Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009
OR
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE TRANSITION FROM _______ TO ________.
COMMISSION FILE NUMBER 000-25301
SIERRA RESOURCE GROUP, INC.
_________________________________________________________________
(Exact Name of Small Business Issuer as Specified in its Charter)
NEVADA 88-0413922
_______________________________ ___________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6767 W. TROPICANA AVENUE, SUITE 207
LAS VEGAS, NEVADA 89103
________________________________________ __________
(Address of principal executive offices) (Zip code)
Issuer's telephone number: (702) 248-1027
N/A
____________________________________________________
(Former name, former address and former fiscal year,
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 [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (SS 232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
________________________________________________________________________________
Non-accelerated filer Smaller
Large accelerated (Do not check if a smaller reporting
filer Accelerated filer reporting company) company
[ ] [ ] [ ] [X]
________________________________________________________________________________
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, for the period covered by this report and as at the latest practicable
date:
At September 30, 2009, and as of the date hereof, there were outstanding
12,090,000 shares of the Registrant's Common Stock, $.001 par value.
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SIERRA RESOURCE GROUP, INC.
(A Development Stage Enterprise)
FINANCIAL REPORTS
SEPTEMBER 30, 2009
DECEMBER 31, 2008
2
SIERRA RESOURCE GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONTENTS
________________________________________________________________________________
FINANCIAL STATEMENTS
Balance Sheets 4
Statements of Operations 5
Statement of Stockholders' Deficit 6
Statements of Cash Flows 7
Notes to Financial Statements 8-12
________________________________________________________________________________
3
SIERRA RESOURCE GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
As of As of
September 30, December 31,
2009 2008
(Unaudited) (Audited)
_____________ ____________
ASSETS
CURRENT ASSETS
Cash $ 1,826 $ 1,563
Account receivable 128 174
_________ ___________
Total current assets 1,954 1,737
_________ ___________
Oil & Gas interests - net 8,575 12,637
_________ ___________
Total assets $ 10,529 $ 14,374
========= ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Officer advances $ 89,055 $ 77,851
Interest accrued-related party 2,496 1,188
Note payable - related party 29,500 -
_________ ___________
Total current liabilities 121,051 79,039
_________ ___________
LONG-TERM LIABILITIES
Note payable-related party - 29,500
_________ ___________
Total long-term liabilities - 29,500
_________ ___________
Total liabilities 121,051 108,539
_________ ___________
STOCKHOLDERS' DEFICIT
Common stock: $.001 par value;
authorized 25,000,000 shares;
issued and outstanding: 12,090,000
shares at September 30, 2009 and December 31, 2008 12,090 12,090
Accumulated deficit during development stage (122,612) (106,255)
_________ ____________
Total stockholders' deficit (110,522) (94,165)
_________ ____________
Total liabilities and stockholders' deficit $ 10,529 $ 14,374
========= ===========
See Accompanying Notes to Financial Statements.
4
SIERRA RESOURCE GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
(UNAUDITED)
From inception
For the three For the three For the nine For the nine (Dec. 21, 1992)
months ended months Ended months ended months Ended to
Sept. 30, 2009 Sept. 30, 2008 Sept. 30, 2009 Sept. 30, 2008 Sept. 30, 2009
______________ ______________ ______________ ______________ ______________
Revenues $ 128 $ 508 $ 288 $ 586 $ 1,275
Cost of revenue - - - - -
____________ ____________ ____________ ____________ ____________
Gross profit 128 508 288 586 1,275
General, selling and
administrative expenses 2,197 2,934 11,275 10,050 90,236
Amortization 1,354 - 4,062 - 10,618
____________ ____________ ____________ ____________ ____________
Operating loss (3,423) (2,426) (15,049) (9,464) (99,579)
Other income (expense)
Interest expense (436) (742) (1,308) (742) (2,496)
Impairment loss on Oil and Gas interest - - - - (10,307)
____________ ____________ ____________ ____________ ____________
Total other income (expense) (436) (742) (1,308) (742) (12,803)
Net loss $ (3,859) $ (3,168) $ (16,357) $ (10,206) $ (112,382)
============ ============ ============ ============ ============
Net loss per share, basic $ (0.00) $ (0.00) $ (0.00) $ (0.00) $ (0.00)
============ ============ ============ ============ ============
Average number of shares
of common stock outstanding 12,090,000 12,090,000 12,090,000 12,090,000 12,090,000
============ ============ ============ ============ ============
See Accompanying Notes to Financial Statements.
5
SIERRA RESOURCE GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' DEFICIT
(UNAUDITED)
Accumulated
Deficit
Common Stock During
_______________________ Development
Shares Amount Stage Total
_________ _______ ___________ ________
December 21, 1992, issue
common stock 12,090,000 $12,090 $(10,230) $ 1,860
Net loss, December 31, 1992 (1,860) (1,860)
__________ _______ _________ _________
Balance, December 31, 1992 12,090,000 12,090 (12,090) -
Net loss, December 31, 1993 - -
__________ _______ _________ _________
Balance, December 31, 1993 12,090,000 12,090 (12,090) -
Net loss, December 31, 1994 - -
__________ _______ _________ _________
Balance, December 31, 1994 12,090,000 12,090 12,090) -
Net loss, December 31, 1995 - -
__________ _______ _________ _________
Balance, December 31, 1995 12,090,000 12,090 (12,090) -
Net loss, December 31, 1996 - -
__________ _______ _________ _________
Balance, December 31, 1996 12,090,000 12,090 (12,090) -
Net loss, December 31, 1997 - -
__________ _______ _________ _________
Balance December 31, 1997 12,090,000 12,090 (12,090) -
Net loss, December 31, 1998 (450) (450)
Balance, December 31, 1998 12,090,000 12,090 (12,540) (450)
Net loss, December 31, 1999 (22,668) (22,668)
__________ _______ _________ _________
Balance, December 31, 1999 12,090,000 12,090 (35,208) (23,118)
Net loss, December 31, 2000 (8,394) (8,394)
__________ _______ _________ _________
Balance, December 31, 2000 12,090,000 12,090 (43,602) (31,512)
Net loss, December 31, 2001 - (4,888) (4,888)
__________ _______ _________ _________
Balance, December 31, 2001 12,090,000 12,090 (48,490) (36,400)
Net loss, December 31, 2002 (3,156) (3,156)
__________ _______ _________ _________
Balance, December 31, 2002 12,090,000 12,090 $ (51,646) $ (39,556)
Net loss, December 31, 2003 (85) (85)
__________ _______ _________ _________
Balance, December 31, 2003 12,090,000 12,090 (51,731) (39,641)
Net loss, December 31, 2004 (2,840) (2,840)
__________ _______ _________ _________
Balance, December 31, 2004 12,090,000 12,090 (54,571) (42,481)
Net loss, December 31, 2005 (8,415) (8,415)
__________ _______ _________ _________
Balance, December 31, 2005 12,090,000 12,090 (62,986) (50,896)
Net loss, December 31, 2006 ( 4,387) ( 4,387)
__________ _______ _________ _________
Balance, December 31, 2006 12,090,000 12,090 (67,373) (55,283)
Net loss, December 31, 2007 ( 5,280) ( 5,280)
__________ _______ _________ _________
Balance, December 31, 2007 12,090,000 12,090 (72,653) (60,563)
Net loss, December 31, 2008 (33,602) (33,602)
__________ _______ _________ _________
Balance, December 31, 2008 12,090,000 12,090 (106,255) (94,165)
Net loss, September 30, 2009 (16,357) (16,357)
__________ _______ _________ _________
Balance, September 30, 2009 12,090,000 $12,090 $(122,612) $(110,522)
(unaudited) ========== ======= ========= =========
See Accompanying Notes to Financial Statements.
6
SIERRA RESOURCE GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the nine For the nine From inception
months ended months ended (Dec. 21, 1992)
Sept. 30, 2009 Sept. 30, 2008 Sept. 30, 2009
______________ ______________ ______________
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(16,357) $(10,206) $ (112,382)
Adjustments to reconcile net loss to net cash
used in operating activities:
Amortization 4,062 - 10,618
Impairment of oil and gas interest - - 10,307
Changes in operating assets and liabilities
decrease (increase) in accounts receivable 46 (375) (128)
Increase in interest accrued-related party 1,308 742 2,496
________ ________ __________
Net cash used in operating activities (10,941) (9,839) (89,089)
________ ________ __________
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in oil and gas interests - (29,500) (29,500)
________ ________ __________
Net cash used in investing activities - (29,500) (29,500)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock - - 1,860
Increase in officer advances 11,204 10,800 89,055
Proceeds from note payable-related party - 29,500 29,500
________ ________ __________
Net cash provided by financing activities 11,204 40,300 120,415
________ ________ __________
Net increase in cash 263 961 1,826
Cash, beginning of period 1,563 - -
________ ________ __________
Cash, end of period $ 1,826 $ 961 $ 1,826
======== ======== ==========
SUPPLEMENTAL CASH FLOW INFORMATION
Impairment of oil and gas interest $ - $ - $ 10,307
======== ======== ==========
See Accompanying Notes to Financial Statements.
7
SIERRA RESOURCE GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Sierra Resource Group, Inc. ("Company") was organized December 21, 1992 under
the laws of the State of Nevada. The Company currently has start-up operations
and, in accordance with Statement of Financial Accounting Standard (SFAS) No. 7,
"ACCOUNTING AND REPORTING BY DEVELOPMENT STAGE ENTERPRISES," is considered a
Development Stage Enterprise.
The accompanying Financial Statements of Sierra Resource Group, Inc. (the
"Company") should be read in conjunction with the Company's Annual Report on
Form 10-K for the year ended December 31, 2008. Significant accounting policies
disclosed therein have not changed.
The accompanying Financial Statements and the related footnote information are
unaudited. In the opinion of management, they include all normal recurring
adjustments necessary for a fair presentation of the balance sheet of the
Company as of September 30, 2009 and the results of operations and cash flows
for the nine months ended September 30, 2009. Results of operations reported for
the interim periods are not necessarily indicative of results for the entire
year. The Company has evaluated subsequent events through November 6, 2009, the
date which the financial statement were available to be issued.
A summary of the Company's significant accounting policies is as follows:
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 revenues and expenses during the reporting period.
Actual results could differ from those estimates.
CASH
For the statements of cash flows, all highly liquid investments with maturity of
three months or less are considered to be cash equivalents. There were no cash
equivalents as of September 30, 2009 and December 31, 2008.
INCOME TAXES
Income taxes are provided for using the liability method of accounting in
accordance with SFAS No. 109 "ACCOUNTING FOR INCOME TAXES," and clarified by FIN
48, "ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES--AN INTERPRETATION OF FASB
STATEMENT NO. 109." A deferred tax asset or liability is recorded for all
temporary differences between financial and tax reporting. Temporary differences
are the differences between the reported amounts of assets and liabilities and
their tax basis. Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely than not that some portion or
all of the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effect of changes in tax laws and rates on the
date of enactment.
8
SIERRA RESOURCE GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SHARE BASED EXPENSES
In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 123R "SHARE BASED PAYMENT." This statement is a revision to SFAS 123 and
supersedes Accounting Principles Board (APB) Opinion No. 25, "ACCOUNTING FOR
STOCK ISSUED TO EMPLOYEES," and amends FASB Statement No. 95, "STATEMENT OF CASH
FLOWS." This statement requires a public entity to expense the cost of employee
services received in exchange for an award of equity instruments. This statement
also provides guidance on valuing and expensing these awards, as well as
disclosure requirements of these equity arrangements. The Company adopted SFAS
No. 123R upon creation of the company and expenses share based costs in the
period incurred.
NET LOSS PER COMMON SHARE
Net loss per share is calculated in accordance with SFAS No. 128, "EARNING PER
SHARE." The weighted-average number of common shares outstanding during each
period is used to compute basic loss per share. The calculation of diluted net
loss per share gives effect to common stock equivalents; however, potential
common shares are excluded if their effect is antidilutive. Basic loss per
common share is based on the weighted average number of shares of common stock
outstanding of 12,090,000 for the periods ended September 30, 2009 and December
31, 2008. For the periods ended September 30, 2009 and December 31, 2008, the
Company had no dilutive potential common stock.
GOING CONCERN
The Company's financial statements are prepared in accordance with generally
accepted accounting principles applicable to a going concern. This contemplates
the realization of assets and the liquidation of liabilities in the normal
course of business. Currently, the Company does not have adequate cash, or
significant material assets, nor does it have substantial operations or a source
of revenue sufficient to cover its operation costs and allow it to continue as a
going concern. The Company has an accumulated deficit of ($122,612). The Company
will be dependent upon the raising of additional capital through placement of
our common stock in order to implement its business plan. There can be no
assurance that the Company will be successful in either situation in order to
continue as a going concern. The officers and directors have committed to
advancing certain operating costs of the Company. These financial statements do
not include any adjustments relating to the recoverability and classification of
recorded asset amounts, or amounts and classification of liabilities that might
result from this uncertainty.
RECENT ACCOUNTING PRONOUNCMENTS
In June 2009, the FASB issued SFAS No. 165, "Subsequent Events," ("SFAS No.
165"). SFAS 165 establishes general standards of accounting for and disclosure
of events that occur after the balance sheet date but before financial
statements are issued or are available to be issued. SFAS 165 applies to both
interim financial statements and annual financial statements. SFAS 165 is
effective for interim or annual financial periods ending after June 15, 2009.
SFAS 165 does not have a material impact on our financial statements.
9
SIERRA RESOURCE GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECENT ACCOUNTING PRONOUNCMENTS - (CONTINUED)
In June 2009, the FASB issued SFAS No. 166, "Accounting for Transfers of
Financial Assets, an amendment to SFAS No. 140," ("SFAS 166"). SFAS 166
eliminates the concept of a "qualifying special-purpose entity," changes the
requirements for derecognizing financial assets, and requires additional
disclosures in order to enhance information reported to users of financial
statements by providing greater transparency about transfers of financial
assets, including securitization transactions, and an entity's continuing
involvement in and exposure to the risks related to transferred financial
assets. SFAS 166 is effective for fiscal years beginning after November 15,
2009. The Company will adopt SFAS 166 in fiscal 2010. The Company does not
expect that the adoption of SFAS 166 will have a material impact on the
financial statements.
In June 2009, the FASB issued SFAS No. 167, "Amendments to FASB Interpretation
No. 46(R)," ("SFAS 167"). The amendments include: (1) the elimination of the
exemption for qualifying special purpose entities, (2) a new approach for
determining who should consolidate a variable-interest entity, and (3) changes
to when it is necessary to reassess who should consolidate a variable-interest
entity. SFAS 167 is effective for the first annual reporting period beginning
after November 15, 2009 and for interim periods within that first annual
reporting period. The Company will adopt SFAS 167 in fiscal 2010. The Company
does not expect that the adoption of SFAS 167 will have a material impact on the
financial statements.
In June 2009, the FASB issued SFAS No. 168, "The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles--a
replacement of FASB Statement No. 162" ("SFAS 168"). SFAS 168 replaces SFAS No.
162, THE HIERARCHY OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, and establishes
the FASB Accounting Standards Codification ("Codification") as the source of
authoritative accounting principles recognized by the FASB to be applied by
nongovernmental entities in the preparation of financial statements in
conformity with GAAP. Rules and interpretive releases of the Securities and
Exchange Commission ("SEC") under authority of federal securities laws are also
sources of authoritative GAAP for SEC registrants. The FASB will no longer issue
new standards in the form of Statements, FASB Staff Positions, or Emerging
Issues Task Force Abstracts; instead the FASB will issue Accounting Standards
Updates. Accounting Standards Updates will not be authoritative in their own
right as they will only serve to update the Codification. The issuance of SFAS
168 and the Codification does not change GAAP. SFAS 168 becomes effective for
interim and annual periods ending after September 15, 2009. Management does not
expect the adoption of SFAS 168 to have a material impact on the Company's
financial position, cash flows and results of operations.
2. RECLASSIFICATION: STOCK SPLIT ADJUSTMENT
Certain reclassifications have been made in the current year's financial
statements.
On December 18, 1998 and July 14, 2006, the Company executed a forward stock
split, effected as a stock dividend, which was originally recorded as a debit to
Additional Paid-in Capital and a corresponding credit to Common Stock, in the
amount of $10,230. During the nine months ended September 30, 2009, the Company
recorded an adjustment, whereby the Company recorded a debit to Retained
Earnings and a credit to Additional Paid-in Capital, in the amount of $10,230.
This adjustment did not change total stockholders equity. (See Note 3 for more
information regarding the stock split).
10
SIERRA RESOURCE GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
3. STOCKHOLDERS' DEFICIT
COMMON STOCK
The authorized common stock of the Company consists of 25,000,000 shares with
par value of $0.001. On December 21, 1992 the Company authorized and 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 per
share.
On December 18, 1998, the Company's shareholders approved a forward split of its
common stock at one thousand shares for one share of the existing shares. The
number of common shares outstanding increased from 1,860 to 1,860,000. Prior
period information has been restated to reflect the stock split, on a
retroactive basis.
On July 14, 2006, the Company's shareholders declared a 5.5 share dividend for
each one share of the issued and outstanding shares. The record date was July
28, 2006; payable July 31, 2006. The number of common shares outstanding
increased from 1,860,000 to 12,090,000. Prior period information has been
restated to reflect the stock dividend on a retroactive basis.
The Company has not authorized any preferred stock.
There are no warrants or options outstanding to acquire additional shares of
common stock of the Company.
4. RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. An officer
and resident agency 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 for 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 interest. The Company has not formulated a policy for the
resolution of such conflicts. As of September 30, 2009 and December 31, 2008,
the Company owed an officer $89,055 and $77,851, respectively.
During the year ended December 31, 2008, the Company entered into an "Assignment
and Quit Claim of Oil and Gas Leases" agreement (the "Agreement") with Sierra
Asset Holdings LLC (the "Assignor") whereby the Assignor assigned 100% of
Assignor's right, title and interest in and to the leasehold estate in the oil
and gas leases located in Louisiana and Kansas for a note in the amount of
$29,500 secured by the oil and gas interests assigned. The Company is amortizing
the oil and gas interest on a 3 year straight line method. Total amortization
expense for the periods ended September 30, 2009 and September 30, 2008 was
$4,062 and $nil, respectively. According to the Agreement, the Assignor conveyed
100% of the .04% working interests with a .03% net revenue interest in one well
and conveyed 100% of .035% working interests with a .03% net revenue interest in
three wells. The Company incurred an obligation of $29,500 for the interests to
the Assignor, all due and payable in April 2010. The note bears no interest;
however the Company has decided to impute interest based on APB 21 "INTEREST ON
RECEIVABLES AND PAYABLES" by imputing a reasonable rate of interest of 6% per
annum. The Assignor paid cash in the amount of $29,500 to Natural Oil & Gas
"Choice" Development Fund I, LP and Team Resources, Inc. during the year ended
December 31, 2008 for the acquired interests assigned.
11
SIERRA RESOURCE GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
4. RELATED PARTY TRANSACTIONS - (CONTINUED)
The Assignor is an affiliate of an officer and director of the Company. The note
to the Assignor is in the amount of $29,500 and is secured by a security
interest in the acquired interests assigned. Giving effect to the transaction,
the Company is directly or indirectly obligated to the officers and directors in
the total sum of $121,051 and $108,539 as of September 30, 2009 and December 31,
2008, respectively.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The discussion contained herein contains "forward looking statements" that
involve risk and uncertainties. These statements may be identified by the use of
terminology such as "believes," "expects," "may," "should" or "anticipates" or
expressing this terminology negatively or similar expressions or by discussions
of strategy. The cautionary statements made in this Form 10Q should be read as
being applicable to all related forward-looking statements wherein they appear
in this Form 10Q. Our actual results could differ materially from those
discussed in this report.
Sierra Resource Group, Inc. (sometimes the "Company") currently has limited
assets or operations. We originally intended to engage in the acquisition of oil
and natural gas leases, primarily in East Texas. It was our intent to enter into
lease option agreements primarily for leasehold interests in both developed and
undeveloped acreage. In the event any leasehold interests were acquired, we
intended to enter into exploration and developmental agreements with third
parties wherein said third parties would at its risk and expenses, operate,
develop and explore the property thereby relieving us of any future significant
operating, exploration and developmental costs. We contemplated negotiating or
retaining a small overriding royalty interest above the royalty leasehold
interest and/or retention of a working interest. If we needed additional funds,
an offering of the Company's securities was contemplated. Of March 31, 1993, the
Company was still deemed to be a developmental stage company and all funds
raised in order to fulfill our initial objective had been expended and we,
thereafter, became dormant.
On April 30, 2008, we entered and completed our acquisition of certain assets as
described in the "Assignment and Quit Claim of Oil and Gas Leases" agreement
(the "Agreement") with Sierra Asset Holdings LLC (the "Assignor") whereby the
Assignor assigned 100% of Assignor's right, title and interest in and to the
leasehold estate in the oil and gas leases located in Louisiana and Kansas for a
note of $29,500 secured by the oil and gas interests assigned.
Pursuant to the Agreement, the Assignor conveyed 100% of .04% working interest
with a .03% net revenue interest in one well and conveyed 100% of .035% working
interest with a .03% net revenue interest in three wells. The Assignor had paid
$29,500 for the interest to Natural Gas & Oil "Choice" Development Fund I, LP
and Team Resources, Inc. during the year ended December 31, 2008.
Paul W. Andre, an officer and director of the Company, provided the funds to
Sierra Asset Holdings LLC to acquire the working and net revenue interests in
the wells from Natural Gas & Oil "Choice Development Fund I, LP, an unrelated
party.
Natural Gas & Oil "Choice" Development Fund I, LP and Team Resources, Inc. (with
the other interest holders) have assumed all future and contingent obligations
of the Assignor relating to the interests, inclusive of drilling, testing and
completion of the wells and/or associated with the abandonment of the well and
shut-in costs.
As of the date hereof, we can also be defined as a "shell" company.
13
PLAN OF OPERATION
We intend to acquire assets or shares of an entity actively engaged in a mineral
business that generates revenues in exchange for our securities.
Our plan of operations for the next nine months is as follows:
1. We plan to investigate and attempt to attract possible mineral prospects or
mineral businesses projects, and merger or business acquisition candidates
through the issuance of additional shares of our common stock. This will be
a continuous effort.
2. The acquisition of additional interests in any mineral properties requires
an extensive review, as does the investigation of any other merger or
acquisition candidate. We are unable at this time, to determine with any
degree of accuracy the amount of time that it would take for us to locate a
suitable acquisition or merger candidate and to complete such a
transaction.
In order to obtain further financing, unless we complete an acquisition of a
mineral prospect, we believe that debt financing will not be an alternative for
funding as we do not have tangible assets to secure any debt financing. We
anticipate that any additional funding will be in the form of equity financing
from the sale of our common stock. However, we do not have any financing
arranged and we cannot provide investors with any assurance that we will be able
to raise sufficient funding from the sale of our common stock.
On June 29, 2005, the Securities and Exchange Commission adopted rules amending
the Form S-8 and the Form 8-K for shell companies like us. The amendments expand
the definition of a shell company to be broader than a company with nominal
operations/assets or assets consisting of cash and cash equivalents. The
amendments prohibit the use of a Form S-8 (a form used by a corporation to
register securities issued to an employee, director, officer consultant or
advisor, under certain circumstances), and review the Form 8-K to require a
shell company to include current Form 10 information, including audited
financial statements, in the filing on Form 8-K that the shell company files to
report the acquisition of the business opportunity. The rules are designed to
assure that investors in shell companies that acquire operations or assets have
access on a timely basis to the kind of information as is available to investors
on public companies with continuing operations.
On February 15, 2008, the Securities and Exchange Commission adopted final rules
amending Rule 144 (and Rule 145) for shell companies like us. The amendments
currently in full force and effect provide that the current holding periods
applicable to affiliates and non-affiliates holding restructed stock is now
available for securities currently issued by either a reporting or non-reporting
shell company, unless certain conditions are met. An investor will be able to
resell securities issued by a shell company subject to Rule 144 conditions if
the reporting or non-reporting issuer (i) had ceased to be a shell (ii) is
subject to the Exchange Act reporting obligations (iii) has filed all required
Exchange Act reports during the proceeding twelve months, and (iv) at least 90
days has elapsed from the time the issuer has filed the "Form 10 Information"
reflecting the fact that it had ceased to be a shell company before any
securities were sold under Rule 144. The amendment to Rule 144(i)(1)(i) was not
intended to capture a "start-up company," or a company with limited operating
history or the shares originally issued by us in 1992, except for the shares of
stock currently held by our officers and directors (affiliates). Our shares held
by non-affiliates have been registered under the Securities Act of 1933, as
amended.
14
FINANCIAL CONDITION
Our auditor's going concern opinion and the notation in the financial statements
indicate that we do not have sufficient cash or other material assets and we are
relying on advances from shareholders, officers and directors to meet limited
operating expenses. We do not have sufficient cash or other material assets nor
do we have sufficient operations or an established source of revenue to cover
our operational costs that would allow us to continue as a going concern. We are
insolvent in that we are unable to pay our debts in the ordinary course of
business as they become due.
Since the Company has had no operating history nor any significant revenues or
earnings from operations, with no significant assets or financial resources, we
will in all likelihood sustain operating expense without corresponding revenues,
at least until the acquisition of additional mineral prospects or 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 the acquisition of mineral prospects of a business combination with a
profitable business.
LIQUIDITY AND OPERATIONAL RESULTS
The Company has no current operating history and has minimal revenues or
earnings from operations. The Company has limited financial resources. We will,
in all likelihood, sustain operating expenses without corresponding revenues, at
least until the acquisition of additional mineral prospects or consummation of a
business combination. This may result in the Company incurring a net operating
loss that will increase continuously until the Company can consummate the
acquisition of additional mineral prospects or a business combination with a
profitable business opportunity. There is no assurance that the Company can
identify such a business opportunity or consummate such a business combination.
We are dependent upon officers to meet any de minimis costs that 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 he is an officer and
director of the Company when the obligation is incurred. All advances are
interest free.
LIQUIDITY
As of September 30, 2009, we had total assets of $10,529 and total liabilities
of $121,051 and we had a negative net worth of $110,522. As of December 31,
2008, we had total assets of $14,374 and total liabilities of $108,539 and a
negative net worth of $94,165.
We have had nominal revenues from inception (December 21, 1992) through
September 30, 2009. We have an accumulated deficit from inception (December 21,
1992) through September 30, 2009, of $ 122,612.
We had officer advances as of September 30, 2009 of $89,055 and $77,851 as of
December 31, 2008. As of September 30, 2009, the total outstanding notes payable
including accrued interest is $31,996, which is due to an affiliate of an
officer and giving effect to the note and accrued interest, the Company was
obligated to the officer as of September 30, 2009 for $121,051.
ITEM 3. EVALUATION OF DISCLOURE ON CONTROLS AND PROCEDURES
Based on an evaluation of our disclosure controls and procedures as of the end
of the period covered by this Form 10Q (and the financial statements contained
in the report), our president and treasurer have determined that our current
disclosure controls and procedures are effective.
There have not been any changes in our internal control over financial reporting
(as such term is defined in Rule 13a-15(f) under the Exchange Act) or any other
factors during the year covered by this report, that have materially affected,
or are reasonably likely to materially affect our internal control over
financial reporting.
15
CONTROLS AND PROCEDURES
Internal control over financial reporting refers to the process designed by, or
under the supervision of, our Chief Executive Officer and Chief Financial
Officer, and effected by our Board of Directors, management and other personnel,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles, and includes those policies and
procedures that:
1) Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of our
assets.
2) Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with authorization
of our management and directors; and
3) Provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisitions, or dispositions of our assets that could
have a material effect on the financial statements.
Internal control over financial reporting cannot provide absolute assurance of
achieving financial reporting objectives because of its inherent limitations. It
is a process that involves human diligence and compliance and is subject to
lapses in judgment and breakdown resulting from human failures. It also can be
circumvented by collusion or management override.
Because of such limitations, there is a risk that material misstatements may not
be prevented or detected on a timely basis by internal control over financial
reporting. However, these inherent limitations are known features of the
financial reporting process. Therefore, it is possible to design into the
process certain safeguards to reduce though not eliminate this risk. Management
is responsible for establishing and maintaining adequate internal control over
financial reporting. To avoid segregation of duties due to management accounting
size, management has engaged an outside CPA to assist in the financial
reporting.
Management has used the framework set forth in the report entitled Internal
Control - Integrated Framework published by the Committee of Sponsoring
Organizations of the Treadway Commission, known as COSO, to evaluate the
effectiveness of our internal control over financial reporting. Based upon this
assessment, controls and procedures were effective for the quarter ended
September 30, 2009.
The Company was not an "accelerated filer" for the 2008 fiscal year because it
was qualified as a "small issuer." Hence, under current law, the internal
controls certification and attestation requirements of Section 404 of the
Sarbanes-Oxley act did not apply to the Company.
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PART II
OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS................................................NONE
ITEM 1A - RISK FACTORS
There has been no material changes in the risk factors previously disclosed.
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS......None
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES..................................None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..............None
ITEM 5 - OTHER INFORMATION................................................None
ITEM 6 - EXHIBITS
The following exhibits are filed with this report:
31.1 Certification of Chief Executive Officer.
31.2 Certification of Chief Financial Officer.
32.1 Section 1350 Certification - Chief Executive Officer.
32.1 Section 1350 Certification - Chief Financial Officer.
17
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.
Dated: November 13, 2009
SIERRA RESOURCE GROUP, INC.
By: /s/ SANDRA J. ANDRE
_________________________________________
Sandra J. Andre
President and Chief Executive Officer
By: /s/ PAUL W. ANDRE
_________________________________________
Paul W. Andre
Treasurer and Chief Financial Officer
18
