As Filed with the Securities and Exchange Commission on June 7, 2001
Registration Statement No. 333-______
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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RETURN ASSURED INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 13-3896069
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
Matthew Sebal, President
Return Assured Incorporated
1901 Avenue of the Stars, Suite 1901 Avenue of the Stars, Suite
1710 1710
Los Angeles, CA 90067 Los Angeles, CA 90067
(887) 807-4664 (887) 807-4664
(Address, including zip code, and (Name, address, including zip code,
telephone number, including area and telephone number, including
code, of registrant's principal area code, of agent for service)
executive offices)
----------------
With copies to:
Adam S. Gottbetter, Esq.
Kaplan Gottbetter & Levenson, LLP
630 Third Avenue, 5th Floor
New York, NY 10017-6705
(212) 983-6900
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Approximate Date of Commencement of Proposed Sale to the Public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: |_|
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended ("the Securities Act") check the following box: |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: |_|
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CALCULATION OF REGISTRATION FEE
=================================================================================================================================
Title of Each Class of Proposed Maximum Proposed Maximum
Securities to be Amount to be Offering Aggregate Amount of
Registered Registered Price Per Security(2) Offering Price(2) Registration Fee
- ---------------------------------------------------------------------------------------------------------------------------------
Common stock, $.001 par
value(1)
Total ................. 8,000,000 $.33 $2,640,000.00 $800.00
=================================================================================================================================
(1) Includes 8,000,000 shares which may become issuable upon conversion of the
issuer's Series A Preferred Stock.
(2) Estimated solely for purposes of calculating the registration fee for the
common stock, based upon the average of the high and low sales prices of
the common stock on the Nasdaq SmallCap Market on June 1, 2001, pursuant
to Rule 457(c) under the Securities Act.
This Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8 of the Securities Act of 1933, or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8, may determine.
===============================================================================
Subject to Completion, Dated June 7, 2001
PROSPECTUS
8,000,000 Shares
RETURN ASSURED INCORPORATED
Common Stock
----------------
GEM Global Yield Fund Limited is offering an aggregate of 8,000,000 shares
of our common stock that may be issued if it converts outstanding shares of
our Series A Convertible Preferred Stock held by it.
The preferred stock, which the common stock underlies, was sold to GEM in
transactions exempt from registration under the Securities Act. Return Assured
Incorporated will not receive any of the proceeds from the sale of the common
stock being offered by this prospectus.
The shares of common stock being offered by GEM may be sold from time to
time in transactions on the Nasdaq SmallCap Market, in the over-the-counter
market or in negotiated transactions. GEM directly, or through agents or
dealers designated from time to time, may sell the common stock offered by it
at fixed prices, at prevailing market prices at the time of sale, at varying
prices determined at the time of sale or at negotiated prices.
Our common stock is listed on the Nasdaq SmallCap Market under the symbol
"RTRN." On June 1, 2001, the last reported sale price of the common stock on
the Nasdaq SmallCap Market was $.29 per share.
----------------
Investing in our common stock involves risks. See "Risk Factors" beginning
on page 4.
----------------
The Securities and Exchange Commission and state securities regulators have
not approved or disapproved these securities, or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal
offense.
----------------
The date of this Prospectus is June ____, 2001
Information contained in this prospectus is subject to completion or
amendment. A registration statement relating to these securities has been
filed with the securities and exchange commission. These securities may not be
sold nor may offers to be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an offer to
sell or the solicitation of an offer to buy nor shall there be any sale of
these securities in any state in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws
of any state.
TABLE OF CONTENTS
Page
----
Special Note Regarding Forward-Looking Statements................... ii
Where You Can Find More Information About Us........................ ii
Prospectus Summary.................................................. 1
Risk Factors........................................................ 4
Use of Proceeds..................................................... 10
Selling Stockholders................................................ 10
Plan of Distribution................................................ 11
Indemnification..................................................... 12
Legal Matters....................................................... 12
Experts............................................................. 12
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. The selling stockholders are offering to sell,
and seeking offers to buy, shares of common stock only in jurisdictions where
offers and sales are permitted. The information contained in this prospectus
is accurate only as of the date of this prospectus.
i
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under "Our Company," "Risk Factors" and elsewhere in
this prospectus are forward-looking statements. These statements involve known
and unknown risks, uncertainties, and other factors that may cause our actual
results, levels of activity, performance, or achievements to be materially
different from any future results, levels of activity, performance, or
achievements expressed or implied by those forward-looking statements.
In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "expects," "plans," "anticipates,"
"believes," "estimates," "predicts," "potential," or "continue" or the
negative of those terms or other comparable words.
We believe that the expectations reflected in the forward-looking statements
are reasonable, but we cannot guarantee future results, levels of activity,
performance, or achievements.
We do not promise to update or revise any of the forward-looking statements,
whether as a result of new information, future events or otherwise. In light
of these risks, uncertainties and assumptions, the forward-looking events
discussed in this prospectus may not occur.
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file with the Commission at the Public Reference Room at the
Commission, at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call 1-800-SEC-0330 for further information
concerning the Public Reference Room. The Commission also makes these
documents and other information available on its web site at
http://www.sec.gov.
We have filed with the Commission a registration statement on Form S-3 under
the Securities Act of 1933, as amended, relating to the common stock offered
by this prospectus. This prospectus is a part of the registration statement
but does not contain all of the information in the registration statement and
its exhibits. For further information, we refer you to the registration
statement and its exhibits.
The Commission allows us to "incorporate by reference" the information we
file with it, which means that we can disclose important information to you by
referring you to another document we have filed with the Commission. The
information incorporated by reference is an important part of this prospectus
and information that we file later with the Commission will automatically
update and supersede this information. We incorporate by reference the
following:
o Annual Report on Form 10-KSB for the fiscal year ended August 31, 2000,
as filed with the Commission on December 14, 2000;
o The Current Report on Form 8-K dated December 15, 2000, as filed with the
Commission on January 12, 2001.
o The Current Report on Form 8-K dated May 11, 2001, as filed with the
Commission on May 15, 2001;
o The Quarterly Report on Form 10-QSB for the quarter ended November 30,
2000, as filed with the Commission on January 19, 2001;
o The Quarterly Report on Form 10-QSB for the quarter ended February 28,
2001, as filed with the Commission on April 23, 2001; and
o Any future filings we make with the Commission until the selling
stockholder sells all of the common stock offered by it by this
prospectus.
ii
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address or telephone number:
Return Assured Incorporated
Attn: Investor Relations
1901 Avenue of the Stars, Suite 1710
Los Angeles, CA 90067
Tel: (877) 807-4664
E-mail: info@returnassured.com
iii
PROSPECTUS SUMMARY
OUR COMPANY
Our Business
Return Assured has brought to market the world's first proprietary business-
to-business and business-to-consumer value added "Return Seal of Approval".
The "Return Assured Seal of Approval" is provided to those merchants that meet
our criteria. If a customer orders from a merchant displaying our seal, Return
Assured will provide assurance that the merchant displaying the Seal will
honor its stated return policies. Return Assured charges the merchant for our
services based on the number of orders placed through that merchant.
Market adoption of the Seal has not met forecasted expectations. As a
result, the Company is currently developing a number of revised products with
complementary target markets. Return Assured has just completed a pilot credit
card program and is in the process of presenting the program to a number of
major credit card marketers.
The Company has scaled back operations in the "e-retail" sector in response
to the slow sales of the Seal program. No sales of the Seal were made in the
first quarter of 2001 as operations had not commenced. During the second
quarter of 2001, although we had encouraging responses to our marketing
efforts, these did not translate into a volume of paying customers that was
sufficient to warrant our projected marketing effort. Seal revenue amounted to
less than $10,000 in the second quarter of 2001. As a result, we reduced staff
and operations while developing products for the credit card marketing sector.
We continue to work on the credit card program noted above and are waiting on
decisions from several large card marketers with whom we have proposed pilot
programs.
Our Strategies:
Our Business Strategy
o Generate revenue from "Return Seal of Approval" transactions;
o Establish automated web seal tracking and monitoring in the "e-retail"
sector;
o Complete our executive and administrative management team;
o Develop additional confidence products for "customer not present"
transactions which occur on the web and in the direct marketing sector;
o Conserve our cash resources while new product development and business
development activities take place; and
o Aggressively seek potential merger candidates. (these efforts have
resulted in the signing of the agreement noted in the "Recent Events"
section below.)
Our Marketing Strategy
o Attract new merchants through co-marketing with web portals to promote
and endorse our web seal service to their participating merchants;
o Promote our service to merchants through direct response channels; and
o Attract new merchants through joint marketing programs with various
marketing and technology partners.
Our Growth Strategy
o Increase brand awareness of our "Return Assured Seal of Approval"
o Expand through diversifying product lines; and
1
o Expand through purchasing complementary businesses.
Our Strategic Relationships
Lloyd's of London. We are insured by Lloyd's for errors and omissions
relating to services provided to merchants and consumers. As a result of our
association with Lloyd's, we are authorized to display the Lloyd's of London
logo together with our own web seal on merchants' websites. The policy and web
seal are intended to develop and build an image of stability and reliability.
The policy covers cyber liability and catastrophic losses of up to $10
million.
IBM. We have teamed up with IBM to develop a reliable, scalable and secure
web environment using a three-tiered approach of IBM hardware, software and e-
business services working in unison to enable our customers to transact with
us on our site. Our merchants have the ability to sign up for our "Return
Assured Seal of Approval" over the web. Consumers also have the ability to
submit a return claim over the web.
The Merger with Hertz Technology Group
On October 13, 2000, the company closed the business combination of our
Return Assured business and Hertz Technology Group ("Hertz") business. Asure
Acquisition Corp., a wholly-owned subsidiary of Hertz Technology Group, Inc.,
a Delaware Corporation, was merged into Return Assured Incorporated, a Nevada
Corporation. At the same time, Hertz changed its name to Return Assured
Incorporated.
The operations listed below were acquired when the Company merged with Hertz
(the "Hertz Operations"):
o RemoteIT.com(R): RemoteIT offers networking, Internet, and communications
services.
o Hergo(R) Modular Systems: Our Hergo division designs, manufactures and
sells a line of functional, ergonomic, modular products, which are
instrumental in achieving efficient workplace environments.
Return Assured is proposing to sell the Hertz operations and will be
requesting shareholder approval to do so as part of our Annual and Special
Shareholder meetings.
Recent Events:
Proposed Merger with Internet Business's International, Inc.
On June 4, 2001 we signed a merger agreement with Internet Business
International, Inc. ("IBUI"), a publicly traded Nevada corporation
(IBUI:OTCBB).
The major points of the proposed merger are as follows:
o Return Assured will consolidate its stock by means of a reverse-split;
o Return Assured will issue stock to IBUI shareholders such that the IBUI
shareholders will own approximately 90% of Return Assured; and
o IBUI shall become a wholly-owned subsidiary of Return Assured.
IBUI is a broad-based Internet company that generates revenue from the
Internet through the products and services that it provides.
IBUI, through its four divisions, offers the following online services: ASP,
B2B, B2C, e-commerce, online lending and leasing, a national Internet Service
Provider that offers Web hosting and design through dial-up Internet access,
high-speed Internet access through DSL (in the Western United States), and
wireless Internet which is currently offered in Las Vegas and Woodland, Calif.
With eight offices in the United States and one in Europe, IBUI has more
than 120 employees.
The Return Assured and IBUI businesses are complimentary in that the Return
Seal will enhance and improve sales for IBUI and Return Assured will gain
access to IBUI's current customer base.
2
Nasdaq Notice to De-list our Common Stock
On June 5, 2001, the NASDAQ Stock Market issued a delisting notice to Return
Assured for failure to comply with NASDAQ's minimum bid price requirements.
The Company's common stock will be automatically delisted from NASDAQ unless
we make a formal request for a hearing. The Company is in the process of
requesting a hearing pursuant to the applicable Nasdaq Marketplace rules.
References in this prospectus to "we", "us", "our" and similar terms means
Return Assured Incorporated, a Delaware corporation, formerly Hertz Technology
Group, Inc.
THE OFFERING
Securities Offered: 8,000,000 shares of common stock
Common Stock Outstanding: 15,462,405 shares
Common Stock Market Symbol: Nasdaq SmallCap Market -- "RTRN"
Use of Proceeds: The selling security holder will receive
the net proceeds from the sale of the
shares. We will receive none of the
shares offered by this prospectus.
Risk Factors: An investment in the shares involves a
high degree of risk. See "Risk Factors"
commencing on the next page.
3
RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. The risks described below are not the only ones facing
our company. Additional risks not presently, known to us or that we currently
deem immaterial may also impair our business operations.
Our business, financial condition or results of operations could be
materially adversely affected by any of these risks. The trading price of our
common stock could decline due to any of these risks and you may lose all or
part of your investment.
Risks associated with our business
We have a history of losses and may not be able to operate profitably in the
future. During the fiscal years ended August 31, 2000 and 1999, our Hertz
Technology operations reported net losses of $2,338,069 and $694,871. As a
result of operating expenses and development expenditures, our Return Assured
operations have incurred cumulative net losses through August 31, 2000 of
$2,323,019. If the merger occurred as of the beginning of fiscal 2000, we
would have had net losses for the fiscal year ended August 31, 2000 of
approximately $5,852,000 on a pro forma basis. We may not be able to operate
profitably in the future. We expect to experience substantial quarterly net
losses for the foreseeable future, due primarily to the following factors:
o Amortization of the goodwill arising from the merger will be a continuing
drain on our earnings as that goodwill is charged to earnings over future
quarters;
o Competitive pricing pressures in our Hergo and RemoteIT businesses are
expected to continue to negatively affect gross margins; and
o Probable significant spending on operating expenses, in particular
marketing expenses to bring the attention of businesses and consumers to
Return Assured's services, will likely increase losses.
Our Return Assured business plan is unproven and we may not be able to
achieve profitability. We have not generated any revenues from our Return
Assured operations. We intend to focus substantially all of our efforts, and
use substantially all of our current working capital, in developing our Return
Assured operations. We expect that our sales and marketing, operations and
administrative expenses will increase in the future. As a result, we will need
to generate significant revenues to achieve and maintain profitability. We do
not know if our revenues will be sufficient to pay our expenses or that we
will achieve profitability. We cannot be certain that we will achieve or
sustain positive cash flow or profitability from our operations. Furthermore,
Eli Hertz will receive 25% of the gross profit from our Hergo operations. As a
result, little net cash flow from their operations, if any, will be available
to us. Our net losses and negative cash flow from operating activities are
likely to be substantial if:
o we are unable to attract and retain merchants using our web seal; or
o there is insufficient consumer demand for our web seal service.
The demand for our web seal of approval service may be less than we
expect. We believe there is a considerable demand from merchants to provide
their customers with the assurance that the goods they order will be delivered
and that the merchants will honor their return policies. But our management
has not conducted any marketing studies to confirm that this demand exists or
the extent of the demand. We may find that as customers become more
comfortable with e-commerce they will not feel the need for outside assurance
of delivery and returns. If that happens, the number of merchants willing to
pay for our web seal service may be too small for us to be profitable.
We may be unable to achieve our operating and financial objectives if we
cannot manage our anticipated growth effectively. We anticipate that our
business will grow rapidly. Our future success depends in large part on our
ability to manage this anticipated growth. For us to manage this growth, we
will need to:
o expand and enhance our operating and financial procedures and controls;
o replace or upgrade our operational and financial management information
systems; and
4
o attract, train, manage and retain key employees.
These activities are expected to place a significant strain on our financial
and management resources. If we are unable to manage growth effectively, our
business could suffer.
If our business plan is successful, other companies with more resources and
greater name recognition may make competition so intense that our web seal
business will not be profitable. Our business plan is based on us being the
first to market with our web seal service. Our service is not protected by
patents or other intellectual property rights, and if it is successful a
number of other companies with far more money and greater name recognition may
decide to compete with us. This competition could both reduce the number of
merchants who select us to provide the service and create downward pressure on
the amount we could charge for the service so that we would not have enough
revenue to generate a profit.
Our business could be harmed if we are unable to retain and attract key
personnel. We believe our short and long-term success depends largely on our
ability to attract and retain highly skilled technical, managerial and
marketing personnel, particularly additional management personnel in the areas
of application integration and technical support. Competition for such
personnel is intense. We may not be able to hire or retain the necessary
personnel to implement our business strategy, or we may need to pay higher
compensation for employees than we currently expect. Our inability to attract
and retain such personnel would limit our growth and harm our business.
Our cyber liability insurance policy does not cover substantial portions of
the cost we might incur if a merchant is unable or unwilling to deliver its
product or honor its return policy. We purchased a "cyber liability" insurance
policy from Lloyd's of London covering our own negligence in selecting a
merchant or failing to carefully monitor the shipment and return of the
merchant's products. However, that policy has a deductible of $2 million for
each merchant. Since most claims are likely to be less in the aggregate than
$2 million per merchant, it is unlikely that we would ever be able to make a
claim under the policy.
State regulations governing insurance could apply to our business, making
that business impractical. Virtually every state tightly regulates companies
who are in the business of insurance. We do not believe that our proposed
business is insurance under the laws of any state. This business, however,
will be entirely new and one or more states might try to regulate our
operations as insurance. If our business were to be regulated as insurance our
business plan would most probably not be practicable because the costs of
complying with the insurance regulations would be so high that we would have
to raise our fees to a level most merchants would not be willing to pay. In
addition, the cost of defending against state regulators' claims, if brought,
could be prohibitive.
We will be almost entirely dependent on third parties to develop and
implement our web seal service. We have entered into an agreement with IBM to
evaluate our business plan and assist in developing and implementing our web
site, but we cannot give any assurance that we, even with IBM's assistance,
will be able to implement our business plan.
We are currently evaluating our future plans for our Hergo and RemoteIT
businesses. We have recently discontinued the operations of our Edutec and
Hertz Computer operations. We are currently evaluating our plans for Hergo,
which will need new equipment in the near future, and RemoteIT, which is
currently operating at a loss. We are also evaluating whether some of the web-
based services of RemoteIT will complement our web seal service business, and
whether the expertise of that division will enhance our ability to pursue our
business plan. Because our other operations are less closely linked to our web
seal service business plans, we do not have any definitive plans as to the
future operations of those businesses. Mr. Eli Hertz is the chief executive
officer of our Hergo and RemoteIT subsidiaries and expects to continue
operating those subsidiaries on a more or less autonomous basis. We are
currently proposing to sell the Hertz Operations and will be requesting
shareholder approval to do so as part of our Annual and Special shareholder
meetings.
We cannot predict our future capital needs and we may not be able to secure
additional financing. To fully implement our business plan, we will likely
need to raise additional funds within the next 12 months in order to develop
our web seal service, to fund continuing operating losses or to acquire
complementary businesses, technologies or services. Additional financing may
not be available on terms favorable to us, or may not be available to us at
all. If we raise additional funds by issuing equity securities, our
stockholders
5
may experience significant dilution of their ownership interest, and these
securities may have rights senior to the rights of common stock holders. If
additional financing is not available when required or is not available on
acceptable terms, we may be unable to fund continuing operations, promote our
brand name, enhance or develop our services, take advantage of business
opportunities or respond to competitive pressures, any of which could harm our
business.
We have no direct control over shipping and quality of products (returns)
shipped by merchants. We will rely on vendors to ship merchandise directly to
customers. Consequently, we will have limited control over the goods shipped
by these vendors, and shipments of goods may be subject to delays. In
addition, we may accept returns from customers for which we will not receive
reimbursements from manufacturers or vendors. If the quality of service
provided by these vendors falls below a satisfactory standard or if our level
of returns exceeds expectations, this could have a harmful effect on our
business.
Our online commerce services will be vulnerable to interruption. Merchant
access to our web site will directly affect the volume of orders and thus
affect our revenues. System interruptions may make our web site unavailable or
prevent us from processing shipments and returns efficiently, reducing the
attractiveness of our services. We may need to add hardware and software and
further develop and upgrade our existing technology, transaction-processing
systems and network infrastructure to accommodate increased traffic on our web
site and increased sales volume. We will maintain substantially all of our
computer and communications hardware at one facility, in a co-location
facility. Our systems and operations could be damaged or interrupted by fire,
flood, power loss, telecommunications failure, network break-ins, earthquake
and similar events. Our backup systems and disaster recovery plan may not be
adequate, and we may not have sufficient business interruption insurance to
compensate us for losses from a major interruption.
Computer viruses, physical or electronic break-ins, deliberate attempts by
third parties to exceed the capacity of our systems and similar disruptions
could cause system interruptions, delays and loss of critical data, and could
prevent us from providing services and processing order tracking and return.
Risks associated with the merger of Hertz Technology Group and Return Assured
We have limited operating histories as online commerce companies, which will
make the business of the combined company difficult to evaluate. The merger
combined two companies that have limited operating histories as online
commerce companies. Hertz Technology has been in the business of providing
Internet and web-based services for only a little over a year. Return Assured
was formed less than a year ago. Our prospects will therefore be subject to
the risks, expenses and uncertainties frequently encountered by young
companies that operate in the new and rapidly evolving markets for Internet
products and services. These risks include:
o evolving and unpredictable business models;
o intense competition;
o our need and ability to manage growth; and
o the rapid evolution of technology in electronic commerce.
The integration of our two companies may be difficult. Integrating our two
companies involves technological, operational and personnel-related risks. The
integration process will be complex, time-consuming and expensive, and may
disrupt our business. We will use common information and communication
systems, facilities, operating procedures, financial controls and human
resources practices. We may lose key employees that we do not anticipate
losing, and the attention of our management team may be diverted from other
ongoing business concerns more than we anticipate.
We will incur significant charges to our earnings for a long time into the
future as a result of the goodwill created by accounting for the merger as a
purchase. The merger was accounted for as a purchase of Hertz by Return
Assured. Under purchase accounting, Hertz's tangible assets were entered on
our books at their fair market value. The excess of the value of the common
shares and warrants issued and the cost of the transaction over the net assets
of Hertz are recorded as goodwill. The transaction resulted in approximately
$10,683,000 of goodwill. That goodwill will be charged to earnings over 15
years, which will result in an
6
expense charge of $712,000 per year for the next 15 years. This continuing
write-off may make it difficult for us to obtain financing in the future.
We will incur additional charges to our earnings for compensation payable to
Mr. Hertz under his employment agreement with Hergo and his consulting
agreement with us. The employment arrangements after the merger include a
five-year employment agreement between Eli Hertz and our Hergo subsidiary and
a two-year consulting agreement between Mr. Hertz and us. Under the employment
agreement, Mr. Hertz is to receive $250,000 per year and under the consulting
agreement he is to receive $125,000 per year. These costs will be in addition
to whatever compensation we decide to pay our senior management. In addition,
Mr. Hertz will receive 25% of the gross profit from Hergo. The share of gross
profits will be payable whether or not we or our subsidiaries earn a net
profit. The added costs will be a continuing drag on earnings over the terms
of these agreements and may make it difficult to obtain financing in the
future.
The cash payment required to redeem Mr. Hertz's common stock has reduced our
available working capital which could make it more difficult for us to meet
our obligations and limit future expansion. We purchased 115,385 shares of
common stock from Eli E. Hertz at the close of the merger for $435,000 cash
and a $290,000 note due April 17, 2001 (the "Hertz Note"). The funds that were
available to purchase the shares were the cash of the combined companies on
hand at the time the merger was completed and the proceeds of sale of the
Series A preferred stock. As a result, it will reduce our working capital.
Mr. Hertz has filed suit to collect on the Hertz Note. In May 2001, Mr.
Hertz filed a suit against Return Assured claiming that certain amounts under
the Hertz Note were due and payable. The Company disputes certain allegations
made by Mr. Hertz and is currently in the process of responding to Mr. Hertz
claims. The Company has enough cash on hand to satisfy any judgment rendered
against us in this matter.
Risks associated with our industry
We will operate in an extremely competitive market and we could lose revenue
and customers to competitors. It is perceived to be easy to enter the online
commerce services market. Current and new competitors can launch new online
commerce web sites at relatively low cost. Competition in services to online
commerce will likely increase as well-recognized web participants decide to
enter this market segment. Increased competition may result in price
reductions, reduced gross margins, increased marketing costs or loss of market
share, or any combination of these problems.
Major credit card companies already offer some protection against both
failure to deliver and the delivery of defective products, and they may decide
to compete with us by, for example, themselves undertaking to resolve delivery
disputes or guaranty delivery and returns for customers who use their cards to
purchase online.
We may not be successful in competing against these competitors. Many of
these competitors have greater financial, marketing, customer support,
technical and other resources than us. As a result, they may be able to
provide the same services we provide on more favorable terms than us, and they
may be able to respond more quickly to changes in customer preference or to
devote greater resources to the development, promotion and sale of their
services than we can. If competition increases and our branding efforts are
not successful, we may not be able to command higher margins on our services,
or we may lose revenue and customers to our competitors.
Our business may be affected by government regulation. The need for our
services may be reduced by future state or federal regulation providing for
governmental enforcement of the obligations of online merchants to deliver
their products and honor returns policies. Even if this does not happen, it is
possible that one or more states may decide that our proposed business is
close enough to the business of insurance that it should be regulated like
insurance. This could result in an interference with our business that would
create unacceptable costs to us.
The tax treatment of the Internet and electronic commerce is currently
unsettled. A number of proposals have been made at the federal, state and
local level and by some foreign governments that could impose taxes on the
sale of goods and services and some other Internet activities. Our business
may be
7
harmed by the passage of laws in the future imposing taxes or other burdensome
regulations on online commerce.
Due to the increasing popularity and use of the Internet, it is possible
that a number of laws and regulations may be adopted with respect to the
Internet generally, covering issues such as user privacy, pricing and
characteristics and quality of products and services. Similarly, the growth
and development of the market for Internet commerce may prompt calls for more
stringent consumer protection laws that may impose additional burdens on those
companies conducting business over the Internet. The adoption of any
additional laws or regulations may decrease the growth of commerce over the
Internet, increase our cost of doing business or otherwise have a harmful
effect on our business.
Risks associated with investing in us
We expect our stock price to be volatile. The market price of the shares of
our common stock has been, and will likely continue to be, subject to wide
fluctuations in response to several factors, such as:
o actual or anticipated variations in our results of operations;
o announcements of technological innovations;
o new services or product introductions by us or our competitors;
o changes in financial estimates by securities analysts; and
o conditions and trends in the Internet and electronic commerce industries.
The stock markets generally, and the Nasdaq SmallCap Market in particular,
have experienced extreme price and volume fluctuations that have particularly
affected the market prices of equity securities of many companies and that
often have been unrelated or disproportionate to the operating performance of
those companies. These market fluctuations, as well as general economic,
political and market conditions such as recessions, interest rates or
international currency fluctuations may adversely affect the market price of
our common stock.
Shares of our outstanding common stock may increase more than expected
because the conversion price of our Series A preferred stock is not fixed, but
is determined based on the market value of the common stock at the time of
conversion. Our operations are initially being financed by the sale of $5
million in Series A convertible preferred stock to GEM. This convertible
preferred stock has a maximum conversion price of $3.00 per share. However, if
the market price of our stock at the time of conversion is below $3.00 per
share the conversion price is reduced to the market price at that time. As a
result, if our common stock declines significantly in price, we will have to
issue more shares of common stock than we would if the conversion price were
fixed. Nothing in the agreement for sale of the preferred stock would prevent
the holder of the preferred stock from repeatedly selling the stock short and
covering its short sale at a lower price. It would not be subject to the usual
risks of a short seller, who might have to buy back the stock it has sold at
an undetermined and much higher price in order to cover his short position,
because the conversion can never go above $3.00 per share. In addition, a
holder of the preferred stock could continue converting and selling at ever
lower prices without incurring an economic loss. These sales could result in a
major decline in the price of our common stock. They could also make us more
vulnerable to a takeover by an outside party. The holder of the Series A
preferred stock has agreed with us to never own more than 4.99% of our common
stock. As a result the holder must sell enough shares upon each conversion to
not violate our agreement -- possibly depressing our stock price.
The following table illustrates the number of shares that we would be
required to issue at various assumed prices upon conversion of the $5,000,000
of the Series A preferred stock, subject to the limitations described in the
text following the table. This table is for illustrative purposes only, and
should not be assumed to represent our projections of the range of future
stock prices.
8
Shares of Common Stock Common Stock Underlying Series A Remaining
Conversion Issuable Under the Preferred Stockholders as a Percentage Value of
Share Price Series A Preferred Stock of Total Common Stock Outstanding(1) Preferred Stock
----------- ------------------------ -------------------------------------- ---------------
$0.13 30,282,692 64.12% $3,936,750
0.25 15,747,000 48.17% $3,936,750
0.50 7,873,500 31.72% $3,936,750
- ---------------
(1) Based on 16,946,094 shares outstanding on June 6, 2001.
You could therefore experience dilution of your ownership percentage upon
conversion of the convertible preferred stock. The exercise of such a large
amount of stock, especially if close in time, may have a substantial negative
effect on the market price of our common stock.
As of the date of this Prospectus, GEM has converted $1,184,379 worth of
Series A Preferred Stock (1,184 shares) for 8,312,580 shares of our common
stock.
We may be required to redeem the preferred stock for an amount that would
force us to go out of business. The agreement for sale of the Series A
preferred stock requires us to maintain an effective registration statement
covering resale of the shares of common stock that may be issued upon
conversion. If we are unable to maintain the effectiveness of that
registration statement or otherwise do not comply with agreements we make with
holders of that preferred stock, we will have to redeem all the outstanding
preferred stock at the stated value of $1,000 per share plus accrued
dividends. There is no provision in the agreement for payment of this
obligation over time, and we will not have any commitment for credit to
finance the payment of the redemption price. As a result, a redemption may
leave us with not enough liquid assets to continue paying our other debts and
we may be forced to go out of business.
Possibility of De-listing from NASDAQ
If our common stock is de-listed from Nasdaq, liquidity in our common stock
will likely be adversely affected. Our common stock is listed for trading on
the NASDAQ SmallCap Market. On June 5, 2001, we received notice from NASDAQ
indicating that we have not met the ongoing listing requirements in that our
common stock has traded below $1.00 for more than thirty (30) trading days and
that the Company's common stock will be automatically delisted unless we make
a formal request to NASDAQ to obtain a hearing on the matter. We are currently
in the process of requesting a hearing with NASDAQ.
In addition to the maintenance of a minimum bid price for our common stock,
NASDAQ also requires us to meet certain financial criteria, including one of
the following:
o maintaining $2,000,000 in net tangible assets,
o having a market capitalization of at least $35,000,000, or
o having net income of $500,000.
As of February 28, 2001, we had net tangible assets of $3,932,777 and did
not satisfy the requirements for market capitalization or net income. The
failure to meet Nasdaq's maintenance criteria may result in the de-listing of
the our common stock from Nasdaq, and trading, if any, in our securities would
thereafter be conducted in the non-Nasdaq over-the-counter market. As a result
of such
de-listing, you could find it more difficult to dispose of, or to obtain
accurate quotations as to the market value of, our securities.
If our common stock is de-listed from Nasdaq, our common stock may become
subject to the penny stock rules. Broker-dealer practices in connection with
transactions in "penny stocks" are regulated by certain rules adopted by the
Securities and Exchange Commission. Penny stocks generally are equity
securities with a price of less than $5.00 other than securities registered on
certain national securities exchanges or quoted on Nasdaq provided that
current price and volume information with respect to transactions in such
securities is provided by the exchange or system. The rules require that,
prior to a transaction in a penny stock not otherwise exempt from the rules,
the broker-dealer must:
o deliver a standardized risk disclosure document that provides information
about penny stocks and the risks in the penny stock market;
9
o provide the customer with current bid and offer quotations for the penny
stock;
o disclose the compensation of the broker-dealer and its salesperson in
connection with the transaction;
o provide the customer monthly account statements showing the market value
of each penny stock held in the customer's account; and
o make a special written determination that the penny stock is a suitable
investment for the customer and receive the customer's written agreement
to the transaction.
These disclosure requirements may have the effect of reducing the liquidity
of penny stocks. If our securities are subject to the penny stock rules, you
may find it more difficult to sell your shares of our common stock.
Our ability to pay dividends is limited. We currently intend to retain any
future earnings and, therefore, do not plan to pay dividends in the
foreseeable future. Our future dividend policy will depend on our earnings,
capital requirements, financial condition and other factors that our board of
directors deems relevant. We cannot assure you that dividends will ever be
paid.
Shares eligible for future sales by our current stockholders may adversely
affect the price of our stock. The market price of our common stock could
decline as a result of sales of shares of common stock by our existing
stockholders. These sales might make it more difficult for us to sell equity
securities in the future at a time and at a price that we deem appropriate.
Anti-takeover provisions and our right to issue preferred stock could make a
third party acquisition of us difficult and could deprive our stockholders of
a takeover premium for their shares. We are a Delaware corporation. Anti-
takeover provisions of Delaware law could make it more difficult for a third
party to acquire control of us, even if a change in control would be
beneficial to shareholders. Our amended certificate of incorporation provides
that our board of directors may issue preferred stock without shareholder
approval. The issuance of preferred stock could make it more difficult for a
third party to acquire us. Our board of directors may issue preferred stock
with voting or conversion rights that may have the effect of delaying,
deferring or preventing a change of control of us and would adversely affect
the market price of our common stock or voting and other rights of holders of
our common stock.
The exercise of outstanding options and warrants will dilute the interests
of our stockholders. As of June 2001 we had 16,946,094 shares of our common
stock outstanding. If all our outstanding options and warrants are exercised,
we will have approximately 23,601,696 (fully diluted, not including the
dilutive effect of the 8,000,000 shares offered by this Prospectus or shares
that could be issued upon the conversion of the preferred stock) shares
outstanding. Thus, the percentage of shares owned by all existing stockholders
will be reduced proportionately as warrants are exercised.
USE OF PROCEEDS
All of the shares of common stock offered by this prospectus are being
offered by GEM. We will not receive any proceeds from sales of common stock by
GEM.
SELLING STOCKHOLDERS
We sold the preferred stock, which the common stock underlies, to GEM in
transactions exempt from registration under the Securities Act. As part of the
above transactions, we agreed to register the shares being offered by this
prospectus.
The following table sets forth information as of June 1, 2001 about GEM and
the number of shares of common stock beneficially owned by it, all of which
are offered by this prospectus. For purposes of computing the number and
percentage of shares beneficially owned by the selling stockholder on June 1,
2001, any shares which such person has the right to acquire within 60 days
after such date are deemed to be outstanding, but those shares are not deemed
to be outstanding for the purpose of computing the percentage ownership of any
other selling stockholder. As a result, GEM is deemed to own all of the shares
that may be issued either on conversion of the preferred stock it owns or upon
exercise of its warrant.
10
Percent Shares
Shares Owned Owned Upon Percent
Being Before Completion of Owned After
Name and Address Offered Offering(1)(2) Offering Offering (1)(2)
- ---------------- ------- -------------- -------- ---------------
GEM Global Yield Fund Limited ............................ 8,000,000 4.99% 0 4.99%
Hunkins Waterfront Plaza
P.O. Box 556, Main Street
Nevis, West Indies
- ---------------
(1) Based on 23,601,696 (fully diluted, not including the dilutive effect of
the 8,000,000 shares offered by this Prospectus or shares that could be
issued upon the conversion of the preferred stock) shares, including
16,946,094 shares presently outstanding, plus the 8,000,000 shares being
offered by this Prospectus.
(2) Under its stock purchase agreement, GEM's ownership may not at any time
exceed 4.99% of our outstanding stock unless we violate that agreement in a
way that would allow GEM to convert all of its preferred stock at once.
PLAN OF DISTRIBUTION
GEM may sell the common stock being offered by this prospectus from time to
time directly to other purchasers, or to or through dealers or agents. To the
extent required, a prospectus supplement with respect to the common stock will
set forth the terms of the offering of the common stock, including the name(s)
of any dealer or agents, the number of shares of common stock to be sold, the
price of the common stock, any underwriting discount or other items
constituting underwriters' compensation.
GEM may sell its stock from time to time directly or, alternatively, through
broker-dealers or agents. GEM will act independently of us in making decisions
regarding the timing, manner and size of each sale. It may sell its common
stock in one or more transactions at fixed prices, at prevailing market prices
at the time of sale, at varying prices determined at the time of sale or at
negotiated prices. The sales may be made in transactions (which may involve
crosses or block transactions)
o on any national securities exchange for quotation services on which the
common stock may be listed or quoted at the time of sale
o in the over-the-counter market,
o in transactions other than on such exchanges or services or in the over-
the-counter market, or
o through the writing of options.
In connection with sales of the common stock, GEM may enter into hedging
transactions with broker-dealers, and those broker-dealers may in turn engage
in short sales of the common stock in the course of hedging the positions they
assume. GEM may also sell short the common stock offered by this prospectus
and deliver that common stock to close out such short positions, or lend or
pledge such common stock to broker-dealers that in turn may sell such
securities. GEM may also sell some of the common stock offered by this
prospectus under Rule 144 under the Securities Act.
GEM and any brokers, dealers or agents described above may be deemed
"underwriters" as that term is defined by the Securities Act.
Each selling stockholder and any other persons participating in a
distribution of securities will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including, without
limitation, Regulation M may limit the timing of purchases and sales of
securities by selling stockholder and others participating in a distribution
of securities. In addition, under Regulation M, those engaged in a
distribution of securities may not at the same time make a market in the
securities or take other actions that may affect the market price of the
securities for a specified period of time before the beginning of the
distribution, subject to some exceptions or exemptions. All of the
restrictions described above may affect the marketability of the securities
offered by this prospectus.
If a dealer is used in the sale of any common stock where this prospectus is
delivered, GEM may sell the common stock to the public at varying prices to be
determined by the dealer at the time of resale. To the
11
extent required, the name of the dealer and the terms of the transaction will
be set forth in the related prospectus supplement.
In connection with the sale of common stock, dealers or agents may receive
discounts, concessions, or commissions from GEM or from purchasers of the
common stock for whom they may act as agents. Agents and dealers participating
in the distribution of the common stock may be deemed to be underwriters, and
any compensation received by them and any profit on the resale of common stock
by them may be deemed to be underwriting discounts or commissions under the
Securities Act.
Under the Registration Rights Agreement with GEM, we have agreed to pay
costs and expenses associated with the registration of the shares of common
stock to be sold by this prospectus. In addition, GEM may be entitled to
indemnification against certain liabilities under the Registration Rights
Agreement.
We will make copies of this prospectus available to GEM and have informed
GEM of the need to deliver a copy of this prospectus to each purchaser before
or at the time of such sale.
INDEMNIFICATION
Section 145 of the Delaware General Corporation Law grants corporations the
power to indemnify their directors, officers, employees and agents. Our
Amended and Restated Certificate of Incorporation and our
By-laws provide for indemnification of our directors, officers, agents and
employees to the full extent permissible under the General Corporation Law.
The General Corporation Law also allows a corporation to eliminate the
liability of directors for breach of fiduciary duty in some cases. Our
certificate of incorporation eliminates that liability to the full extent
permitted by the that law.
We have signed indemnification agreements with each of our directors and
executive officers. Each of these agreements provides that we will indemnify
that person against expenses, including reasonable attorneys' fees, judgments,
penalties, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with any civil or criminal action or
administrative proceeding arising out of the performance of his duties as an
officer, director, employee or agent of our company. This indemnification will
be available if the acts of the person we are indemnifying were in good faith,
if the he acted in a manner he reasonably believes to be in or not opposed to
our best interest and, as to any criminal proceeding, he had no reasonable
cause to believe his conduct was unlawful.
The registration rights we have granted the selling stockholders, contain
indemnification provisions.
We maintain directors' and officers' liability insurance coverage with an
aggregate policy limit of $5 million for each policy year.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers and controlling persons
under the above provisions, or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission that indemnification is
against public policy and is, therefore, unenforceable.
LEGAL MATTERS
The validity of the issuance of shares of common stock offered by this
prospectus will be passed upon for us by Kaplan Gottbetter & Levenson, LLP.
The principals of Kaplan Gottbetter & Levenson, LLP are also the principals of
KGL Investments, Ltd., a selling stockholder in this prospectus.
EXPERTS
Our financial statements as of August 31, 2000 and 1999 and for the years
then ended have been incorporated by reference in this prospectus and in the
registration statement in reliance on the report of Goldstein Golub Kessler
LLP, independent auditors, given upon the authority of that firm as experts in
accounting and auditing. Financial statements of our subsidiary, Return
Assured Incorporated, a Nevada corporation, as of August 31, 2000 and August
31, 1999 and for the years then ended have been incorporated by reference in
this prospectus and in the registration statement in reliance on the report of
Pannell Kerr Forster, chartered accountants, given upon the authority of that
firm as experts in accounting and auditing.
12
8,000,000 Shares
Return Assured Incorporated
Common Stock
----------
PROSPECTUS
----------
June __, 2001
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The estimated expenses in connection with the distribution of the securities
being registered, all of which are to be paid by the Registrant, are as
follows:
Securities and Exchange Commission Registration Fee.................. $800.00
Printing and Engraving Expenses...................................... *
Legal Fees and Expenses.............................................. *
Accounting Fees and Expenses......................................... *
Miscellaneous Fees and Expenses...................................... *
Total................................................................ *
- ---------------
* To be completed by amendment.
Item 15. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law ("GCL") grants
corporations the power to indemnify their directors, officers, employees and
agents in accordance with the provisions thereof. Article Sixth of the
Registrant's Amended and Restated Certificate of Incorporation ("Certificate")
and Article V of the Registrant's By-laws provide for indemnification of
Registrant's directors, officers, agents and employees to the full extent
permissible under Section 145 of the GCL. Section 102(b)(7) of the GCL
authorizes a corporation to eliminate the liability of directors for breach of
fiduciary duty in certain cases. Article Eighth of the Certificate eliminates
such liability to the full extent permitted by the GCL.
Registrant has entered into indemnification agreements with each of its
directors and executive officers. Each such agreement provides that Registrant
will indemnify the indemnitee against expenses, including reasonable
attorneys' fees, judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with any civil or
criminal action or administrative proceeding arising out of the performance of
his duties as an officer, director, employee or agent of Registrant. Such
indemnification will be available if the acts of the indemnitee were in good
faith, if the indemnitee acted in a manner he reasonably believes to be in or
not opposed to the best interest of Registrant and, with respect to any
criminal proceeding, the indemnitee had no reasonable cause to believe his
conduct was unlawful.
The registration rights granted by Registrant to selling stockholders,
contain indemnification provisions.
Registrant maintains directors' and officers' liability insurance coverage
with an aggregate policy limit of $5 million for each policy year.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
An Exhibit Index has been attached as part of this Registration Statement
and is incorporated herein by reference.
(b) Financial Statement Schedules
Schedules are omitted because they are either not required, are not
applicable or because equivalent information has been included in the
financial statements, the notes thereto or elsewhere herein.
II-1
Item 17. Undertakings
a. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(b) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement;
(c) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement; provided, however, that paragraphs (1)(a)
and (1)(b) above do not apply if the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d)
of the Exchange Act that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
b. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall by deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
c. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted
to directors, officers and controlling persons of the Registrant pursuant to
the provisions described under "Item 15, Indemnification of Directors and
Officers" above, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment to the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
d. The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on a Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on the 7th day of
June, 2001.
RETURN ASSURED INCORPORATED
(Registrant)
By: /s/ MATTHEW SEBAL
---------------------------
Name: Matthew Sebal
Title: President
Known All Men by These Presents, that each person whose signature appears
below does hereby constitute and appoint Matthew Sebal with full power to act
as his or her true and lawful attorney-in-fact and agent for him and in his
name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement including without limitation any
registration statement for the same offering that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act of 1933, and to file
the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully, for all intents and
purposes, as he or she could or might do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities on June 7, 2001.
By: /s/ MATTHEW SEBAL
-----------------------------------
Matthew Sebal
President and Chairman of the Board
By: /s/ MICHAEL HILLERBRAND
-----------------------------------
Michael Hillerbrand
Director
By: /s/ ROBERT BLAGMAN
-----------------------------------
Robert Blagman
Director
By: /s/ DALE VANDER GEISSEN
-----------------------------------
Dale Vander Geissen
Director
By: /s/ MICHAEL SWEATMAN
-----------------------------------
Michael Sweatman
Vice President of Finance and
Chief Accounting Officer
II-3
EXHIBIT INDEX
Exhibit No.
-----------
Description
--------------------------
5.1 Form of opinion of Kaplan Gottbetter & Levenson, LLP
23.1 Consent of Goldstein Golub Kessler LLP
23.2 Consent of Pannell Kerr Forster
23.3 Consent of Kaplan Gottbetter & Levenson, LLP (included in Exhibit 5)