SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) April 26, 2002
Return Assured Incorporated
(Exact name of registrant as specified in its charter)
Delaware 13-3896069
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
5962 La Place Court
Suite 230
Carlsbad, California 92008
(Address of principal executive offices) (Zip Code)
(760) 438-7245
(Registrant=s Telephone Number, Including Area Code)
- --------------------------------------------------------------------------------
(Former Name or Former Address, If Changed since Last Report.)
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
The financial statements of EliteJet, Inc., which we acquired on April 26,
2002, are filed with this report.
Item 8. Change in Fiscal Year
Our acquisition of EliteJet, Inc., which we acquired on April 26, 2002, is
required to be accounted for as a reverse acquisition, with EliteJet being
treated as the acquiring company. The fiscal year of EliteJet, which is for
years ending December 31, became our fiscal year as of April 26, 2002. Our next
periodic report on Form 10-K or 10-Q is our Form 10-Q for the quarter ended June
30, 2002, which is required to be filed by August 14, 2002.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RETURN ASSURED INCORPORATED
Date: July 23, 2002 By: /s/ Matthew Sebal
----------------------
Matthew Sebal
President
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
EliteJet, Inc. and Subsidiary
We have audited the accompanying consolidated balance sheet of EliteJet, Inc. (a
Nevada corporation) and Subsidiary as of December 31, 2001, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the two-year period ended December 31, 2001. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
EliteJet, Inc. and Subsidiary as of December 31, 2001, and the consolidated
results of their operations and their cash flows for the two-year period ended
December 31, 2001 in conformity with accounting principles generally accepted in
the United States of America.
Rogoff & Company, P.C.
New York, New York
July 10, 2002
F-1
EliteJet, Inc. and Subsidiary
Consolidated Balance Sheets
March 31, December 31,
2002 2001
---- ----
(Unaudited)
ASSETS
Current assets:
Cash $ -- $ 341,899
Accounts receivable 42,116 220,053
Prepaid expenses 14,379 2,194
----------- -----------
Total current assets 56,495 564,146
Other assets:
Fixed assets 2,764,392 2,562,211
----------- -----------
Total other assets 2,764,392 2,562,211
----------- -----------
TOTAL ASSETS 2,820,887 3,126,357
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
Current liabilities:
Cash overdraft 1,882 --
Accounts payable and accrued expenses 622,477 243,893
Current portion of long-term debt 242,967 242,967
Customer deposits 50,000 50,000
----------- -----------
Total current liabilities 917,326 536,860
Other liabilities:
Long-term debt, net of current portion 2,118,751 2,151,155
Commitments and contingencies -- --
----------- -----------
Total other liabilities 2,118,751 2,151,155
----------- -----------
Total liabilities 3,036,077 2,688,015
----------- -----------
Minority interest in equity of subsidiary 292,927 299,258
Stockholders' equity (Deficiency):
Common stock, $1.00 par value, 25,000 shares
authorized, 500 shares issued and outstanding 500 500
Additional paid-in capital 2,114,382 2,114,382
Retained earning (deficit) (2,622,999) (1,975,798)
----------- -----------
Total stockholders' equity (net capital deficiency) (508,117) 139,084
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,820,887 $ 3,126,357
=========== ===========
See Notes to Financial Statements
F-2
EliteJet, Inc. and Subsidiary
Consolidated Statements of Operations
Three-Month Three-Month Year Year
Period Ended Period Ended Ended Ended
March 31, March 31, December 31, December 31,
2002 2001 2001 2000
---- ---- ---- ----
(Unaudited) (Unaudited)
Operating income:
Charter income $ 446,967 $ -- $ 1,328,980 $ --
Cost of sales 667,397 69,865 901,688 87,048
----------- --------- ----------- -----------
Total operating income (220,430) (69,865) 427,292 (87,048)
Operating expenses:
Selling expenses 25,190 7,974 78,851 110,647
General and administrative expenses 139,951 41,064 258,791 174,236
Depreciation expense 217,415 196,308 785,232 581,261
----------- --------- ----------- -----------
Total operating expenses 382,556 245,346 1,122,874 866,144
----------- --------- ----------- -----------
Income (loss) from operations (602,956) (315,211) (695,582) (953,192)
Other income and (expenses):
Interest income -- -- --
3,369
Other income and (expenses) (44,264) (42,530) (176,172) (154,512)
----------- --------- ----------- -----------
Total other income and (expenses) (44,264) (42,530) (176,172) (151,143)
----------- --------- ----------- -----------
Loss before minority interest $ (647,250) $(357,741) $ (871,754) $(1,104,336)
Minority Interest in Loss of Subsidiary 49 -- 292 --
----------- --------- ----------- -----------
Net Income (Loss) $ (647,201) $(357,741) $ (871,462) $(1,104,336)
=========== ========= =========== ===========
Weighted average shares outstanding 500 500 500 500
Earnings (loss) per share $ (1,294.40) $ (714.19) $ (1,742.92) $ (2,208.67)
See Notes to Financial Statements
F-3
EliteJet, Inc. and Subsidiary
Consolidated Statements of Stockholders' Equity
For the years ended December 31, 2001 and 2000
And for the Three-Months Ended March 31, 2002 (Unaudited)
Additional Retained
Number Common Paid-in Earnings
of Shares Stock Capital (Deficit) Total
--------- ----- ------- --------- -----
BALANCE, JANUARY 1, 2000 -- $ -- $ -- $ -- $ --
Net proceeds from the issuance
of common stock - Founder 500 500 2,114,382 -- 2,114,882
Net income (loss) for the year
ended December 31, 2000 -- -- -- (1,104,336) (1,104,336)
--- ---- ---------- ----------- -----------
BALANCE, DECEMBER 31, 2000 500 $500 $2,114,382 $(1,104,336) $ 1,010,546
=== ==== ========== =========== ===========
Net income (loss) for the year
ended December 31, 2001 -- -- -- (871,462) (871,462)
--- ---- ---------- ----------- -----------
BALANCE, DECEMBER 31, 2001 500 $500 $2,114,382 $(1,975,798) $ 139,084
=== ==== ========== =========== ===========
Net income (loss) for
the three-month period
ended March 31, 2002
(Unaudited) -- -- -- (647,201) (647,201)
--- ---- ---------- ----------- -----------
BALANCE, MARCH 31,
2002 (UNAUDITED) 500 $500 $2,114,382 $(2,622,999) $ (508,117)
=== ==== ========== =========== ===========
See Notes to Consolidated Financial Statements
F-4
EliteJet, Inc. and Subsidiary
Consolidated Statements of Cash Flows
Three-Month Three-Month Year Year
Period Ended Period Ended Ended Ended
March 31, March 31, December 31, December 31,
2002 2001 2001 2000
---- ---- ---- ----
(Unaudited) (Unaudited)
CASH FLOWS FROM:
Operating activities:
Net income (loss) $(647,250) $(357,741) $(871,754) $(1,104,336)
Non-cash transaction -
Professional services -- -- 25,000 --
Adjustments to reconcile net (loss) to net cash
provided by (used in) operating activities:
Depreciation (217,415) (196,308) (785,232) (581,261)
Minority interest (99) -- (292) --
Increase (decrease) in:
Accounts receivable 177,937 -- (220,053) --
Prepaid expenses (12,185) 4,500 7,500 (9.694)
(Increase) decrease in:
Cash overdraft 1,882 -- -- --
Accounts payable and
accrued expenses 378,584 63,707 231,741 12,152
Customer deposits -- -- 50,000 --
--------- --------- --------- -----------
Net cash provided by (used in)
operating activities 116,384 (93,226) 7,667 (520,617)
Financing activities:
Issuance of common stock -- -- -- 2,114,882
Sale of LLC Units -- -- 274,550 --
Aircraft acquisition loan -- -- -- 2,449,073
--------- --------- --------- -----------
Repayment of long-term debt (32,405) (4,290) (24,366) (30,585)
--------- --------- --------- -----------
Net cash provided by (used in)
financing activities $ (32,405) $ (4,290) $ 250,184 $ 4,533,369
(Continued)
F-5
EliteJet, Inc. and Subsidiary
Consolidated Statements of Cash Flows (continued)
Three-Month Three-Month Year Year
Period Ended Period Ended Ended Ended
March 31, March 31, December 31, December 31,
2002 2001 2001 2000
---- ---- ---- ----
(Unaudited) (Unaudited)
CASH FLOWS FROM:
Investing activities:
Acquisition of property, plant
and equipment $(419,596) $ -- $ (54,188) $(3,874,517)
Private placement expenses (6,282) -- -- --
--------- --------- --------- -----------
Net cash (used in)
investing activities (425,878) -- (54,188) (3,874,517)
--------- --------- --------- -----------
Net increase in cash and
cash equivalents (341,899) (97,515) 203,664 138,235
Cash and cash equivalents
at beginning of period 341,899 138,235 $ 138,235 --
--------- --------- --------- -----------
Cash and cash equivalents
at end of period $ -- $ 40,720 $ 341,899 $ 138,235
========= ========= ========= ===========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 44,494 $ 42,530 $ 176,238 $ 151,143
Income taxes $ -- $ -- $ -- $ --
Non cash transactions:
Accounts payable for LLC Units $ 7,500 $ -- $ -- $ --
Consulting services for LLC Units $ -- $ -- $ 25,000 $ --
See Notes to Financial Statements
F-6
EliteJet, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2001 and March 31, 2002 and 2001
(unaudited with respect to the three months ended March 31, 2002 and 2001)
Note 1: Organization and Business
EliteJet, Inc. (the "Parent") was organized on November 16, 1999, pursuant to
the corporation laws of the State of Nevada as Exec Jet, Inc. On September 28,
2001, the Parent amended its Articles of Incorporation and Corporate Charter to
change its name to EliteJet, Inc. On May 16, 2001, the Parent was qualified and
authorized to transact intrastate business in the State of California. The
Company was formed to acquire, own and operate jet air transportation. Its
current operations are to provide certain management services to Elite Jet
Partners, LLC. The company provides charter services throughout North America
and the Carribbean.
Elite Jet Partners, LLC (the "Subsidiary") was organized on May 2, 2001,
pursuant to the Beverly-Lillea Limited Liability Company Act of the State of
California as ExecJet Partners, LLC. On July 25, 2001, the Company amended its
Articles of Organization to change its name to Elite Jet Partners, LLC. The
Company was formed to acquire, own and provide jet air transportation for the
cooperative use of its members.
The Company's ability to remain operational is dependent upon its ability to
raise additional funds and have positive cash flows from operations. The
Company's future capital requirements will depend on numerous factors including,
but not limited to, continued progress in its selling capabilities and
implementing its marketing strategies. The Company plans to engage in such
ongoing financing efforts on a continuing basis.
Note 2: Basis of Presentation
The consolidated financial statements include the accounts of the Parent,
EliteJet, Inc., and its majority-owned Subsidiary, Elite Jet Partners, LLC
(collectively referred to herein as the "Company", from their respective dates
of incorporation/organization). All significant inter-company transactions and
account balances have been eliminated in consolidation.
F-7
EliteJet, Inc. and Subsidiary
Notes to Consolidated Financial Statements (continued)
December 31, 2001 and March 31, 2002 and 2001
(unaudited with respect to the three months ended March 31, 2002 and 2001)
Note 3: Private Placement Offering
During the year ended December 31, 2001, the Managing Member of the Subsidiary
passed a resolution authorizing the management to initiate steps to make a
private placement of the Subsidiary's Member Interests or "Units" in order to
raise capital. The Subsidiary initiated an offering of securities under an
exemption pursuant to Rule 506 of Regulation D, "Rules Governing the Limited
Offer and Sale of Securities Without Registration Under the Securities Act of
1933 (as amended)" (the "Offering"). The Offering includes the sale of up to six
hundred (600) Units, including rights in the Subsidiary consisting of the
Member's Economic Interest, any right to vote or participate in management, and
any right to information concerning the business and affairs of the Subsidiary,
at the offering price of $25,000.00 per Unit, for an aggregate of $15,000,000.00
on a best efforts, twelve (12) Unit minimum investment basis.
The Offering was commenced on August 31, 2001, with the first and only sale to
date of twelve (12) Units of the Subsidiary that raised an aggregate of
$300,000. Offering costs of $31,732, for legal fees, registration fees, printing
fees and other related expenses, were charged to the proceeds of the offering.
Note 4: Summary of Significant Accounting Policies
Cash and cash equivalents
The Company considers all highly liquid debt instruments purchased with original
maturities of three months or less to be cash equivalents.
Accounts receivable
Accounts receivable is stated at its gross amount. No allowance for doubtful
accounts has been provided for. Based upon its past history, the Company has not
experienced bad debt and does not expect to. The Company evaluates accounts
receivable as part of its determination of profit and loss.
In addition the Balance Sheet includes the value attributed to the minority
interest of the subsidiary. As a result of operations, the minority interest of
the subsidiary has been charged with their share of the subsidiary's loss.
F-8
EliteJet, Inc. and Subsidiary
Notes to Consolidated Financial Statements (continued)
December 31, 2001 and March 31, 2002 and 2001
(unaudited with respect to the three months ended March 31, 2002 and 2001)
Note 4: Summary of Significant Accounting Policies (continued)
Fixed assets
The Company's policy is to capitalize the cost of the acquisition and
significant improvements to its aircraft, as well as significant furniture and
fixtures, equipment and leasehold improvements. Purchased assets are capitalized
and stated at cost. Furniture, fixtures and equipment are depreciated using the
straight-line method over the estimated useful lives of the assets for financial
statement reporting purposes. For federal income tax purposes, depreciation is
provided for under the guidelines in the Internal Revenue Code.Gains or losses
on disposals of fixed assets are recorded as current activities. The Company
assesses at least annually the recovery of its long-lived and intangible assets.
If an impairment exists, the carrying amount of the related asset is reduced to
fair value.
Organization costs
Organization costs incurred in conjunction with the formation of the Company
have been expensed to operations.
Year-end
The Company has adopted a year-end of December 31 for financial statement and
income tax reporting purposes.
Revenue Recognition
Revenue is recognized when revenue is realized and has been earned.
Major customers
The Company has a concentration risk as defined by American Institute of
Certified Public Accountants (AICPA) Statement of Position (SOP) 94-6,
"Disclosure of Certain Risks and Uncertainties" in that the Company conducts
virtually all of its business with a relatively small number of customers, the
loss of any of which may have a materially negative effect on the Company's
financial position and/or results of operations. At December 31, 2001 and at
March 31, 2002, 4 of the Company's customers accounted for $ 112,530 (51%) and $
17,183 (40%) of Accounts Receivable, respectively. Revenues for the four
customers amounted to approximately $ 779,000 (59%) and $ 298,000 (67%) of the
total revenues for the year ended December 31, 2001 and for the three months
ended March 31, 2002.
F-9
EliteJet, Inc. and Subsidiary
Notes to Consolidated Financial Statements (continued)
December 31, 2001 and March 31, 2002 and 2001
(unaudited with respect to the three months ended March 31, 2002 and 2001)
Note 4: Summary of Significant Accounting Policies (continued)
Income taxes
The Company reports income (loss) for income tax reporting purposes on a
calendar year basis. The results of operations for the three-month periods ended
March 31, 2002 and 2001 (unaudited) and for the years ended December 31, 2001
and 2000 do not contain a substantial provision for income taxes because of the
Company's S Corporation election under the Internal Revenue Code, which was
involuntarily terminated on April 26, 2002 upon a business combination. Income
taxes on earnings of the Company are payable by the Stockholder individually
under the Internal Revenue Code and, accordingly, are not reflected in the
historical financial statements. State income taxes were immaterial.
Earnings (loss) per share
Earnings (loss) per share has been computed by dividing the net (loss) by the
weighted average number of common stock outstanding.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
Interim reporting (unaudited)
Information pertaining to the three-months ended March 31, 2002 and 2001 has not
been audited. In the opinion of management, the unaudited interim financial
information reflects all adjustments, consisting only of normal recurring
accruals, necessary for a fair presentation. Results for interim periods are not
necessarily indicative of results for a full year.
F-10
EliteJet, Inc. and Subsidiary
Notes to Consolidated Financial Statements (continued)
December 31, 2001 and March 31, 2002 and 2001
(unaudited with respect to the three months ended March 31, 2002 and 2001)
Note 5: Fixed Assets
Fixed assets includes aircraft and improvements, furniture, fixtures and
computer equipment at December 31, 2001 and consists of the following:
Aircraft and improvements $ 3,923,642
Furniture and fixtures 1,671
Computer equipment 3,391
-----------
Total fixed assets 3,928,704
Accumulated depreciation and amortization (1,366,493)
-----------
Total fixed assets, net $ 2,562,211
===========
Note 6: Note Payable
The Company has a note payable outstanding at December 31, 2001 and March 31,
2002 (unaudited), in the amount of $2,394,122 and $2,361,718, respectively, for
the acquisition and upgrade of an aircraft. The note bears interest at the rate
of two-and-a-quarter percent (2.25%) above the Governing Rate ("The Wall Street
Journal One Year Treasury Bill Rate" 2.22% at December 31, 2001 and March 31,
2002), is due May 1, 2010, and is payable in monthly principal installments of
$23,975.
F-11
EliteJet, Inc. and Subsidiary
Notes to Consolidated Financial Statements (continued)
December 31, 2001 and March 31, 2002 and 2001
(unaudited with respect to the three months ended March 31, 2002 and 2001)
Note 6: Note Payable (continued)
Future principal payments of long-term debt - The future principal payments for
long-term debt as of December 31, 2001 and March 31, 2002 (unaudited) are as
follows:
March 31, December 31,
2002 2001
---- ----
(Unaudited)
2002 $ 242,967 $ 242,967
2003 242,967 242,967
2004 242,967 242,967
2005 242,967 242,967
2006 242,967 242,967
2007 and thereafter 1,146,883 1,179,287
----------- -----------
Total future minimum principal payments $ 2,361,718 $ 2,394,122
=========== ===========
Note 7: Real Estate Lease
The Company leases its executive offices and operating facilities under a
non-cancelable agreement accounted for as an operating lease which expires on
January 31, 2003. The terms of the agreement require the Company to make minimum
fixed rental payments plus pay amounts as additional rent for 3.85% of the
Landlord's share of real estate taxes, water charges, sewer rent, sprinkler
charges vault taxes and assessments apportioned on a pro rata basis. Office rent
expense totaled $17,880 and additional rent totaled $1,397 for the year
three-month period ended March 31, 2002 (unaudited).
Minimum lease payments for the years ended December 31
2002 $ 32,538
2003 2,958
F-12
EliteJet, Inc. and Subsidiary
Notes to Consolidated Financial Statements (continued)
December 31, 2001 and March 31, 2002 and 2001
(unaudited with respect to the three months ended March 31, 2002 and 2001)
Note 8: Operating Lease (continued)
On November 19, 2001 the Company entered into an agreement accounted for as an
operating lease for a Dassault 10 aircraft. Minimum monthly payments are
$10,938. Additional lease payments may be due under certain conditions pursuant
to the agreement.
Schedule of future lease payments at December 31, 2001 and March 31, 2002
(unaudited) are as follows:
March 31, December 31,
2002 2001
---- ----
(Unaudited)
2002 $ 131,250 $ 131,250
2003 131,250 131,250
2004 131,250 131,250
2005 131,250 131,250
2006 131,250 131,250
2007 and thereafter 1,268,749 1,301,563
----------- -----------
Total future minimum principal payments $ 1,924,999 $ 1,957,813
=========== ===========
Note 9: Issuance of Units
On May 2, 2001 the Subsidiary issued 1 LLC Unit to Bruce Jenner in exchange for
marketing and promotion services. The transaction has been valued at the
offering price of $25,000 per Unit for financial statement reporting purposes at
December 31, 2001 since this was more readily determinable than the value of the
services. Accordingly, the Company charged $25,000 to operations (general and
administrative expenses).
Note 10: Related Party Transactions
Issuance of Units
On May 2, 2001, the Subsidiary issued 612 LLC Units to its managing member,
EliteJet, Inc., the Parent, a Nevada corporation authorized to do business in
the State of California in exchange for cash payments of the Company's costs,
including legal and filing fees for the establishment of the Subsidiary and the
preparation of the Private Placement Offering.
F-13
EliteJet, Inc. and Subsidiary
Notes to Consolidated Financial Statements (continued)
December 31, 2001 and March 31, 2002 and 2001
(unaudited with respect to the three months ended March 31, 2002 and 2001)
Note 10: Related Party Transactions (continued)
Loan to Managing Member
The Subsidiary has made an advance to its managing member, EliteJet, Inc., the
Parent. The advance, which is non-interest bearing, amounted to $300,000 at
March 31, 2002 (unaudited) and December 31, 2001, respectively. The proceeds
were utilized to upgrade and refurbish the managing member's aircraft.
Real estate leases
The Subsidiary occupies space at the office of its managing member, EliteJet,
Inc., the Parent, located at 5962 La Place Court, Carlsbad, California 92008 on
a month-to-month basis, at no charge, pursuant to an informal verbal agreement.
This lease is accounted for as an operating lease.
Note 11: Subsequent Events
On April 26, 2002 the Company entered into a transaction whereby the
Shareholders exchanged all of their common stock for 7,000,000 shares of common
stock of Return Assured Incorporated.
Note 12: Recent Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board issued Statement No. 141,
"Business Combinations" and Statement No. 142, "Goodwill and Other Intangible
Assets". These statements become effective to the Company on July 1, 2001 for
Statement No. 141 and August 1, 2002 for Statement No. 142. The Company has not
completed any business combinations as of December 31, 2001 and management
cannot currently assess what effect the future adoption of these pronouncements
will have on the Company's financial statements.
In June 15, 2001, the Financial Accounting Standards Board also issued Statement
No. 143 "Accounting For Asset Retirement Obligations" and in August 15, 2001,
Statement No. 144 "Accounting For Impairment and Disposal of Long Lived Assets".
F-14
EliteJet, Inc. and Subsidiary
Notes to Consolidated Financial Statements (continued)
December 31, 2001 and March 31, 2002 and 2001
(unaudited with respect to the three months ended March 31, 2002 and 2001)
Note 12: Recent Accounting Pronouncements (continued)
Statement No. 143 will change the accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs in four significant ways. First, Statement 143 requires
that the amount initially recognized for an asset retirement obligation be
measured at fair market value and not under the current practice of using a
cost-accumulation measurement approach. Second, Statement 143 requires that the
retirement obligation liability is discounted and accretion expense is
recognized using the credit-adjusted risk-free interest rate in effect when the
liability was initially recognized.
Prior practice did not require discounting of the retirement obligation
liability and therefore no accretion was recorded in periods subsequent to the
initial recognition period. Third, under prior practice, dismantlement and
restoration costs were taken into account in determining amortization and
depreciation rates and often the recognized asset retirement obligation was
recorded as a contra-asset. Under Statement 143, recognized asset retirement
obligations are recognized as a liability. Fourth, under prior practice, the
asset retirement obligation was recognized over that useful life of the related
asset and under Statement 143 the obligation is recognized over that useful life
of the related asset and under Statement 143 the obligation is recognized when
the liability is incurred. The effective date for Statement No. 143 is for
fiscal years beginning after June 15, 2002.
Statement No. 144, changes the accounting for long lived assets to be held and
used by eliminating the requirement to allocate goodwill to long-lived assets to
be tested for impairment, by providing a probability-weighted cash flow
estimation approach to deal with situations in which alternative courses of
action to recover the carrying amount of possible future cash flows and
establishing a "primary-asset" approach to determine the cash flow estimation
period for a group of assets and liabilities that represents the unit of
accounting for a long-lived asset to be held and used. Statement No. 144 changes
the accounting for long-lived assets to be disposed of other than the sale by
requiring that the depreciable life of a long lived asset to be abandoned, be
revised to reflect a shortened useful life and by requiring that an impairment
loss be recognized at the date a long-lived asset is exchanged for a similar
productive asset or distributed to owners in a spin-off if the carrying amount
of the asset exceeds its fair value. Statement No. 144 changes the accounting
for long lived assets to be disposed of by sale by requiring that discontinued
operations no longer be measured on a net realizable value basis (but at the
lower of carrying amount or fair value less costs to sell), by eliminating the
recognition of future operating losses of discontinued components before they
occur and by broadening the presentation of discontinued operations in the
income statement to include a component of an entity rather than a segment of a
business. A component of an entity comprises operations and cash flows that can
be clearly distinguished, operationally, and for financial reporting purposes,
from the rest of the entity. The effective date for Statement No. 144 is for
fiscal years beginning after December 15, 2001.
F-15
EliteJet, Inc. and Subsidiary
Notes to Consolidated Financial Statements (continued)
December 31, 2001 and March 31, 2002 and 2001
(unaudited with respect to the three months ended March 31, 2002 and 2001)
Note 12: Recent Accounting Pronouncements (continued)
The Company expects that the adoption of the new statements will not have a
significant impact on its financial statements. It is not possible to quantify
the impact until the newly issued statements have been studied.
F-16
INDEPENDENT AUDITORS' REPORT
To the Members of
Elite Jet Partners, LLC
We have audited the accompanying balance sheet of Elite Jet Partners, LLC, a
majority-owned subsidiary of EliteJet, Inc. (a California limited liability
company and a development stage enterprise) as of December 31, 2001, and the
related statements of operations, members' equity, and cash flows for the period
from May 2, 2001 (inception) to December 31, 2001. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Elite Jet Partners, LLC as of
December 31, 2001, and the results of its operations and its cash flows for the
period from May 2, 2001 (inception) to December 31, 2001 in conformity with
accounting principles generally accepted in the United States of America.
Rogoff & Company, P.C.
New York, New York
July 9, 2002
G-1
Elite Jet Partners, LLC
(A Development Stage Enterprise)
Balance Sheets
March 31, December 31,
2002 2001
---- ----
(Unaudited)
ASSETS
Current assets:
Loan to managing member $300,000 $300,000
-------- --------
Total current assets 300,000 300,000
Other assets:
Other assets -- --
-------- --------
Total other assets -- --
-------- --------
TOTAL ASSETS 300,000 300,000
======== ========
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses 5,094 3,988
-------- --------
Total current liabilities 5,094 3,988
Other liabilities:
Commitments and contingencies -- --
-------- --------
Total other liabilities -- --
-------- --------
Total liabilities 5,094 3,988
-------- --------
Members' equity:
Members' equity 294,906 296,012
-------- --------
Total members' equity 294,906 296,012
-------- --------
TOTAL LIABILITIES AND MEMBERS' EQUITY $300,000 $300,000
======== ========
See Notes to Financial Statements
G-2
Elite Jet Partners, LLC
(A Development Stage Enterprise)
Statements of Operations
For the For the
Period from Period from
May 2, May 2,
Three-Month 2001 2001
Period Ended (inception) to (inception) to
March 31, December 31, March 31,
2002 2001 2002
---- ---- ----
(Unaudited) (Unaudited)
Operating income:
Operating income $ -- $ -- $ --
------- -------- --------
Total operating income -- -- --
Operating expenses:
General and administrative expenses 2,094 13,852 15,946
------- -------- --------
Total operating expenses 2,094 13,852 15,946
------- -------- --------
Income (loss) from operations (2,094) (13,852) (15,946)
Other income and (expenses):
Other income and (expenses) (230) (66) (296)
------- -------- --------
Total other income and (expenses) (230) (66) (296)
------- -------- --------
Net income (loss) $(2,324) $(13,918) $(16,242)
======= ======== ========
Weighted average units outstanding 625 619
Earnings (loss) per unit $ (3.72) $ (22.48)
See Notes to Financial Statements
G-3
Elite Jet Partners, LLC
(A Development Stage Enterprise)
Statements of Members' Equity
For the period from May 2, 2001 (inception) to December 31, 2001
And for the Three-Month Period Ended March 31, 2002 (Unaudited)
Number Members' Earnings Members'
of Units Investment (Loss) Draw Total
-------- ---------- ------ ---- -----
BALANCE, INCEPTION
(MAY 2, 2001) -- $ -- $ -- $ -- $ --
Net proceeds from the issuance
of LLC Units - Founder 612 10,380 -- -- 10,380
Issuance of LLC Units
for services 1 25,000 -- -- 25,000
Net proceeds from the
issuance of LLC Units -
Private Placement - Net 12 274,550 -- -- 274,550
Net income (loss) for the
period from May 2,
2001 (inception) to
December 31, 2001 -- -- (13,918) -- (13,918)
--- --------- -------- ------ ---------
BALANCE, DECEMBER
31, 2001 625 $ 309,930 $(13,918) $ -- $ 296,012
Additional proceeds from the
Issuance of LLC Units -
Founder -- 7,500 -- -- 7,500
Additional costs in connection
with private placement -- (6,282) -- -- (6,282)
Net income (loss) for the
three-month period ended
March 31, 2002 (Unaudited) -- --- $ (2,324) -- (2,324)
--- --------- -------- ------ ---------
BALANCE, MARCH 31,
2002 (UNAUDITED) 625 $ 311,148 $(16,242) $ -- $ 294,906
=== ========= ======== ====== =========
See Notes to Financial Statements
G-4
Elite Jet Partners, LLC
(A Development Stage Enterprise)
Statements of Cash Flows
For the For the
Period from Period from
May 2, May 2,
Three-Month 2001 2001
Period Ended (inception) to (inception) to
March 31, December 31, March 31,
2002 2001 2002
---- ---- ----
(Unaudited) (Unaudited)
CASH FLOWS FROM:
Operating activities:
Net income (loss) $(2,324) $ (13,918) $ (16,242)
Consulting services for Units -- 25,000 25,000
Adjustments to reconcile net (loss) to
Net cash (used in) operating activities:
Increase in accounts payable and accrued expenses 8,606 3,988 12594
------- --------- ---------
Net Cash provided by operating activities 6,282 15,070 21,352
------- --------- ---------
Financing activities:
Issuance of LLC Units - founder -- 10,380 10,380
Issuance of LLC Units - private placement -- 300,000 300,000
Additional costs in connection with public offering (6,282) (25,450) (31,732)
------- --------- ---------
Net Cash provided by financing activities (6,282) 284,930 278,648
------- --------- ---------
Investing activities:
Loan to Elite Jet, Inc. -- (300,000) (300,000)
------- --------- ---------
Net Cash provided by investing activities -- (300,000) (300,000)
------- --------- ---------
Net increase in cash and cash equivalents $ -- $ -- $ --
(Continued)
G-5
Elite Jet Partners, LLC
(A Development Stage Enterprise)
Statements of Cash Flows (continued)
For the For the
Period from Period from
September 7, September 7,
Three-Month 2001 2001
Period Ended (inception) to (inception) to
March 31, December 31, March 31,
2002 2001 2002
---- ---- ----
(Unaudited) (Unaudited)
Net increase in cash and cash equivalents $ -- $ -- $ --
Cash and cash equivalents at beginning of period -- -- --
------ ------- ----
Cash and cash equivalents at end of period $ -- $ -- $ --
====== ======= ====
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 230 $ 66 $296
Income taxes $ -- $ -- $ --
Non-cash transactions:
Accounts payable and common stock $7,500 $ -- $ --
Consulting services 25,000
See Notes to Financial Statements
G-6
Elite Jet Partners, LLC
(A Development Stage Enterprise)
Notes to Financial Statements
(Unaudited with respect to the three-month period ended March 31, 2002)
Note 1: Organization and Business
Elite Jet Partners, LLC (the "Company") was organized on May 2, 2001, pursuant
to the Beverly-Lillea Limited Liability Company Act of the State of California
(California Corporation Code ss.ss. 17001-17705) as ExecJet Partners, LLC. On
July 25, 2001, the Company amended its Articles of Organization to change its
name to Elite Jet Partners, LLC. The Company was formed to acquire, own and
provide jet air transportation for the cooperative use of its members and the
general public.
The Company is a development stage enterprise as defined by Financial Accounting
Standards Board (FASB) Statements of Financial Accounting Standards (SFAS) No.
7, "Accounting and Reporting by Development Stage Enterprises". The Company has
not yet commenced operations. The Company's only activities to date have been
its formation and raising capital. Because the Company is in the development
stage, the accompanying consolidated financial statements should not be regarded
as typical for normal operating periods.
The Company has not yet commenced operations. Its only activities since
inception have been its formation and efforts to raise capital. These factors
indicate that the Company's ability to become operational is dependent upon its
ability to raise additional funs and have positive cash flows from operations.
The Company's future capital requirements will depend on numerous factors
including, but not limited to, continued progress in its selling capabilities
and implementing its marketing strategies. The Company plans to engage in such
ongoing financing efforts on a continuing basis.
Note 2: Private Placement Offering
During the year ended December 31, 2001, the Board of Directors of the Company
passed a resolution authorizing the management of the Company to initiate steps
to make a private placement of the Company's Member Interests or "Units" in
order to raise capital. The Company initiated an offering of securities under an
exemption pursuant to Rule 506 of Regulation D, "Rules Governing the Limited
Offer and Sale of Securities Without Registration Under the Securities Act of
1933 (as amended)" (the "Offering"). The Offering includes the sale of up to six
hundred (600) Units, including rights in the Company consisting of the Member's
Economic Interest, any right to vote or participate in management, and any right
to information concerning the business and affairs of the Company, at the
offering price of $25,000 per Unit, for an aggregate of $15,000,000 on a best
efforts, twelve (12) Unit minimum investment basis.
G-7
Elite Jet Partners, LLC
(A Development Stage Enterprise)
Notes to Financial Statements (continued)
(Unaudited with respect to the three-month period ended March 31, 2002)
Note 2: Private Placement Offering (continued)
The Offering was commenced on August 31, 2001, with the first and only sale to
date of twelve (12) Units of the Company that raised an aggregate of $300,000.
Organization expenses and offering costs of $22,678, for legal fees,
registration fees, printing fees and other related expenses, were charged to
general and administrative expense.
Note 3: Summary of Significant Accounting Policies
Cash and cash equivalents
The Company considers all highly liquid debt instruments purchased with original
maturities of three months or less to be cash equivalents.
Organization costs
Organization costs incurred in conjunction with the formation of the Company
have been expensed to operations.
Deferred offering costs
Costs and fees incurred in conjunction with the private placement of the
Company's securities pursuant to the Securities Act of 1933 (as amended) have
been deferred and charged against the gross proceeds of the offering.
Year-end
The Company has adopted a year-end of December 31 for financial statement and
income tax reporting purposes.
Revenue Recognition
Revenue is recognized when revenue is realized and has been earned.
G-8
Elite Jet Partners, LLC
(A Development Stage Enterprise)
Notes to Financial Statements (continued)
(Unaudited with respect to the three-month period ended March 31, 2002)
Note 3: Summary of Significant Accounting Policies (continued)
Income taxes
The Company reports income (loss) for income tax reporting purposes on a
calendar year basis. The results of operations for the three-month period ended
March 31, 2002 (unaudited) and for the year ended December 31, 2001 do not
contain a substantial provision for income taxes because the Company is a
limited liability company. Income taxes on earnings of the Company are payable
by the Members individually under the Internal Revenue Code and, accordingly,
are not reflected in the historical financial statements.
Earnings (loss) per unit
Earnings (loss) per unit have been computed by dividing the net income (loss) by
the weighted average number of units outstanding.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
Interim reporting (unaudited)
Information pertaining to the three-months ended March 31, 2002 has not been
audited. In the opinion of management, the unaudited interim financial
information reflects all adjustments, consisting only of normal recurring
accruals, necessary for a fair presentation. Results for interim periods are not
necessarily indicative of results for a full year.
G-9
Elite Jet Partners, LLC
(A Development Stage Enterprise)
Notes to Financial Statements (continued)
(Unaudited with respect to the three-month period ended March 31, 2002)
Note 4: Issuance of Units
On May 2, 2001 the Company issued 1 LLC Unit to Bruce Jenner in exchange for
marketing and promotion services. The transaction has been valued at the
offering price of $25,000 per Unit for financial statement reporting purposes at
December 31, 2001 since this was more readily determinable than the value of the
services. Accordingly, the Company charged $25,000 to operations (general and
administrative expenses).
Note 5: Related Party Transactions
Issuance of Units
On May 2, 2001, the Company issued 612 LLC Units to its managing member,
EliteJet, Inc., a Nevada corporation authorized to do business in the State of
California in exchange for cash payments of the Company's costs, including legal
and filing fees for the establishment of the Company and the preparation of the
Private Placement Offering.
Loan to Managing Member
The Company has made an advance to its managing member, EliteJet, Inc. The
advance, which is non-interest bearing, amounted to $300,000 at March 31, 2002
(unaudited) and December 31, 2001, respectively. The proceeds were utilized to
upgrade and refurbish the managing member's aircraft.
Real estate leases
The Company occupies space at the office of its managing member, EliteJet, Inc.,
located at 5962 La Place Court, Carlsbad, California 92008 on a month-to-month
basis, at no charge, pursuant to an informal verbal agreement. This lease is
accounted for as an operating lease.
G-10
Elite Jet Partners, LLC
(A Development Stage Enterprise)
Notes to Financial Statements (continued)
(Unaudited with respect to the three-month period ended March 31, 2002)
Note 6: Recent Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board issued Statement No. 141,
"Business Combinations" and Statement No. 142, "Goodwill and Other Intangible
Assets". These statements become effective to the Company on July 1, 2001 for
Statement No. 141 and August 1, 2002 for Statement No. 142. The Company has not
completed any business combinations as of December 31, 2001 and management
cannot currently assess what effect the future adoption of these pronouncements
will have on the Company's financial statements.
In June 15, 2001, the Financial Accounting Standards Board also issued Statement
No. 143 "Accounting For Asset Retirement Obligations" and in August 15, 2001,
Statement No. 144 "Accounting For Impairment and Disposal of Long Lived Assets".
Statement No. 143 will change the accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs in four significant ways. First, Statement 143 requires
that the amount initially recognized for an asset retirement obligation be
measured at fair market value and not under the current practice of using a
cost-accumulation measurement approach. Second, Statement 143 requires that the
retirement obligation liability is discounted and accretion expense is
recognized using the credit-adjusted risk-free interest rate in effect when the
liability was initially recognized.
Prior practice did not require discounting of the retirement obligation
liability and therefore no accretion was recorded in periods subsequent to the
initial recognition period. Third, under prior practice, dismantlement and
restoration costs were taken into account in determining amortization and
depreciation rates and often the recognized asset retirement obligation was
recorded as a contra-asset. Under Statement 143, recognized asset retirement
obligations are recognized as a liability. Fourth, under prior practice, the
asset retirement obligation was recognized over that useful life of the related
asset and under Statement 143 the obligation is recognized over that useful life
of the related asset and under Statement 143 the obligation is recognized when
the liability is incurred. The effective date for Statement No. 143 is for
fiscal years beginning after June 15, 2002.
G-11
Elite Jet Partners, LLC
(A Development Stage Enterprise)
Notes to Financial Statements (continued)
(Unaudited with respect to the three-month period ended March 31, 2002)
Note 6: Recent Accounting Pronouncements (continued)
Statement No. 144, changes the accounting for long lived assets to be held and
used by eliminating the requirement to allocate goodwill to long-lived assets to
be tested for impairment, by providing a probability-weighted cash flow
estimation approach to deal with situations in which alternative courses of
action to recover the carrying amount of possible future cash flows and
establishing a "primary-asset" approach to determine the cash flow estimation
period for a group of assets and liabilities that represents the unit of
accounting for a long-lived asset to be held and used. Statement No. 144 changes
the accounting for long-lived assets to be disposed of other than the sale by
requiring that the depreciable life of a long lived asset to be abandoned, be
revised to reflect a shortened useful life and by requiring that an impairment
loss be recognized at the date a long-lived asset is exchanged for a similar
productive asset or distributed to owners in a spin-off if the carrying amount
of the asset exceeds its fair value. Statement No. 144 changes the accounting
for long lived assets to be disposed of by sale by requiring that discontinued
operations no longer be measured on a net realizable value basis (but at the
lower of carrying amount or fair value less costs to sell), by eliminating the
recognition of future operating losses of discontinued components before they
occur and by broadening the presentation of discontinued operations in the
income statement to include a component of an entity rather than a segment of a
business. A component of an entity comprises operations and cash flows that can
be clearly distinguished, operationally, and for financial reporting purposes,
from the rest of the entity. The effective date for Statement No. 144 is for
fiscal years beginning after December 15, 2001.
The Company expects that the adoption of the new statements will not have a
significant impact on its financial statements. It is not possible to quantify
the impact until the newly issued statements have been studied.
G-12
PRO FORMA FINANCIAL INFORMATION
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited consolidated pro forma financial statements give effect
to the acquisition by Return Assured Incorporated ("Return Assured") of
EliteJet, Inc. ("EliteJet"). This transaction has been accounted for as a
reverse merger with EliteJet as the accounting acquiror. The unaudited pro forma
consolidated balance sheet presents the combined financial position of Return
Assured and EliteJet as of March 31, 2002 assuming the merger had occurred on
that date. Such pro forma information is based upon the historical balance sheet
data of Return Assured as of February 28, 2002 and EliteJet as of March 31,
2002. The unaudited pro forma consolidated statements of operations give effect
to the merger of Return Assured and EliteJet by combining the results of
operations of Return Assured for the twelve months ended November 30, 2001 with
the results of EliteJet for the year ended December 31, 2001, and by combining
the results of operations of Return Assured for the three months ended February
28, 2002 with the results of EliteJet for the three months ended March 31, 2002
as if the merger and reverse stock split had occurred on January 1, 2001 and
January 1, 2002, respectively. Due to the difference in year ends, the results
of operations for the three months ended November 30, 2000 of Return Assured
have been removed from and the results of operations for the three months ended
November 30, 2001 have been added to Return Assured's results of operations for
their fiscal year ended August 31, 2001 in order to present twelve month
results. During the year ended December 31, 2001 and the three months ended
March 31, 2002, the consolidated pro forma statements of operations also give
effect to a reverse split of Return Assured common stock, on a 1 for 60 basis,
which was effective prior to the closing of the merger.
The unaudited pro forma consolidated financial statements are based on the
estimates and assumptions set forth in the notes to these financial statements,
which have been made solely for purposes of developing this pro forma
information. The unaudited pro forma consolidated financial statements are not
necessarily an indication of the results that would have been achieved had such
transactions been consummated as of the dates indicated or that may be achieved
in the future.
These unaudited pro forma combined consolidated financial statements should be
read in conjunction with the historical financial statements and related notes
of Return Assured and EliteJet.
H-1
Return Assured Incorporated and Subsidiaries
Proforma Consolidated Statement of Operations
For the twelve months ended November 30, 2001 (Return Assured) and
the year ended December 31, 2001 (EliteJet)
(Unaudited)
Historical
------------------------------
Return EliteJet
Assured and and
Subsidiaries Subsidiary Pro Forma
------------ ---------- ---------
Revenue $ 10,851 $ 1,328,980 $ 1,339,831
Cost of Revenue 32,177 901,688 933,865
----------- ----------- -----------
Margin (21,326) 427,292 405,966
Selling, general and administrative expenses 3,016,778 1,122,874 4,139,652
----------- ----------- -----------
Operating loss (3,038,104) (695,582) (3,733,686)
Interest expense 561,097 176,172 737,269
----------- ----------- -----------
Loss from continuing operations before minority interest (3,599,201) (871,754) (4,470,955)
Minority interest in loss of subsidiary 292 292
----------- ----------- -----------
Loss from continuing operations (3,599,201) (871,462) (4,470,663)
Discontinued Operations:
Loss from operations of discontinued segments, including
impairment of goodwill of $2,840,938 (2,472,155) (2,472,155)
Loss from disposal of discontinued segments, including
provision of $56,000 for operating losses during phase-
out period (1,678,128) (1,678,128)
----------- ----------- -----------
Loss from discontinued operations (4,150,283) (4,150,283)
----------- ----------- -----------
Net Income (Loss) (7,749,484) (871,462) (8,620,946)
Dividends on preferred stock (51,980) (51,980)
----------- ----------- -----------
Net loss attributable to common shareholders $(7,801,464) $ (871,462) $(8,672,926)
=========== =========== ===========
Net Loss per share, basic and diluted, continuing operations $ (17.33) (1,742.92) $ (0.62)
=========== =========== ===========
Net Loss per share, basic and diluted, discontinued operations $ (19.70) 0.00 $ (0.58)
=========== =========== ===========
Net Loss per share, basic and diluted $ (37.03) $ (1,742.92) $ (1.20)
=========== =========== ===========
Weighted Average number of shares outstanding 1 210,684 500 2 $ 7,210,684
=========== =========== ===========
H-2
Return Assured Incorporated and Subsidiaries
Notes to unaudited Pro Forma Consolidated Statement of Operations
For the year ended December 31, 2001
The pro forma consolidated statement of operations of Return Assured and
EliteJet gives effect to the issuance of Return Assured common stock in exchange
for all the outstanding stock of EliteJet as if it had occurred on January 1,
2001.
1. Adjustment to the historical financial statements of Return Assured to
reflect the one for sixty stock split.
2. Pro forma net income per share is computed by dividing the pro forma net
income by Return Assured's weighted average number of shares and the
issuance of 7,000,000 shares of common stock to the shareholders of
EliteJet in exchange for all the outstanding common stock of EliteJet.
Incremental shares from the effect of options, warrants and convertible
preferred stock have not been included in the weighted average shares
calculation on a diluted basis as the effect would have been
anti-dilutive.
H-3
Return Assured Incorporated and Subsidiaries
Proforma Consolidated Statement of Operations
For the three-months ended February 28, 2002 (Return Assured) and
the three-months ended March 31, 2002 (Elite Jet)
(Unaudited)
Historical
--------------------------
Return
Assured Elite Jet Pro Forma
--------- ----------- -----------
Revenue $ 446,967 $ 446,967
Cost of Revenue 667,397 667,397
--------- ---------- -----------
Margin (220,430) (220,430)
General and administrative expenses $ 351,130 382,556 733,686
--------- ---------- -----------
Operating loss (351,130) (602,986) (954,116)
Interest expense 24,954 44,264 69,218
--------- ---------- -----------
Loss before minority interest (376,084) (647,250) (1,023,334)
Minority interest in loss of subsidiary 49 49
--------- ---------- -----------
Net loss (376,084) (647,201) (1,023,285)
Dividends on preferred stock (9,441) (9,441)
--------- ---------- -----------
Net loss attributable to common
shareholders $(385,525) $ (647,201) $(1,032,726)
========= ========== ===========
Net Loss per share, basic and diluted $ (1.37) $(1,294.40) $ (0.14)
========= ========== ===========
Weighted Average number of shares
outstanding 1 280,770 500 2 7,280,770
========= ========== ===========
H-4
Return Assured Incorporated and Subsidiaries
Notes to unaudited Pro Forma Consolidated Statement of Operations For the three
months ended March 31, 2002
The pro forma consolidated statement of operations of Return Assured and
EliteJet gives effect to the issuance of Return Assured common stock in exchange
for all the outstanding stock of EliteJet as if it had occurred on January 1,
2002.
1. Adjustment to the historical financial statements of Return Assured to
reflect the one for sixty stock split.
2. Pro forma net income per share is computed by dividing the pro forma net
income by Return Assured's weighted average number of shares and the
issuance of 7,000,000 shares of common stock to the shareholders of
EliteJet in exchange for all the outstanding common stock of EliteJet.
Incremental shares from the effect of options, warrants and convertible
preferred stock have not been included in the weighted average shares
calculation on a diluted basis as the effect would have been
anti-dilutive.
H-5
Return Assured Incorporated and Subsidiaries
Pro Forma Consolidated Balance Sheet
At February 28, 2002 (Return Assured) and
at March 31, 2002 (EliteJet)
(Unaudited)
Historical
-------------------------------
Return
Assured and EliteJet Pro forma
Subsidiaries and Subsidiary Adjustments Pro Forma
------------ -------------- ----------- ---------
ASSETS
Current Assets:
Cash $ 886 $ 886
Cash in escrow 2,808,056 2,808,056
Accounts receivable $ 42,116 42,116
Prepaid expenses and other
current assets 3,086 14,379 17,465
------------ ----------- -------------- -----------
Total current assets 2,812,028 56,495 2,868,523
Goodwill 2 $ 2,875,662 2,875,662
Property and Equipment 2,764,392 2,764,392
------------ ----------- -------------- -----------
Total Assets $ 2,812,028 $ 2,820,887 $ 2,875,662 $ 8,508,577
============ =========== ============== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Cash overdraft $ 1,882 $ 1,882
Accounts payable and
accrued liabilities $ 1,500,477 622,477 2,122,954
Current portion of long-term debt 242,967 242,967
50,000 50,000
------------ ----------- -----------
Total current liabilities 1,500,477 917,326 2,417,803
Long-term debt, net of current portion 2,118,751 2,118,751
------------ ----------- -----------
Total Liabilities 1,500,477 3,036,077 4,536,554
------------ ----------- -----------
Minority Interest 292,927 292,927
------------ ----------- -----------
Redeemable Preferred Stock 3,828,873 3,828,873
------------ ----------- -----------
Common Shareholders' Equity (Deficit):
Common Stock 16,847 500 1,2 $ (10,067) 7,280
Additional paid-in capital 10,933,382 2,114,382 1,2 (10,582,325) 2,465,439
Accumulated other comprehensive income 503 503
Accumulated deficit (13,468,054) (2,622,999) 2 13,468,054 (2,622,999)
------------ ----------- -------------- -----------
Total Common Shareholders'
Equity (Deficit) (2,517,322) (508,117) 2,875,662 (149,777)
------------ ----------- -------------- -----------
Total Liabilites and Common
Shareholders' Equity (Deficit) $ 2,812,028 $ 2,820,887 $ 2,875,662 $ 8,508,577
============ =========== ============== ===========
H-6
Return Assured Incorporated and Subsidiaries
Notes to unaudited Pro Forma Consolidated Balance Sheet
March 31, 2002
The pro forma consolidated balance sheet of Return Assured Incorporated ("Return
Assured") gives effect to the issuance of Return Assured Common Stock to
purchase common stock in exchange for all the outstanding common stock of
EliteJet as if it had occurred on March 31, 2002. For accounting purposes, this
transaction is being accounted for as a purchase with EliteJet as the acquiror.
The following is a summary of the pro forma adjustments to reflect this merger
as well as a reverse stock split of Return Assured that will take place prior to
the closing of the merger:
1. Adjustment to reflect stock split of Return Assured on a one for sixty
basis.
2. Adjustment to (a) eliminate the stockholders' equity of Return Assured,
the accounting acquiree, (b) record the purchase price of $358,340
recorded on the acquisition and to allocate $7,000 of this purchase price
to common stock on the issuance of Return Assured $.001 par value common
stock to the shareholders of EliteJet and the remaining $351,340 to
additional paid in capital and (c) to record goodwill of $2,875,662 on the
merger. The purchase price of $358,340 is based upon the market value of
Return Assured common stock outstanding prior to the acquisition. The
excess of the purchase price of the transaction over the net assets of
Return Assured has been recorded as goodwill.