UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended February 28, 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. Employer incorporation or organization) Identification No.) 1901 Avenue of the Stars Suite 1710 Los Angeles, California 90067 (Address of principal executive offices) (Zip Code) 887-807-4664 (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 April 19, 2001, there were 9,113,265 shares of the registrant's common stock, par value $0.001 issued and outstanding. RETURN ASSURED INCORPORATED NOVEMBER 30, 2000 QUARTERLY REPORT ON FORM 10-QSB TABLE OF CONTENTS Page Number Special Note Regarding Forward Looking Information ...........................2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements .........................................................3 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..................................................12-13 Item 3. Quantitative and Qualitative Disclosures About Market Risk...................14 PART II - OTHER INFORMATION Item 1. Legal Proceedings............................................................14 Item 2. Changes in Securities and Use of Proceeds....................................15 Item 3. Defaults Upon Senior Securities..............................................15 Item 4. Submission of Matters to a Vote of Security Holders..........................15 Item 5. Other Information............................................................15 Item 6. Exhibits and Reports on Form 8-K..........................................16-17 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 February 28, 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. 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Independent Accountant's Report...............................................4 Consolidated Balance Sheet as of February 28, 2001 and August 31, 2000........5 Consolidated Statements of Operations for the three and six month periods ended February 28, 2001 and February 29, 2000..........................................................6 Consolidated Statement of Shareholders' Equity................................7 Consolidated Statements of Cash Flows for the six months ended February 28, 2001 and February 29, 2000 ..........8 Notes to Consolidated Financial Statements.................................9-11 3 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 February 28, 2001, and the related consolidated statements of operations for the three-month and six-month periods then ended, and the consolidated statements of shareholders' equity, and cash flows for the six-month period then ended. These financial statements are the responsibility of the Company's management. We conducted our review 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 review, 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. GOLDSTEIN GOLUB KESSLER LLP New York, New York March 27, 2001 4 (Draft April 20, 2001) RETURN ASSURED INCORPORATED (formerly A Sure eCommerce, Inc.) - ------------------------------------------------------------------------------------------------------------------------ CONSOLIDATED BALANCE SHEET February 28, August 31, 2001 2000 - ------------------------------------------------------------------------------------------------------------------------ (unaudited) ASSETS Current: Cash $ 519,819 $ 132,107 Cash in Escrow 3,200,000 Accounts receivable (net of allowance for doubtful accounts of $54,525 as of February 28, 2001) 1,004,249 37,759 Inventory (Note 2) 401,112 Prepaid expenses 444,217 270,599 - ------------------------------------------------------------------------------------------------------------------------ Total current assets 5,569,397 440,465 Goodwill (net of accumulated amortization of $189,526) 10,493,289 Property and Equipment (net of accumulated depreciation of $273,492 and $16,817, respectively) 1,018,988 97,036 Deferred Offering Cost 1,129,361 Other Assets 175,000 - ------------------------------------------------------------------------------------------------------------------------ Total Assets $17,256,674 $ 1,666,862 ======================================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued liabilities $ 961,046 $ 346,166 Current portion of capital lease obligations 64,483 Notes payable 290,000 - ------------------------------------------------------------------------------------------------------------------------ Total current liabilities 1,315,529 346,166 Capital Lease Obligation, net of current portion 199,550 Notes Payable 200,000 - ------------------------------------------------------------------------------------------------------------------------ Total liabilities 1,515,079 546,166 Shareholders' Equity: Preferred stock, series A, stated value $1,000, authorized 6,000 shares, issued and outstanding 4,838.252 shares 4,838,252 Common stock - $0.001 par value; authorized 100,000,000 shares, issued and outstanding 8,512,961 and 4,695,685 shares, respectively 8,514 4,696 Additional paid-in capital 16,783,368 3,438,516 Accumulated other comprehensive income 503 503 Accumulated deficit (5,889,042) (2,323,019) - ------------------------------------------------------------------------------------------------------------------------ Total Shareholders' Equity 15,741,595 1,120,696 - ------------------------------------------------------------------------------------------------------------------------ Total Liabilities and Shareholders' Equity $17,256,674 $ 1,666,862 ======================================================================================================================== See Notes to Consolidated Financial Statements. 5 RETURN ASSURED INCORPORATED AND SUBSIDIARIES (formerly A Sure eCommerce, Inc.) - ------------------------------------------------------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF OPERATIONS - ------------------------------------------------------------------------------------------------------------------------------- Three months Three months Six months Six months ended ended ended ended February 28, February 29, February 28, February 29, 2001 2000 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------- (unaudited) (unaudited) (unaudited) (unaudited) Sales $ 1,457,608 $ 2,235,907 Cost of sales 858,670 1,317,473 - ------------------------------------------------------------------------------------------------------------------------------- Margin 598,938 918,434 General and administrative expenses: Wages and salaries 809,195 $ 62,515 1,368,657 $ 97,618 Professional fees 204,323 7,938 305,245 18,071 Development costs Financing Fees 506,000 Insurance 13,125 31,608 Travel and promotion 47,015 16,584 120,062 16,584 Consulting fees 81,715 268,932 Rent 55,990 13,971 73,519 18,464 Office and miscellaneous 253,779 4,195 555,917 15,558 Internet service and web design 17,366 4,495 57,617 7,438 Telephone 2,370 1,223 27,792 1,997 Loan receivable write-off 13,230 13,230 Interest and finance charges 517,284 1,128 533,914 Depreciation and amortization 136,025 2,906 373,019 5,811 - ------------------------------------------------------------------------------------------------------------------------------- Net loss from operations (1,539,249) (128,185) (3,303,848) (194,771) Other Income 425,513 425,513 - ------------------------------------------------------------------------------------------------------------------------------- Net Loss (1,113,736) (128,185) (2,878,335) (194,771) Value of warrants issued in connection with preferred stock (669,350) Dividends on preferred stock (18,338) (18,338) - ------------------------------------------------------------------------------------------------------------------------------- Net loss attributable to common shareholders $(1,132,074) $(128,185) $(3,566,023) $(194,771) =============================================================================================================================== Net loss per share - basic and diluted $ (0.15) N/A $ (0.52) N/A =============================================================================================================================== Weighted average number of shares 7,762,209 90 6,875,769 90 =============================================================================================================================== See Notes to Consolidated Financial Statements. 6 RETURN ASSURED INCORPORATED AND SUBSIDIARIES (formerly A Sure eCommerce, Inc.) - ------------------------------------------------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY - ------------------------------------------------------------------------------------------------------------------------- Common Shares and Paid in Capital in Additional Preferred Excess of $0.001 Par Value Paid-in Accumulated Stock Number Capital Deficit - ------------------------------------------------------------------------------------------------------------------------- Issuance of common stock: For cash: Initial shares 90 $ 1 Subscriptions received Exchange loss Net loss $ (61,713) - ------------------------------------------------------------------------------------------------------------------------- Balance at August 31, 1999 90 1 (61,713) Common Stock: Private placement 1,445,685 1,446 $ 1,054,864 Shares issued for offering costs: For proposed offering 340,000 340 485,860 For private placement 200,000 200 285,800 For private placement 200,000 200 285,800 Value of warrants issued in connection with proposed offering 233,726 Shares issued to founders' and other employees and consultants and recapitalization 2,095,000 2,095 885,381 Cancellation of original shares (90) (1) Financing fees 415,000 415 207,085 Exchange gain Net loss (2,261,306) - ------------------------------------------------------------------------------------------------------------------------- Balance at August 31, 2000 4,695,685 4,696 3,438,516 (2,323,019) Unaudited: Preference shares issued for cash $5,000,000 Exercise warrants for cash 100,000 100 199,900 Issuance of shares for financing fee 100,000 100 199,900 Common stock issued as consequence of merger 2,353,304 2,353 12,351,329 Accrual of dividends on preferred stock (18,338) Repurchase of common stock (115,385) (115) (724,885) Common stock issued on conversion of preferred stock (161,748) 579,661 580 174,420 Value of warrants attached to preferred stock 669,350 (669,350) Common stock issued to for Services (Plasmanet) 799,696 800 352,838 Value of options and warrants granted to consultants 122,000 Net loss (2,878,335) - ------------------------------------------------------------------------------------------------------------------------- Balance February 28, 2001 $4,838,252 8,512,961 $ 8,514 $16,783,368 $(5,889,042) ========================================================================================================================= - -------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------- Comprehensive Total Shareholders' Income Subscriptions Equity (Loss) Received (Deficiency) - -------------------------------------------------------------------------------------------------- Issuance of common stock: For cash: Initial shares $ 1 Subscriptions received $ 35,426 35,426 Exchange loss $ (33) (33) Net loss (61,713) - -------------------------------------------------------------------------------------------------- Balance at August 31, 1999 (33) 35,426 (26,319) Common Stock: 0 Private placement 1,056,310 Shares issued for offering costs: 0 For proposed offering 486,200 For private placement 286,000 For private placement 286,000 Value of warrants issued in connection 0 with proposed offering 233,726 Shares issued to founders' and other 0 employees and consultants and 0 recapitalization (35,426) 852,050 Cancellation of original shares (1) Financing fees 207,500 Exchange gain 536 536 Net loss (2,261,306) - -------------------------------------------------------------------------------------------------- Balance at August 31, 2000 503 1,120,696 Unaudited: Preference shares issued for cash 5,000,000 Exercise warrants for cash 200,000 Issuance of shares for financing fee 200,000 Common stock issued as consequence of merger 12,353,682 Accrual of dividends on preferred stock (18,338) Repurchase of common stock (725,000) Common stock issued on conversion of preferred stock 13,252 Value of warrants attached to preferred stock 0 Common stock issued to for Services (Plasmanet) 353,638 Value of options and warrants granted to consultants 122,000 Net loss (2,878,335) - -------------------------------------------------------------------------------------------------- Balance February 28, 2001 $ 503 $ - $15,741,595 ================================================================================================== See Notes to Consolidated Financial Statements. 7 RETURN ASSURED INCORPORATED AND SUBSIDIARIES (formerly A Sure eCommerce, Inc.) - ---------------------------------------------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF CASH FLOWS Six months Six months ended ended February 28, February 29, 2001 2000 - ---------------------------------------------------------------------------------------------------------------------- (unaudited) (unaudited) Operating activities: Net loss $(2,878,335) $(194,771) Items not involving cash: Depreciation and amortization 457,537 5,811 Services rendered in exchange for shares, options and warrants 961,638 Loss on abandonment of assets 82,429 Changes in operating assets and liabilities: Accounts receivable (270,765) (9,013) Inventory 32,983 Prepaid expenses (30,295) (9,605) Accounts payable and accrued liabilities 469,652 40,266 - ---------------------------------------------------------------------------------------------------------------------- Net cash used in operating activities (1,175,156) (167,312) Investing activities: Acquisition of property and equipment (17,659) (79,850) Advances to shareholder (16,302) Cash received in acquisition 249,492 - ---------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) investing activities 231,833 (96,152) Financing activities: Capital lease payments (33,965) Payment of notes payable (200,000) Issuance of common stock (cash) 200,000 263,362 Repurchase of common stock (435,000) Issuance of preferred stock 5,000,000 - ---------------------------------------------------------------------------------------------------------------------- Net cash provided by financing activities 4,531,035 263,362 Effect of Foreign Currency Translation (560) Increase in cash 3,587,712 (662) Cash, beginning of period 132,107 2,674 - ---------------------------------------------------------------------------------------------------------------------- Cash, end of period $ 3,719,819 $ 2,012 ====================================================================================================================== See Notes to Consolidated Financial Statements. 8 (Draft April 20, 2001) RETURN ASSURED INCORPORATED AND SUBSIDIARIES (Formerly A Sure eCommerce, Inc.) NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- 1. BASIS OF PRESENTATION, ORGANIZATION AND NATURE OF OPERATIONS The accompanying consolidated financial statements are unaudited and in the opinion of management reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation in accordance with generally accepted accounting principles and with the instructions to Form 10-QSB. Operating results for the three-month and six-month periods ended February 28, 2001 are not necessarily indicative of the results that may be expected for the fiscal year ended August 31, 2001. For further information refer to the annual financial statements of Return Assured Incorporated and Hertz Technology Group Inc. included in the 10-KSB report previously filed. Return Assured Incorporated (the "Company") was incorporated under the laws of the State of Nevada on June 10, 1999. The Company was deemed to be in the development stage as more fully defined in Statement No. 7 of the Financial Accounting Standards Board through the period ended August 31, 2000. The Company intends to provide a service that will guarantee customers who order products through the web sites of merchant members will get the product and that the merchant member will honour its stated return policies. On October 13, 2000 the Company, through a reverse triangular merger, became the accounting parent company and the legal subsidiary of Hertz Technology Group Inc. ("Hertz") Hertz subsequently was renamed Return Assured Incorporated, 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 Incorporated (Delaware), Return Assured Incorporated (Nevada), Hertz Computer Corporation, Hergo Ergonomic Support Systems Inc., Remote IT.com, Inc. and Edutec Computer Education Institute, Inc. The merger has been accounted for as a purchase with resulting goodwill amounting to $10,683,000. The consolidated Statements of Operations include the operations of Hertz and its subsidiaries since the date of the merger. 9 (Draft April 20, 2001) RETURN ASSURED INCORPORATED AND SUBSIDIARIES (Formerly A Sure eCommerce, Inc.) NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- The following pro forma information assumes the acquisition had occurred at the beginning of the periods presented: Six Months Three Months Ended Ended February 28, February 29, February 29, 2001 2000 2000 ----- ---- ----- Sales $2,070,016 $3,280,316 $1,700,868 Net Loss (1,481,503) (1,335,469) (799,621) Loss per share - basic and diluted $(0.20) $(0.63) $(0.38) Weighted average number of shares outstanding 7,386,225 2,129,173 2,129,173 The operations have ceased in Hertz Computer Corporation during the previous fiscal year and in Edutec during the current quarter. 2. INVENTORY As at February 28, 2001 inventory consists of: Raw materials $54,069 Work in progress 101,553 Finished goods 245,490 --------------- 401,112 =============== 3. SEGMENT INFORMATION For the six months ended February 28, 2001: . Financial Technology Services Hergo Group Corporate Consolidated Assets $424,410 $2,849,410 $ 280,397 $13,702,057 $17,256,674 Sales (unaffiliated) 9,982 1,772,850 453,075 2,235,907 Net Loss (1,706,947) (76,973) (126,260) (968,155) (2,878,335) 10 (Draft April 20, 2001) RETURN ASSURED INCORPORATED AND SUBSIDIARIES (Formerly A Sure eCommerce, Inc.) NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- For the three months ended February 28, 2001: Financial Technology Services Hergo Group Corporate Consolidated Assets $424,410 $2,849,410 $ 280,397 $13,702,057 $17,256,674 Sales (unaffiliated) 9,982 994,551 453,075 1,457,608 Net Loss (751,781) (23,941) 119,732 (457,746) (1,113,736) 4. CAPITAL TRANSACTIONS The Company completed a financing of Series A Convertible Preferred Stock at the same time as the merger. The preferred shares carry a dividend of 1% and are convertible at the lesser of the average three lowest Per Share Market Value Prices for the previous 45 day period preceding the conversion date or $3.00. Per Share Market Price is defined as the closing bid prices of the Company's common shares. The Company has placed in Escrow 8,267,195 common shares to facilitate conversion of the preference shares. As at February 28, 2001 the holder of the preferred shares had converted $161,748 of preference shares and $13,252 of accrued dividends into 579,661 common shares. 5. NOTES PAYABLE Notes payable due at February 28, 2001 are due to a consultant of the Company on April 17, 2001. This payment had not been paid as of the date of this filing. The Company is currently in negotiations with the consultant regarding this note. 6. OTHER INCOME Other income consists of the amount paid to the Company to vacate the Varick Street location and the buyout of a consulting contract the Company had previously entered into. 11 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. General The Merger We recently 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. Simultaneously, Hertz Technology Group changed its name to Return Assured Incorporated. As a result of this merger (the "Merger"), Return Assured Incorporated (Nevada) became the predecessor for accounting purposes. The Consolidated Financial Statements now include the following companies: Return Assured Incorporated (Delaware); Hergo Ergonomic Support Systems, Inc.; Return Assured Incorporated (Nevada); Hertz Computer Corporation; Remote IT.com, Inc.; and Edutec Computer Education Institute, Inc. ("Edutec"). Subsequent to the Merger we operated in three areas: our financial services area comprising the Return Assured Business and its "Web Seal of Approval" and related services; the Hergo Group, which is comprised of Hergo Ergonomic Support Systems, Inc.; and the Technology Group, which is comprised of Remote IT.Com, Inc., Hertz Computer Corporation and Edutec Computer Education Institute, Inc. Hertz Computer Corporation ceased manufacturing in the later part of Fiscal 2000 (ended August 31, 2000), and Edutec ceased active operations in December 2000 with the surrender of the Varick Street Lease. The financial statements include only the Hertz operations from October 13, 2000, the date of the merger, to February 28, 2001. Plan of Operations Results of 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 sign ups with a number of merchants were encouraging, follow through revenue has been disappointing. In addition the initial rush of inquiries and sign ups announced in early January have not resulted in significant revenues. As a result the Company has reduced operations and is looking towards a redefinition of the Return Assured Seal of Approval program and defining other areas where the seal may be applicable. 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 are currently in hand. Management recognizes that the raising of additional funds for a largely internet retail based business will be particularly difficult given the depressed state of the technology capital markets. 12 The Company entered into a letter of intent to merge with the Affinity Group of St Petersburg, Florida in February, 2001. This letter of intent was abandoned by mutual consent of the parties. The Company continues its search for appropriate merger candidates. At the completion of the Merger, we also completed a financing in the amount of $5,000,000 through the issuance of 5,000 convertible preferred shares. As a result of the financing, we expect that we will have sufficient cash resources to fund all of our proposed operations for the next 12 months. We have recently commenced our Return Assured operations and have not generated any revenues since inception in June 1999 through August 31, 2000. Our Return Assured operations have consisted of: o determining the feasibility and potential market acceptance of our web seal service; o developing the infrastructure to deliver and monitor our web seal service; o structuring our cyber insurance policy with Lloyd's of London; o pursuing our marketing strategy by forming strategic relationships with web portals; o raising capital to finance our business plan; and o 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 as a response to the poor sales results. 13 Most of our expenses through February 28, 2001 have been for wages and salaries; professional and consulting fees; and February 28, 2001 fees. Liquidity And Capital Resources o In October 2000, we raised $5,000,000 from the sale of our Series A convertible preferred stock. After giving effect to the Merger, the sale of our Series A preferred stock and the redemption of Eli Hertz' common stock pursuant to the Merger, we had, as of February 28, 2001, approximately: o $ 3,719,819 in cash; and o $ 4,253,868 in working capital. A significant portion of our working capital will be used to launch our web seal operations. We believe that our current cash will be sufficient to meet our 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 our liquidity requirements, we 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 our stockholders. If we issue debt securities, our fixed obligations will increase and we may become subject to covenants that would restrict our operations. Such financing may not be available in amounts or on terms acceptable to us, if at all. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not Applicable. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. 14 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. Under the Agreement, PlasmaNet and Return Assured will create 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. We have delivered into escrow 1,400,000 shares of common stock. Of the 1,400,000 shares in escrow, 799,696 shares have been delivered to PlasmaNet for the first 200,000 registrations, which shares will be returned to us if the program fails to result in 200,000 registrations. These securities were sold under the exemptions from registration provided by Section 4(2) of 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. 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. Of the $175,000 worth of preferred stock converted by the holder, $13,252 was accrued dividends and the difference reduced the amount of preferred stock by $161,748. 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 has received a letter from NASDAQ indicating that it has not met the ongoing listing requirements in that the Company's common stock has traded below $1.00 for more than 30 trading days. The Company's shares now must close above $1.00 for 10 consecutive trading days by June 15, 2001, or the Company may be at risk of losing its listing on NASDAQ. There are a number of courses of action which are being considered by the Company and include merging with another Company, as noted above, or a consolidation of the Company's common stock. No decisions have been made in this regard. 15 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. (b) Reports on Form 8-K. We have filed a Current Report on Form 8-K on January 12, 2001 disclosing the agreement with PlasmaNet Inc. 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: April 20, 2001 By: /s/ Matthew Sebal ---------------------------------------- Matthew Sebal President and Chief Executive Officer Dated: April 20, 2001 By: /s/ Michael Sweatman ---------------------------------------- Michael Sweatman Chief Accounting Officer 16