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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 5, 2001
REGISTRATION STATEMENT NO. 333-62546
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
RETURN ASSURED INCORPORATED
(Exact name of Registrant as specified in its charter)
DELAWARE 13-3896069
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
MATTHEW SEBAL, PRESIDENT
RETURN ASSURED INCORPORATED
1901 AVENUE OF THE STARS, SUITE 1710 1901 AVENUE OF THE STARS, SUITE 1710
LOS ANGELES, CA 90067 LOS ANGELES, CA 90067
(887) 807-4664 (887) 807-4664
(address, including zip code, and (Name, address, including zip
telephone number, including area code, code, and telephone number,
of registrant's principal including area code, of
executive offices) agent for service)
With copies to:
ADAM S. GOTTBETTER, ESQ.
KAPLAN GOTTBETTER & LEVENSON, LLP
630 THIRD AVENUE, 5TH FLOOR
NEW YORK, NY 10017-6705
(212) 983-6900
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS
SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended ("the Securities Act") check the following
box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: [ ]
CALCULATION OF REGISTRATION FEE
PROPOSED
MAXIMUM PROPOSED
OFFERING MAXIMUM AMOUNT OF
AMOUNT TO BE PRICE PER AGGREGATE REGISTRATION
TITLE OF EACH CLASS OF SECURITIES BEING REGISTERED REGISTERED SECURITY(2) OFFERING PRICE(2) FEE
Common Stock, $.001 par value(1) .......... 25,000,000 $.025 $625,000.00
Total.................................... 25,000,000 $625,000.00 $156.25
(1) Includes 25,000,000 shares which may become issuable upon conversion of the
issuer's Series A Preferred Stock.
(2) Estimated solely for purposes of calculating the registration fee for the
common stock, based upon the average of the high and low sales prices of
the common stock on the NASD Over-the-Counter Bulletin Board on October 2,
2001, pursuant to Rule 457(c) under the Securities Act.
THIS REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8 OF THE SECURITIES
ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH
DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8, MAY DETERMINE.
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INFORMATION CONTAINED IN THIS PROSPECTUS IS SUBJECT TO COMPLETION OR AMENDMENT.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
SUBJECT TO COMPLETION, DATED OCTOBER_, 2001
PROSPECTUS
25,000,000 SHARES
RETURN ASSURED INCORPORATED
COMMON STOCK
GEM Global Yield Fund Limited is offering an aggregate of 25,000,000
shares of our common stock that may be issued if it converts outstanding shares
of our Series Convertible Preferred Stock held by it.
The preferred stock, which the common stock underlies, was sold to GEM
in transactions which we believe to have been exempt from registration under the
Securities Act. Return Assured Incorporated will not receive any of the proceeds
from the sale of the common stock being offered by this prospectus.
The shares of common stock being offered by GEM may be sold from time
to time in the over-the-counter market or in negotiated transactions. GEM
directly, or through agents or dealers designated from time to time, may sell
the common stock offered by it at fixed prices, at prevailing market prices at
the time of sale, at varying prices determined at the time of sale or at
negotiated prices.
Our common stock is listed on the NASD OTC Bulletin Board ("OTCBB")
under the symbol "RTRN." On October 2, 2001, the last reported sale price of the
common stock on the OTCBB was $.025 per share.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. INVESTORS SHOULD NOT BUY
THESE SHARES UNLESS THEY CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. SEE "RISK
FACTORS" BEGINNING ON PAGE 6.
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS
HAVE NOT APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is October__, 2001
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TABLE OF CONTENTS
PAGE
Special Note Regarding Forward-Looking Statements.......................ii
Where You Can Find More Information About Us............................ii
Prospectus Summary.......................................................1
Risk Factors............................................................12
Use of Proceeds.........................................................21
Selling Stockholders....................................................22
Plan of Distribution....................................................23
Indemnification.........................................................24
Legal Matters...........................................................24
Experts.................................................................24
We have not authorized anyone to provide you with information different
from that contained in this prospectus. The selling stockholders are offering to
sell, and seeking offers to buy, shares of common stock only in jurisdictions
where offers and sales are permitted.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under "Our Company," "Risk Factors" and
elsewhere in this prospectus are forward-looking statements. These statements
involve known and unknown risks, uncertainties, and other factors that may cause
our actual results, levels of activity, performance, or achievements to be
materially different from any future results, levels of activity, performance,
or achievements expressed or implied by those forward-looking statements.
In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "expects," "plans," "anticipates,"
"believes," "estimates," "predicts," "potential," or "continue" or the negative
of those terms or other comparable words.
We believe that the expectations reflected in the forward-looking
statements are reasonable, but we cannot guarantee future results, levels of
activity, performance, or achievements.
We do not promise to update or revise any of the forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this prospectus may not occur.
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any document we file with the Commission at the Public Reference Room at
the Commission, at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call 1-800-SEC-0330 for further information
concerning the Public Reference Room. The Commission also makes these documents
and other information available on its web site at http://www.sec.gov.
We have filed with the Commission a registration statement on Form S-3
under the Securities Act of 1933, as amended, relating to the common stock
offered by this prospectus. This prospectus is a part of the registration
statement but does not contain all of the information in the registration
statement and its exhibits. For further information, we refer you to the
registration statement and its exhibits.
The Commission allows us to "incorporate by reference" the information
we file with it, which means that we can disclose important information to you
by referring you to another document we have filed with the Commission. The
information incorporated by reference is an important part of this prospectus
and information that we file later with the Commission will automatically update
and supersede this information. We incorporate by reference the following:
- Annual Report on Form 10-KSB for the fiscal year ended August 31,
2000, as filed with the Commission on December 14, 2000;
- Amended Annual Report on Form 10-KSB/A for the fiscal year ended
August 31, 2000 as filed with the Commission October 3, 2001;
- The Current Report on Form 8-K dated December 15, 2000, as filed with
the Commission on January 12, 2001.
- The Current Report on Form 8-K dated May 11, 2001, as filed with the
Commission on May 15, 2001;
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- The Current Report on Form 8-K dated June 4, as filed with the
Commission on June 28, 2001;
- The Current Report on Form 8-K dated June 4, as filed with the
Commission on July 30, 2001;
- The Quarterly Report on Form 10-QSB for the quarter ended November 30,
2000, as filed with the Commission on January 19, 2001;
- The Amended Quarterly Report on Form 10-QSB/A for the quarter ended
November 30, 2000, as filed with the Commission on October 3, 2001;
- The Quarterly Report on Form 10-QSB for the quarter ended February 28,
2001, as filed with the Commission on April 23, 2001;
- The Amended Quarterly Report on Form 10-QSB/A for the quarter ended
February 28, 2001, as filed with the Commission on October 3, 2001;
- The Quarterly Report on Form 10-QSB for the quarter ended May 31,
2001, as filed with the Commission on July 20, 2001;
- The Amended Quarterly Report on Form 10-QSB for the quarter ended May
31, 2001, as filed with the Commission on October 3, 2001; and
- Any future filings we make with the Commission until the selling
stockholder sells all of the common stock offered by it by this
prospectus.
Note that interim review reports of independent accountants are
governed by SAS 71/AU 722. These are reports which are included in financial
statements that are generally unaudited. SAS 71/AU 722 interim review reports
are not considered "reports" as such as defined in Sections 7 and 11 of the
Securities Act of 1933, as amended, (the "Act"). In addition, the liability of
independent accountants under Section 11,"Civil Liabilities on Account of False
Registration Statement," does not extend to SAS71/AU 722 review reports.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address or telephone number:
Return Assured Incorporated
Attn: Investor Relations
1901 Avenue of the Stars, Suite 1710
Los Angeles, CA 90067
Tel: (877) 807-4664
E-mail: info@returnassured.com
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PROSPECTUS SUMMARY
OUR COMPANY
OUR BUSINESS
Return Assured has brought to market the world's first proprietary
business-to-business and business-to-consumer value added "Return Seal of
Approval". The "Return Assured Seal of Approval" is provided to those merchants
that meet our criteria. If a customer orders from a merchant displaying our
seal, Return Assured will provide assurance that the merchant displaying the
Seal will honor its stated return policies. Return Assured charges the merchant
for our services based on the number of orders placed through that merchant.
Market adoption of the Seal has not met forecasted expectations. As a
result, the Company is currently developing a number of revised products with
complementary target markets. Return Assured has just completed a pilot credit
card program and is in the process of presenting the program to a number of
major credit card marketers.
The Company has scaled back operations in the "e-retail" sector in
response to the slow sales of the Seal program. No sales of the Seal were made
in the first quarter of 2001 as operations had not commenced. During the second
quarter of 2001, although we had encouraging responses to our marketing efforts,
these did not translate into a volume of paying customers that was sufficient to
warrant our projected marketing effort. Seal revenue amounted to less than
$10,000 in the second and third quarters of 2001. As a result, we reduced staff
by seven (7) employees and currently have 42 employees. We also scaled back our
operations while developing products for the credit card marketing sector. We
continue to work on the credit card program noted above and are waiting on
decisions from several large card marketers with whom we have proposed pilot
programs.
Our Marketing Strategy
- Attract new merchants through co-marketing with web portals to promote
and endorse our web seal service to their participating merchants;
- Promote our service to merchants through direct response channels; and
- Attract new merchants through joint marketing programs with various
marketing and technology partners.
Our Growth Strategy
- Increase brand awareness of our "Return Assured Seal of Approval";
- Expand through diversifying product lines; and
- Expand through purchasing complementary businesses.
OUR STRATEGIC RELATIONSHIPS
Lloyd's of London. We are insured by Lloyd's for errors and omissions
relating to services provided to merchants and consumers. As a result of our
association with Lloyd's, we are authorized to display the Lloyd's of London
logo together with our own web seal on merchants' websites. The policy and web
seal are intended to develop and build an image of stability and reliability.
The policy covers cyber liability and catastrophic losses of up to $10 million.
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IBM. We have teamed up with IBM to develop a reliable, scalable and
secure web environment using a three-tiered approach of IBM hardware, software
and e-business services working in unison to enable our customers to transact
with us on our site. Our merchants have the ability to sign up for our "Return
Assured Seal of Approval" over the web. Consumers also have the ability to
submit a return claim over the web.
THE MERGER WITH HERTZ TECHNOLOGY GROUP
On October 13, 2000, the company closed the business combination of our
Return Assured business and Hertz Technology Group ("Hertz") business. Asure
Acquisition Corp., a wholly-owned subsidiary of Hertz Technology Group, Inc., a
Delaware Corporation, was merged into Return Assured Incorporated, a Nevada
Corporation. At the same time, Hertz changed its name to Return Assured
Incorporated.
HERTZ OPERATIONS
The operations listed below were acquired when the Company merged with
Hertz:
- RemoteIT.com(R): RemoteIT offers networking, Internet, and
communications services.
- Hergo(R) Modular Systems: Our Hergo division designs, manufactures and
sells a line of functional, ergonomic, modular products, which are
instrumental in achieving efficient workplace environments.
Return Assured is giving serious consideration to the disposition of
the Hertz operations including Hergo and Remote IT.
RECENT EVENTS
PROPOSED MERGER WITH INTERNET BUSINESS'S INTERNATIONAL, INC.
On June 4, 2001 we signed a merger agreement with Internet Business
International, Inc. ("IBUI"), a publicly traded Nevada corporation (IBUI:OTCBB).
The major points of the proposed merger as follows:
- Return Assured will consolidate its stock by means of a reverse-split;
- Return Assured will issue stock to IBUI shareholders such that the
IBUI shareholders will own approximately 90% of the merged company;
and
- IBUI shall become a wholly-owned subsidiary of Return Assured.
IBUI is a broad-based Internet company that generates revenue from the
Internet through the products and services that it provides.
IBUI, through its four divisions, offers the following online services:
ASP, B2B, B2C, e-commerce, online lending and leasing, a national Internet
Service Provider that offers Web hosting and design through dial-up Internet
access, high-speed Internet access through DSL (in the Western United States),
and wireless Internet which is currently offered in Las Vegas and Woodland,
Calif.
With eight offices in the United States and one in Europe, IBUI has
more than 120 employees.
The Return Assured and IBUI businesses are complementary in that the
Return Seal will enhance and improve sales for IBUI and Return Assured will gain
access to IBUI's current customer base.
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NASDAQ DE-LISTING OF OUR COMMON STOCK
On August 2, 2001, the NASDAQ Stock Market issued a delisting notice to
Return Assured for failure to comply with NASDAQ's minimum bid price
requirements and that effective August 3, 2001, the Company's common stock would
be delisted from the Nasdaq SmallCap Stock Market. Return Assured immediately
began to be traded on the NASD Over the Counter Bulletin Board under the same
stock symbol, RTRN.
References in this prospectus to "we", "us", "our" and similar terms
means Return Assured Incorporated, a Delaware corporation, formerly Hertz
Technology Group, Inc.
THE OFFERING
Securities Offered: 25,000,000 shares of common stock
Common Stock Outstanding: 16,850,799 shares
Common Stock Market Symbol: NASD Over-the-Counter Bulletin Board - symbol "RTRN"
Use of Proceeds: The selling security holder will receive the net proceeds
from the sale of the shares. We will receive none of the
shares offered by this prospectus.
Risk Factors: An investment in the shares involves a high degree of risk.
See "Risk Factors" commencing on the next page.
In May 2000, GEM Global Yield Fund Limited ("GEM") executed an agreement for a
"PIPE" financing with A Sure eCommerce, Inc. for $5,000,000 of preferred stock.
Pursuant to the Merger Agreement by and among Hertz Technology Group, Inc.
("HERZ"); A Sure Acquisition Corporation, (the "Merger Subsidiary"), and A Sure
eCommerce, Inc. ("Asure"), dated July 13, 2000, the merger subsidiary, a
wholly-owned subsidiary of Hertz Technology Group, Inc ("HTG") was merged with
and into Return Assured Incorporated, a Nevada Corporation, ("RAI"). As a result
of the merger, the separate corporate existence of A Sure Acquisition ceased and
RAI survived the merger as a wholly-owned subsidiary of HTG. At the effective
time of the merger, the corporate name of HTG was changed to "Return Assured
Incorporated"("Registrant"). As part of the Merger Agreement, Registrant assumed
the PIPE financing of A Sure eCommerce, Inc. because the closing of the PIPE was
a condition to the closing of the merger.
GEM Global Yield Fund Limited, a private investment fund, purchased Series A
Preferred Stock in the amount of $5,000,000, a five-year warrant to purchase
404,041 shares of common stock exercisable at $3.00 per share. The Series A
Preferred Stock accrues dividends at a rate of 1% per annum. It is convertible
into common stock. The number of shares of common stock to be issued upon
conversion of each share of preferred stock is determined by dividing $1,000,
the stated value of the preferred share, plus accrued dividends, by the
conversion price at the time of conversion. The maximum conversion price is
$3.00 per share. However, if the market price of Registrant's stock at the time
of conversion is below the maximum conversion price, the
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conversion price is reduced to the average of the three lowest closing bid
prices for the common stock during the 45 days before the date of conversion.
Because the actual number of shares of the common stock that could be issued on
conversion of the preferred shares may fluctuate, the number of shares to be
issued upon the conversion of all the Preferred Stock can only be estimated
based on the then current price of the Registrant's common stock. In addition,
the forthcoming 1:6 reverse split has not been included in the number of shares
being converted by GEM.
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MATERIAL CHANGES
On June 4, 2001, we signed an Agreement and Plan of Merger and Share
Exchange with Internet Business's International, Inc. ("IBUI"), a
publicly-traded Nevada corporation (OTCBB:IBUI). We amended this October 1,
2001. Under the agreement, IBUI will become a wholly-owned subsidiary of Return
Assured by means of a share exchange between the shareholders of IBUI and Return
Assured.
Under the agreement, each of the outstanding shares of IBUI will be converted
into the right to receive 0.14 shares of Return Assured common stock. The
current shareholders of IBUI will own approximately 90% of ReturnAssured upon
the completion of the transaction.
Return Assured will also conduct a 1:6 reverse split of its common stock in
connection with the merger transaction.
Financial Information
The historical financial information of IBUI has been incorporated herein by
reference to IBUI's past filings with the Commission. For financial information
giving effect to the merger, please see the Unaudited Pro Forma Consolidated
Financial Statements set forth below.
PRO FORMA FINANCIAL INFORMATION
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited consolidated pro forma financial statements give effect
to the merger of Return Assured Incorporated ("RAI") and Internet Business's
International, Inc. ("IBUI"). This merger, a purchase transaction, has been
accounted for as a reverse merger with IBUI as the accounting acquiror. The
unaudited pro forma consolidated balance sheet presents the combined financial
position of RAI and IBUI as of May 31, 2001 assuming the merger had occurred on
that date. Such pro forma information is based upon the historical balance sheet
data of RIA as of May 31, 2001 and IBUI as of June 30, 2001. The unaudited pro
forma consolidated statements of operations give effect to the merger of RAI and
IBUI by combining the results of operations of RAI for the year ended August 31,
2000 with the results of IBUI for the year ended June 30, 2000, and by combining
the results of operations of RAI for the nine months ended May 31, 2001 with the
results of IBUI for the nine months ended June 30, 2001 as if the merger and the
Preferred Stock transaction had occurred on September 1, 1999. Due to the
difference in year ends, the results of operations of IBUI from July 1, 2000 to
September 30, 2000 have been removed from IBUI's results of operations for the
year ended June 30, 2001 in order to present nine month results. IBUI's revenue
for the three-month period not presented was approximately $6,900,000 and the
net loss for the three-month period was approximately $862,000. During the
year ended August 31, 2000, RAI was a development stage company. The
consolidated pro forma statements of operations also give effect to a reverse
split of RAI common stock, on a 1 to 6 basis, which is to be completed prior
to the closing of the merger.
In addition, the unaudited consolidated pro forma financial statements at May
31, 2001 and for the nine-months then ended separately give effect to the
proposed disposition of its Hergo segment and portions of its Technology Group
segment (the "business to be disposed of").
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The unaudited pro forma consolidated financial statements are based on the
estimates and assumptions set forth in the notes to these financial statements,
which have been made solely for purposes of developing this pro forma
information. The unaudited pro forma consolidated financial statements are not
necessarily an indication of the results that would have been achieved had such
transactions been consummated as of the dates indicated or that may be achieved
in the future.
These unaudited pro forma combined consolidated financial statements should be
read in conjunction with the historical financial statements and related notes
of RAI and IBUI.
RETURN ASSURED INCORPORATED AND SUBSIDIARIES
PROFORMA BALANCE SHEET
HISTORICAL TOTAL
----------------------- LESS: PRO FORMA
RAI PRO FORMA BUSINESS TO LESS BUSINESS
MAY 31, IBUI ADJUSTMENTS - BE DISPOSED TO BE
2001 JUNE 30, 2001 REVERSE MERGER SUBTOTAL OF DISPOSED OF
---- ------------- -------------- -------- -- -----------
ASSETS
Current Assets:
Cash $ 481,294 $ 258,019 $ 739,313 $ (463,522) $ 275,791
Cash in escrow 3,102,839 3,102,839 3,102,839
Accounts receivable net 757,178 200,968 958,146 (738,848) 219,298
Mortgage notes held for resale 6,929,724 6,929,724 6,929,724
Inventory 478,833 166,307 645,140 (478,833) 166,307
Prepaid expenses 346,056 106,092 452,148 (186,459) 265,689
----------- ------------- ------------ ------------ ------------ ------------
Total Current Assets 5,166,200 7,661,110 0 12,827,310 (1,867,662) 10,959,648
Goodwill - net 1,268,585 (1,268,585) (2b) 1,268,585 1,856,096 3,124,681
1,268,585 (2d)
Intangibles assets --
Property and equipment, net 1,496,386 1,869,781 3,366,167 (1,388,783) 1,977,384
Investment in unconsolidated companies \ 2,543,697 2,543,697 2,543,697
Note receivable --
Other Assets 44,624 44,624 (2,234) 42,390
----------- ------------ ------------ ------------ ------------ ------------
Total Assets $ 7,975,795 $ 12,074,588 $ -- $ 20,050,383 $ (1,402,583) $ 18,647,800
=========== ============ ============ ============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and Accrued Liabilities $ 1,218,420 $ 600,255 $ 1,818,675 $ (552,460) $ 1,266,215
Revolving Line of Credit 6,230,678 6,230,678 6,230,678
Current portion long term debt 14,048 14,048 14,048
Current portion of Capital
Lease Obligations 140,184 140,184 (140,184) --
Notes Payable 200,000 200,000 (200,000) --
Deferred Revenue 56,966 56,966 56,966
0 --
----------- ------------- ------------ ------------ ------------ ------------
Total Current Liabilities 1,558,604 6,901,947 0 8,460,551 (892,644) 7,567,907
Capital Lease Obligations -
net of current portion 509,939 509,939 (509,939) --
Notes Payable 1,168,453 1,168,453 1,168,453
----------- ------------- ------------ ------------ ------------ ------------
Total liabilities 2,068,543 8,070,400 0 10,138,943 (1,402,583) 8,736,360
Redeemable Preferred Shares 4,202,252 4,202,252 4,202,252
----------- ------------- ------------ ------------ ------------ ------------
Common Shareholders' Equity:
Common Shares 13,975 2,672,360 (2,672,360) (3) 39,742 39,742
37,413 (2c)
(11,646) (1)
Additional Paid in Capital 10,562,874 3,669,490 (10,562,874) (2a) 8,007,108 8,007,108
2,672,360 (3)
(13,975) (2a)
1,667,587 (2c)
11,646 (1)
Accumulated Other Comprehensive Income 503 (503) (2a) 0 --
Accumulated Deficit (8,872,352) (2,337,662) 8,872,352 (2a) (2,337,662) (2,337,662)
----------- ------------- ------------ ------------ ------------ ------------
Total Common Shareholders'
Equity 1,705,000 4,004,188 0 5,709,188 0 5,709,188
----------- ------------- ------------ ------------ ------------ ------------
Total Liabilities and
Shareholders' Equity $ 7,975,795 $ 12,074,588 $ -- $ 20,050,383 $ (1,402,583) $ 18,647,800
=========== ============ ============ ============ ============ ============
see accompanying notes
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Return Assured Incorporated and Subsidiaries
Notes to Unaudited Pro Forma Consolidated Balance Sheet
May 31, 2001
The first section of the pro forma consolidated balance sheet of RAI and IBUI
gives effect to the issuance of RAI common stock in exchange for all the
outstanding stock of IBUI as if it had occurred on May 31, 2001. For accounting
purposes, this transaction is being accounted for as a purchase with IBUI being
the acquiror. Following is a summary of the pro forma adjustments to reflect
this merger as well as a reverse stock split of RAI that will take place prior
to the closing of the merger:
1. Adjustment to reflect reverse stock split of RAI on a one for six
basis.
2. Adjustment to (a) eliminate the stockholder's equity of RAI, the
accounting acquiree, (b) eliminate the previous goodwill of RAI, (c)
record the purchase price of $1,705,000 recorded on the merger and to
allocate $37,413 of this purchase price to common stock on the issuance
37,413,044 shares of RAI $.001 par value common stock to the
shareholders of IBUI and the remaining $1,667,587 to additional paid in
capital and (d) to record goodwill of $1,268,585 on the merger. The
purchase price of $1,705,000 is based upon a comparison of the market
values of RAI's common stock outstanding and the market value of the
portion of IBUI common stock given up in the merger. The purchase price
based upon these market values has been deemed to be approximately
$1,605,000 plus estimated expenses of the merger of $100,000. The
excess of the purchase price and costs of the transactions over the net
assets of RAI has been recorded as goodwill.
3. Adjustment to reclassify the par value of the common stock of IBUI
prior to the merger to additional paid in capital.
The second section of the pro forma consolidated balance sheet of RAI and IBUI
gives effect to the proposed disposition of its Hergo segment and portions of
its Technology Group segment (the "business to be disposed of"). No loss on this
proposed disposition has been recorded as this amount is deemed to be a
preacquisition contingency and thus will be included in the allocation of the
purchase price in the merger between RAI and IBUI and will result in the
recording of additional goodwill.
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RETURN ASSURED INCORPORATED
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
HISTORICAL
---------------------------
IBUI LESS: TOTAL PRO
RAI FOR THE NINE ACTIVITY FORMA LESS
FOR THE NINE MONTHS ENDED OF BUSINESS ACTIVITY OF
MONTHS ENDED JUNE 30, TO BE BUSINESS BE
MAY 31, 2001 2001 PRO FORMA DISPOSED OF DISPOSED OF
------------ ---- --------- ----------- -----------
Revenues 3,605,548 $ 42,600,000 $ 46,205,548 3,567,647 42,637,901
Costs and expenses:
Costs of revenues 2,026,367 36,394,000 38,420,367 2,003,996 36,416,371
Selling general and
administrative 5,290,409 4,084,000 9,374,409 1,974,667 7,399,742
Other depreciation
and amortization 309,701 629,000 938,701 160,384 778,317
Impairment of
goodwill 1,616,708 -- 1,616,708 1,616,708
Interest expense and
financing fees 614,659 139,000 753,659 16,641 737,018
----------- ------------ ------------ ----------- ------------
Total costs
and expenses 9,857,844 41,246,000 51,103,844 4,155,688 46,948,156
----------- ------------ ------------ ----------- ------------
Income (Loss)
from operations (6,252,296) 1,354,000 (4,898,296) (588,041) (4,310,255)
Other income / (expense) 427,744 322,000 749,744 437,035 312,709
----------- ------------ ------------ ----------- ------------
Net Income (loss) $(5,824,552) $ 1,676,000 $ (4,148,552) $ (151,006) $ (3,997,546)
Dividends on Preferred
Stock (55,431) (55,431) (55,431)
Value of Warrants issued
with Preferred Stock (669,350) (669,350) (669,350)
----------- ------------ ------------ ----------- ------------
Net income (loss)
attributable to
Common Shareholders $(6,549,333) $ 1,676,000 $ (4,873,333) $ (151,006) $ (4,722,327)
=========== ============ ============ =========== ============
Net Income (loss) per
common share $ (0.87) $ 0.01 $ (0.13) $ (0.12)
=========== ============ ============ ============
Weighted average number
of shares outstanding 7,559,610 250,907,333 38,672,979 (1) 38,672,979 (1)
=========== ============ ============ ============
8
14
RETURN ASSURED INCORPORATED AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED MAY 31, 2001
The first section of the pro forma consolidated statement of operations of RAI
and IBUI gives effect to the issuance of RAI common stock in exchange for all
the outstanding stock of IBUI as if it had occurred on September 1, 2000
1. Pro forma net income per share is computed by dividing the pro forma
net income by RAI's weighted average number of shares after giving
effect to a reverse stock split on a one for six basis and the issuance
of 37,413,044 shares of common stock to the shareholders of IBUI in
exchange for all the outstanding common stock of IBUI. Incremental
shares from the effect of options, warrants and convertible preferred
stock have not been included in the weighted average shares calculation
on a diluted basis as the effect would have been anti-dilutive.
2. Note: (a) No adjustment has been made for the amortization of goodwill
due to the issuance of Statement of Financial Accounting Standards No.
142 "Goodwill and Other Intangible Assets" which eliminates the
amortization of goodwill for business combinations in which the
acquisition date is after June 30, 2001; (b) No adjustment has been
made for the base salaries of the employment agreements with Louis
Cherry and Al Reda as the employment agreements are not significantly
different than the actual salaries earned by these individuals during
the year.
The second section of the pro forma consolidated statement of operations of RAI
and IBUI gives effect to the proposed disposition of its Hergo segment and
portions of its Technology Group segment (the "business to be disposed of"). No
loss on this proposed disposition has been recorded as this amount is deemed to
be a preacquisition contingency and thus will be included in the allocation of
the purchase price in the merger between RAI and IBUI and will result in the
recording of additional goodwill.
9
15
RETURN ASSURED INCORPORATED
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
HISTORICAL
------------------------------------------
RAI IBUI
FOR THE YEAR ENDED FOR THE YEAR ENDED
AUGUST 31, 2000 JUNE 30, 2000 PRO FORMA
--------------- ------------- ---------
Revenues $ 10,169,090 $ 10,169,090
Costs and expenses:
Costs of revenues 8,848,582 8,848,582
Selling general and administrative 2,028,397 3,107,140 5,135,537
Depreciation and amortization 16,817 791,426 808,243
Interest expense and financing fees 216,092 86,611 302,703
------------ ------------ ------------
Total costs and expenses 2,261,306 12,833,759 15,095,065
------------ ------------ ------------
Loss from operations (2,261,306) (2,664,669) (4,925,975)
Other income / expense 44,157 44,157
------------ ------------ ------------
Loss before income taxes and
minority interest (2,261,306) (2,620,512) (4,881,818)
Income taxes 8,800 8,800
------------ ------------ ------------
Loss before minority interest (2,261,306) (2,629,312) (4,890,618)
Minority interest in loss of subsidiary 32,868 32,868
------------ ------------ ------------
Net loss $ (2,261,306) $ (2,596,444) $ (4,857,750)
============ ============ ============
Net loss per common share $ (1.96) $ (0.01) $ (0.13)
============ ============ ============
Weighted average number of shares
outstanding 1,155,950 189,571,337 37,605,702 (1)
============ ============ ============
10
16
RETURN ASSURED INCORPORATED AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2000
The pro forma consolidated statement of operations of RAI and IBUI gives effect
to the issuance of RAI common stock in exchange for all the outstanding stock
of IBUI as if it had occurred on September 1, 1999
1. Pro forma net income per share is computed by dividing the pro forma
net income by RAI's weighted average number of shares after giving
effect to a reverse stock split on a one for six basis and the issuance
of 37,413,044 shares of common stock to the shareholders of IBUI in
exchange for all the outstanding common stock of IBUI. Incremental
shares from the effect of options, warrants and convertible preferred
stock have not been included in the weighted average shares calculation
on a diluted basis as the effect would have been anti-dilutive.
2. Note: (a) No adjustment has been made for the amortization of goodwill
due to the issuance of Statement of Financial Accounting Standards No.
142 "Goodwill and Other Intangible Assets" which eliminates the
amortization of goodwill for business combinations in which the
acquisition date is after June 30, 2001; (b) No adjustment has been
made for the base salaries of the employment agreements with Louis
Cherry and Al Reda as the employment agreements are not significantly
different than the actual salaries earned by these individuals during
the year.
The historical results of RAI have not been adjusted for the merger with Hertz
Technology Group, Inc. and Subsidiaries ("Hertz businesses") since RAI has
proposed to dispose of the majority of the Hertz businesses.
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17
RISK FACTORS
You should carefully consider the risks described below before making
an investment decision. The risks described below are not the only ones facing
our company. Additional risks not presently, known to us or that we currently
deem immaterial may also impair our business operations. These are all the risks
known to us at this time.
Our business, financial condition or results of operations could be
materially adversely affected by any of these risks. The trading price of our
common stock could decline due to any of these risks and you may lose all or
part of your investment.
RISKS ASSOCIATED WITH OUR BUSINESS
We have a history of losses and may not be able to operate profitably
in the future. During the fiscal years ended August 31, 2000 and 1999, our Hertz
Technology operations reported net losses of $2,338,069 and $694,871. As a
result of operating expenses and development expenditures, our Return Assured
operations have incurred cumulative net losses through August 31, 2000 of
$2,323,019. If the merger between Return Assured and Hertz had occurred as of
the beginning of fiscal 2000, we would have net losses for the fiscal year ended
August 31, 2000 of approximately $5,515,000 on a pro forma basis. We may not be
able to operate profitably in the future. We expect to experience substantial
quarterly net losses for the foreseeable future, due primarily to the following
factors:
- Possible disposition of Hergo and Remove I-T and the costs attendant
thereto;
- Competitive pricing pressures in our Hergo and RemoteIT businesses which
are expected to continue to negatively affect gross margins; and
- Probable significant spending on operating expenses, in particular
marketing expenses to bring the attention of businesses and consumers to
Return Assured's services, which are likely to increase losses.
Our Return Assured business plan is unproven and we may not be able to
achieve profitability. We have not generated any revenues from our Return
Assured operations. We intend to focus substantially all of our efforts, and use
substantially all of our current working capital, in developing our Return
Assured operations. We expect that our sales and marketing, operations and
administrative expenses will increase in the future. As a result, we will need
to generate significant revenues to achieve and maintain profitability. We do
not know if our revenues will be sufficient to pay our expenses or that we will
achieve profitability. We cannot be certain that we will achieve or sustain
positive cash flow or profitability from our operations. Furthermore, Eli Hertz
will receive 25% of the gross profit from our Hergo operations. As a result,
little net cash flow from their operations, if any, will be available to us. Our
net losses and negative cash flow from operating activities are likely to be
substantial if:
- we are unable to attract and retain merchants using our web seal; or
- there is insufficient consumer demand for our web seal service.
A lack of demand for our web seal of approval service may result in our
inability to achieve profitability. We believe there is a considerable demand
from merchants to provide their customers with the assurance that the goods they
order will be delivered and that the merchants will honor their return
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policies. But our management has not conducted any marketing studies to confirm
that this demand exists or the extent of the demand. We may find that as
customers become more comfortable with e-commerce they will not feel the need
for outside assurance of delivery and returns. If that happens, the number of
merchants willing to pay for our web seal service may be too small for us to be
profitable.
We may be unable to achieve our operating and financial objectives if
we cannot manage our anticipated growth effectively. We anticipate that our
business will grow rapidly. Our future success depends in large part on our
ability to manage this anticipated growth. For us to manage this growth, we will
need to:
- expand and enhance our operating and financial procedures and
controls;
- replace or upgrade our operational and financial management
information systems; and
- attract, train, manage and retain key employees.
These activities are expected to place a significant strain on our
financial and management resources. If we are unable to manage growth
effectively, our business could suffer.
If our business plan is successful, other companies with more resources
and greater name recognition may make competition so intense that our web seal
business will not be profitable. Our business plan is based on us being the
first to market with our web seal service. Our service is not protected by
patents or other intellectual property rights, and if it is successful a number
of other companies with far more money and greater name recognition may decide
to compete with us. This competition could both reduce the number of merchants
who select us to provide the service and create downward pressure on the amount
we could charge for the service so that we would not have enough revenue to
generate a profit.
If we are unable to retain and attract key personnel, our revenues may
not reach projected levels and expenses may not be managed properly. We believe
our short and long-term success depends largely on our ability to attract and
retain highly skilled technical, managerial and marketing personnel,
particularly additional management personnel in the areas of application
integration and technical support. Competition for such personnel is intense. We
may not be able to hire or retain the necessary personnel to implement our
business strategy, or we may need to pay higher compensation for employees than
we currently expect. Our inability to attract and retain such personnel would
limit our growth and harm our business.
Our cyber liability insurance policy does not cover substantial
portions of the cost we might incur if a merchant is unable or unwilling to
deliver its product or honor its return policy which would result in higher
costs and reduced earnings. We purchased a "cyber liability" insurance policy
from Lloyd's of London covering our own negligence in selecting a merchant or
failing to carefully monitor the shipment and return of the merchant's products.
However, that policy has a deductible of $2 million for each merchant. Since
most claims are likely to be less in the aggregate than $2 million per merchant,
it is unlikely that we would ever be able to make a claim under the policy.
State regulations governing insurance could apply to our business,
making that business impractical which would cause a tremendous downturn in our
business. Virtually every state tightly regulates companies who are in the
business of insurance. We do not believe that our proposed business is insurance
under the laws of any state. This business, however, will be entirely new and
one or more states might try to regulate our operations as insurance. If our
business were to be regulated as insurance our business plan would most probably
not be practicable because the costs of complying with the insurance regulations
would be so high that we would have to raise our fees to a level most merchants
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19
would not be willing to pay. In addition, the cost of defending against state
regulators' claims, if brought, could be prohibitive.
We will be extremely dependent on third parties to develop and
implement our business plan and our web seal service which could negatively
impact our costs and product quality. We have entered into an agreement with IBM
to evaluate our business plan and assist in developing and implementing our web
site, but we cannot give any assurance that we, even with IBM's assistance, will
be able to implement our business plan.
We are currently evaluating our future plans for our Hergo and RemoteIT
businesses and may discontinue these businesses which would result in costs of
divestiture. We have recently discontinued the operations of our Edutec and
Hertz Computer operations. We are currently evaluating our plans for Hergo,
which will need new equipment in the near future, and RemoteIT, which is
currently operating at a loss. We are also evaluating whether some of the
web-based services of RemoteIT will complement our web seal service business,
and whether the expertise of that division will enhance our ability to pursue
our business plan. Because our other operations are less closely linked to our
web seal service business plans, we do not have any definitive plans as to the
future operations of those businesses. Mr. Eli Hertz is the chief executive
officer of our Hergo and RemoteIT subsidiaries and expects to continue operating
those subsidiaries on a more or less autonomous basis. Additionally, if we
determine that one or more of these businesses is not central to our business
plan, we may dispose of or discontinue these operations.
We cannot predict our future capital needs and we may not be able to
secure additional financing. To fully implement our business plan, we will
likely need to raise additional funds within the next 12 months in order to
develop our web seal service, to fund continuing operating losses or to acquire
complementary businesses, technologies or services. Additional financing may not
be available on terms favorable to us, or may not be available to us at all. If
we raise additional funds by issuing equity securities, our stockholders may
experience significant dilution of their ownership interest, and these
securities may have rights senior to the rights of common stockholders. If
additional financing is not available when required or is not available on
acceptable terms, we may be unable to fund continuing operations, promote our
brand name, enhance or develop our services, take advantage of business
opportunities or respond to competitive pressures, any of which could harm our
business.
We have no direct control over shipping and quality of products
(returns) shipped by merchants which may result in customers' returning
merchandise for which we are not reimbursed. We will rely on vendors to ship
merchandise directly to customers. Consequently, we will have limited control
over the goods shipped by these vendors, and shipments of goods may be subject
to delays. In addition, we may accept returns from customers for which we will
not receive reimbursements from manufacturers or vendors. If the quality of
service provided by these vendors falls below a satisfactory standard or if our
level of returns exceeds expectations, this could have a harmful effect on our
business.
Our online commerce services will be vulnerable to interruption and
could result in a loss of business and lower earnings. Merchant access to our
web site will directly affect the volume of orders and thus affect our revenues.
System interruptions may make our web site unavailable or prevent us from
processing shipments and returns efficiently, reducing the attractiveness of our
services. We may need to add hardware and software and further develop and
upgrade our existing technology, transaction-processing systems and network
infrastructure to accommodate increased traffic on our web site and increased
sales volume. We will maintain substantially all of our computer and
communications hardware at one facility, in a co-location facility. Our systems
and operations could be damaged or interrupted by fire, flood, power loss,
telecommunications failure, network break-ins, earthquake and similar events.
Our backup systems and disaster recovery plan may not be adequate, and we may
not have sufficient business interruption insurance to compensate us for losses
from a major interruption.
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Computer viruses, physical or electronic break-ins, deliberate attempts
by third parties to exceed the capacity of our systems and similar disruptions
could cause system interruptions, delays and loss of critical data, and could
prevent us from providing services and processing order tracking and return.
RISKS ASSOCIATED WITH THE MERGER OF HERTZ TECHNOLOGY GROUP AND RETURN ASSURED
We have limited operating histories as online commerce companies, which
will make the business of the combined company difficult to evaluate and may
make market acceptance limited. The merger combined two companies that have
limited operating histories as online commerce companies. Hertz Technology has
been in the business of providing Internet and web-based services for only a
little over a year. Return Assured was formed less than a year ago. Our
prospects will therefore be subject to the risks, expenses and uncertainties
frequently encountered by young companies that operate in the new and rapidly
evolving markets for Internet products and services. These risks include:
- evolving and unpredictable business models;
- intense competition;
- our need and ability to manage growth; and
- the rapid evolution of technology in electronic commerce.
The integration of our two companies may be difficult and may not
generate the financial results we are projecting. Integrating our two companies
involves technological, operational and personnel-related risks. The integration
process will be complex, time-consuming and expensive, and may disrupt our
business. We will use common information and communication systems, facilities,
operating procedures, financial controls and human resources practices. We may
lose key employees that we do not anticipate losing, and the attention of our
management team may be diverted from other ongoing business concerns more than
we anticipate.
We may incur charges to our operations relating to goodwill impairment
under a recently issued accounting standard. The merger was accounted for as a
purchase of Hertz by Return Assured. Under purchase accounting, Hertz's tangible
assets were entered on our books at their fair market value. The excess of the
value of the common shares and warrants issued and the cost of the transaction
over the net assets of Hertz are recorded as goodwill. The transaction resulted
in approximately $3,011,000 of goodwill. That goodwill was being charged to
earnings over 15 years, which resulted in an expense charge of $201,000 per year
for 15 years. Upon the adoption of Statement of Financial Accounting Standards
No. 142, "Goodwill and Other Intangible Assets" by the Company, which is
required by September 1, 2002, this goodwill charge will cease. Under this
standard, the Company will be required to evaluate the carrying value of its
goodwill upon adoption and on an ongoing basis which could potentially result in
changes to the Company's operation for any goodwill impairment.
We will incur additional charges to our earnings for compensation
payable to Mr. Hertz under his employment agreement with Hergo and his
consulting agreement with us. The employment arrangements after the merger
include a five-year employment agreement between Eli Hertz and our Hergo
subsidiary and a two-year consulting agreement between Mr. Hertz and us. Under
the employment agreement, Mr. Hertz is to receive $250,000 per year and under
the consulting agreement he is to receive $125,000 per year. These costs will be
in addition to whatever compensation we decide to pay our senior management. In
addition, Mr. Hertz will receive 25% of the gross profit from Hergo. The share
of gross profits will be payable whether or not we or our subsidiaries earn a
net profit. The added costs will be a continuing drag on earnings over the terms
of these agreements and may make it difficult to obtain financing in the future.
The cash payment required to redeem Mr. Hertz's common stock has
reduced our available working capital which could make it more difficult for us
to meet our obligations and limit future expansion. We purchased 115,385 shares
of common stock from Eli E. Hertz at the close of the merger
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21
for $435,000 cash and a $290,000 note due April 17, 2001 (the "Hertz Note"). The
funds that were available to purchase the shares were the cash of the combined
companies on hand at the time the merger was completed and the proceeds of sale
of the Series A preferred stock. As a result, it will reduce our working
capital.
Mr. Hertz has filed suit to collect on the Hertz Note which has an
outstanding balance of $200,000 plus interest. In April 2001, Mr. Hertz filed a
suit against Return Assured claiming that certain amounts under the Hertz Note
were due and payable. We are currently in the process of negotiating a
settlement agreement with Mr. Hertz.
RISKS ASSOCIATED WITH OUR INDUSTRY
We will operate in an extremely competitive market and we could lose
revenue and customers to competitors. It is perceived to be easy to enter the
online commerce services market. Current and new competitors can launch new
online commerce web sites at relatively low cost. Competition in services to
online commerce will likely increase as well-recognized web participants decide
to enter this market segment. Increased competition may result in price
reductions, reduced gross margins, increased marketing costs or loss of market
share, or any combination of these problems.
Major credit card companies already offer some protection against both
failure to deliver and the delivery of defective products, and they may decide
to compete with us by, for example, themselves undertaking to resolve delivery
disputes or guaranty delivery and returns for customers who use their cards to
purchase online.
We may not be successful in competing against these competitors. Many
of these competitors have greater financial, marketing, customer support,
technical and other resources than us. As a result, they may be able to provide
the same services we provide on more favorable terms than us, and they may be
able to respond more quickly to changes in customer preference or to devote
greater resources to the development, promotion and sale of their services than
we can. If competition increases and our branding efforts are not successful, we
may not be able to command higher margins on our services, or we may lose
revenue and customers to our competitors.
Our business may be affected by government regulation and result in
unacceptable costs to us. The need for our services may be reduced by future
state or federal regulation providing for governmental enforcement of the
obligations of online merchants to deliver their products and honor returns
policies. Even if this does not happen, it is possible that one or more states
may decide that our proposed business is close enough to the business of
insurance that it should be regulated like insurance. This could result in an
interference with our business that would create unacceptable costs to us.
The tax treatment of the Internet and electronic commerce is currently
unsettled, and taxes may be assessed which would reduce earnings. A number of
proposals have been made at the federal, state and local level and by some
foreign governments that could impose taxes on the sale of goods and services
and some other Internet activities. Our business may be harmed by the passage of
laws in the future imposing taxes or other burdensome regulations on online
commerce.
Due to the increasing popularity and use of the Internet, it is
possible that a number of laws and regulations may be adopted with respect to
the Internet generally, covering issues such as user privacy, pricing and
characteristics and quality of products and services. Similarly, the growth and
development of the market for Internet commerce may prompt calls for more
stringent consumer protection laws that may impose additional burdens on those
companies conducting business over the Internet. The adoption of any additional
laws or regulations may decrease the growth of commerce over the Internet,
increase our cost of doing business or otherwise have a harmful effect on our
business.
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22
RISKS ASSOCIATED WITH INVESTING IN US
We expect our stock price to be volatile. The market price of the
shares of our common stock has been, and will likely continue to be, subject to
wide fluctuations in response to several factors, such as:
- actual or anticipated variations in our results of operations;
- announcements of technological innovations;
- new services or product introductions by us or our competitors;
- changes in financial estimates by securities analysts; and
- conditions and trends in the Internet and electronic commerce industries.
The stock markets generally, and the Nasdaq SmallCap Market in
particular, have experienced extreme price and volume fluctuations that have
particularly affected the market prices of equity securities of many companies
and that often have been unrelated or disproportionate to the operating
performance of those companies. These market fluctuations, as well as general
economic, political and market conditions such as recessions, interest rates or
international currency fluctuations may adversely affect the market price of our
common stock.
Shares of our outstanding common stock may increase more than expected
because the conversion price of our Series A preferred stock is not fixed, but
is determined based on the market value of the common stock at the time of
conversion. Our operations are initially being financed by the sale of $5
million in Series A convertible preferred stock to GEM. This convertible
preferred stock has a maximum conversion price of $3.00 per share. However, if
the market price of our stock at the time of conversion is below $3.00 per share
the conversion price is reduced to the market price at that time. As a result,
if our common stock declines significantly in price, we will have to issue more
shares of common stock than we would if the conversion price were fixed. Nothing
in the agreement for sale of the preferred stock would prevent the holder of the
preferred stock from repeatedly selling the stock short and covering its short
sale at a lower price. It would not be subject to the usual risks of a short
seller, who might have to buy back the stock it has sold at an undetermined and
much higher price in order to cover his short position, because the conversion
can never go above $3.00 per share. In addition, a holder of the preferred stock
could continue converting and selling at ever lower prices without incurring an
economic loss. These sales could result in a major decline in the price of our
common stock. They could also make us more vulnerable to a takeover by an
outside party. The holder of the Series A preferred stock has agreed with us to
never own more than 4.99% of our common stock. As a result the holder must sell
enough shares upon each conversion to not violate our agreement - possibly
depressing our stock price.
The following table illustrates the number of shares that we would be
required to issue at various assumed prices upon conversion of $3,828,873, the
remaining amount of the $5,000,000 of the Series A preferred stock that has not
yet been converted, subject to the limitations described in the text following
the table. This table is for illustrative purposes only, and should not be
assumed to represent our projections of the range of future stock prices.
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23
Shares of Common Stock Common Stock Underlying Series A
Conversion Issuable Under the Preferred Stockholders as a Percentage
Share Price Series A Preferred Stock of Total Common Stock Outstanding(1)
----------- ------------------------ ------------------------------------
$0.025(2) 153,154,920(3) 90.1%
0.05(4) 76,577.460(3) 82%
0.10(5) 38,288,730(3) 69.4%
----------
(1) Based on 16,850,799 shares outstanding on October 1, 2001 and assuming
authorized shares are increased.
(2) Assuming $0.025 is the lowest trading price in accordance with the
parameters of the Stock Purchase Agreement.
(3) Calculated without effect given to dividends accrued.
(4) Assuming $.05 is the lowest trading price in accordance with the parameters
of the Stock Purchase Agreement.
(5) Assuming $.10 is the lowest price in accordance with the parameters of the
Stock Purchase Agreement.
To date, GEM has converted the following number of shares:
GEM CONVERSIONS
CONVERSION
DATE TRANSACTION RATE # COMMON
--------------------------------------------------------------------------------------
16-Oct-00 $5,000,000 $5,000,000
Various Dividend accrual $ 13,252 $5,013,252
14-Nov-00 $ (50,000) $4,963,252 $1.00 50,000
17-Jan-01 $ (125,000) $4,838,252 $0.24 529,661
16-May-01 $ (30,000) $4,808,252 $0.15 200,000
22-May-01 $ (50,000) $4,758,252 $0.13 384,615
23-May-01 $ (55,000) $4,703,252 $0.13 423,077
24-May-01 $ (60,000) $4,643,252 $0.13 461,538
25-May-01 $ (60,000) $4,583,252 $0.13 461,538
29-May-01 $ (70,000) $4,513,252 $0.13 538,462
29-May-01 $ (62,000) $4,451,252 $0.13 476,923
30-May-01 $ (61,000) $4,390,252 $0.13 469,231
30-May-01 $ (66,000) $4,324,252 $0.13 507,692
31-May-01 $ (58,500) $4,265,752 $0.13 450,000
31-May-01 $ (63,500) $4,202,252 $0.13 488,462
01-Jun-01 $ (58,000) $4,144,252 $0.13 446,154
01-Jun-01 $ (60,000) $4,084,252 $0.13 461,538
01-Jun-01 $ (62,499) $4,021,753 $0.13 480,000
04-Jun-01 $ (60,030) $3,961,723 $0.13 461,769
04-Jun-01 $ (61,000) $3,900,723 $0.13 469,231
05-Jun-01 $ (66,300) $3,834,423 $0.13 510,000
06-Jun-01 (5,550) $3,828,873 $0.13 42,689
8,312,580
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With the remaining shares that GEM may and ultimately is expected to
convert, you may experience dilution of your ownership percentage upon GEM's
conversion of the preferred stock. The exercise of such a large amount of stock,
especially if close in time, may have a substantial negative effect on the
market price of our common stock.
We may be required to redeem the preferred stock for an amount that
would force us to go out of business. The agreement for sale of the Series A
preferred stock requires us to maintain an effective registration statement
covering resale of the shares of common stock that may be issued upon
conversion. If we are unable to maintain the effectiveness of that registration
statement or otherwise do not comply with agreements we make with holders of
that preferred stock, we will have to redeem all the outstanding preferred stock
at the stated value of $1,000 per share plus accrued dividends. There is no
provision in the agreement for payment of this obligation over time, and we will
not have any commitment for credit to finance the payment of the redemption
price. As a result, a redemption may leave us with not enough liquid assets to
continue paying our other debts and we may be forced to go out of business.
Shares of our outstanding common stock may increase more than expected because
of our Program Promotion Agreement with PlasmaNet, Inc. On December 15, 2000, we
entered into a Program Promotion Agreement with Plasma Net Inc., the provider of
FreeLotto.com. a free online sweepstakes. Under the Agreement, PlasmaNet and
Return Assured have created promotional programs enhanced by FreeLotto's
relationship with its approximate 12,000,000 registered users. Under the
programs, FreeLotto members that opt in , will have their contact information
forwarded to us in real time for the purpose of new membership/database
relationship management.
In exchange for the above-mentioned membership generation, we will at
the end of each calendar week, issue $6.00 worth of our common stock to
PlasmaNet for each new member referred by us for that week. The recent decline
in our stock price will result in increased dilution of our common stock, for
each name we acquire from PlasmaNet, Inc.
DE-LISTING FROM NASDAQ
If we are unable to be relisted on Nasdaq, liquidity in our common
stock will likely be adversely affected. Our common stock was delisted from
trading on the NASDAQ SmallCap Market We have appealed this decision, and a
hearing has been scheduled for October 17, 2001 in order that further
information be presented and a redetermination be made. NASDAQ has maintained
that we have not met the ongoing listing requirements in that our common stock
has traded below $1.00 for more than thirty (30) trading days.
In addition to the maintenance of a minimum bid price for our common
stock, NASDAQ also requires us to meet certain financial criteria, including one
of the following:
- maintaining $2,000,000 in net tangible assets,
- having a market capitalization of at least $35,000,000, or
- having net income of $500,000.
As of May 31, 2001, on a pro forma basis before any adjustment for the
proposed disposition, we had net tangible assets of $4,444,603 but did not
satisfy the requirements for market capitalization or net income. The failure to
meet Nasdaq's maintenance criteria resulted in the de-listing of the our common
stock from Nasdaq, and trading being conducted on the NASD Over-the-Counter
Bulletin Board. As a result of such de-listing, you could find it more
difficult to dispose of, or to obtain accurate quotations as to the market value
of, our securities.
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Our common stock has been de-listed from Nasdaq, and our common stock
is subject to the penny stock rules. Broker-dealer practices in connection with
transactions in "penny stocks" are regulated by certain rules adopted by the
Securities and Exchange Commission. Penny stocks generally are equity securities
with a price of less than $5.00 other than securities registered on certain
national securities exchanges or quoted on Nasdaq provided that current price
and volume information with respect to transactions in such securities is
provided by the exchange or system. The rules require that, prior to a
transaction in a penny stock not otherwise exempt from the rules, the
broker-dealer must:
- deliver a standardized risk disclosure document that provides information
about penny stocks and the risks in the penny stock market;
- provide the customer with current bid and offer quotations for the penny
stock;
- disclose the compensation of the broker-dealer and its salesperson in
connection with the transaction;
- provide the customer monthly account statements showing the market value of
each penny stock held in the customer's account; and
- make a special written determination that the penny stock is a suitable
investment for the customer and receive the customer's written agreement to
the transaction.
These disclosure requirements may have the effect of reducing the
liquidity of penny stocks. If our securities are subject to the penny stock
rules, you may find it more difficult to sell your shares of our common stock.
Our ability to pay dividends is limited. We currently intend to retain
any future earnings and, therefore, do not plan to pay dividends in the
foreseeable future. Our future dividend policy will depend on our earnings,
capital requirements, financial condition and other factors that our board of
directors deems relevant. We cannot assure you that dividends will ever be paid.
Shares eligible for future sales by our current stockholders may
adversely affect the price of our stock. The market price of our common stock
could decline as a result of sales of shares of common stock by our existing
stockholders. These sales might make it more difficult for us to sell equity
securities in the future at a time and at a price that we deem appropriate.
Anti-takeover provisions and our right to issue preferred stock could
make a third party acquisition of us difficult and could deprive our
stockholders of a takeover premium for their shares. We are a Delaware
corporation. Anti-takeover provisions of Delaware law could make it more
difficult for a third party to acquire control of us, even if a change in
control would be beneficial to shareholders. Our amended certificate of
incorporation provides that our board of directors may issue preferred stock
without shareholder approval. The issuance of preferred stock could make it more
difficult for a third party to acquire us. Our board of directors may issue
preferred stock with voting or conversion rights that may have the effect of
delaying, deferring or preventing a change of control of us and would adversely
affect the market price of our common stock or voting and other rights of
holders of our common stock.
The exercise of outstanding options and warrants will dilute the
interests of our stockholders. As of October 2, 2001 we had 16,850,799 shares of
our common stock outstanding. If all our outstanding options and warrants are
exercised, we will have approximately 23,601,696 (fully diluted, not including
the dilutive effect of the 25,000,000 shares offered by this Prospectus or
shares that could be issued upon the conversion of the preferred stock) shares
outstanding. Thus, the percentage of shares owned by all existing stockholders
will be reduced proportionately as warrants are exercised.
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DESCRIPTION OF SECURITIES
COMMON STOCK: The authorized capital stock of the Company consists of 50,000,000
shares of Common Stock, $.001 par value per share. There are 16,850,799 issued
and outstanding Shares. Holders of the Shares do not have preemptive rights to
purchase additional Shares or other subscription rights. The Shares carries no
conversion rights and are not subject to redemption or to any sinking fund
provisions. All Shares are entitled to share equally in dividends from sources
legally available therefor when, as and if declared by the Board of Directors
and, upon liquidation or dissolution of the Company, whether voluntary or
involuntary, to share equally in the assets of the Company available for
distribution to shareholders. All outstanding Shares are validly authorized and
issued, fully paid and nonassessable, and all Shares to be sold and issued as
contemplated hereby, will be validly authorized and issued, fully paid and
nonassessable. The Board of Directors is authorized to issue additional Shares
not to exceed the amount authorized by the Company's Certificate of
Incorporation, and to issue options and warrants for the purchase of such
shares, on such terms and conditions and for such consideration as the Board
warrants for the purchase of shares, on such terms and conditions and for such
consideration as the Board may deem appropriate without further shareholders
action. The above description concerning the Shares does not purport to be
complete. Reference is made to the Company's Certificate of Incorporation and
bylaws which are available for inspection upon proper notice at the Company's
offices, as well as to the applicable statutes of the State of Delaware for a
more complete description concerning the rights and liabilities of shareholders.
Each holder of Shares is entitled to one vote per share on all matters on which
such shareholders are entitled to vote. Since the Shares do not have cumulative
voting rights, the holders of more than fifty percent (50%) of the Shares voting
for the election of directors can elect all the directors if they choose to do
so and, in such event, the holders of the remaining shares will not be able to
elect any person on the Board of Directors.
PREFERRED STOCK: The Board of Directors is empowered to authorize the issuance
of one or more classes up to a total of 1,000,000 shares of the Corporation's
Preferred Stock, or one or more series of any such class, and to fix the
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof for each such class or
series, specifying for each such class or series: (i) the designation thereof in
such manner as shall distinguish shares thereof from all other series of
Preferred Stock then or theretofore authorized; (ii) the number of shares which
shall initially constitute such class or series; (iii) whether or not the shares
of such class or series shall have voting rights in addition to the voting
rights affirmatively required by law; (iv) the rate or rates and the time or
times at which dividends and other distributions on the shares of such class or
series shall be paid, and whether or not any such dividends shall be cumulative;
(v) he amount payable on the shares of such class or series in the event of the
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Corporation; (vi) whether or not shares of such class or series are to be
redeemable, and the terms and conditions upon which the Corporation or a holder
may exercise its or his right to redeem, or require redemption of, shares of
such class or series; (vii) whether or not a sinking fund shall be created for
the redemption of the shares of such class or series, and the terms and
conditions of any such fund; and (viii) any other preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof which shall be applicable to such class or series."
USE OF PROCEEDS
All of the shares of common stock offered by this prospectus are being
offered by GEM. We will not receive any proceeds from sales of common stock by
GEM.
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SELLING STOCKHOLDERS
We sold the preferred stock, which the common stock underlies, to GEM
in transactions exempt from registration under the Securities Act. As part of
the above transactions, we agreed to register the shares being offered by this
prospectus.
The following table sets forth information as of June 1, 2001 about GEM
and the number of shares of common stock beneficially owned by it, all of which
are offered by this prospectus. For purposes of computing the number and
percentage of shares beneficially owned by the selling stockholder on June 1,
2001, any shares which such person has the right to acquire within 60 days after
such date are deemed to be outstanding, but those shares are not deemed to be
outstanding for the purpose of computing the percentage ownership of any other
selling stockholder. As a result, GEM is deemed to own all of the shares that
may be issued either on conversion of the preferred stock it owns or upon
exercise of its warrant.
Percent Shares
Shares Owned Owned Upon Percent
Being Before Completion Owned After
Name and Address Offered Offering(1) of Offering Offering(1)
---------------- -------- -------------- ----------- --------------
GEM Global Yield Fund Limited 35,687,740 85.27% 10,687,740 25.54%
Hunkins Waterfront Plaza
P.O. Box 556, Main Street
Nevis, West Indies
(1) Based on 41,850,799, (fully diluted, not including the dilutive effect
of the 25,000,000 shares offered by this Prospectus or shares that
could be issued upon the conversion of the preferred stock) shares,
including 16,850,799 shares presently outstanding, plus the 25,000,000
shares being offered by this Prospectus.
The following people hold the offices of GEM Global Yield Fund Ltd., a
Nevis, West Indies company, shown next to their names and are those
who share beneficial ownership of the GEM shares:
Margareta Hedstrom, Preisdent and Treasurer
Pierce Loughran, Director
Thomas Lacy, Director
James A. Loughran, Authorized signatory
James E. Martin, Authorized signatory
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PLAN OF DISTRIBUTION
GEM MAY SELL THE COMMON STOCK BEING OFFERED BY THIS PROSPECTUS FROM TIME TO
TIME DIRECTLY TO OTHER PURCHASERS, OR TO OR THROUGH DEALERS OR AGENTS. TO
THE EXTENT REQUIRED, A PROSPECTUS SUPPLEMENT WITH RESPECT TO THE COMMON
STOCK WILL SET FORTH THE TERMS OF THE OFFERING OF THE COMMON STOCK,
INCLUDING THE NAME(S) OF ANY DEALER OR AGENTS, THE NUMBER OF SHARES OF
COMMON STOCK TO BE SOLD, THE PRICE OF THE COMMON STOCK, ANY UNDERWRITING
DISCOUNT OR OTHER ITEMS CONSTITUTING UNDERWRITERS' COMPENSATION.
GEM, a broker-dealer itself, may sell its stock from time to time
directly or, alternatively, through broker-dealers or agents. GEM will act
independently of us in making decisions regarding the timing, manner and size of
each sale. It may sell its common stock in one or more transactions at fixed
prices, at prevailing market prices at the time of sale, at varying prices
determined at the time of sale or at negotiated prices. The sales may be made in
transactions (which may involve crosses or block transactions)
- on any national securities exchange for quotation services on
which the common stock may be listed or quoted at the time of
sale
- in the over-the-counter market,
- in transactions other than on such exchanges or services or in
the over-the-counter market, or
- through the writing of options.
In connection with sales of the common stock, GEM may enter into
hedging transactions with broker-dealers, and those broker-dealers may in turn
engage in short sales of the common stock in the course of hedging the positions
they assume. GEM may also sell short the common stock offered by this prospectus
and deliver that common stock to close out such short positions, or lend or
pledge such common stock to broker-dealers that in turn may sell such
securities. GEM may also sell some of the common stock offered by this
prospectus under Rule 144 under the Securities Act.
GEM and any brokers, dealers or agents described above may be deemed
"underwriters" as that term is defined by the Securities Act.
Each selling stockholder and any other persons participating in a
distribution of securities will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including, without
limitation, Regulation M may limit the timing of purchases and sales of
securities by selling stockholder and others participating in a distribution of
securities. In addition, under Regulation M, those engaged in a distribution of
securities may not at the same time make a market in the securities or take
other actions that may affect the market price of the securities for a specified
period of time before the beginning of the distribution, subject to some
exceptions or exemptions. All of the restrictions described above may affect the
marketability of the securities offered by this prospectus.
If a dealer is used in the sale of any common stock where this
prospectus is delivered, GEM may sell the common stock to the public at varying
prices to be determined by the dealer at the time of resale. To the extent
required, the name of the dealer and the terms of the transaction will be set
forth in the related prospectus supplement.
In connection with the sale of common stock, dealers or agents may
receive discounts, concessions, or commissions from GEM or from purchasers of
the common stock for whom they may act as agents. Agents and dealers
participating in the distribution of the common stock may be deemed to be
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underwriters, and any compensation received by them and any profit on the resale
of common stock by them may be deemed to be underwriting discounts or
commissions under the Securities Act.
Under the Registration Rights Agreement with GEM, we have agreed to pay
costs and expenses associated with the registration of the shares of common
stock to be sold by this prospectus. In addition, GEM may be entitled to
indemnification against certain liabilities under the Registration Rights
Agreement.
We will make copies of this prospectus available to GEM and have
informed GEM of the need to deliver a copy of this prospectus to each purchaser
before or at the time of such sale.
INDEMNIFICATION
Section 145 of the Delaware General Corporation Law grants corporations
the power to indemnify their directors, officers, employees and agents. Our
Amended and Restated Certificate of Incorporation and our By-laws provide for
indemnification of our directors, officers, agents and employees to the full
extent permissible under the General Corporation Law. The General Corporation
Law also allows a corporation to eliminate the liability of directors for breach
of fiduciary duty in some cases. Our certificate of incorporation eliminates
that liability to the full extent permitted by the that law.
We have signed indemnification agreements with each of our directors
and executive officers. Each of these agreements provides that we will indemnify
that person against expenses, including reasonable attorneys' fees, judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with any civil or criminal action or administrative
proceeding arising out of the performance of his duties as an officer, director,
employee or agent of our company. This indemnification will be available if the
acts of the person we are indemnifying were in good faith, if the he acted in a
manner he reasonably believes to be in or not opposed to our best interest and,
as to any criminal proceeding, he had no reasonable cause to believe his conduct
was unlawful.
The registration rights we have granted the selling stockholders,
contain indemnification provisions.
We maintain directors' and officers' liability insurance coverage with
an aggregate policy limit of $5 million for each policy year.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to our directors, officers and controlling persons
under the above provisions, or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission that indemnification is
against public policy and is, therefore, unenforceable.
LEGAL MATTERS
The validity of the issuance of shares of common stock offered by this
prospectus will be passed upon for us by Kaplan Gottbetter & Levenson, LLP. The
principals of Kaplan Gottbetter & Levenson, LLP are also the principals of KGL
Investments, Ltd., a selling stockholder in this prospectus.
EXPERTS
Our financial statements as of August 31, 2000 and 1999 and for the
years then ended have been incorporated by reference in this prospectus and in
the registration statement in reliance on the report of
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Goldstein Golub Kessler LLP, independent auditors, given upon the authority of
that firm as experts in accounting and auditing. Financial statements of our
subsidiary, Return Assured Incorporated, a Nevada corporation, as of August 31,
2000 and August 31, 1999 and for the years then ended have been incorporated by
reference in this prospectus and in the registration statement in reliance on
the report of Pannell Kerr Forster, chartered accountants, given upon the
authority of that firm as experts in accounting and auditing. IBUI's financial
statements for the period ending June 30, 2001 have been incorporated by
reference in this prospectus and in the registration statement in reliance on
the report of Henry Schiffer, C.P.A., given upon the authority of that firm as
experts in accounting and auditing.
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25,000,000 SHARES
RETURN ASSURED INCORPORATED
COMMON STOCK
PROSPECTUS
OCTOBER ___, 2001
32
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with the distribution of the
securities being registered, all of which are to be paid by the Registrant, are
as follows:
Securities and Exchange Commission Registration Fee $703.00
Printing and Engraving Expenses *
Nasdaq Qualification Fee *
Legal Fees and Expenses *
Accounting Fees and Expenses *
Miscellaneous Fees and Expenses *
Total *
----------
* To be completed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("GCL") grants
corporations the power to indemnify their directors, officers, employees and
agents in accordance with the provisions thereof. Article Sixth of the
Registrant's Amended and Restated Certificate of Incorporation ("Certificate")
and Article V of the Registrant's By-laws provide for indemnification of
Registrant's directors, officers, agents and employees to the full extent
permissible under Section 145 of the GCL. Section 102(b)(7) of the GCL
authorizes a corporation to eliminate the liability of directors for breach of
fiduciary duty in certain cases. Article Eighth of the Certificate eliminates
such liability to the full extent permitted by the GCL.
Registrant has entered into indemnification agreements with each of its
directors and executive officers. Each such agreement provides that Registrant
will indemnify the indemnitee against expenses, including reasonable attorneys'
fees, judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with any civil or criminal action or
administrative proceeding arising out of the performance of his duties as an
officer, director, employee or agent of Registrant. Such indemnification will be
available if the acts of the indemnitee were in good faith, if the indemnitee
acted in a manner he reasonably believes to be in or not opposed to the best
interest of Registrant and, with respect to any criminal proceeding, the
indemnitee had no reasonable cause to believe his conduct was unlawful.
The registration rights granted by Registrant to selling stockholders,
contain indemnification provisions.
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Registrant maintains directors' and officers' liability insurance
coverage with an aggregate policy limit of $5 million for each policy year.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
An Exhibit Index has been attached as part of this
Registration Statement and is incorporated herein by reference.
(b) Financial Statement Schedules
Schedules are omitted because they are either not required,
are not applicable or because equivalent information has been included
in the financial statements, the notes thereto or elsewhere herein.
ITEM 17. UNDERTAKINGS
a. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(a) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(b) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(c) To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement; provided, however,
that paragraphs (1)(a) and (1)(b) above do not apply if the
information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
b. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall by deemed to be a new registration statement
relating to the securities
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offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
c. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described under "Item 15,
Indemnification of Directors and Officers" above, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment to the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification is against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
d. The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on a Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, State of New York, on the 5th day
of October, 2001.
RETURN ASSURED INCORPORATED
(Registrant)
By: /s/ MATTHEW SEBAL
--------------------------
Name: Matthew Sebal
Title: President
KNOWN ALL MEN BY THESE PRESENTS, that each person whose signature
appears below does hereby constitute and appoint Matthew Sebal with full power
to act as his or her true and lawful attorney-in-fact and agent for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement including without limitation any
registration statement for the same offering that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same, as fully, for all intents and purposes, as he or she could
or might do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities on October 5, 2001.
By: /s/ MATTHEW SEBAL
-----------------------------------
Matthew Sebal
President and Chairman of the Board
By: /s/ MICHAEL HILLERBRAND
-----------------------------------
Michael Hillerbrand
Director
By: /s/ ROBERT BLAGMAN
-----------------------------------
Robert Blagman
Director
By: /s/ DALE VANDER GEISSEN
-----------------------------------
Dale Vander Geissen
Director
By: /s/ MICHAEL SWEATMAN
-----------------------------------
Michael Sweatman
Vice President of Finance and
Chief Accounting Officer
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EXHIBIT INDEX
Exhibit No. Description
5.1 Opinion of Kaplan Gottbetter & Levenson, LLP
10.1 Agreement and Plan of Merger and Share Exchange. (1)
10.2 First Modification to Agreement and Plan of Merger and Share Exchange.
10.3 Series A Preferred Stock Purchase Agreement.
23.1 Consent of Goldstein Golub Kessler LLP.
23.2 Consent of Pannell Kerr Forster.
23.3 Consent of Kaplan Gottbetter & Levenson, LLP (included in Exhibit 5).
23.4 Consent of Henry Schiffer, CPA.
23.5 Awareness Letter of Goldstein Golub Kessler LLP.
23.6 Awareness Letter of Goldstein Golub Kessler LLP.
23.7 Awareness Letter of Goldstein Golub Kessler LLP.
(1) Previously filed with Amendment No. 1 to Registration Statement on Form
S-3 (File No. 333-62546) on June 26, 2001.