% of sales) as
compared with operating expenses of $487,560 during 1999 (154% of sales), a
decrease of $5,180.
Interest expense for the three months ended March 31,2000 was $77,362
compared with interest expense of $118,331 for the 1999, a decrease of $40,969.
The decrease was due primarily to the Company's ability to effect a private
placement of its common stock which allowed it to place less reliance on its
commercial lender. In addition, during 1998, the Company raised through a
private placement $1,000,000 of 10% unsecured promissory notes to finance its
developmental activities. As of August 31, 1999, pursuant to an exchange offer,
holders of an aggregate $950,000 of notes payable exchanged their notes for
consideration of 380,000 shares of common stock of the Company and warrants to
purchase an additional 380,000 shares at an exercise price of $2.50 per share.
Further, stockholders of the Company's Robern Skiwear, Inc. subsidiary exchanged
for $1,814,018 of 8% loans outstanding at June 30, 1999 into 400,000 shares of
the common stock of the Company. These factors should positively impact interest
expense in future periods.
The net loss for the three months ended March 31, 2000 was $487,584 ($0.15
per share), compared with a loss of $ 830,240 ($0.44 per share) for the three
months ended March 31, 1999, due to the factors described above.
Liquidity and Capital Resources
The Company has historically suffered from a shortage of working capital.
In addition to conducting its operations with funds provided by commercial
lenders, the Company was required to pay notes related to its acquisition and
relied on loans made by the stockholders and collateral deposited by the
stockholders.
At December 31, 1999, the Company had a deficit in working capital of
$1,687,000. In addition, at December 31, 1999, the Company had a deficit in net
worth of $1,634,000, indicating a continuing requirement for equity financing.
The Company is dependent on a line of credit from its commercial lender. The
line of credit is asset based and, accordingly, is limited, requiring principal
stockholder guarantees and collateralization. The line of credit is secured by
substantially all of the assets of the Company and is terminable on 30 days'
notice. The principal stockholders and their affiliates have pledged
approximately $1,300,000 in collateral with the Company's lender.
During the quarter ended March 31, 2000, pursuant to a Confidential
Offering Memorandum dated January ,2000, the Company realized net proceeds after
offering expenses aggregating approximately $458,000.
During 1999, pursuant to a Confidential Offering Memorandum dated July 1,
1999, the Company issued 380,000 shares of common stock to investors for net
proceeds after offering expenses aggregating approximately $1,348,000. In
addition, the Company issued 225,000 shares to investors who had advanced
$400,000 to silverzipper Delaware in April and May, 1999. These investors also
received $75,000 of promissory notes bearing interest at 10% per annum, due
October 31, 1999. Of this amount, $37,500 was repaid, with the remaining $37,500
due upon demand.
During 1998, the Company raised $1,000,000 through a private offering of
its 10% promissory notes (the "Notes"). The proceeds were used to fund the
development expenses of the Company, which consisted primarily of payroll and
legal fees incurred to assemble a management team, identify candidate companies
which fit the criteria for its consolidation strategy, and exploring strategic
alliances for its internet strategy. Pursuant to the terms of the offering, the
Notes bore interest at the rate of 10% per annum, payable quarterly, and were
due at the earlier of the closing of an initial public offering of the Company's
securities, or December 31, 1999. As of August 31, 1999, pursuant to an exchange
offer, holders of an aggregate of $950,000 of notes payable exchanged their
notes for consideration of 380,000 shares of common stock of the Company and
warrants to purchase an additional 380,000 shares of common stock at an exercise
price of $2.50 per share.
The Company is highly dependent upon an equity infusion in order to achieve
its goals of industry consolidation, forging strategic alliances with key
e-commerce companies and executing is marketing strategy. There can be no
assurance of obtaining substantial additional equity financing. In the absence
additional equity and/or debt financing, the Company can maintain, and/or expand
sales only by obtaining improved payment terms from the Company's suppliers and
customers. There is no assurance such effort would be successful and if the same
is successful, may well carry with them additional expenses in the form of
higher supplier prices and larger customer discounts, which would adversely
affect profitability.
PART II - OTHER INFORMATION
Item 6. Exhibits
A. Exhibits: 27 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
silverzipper.com, Inc.
By:/s/ Paul E. Palmeri
--------------------
Paul E. Palmeri
Chief Executive Officer
By:/s/ Cheung Lau
--------------------
Cheung Lau
Acting Chief Financial Officer
Date: May 15, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000866491
<NAME> silverzipper.com, Inc.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 226,427
<SECURITIES> 0
<RECEIVABLES> 424,693
<ALLOWANCES> 0
<INVENTORY> 578,484
<CURRENT-ASSETS> 1,295,020
<PP&E> 27,694
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<CURRENT-LIABILITIES> 3,143,169
<BONDS> 0
0
0
<COMMON> 5,942
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<TOTAL-LIABILITY-AND-EQUITY> 7,387,766
<SALES> 541,133
<TOTAL-REVENUES> 0
<CGS> 368,975
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 482,380
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 77,362
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<INCOME-TAX> 0
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<DISCONTINUED> 0
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<CHANGES> 0
<NET-INCOME> 487,584
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