UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended November 30, 2001
or
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission file number 0-21679
RETURN ASSURED INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 13-3896069
(State or other jurisdiction of (I.R.S. or Employer
incorporation or organization) Identification No.)
1901 AVENUE OF THE STARS, SUITE 1710
LOS ANGELES, CALIFORNIA 90067
(Address of principal executive offices) (Zip Code)
(877) 807-4664
(Registrant's telephone number, including area code)
Check whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months, and (2) has been subject to such filing requirements for
the past 90 days. Yes |X| No | |
As of January 18, 2001, there were 16,850,799 shares of the registrant's
common stock, par value $0.001 issued and outstanding.
RETURN ASSURED INCORPORATED
NOVEMBER 30, 2001 QUARTERLY REPORT ON FORM 10-QSB
TABLE OF CONTENTS
Page
Number
Special Note Regarding Forward-Looking Statements.................2
PART I - FINANCIAL INFORMATION
3
Item 1. Financial Statements..............................................3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................6
Item 3. Quantitative and Qualitative Disclosures About Market Risk.......16
PART II - OTHER INFORMATION
Item 1. Legal Proceedings................................................16
Item 2. Changes in Securities and Use of Proceeds........................17
Item 3. Defaults in Senior Securities....................................18
Item 4. Submission of Matters to a Vote of Security Holders..............18
Item 5. Other Information................................................19
Item 6. Exhibits and Reports on Form 8-K.................................19
References in this report to "we", "us", "our" and similar terms means
Return Assured Incorporated, a Delaware corporation, formerly Hertz Technology
Group, Inc.
Special Note Regarding Forward-Looking Statements
To the extent that the information presented in this Quarterly Report on
Form 10-QSB for the quarter ended November 30, 2001 discusses financial
projections, information or expectations about our products or markets, or
otherwise makes statements about future events, such statements are
forward-looking. We are making these forward-looking statements in reliance on
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Although we believe that the expectations reflected in these
forward-looking statements are based on reasonable assumptions, there are a
number of risks and uncertainties that could cause actual results to differ
materially from such forward-looking statements. These risks and uncertainties
are described, among other places in this Quarterly Report, in "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
In addition, we disclaim any obligations to update any forward-looking
statements to reflect events or circumstances after the date of this Quarterly
Report. When considering such forward-looking statements, you should keep in
mind the risks referenced above and the other cautionary statements in this
Quarterly Report.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Independent Accountant's Report........................................4
Consolidated Balance Sheet as of November 30, 2001 and August
31, 2001............................................................5
Consolidated Statements of Operations for the three months
ended November 30, 2001 and November 30, 2000.......................6
Consolidated Statements of Cash Flows for the three months
ended November 30, 2001 and November 30, 2000.......................7
Notes to Consolidated Financial Statements..........................8-10
INDEPENDENT ACCOUNTANT'S REPORT
To the Board of Directors and Shareholders of
Return Assured Incorporated
We have reviewed the accompanying consolidated balance sheet of Return Assured
Incorporated and Subsidiaries as of November 30, 2001, and the related
consolidated statements of operations and cash flows for the three-month periods
ended November 30, 2001 and 2000. These financial statements are the
responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements reported upon, the Company has no established source of revenue, has
sustained recurring net operating losses, and has a shareholders' deficit that
raises substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from this
uncertainty.
GOLDSTEIN GOLUB KESSLER LLP
New York, New York
January 14, 2002
RETURN ASSURED INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
_______________________________________________________________________________
<Table>
<Caption> November 30, August 31,
2001 2001
(unaudited) (unaudited)
- --------------------------------------------------------------------------------------------------
ASSETS
Current Assets:
Cash $ 2 $ 972
Cash in escrow 2,974,050 3,000,978
Accounts receivable 2,158
Prepaid expenses and other current assets 1,940 59,359
Current assets of discontinued operations 1,511,083
- --------------------------------------------------------------------------------------------------
Total current assets 2,975,992 4,574,550
Noncurrent assets of discounted operations 1,341,159
- --------------------------------------------------------------------------------------------------
Total Assets $ 2,975,992 $ 5,915,709
==================================================================================================
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 1,278,916 $ 1,048,564
Note payable 200,000
Accrued loss on disposal of discontinued operations 1,678,128
Current liabilities of discontinued operations 467,658
- --------------------------------------------------------------------------------------------------
Total current liabilities 1,278,916 3,394,350
Noncurrent liabilities of discontinued operations 483,289
- --------------------------------------------------------------------------------------------------
Total liabilities 1,278,916 3,877,639
- --------------------------------------------------------------------------------------------------
Commitments and Contingencies
Redeemable preferred stock, series A, stated value $1,000
authorized 6,000 shares, 5,000 issued, and 3,829 outstanding shares
No liquidation preference. 3,828,873 3,828,873
- --------------------------------------------------------------------------------------------------
Common Shareholders' Deficit:
Common stock - $.001 par value; authorized 100,000,000
shares, issued and outstanding 16,846,184 shares 16,847 16,847
Additional paid-in capital 10,933,382 10,933,382
Accumulated other comprehensive Income 503 503
Accumulated deficit (13,082,529) (12,741,535)
- --------------------------------------------------------------------------------------------------
Total common shareholders' deficit (2,131,797) (1,790,803)
- --------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Deficit $ 2,975,922 $ 5,915,709
==================================================================================================
See Notes to Consolidated Financial Statements
F-3
</Table>
RETURN ASSURED INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
_____________________________________________________________________________
<Table>
<Caption> Unaudited
------------------------
Three months ended November 30, 2001 2000
- -----------------------------------------------------------------------------------------------
Revenue $ 29,571
Cost of revenue 6,242
- -----------------------------------------------------------------------------------------------
Margin 23,329
General and administrative expenses
Wages and salaries $ 46,500 218,293
Professional fees 180,568 117,578
Financing fees 506,000
Insurance 15,805
Travel and promotion 62,136
Consulting fees 15,305 187,217
Rent 30,050
Office and miscellaneous 20,001 215,900
Internet service and web design 8,943
Telephone and utilities 172 19,561
Interest and finance charges 21,098 81,789
Depreciation and amortization 50,973
- -----------------------------------------------------------------------------------------------
Loss from continuing operations (283,644) (1,490,916)
Discontinued Operations:
Loss from operations of discontinued segments (47,804) (772,780)
- -----------------------------------------------------------------------------------------------
Net loss (331,448) (2,263,696)
Value of warrants issued in connection with preferred stock (669,350)
Dividends on preferred stock (9,546) (25,000)
- -----------------------------------------------------------------------------------------------
Net loss attributable to common shareholders $ (340,994) $(2,958,046)
===============================================================================================
Net loss per share - basic and diluted, continuing operations $ (0.02) $ (0.37)
===============================================================================================
Net loss per share - basic and diluted, discontinued operations (0.00) (0.13)
===============================================================================================
Net loss per share - basic and diluted $ (0.02) $ (0.50)
===============================================================================================
Weighted-average number of shares outstanding 16,846,184 5,927,638
===============================================================================================
See Notes to Consolidated Financial Statements
F-4
</Table>
RETURN ASSURED INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
________________________________________________________________________________
<Table>
<Caption>
Unaudited
-----------------------
Three-months ended November 30, 2001 2000
- ---------------------------------------------------------------------------------------------------
Operating activities:
Net loss $ (331,448) $(2,263,696)
Items not involving cash:
Depreciation and amortization 206,161
Compensation charge for excess of fair value given in share repurchase 494,230
Services rendered in exchange for shares, options and warrants 486,000
Loss on abandonment of assets 82,429
Non cash interest expense 68,800
Changes in operating assets and liabilities:
Accounts receivable 2,158 (247,309)
Inventory (38,591)
Prepaid expenses and other current assets 57,419 40,989
Current assets of discontinued operations 1,511,083
Noncurrent assets of discontinued operations 1,341,159
Accounts payable and accrued liabilities 220,806 381,189
Accrued loss on disposal of discontinued operations (1,878,128)
Current liabilities of discontinued operations (467,658)
Noncurrent liabilities of discontinued operations (483,289)
- ----------------------------------------------------------------------------------------------------
Net cash used in operating activities (27,898) (789,798)
- ----------------------------------------------------------------------------------------------------
Investing activities:
Acquisition of property and equipment (16,652)
Net cash received on merger 249,492
- ----------------------------------------------------------------------------------------------------
Net cash provided by investing activities 232,840
- ----------------------------------------------------------------------------------------------------
Financing activities:
Capital lease payments (52,656)
Payment of notes payable (200,000)
Issuance of common stock (cash) 200,000
Repurchase of common stock (435,000)
Issuance of preferred stock 5,000,000
- ----------------------------------------------------------------------------------------------------
Net cash provided by financing activities 4,512,344
- ----------------------------------------------------------------------------------------------------
(Decrease) increase in cash (27,898) 3,955,386
Cash at beginning of period 3,001,950 132,107
- ----------------------------------------------------------------------------------------------------
Cash at end of period $2,974,052 $4,087,493
====================================================================================================
Supplemental Disclosure of Noncash Financing Activity:
Accrual of dividends on preferred stock $ 9,546
====================================================================================================
See Notes to Consolidated Financial Statements
F-5
</Table>
RETURN ASSURED INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. PRINCIPAL BUSINESS Return Assured Incorporated (Return Assured
ACTIVITY AND SUMMARY Nevada) was incorporated under the laws of the
OF SIGNIFICANT State of Nevada on June 10, 1999. The Company
ACCOUNTING POLICIES: was deemed to be in the development stage
through October 13, 2000.
On October 13, 2000, Return Assured Nevada,
through a reverse triangular merger, became
the accounting parent and the legal subsidiary
of Hertz Technology Group, Inc. ("Hertz").
Hertz subsequently changed its name to Return
Assured Incorporated ("Return Assured
Delaware"), a Delaware Corporation. As a
result, the former subsidiaries of Hertz have
become wholly owned subsidiaries. The
consolidated financial statements now include
the following companies, Return Assured
Delaware, Return Assured Nevada, Hertz
Computer Corporation ("Hertz Computer"), Hergo
Ergonomic Support Systems, Inc. ("Hergo"),
RemoteIT.com, Inc. ("RemoteIT"), and Edutec
Computer Education Institute, Inc. ("Edutec")
(collectively "the Company"). The merger was
accounted for as a purchase with resulting
goodwill of approximately $3,011,000. The
consolidated statements of operations and cash
flows include the activity of Hertz and its
former subsidiaries only since the date of the
merger. As further discussed below, the
Company disposed of Hergo, RemoteIT, and Hertz
Computer. The measurement date for disposal of
these operations was October 8, 2001.
Effective October 8, 2001, the Company
divested itself of Hergo, RemoteIT, and Hertz
Computer. In exchange for the Companies, Eli
Hertz agreed to cancel all debt that is owed
to him by the Company (approximately $220,000)
and agreed to cancel his consulting agreement
with the Company.
The accompanying consolidated financial
statements have been prepared assuming the
Company will continue as a going concern. As
shown in the accompanying consolidated
financial statements, the Company has
recurring net losses. In addition, the holders
of the Preferred Stock currently have the
right to redeem their shares for cash. If that
were to happen, the Company would not be able
to meet this obligation. The Company is
currently seeking a merger candidate which
they believe will be sufficient for the
Company to continue as a going concern.
The Company operated in four segments, the
financial services segment, the technology
group segment, the Hergo segment, and the
Corporate segment. The financial services
segment includes the activity of Return
Assured Nevada. Return Assured Nevada provided
assurance to customers through its "Web Seal
of Approval" that guarantees that customers
who order products through the web sites
displaying the seal that the Company will
honor its stated return policies. To date, the
Company has not generated significant revenue
from this segment.
The technology group segment was comprised of
RemoteIT, Hertz Computer and Edutec. RemoteIT
offered full service networking solutions and
internet and web-related services, including
high-speed communications services. Hertz
Computer custom designed and assembled
personal workstations and networking,
communication and web servers. Edutec offered
state-of-the-art computerized training
facilities that can be used for software,
sales, education or management training. As of
November 30, 2001, the Company has ceased
operations in Edutec and disposed of Hertz
Computer and RemoteIT.
RETURN ASSURED INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Hergo manufactured and sold space-saving
modular racks and technical furniture to help
organize all types of computer hardware and
communication and electronic equipment. In
addition, Hergo provided custom, contract
manufacturing and fabrication of specialty
metal products for use in a variety of
industries. As of November 30, 2001, the
Company had disposed of Hergo.
The Corporate segment is comprised of Return
Assured Delaware, which handles the Company's
corporate compliance and equity transactions.
The interim financial statements include all
adjustments which in the opinion of
management are necessary in order to make the
financial statements not misleading.
Cash in escrow denotes cash being held by an
attorney. These amounts are not considered
restricted because these funds are subject to
withdrawal by the Company at the Company's
option.
2. CONTINGENCIES: The Company was named in a lawsuit against
Internet Business International, Inc. by
Michael Rose, et al, in Orange County
Superior Court. The lawsuit alleges that the
Company breached a contract to pay a
finder's fee on the merger transaction. It is
the Company's position that no liability
exists, and the Company intends to vigorously
defend the suit. If the Company was
unsuccessful in defending this suit, the
Company could incur a loss of $750,000.
Michael Mulberry, a former Vice President of
the Company, has filed a lawsuit against the
Company claiming wrongful dismissal when his
employment was terminated in February 2001.
The Company intends to vigorously defend the
suit and could incur a loss of $81,000.
A creditor has filed a small claim in British
Columbia, Canada against the Company's Nevada
subsidiary. The Company has filed a defense in
this action and if unsuccessful, could incur a
loss of approximately $12,000.
A legal proceeding is pending against the
Company and two former officers, by a former
officer of a subsidiary of Return Assured's.
This former officer of the Company's
subsidiary is claiming that he is entitled to
receive shares from the Company for
contributions in founding Return Assured's
subsidiary. It is the Company's position that
its defense has merit. The two former officers
of the Company have escrowed 780,000 shares of
the Company's common stock they own to secure
any successful claim.
P. Sun's Enterprises (Vancouver) Ltd. has
filed a lawsuit against the Company for the
Company's failure to pay rent in accordance
with a lease which the Company entered into
for office space at 885 West Georgia Street
in Vancouver, British Columbia. The Company
expects to settle this lawsuit.
Since estimated losses under legal proceedings
were not probable, no accrual is required in
accordance with Statement of Financial
Accounting Standards No. 5.
The Company entered into a letter of intent to
merge with Internet Business International
Inc. ("IBUI") in May 2001 and executed a
definitive merger agreement in June 2001. On
January 14, 2002, however, IBUI and Return
Assured mutually decided to terminate the
merger agreement and ceased all activity in
process related to the merger.
RETURN ASSURED INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. SEGMENT INFORMATION: During the quarters ended November 30, 2001
and 2000, respectively, the Company had four
industry segments: (i) Financial Services,
(ii) Technology Group (iii) Hergo (iv) and
Corporate. The accounting policies of the
segments and the products and services
provided by the operating segments are
described in Note 1. The tables below present
information about reported segments.
For the quarter ended November 30, 2001:
Financial Technology
Services Hergo Group Corporate Consolidated
Net loss from continuing
operations $(136,176) $ (195,272) (331,448)
Net loss from discontinued
operations $ (47,804) (47,804)
Assets 1,942 2,974,050 2,975,992
------------------------------------------------------------------------------------------------
For the quarter ended November 30, 2000:
Financial Technology
Services Hergo Group Corporate Consolidated
Revenue (unaffiliated) $ 30,000 $ (429) $ 29,571
Net loss from continuing
operations (955,167) (116,803) (418,946) (1,490,916)
Net loss from discontinued
operations $ (532,825) (239,955) (772,780)
------------------------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion and analysis should be read in conjunction with
the Financial Statements and Notes thereto appearing elsewhere in this Quarterly
Report. Certain statements in this Quarterly Report, which are not statements of
historical fact, are forward-looking statements. See "Special Note Regarding
Forward-Looking Information" on Page 3.
FORWARD-LOOKING STATEMENTS
Except for historical information, this report contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Such forward-looking
statements involve risks and uncertainties, including, among other things,
statements regarding our business strategy, future revenues and anticipated
costs and expenses. Such forward-looking statements include, among others, those
statements including the words "expects," "anticipates," "intends," "believes"
and similar language. Our actual results may differ significantly from those
projected in the forward-looking statements. Factors that might cause or
contribute to such differences include, but are not limited to, those discussed
in the section "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business--Risk Factors". You should carefully review
the risks described in other documents we file from time to time with the
Securities and Exchange Commission. You are cautioned not to place undue
reliance on the forward-looking statements, which speak only as of the date of
this report. We undertake no obligation to publicly release any revisions to the
forward-looking statements or reflect events or circumstances after the date of
this document.
DESCRIPTION OF BUSINESS
Mergers
In June 2001, we entered into a Merger and Share Exchange Agreement
("Merger Agreement") with Internet Business's International, Inc. ("IBUI") at
which time, we planned to complete the Merger during fiscal year 2002. On
January 14, 2002, however, the two companies announced their mutual decision to
terminate the Merger Agreement and to cease all efforts underway to effectuate
the merger. In the prior fiscal year, we closed the business combination of our
Return Assured business and Hertz Technology Group business. On October 13, 2000
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 Technology Group changed its name to
Return Assured Incorporated. We discovered, however, that the synergies we
expected between Return Assured and certain of the subsidiaries of the Hertz
Technology Group including Hergo Ergonomic Support Systems, Inc. ("Hergo") and
its subsidiary RemoteIT.com Inc. and Hertz Computer Corporation, did not come to
fruition and, therefore, Return Assured disposed of Hergo, RemoteIT.com Inc.,
and Hertz Computer Corporation (collectively the "Hertz Businesses") because the
Hertz businesses are not core businesses of Return Assured. For example, Hergo's
primary business is the manufacture and distribution of office furniture which
is not an Internet business and has little in common with Return Assured,
precluding the possibility of any efficiencies of scale, joint sales or
marketing efforts or other joint initiatives.
At the time of the merger of Return Assured and the Hertz Technology
Group, Return Assured entered into a note agreement with Eli Hertz, founder of
the Hertz Technology Group, in the principal amount of $290,000 plus interest at
10% per annum payable to Eli Hertz.
In order to fully divest of the Hertz Businesses, Return Assured entered
into an agreement with Eli Hertz regarding the balance remaining on the note
wherein Return Assured would pay the remaining balance of the note in full by
October 8, 2001; provided, however, that the failure of Return Assured to pay
the note in full would result in 100% of the issued and outstanding stock of
Hergo and Hertz Computer Corporation being returned to Eli Hertz. Return Assured
did not pay the note in full by the due date, and all issued and outstanding
shares of Hergo's and Hertz Computer Corporation's common stock have been
transferred to Eli Hertz. These transfers have resulted in Return Assured's
disposition of Hergo and Hergo's subsidiary, RemoteIT.com and Hertz Computer
Corporation while Edutec continues to be a subsidiary of the Company.
References in this report to "we", "us", "our" and similar terms means
Return Assured Incorporated, a Delaware corporation, formerly Hertz Technology
Group, Inc.
Industry Overview
As the world familiarizes itself with the convenience of online shopping,
the wonders of the Internet have virtually placed almost anything one would want
to buy at our fingertips. The Internet has become a resource
for information and research as well as a retail mecca offering myriads of
products and services that were previously inaccessible.
A strong web presence is mandatory for any retailer that wants to compete
in the 21st century. In order to become market leaders retailers must measure
and act upon their customers' needs, provide seamless service between channels
and develop new ways for customers to shop.
However, with the rapid growth of the Internet a few negatives are
threatening the retail landscape. There are mounting consumer concerns about
credit card fraud, lack of trust in the vendor or product, security risks with
personal information disclosure and a lack of systems to provide the consumer
with a safety net or comfort zone when dealing with unknown merchants. Small and
medium sized retailers may be at a disadvantage because without recognized
brands or reputations consumers are wary of shopping on these sites. In fact,
80% of online shoppers agree that their purchasing decisions are strongly
influenced by the ability to buy from known, trusted retailers and to buy known,
trusted product brand names. In addition, it is estimated that 75% of shopping
carts are abandoned before the transaction process is complete. Even in the case
where the carts are not voluntarily abandoned, 28% of online purchases fail. Of
those purchases that failed, 28% of the customers stopped shopping online.
Furthermore, a survey shows that the inability to return goods and general lack
of trust in the vendor were two of the top ten reasons Internet users did not
buy online. For those consumers that did buy apparel online in 2000, low prices,
free delivery, large merchandise selection and ease of return topped the list of
most important features when selecting an online merchant. However, not all
return policies were rated equally. One survey showed that the most important
factor for an optimal online return policy would be a 100% money back guarantee.
Our Business
We have brought to market the world's first proprietary
business-to-business and business-to-consumer value added "web seal of approval"
which provides a service that guarantees customers who order products through
the web sites of merchant members that the merchants' stated return policy will
be honored.
Our web seal of approval is designed to meet the needs of small and medium
sized businesses by removing the risk and uncertainty that are responsible for
incomplete online transactions. We offer a risk-free shopping experience because
we guarantee to fulfill the terms of a participating merchant's return policy in
cases where the merchant will not.
According to a recent study, 75% of shopping carts are abandoned before
the transaction process is complete for two reasons:
- Online shoppers are wary of the security risk of sending their credit
card number over the public Internet; and
- Online shoppers are unsure, as in the mail order catalogue business,
that Internet retailers will accept return of a product if the product
is unacceptable to the consumer.
We deal with the second of these issues by providing our "Return Assured
Seal of Approval" web seal to those e-commerce sites that meet our
criteria. If a customer orders from a site displaying this web seal, we provide
assurance that the merchant displaying the web seal will honor its stated return
policies.
When a merchant applies for the Return Assured web seal, we perform a
credit check through Dun & Bradstreet or other sources such as the Better
Business Bureau, to verify the financial and credit standing of the merchant.
Depending on the results of our initial credit investigation, the merchant may
be approved immediately, approved after a review by senior management or
questioned about the reasons for any adverse financial or credit standing. A
merchant that is ultimately approved is authorized to display the Return Assured
web seal on its e-commerce web site. The web seal itself remains on our
computers. The merchant displays our web seal by linking to the file from its
web site.
As a condition for approval, all merchants must provide us with a copy of
their current merchandise return policies and to ship their products on carriers
which we have approved. These carriers must provide for online tracking of
shipments made on them. We are notified each time a customer places an order
through the site on which our web seal is displayed and receive shipping
information from the merchant which allows us to track the merchandise through
the delivery process. We have software that allows the tracking to be done
automatically. A customer who has not received merchandise ordered can contact
us and quickly determine the status of the shipment. Any delivery problems are
followed up with the carrier. If the shipment has not yet been made, we contact
the merchant to determine why and to resolve any outstanding issues.
If the customer wants to return merchandise ordered, we initially direct
the customer to contact the merchant directly for a return merchandise
authorization number and to return the merchandise directly to the merchant. If
the customer has already contacted the merchant without success, our service
representative reviews the merchant's return policies to see whether the return
would be consistent with those policies.
If the return is not consistent with the merchant policy, we tell the
customer that the return is not covered. If the return is covered, we contact
the merchant to determine whether there was a valid reason for refusal to accept
the return. We tell the merchant that if the reason is not satisfactory, the
merchant risks losing the Return Assured web seal for its site. If we are unable
to persuade the merchant to honor a valid claim, we direct the customer to
return the merchandise to us with a claim form. On verifying that the return is
in order, we mail our own refund check to the customer. We then dispose of the
merchandise either by trying to sell it for its salvage value or by donating it
to a charity. We may then seek to recover from the merchant the amount we have
reimbursed the customer.
Since our web seal displayed on a merchant's site is controlled by our
computers rather than by the merchant, we are able to immediately remove our web
seal from the site of any merchant which we determine is not making prompt
delivery of goods that are ordered or is not complying with its stated return
policy.
We charge the merchant for our services based on the number of orders
placed through the merchant's site. The amount of the charge will depend upon a
variety of factors including
- the value of the item,
- the merchant's retail sector,
- the typical return rate for that item,
- the number of years the merchant has been in business, and
- whether the merchant has a physical location.
Generally we charge from $.25 to $1.00 per transaction.
We created this service because we saw that, with the rapid growth of the
Internet retail landscape, there were mounting consumer concerns and a lack of
systems or services to provide the consumer with a safety net or comfort zone
when dealing with e-retailers.
We set a higher standard of confidence and trust between consumers and
merchants for an improved online shopping experience. Our "Return Assured Seal
of Approval" appears on the websites of certified, participating merchants,
which represents a guarantee to the consumer that the merchant's return policy
will be honored. This innovation injects a comfort level for consumers that want
to buy online safely and provide a level playing field for large and small
merchants alike - many of which have no arrangements for merchandise returns or
refunds. The result provides consumers with a virtual risk-free environment to
shop online safely.
Research and Development
We believe that some of our future success will depend in part on our
ability to continue to maintain and enhance our current technologies and
Internet-based trust services. Although we will continue to work closely with
developers and major customers in our development efforts, we expect that most
of our future enhancements to existing services and new Internet-based services
will be developed internally.
Our Other Operations
We operated additional lines of business but have recently disposed of
certain of the Hertz businesses including Hergo Ergonomic Support Systems, Inc.,
which was the subsidiary that manufactured and sold a line of functional,
ergonomic, modular products instrumental in achieving efficient workplace
environments. We also disposed of RemoteIT.Com Inc., which offered Internet and
communication services. We are disposed of Hertz Computer Corporation, the
subsidiary that configured and sold customized personal computers and
peripherals.
Subsidiary
Edutec is a Return Assured subsidiary which had training facilities
equipped with personal computer workstations and related audio-visual technology
and whose business it was to provide customers with access to such training
facilities. Because Edutec continued to sustain losses during fiscal 2001, the
Company discontinued Edutec's operations. Nevertheless, Edutec still exists as a
New York corporation and the Company has not disposed of Edutec's issued and
outstanding shares of common stock as of the date of this report.
Our Competition
We operate in a business that is subject to competitive pressures. We have
a few competitors, ranging from better business consumer dispute resolution
services to a number of relatively small, reverse logistics providers. In
addition, a few major e-commerce sites have their own systems for returns but
they are very limited in scope or flexibility for the consumer. There are also a
small number of escrow service companies offering limited merchandise
satisfaction programs, but their charges are widely varied, ranging from 1% to
6% of the goods involved, and where the transaction value is high, the costs of
such escrow programs are quite expensive.
We believe that the combination of product, price, branding, alliances,
performance, quality, and reliability, are important competitive factors that
set us apart. However, intense competitive pressures could affect demand for our
web seal products and services, resulting in reduced profit margins and/or loss
of market opportunity.
There are a number of other companies addressing different segments of the
reverse logistics and trust business. We believe that none of these companies
have successfully married the seamless return of goods with the money back
guarantee that we provide. Some of the competing companies are:
- Return.com which offers a reverse logistics program, limited to the
physical process of returning goods to retailers. Return.com does not,
however, provide any guarantees that the merchant's return and refund
policies will be honored. In addition, Return.com does not provide
refunds to consumers.
- ePubliceye.com which is a monitoring system that provides consumers
with limited information on e-businesses, reliability, privacy, and
customer satisfaction. ePubliceye.com is an information site relying
on subjective customer feedback which provides no return program.
- WebAssured.com which evaluates the reliability of online sellers by
alerting shoppers of sites with poor reputations and thereby acts as
an arbitrator. Customers must, however, use their browser plug in and
rely only on customer feedback to generate reliability of merchants.
They only offer a maximum refund of $200.00.
- ReturnExchange.com which only handles the physical process of
returning goods to merchants and exchanges and provides no refunds to
consumers.
- ClickSure.com, a UK-based online retailer verification program, which
certifies merchants for standards of privacy, security, reliability
and content. Their verification process is lengthy and rigorous, and
costly for the merchant - about $1,500. They do not offer refunds or
guarantees to consumers.
- Yahoo has a Buyer Protection Program for items purchased on its
auction site which close at prices above $25 and below $10,000.
However, this protection is limited and the claims process is time
consuming. In addition, refunds are not automatically issued. First,
the claim goes through customer support and arbitration and
only if the matter is not resolved does it go through their claims
department. A claim may only be submitted to Yahoo after the purchaser
has contacted the seller and a period of 25 days has passed and the
matter has not been resolved. At that point, the purchaser may file a
complaint with Yahoo!'s complaint system. After submitting a
complaint, customers then access information on it through Yahoo's
website. The claims department takes 45 days from when they receive
the claim to when they profess judgment on the case. It could take up
to a few months to get judgment on a case that only covers a limited
amount of the total money spent by the consumer.
Description of Property
We previously rented approximately 2,000 square feet of office space at
885 West Georgia Street Vancouver, B.C., Canada. We vacated this space on or
about April 30, 2001 although the lease that the Company executed with the
lessor was to run through May 2003 at an annual rate of Cdn$57,707. The lessor
commenced legal proceedings against the Company on September 19, 2001 (see Legal
Proceedings) and terminated the lease on October 15, 2001.
We currently sublease office space at 1901 Avenue of the Stars, Los
Angeles, California, from Blagman Media whose president and a principal
stockholder, Robert Blagman, is a former director of the Company. This lease is
on a month to month basis which Blagman Media provides at no cost to the
Company. We are currently looking to establish a permanent executive and sales
office in Los Angeles.
Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
Holders
As of January 18, 2002, there were approximately 97 record holders of our
common stock.
Dividends
As of the date hereof, no cash dividends have been declared on our common
stock. Subject to the prior rights of the holders of Series A preferred stock
and any other series of the preferred stock which may from time to time be
outstanding, if any, payment of dividends to holders of our common stock in the
future is within the discretion of our board of directors and will depend on our
earnings, capital requirements, financial condition and other relevant factors.
We presently intend to retain future earnings, if any, for use in our business
and have no present intention to pay cash dividends on our common stock.
Recent Sales Of Securities
There were no sales of securities during the quarter ended November
30,2001.
Simultaneous with the merger of Return Assured with Hertz Technology Group
in the first quarter of fiscal 2001, we issued 5,000 shares of Series A
Preferred Stock and 404,041 common stock purchase warrants in a private
placement to Global Emerging Markets ("GEM") for $5,000,000. These securities
were sold under the exemption from registration provided by Section 4(2) of the
Securities Act and Rule 506 promulgated under the Securities Act. GEM did not
convert any shares during the quarter ended November 30, 2001.
Financial Statements
The financial statements and supplementary data are included beginning
immediately following the signature page to this report including a list of the
financial statements and financial statement schedules included.
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
None.
GENERAL
THE MERGER
During fiscal year 2000, we completed the business combination of the
Return Assured business and the Hertz Technology Group business. On October 13,
2000 Asure Acquisition Corp., a wholly-owned subsidiary of Hertz Technology
Group, Inc., a Delaware Corporation, was merged with and into Return Assured
Incorporated, a Nevada Corporation. At the same time Hertz Technology Group
changed its name to Return Assured Incorporated.
Following the merger, Return Assured discovered that the synergies it
anticipated between Hertz and Return Assured did not materialize and therefore
Return Assured decided to dispose of Hergo Ergonomic Support Systems, Inc.,
RemoteIT.com, Inc. and Hertz Computer Corporation (collectively the "Hertz
Businesses").
The Company now operates in the financial services area consisting
primarily of Return Assured's "Web Seal of Approval" and related services. While
Edutec is still a subsidiary of Return Assured, Edutec ceased active operations
in the prior fiscal year with the termination of the Varick Street lease.
PLAN OF OPERATIONS
Results of Operations
Due to the Company's divestiture of Hergo Technology Inc., RemoteIT.com
and Hertz Computer Corporation (collectively the "Hertz Businesses"), the
Company's financial results for the quarter ended November 30, 2001 do not
include the financial results of the Hertz businesses for the entire quarter. As
Return Assured owned the Hertz Businesses for the first month of the quarter,
financial results for that period are included in the line entitled "Loss from
Discontinued Operations."
The timing of the commencement of our Return Assured operations has
coincided with a significant downturn in the entire Internet sector and although
initial signups with a number of merchants were encouraging, follow-through
revenue has been very disappointing. In addition, the initial rush of inquiries
and signups, announced in early January 2001, have not resulted in significant
revenues.
As a result, the Company has reduced operations in the financial services
area, and is looking towards a redefinition of the Return Assured Seal of
Approval and its areas of operations.
In addition, the Company has commenced the search for acquisition and
merger candidates which will allow the Company to sustain operations beyond the
resources which it currently has. Management recognizes that raising additional
funds for a retail-based Internet business will be particularly difficult given
the depressed state of the technology capital markets.
The Company entered into a letter of intent to merge with Internet
Business International Inc ("IBUI") in May 2001 and executed a definitive merger
agreement in June 2001. On January 14, 2002, however, IBUI and Return Assured
mutually decided to terminate the merger agreement and ceased all activity in
process related to the merger.
Our Return Assured operations have not generated any significant revenues
since inception in June 1999 through November 30, 2001. Our Return Assured
operations have consisted of:
- determining the feasibility and potential market acceptance of our web
seal service;
- developing the infrastructure to deliver and monitor our web seal
service;
- pursuing our marketing strategy by forming strategic relationships
with web portals;
- raising capital to finance our business plan; and
- assembling our management team.
As noted above, we have scaled back the Return Assured operations and are
in the process of redefining our markets and products in response in order to
generate higher revenues. This redefinition continues and currently we continue
to test market the Seal of Approval.
The Company will also be meeting with our insurance underwriter to discuss
our ongoing relationship and to ensure that our product development efforts can
be reconciled with the needs of our insurer.
The Company has received a database of names pursuant to the FreeLotto
Agreement and is reviewing options for the use of that database.
Return Assured is experiencing significant negative effects from the
overall Dot Com meltdown. Sales have been affected as the Edutec classroom was
closed when the company gave up its lease on the Varick Street space.
The launch of the Seal of Approval has been disappointing and staff in the
Financial services division has been reduced in an effort to control costs.
Management is rethinking the seal program with a view to re-launching a modified
product in an attempt to increase market acceptance of the product. This has
been precipitated by the general decline and rethinking of internet retailing as
well as a misjudging of the potential for the seal.
Initial probes of the potential of a seal of approval product for credit
card industry have been encouraging but remain largely in the discussion phase
at this time.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended November 30, 2001, we had net cash used in
operating activities of $27,898 as compared to $789,798 for the three months
ended November 30, 2000. The change in the operating activities is due to the
fact that the Company has cut back on its businesses. We were unable to generate
cash flows from operating activities. In the previous fiscal year, we issued
preferred stock in the amount of $5,000,000 to fund the shortfall in working
capital.
Cash provided by investment activities for the three months ended November
30, 2001 was nil as compared to $232,840 in net cash provided by investing
activities for the three months ended November 30, 2000. In the prior year the
primary source of this was the cash received upon the acquisition of the Hertz
Technology Group.
Cash provided by financing activities for the quarter ended November 30,
2001 totaled nil as compared to $4,512,344 in cash provided by financing
activities for the quarter ended November 30, 2000. The Company completed a
financing of its preferred stock at the same time as the merger (the "Preferred
Shares"), issuing 5,000 of the Preferred Shares for $5,000,000 and granting a
warrant to purchase up to $1,000,000 of additional shares of the Company's
common stock. The Company issued a note payable to Eli Hertz who was the Chief
Executive Officer of Hertz Technology Group at the time of the merger in the
amount of $290,000.
At the end of the quarter ended November 30, 2001, the Company had cash in
the amount of $2,974,052 as compared to $3,001,950 at the beginning of the
quarter, a decrease of $27,898.
The Company believes that its current cash will be sufficient to meet its
anticipated cash needs for working capital and capital expenditures for at least
the next twelve months. If cash generated from operations is insufficient to
satisfy liquidity requirements, the Company may seek to sell additional equity
or debt securities or to obtain a credit facility. The sale of additional equity
or convertible debt securities could result in additional dilution to Return
Assured's stockholders. If the Company issues debt securities, fixed obligations
will increase and the Company may have to comply with covenants that might
inhibit its operations. Moreover, such financing may not be available in amounts
or on terms acceptable to the Company, if at all.
As of November 30, 2001, the Company had $2,974,052 in cash and $1,697,076
in working capital.
A significant portion of our working capital was to have been used to
launch our web seal operations. The cash flow from operations has not been
sufficient to meet our operating expenses. However, the Company has cut staff
and operating expenses and scaled back operations in order to preserve cash. The
cash position will be used in our ongoing effort to redefine the Company's
business model and to launch new products when feasible.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Legal Proceedings
Greg Chapman, the former president of Return Assured's Nevada subsidiary,
filed a lawsuit against the Company and John A. Carter, the former chairman of
Return Assured and Michael Mulberry, the former Vice President of Investor
Relations of the Company, claiming that he is entitled to receive shares from
the Company for contributions he claims to have made in the founding of the
subsidiary. We are defending against this lawsuit and believe that our defenses
have merit and that Mr. Chapman will not be successful. Messieurs Carter and
Mulberry have escrowed an aggregate of 780,000 shares of Return Assured's common
stock which they own to secure any successful claim by Mr. Chapman.
The Company was named in a lawsuit against Internet Business
International, Inc. by Michael Rose, et al, in Orange County Superior Court. The
allegations involve breach of contract by the Company to pay finder's fees on
the merger transaction. It is the Company's position that no liability exists,
and the Company intends to vigorously defend the lawsuit. If the Company was
unsuccessful in defending this lawsuit, the Company could incur a loss of
approximately $750,000 USD.
Michael Mulberry, a former Vice President of the Company, has filed a
lawsuit against the Company claiming wrongful dismissal when his employment was
terminated in February 2001. If the Company was unsuccessful in defending this
lawsuit, the Company could incur a loss of approximately $81,000 USD.
In October 2001, a settlement was reached between Eli Hertz ("Hertz") and
Return Assured regarding a lawsuit brought by Hertz against the Company under
which Hertz claimed payment due under a note in the amount of $290,000. In
accordance with the terms of the settlement agreement, upon the default by the
Company on the note, all issued and outstanding shares of the common stock of
Hergo Technology, Inc. ("Hergo Shares") would be transferred to Hertz. The
Company defaulted on the note on or about October 8, 2001 and the Hergo Shares
were thereupon transferred to Hertz.
A creditor has filed a small claim in British Columbia Canada against the
Company's Nevada subsidiary. The Company has filed a defense in this action. If
the Company was unsuccessful in defending this lawsuit, the Company could incur
a loss of approximately $12,000 USD.
P. Sun's Enterprises (Vancouver) Ltd. has filed a lawsuit against the
Company for the Company's failure to pay rent in accordance with a lease
which the Company entered into for office space at 885 West Georgia Street in
Vancouver, British Columbia. The Company expects to settle this lawsuit.
Since estimated losses under the legal proceedings were not probable, no
accrual in required in accordance with SFAS 5.
Item 2. Changes in Securities and Use of Proceeds
On December 15, 2000, we entered into a Program Promotion Agreement with
Plasma Net Inc., the provider of FreeLotto.com., a free online sweepstakes
("PlasmaNet"). Under the Agreement, PlasmaNet and Return Assured will create
promotional programs enhanced by FreeLotto's relationship with its approximately
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.
The Company has received a database of names pursuant to the FreeLotto
Agreement and is reviewing options for the use of that database.
In exchange for the above-mentioned membership generation, at the end of
each calendar week, we issue $6.00 worth of our common stock to PlasmaNet for
each new member referred by us for that week. We have delivered into escrow
1,400,000 shares of common stock. All 1,400,000 have been delivered to PlasmaNet
for the registrations. These shares were subsequently registered pursuant to a
Registration Statement on Form S-3 filed January 16, 2001 (the "Registration
Statement").
PlasmaNet owns and operates FreeLotto.com which has a daily relationship
by web site, email or banner advertising, with over 22 million people per day.
FreeLotto.com affords its players the opportunity to win up to $10 million
dollars per day for the consideration of viewing ads or answering direct
marketing qualification questions. Return Assured was just beginning to market
and promote the "Return Seal of Approval" business at the time. As our sales
people were developing business, customers and sales prospects alike commented
that the Seal did not have wide consumer recognition. We were introduced,
through our finance group, to FreeLotto.com. FreeLotto.com initially proposed
their help in creating an opt-in Return Assured mailing list or "club" of
pre-qualified consumers interested in hearing about e-retailers that employed
the Return Assured "Return Seal of Approval" and therefore provided a "risk-free
shopping experience". We could then offer reluctant retailers a free mailing to
our "club" members announcing that retailers products or services, provided they
adopted the seal program. FreeLotto's price for creating the campaign, hosting
the banners, serving the impressions and maintaining the database was $3.00 per
name. We did not want to pay with cash so we negotiated terms for $6.00 per name
(to an initial maximum of 1 million names), paid by stock. The price was vetted
with a number of our direct-marketing contacts and was considered within the
market range. We further negotiated 50 million emails announcing the benefits of
the Return Assured program to consumers and retailers alike to be mailed
periodically by FreeLotto.com as an "awareness" campaign. The awareness campaign
proved to be a success, by creating numerous retailer sign-ups and media and
consumer interest and the 339,000 names we have collected so far.
Shares of Return Assured common stock that were given to PlasmaNet were
accounted for by debiting expense and crediting equity for the market value of
the stock as of the date PlasmaNet's performance was complete in accordance with
EITF 96-18, Accounting for Equity Instruments That Are Issued
to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods,
and Services.
These securities were sold under the exemptions from registration provided
by Section 4(2) of the Securities Act of 1933, as amended (the "Securities
Act"). Neither we nor any person acting on our behalf offered or sold the
securities by means of any form of general solicitation or general advertising.
PlasmaNet, Inc. represented in writing that it acquired the securities for its
own account. A legend was placed on the certificates stating that the securities
have not been registered under the Securities Act and cannot be sold or
otherwise transferred without an effective registration or an applicable
exemption.
The holder of our outstanding Series A Preferred Stock converted a portion
of such preferred stock. On November 11, 2000, it converted $50,000 worth of the
preferred stock for 50,000 shares of common stock. On January 17, 2001, it
converted $125,000 worth of the preferred stock for 529,661 shares of common
stock. On May 16, 2001, it converted $30,000 worth of the preferred stock for
200,000 shares of common stock. On May 22, 2001, it converted $50,000 worth of
the preferred stock for 384,615 shares of common stock. On May 23, 2001, it
converted $55,000 worth of the preferred stock for 423,077 shares of common
stock. On May 24, 2001, it converted $60,000 worth of the preferred stock for
461,538 shares of common stock. On May 25, 2001, it converted $60,000 worth of
the preferred stock for 461,538 shares of common stock. On May 29, 2001, it
converted $70,000 worth of the preferred stock for 538,462 shares of Common
Stock. On May 29, 2001, it converted $62,000 worth of the preferred stock for
476,923 shares of common stock. On May 30, 2001, it converted $61,000 worth of
the preferred stock for 469,231 shares of common stock. On May 30, 2001, it
converted $66,000 worth of the preferred stock for 507,692 shares of Common
Stock. On May 31, 2001, it converted $58,500 worth of the preferred stock for
450,000 shares of common stock. On May 31, 2001, it converted $63,500 worth of
the preferred stock for 488,462 shares of common stock. These shares of common
stock were delivered from escrow to the holder upon conversion under the
exemption from registration provided by Section 4(2) of the Securities Act.
These shares were registered pursuant to a Registration Statement filed on
Form S-3 ("S-3 Registration Statement") prior to and in anticipation of the
Merger. This S-3 Registration Statement was filed under Hertz Technology Group
Inc. dated August 28, 2000 and amended on both September 5, 2000 and October 4,
2000.
An additional Registration Statement was filed on Form S-3 on June 7,
2001, and amended on June 26, 2001 and October 5, 2001 pursuant to the preferred
share agreements, so that an additional 25,000,000 shares are available for
conversion. The shares will be held in escrow until such conversions occur. The
Company is awaiting comment from the Securities and Exchange Commission in
respect of this Registration Statement.
Item 3. Defaults in Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
The Company was informed by Nasdaq that it was delisted in August 2001.
Return Assured appealed this decision primarily because of its estimate of the
market value of the stock upon its merger with IBUI. A decision on the appeal
was reached and Return Assured was informed by Nasdaq that the Company's common
stock was not going to be relisted on Nasdaq at this particular point in time.
The Company has filed a Form S-3 Registration Statement to register
25,000,000 common shares to be held in escrow to be issued on conversion of the
Preferred Shares which remain outstanding. At the current conversion price,
these 25,000,000 Common Shares will not be sufficient to provide for conversion
of all of the outstanding Preferred Shares.
Item 6. Exhibits and Reports on Form 8-K
EXHIBIT
NUMBER DESCRIPTION
3.1.1(1) Certificate of Incorporation, as amended.
3.1.2(2) Certificate of Incorporation, as amended.
3.1.3(2) Certificate of Incorporation, as amended.
3.1.4(2) Certificate of Incorporation, as amended.
3.1.5(3) Certificate of Incorporation, as amended.
3.1.6(4) Certificate of Incorporation.
3.2(1)(4) Bylaws.
4.1.1(5) Specimen Stock Certificate, Common Stock.
4.1.2(2)(6) Certificate of Designation of Convertible Preferred Stock,
Series A, as amended.
(1) Incorporated by reference to Return Assured's Current Report on Form
8-K (File No. 0-21679), filed on October 20, 2000.
(2) Incorporated by reference to Return Assured's Registration Statement on
Form S-8 (File No. 333-35004), filed on April 18, 2000.
(3) Incorporated by reference to Amendment No. 2 to Return Assured's
Registration Statement on Form SB-2 (File No. 333-09783), filed on
October 21, 1996.
(4) Incorporated by reference to Return Assured's Registration Statement on
Form SB-2 (File No. 333-09783), filed on August 8, 1996.
(5) Incorporated by reference to Return Assured's Annual Report on Form
10-KSB (File No. 0-21679), filed on December 14, 2000.
(6) Incorporated by reference to Return Assured's Registration Statement on
Form S-3 (File No. 333-44614), filed on August 25, 2000.
(b) Reports on Form 8-K:
On December 4, 2001, Return Assured filed a report on Form 8-K to report
that it had disposed of certain of its wholly-owned subsidiaries including Hergo
Technology, Inc. and its wholly-owned subsidiary, RemoteIT.com, Inc. and that
the Company was in the process of disposing of its wholly owned computer
subsidiary, Hertz Computer Corporation.
On January 16, 2002, Return Assured filed a report on Form 8-K to report
that it had terminated a Merger Agreement and plans to merge with Internet
Business's International Inc.
No other Form 8-K's were filed during the period represented by this
Quarterly Report on Form 10-QSB.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
RETURN ASSURED INCORPORATED
Dated: January 22, 2002 By: /s/ Matthew Sebal
----------------------------
Matthew Sebal
President, Chairman and Acting
Chief Financial Officer
Dated: January 22, 2002 By: /s/ Todd Cusolle
------------------------------
Todd Cusolle
Director