-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AyrRsZiQroPZ4IJX42oHolJ09ZhVmySX9ZuLR43hDt+C1sSMXRkZQ+VYzLPp2C6h x1RgnHqQp9fjcu4LPg2iBw== 0000927797-97-000097.txt : 19970912 0000927797-97-000097.hdr.sgml : 19970912 ACCESSION NUMBER: 0000927797-97-000097 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970902 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIERRA ROCKIES CORP CENTRAL INDEX KEY: 0000837852 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RETAIL STORES, NEC [5990] IRS NUMBER: 330300193 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-19644 FILM NUMBER: 97674225 BUSINESS ADDRESS: STREET 1: 421 N RODEO DR CITY: BEVERLY HILLS STATE: CA ZIP: 90210 BUSINESS PHONE: 3102732105 MAIL ADDRESS: STREET 1: 421 NORTH RODEO DRIVE CITY: BEVERLY FILLS STATE: CA ZIP: 90210 FORMER COMPANY: FORMER CONFORMED NAME: GALLERY RODEO INTERNATIONAL DATE OF NAME CHANGE: 19941118 10QSB 1 QUARTERLY REPORT 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 June 30, 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 (I.R.S. Employer Identification No.) of incorporation ororganization) 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 June 30, 1997 - ------------------------------- ---------------------------- Common stock, $.001 par value 17,393,048 shares ---------------------------- FORM 10-Q 2nd QUARTER INDEX ----- PAGE PART I - FINANCIAL INFORMATION Item 1. Financial Statements - Balance Sheets - June 30, 1997 (Unaudited ........................ 3 Statements of Operations - Three months ended June 30, 1997 and June 30, 1996 and Six months ended June 30, 1997 and June 30, 1996 (Unaudited) ................... 4 Statement of Cash Flows - Six months ended June 30, 1997 and June 30, 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 ............................................... 9 SIGNATURES ....................................................... 10 - The accompanying financial statements are not covered by an independent certified public accountant's report. -2- Part I. Item 1. Financial Information SIERRA ROCKIES CORPORATION
Condensed Consolidated Balance Sheet June 30, 1997 ASSETS Accounts Receivable - related Party ............................... $ 8,765 Cost in excess of billings on uncompleted contracts ............... 58,357 Total current assets 67,122 Land .............................................................. 2,150,000 Property & equipment, net ......................................... 5,999 Construction in progress .......................................... 14,836 Notes receivable - related party .................................. 1,476,266 Allowance for doubtful notes receivable ........................... (1,476,266) ----------- Total assets $ 2,259,380 =========== LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable - trade .......................................... $ 307,885 Accounts payable - related party .................................. 240,000 Other, due to related party ....................................... 251,184 Billings in excess of costs on uncompleted contracts .............. 24,661 Notes payable - related party ..................................... 491,839 Notes payable ..................................................... 690,960 ----------- Total current liabilities 2,006,529 ----------- Convertible debentures ............................................ 20,000 Common stock ...................................................... 17,146 Additional paid in capital ........................................ 5,404,010 Deferred gain-transactions with parties under common control ...... 784,232 Costs in excess of net assets acquired-related party .............. (116,533) Retained deficit .................................................. (5,383,663) Current loss ...................................................... (472,341) ----------- Total liabilities and shareholders' equity ........................ $ 2,259,380 ===========
See accompanying notes to condensed consolidated financial statements 3 SIERRA ROCKIES CORPORATION
Condensed Consolidated Statements of Operations Three months ended Six months ended June 30, June 30, ---------- -------- 1997 1996 1997 1996 --------------- -------------- -------------- --------------- Construction contract revenues earned ........... $ 53,541 $ -0- $ 90,934 $ -0- Cost of construction contract revenues earned ... 46,816 -0- 76,849 -0- ------------ -------- Gross profit .................................... 6,725 -0- 14,085 -0- Operating Expenses Management fees ............................ 120,000 80,000 240,000 80,000 General and administrative fees ............ 60,593 55,840 120,888 90,447 ------------ ------------ ------------ -------- 180,593 135,840 360,888 170,447 Loss from operations ............................ (173,868) (135,840) (346,803) (170,447) Other Income (Expense) Loss on equity investment-subsidiaries ... -0- (119,088) -0- (123,106) Buyout of former president's mgmt contract (350,000) (350,000) Interest expense ......................... (60,742) (51,124) (127,053) (95,055) Interest income .......................... 16,431 33,098 Other, net ............................... (1,191) 500 1,515 871 ------------ ------------ ------------ ------------ Loss before taxes ............................... (235,801) (639,121) (472,341) (704,639) Income taxes .................................... -0- -0- -0- -0- Net loss ........................................ $ (235,801) $ (639,121) $ (472,341) $ (704,639) ============ ============ ============ ============ Net loss per share .............................. $ (.01) $ (.04) $ (.03) $ (.05) Weighted average shares outstanding ............. 17,393,048 15,516,681 17,393,048 15,516,681
See accompanying notes to condensed consolidated financial statements 4 SIERRA ROCKIES CORPORATION
Condensed Consolidated Statements of Cash Flows Six Months Ended June 30, 1997 1996 ---- ---- Cash flows provided from operating activities ........ $ 33,272 $ 131,261 --------- --------- Cash flows (used in)/provided by investing activities: Proceeds from sale of property ................... -0- 150,000 Purchase of equipment ............................ (962) -0- --------- --------- Net cash (used in)/provided by investing activities .. (962) 150,000 --------- --------- Cash flows used in financing activities Debt refinancing costs ........................... (36,846) -0- Debt repayments, net ............................. -0- (281,237) Advances/repayments from/to related party, net ... 3,546 -0- --------- --------- Net cash used in financing activities ................ (32,310) (281,327) --------- --------- Net increase in cash ................................. -0- 24 Cash, beginning of year .............................. -0- 303 Cash, end of period .................................. -0- 327 ========= ==========
See accompanying notes to condensed consolidated financial statements 5 SIERRA ROCKIES CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) June 30, 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 six months ended June 30, 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 June 30, 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 six months ended June 30, 1997 were approximately $90,000. Throughout the period, advances of approximately $80,000 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 six months ended June 30, 1997 totalled $240,000. 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. 6 SIERRA ROCKIES CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) June 30, 1997 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. 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 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 May 29, 1997, the Company's subsidiary, Sierra Hospitality Services, Inc., entered into a management contract with Barrington Hotel, Donald Schofield, Robert Schofield and Jodie Wood to provide management services for The Barrington Hotel located in Branson, Missouri. The hotel is a 149-room, limited service hotel. Under the terms of a previous letter of intent, Sierra Hospitality Services, Inc., began management of the hotel on June 1, 1997. On June 9, 1997, the Company's subsidiary, Sierra Hospitality Services, Inc., entered into a management contract with Great Southern Bank FSB to provide management services for Brighton Place Motel located in Branson, Missouri. The motel is a 78-room, limited service motel. Sierra Hospitality Services, Inc., began management of the motel on June 11, 1997. Approximately $2,500 of management fee income was earned as of June 30, 1997. On May 28, 1997, the Board accepted the effective resignation of Raymond Bouchard as a Director of the Corporation due to his non-participation in corporate affairs. The Company's construction subsidiary, Sierra-Rockies Development Corporation, contributed $(173,868) to corporate operations during the quarter ending June 30, 1997. The construction subsidiary is a company specializing in the installation of manufactured houses. The Company is continuing to pursue its Wandering Star Hotel & Casino project located in Cripple Creek, Colorado. FINANCIAL CONDITION - ------------------- The Company's financial condition remains unchanged from the previous report in its March 31, 1997 Form 10-QSB. The Company holds certain promissory notes secured by real estate in Cripple Creek, Colorado, as a result of its sale of said property to Colorado Escrow, Inc., in June of 1996. These promissory notes have previously been written down. In June of 1997 the holder of the first mortgage upon said project commenced a foreclosure, which resulted in the sale of said property at foreclosure sale on June 18, 1997. The Company, by virtue of its secured position through deeds of trust, holds an equity redemption upon said foreclosure which expires on or about 9/22/97. Management has not determined whether to exercise its equity redemption in order to reacquire said property. 8 RESULT OF OPERATIONS: - --------------------- The Company incurred net (losses)/profits of $(235,801), and $(639,121) for the three months ended June 30, 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. 9 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: 8/28/97 BY: /s/ Kenneth M. Cahill ------------ ------------------------------------ KENNETH M. CAHILL, PRESIDENT DATE: 8/28/97 BY: /s/ J. Royce Renfrow ------------ ------------------------------------- J. ROYCE RENFROW, SECRETARY DATE: 8/28/97 BY: /s/ James A. Humpal ------------ ------------------------------------- JAMES A. HUMPAL, TREASURER Principal Financial Officer 10 EX-27 2 FDS --
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SIERRA-ROCKIES CORPORATION AND IT SUBSIDIARIES UNAUDITED BALANCE SHEET AS OF JUNE 30, 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. 1 U.S. 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 1 0 0 8,765 0 0 67,122 5,999 696 2,259,380 2,006,529 0 0 0 17,146 215,705 2,259,380 90,934 90,934 76,849 437,737 (1,515) 0 127,053 (472,341) 0 (472,341) 0 0 0 (472,341) (.03) (.03)
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