SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 2)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
July 27, 1999
silverzipper.com, Inc.
(Exact name of registrant as specified in its charter)
NEVADA 33-55254-08 87-0434286
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
350 FIFTH AVENUE, SUITE 1222, NEW YORK, NEW YORK 10118
(Address of principal executive offices) (Zip code)
(212) 563-7040
(Registrant's telephone number, including area code)
SABER CAPITAL, INC.
(Former name or address, if changed since last report)
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
This Form 8-K/A includes the following financial information required
to be filed pursuant to Item 7 (Financial Statements and Exhibits) of the
current Report on Form 8-K dated August 6, 1999:
(a) Financial Statements of Business Acquired: Page
Independent Auditors' Report F-1
Balance Sheets of silverzipper.com, Inc. (a Delaware corporation) as of December F-2
31, 1998 and June 30, 1999 (unaudited).
Statements of Operations of silverzipper.com, Inc. (a Delaware corporation) F-3
for the year ended December 31, 1998 and the six months ended June 30, 199
(unaudited).
Statements of Cash Flows of silverzipper.com, Inc. (a Delaware corporation) for the F-4
year ended December 31, 1998 and the six months ended June 30, 1999 (unaudited).
Notes To Financial Statements of silverzipper.com, Inc. (a Delaware corporation) for F-5
the year ended December 31, 1998 and the six months ended June 30, 1999 (unaudited).
(b) Pro Forma Financial Information:
Unaudited Pro-Forma Combined Statements of Operations for the year F-9
ended December 31, 1998 and the six months ended June 30, 1999.
Notes to Unaudited Pro Forma Combined Statements of Operations. F-12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by the
undersigned hereunto duly authorized.
silverzipper.com, Inc.
By: /s/ Paul E. Palmeri
-------------------
Paul E. Palmeri, CEO
Date: October 5, 1999
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
silverzipper.com, Inc. and Subsidiary, Robern Skiwear, Inc.
New York, NY
We have audited the accompanying balance sheet of silverzipper.com,
Inc. and subsidiary, Robern Skiwear, Inc. as of December 31, 1998 and the
related statement of operations, deficit and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of silverzipper.com,
Inc. and Subsidiary, Robern Skiwear, Inc. as of December 31, 1998 and the
results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
/s/
Kelly, Welde & Co.
September 23, 1999
silverzipper.com, Inc. and Subsidiary,
Robern Skiwear, Inc.
Balance Sheets
December 31, June 30,
1998 1999 (Unaudited)
---- ----------------
ASSETS
CURRENT ASSETS:
Cash ........................................... $ 93,081 $ 295,291
Accounts receivable (Notes 1-C & 3) ............ 101,408 13,485
Inventory (Notes 1-B) .......................... 768,804 144,810
Prepaid expenses ............................... 78,073 156,734
----------- -----------
Total current assets ......................... 1,041,366 610,320
----------- -----------
PROPERTY AND EQUIPMENT, NET ...................... 22,566 25,323
----------- -----------
OTHER ASSETS
Intangible assets, net (Note 2) ................ 916,786 867,220
Deposits ....................................... 4,767 4,767
----------- -----------
921,553 871,987
----------- -----------
$ 1,985,485 $ 1,507,630
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable ................................ $ 261,639 $ 361,981
Accounts payable - Factor (Note 3) .............. 2,060,558 2,381,703
Accrued expenses ................................ 125,201 186,531
Notes payable - Private placement (Note 4) ...... 1,000,000 1,000,000
----------- -----------
Total current liabilities ..................... 3,447,398 3,930,215
----------- -----------
LONG-TERM LIABILITIES
Advances from investors (Note 7) ................ -- 400,000
Notes payable - Stockholders (Note 5) ........... 1,834,018 1,814,018
----------- -----------
Total long-term liabilities ................... 1,834,018 2,214,018
----------- -----------
Total liabilities ................................ 5,281,416 6,144,233
----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 6)
STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock, $0.01 par value;
1,000 shares authorized; issued
and outstanding, 200 shares at
December 31, 1998
$0.001 par value; 6,000,000 shares
authorized; issued and outstanding
1,870,000 shares at June 30, 1999 (Note 1-A) .. 2 1,870
Additional paid-in capital ...................... 499,998 498,130
Retained earnings/(deficit) ..................... (3,795,931) (5,136,603)
----------- -----------
Total Stockholders' Equity (Deficit) .......... (3,295,931) (4,636,603)
----------- -----------
$ 1,985,485 $ 1,507,630
=========== ===========
See notes to financial statements and accountants' report
F-2
silverzipper.com, Inc. and Subsidiary,
Robern Skiwear, Inc.
Statements Of Operations and Deficit
Year Ended Six Months
December 31, Ended June 30,
1998 1999 (Unaudited)
---- ----------------
Sales, net ..................... $ 6,688,920 $ 706,198
Cost of goods sold ............. 4,978,951 630,242
----------- -----------
Gross Profit ................... 1,709,969 75,956
Operating expenses ............. 2,387,601 1,204,718
----------- -----------
Operating Income/(Loss) ........ (677,632) (1,128,762)
Interest expense, net .......... 717,441 211,910
----------- -----------
Loss before income taxes ....... (1,395,073) (1,340,672)
Income taxes (Note 1-F) ........ -- --
----------- -----------
Net (Loss) ..................... (1,395,073) (1,340,672)
Deficit - Beginning ............ (2,400,858) (3,795,931)
----------- -----------
Deficit - Ending ............... $(3,795,931) $(5,136,603)
=========== ===========
See notes to financial statements and accountants' report
F-3
silverzipper.com, Inc. and Subsidiary,
Robern Skiwear, Inc.
Statements Of Cash Flows
Year Ended Six Months
December 31, Ended June 30,
1998 1999 (Unaudited)
---- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) ............................................. $(1,395,073) $(1,340,672)
Adjustments to reconcile net (loss) to
cash used by operating activities:
Depreciation and amortization ...................... 106,921 54,921
Decrease/(Increase) in:
Accounts receivable, net ....................... 79,910 87,923
Inventory ...................................... 256,033 623,994
Prepaid expenses ............................... (67,292) (78,661)
Increase/(Decrease) in:
Accounts payable ............................... 203,833 100,342
Accrued expenses ............................... 17,420 61,330
----------- -----------
Net cash provided by/(used in) operating activities .... (798,248) (490,823)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment ................ (24,554) (8,112)
----------- -----------
Net cash used in investing activities .................. (24,554) (8,112)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from investors ........................... -- 400,000
Proceeds from private placement of promissory notes 1,000,000 --
(Decrease)/Increase in accounts payable - Factor .. (140,922) 321,145
Repayment of acquisition note payable ............. (164,993) --
Net repayment of notes payable - stockholders ..... (173,566) (20,000)
----------- -----------
Net cash used in financing activities .................. 520,519 701,145
----------- -----------
Net (Decrease)/Increase in cash ........................ (302,283) 202,210
Cash at the beginning of the year ...................... 395,364 93,081
----------- -----------
Cash at the end of the year ............................ $ 93,081 $ 295,291
=========== ===========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest ............................................. $ 701,442 $ 199,410
=========== ===========
<FN>
See notes to the financial statements and accountants' report
</FN>
F-4
silverzipper.com, Inc. and Subsidiary,
Robern Skiwear, Inc.
Notes To Financial Statements
Year Ended December 31, 1998 and
Six Months Ended June 30, 1999 (Unaudited)
1. Summary Of Business and Significant Accounting Policies
A. Basis of Presentation
silverzipper.com, Inc. (a Delaware corporation) ("silverzipper Delaware") was
organized in 1998 by the principal shareholders of Robern Skiwear, Inc.
("Robern") for the purpose of acquiring branded sport apparel and accessory
companies and to market their products online via the Internet. Effective April
1, 1999, Robern became a wholly-owned subsidiary of silverzipper Delaware.
silverzipper Delaware is a holding company whose sole investment is 100% of the
outstanding common stock of Robern. silverzipper Delaware was inactive in 1998,
therefore, the 1998 audited financial statements represent the pre-affiliation
activity of Robern. The 1999 unaudited financial statements represent a
consolidation of the activity of silverzipper Delaware and Robern.
B. Inventory
Inventory consists of finished garments and is stated at the lower of cost
(first-in, first-out method) or market.
C. Accounts Receivable
In the opinion of management, all accounts receivable are collectible and no
allowance for doubtful accounts is considered necessary.
D. Property and Equipment
Property and equipment are carried at cost. Depreciation is provided by the
declining balance method over the estimated useful lives of the assets, 5 or 7
years. Depreciation was $7,173 and $5,354 for the year ended December 31, 1998
and the six months ended June 30, 1999, respectively.
E. Intangible Assets
Intangible assets consist of the excess of cost over net assets acquired
(goodwill), trademarks and a noncompete agreement which are being amortized
using the straight-line method over their estimated lives, 15 years. The
carrying value of intangibles is evaluated periodically in relation to the
operating performance and future undiscounted cash flows of the underlying
businesses.
F. Income Taxes
The shareholders of Robern had previously elected to be taxed as an S
Corporation under the Internal Revenue Code. This election is terminated
effective April 1, 1999 with the acquisition of Robern by silverzipper Delaware.
Since silverzipper Delaware has not yet realized income as of the date of these
financial statements, no provision for taxes has been made.
F-5
G. Disclosure of Cash Flow Information
silverzipper Delaware considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalent.
H. Use of Estimates
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
effect the reported amounts of 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.
I. Unaudited Interim Information
The unaudited interim financial statements include all adjustments, consisting
only of normal recurring adjustments, which management considers necessary for a
fair presentation of the financial position and results of operations. The
results of operations for the six months ended June 30, 1999 are not necessarily
indicative of the results that may be expected for a full year.
2. Intangible Assets
Intangible assets consist of the following:
December 31, June 30, Amorti-
zation
1998 1999 Period
------ ------ ----------
(Unaudited)
Excess of cost over
net assets acquired $ 620,000 $ 620,000 15 years
Trademarks and Patterns 212,000 212,000 15 years
Noncompete covenant 655,000 655,000 15 years
----------- -----------
1,487,000 1,487,000
Less accumulated amortization 570,214 619,780
----------- -----------
$ 916,786 $ 867,220
========== ==========
Amortization was $99,748 and $49,566 for the year ended December 31, 1998 and
the six months ended June 30, 1999, respectively.
3. Accounts payable - Factor
silverzipper Delaware has an ongoing financing agreement with a lender providing
for a line of credit which maximum borrowings thereunder are determined at the
sole discretion of the lender. Borrowings under the line of credit may be made
as cash advances, letters of credit, and payment due on presentation. Interest
is payable on the outstanding cash advance balance at the rate of 2 1/2% over
the prime rate. At December 31, 1998 and June 30, 1999, the prime rate was
7.75%.
Under the factoring provisions, the lender guarantees the face amount of certain
receivables accepted by it, in exchange for the payment to the lender of a
factoring fee of 1.5% on all receivables. The lender assumes the credit risk for
the guaranteed receivables other than customer disputes, claims, returns, etc.
The lender may terminate the line of credit on 30 days notice or immediately of
an event of default, as defined, occurs.
F-6
Borrowings under the aforementioned facility are secured by liens on
substantially all of silverzipper Delaware's assets. In addition, collateral has
been pledged by silverzipper Delaware's stockholders and others. Under the
agreement, silverzipper Delaware is prohibited from selling or pledging any of
its assets or pay dividends without the lender's consent.
4. Notes payable - Private placement
During 1998, silverzipper Delaware 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 silverzipper Delaware, 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 bear interest at the rate of
10% per annum, payable quarterly, and are due at the earlier of the closing of
an initial public offering of silverzipper Delaware's securities, or December
31, 1999. Interest expense to noteholders was $77,813 for the year ended
December 31, 1998 and $50,000 for the six months ended June 30, 1999.
As of August 31, 1999, pursuant to an exchange offer, holders of an aggregate
$950,000 of notes payable have agreed to exchange their notes for consideration
of 380,000 shares of Saber Capital, Inc. and warrants to purchase an additional
380,000 shares (Note 7).
5. Notes payable - Stockholders
From time to time, the principal stockholders of silverzipper Delaware have made
advances to silverzipper Delaware, generally for working capital purposes. As of
December 31 of each year, these advances are formalized in the form of unsecured
promissory notes. The notes are unsecured and bear interest at the rate of 8%
per annum.
Outstanding amounts on these notes aggregated $1,834,018 and $1,814,018 at
December 31, 1998 and June 30, 1999, respectively. Interest expense for the year
ended December 31, 1998 was $146,386. As of July 27, 1999, these notes totaling
$1,814,018 were exchanged for 350,000 shares of common stock of
silverzipper.com, Inc., a Nevada corporation, formerly known as Saber Capital,
Inc. ("silverzipper Nevada") (Note 7).
6. Commitments and Contingencies
At June 30, 1999, silverzipper Delaware was obligated under a non-cancelable
lease for office and showroom space aggregating approximately $216,000.
At June 30, 1999, future minimum lease payments are as follows:
2000 $92,805
2001 $92,805
2002 $30,935
The lease contains provisions for increases due to increased maintenance costs
and taxes. Rent expense was $83,000 and $57,190 for the year ended December 31,
1998 and the six months ended June 30, 1999, respectively.
7. Subsequent Events
On July 27, 1999, silverzipper Nevada acquired 100% of the issued outstanding
stock of silverzipper Delaware through the issuance of 2,095,000 shares of its
own authorized and
F-7
unissued common stock. These shares include 225,000 shares issued for
consideration of $325,000 to investors who had advanced $400,000 to silverzipper
Delaware at June 30, 1999. The remaining $75,000 advanced is to be converted to
promissory notes. These shares also include 350,000 shares issued to the
stockholders of Robern in exchange for the $1,814,018 of loans outstanding at
June 30, 1999. The transaction will be accounted for as a reverse acquisition.
On August 30, 1999, the Board of Directors of silverzipper Nevada amended its
Articles of Incorporation to change the name of silverzipper Nevada to
silverzipper.com, Inc. (a Nevada Corporation).
F-8
silverzipper.com, Inc., a Nevada corporation (formerly Saber Capital, Inc.)
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION BASIS OF PRESENTATION
The unaudited pro forma combined statements of operations of
silverzipper Nevada for the year ended December 31, 1998 and the six months
ended June 30, 1999 are presented to show the effects of the acquisition of
silverzipper Delaware on July 27, 1999 as if it had occurred on January 1, 1998.
The pro forma information is based on the historical financial statements of
silverzipper Nevada and silverzipper Delaware giving effect to the assumptions
and adjustments in the accompanying notes to the pro forma consolidated
financial information. The transaction is account for as a reverse acquisition.
In the opinion of silverzipper Nevada's management, all adjustments
necessary for a fair presentation have been made. This unaudited pro forma
information should be read in conjunction with the accompanying notes and the
financial statements of Saber Capital, Inc. (name changed to silverzipper.com,
Inc.) and the related notes included in silverzipper Nevada's 1998 Annual Report
on Form 10-K and Quarterly Report on Form 10-Q for the quarter ended June 30,
1999.
F-9
silverzipper.com, Inc., a Nevada corporation (formerly Saber Capital, Inc.)
Unaudited Pro Forma Combined Statement of Operations
For the Year Ended December 31, 1998
Pro Forma
silverzipper.com, Inc. Pro Forma Combined
Historical (Delaware) Adjustments Totals
---------- ---------- ----------- ------
Sales, net ................... $ -- $ 6,688,920 $ -- $ 6,688,920
Cost of goods sold ........... -- 4,978,951 -- 4,978,951
----------- ----------- ----------- -----------
Gross Profit ................. -- 1,709,969 -- 1,709,969
Operating expenses ........... -- 2,387,601 -- 2,387,601
----------- ----------- ----------- -----------
Operating Income/(Loss) ...... -- (677,632) -- (677,632)
Interest expense, net ........ -- 717,441 -- 717,441
----------- ----------- ----------- -----------
Earnings/(loss)
Before Income Taxes ....... -- (1,395,073) -- (1,395,073)
Provision for income taxes ... -- -- -- --
----------- ----------- ----------- -----------
Net Income/(Loss) ............ $ -- $(1,395,073) $ -- $(1,395,073)
=========== =========== =========== ===========
Income/(loss) per common share $ -- $ (0.49)
=========== ===========
Weighted average number of
shares and share equivalents
outstanding .................. 1,000,000 1,824,200 2,824,200
=========== =========== ===========
F-10
silverzipper.com, Inc., a Nevada corporation (formerly Saber Capital, Inc.)
Unaudited Pro Forma Combined Statement of Operations
For the Six Months Ended June 30, 1999
Pro Forma
silverzipper.com, Inc. Pro Forma Combined
Historical (Delaware) Adjustments Totals
---------- ---------- ----------- ------
Sales, net ................... $-- $ 706,198 $ -- $ 706,198
Cost of goods sold ........... -- 630,242 -- 630,242
----- ----------- ----------- -----------
Gross Profit ................. -- 75,956 -- 75,956
Operating expenses ........... -- 1,204,718 -- 1,204,718
----- ----------- ----------- -----------
Operating Income/(Loss) ...... -- (1,128,762) -- (1,128,762)
Interest expense, net ........ -- 211,910 -- 211,910
----- ----------- ----------- -----------
Earnings/(loss)
Before Income Taxes ....... -- (1,340,672) -- (1,340,672)
Provision for income taxes ... -- -- -- --
----- ----------- ----------- -----------
Net Income/(Loss) ............ $-- $(1,340,672) $ -- $(1,340,672)
===== =========== =========== ===========
Income/(loss) per common share $-- $ (0.47)
==== ===========
Weighted average number of
shares and share equivalents
outstanding .................. 1,000,000 1,824,200 2,824,200
========= =========== ===========
F-11
silverzipper.com, Inc., a Nevada corporation, (formerly Saber Capital, Inc.)
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
On July 27, 1999, silverzipper Nevada acquired 100% of the issued and
outstanding common stock of the silverzipper Delaware through the issuance of
2,095,000 shares of its authorized and unissued common stock. The transaction
has been accounted for as a reverse acquisition.
On August 30, 1999, the Board of Directors of silverzipper Nevada amended
its Articles of Incorporation to change the name of the Company to
silverzipper.com, Inc.
The accompanying pro forma combined statements of operations reflect the
pro forma results of silverzipper Nevada as if the acquisition had occurred on
January 1, 1998.
PRO FORMA ADJUSTMENT
1. To record the issuance of 2,095,000 authorized and unissued shares of
Common Stock of silverzipper Nevada and the cancellation of an
aggregate of 270,800 shares of Common Stock of silverzipper Nevada.
F-12